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Strong GrowthNovember 12th, 2014. Independent execution and research broker Investment Technology Group last week reported a 5.6% increase in revenues but, due to the operational leverage of the company, EPS increased by a hefty 25% to $0.25. Earnings for the first 9 months were also up 28.6% to $0.72.
International expansion is a crucial driver of profitability and the company believes the ongoing expansion into new asset classes will enable it to deliver improved returns in the years ahead. Key to this are the higher margins the company is able to achieve internationally with pre tax margins of just 1.4% in the US comparing to a massive 17.7% across internationally.
Revisiting the revenue figures we can see that the 5.6% increase was driven by a small decline in the US to $72.5 million and offset by a 40% increase in Europe to $31.7 million and 20% increase in AsiaPac to $12.6 million.
Priced on a multiple of 14.1 times 2014 earnings with annual EPS growth of over 30% forecast for the next five years may make this stock interesting for investors who expect the international growth to continue.

 

Potential Value. November 11th, 2014. Goldmans Sachs trades on a PE of 11.09 despite recently reporting very strong third quarter results that included a 25% increase in revenues to $8.39 billion and a 59% increase in EPS to $4.57.  The increase smashed forecasts of $3.21 per share and resulted from improvements across the board as Investment Banking revenues rose 26%, Institutional Client Services jumped 32%, Investing & Lending was 15% higher and Investment Management was 20% higher.  

Some commentators are concerned about weak future growth but forecasters should note that Goldman has beaten forecasts in the last four quarters by 9%, 16.5%, 34.4% and most recently 42.4%.  As the only remaining pure play Investment Bank it arguably has less competition than a decade ago and ranks first globally for announced and completed mergers and acquisitions this year.  With a 36% increase in M&A activity reported in Q3 pent up demand is finally appearing as the economy continues to improve and the prospect of rising interest rates increases.  

 

Earnings Report November 11th, 2014. Rackspace Hosting reports an 18.3% increase in quarterly revenue. EPS grow to 18 cents from 11 cents and beat forecasts of 16 cents. 

 

Earnings Report November 10th, 2014. Phillips 66 reported third quarter results last Wednesday with EPS of $2.02 compared to forecasts  of $1.69 and last years $0.85 result.  The figure was boosted by Refining which generated adjusted earnings of $558 million compared with a loss of $30 million in the prior-year quarter.  Chemicals reported earnings up 14% to $299 million.  Barclays reiterated an Overweight rating for Phillips 66 and lifted its price target to $109 from $100 on October 13.  The stock closed on Friday at $74.70 with a PE of 9.80.

 

Potential Value. November 10th, 2014.  Lentuo International is a Chinese auto dealer with 12 franchise dealerships, 10 showrooms and 1 repair shop.  The company recently announced it was entering into a joint venture with BitAuto, a leading internet marketing services provider, to establish a nationwide online-to-offline platform focused on high-end, and high margin, used cars in China.  With new BMW dealerships and luxury pre-owned car sales in China forecast to rise from 10 million in 2015 to 36 million in 2023 Lentuo looks well placed.  Current valuation with PE of 8.7 looks inexpensive compared to peers. 

 

Insider Purchase. November 9th, 2014. Imvestors may want to follow the lead of insiders at investment bank JMP Group.  CEO Joseph Jolson bought $3.7 million of stock after announcing strong third quarter results and was joined by three other company officers and directors.  Adjusted net revenues increased 11.3% to $40.3 million. Operating earnings increased 28% year-over-year to $0.15 per share, despite a slower pace in the equity capital markets environment.  The company is trading on 9.4 times forward earnings with annual EPS growth of 18% forecast.

 

Insider Purchase. November 8th, 2014. The Dow Chemical Company Director Paul Polman bought $1 million of stock after upbeat earnings release.  Adjusted earnings per share in the three months ended September 30 were $0.72 cents, surpassing expectations for earnings of $0.67 cents per share. This compares with adjusted earnings of $0.50 per share in the same quarter last year (article).

  

Earnings Report November 8th, 2014. IKONICS Reports Record Sales and a 20% Third Quarter Earnings Increase. This was the fourth consecutive quarter of record sales on a quarter-to-quarter comparison basis. Year-to-date earnings are up 69% and sales are up 8% over last year. (article

 

Earnings Report November 8th, 2014.  Hawaii-based shipping company Matson Inc. reported a 25% increase in EPS as a result of a rebound in container carriage in its core Hawaii market (article). EPS of 50 cents exceeded analyst expectations of 44 cents (article). Matt Cox, Matson's President and Chief Executive Officer, commented, "as we look to the fourth quarter of this year, we expect overall results to exceed the results achieved in the fourth quarter of 2013, reflecting continued market growth in our core Hawaii market, strong demand for our premium expedited China service, and improvements at Logistics."  

