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(Best) PVTB, LYV, NFLX (Worst) NEU, X, CPSI from Better Trades
February 1, 2010
With the first month of the New Year behind us, the markets have posted heavy losses thus far. Despite reaching 15-month highs two weeks ago, the S&P index ended January down 5.7%.
The down month is causing apprehension for some investors who are concerned over the saying that as January goes, so does the year. Used as a barometer, the S&P 500 index in January is seen as a forecast of how stocks will end the year. Since 1950, there have been only five major errors in the prediction of the markets’ direction.
The DOW closed the week lower, falling 105.65 points, or 1.0%, to close at 10,067.33. The S&P also finished the week in the red, slipping 17.89 points, or 1.6%, ending at 1,073.87. The NASDAQ concluded the week down, declining by 57.94 points, or 2.6%, to close at 2,147.35.
Top 3 Stocks
PVTB – Privatebancorp Inc. ($10.00 to $13.60) +36.0%
Posting one of the larger percentages gains for the final week in January was Privatebancorp Inc. (PVTB), a bank holding company for The PrivateBank and Trust Company. The company managed to see an increase in market share of 36% during last week’s trading, bolstered by the company’s recent release of quarterly earnings.
Announcing for the 4Q, PVTB confirmed early last week that the company’s booked a net loss of $18.63M, or $0.30 per share for the recent period, compared to last year’s net loss of $62.78M, or $1.98 per share, cutting the year-over-year loss by more than 70%. Quarterly revenues surged during the quarter, advancing from $71.7M a year ago to $114.8M, an increase in overall sales of more than 60%.
The company benefited from a decrease in interest expenses, which came in at $33.26M, down nearly 46% from last year’s tally of $61.49M. Privatebancorp was also able to write-down more than $41M in expenses, which consisted of about $13M in commercial real estate loans and $14.2M in construction loans.
For the year, Privatebancorp posted an annual loss of $42.5M, or $0.95 per share, compared to an even greater loss of $93.5M, or $3.16 per share, last year. On a yearly basis, net interest income for the bank was $199.41M, up more than 5% from last year’s income of $189.57M.
Commenting on the company’s recent performance was Larry Richman, President and CEO, "While we are not out of the woods as it relates to stress on our credit portfolio, our combination of strong core performance, attention to rigorous risk management and balance sheet strength position us well as we move into 2010. Over the long-term, the continued growth in client relationships will lead to higher net revenues and deposits and improvement in our net interest margin. This, along with the increased efficiency of our operations, will facilitate earnings growth."
After gaining $3.60 during last week’s trading sessions, shares of PVTB continued on their upward trend at the start of the new week. By the sound of the closing bell on February 1, the company’s stock managed to tick higher, adding $0.36, or 2.6%, to conclude the session at $13.96 per share.
Over the course of a year, the stock has traded as high as $29.11 per share, while slipping to an annual low of $8.33 per share.
LYV – Live Nation Entertainment Inc. ($9.16 to $11.47) +25.2%
Included in the list of top performers for the week ending January 29 was Live Nation Entertainment Inc. (LYV), which is one of the world's largest diversified promoters and producers of, and venue operators for, live entertainment events. News early last week revealed that Live Nation and ticket-seller Ticketmaster (TKTM) finalized merger talks, following an approval from the U.S. Justice Department.
In order to satisfy conditions set forth by the DOJ, regulators are requiring Ticketmaster to license its ticketing software to a competitor and sell a subsidiary that handles tens of millions of tickets a year. This was done in order to lower ticket prices, which has been long sought by consumers.
The combining of companies is said to streamline operations, which could lead to a possible yearly saving of $40M. The emerging company will thus assume all operations relating to the concert business, including promotions, ticket sales, alcohol sales and parking, album releases and managing the company’s array of budding artists.
In response to the merger, Liberty Media Corp. (LINTA), which currently holds 14.6% of Live Nation’s outstanding shares, reported that they intend to purchase an additional 34.5M shares of LYV at a proposed price of $12 per share. If the purchase goes through, Liberty would own nearly 35% of all outstanding shares of Live Nation. The board of directors for Live Nation is currently in talks about the proposed offer and is awaiting advisement from company analysts.
Live Nation managed to record a gain in market share of more than 25% during last week’s trading. With a new week and month of trading kicking off, shares of LYV continued to climb, adding $0.06, or 0.5%, to end the February 1 session at $11.53 per share.
Throughout the past year, the company’s stock has traded within a relatively broad range, reaching a yearly high of $12.36 per share, following the merger announcement, while dipping to a seasonal low of $2.47 per share.
