BetterTrades looks at Dell Inc.

An ambitious plan to re-ignite Dell Inc.'s fortunes got a mixed response from analyst and investors, who appeared split over how well, and how quickly, the computer maker can reinvent itself as an all-in-one technology juggernaut. In the company's first earnings conference call with analysts in over a year, Dell CFO Don Carty and founder and CEO Michael Dell on Thursday predicted more restructuring costs for the future. These will include acquisitions, layoffs and what Carty described as a slower decline in component costs. Michael Dell then outlined a long-term growth strategy that will focus on five key markets and products, including hardware for consumers, software and other products for small- and mid-size businesses, and the lucrative business of software services, where Dell manages computer systems for other companies.

Dell, Inc.(DELL) and its subsidiaries engage in the design, development, manufacture, marketing, sale, and support of various computer systems and services worldwide. It offers various products, including desktop computer systems and workstations; mobility products that consist of notebook computers, mobile workstations, and MP3 players; software and peripherals, such as printers, monitors, plasma and LCD televisions, and projectors, as well as third-party printers, televisions, software, and digital cameras; servers and networking products; and storage devices. The company also provides infrastructure consulting services; deployment services; asset recovery and recycling services; training services; enterprise support services; client support services; and managed lifecycle services. Dell has a joint venture with CIT Group, Inc. to provide various financing alternatives, asset management services, and other customer financial services. The company sells its products and services directly to large corporate, government, healthcare, and education accounts, as well as small-to-medium businesses and individual customers. The company was founded in 1984, headquartered in Round Rock, Texas, and currently employs more than 83,000 people.

Thursday evening, after the close of the markets, Dell announced 3Q earnings which fell short of analysts’ expectations of $0.35 a share on Revenue of $15.34B. Dell, which earned $766M or $0.34 per share for the current quarter, was actually up from $601M, or $0.27 per share from the same quarter a year ago. Revenues, meanwhile, grew 9% to $15.64B. During the quarter, Dell shipped about 9.9 million computers worldwide and Dell had about 14.4% of the worldwide PC market, down from 15.9% a year earlier. Despite a down 3Q, Dell is still able to maintain positive margins; Profit – 4.9% and Operating – 5.8%. In addition, Dell has been able to post a 55.4% increase in quarterly Earnings growth, along with a 4% increase in Revenue growth. Over the past twelve months, the company has generated more than $58B in Revenues while keeping almost $12B in total Cash on the Balance Sheets.

If you are able to look at the company’s stock chart, you will be able see that since the middle of March through late July, Dell’s stock had made an impressive run in price. During this time, the stock gained nearly 40% before the downturn and the influence of the market’s volatility. With most, if not all, companies feeling the affects from the market’s turbulent trading, Dell was no exception. From late July through much of August, Dell’s shares lost 16% in price before rebounding by the end of the month. Besides the downturn in the markets, Dell was also hit with accounting issues that reduced earnings between $50M and $150M, or $0.02 and $0.07 per share. Once corrected, Dell’s stock began another upward trend that would take them through much of September, all of October and the beginning of November. During which time, the stock would hit its 52-week high of $30.77. Through November, there isn’t one specific factor that contributed to the fall of Dell shares, except for the huge swings in market gains and losses. Until today, Dell was on an upward trend in which the stock had gained more than 10% over the last week or so, but today’s 3Q earnings report put a stop to any momentum the company had generated before that.

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BetterTrades looks at Best Buy Co.

The Monday after Thanksgiving, tagged "Cyber Monday" by the National Retail Federation, marks the first big online shopping surge for many merchants as consumers return to their work computers. A number of retailers are hosting one-day sales or special offers for the occasion. Internet research firm comScore Inc. estimated online sales may exceed $700M online on Monday. Nearly one-third of retailers are also having special one-day sales for Cyber Monday. Forty-two percent plan some kind of promotion, according to the National Retail Federation's annual survey. In fact, the number of retailers hosting online deals on the Monday after Thanksgiving has surged to 72% of those polled from 42% just two years ago. Clearly, the biggest draw was electronics, benefiting consumer electronics chains like Best Buy Co.