 

Potential Value. November 7th, 2014. With people switching to healthier chicken products and increasing general demand for food products, Sanderson Farms has seen sales increasing 10% annually over the past decade (Gurufocus).   Falling input costs should boost earnings further while the completion of a sixth processing plant in 2015 should boost production by 15% (SAarticle).  All this makes the current valuation, with a trailing PE of 10 and forward PE of 8.3, look attractive.

 

Strong Growth. November 6th, 2014. Archer Daniels Midland almost doubled third quarter EPS to $0.81 from $0.47 and smashed forecasts of $0.73 as corn processing earnings increase $63 million to $171 million and biofuels increased a massive $113 million to $185 million (article).  The company has benefitted from booming biofuels and increasing food demand over the past ten years and believes the outlook for 2015 is bright (article).  Its latest move into flavorings should boost earnings going forward (SAarticle).

 

Earnings Report November 6th, 2014. American Axle profits soar 54% (article). PE 9.3 with 5 year annual EPS growth forecast at over 17% (YahooFinance).  

 

Potential Value. November 5th, 2014. Net 1 UEPS is trading on a 6.7 times multiple of forecast June 2015 earnings despite having grown revenues 19.1% annually for ten years and EPS 9.2% annually for five years (Gurufocus). Net 1 UEPS offers banking services to the huge number of unbanked people in emerging markets using biometrically secure cards that, uniquely, can be used in remote locations and without internet access. In 2012 it won a significant contract to make payments on behalf of the South African Social Security Agency.  It  was subsequently accused of corruption and cleared but the ruling said that the tender had not been constitutional and would have to be re-offered. Commentators and the company are confident that Net 1 offer are well placed to win a new tender process with Net 1 offering a superior product.  The company has already biometrically tested millions of people, has opened up 10 million new bank accounts and claims it has save the government ZAR 3 billion ($270 million).  Alternatively it may take years for the retender to take place and Net 1 will remain until that time as service provider.  

 

Earnings Report November 5th, 2014. Valero Energy Corp reported a jump in third quarter EPS to $2.00 from $0.57 a year ago due to lower crude costs and running at 98% capacity. Operating income more than tripled to $1.67 billion (Article, Press Release). The company did not release guidance but consensus full year (December 2014) EPS forecasts are $5.52 from 16 analysts on revenues of $128.8 billion. Shares of Valero closed up 0.6% at $50.63.

 

Potential Value.  November 4th, 2014.  hhgregg Inc is a specialist retailer of home appliances and consumer electronics that is currently trading on around 50% of book value and 10% of sales.  A significant expansion of the branch network in recent years has not been successful and the company forecasts losses of $0.70 per share this year and $0.44 next year.  However management are implementing a transition plan from electronic and mobile devices to home appliances, tvs and furniture.  Gross margins remain enviable and there are numerous opportunities to reduce overheads that should boost the bottom line (SA article).

With zero debt and an improving economy the company should have time to effect its planned transition.  Aternatively a leveraged buyout may be possible with private equity fund Freeman, Spogli and Co holding 50% of the stock.  Such an event would be a repeat of the LBO and IPO that took place in 2005. 

 

Earnings Report November 4th, 2014.  Truck-mounted snowplow manufacturer Douglas Dynamics Inc. saw sales soar in the third quarter as last winter's hefty snowfall totals helped release pent-up demand (article). The company reported soaring earnings as revenues climbed 51%.  EPS rose to $0.47 from $0.02 last year and beat consensus forecasts of $0.30 by $0.17.  The company  updated its FY14 guidance to $1.40-1.75 EPS. The stock closed up 1.11% at $20.96.

 

Strong Growth. November 3rd, 2014.  Spirit Airlines has consistently outperformed and last week's results were no exception with revenues up 13.8% and earnings growing 28% year on year. With jet fuel prices down 15% since September overheads may become a tail wind for earnings in 2015 rather than a head wind (Fool). Such a development would be beneficial given Spirit's plans to aggressively grow capacity by 29% in 2015 (article). 

