Burlington Northern Santa Fe Corporation (BNI) is among the world's top transporters of intermodal traffic, while moving more grain than any other American railroad, and hauling enough low-sulphur coal to generate about 10% of the electricity in the United States, according to the company. Because the company's inherent strengths place it in an advantageous position compared with its competitors, Burlington Northern Santa Fe has been rated a “buy” since July 2004. The company's diverse revenue base has made it less vulnerable to economic volatility, allowing it to post 9.4% year-over-year growth in its top line for the 4Q of 2007, despite general weakness in the economy. The company's return on equity (ROE) over the past three years has exceeded the industry and broader-market averages. In addition, the company is well positioned to gain from strong demand for coal shipments from the Powder River Basin in Wyoming, the country's largest coal-producing region. Finally, Warren Buffett's ownership of an 18% stake in Burlington Northern Santa Fe signals the strength of the company to many investors. With Buffet’s purchase, 3M shares of BNI at a total price of nearly $229M from January 7th through January 22nd, the stock increased 15% after taking control of those shares.
Burlington Northern Santa Fe Corporation, through its subsidiaries, engages primarily in the freight rail transportation business. It transports various products and commodities, including consumer, industrial, coal, and agricultural products. The shipments of consumer products include automotive, such as motor vehicles and vehicle parts. The company also offers transportation services for industrial products, including construction products, such as clays, sands, cements, aggregates, sodium compounds, and other industrial minerals, building products comprising of lumber, plywood, oriented strand board, particleboard, paper products, pulpmill feedstocks, wood pulp, and sawlogs. Also, petroleum products, such as liquefied petroleum gas, diesel fuels, asphalt, alcohol, solvents, petroleum coke, lubes, oils, waxes, and carbon black. Chemicals and plastic products, including caustic soda, chlorine, industrial gases, acids, polyethylene, polypropylene, and polyvinyl chloride, and food and beverages, such as canned goods and perishable food items, as well as cotton, salt, rubber and tires, and miscellaneous boxcar shipments. In addition, it transports coal products and agricultural products, such as wheat, corn, bulk foods, soybeans, oil seeds and meals, feeds, barley, oats and rye, flour and mill products, milo, oils, specialty grains, malt, ethanol, and fertilizers. As of December 31, 2007, Burlington Northern Santa Fe operated a railroad system consisting of approximately 32,000 route miles in 28 states and 2 Canadian provinces. The company was founded in 1994, has more than 40,000 employees and is based in Fort Worth, Texas.
What had started in U.S. history as the means to link the East with the West, the Railroad Industry has become a critical aspect of the United States’ economy, and is one of its global competitive advantages. That trend continues as more investment is pouring into the railroad infrastructure. A recent Wall Street Journal report pointed out that railroads have spent $10B in upgrading and extending tracks since 2002, and will continue to invest another $12B. From 1990 to 2000, railroads began to pick up steam again with a 3.6% annual growth rate. U.S. Railroads transport 40% of all freight ton-miles, with a ton mile equal to one ton of freight shipped one mile. According to the Government Accountability Office (GAO), the volume of goods transported by railroads and trucks are expected to increase by 88% by 2035 from 2002 levels. Railroads are three times more fuel-efficient than trucks, and have significantly decreased the costs of moving freight. Railroads have also reduced traffic congestion and have decreased their accident levels by about 65% from 1980 to 2006, according to statistics by the American Railroad Association and many railroads are working on ways to protect the environment by improving fuel efficiency and incorporating new locomotive technologies.
Looking ahead, the increasing popularity of rail transport for energy alternatives such as corn and coal in the face of rising oil prices could benefit the company in the future. With railroad pricing expected to be strong in the year ahead, the long-term outlook for the industry as a whole appears hopeful. Coal is the largest commodity transported by rail in the U.S. accounting for approximately 40% of rail tonnage, and 20% of rail revenue. Farm and food products transported by railroad also account for another 13% of rail freight and revenue. The demand for energy, metals and other commodities is driving increased forecasts of railroad use and may provide a potential investment opportunity. In 2008, Railroads are leading the S&P 500 Industrials with a year-to-date performance of 7%. Bear in mind, however, that severe weather conditions, currency volatility, and higher-than-expected fuel prices could adversely impact the company's performance.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, February 28, 2008
Wednesday, February 27, 2008
BetterTrades looks at Microsoft Corp.