Best Buy Co.(BBY), Inc. operates as a specialty retailer of consumer electronics, home-office products, entertainment software, appliances, and related services primarily in the United States, Canada, and China. It offers various video products, which include televisions, digital cameras, home theater system installations, DVD players, digital camcorders, and accessories; audio products, such as MP3 players, and home theater audio systems, as well as mobile electronics, including car stereo and satellite radio products, and related accessories. The company also provides home-office products that comprise notebook and desktop computers, computer support services, telephones, networking, and accessories; entertainment software products, which include DVD movies, video game hardware and software, CDs and computer software; and appliances product group includes appliances, as well as vacuum cleaners, small electrics, and house wares. Based in Richfield, Minnesota, Best Buy was founded in 1966 and was known as Sound of Music up until 1983 when the company changed its name to Best Buy Co. The company currently employs more than 140,000 workers.

Over the past several months, it appears apparent that BBY has been on a tumultuous ride regarding the company’s stock price. From the beginning of May, through the middle of June, BBY gained more than $4 a share before a sharp drop mid-month. The drop was related to BBY’s fiscal 1Q earnings of $0.39 per share, while experts were expecting earnings to come in at $0.49 a share. The company’s Gross Profit Margin also declined, from 25.4% to 23.9%. The stock dropped nearly 7% that day solely on the company’s earnings report. Later that month, BBY’s stocks rebounded from their below-par earnings, and jumped nearly 5% on news that the company was implementing a $5.5B stock buyback program, while increasing dividends from $0.10 per share to $0.13 a share. July would bring modest channel trading as the stock would fluctuate up-and-down by only a few dollars, until the market’s volatility in August would push the stock towards new levels of its 52-week lows. At its lowest point, in mid-August, BBY traded as low as $41.85, and in the low-$43 range until its resurgence in late-September. The short lived surge was in correlation to the company’s 2Q earnings report which stated that BBY earned $0.55 a share, compared to estimates of $0.44 a share.

From the time the 2Q earnings were reported, BBY traded as high as $50.48, only a few dollars short of its 52-week high of $56.69 set last November. From its high point, BBY also traded down as well, hitting a monthly low of $45 the second week of November. Since the low of $45 a share, the next few week leading up to today, has shown that BBY has begun a resilient march upwards heading into the holiday shopping season. As the company’s 3Q earnings date approaches, December 11th, the company has improved from quarter-to-quarter thus far this year. In the 2Q, BBY was able to post positive margin numbers; 3.56% Profit and 5.29% Operating, while at the same time, posting quarterly Revenue growth of 15.1% and quarterly Earnings growth of 8.7%. Despite the stock’s price volatility, Best Buy generates well over $38B in Revenues while at the same time, carries little debt on their books. As the day after Thanksgiving marks the start of the holiday shopping season, “Black Friday” showed that sales on that day rose 8.3% with an estimated $10.3B in sales with more than 147M shoppers hitting the stores that day, and increase of 4.8% from the previous year. This can only increase the profitability of Best Buy as there are still more than three weeks left in the shopping season.


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BetterTrades looks at Lowe's Companies Inc.

Lowe's Cos. (LOW), the No. 2 U.S. home improvement chain, said Monday that its 3Q profits fell 10.2%, citing a weak sales environment amid a continuing slump in the housing sector. Many external factors contributed to the weak sales environment, including a continuing housing correction, drought conditions in several U.S. markets, and slower than expected sales in Gulf Coast markets. The largest of these impacts was the unstable housing environment evidenced by an even steeper decline in housing turnover, falling home prices in many markets, and a near record inventory of homes for sale.

Lowe's Companies, Inc. and its subsidiaries operate as a home improvement retailer in the United States and Canada. The company offers a range of products and services for home decoration, maintenance, repair, remodeling, and property maintenance. Its home improvement products include appliances, lumber, flooring, millwork, paint, building materials, fashion plumbing, lighting, tools, lawn and landscape, hardware, seasonal living, cabinets and countertops, outdoor power equipment, rough plumbing, rough electrical, nursery, home environment, walls/windows, home organization, boards, panel, irrigation pipe, vinyl sidings, ladders, and building materials products. The company serves homeowners and renters, including do-it-yourself and do-it-for-me customers, and others who buy for personal and family use; and commercial business customers, such as repair and remodeling contractors, electricians, landscapers, painters, plumbers, and commercial and residential property maintenance professionals. Lowe's offers its products through retail stores, as well as online. Founded in 1952, the company is headquartered in Mooresville, North Carolina and currently employs more than 157,000 workers.