 

Strong Growth. November 3rd, 2014.  Hard drive manufacturer Seagate Technology announced a 25% increase in dividend payout as revenues increase 8% and earnings increase almost 4% in the first quarter 2015 (Fool, Forbes). Moreover the company issued a bullish outlook for the current quarter with 5% revenues growth and strengthening margins expected. The company has seen anneal EPS growth of over 40% over the past 5 years and is trading on a forward PE of 12 (Yahoo Finance).

 

Earnings Report November 2nd, 2014. Abbvie raises annual earnings guidance to $3.25 to $3.27 per share, up from $3.06 to $3.16 as Humira, the arthritis drug, sales surge 18 percent (article). Market commentators said AbbVie could win U.S. marketing approval within weeks for a combination treatment for hepatitis C that may bolster earnings next year and beyond.

 

Earnings Report November 2nd, 2014. Marriott International Inc beat fore casts when it reported a 25% increase in third quarter EPS (article). A strengthening economy allowed revenue per available room to increase almost 9% and occupancy reached an extraordinary 77.6%. Overall revenues increased 9.5% (Nasdaq).

 

Earnings Report November 1st, 2014. AutoNation reports 20% increase in EPS with strong growth across new vehicles, used vehicles and parts. Chairman and CEO Mike Jackson says he expects continued growth in 2015 with industry wide new car sales rising to 17 million units (Zacks). He also added that falling used car values reflected a normalization of supply that would be beneficial for the market (Reuters)

 

Earnings Report November 1st, 2014. CBRE Group, the real estate services firm, reported 33% growth in EPS with strong global revenue growth (article). The company has seen annual EPS growth of 43% over the past five years and is priced on 20 times 2014 earnings (Yahoo Finance). 

 

Earnings Report October 31st, 2014. Bombardier reports 20% jump in revenues and 35% increase in adjusted earnings (article).  The company is trading on 7.5 times forecast earnings but risks remain for CSeries jet. 

 

Strong Growth. October 31st, 2014. Meritor Inc is a global supplier of components to commercial vehicle and trailer manufacturers. The company has recently signed a 7 year agreement to supply axles to Volvo in Europe and South America and should benefit from macroeconomic tailwinds in most of the markets its operates. Priced on a forward PE of 15 would not be expensive if 59% annual growth forecasts are correct. (best article) (Yahoo Finance)

 

 Insider Purchase. October 31st, 2014. Bassett Furniture Industries Chairman Paul Fulton bought almost $35,000 of stock on Tuesday increasing his total holding to almost $940,000 (Article). The acquisition comes after double digit sales and earnings growth reported earlier this month. "Our team was excited with our third quarter financial results as we grew our top line by 10.4% and quadrupled our operating income to $3.4 million," said Robert H. Spilman Jr. "We are executing our strategy at a higher level as witnessed by a 13% comparable store sales increase in our Company-owned stores and a strong incoming wholesale order rate during the period. Our balance sheet is strong as cash and investments grew to $42.6 million, partially due to the generation of $4.8 million of operating cash flow in the period." (Press Release

 

Strong Growth. October 30th, 2014. Supercom is a leading electronic identification manufacturer of inbedded chips and biometric testing for passports and the security industry. The company bought its main competitor, SmartID, in a transformational acquisition last year that will help it win more tenders at better pricing while providing synergies and significantly reducing management overheads (SA article). Investors have not been disappointed with second quarter revenues increasing 277% year on year to $7.1 million and operating income growing from $0.5 million to $2.6 million (Q2 results). Third quarter results are due on November 3rd, but the company has already announced cash balances increased by $3.9 million (Company Release) suggesting the strong run rate is continuing.

 

Insider Purchase. October 30th, 2014. CEO and Chairman of Opko Health Inc has made multiple purchases in October at prices between $8.34 to $8.42 and now holds around 17 million shares directly and indirectly. In August the company reported a second quarter loss per share of $0.06 beating consensus forecast losses of $0.09 (article).  Consensus target price from four brokers is currently $11.50.

 

Insider Purchase. October 30th, 2014.  Schlumberger Limited Director purchased $300,000 of stock on Monday at a price of $92.59 after the company reported third-quarter EPS of $1.49 up from $1.29 last year and beat consensus earnings of $1.46 (Zacks). Deutsche Bank analysts reiterated their target price of $119.00 for the stock.

 

Potential Value. October 29th, 2014.  Chicago Bridge and Iron (CBI) is a construction company for the energy sector that has seen net income increase to $590 million from $174 million in 2009. Third quarter revenues grew 13% while earnings jumped 37% beating forecasts by 7% (NASDAQ article). However the company stock price is currently $53.74 representing a PE of 9.95.


