November 11, 2009

Dow Moving Up

The November 10 session began trading in positive ground, hoping to build on the previous session’s surge, as the Dow posted a gain of more than 200 points, pushing the index to its high for the year. Monday’s push higher was a result of a weakened Dollar, which slipped to a 15-month low.

As the season’s earnings reports begin to taper off, there were only a handful of companies reporting before the opening bell on Tuesday. One such company, Beazer Homes USA Inc. (BZH), which designs, builds and sells single-family homes, booked a profit during the 4Q, despite the company witnessing a huge decline in overall sales. For the period, Beazer posted a net profit of $33.8M, or $0.84 per share, in contrast to a net loss of $473.9M, or $12.29 per share a year ago.

Quarterly revenues were a major problem during the period, as sales fell from $649.8M to $376.3M, a decrease in revenues of more than 42%. Beazer saw new home orders advance by 2.4%, while the cancellation rate fell from 46.3% to $34.7%.

On average, analysts within the industry were looking for the Atlanta-based homebuilder to post a quarterly loss of $1.24 per share based on overall sales totals of $338.3M.

Ian McCarthy, President and CEO at Beazer, remarked, "Following difficult market conditions throughout fiscal 2009, we were pleased to finish the year with a fourth quarter year-over-year increase in net new home orders from continuing operations, improved gross margins and a significant cash balance. During the quarter, we experienced some moderation in negative market trends, with attractive interest rates, historically high housing affordability and the federal tax credit attracting more prospective buyers to purchase a new home."

By the close of the November 10 trading session, shares of Beazer were nearly 9%, adding $0.41 to end the day at $5.10 per share. During the course of a year, the company’s stock has traded within a relatively narrow range, reaching a high of $6.93, while falling as low as $0.24 per share.

Also reporting before the markets opened was Fossil Inc. (FOSL), which designs, develops, markets and distributes fashion watches and other accessories. Fossil confirmed early Tuesday morning that the company’s profits during the 3Q retreated from last year’s results.

During the period, Fossil posted a net profit of $35.3M, or $0.52 per share, compared to net income of $36.5M, or $0.54 per share a year ago, a decrease in earnings of just over 3%. Net sales slipped year-over-year as well, falling from $409.8M to $381.4M, a decrease in revenues of almost 7%.

Analysts, on average, were looking for the watchmaker to record a quarterly profit of $0.42 per share based on total sales of $376.9M.

Mike Kovar, Executive VP and CFO, stated, "Our Third Quarter results surpassed our expectations, driven by retail sales stemming from company-owned stores, a more favorable product sales mix and increased expense leverage. Although we have managed our inventories to much lower levels than last year, we remain well-positioned to benefit from any uplift in retail sales during the holiday season."

Following the announcement, Fossil upwardly adjusted their 4Q earnings expectations, and now predicts earnings to come in between $0.82 and $0.86 per share, up from a previously stated range of $0.74 to $0.80 per share. The company also revised their yearly projections as well, and is now looking for earnings to be between $1.85 and $1.89 per share, up from a prior forecast of $1.63 to $1.73 per share.

Analysts are looking for Fossil to post earnings in the 4Q of $0.78 per share, while yearly results are projected to come in at $1.71 per share.

With the November 10 session concluded, shares of FOSL were up 9% on the day, gaining $2.61 to end trading at $31.52 per share. During the past 52 weeks, the stock has managed to fall as low as $11.00 per share, while reaching a high of $32.07, which was achieved on the same day of their earnings announcement.

Operating as a global provider of shipping transportation services, Diana Shipping Inc. (DSX) made it known before the opening bell that net income during the 3Q plunged from last year’s totals, as demand for transport of good slowed drastically. Despite the dismal earnings release, results for earnings per share and revenues managed to come in ahead of expectations.

For the quarter, Diana Shipping recorded a net profit of $28.7M, or $0.36 per share, well short of last year’s tally of $57.6M, or $0.77 per share, a decrease in earnings of more than 50%. As the global economic recession continues, sales during the period fell more than 33%, from $87.4M to $58.2M.

Analysts within the industry were looking for the drybulk shipper to post a quarterly profit of $0.34 per share based on total revenues of $55.5M.

Simeon Palios, Chairman and CEO for Diana Shipping commented on results by saying, "Diana Shipping has again produced strong results during the third quarter of 2009. We have delivered a profitable quarter despite the continued turbulent economic climate."

With the company managing to come in ahead of expectations, investors were convinced by the company’s performance. With that, share of Diana Shipping added more than 1% by the end of trading on Tuesday, gaining $0.23 to conclude the session at $14.39 per share.

Over the past year, shares of DSX have traded within a somewhat broad range, reaching a high of $19.00 per share, while slipping as low as $6.85 per share.

Following a day in which the price of crude advanced by $2 a barrel, oil inched lower by the end of the trading session, as investors sit and wait to see the impact that Hurricane Ida has on the Gulf Coast. By the close of trading, the price for a barrel of light, sweet crude for December delivery slipped $0.38 to settle at $79.05.

In additional NYMEX trading, heating oil slipped $0.01 to $2.0523 a gallon, while gasoline for December delivery retreated by $0.0072 to $1.9746 a gallon. Natural gas for December delivery receded $0.203 to $4.467 per 1,000 cubic feet.

With the demand for U.S. debt remaining strong, Treasury prices advanced by the close of trading along with the government’s auctioning of $25B worth of 10-year notes. Today’s auction is part of a full week of offerings, which includes 3-, 10-, and 30-year notes worth $81B.

At the close, the benchmark 10-year note was higher by 1/32 to 101 5/32 as its yield remained at 3.48%. The longer maturing 30-year note was lower on the day, falling 7/32 to 101 14/32, while its yield was 4.41%, up 0.02% from the previous session. Lastly, the shorter maturing 2-year note was up marginally, gaining 1/32 to 100 10/32 with its yield falling 0.02% to 0.83%.

Inside the Forex markets, the Dollar’s decline paused for a day, as the greenback tried to bounce back from a 15-month low reached in Monday’s session. By late afternoon, the 16-nation Euro slipped versus the Dollar, buying $1.4982, down from the previous session’s price of $1.4999. The British pound slipped against the greenback as well, as the Sterling was valued at $1.6733, down from $1.6752.

In additional currency trading, the Dollar retreated to 89.85 Japanese yen from 89.99 yen, while the greenback advanced to 1.0085 Swiss francs from 1.0079 francs late Monday. However, the Dollar slid to 1.0493 Canadian dollars from 1.0544.

A day after the Dow Jones surged more than 200 points, investors reverted to a more conservative trend as the markets could not maintain their upward momentum. With the November 10 session in the books, the Dow Jones Industrial average added 20.03 points, or 0.2%, to finish at 10,246.97, while the broader market indicators ended the day in negative ground.

The S&P 500 index finished trading down 0.07 point at 1,093.01, while the tech-heavy NASDAQ composite index was down 2.98 points, or 0.1%, at 2,151.08.

2009 Better Trades Article

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BRIAN MULLIN