Earlier today, the European Union (EU) fined Microsoft Corp. (MSFT) a record $1.3B for the amount it charges rivals for software information. EU regulators said the company charged "unreasonable prices" until last October to software developers who wanted to make products compatible with the Windows desktop operating system. The EU alleged that Microsoft withheld crucial interoperability information for desktop PC software in an effort to squeeze into a new market and damage their rivals. Microsoft immediately said the issues for which it was fined have been resolved and that the company was making its products more open. The fine comes less than a week after Microsoft said it would share more information about its products and technology in an effort to make it work better with rivals' software and meet the demands of antitrust regulators in Europe. The fine is the largest ever for a single company and brings the total amount to just under $2.5B, the amount the EU has demanded Microsoft pay in a long-running antitrust dispute. Microsoft fought hard against a March 2004 decision that led to a $613M fine and an order that the software maker share interoperability information with rivals within 120 days. The company lost its appeal in that case in September, at which time, Microsoft was fined another $357M in July 2006 for failing to obey that order.
The Microsoft Corporation provides software products for computing devices worldwide. Its Client segment engages in technical architecture, engineering, and product delivery of Windows product family comprising Windows Vista, Windows XP Professional and Home, Media Center Edition, Tablet PC Edition, and other Windows operating systems. The Server and Tools segment offers integrated server infrastructure and middleware software that support software applications and tools built on the Windows Server operating system. It offers Windows Server operating system, Microsoft SQL Server, Microsoft Enterprise Services, product support services, Visual Studio, System Center products, Forefront Security products, Biz Talk Server, MSDN, and TechNet. The Online Services Business segment offers personal communications services, such as email and instant messaging, and online information through MSN Search, MapPoint, MSN Internet Access, MSN Premium Web Services, Windows Live, and MSN Mobile Services. The Microsoft Business Division offers Microsoft office product set comprising enterprise content management, collaboration, unified communications, and business intelligence products and Microsoft Dynamics products for financial management, customer relationship management, supply chain management, and analytics applications. The Entertainment and Devices Division develops the Xbox video game system, such as consoles and accessories, third-party games, games published under the Microsoft brand, and Xbox Live operations. It also offers Zune digital music and entertainment devices, PC software games, online games, Mediaroom, an Internet protocol television software, and other devices. Further, Microsoft offers online advertising and publishing solutions. It has strategic alliance with Siemens VDO Automotive AG (SI), Phase One A/S, LogicaCMG plc (LGIAF.PK), and AudioCodes, Ltd. (AUDC) and collaborations with Presagis, Inc. Microsoft was founded in 1975, currently employs more than 79,000 people and is headquartered in Redmond, Washington.
Initially, Microsoft had demanded a royalty rate of 3.87% of a licensee’s product revenue for a patent license and of 2.98% for a license giving access to the secret interoperability information. In a statement of objections on March 1st, 2007, the EU Commission set out its concerns regarding Microsoft’s unreasonable pricing. On May 21st, 2007, Microsoft reduced its royalty rates to 0.7% for a patent license and 0.5% for an information license, regarding the sales of their products within the EEA, while leaving the worldwide rates unchanged. As of October 22nd, 2007, Microsoft did provide a license giving access to the interoperability information for a flat fee of $14,900 and an optional worldwide patent license for a reduced royalty of 0.4 % of licensees’ product revenues. Due to the ruling, there have been a number of questions and concerns regarding the judgment that have surfaced. Two of the main question that has arisen is, can Microsoft appeal, and if so, what is the likelihood that they could win the case? The simple answers are yes the can appeal, and based on the fact that they lost their first appeal to the fine in 2004, this doesn’t mean that they will necessarily lose this appeal. However, the latest fine is more than twice the size of the original fine, and is the largest of its kind ever levied on a single company, and the European Commission says it wouldn't have chosen the fine if it didn't think it could defend it. Two other proposed questions are, if fined, will Microsoft pay in Euros, and will the company be able to make payments towards the fine? The fine must be paid in Euros and no, Microsoft must pay the full amount within three months or face additional charges.