The reason is that the market is worried that CBI will not be paid $1.5 billion of receivables that have been caused by cost over runs on two nuclear projects overseen by recently acquired Shaws Group. Reports are that these are "cost plus contracts" and clients are liable (SA article). Warren Buffett seems to agree with 9.9% holding while Deutsche Bank recently reissued target price of $80.

Earnings Report October 29th, 2014.  HCA Holdings, the nations largest hospital operator, beat forecasts as it reported a 47% increase in third quarter earnings to $1.16 a share. The company said revenues grew 9% due to rising admissions and confirmed guidance for $4.40 to $4.60 earnings per share. The company also reported it was buying a small urgent care provider.   The stock price fell 0.17% to $71.28.

 

Earnings Report October 28th, 2014. Precision Drilling (PDS), Canada's biggest oil and gas contractor, reported a 79 per cent jump in third quarter profits boosted by a 20 per cent increase in drilling activity. The company beat the 8 per cent industry wide growth which has been boosted by the shale fuel drilling boom in North America (Reuters). CEO Kevin Neveu said 26 rig deliveries scheduled for the fourth quarter through to mid 2015 will further support the high performance. (Benzinga) PDS is trading on about 7.5 times next year forecast earnings with annual growth of almost 29 per cent expected. (Yahoo Finance)

 

Strong Growth. October 24th, 2014. US Steel manufacturer Nucor is trading on around 23 times forward earnings with annual forecast EPS growth of almost 40%.  The company beat estimates with a 66% jump in earnings as sales rose 15%. Operating profit improved significantly as sales price per tonne increased 15% and volume rose 10%. Industry expected to grow 2% this year and next as strong US growth offsets weaker Chinese economy. (Reuters)

 

Potential Value. October 24th, 2014.  IBM's vision of the future is one where computers are able to think more like humans, except with greater capacity and complexity, in order to analyse the huge amount of data that is now available from social networks on line and elsewhere. So much so it has exited personal computing and is spending around $6 billion each year on research and development. Whether this will transpire and which players will be the ultimate winners has yet to be seen (SA article). But with IBM's standard business currently priced on a PE of 10.22 with EPS forecast to grow at around 6% annually it looks like a free bet (Yahoo Finance). 

 

Earnings Report October 24th, 2014. Ethan Allen, reported first quarter results yesterday with a 33% increase in adjusted EPS as wholesale division sales jump 10%, overall sales rise 5% and gross margin increase 60 basis points. The company is planning the launch of a new website, that has been in development for two years, on October 15th. Advertising is due to be ramped up this quarter and next half. The company remains cautiously optimistic. (article

 

Earnings Report October 24th, 2014. Global biotechnology firm Biogen Idec, Inc. ( BIIB ) reported Wednesday a 76% increase in third quarter profits. Revenues grew 37% as the company reported significant progress in introducing and launching treatments for MS and Hemophilia worldwide. The company raised guidance to a range of $13.45 to $13.55 per share from the prior forecast range of $12.90 to $13.10 per share. (read full article) PE was 34.38 with annual growth of 20% forecast.

 

Potential Value. October 24th, 2014. HealthEquity is priced on ten times earnings with 35% annual growth forecast. It is ironic that Health Savings Accounts and their providers should be thriving under the Affordable Care Act given legislators tried for some time to exclude the accounts from the new regime. However that is exactly what is happening as the accounts offer policy holders and employers a cheaper and tax efficient way to cover their insurance needs. (SA article)
Earnings and revenues have both grown at a double digit rate and consensus forecasts point to 35% annual growth over the next five years. Consensus EPS provided by five analysts for the current year is $0.18 (increasing to $0.29 next year) placing the company on a forward multiple of just over ten with its current stock price of $18.20. Such a low multiple is unusual for a company benefiting from strong industry growth that looks set to continue to benefit profits and margins. (Yahoo Finance)

 

Earnings Report October 24th, 2014. IROBOT , the robot technologycompany, smashed forecasts when it reported third quarter results with net income almost doubling to $14.6 million as sales increased from $124.5 million to $143.5 million. @@Quote@@. At the same time the company hiked full year guidance from the $1.10 - $1.20 range to $1.20 - $1.25 range. 

