For Immediate Release
Chicago, IL – January 20, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: IBM Corp. (IBM), Parker Hannifin Corporation (PH), PetMed Express, Inc. (PETS), US Bancorp (USB) and Plexus Corporation (PLXS).
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Here are highlights from Tuesday’s Analyst Blog:
IBM Beats, Down in After-Market
IBM Corp. (IBM) posted a positive earnings report after the bell Tuesday. For the company’s 4th quarter of 2009, its $3.59 per share beat the Zacks Consensus Estimate of $3.47 by 12 cents, and was up 10% year over year.
Quarterly revenue of $27.2 billion was essentially flat from the year-earlier level (up 0.8%), but down 5% if we exclude the impact of exchange rates. Quarterly gross margin of 48.3% was up from 47.9% from the year-earlier period.
For the full-year 2009, earnings of $10.01 per share were up 13% year over year, and net income of $13.4 billion rose 9% from fiscal year 2008 totals. Both figures also happen to be record numbers for IBM. For fiscal year 2010, the company now expects earnings of at least $11 per share, up from a previously expected $10-11 per share range.
Analysts covering IBM had been standing pat in their earnings estimates over the past month. There had been no movement either way in earnings estimate revisions from any of the 19 analysts covering the company.
It is not particularly surprising to see IBM beat estimates; the company has averaged a 6+% positive earnings surprise over the previous 4 quarters. IBM shares before the bell had been up 1.76% on an up-day overall in the market. But since the earnings announcement, shares have given back all of today’s gains and then some.
Parker Hannifin Tops Expectations
Parker Hannifin Corporation (PH) reported second quarter 2010 earnings per share of 64 cents, beating the Zacks Consensus Estimate of 34 cents. Its fiscal second-quarter profit fell to $104.5 million, or 64 cents a share, from $155.4 million, or 96 cents a share, in the year-ago quarter.
Fiscal 2010 second quarter revenues were $2.4 billion, an increase of 5.3% compared with the first quarter of fiscal 2010 and a decline of 12.4% from $2.7 billion in the second quarter in the year-ago period. Parker also reported a decline of 7% in total orders for the quarter ending Dec. 31, 2009, compared with the same quarter a year ago.
Orders declined 3% in the Industrial North America segment, compared with the same quarter a year ago. Orders were unchanged in the Industrial International segment, compared with the same quarter a year ago. Orders declined 27% in the Aerospace segment on a rolling 12-month average basis. Orders increased 6% in the Climate and Industrial Controls segment, compared with the same quarter a year ago.
PetMed Beats Zacks Estimate
PetMed Express, Inc. (PETS), America’s largest Pet Pharmacy, recently reported third-quarter fiscal 2010 results. The quarterly earnings of 25 cents a share were above the Zacks Consensus Estimate by 2 cents, and rose 19% year over year from 21 cents posted in the prior-year quarter.
Net sales climbed 11.5% to $48.4 million during the quarter. Reorder sales jumped 17% to $37.6 million. New customer additions for the quarter came in at 151,000 compared to 154,000 new customer additions in the year-ago period, down 2%. Advertising spending, which is the prime factor behind the addition of new customers, climbed 6%, while general and administrative expenses declined 2%. Sales over the Internet in the quarter came in at $33.6 million, up 18%. Approximately 70% of PetMed’s orders were placed online.
Gross profit increased 8.7%, driven by an increase in net sales, partially offset by a rise of 13.2% in cost of sales. Total operating expenses increased 3.3% to $10.4 million due to the rise in advertising expenses and depreciation and amortization expenses, partially offset by the decline in general and administrative costs. Operating income increased 16% to $8.4 million.
US Bancorp Earnings Preview
US Bancorp (USB) is scheduled to release its fourth quarter and full year 2009 financial results prior to the market open Wednesday, Jan. 20. According to the Zacks Consensus Estimate, US Bancorp will report earnings of 28 cents per share for the fourth quarter and 96 cents per share for the full year.
US Bancorp remains one of the more profitable large-cap banks in the industry. With a wide range of product offerings, the company remains well positioned for organic growth. Its strong retail banking franchise and leadership in payment processing should continue to create growth opportunities over time.
Given the economic conditions and the company’s strategic operations, we expect net interest income to be up modestly in the fourth quarter compared to the prior quarter. Growth in fee income is expected to be somewhat moderated due to lower mortgage revenues and core expenses to be flat compared to the previous quarter, primarily driven by the expense control initiatives.
On the other hand, given the continued stress in the commercial and residential real estate and consumer loan portfolios, we expect credit losses and nonperforming assets to continue to trend higher in the fourth quarter. However, we noticed that the rate of deterioration has somewhat moderated in the third quarter.
US Bancorp reported third quarter earnings of $603 million or 30 cents per share. Results were ahead of the Zacks Consensus Estimate of 26 cents. Results reflected higher revenue and an increase in fee income, partially offset by a deterioration of credit metrics.
We have been encouraged by US Bancorp’s exit from the Treasury’s Capital Purchase program. Despite the dilutive impact, the capital bolstering initiatives are also positive as these will not only reduce government intervention but also help in maintaining a strong capital base in a soft economic environment.
Earnings Preview: Plexus
Plexus Corporation (PLXS) is scheduled to release its first quarter of fiscal 2010 earnings ended January 2 after the market closes on January 20. Plexus Corp. is currently rated as a Zacks Rank #3 (Neutral) stock, indicating that it should perform in line with the overall market over the next 1−3 months.
Plexus had provided an encouraging guidance for the reportable quarter. The company expects modest revenue growth in the range of $405 – $430 million, up 6% quarter over quarter at the mid point due to the ramp-up of new business wins and improving customer demand.
The company expects earnings per share in the range of 31 cents – 36 cents, up 12% at the mid point excluding restructuring charges but including 5 cents per share in stock-based compensation expense.
The Zacks Consensus Estimate for the quarter of 2010 currently stands at 34 cents, down 22.7% from the year-ago period with a potential negative surprise of 2.94%. This implies that there may be a downward price movement.
Management expects gross margin to be within 9.5% to 9.8%. Depreciation is expected to be approximately in the $9.0 – $9.3 million range. Plexus expects SG&A expenses to be in the range of $24.5 – $25.0 million. The company expects to witness a modest increase in headcount and other spending in the second quarter of 2010. For the full year 2010, capital spending is expected to be in the range of $60 – $70 million.
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