Moving forward, Microsoft, despite the fine levied today, announced the release of its latest version of its Windows operating system for powerful servers on Wednesday, thrusting itself into the red-hot market for virtualization technology that allows one computer to act like many machines. For the time being, Microsoft will ship Windows Server 2008 with a test version of its "Hyper-V" technology, which adds an extra layer of software that sits between the operating system and hardware, but it expects to add the full feature to the software within six months. Virtualization is one of the fastest-growing segments of the software industry because it disrupts the traditional business model that marries one machine to one piece of software like an operating system. Windows Server 2008 marks Microsoft's first major challenge against VMware Inc. (VMW), the leader in virtualization, by building the technology into its core operating system. Before the Windows Server launch, VMware announced on Tuesday an agreement to integrate its virtualization software into computer servers from Dell (DELL), Hewlett-Packard (HPQ) and International Business Machines Corp (IBM). Windows Server 2008 boasts improvements in security, manageability and efficiency. The software helps run computer networks and manage shared applications such as e-mail and Web sites. Last year, Microsoft's Windows Server operating system captured 67% of the market.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
The Microsoft Corporation provides software products for computing devices worldwide. Its Client segment engages in technical architecture, engineering, and product delivery of Windows product family comprising Windows Vista, Windows XP Professional and Home, Media Center Edition, Tablet PC Edition, and other Windows operating systems. The Server and Tools segment offers integrated server infrastructure and middleware software that support software applications and tools built on the Windows Server operating system. It offers Windows Server operating system, Microsoft SQL Server, Microsoft Enterprise Services, product support services, Visual Studio, System Center products, Forefront Security products, Biz Talk Server, MSDN, and TechNet. The Online Services Business segment offers personal communications services, such as email and instant messaging, and online information through MSN Search, MapPoint, MSN Internet Access, MSN Premium Web Services, Windows Live, and MSN Mobile Services. The Microsoft Business Division offers Microsoft office product set comprising enterprise content management, collaboration, unified communications, and business intelligence products and Microsoft Dynamics products for financial management, customer relationship management, supply chain management, and analytics applications. The Entertainment and Devices Division develops the Xbox video game system, such as consoles and accessories, third-party games, games published under the Microsoft brand, and Xbox Live operations. It also offers Zune digital music and entertainment devices, PC software games, online games, Mediaroom, an Internet protocol television software, and other devices. Further, Microsoft offers online advertising and publishing solutions. It has strategic alliance with Siemens VDO Automotive AG (SI), Phase One A/S, LogicaCMG plc (LGIAF.PK), and AudioCodes, Ltd. (AUDC) and collaborations with Presagis, Inc. Microsoft was founded in 1975, currently employs more than 79,000 people and is headquartered in Redmond, Washington.
Initially, Microsoft had demanded a royalty rate of 3.87% of a licensee’s product revenue for a patent license and of 2.98% for a license giving access to the secret interoperability information. In a statement of objections on March 1st, 2007, the EU Commission set out its concerns regarding Microsoft’s unreasonable pricing. On May 21st, 2007, Microsoft reduced its royalty rates to 0.7% for a patent license and 0.5% for an information license, regarding the sales of their products within the EEA, while leaving the worldwide rates unchanged. As of October 22nd, 2007, Microsoft did provide a license giving access to the interoperability information for a flat fee of $14,900 and an optional worldwide patent license for a reduced royalty of 0.4 % of licensees’ product revenues. Due to the ruling, there have been a number of questions and concerns regarding the judgment that have surfaced. Two of the main question that has arisen is, can Microsoft appeal, and if so, what is the likelihood that they could win the case? The simple answers are yes the can appeal, and based on the fact that they lost their first appeal to the fine in 2004, this doesn’t mean that they will necessarily lose this appeal. However, the latest fine is more than twice the size of the original fine, and is the largest of its kind ever levied on a single company, and the European Commission says it wouldn't have chosen the fine if it didn't think it could defend it. Two other proposed questions are, if fined, will Microsoft pay in Euros, and will the company be able to make payments towards the fine? The fine must be paid in Euros and no, Microsoft must pay the full amount within three months or face additional charges.
Moving forward, Microsoft, despite the fine levied today, announced the release of its latest version of its Windows operating system for powerful servers on Wednesday, thrusting itself into the red-hot market for virtualization technology that allows one computer to act like many machines. For the time being, Microsoft will ship Windows Server 2008 with a test version of its "Hyper-V" technology, which adds an extra layer of software that sits between the operating system and hardware, but it expects to add the full feature to the software within six months. Virtualization is one of the fastest-growing segments of the software industry because it disrupts the traditional business model that marries one machine to one piece of software like an operating system. Windows Server 2008 marks Microsoft's first major challenge against VMware Inc. (VMW), the leader in virtualization, by building the technology into its core operating system. Before the Windows Server launch, VMware announced on Tuesday an agreement to integrate its virtualization software into computer servers from Dell (DELL), Hewlett-Packard (HPQ) and International Business Machines Corp (IBM). Windows Server 2008 boasts improvements in security, manageability and efficiency. The software helps run computer networks and manage shared applications such as e-mail and Web sites. Last year, Microsoft's Windows Server operating system captured 67% of the market.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Tuesday, February 26, 2008
BetterTrades looks at Helmerich & Payne Inc.
Now is the time to invest in natural gas. The U.S. has just as much natural gas as it does coal. The primary issue is simply the cost factor, as natural gas costs more to extract. A common misconception about natural gas is that we are running out, and quickly. However, this couldn't be further from the truth. There is an abundance of natural gas in North America, but it is a non-renewable resource, the formation of which takes thousands and possibly millions of years. Therefore, understanding the availability of our supply of natural gas is important as we increase our use of this fossil fuel. As natural gas is essentially irreplaceable, at least with current technology, it is important to have an idea of how much natural gas is left in the ground for us to use. However, this becomes complicated by the fact that no one really knows exactly how much natural gas exists until it is extracted. Measuring natural gas in the ground is no easy job, and it involves a great deal of assumption and estimation. With new technologies, these estimates are becoming more and more reliable; however, they are still subject to revision. One company, who has excelled in this industry and has become a leader, is Helmerich & Payne.