 

Earnings Report October 21st, 2014. Chipotle Mexican Grill reported earnings of $130.8 million or $4.15 per share compared to $2.66 last year and consensus forecasts of $3.86.  Sales rose 19.8% and operating marging jumped 2% to 28.8%.  (ABC) 

 

Potential Value. October 21st, 2014. Horsehead holding co is the largest zinc manufacturer in the US and is set to see cash flows ramp up when its new state of the art Mooresboro facility comes on line, probably next year. However, the company has also recently extended an option for Shell to purchase a 300 acre site in Beaver County, Shell has begun demolishing an existing premises on the site at its own expense and Shell has completed the acquisition of 5.5 acres of adjacent land for $1.87 million. Were Shell to pay the same price for the Horsehead site the land would be valued at over $100 million. The total value of land on Horsehead's balance sheet in June was only $46.4 million. (SA article)

 

Earnings Report October 21st, 2014. Texas Instruments reported a 31% increase in third-quarter net income. EPS was 76 cents compared to consensus forecasts of 71 cents and revenue rose 8%. The outlook for fourth quarter EPS of between 64 cents to 74 cents was at the high end of forecasts as demand for chips used in cars, industrial equipment and mobile phone systems fuel sales growth. CFO Kevin March said We feel pretty good about the portfolio and the way the company is executing and our customers seem to be happy because they keep on giving us plenty of orders and keeping us busy," (Bloomberg) (Reuters)

 

Earnings Report October 21st, 2014. Gannett Company reported a 48.6% increase in earnings as revenues from broadcasting and political advertising increased 105% to $416 million. Revenue at the company's publishing division fell 3.6% to $858.1 million. (NYTimes) The stock price jumped 5% to $29.08 to trade at a PE of 15.55. 

 

Earnings Report October 21st, 2014.  Halliburton beat forecasts yesterday with a 70% jump in earnings and 16% increase in revenues. Joining other oil industry service providers, the company said it believed the current low oil price was unsustainable and that industry fundamentals would rebalance it in a relatively short time. (Reuters)

 

Insider Purchase. October 21st, 2014. Natural Resource Partners (NRP) has seen significant insider buying as the stock has fallen from its 52 week high of $21.57 to recent lows of $10.50. The CEO acquired just over $3 million of stock on October 10th at $12.02 and was joined by his director grandson who acquired $1.0 million. These acquisitions were followed by four other meaningful purchases by company officers .

The purchases are supported by recent comments made in the second quarter earnings report when the company disclosed that revenues increased to$90.6 million from $86.8 million and reported strong performances from oil and gas, soda ash and the Illinois coal businesses. 

The company expects to see continued strong performance in the second half and reaffirmed full year guidance of earnings per unit of between $1.40 and $1.50.

Priced on $12.51 this represents a PE of 9.54. 

 

 Strong Growth. October 20th, 2014. Frutarom Industries is a fast growing flavourings and fine ingredients manufacturer priced on a forward PE multiple of just below 17 in an industry with significant barriers to entry. Annual earnings growth of 15.5% and revenue growth of 13.15% over the past 5 years look set to continue and have been driven by above average organic growth and earnings accretive acquisitions. A significant contributor to value creation is the company's ability to buy companies on an EBITDA multiple of around 6 and incorporate them in Frutarom's which commands a multiple of 12. (SA article

 

Earnings Report October 20th, 2014.  Flexsteel Industries, Inc., the Iowa based commercial and residential furnishing manufacturer, last week reported record first quarter results with adjusted net income increasing 14% to $5 million. Net sales increased 4% and gross margin increased from 22.7% to 23.5%.

The company added that, due to existing strong order backlog and positive order trends, it expects top line growth will continue for fiscal year 2015. Residential growth is expected from existing customers and products, and will be led by increased demand for upholstered, case goods and ready-to-assemble products.

 

Earnings Report October 17th, 2014. Johnson and Johnson last week announced a 5.1% jump in sales as worldwide pharmaceutical sales jumped 18.1% to $8.3 billion. The strong sales results were driven by new products and the strength of our core products. New products include hepatitis C treatment, Olysio, and Invokana for the treatment of type 2 diabetes. 

 

Earnings Report October 17th, 2014.  Knoll, the high quality office design company reported third quarter results with net sales up 23.7% to $268.3 million and earnings up 82.6% to $15.7 million. Diluted earnings per share was $0.33 for the quarter compared to $0.18 per share in the prior year. 

 

Potential Value. October 15th, 2014.  CSS Industries is a stable company trading on a PE multiple of 7.3 when cash is excluded. Founded in 1923, the company designs, manufactures and sells greetings cards and novelty gift items. It is headquartered in Pennsylvania with five showrooms in the US and one in Hong Kong.