Over the past several months, Lowe’s stock performance has taken a hit based on the housing markets and the overall economy. The beginning of May brought prosperity to the stock’s price, as it gained 10%, from $30 a share to $33 a share. At one point in early June, the stock came within $2 of its 52-week high of $35.74. From that point on, LOW began its downward spiral through the middle of August. Before bouncing back, LOW traded as little as $26 a share, its 52-week low at that time. Much of its lack-luster performance could be attributed to the market’s extreme volatility. Once the markets began to settle, Lowe’s stock bounced from its low to gain more than 22% in price through the next month. Late September brought more trouble for LOW’s shares as the Fed reported figures from its Beige Book that pending home sales declined along with the anticipation of the interest rate cut. In addition, Lowe’s also issued a profit warning along with a statement that their sales outlook had decreased from anticipated numbers.

From the middle of October, Lowe’s stock has taken a beating. In fact, the stock has lost more than 20% in price over that time period. Retail and consumer products companies continue to be pressured by higher commodity costs and lower discretionary spending by customers. As housing prices come down, people will think twice about renovating if they don't think they'll get their investment back. Recently, LOW reported 3Q earnings which fell just short of market expectations. Lowe's earned $643M, or $0.43 a share, for the quarter, down from $716M, or $0.46 a share, a year earlier. Lowe's expects to earn $0.25to $0.29 a share for the 4Q. Analysts were expecting earnings of $0.36 a share. The company expects to show sales growth of 3% and anticipates same-store sales decline of 3% to 5% for the period. Lowe's, which in August had predicted full-year earnings per share at the low end of its forecast of $1.97 to $2.01, now forecasts earnings of $1.83 to $1.87.


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BetterTrades looks at The Shaw Group Inc.

The Shaw Group Inc. (SGR) announced earlier this week that its Shaw Environmental & Infrastructure Group has been awarded a study by the Ports Association of Louisiana (PAL) that will support PAL’s efforts of expanding the value added benefits of the maritime industry and related industrial sectors in the state. Louisiana’s port system is one of the largest in the world and a vital part of the local and national economy. Current estimates provided by the American Association of Port Authorities indicate that by 2020, the amount of freight moving through U.S. ports is likely to increase more than 50% over the tonnage shipped in 2001, and that container cargo also is expected to double by 2020.

SGR, is a provider of services to the energy, chemical, and environmental and infrastructure industries, including consulting, engineering, construction, remediation and facilities management services to governmental and commercial customers. It is also a vertically integrated provider of technology, engineering, procurement, construction, maintenance, pipe fabrication and consulting services to the energy and chemical industries. The Company operates through segments, which include Environmental and Infrastructure (E&I), Energy and Chemicals (E&C), Fabrication and Manufacturing (F&M), and Maintenance. In October 2006, the Company completed its acquisition of a 20% investment in Westinghouse Electric Company, the provider of power generating technology, equipment, licensing expertise, fuel and services for nuclear plants.

As recently as six months ago, SGR was trading in the low $30’s at the beginning of May. For the next several week, and months for that matter, the Shaw Group was able to sustain a steady increase in the company’s stock price. Since May, its shares increased from $32 a share to as high as $60, in mid-July, before the stock began to pull-back. During which time, the stock’s price increased 87.5%. The chart will also show that during the market’s extreme volatility from late-July through August, that the Shaw Group, despite falling alongside with the markets, that they were able to rebound by the end of August and begin another upward trend in price. At this time, SGR shares were trading around $50 a share before the move and managed to climb as high $77.30 in late-October, a 52-week high.

Much of the success of the Shaw Group can be directly attributed to the strong financial standing of the company. In addition to the outstanding increase in the stock’s performance in the past 12 months, up 130%, SGR is also able to post 31% increases in quarterly growth while posting well over $5B in Revenues during those same 12 months. Although the company has posted below par number dealing with Profit and Operating Margins, the company has been able to keep debt down while maintaining a positive cash flow on-hand. Just released today, news of the Shaw Group receiving new contracts from both the Air Force and the Navy which could help bolster the company’s 4Q should be released within the upcoming month. Looking forward, the company expects 2007 Revenues to be approximately $5.7B along with Net cash provided from operating activities is expected to approximate $460M.


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