NFLX – Netflix Inc. ($50.89 to $62.25) +22.3%
Rounding out the top three in percentage gainers, Netflix Inc. (NFLX) saw its stock jump nearly $12 per share during last week, as the company revealed a substantial increase in profits for the recent period. Netflix, the largest online movie rental subscription service in the U.S. providing subscribers access to a comprehensive library of more than 18,000 movies, television and other filmed entertainment titles, also benefited from adding more than 1.1M new customers to its list of viewers, the largest three-month gain in subscriptions in the company’s history.
Reporting for the 4Q, Netflix confirmed early last week that the company posted a net profit for the period of $30.9M, or $0.56 per share, versus the previous year’s 4Q earnings of $22.7M, or $0.38 per share, an increase in net income of more than 36%. Quarterly sales were also higher year-over-year, coming in at $444.5M, up 24% from last year’s tally of $359.6M. Analysts, on average, were looking for Netflix to post a quarterly profit of $0.45 per share based on $445.56M in total revenues.
Looking further inside the report, Netflix announced that total operating expenses increased year-over-year during the 4Q, from $98.51M to $115.71M, an increase in costs of more than 17%. The biggest factor to an increase in expenses came from higher overall marketing expenses, which climbed from $58.56M to $70.72M, a jump in costs of nearly 21%.
By the end of the 4Q, Netflix had just over 12 million subscribers, up 31% from last year’s total customers of 9.39 million. Of the total subscribers, 97% were paid subscribers.
For fiscal 2009, Netflix reported a net profit of $115.9M, or $1.98 per share, compared to fiscal 2008 in which the company managed to post a net profit of $83M, or $1.32 per share. Yearly sales came in at $1.67B, up 22% from last year’s tally of $1.365B. On average, analysts within the industry were looking for Netflix to post an annual profit of $1.88 per share based on $1.67B in total sales.
Looking ahead to the upcoming 1Q in fiscal 2010, Netflix is expecting to record a net quarterly profit between $26M and $32M, with EPS coming in between $0.47 and $0.52 per share. Revenues for the period are projected to be between $490M and $496M. Analysts are anticipating a 1Q profit of $0.44 per share based on $486.06M in total revenues.
As the first trading day in February concludes, shares of NFLX plunged 2% by the close, losing $1.22 to end the day at $61.03 per share. During the past year, the stock has managed to trade as high as $64.57 per share, while falling to an annual low of $34.01 per share.
Worst 3 Stocks
NEU – NewMarket Corp. ($115.51 to $90.22) -21.9%
Just as in life, there are always two sides to the coin. Adversely to those aforementioned stocks that managed to post solid percentage gains last week, there were also a handful of companies that slipped in trading throughout the week. The first being NewMarket Corp. (NEU), which develops, manufactures, blends, and delivers leading-edge additive technology for fuels and lubricants around the world.
The company’s stock slipped nearly 22% during the past week, primarily on disheartening news about the company’s outlook for 2010. The good news for NewMarket came from its quarterly earnings announcement, which showed a profit for the recent 4Q that came in well ahead of market expectations. For the quarter, NewMarket posted net income of $46.3M, or $3.03 per share, in sharp contrast to the previous year’s 4Q profit of $19.4M, or $1.27 per share.
Overall sales for the period came in at $404.2M, up nearly 10% from the prior year’s total revenues of $368.6M. Analysts, on average, were looking for the specialty chemical producer to post a quarterly profit of $2.71 per share based on total sales of $391.72M.
NewMarket witnessed several positives throughout the quarter. The first positive was the amount of petroleum additives shipped, which increased by 17%. The increase in additives shipped resulted in the segment’s profit surging from $32.5M a year ago to $65.8M, an increase of 102%.
By the end of the 12-month period, NewMarket recorded a net profit of $162.3M, or $10.65 per share, compared to the previous year’s annual total of $73.2M, or $4.75 per share. Yearly gross sales declined year-over-year, falling from $1.62B a year ago to $1.53B, a drop in revenues of nearly 6%.
The drop in stock price was a result of wavering sentiment within the company. A representative from NewMarket commented, “We are entering 2010 cautiously optimistic that our business has returned to more historical levels of demand. We expect to begin manufacturing and blending in our Singapore facility this year, which will greatly improve our service levels in that very important part of the world. Our plants are running full, we continue to spend heavily in R&D and expect another successful year for our petroleum additives business."
As Monday’s session ends, shares of NEU were down $1.56, or 1.7%, to conclude the day at $88.66 per share. Throughout the past year, the company has witnessed its stock traded within a substantially broad range, reaching a high of $126.89 per share, while dipping to a yearly low of $28.20 per share.
X – United States Steel Corp. ($55.00 to $44.43) -19.2%
As one of the world’s leading manufacturers and purveyors of steel mill products, coke and taconite pellets, United States Steel Corp. (X) was one of many that saw last week’s trading as tumultuous. With a nearly $11 per share decline in price, U.S. Steel’s week was greatly affected by the release of the company’s 4Q earnings report, followed by a weakened outlook for the upcoming 1Q.
Reporting on January 26, U.S. Steel announced that the company booked a net loss for the quarter, losing $267M, or $1.86 per share, versus a net profit of $290M, or $2.50 per share from a year ago. The company also verified that quarterly sales plunged throughout the period, falling from $4.5B in the previous year’s 4Q to $3.35B, a drop in overall revenues of nearly 26%.
Analysts within the industry were looking for the manufacturing giant to record a quarterly net loss of $1.43 per share based on $3.1B in total sales. Throughout the period, U.S. Steel saw total steel shipments increase nearly 11%, from $4.2B a year ago to $4.65B this year. However, the company reported a net loss from operations of $284M, compared to a net loss of $21M from last year’s 4Q.
John P. Surma, U. S. Steel Chairman and CEO, commented on the company’s results, "We reported a modest improvement in fourth quarter results as compared to the third quarter mainly due to higher average realized prices, increased shipments and higher utilization rates for our Flat-rolled operations, primarily driven by North American automotive and service center markets, and the return to profitability of our Tubular operations."
On a yearly basis, U.S. Steel claimed a net loss of $1.4B, or $10.42 per share, versus net earnings of $2.11B, or $17.96 per share from 2008. Annual sales retreated from the previous year’s results as well, falling from $23.75B to $11.05B, a decrease in yearly revenues of almost 54%. Analysts were anticipating a yearly loss of $10.40 per share on $10.71B in overall sales.
Looking ahead to the upcoming 1Q in fiscal 2010, U.S. Steel has announced that the company is looking to post a net quarterly loss similar to that for the most recent quarter.
Surma later remarked, “A gradually strengthening economy should result in improvements in real demand, while apparent demand will likely be positively influenced by the restocking of the manufacturing supply chain, which we believe is under way."
With Monday’s trading in the books, shares of U.S. Steel surged more than 6%, adding $2.89, to end the session at $47.32 per share. In the past 52 weeks, shares of U.S. Steel have traded as low as $16.66 per share, while topping out at $66.45 per share.
CPSI – Computer Programs & Systems Inc. ($46.10 to $37.63) -18.4%
Rounding out the list of top percentage losers for the week ending January 29 was Computer Programs & Systems Inc. (CPSI). CPSI provides a complete health information and patient care system that encompasses the full spectrum of financial and clinical applications. The company is a single-source vendor providing comprehensive software and hardware products, complemented by complete installation services and extensive support.
CPSI witnessed the majority of the company’s stock price decline come as a result of an earnings report that proved to be troublesome for investors. For the quarter, Computer Programs & Systems booked a net profit of $3.6M, or $0.33 per share, in contrast to last year’s net earnings of $4.8M, or $0.44 per share, a decrease in net income of 25% year-over-year.
However, during the quarter, revenues increased year-over-year, climbing from $32M a year ago to $33.8M. On average, analysts within the industry were looking for CPSI to record a quarterly profit of $0.38 per share on $34M in total revenues.
Commenting on the results was Boyd Douglas, CEO and President of CPSI, “Despite the economy, our company achieved solid results in 2009, growing our top line (or gross revenue) by 6.8%. Our 31-year history of organic growth in the community hospital marketplace has afforded us many advantages. Our strong balance sheet, which is a direct result of that growth, has made it possible for us to invest the capital necessary to position ourselves to take full advantage of the upcoming opportunities for 2010 and beyond.”
Douglas later added, “We are confident this investment in our business model, our products and services, and our highly motivated employees will result in a superior return for our customers and our shareholders as we enter the most exciting time in the history of healthcare information technology.”
For the year, CPSI saw a decrease in annual profits, falling from $15.4M, or $1.42 per share, to $15.2M, or $1.39 per share. Yearly sales did manage to come in above last year’s totals, increasing from $119.7M to $127.7M, an advance of nearly 7%.
Looking ahead to the upcoming 1Q, Computer Programs & Systems is looking to post a quarterly profit between $3.4M and $3.6M, or $0.31 to $0.33 per share. Revenues are expected to come in between $31.8M and $33.6M. Analysts are anticipating a quarterly profit of $0.40 per share on $33.97M in sales from CPSI.
By the sound of the closing bell on February 1, shares of CPSI were up, adding $0.37, or 1.0%, to end the session at $38.00 per share. Throughout the course of a year, the stock has managed to trade as high as $50.05 per share, while dipping to an annual low of $23.68 per share.
2010 Better Trades Article
brought to you by
BRIAN MULLIN