Helmerich & Payne, Inc. (HP) engages in the contract drilling of oil and gas wells in the United States and internationally. The company provides drilling rigs, equipment, personnel, and camps on a contract basis to explore for and develop oil and gas from onshore areas and from fixed platforms, tension-leg platforms, and spars in offshore areas. It conducts domestic land drilling primarily in Oklahoma, California, Texas, Wyoming, Colorado, Louisiana, Mississippi, Alabama, Arkansas, New Mexico, and North Dakota, and offshore drilling from platforms in the Gulf of Mexico, California, Trinidad, and Equatorial Guinea. As of September 30, 2007, the company had 156 land drilling rigs in the U.S., 7 offshore platform rigs and international land rigs, including 10 in Venezuela, 7 in Ecuador, 3 in Argentina, 2 in Colombia, and 1 each in Bolivia, Chile, and Tunisia. In addition, Helmerich & Payne engages in the ownership, development, and operation of real estate, principally commercial properties, in Tulsa, Oklahoma. Its property portfolio includes a shopping center, interest in a residential condominium, two service centers, and a multi-tenant warehouse space. The company was founded in 1920, currently employs more than 6,000 people and is based in Tulsa, Oklahoma.
At the same time, HP is making money hand over fist with their oil drilling and real estate assets. While the major gas distributors like BP (BP) and Exxon-Mobile (XOM) are facing decreasing margins due to the volatility of gas prices, the drillers are still making money hand over fist. Their long history of profits and forward movement puts them ahead of the competition in terms of dollars earned per rig and per day. Within the past year, Helmerich & Payne has outperformed their peers, both in terms of profit margin, 26%, and stock price, a 67% increase over the past twelve months. Consistent with their recent momentum, H&P reported earnings recently that beat Wall Street's estimates by several cents. In their latest earnings report, posted in late January, the company earned $107.8M, or $1.02 per share, compared with a year-ago profit of $110.8M, or $1.06 per share. Despite falling short of the previous-year’s levels, HP still managed to beat expectations of $0.94 a share. Revenues during this time, increased 18% to $456.7M from $386.4M, in the same quarter a year-ago.
It is becoming clear, natural gas demand and prices will rise. Currently the energy ratio between oil and gas is 6:1. Meaning the energy content for a barrel of oil is 6X that of natural gas. So as of today, natural gas is vastly under priced; natural gas prices are equivalent to an 8, meaning that the gas equivalent would be about $50, almost half the cost of oil. Not only is natural gas a cheaper alternative to crude oil, it is also a cleaner one. In fact, dirty coal-fired power plants and air pollution power plants are a major source of air pollution, with coal-fired power plants spewing 59% of total U.S. sulfur dioxide pollution and 18% of total nitrogen oxides every year. Coal-fired power plants are also the largest polluter of toxic mercury pollution, the largest contributor of hazardous air toxics, and they release about 50% of all particle pollution. Additionally, power plants release over 40% of total U.S. carbon dioxide emissions, a prime contributor to global warming. On the flip side, HP produces one of the most effective oil rigs in the drilling industry. A FlexRig is a device which is used to pump oil from underground to the surface, which is both safer and much more efficient than the traditional oil rig. HP’s FlexRigs reach efficiency ratios up to 53% better than traditional rigs, and its average daily cost of use is around $6,000 less than the traditional rig. The company is also able to increase performance, along with market share, while constantly satisfying their increasing customer base. Because the company has consistently delivered for customers over a number of years now, they are able to continue to extract unusually long contracts from customers even as market conditions soften. This, in turn, should mean big bucks for HP investors.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Helmerich & Payne, Inc. (HP) engages in the contract drilling of oil and gas wells in the United States and internationally. The company provides drilling rigs, equipment, personnel, and camps on a contract basis to explore for and develop oil and gas from onshore areas and from fixed platforms, tension-leg platforms, and spars in offshore areas. It conducts domestic land drilling primarily in Oklahoma, California, Texas, Wyoming, Colorado, Louisiana, Mississippi, Alabama, Arkansas, New Mexico, and North Dakota, and offshore drilling from platforms in the Gulf of Mexico, California, Trinidad, and Equatorial Guinea. As of September 30, 2007, the company had 156 land drilling rigs in the U.S., 7 offshore platform rigs and international land rigs, including 10 in Venezuela, 7 in Ecuador, 3 in Argentina, 2 in Colombia, and 1 each in Bolivia, Chile, and Tunisia. In addition, Helmerich & Payne engages in the ownership, development, and operation of real estate, principally commercial properties, in Tulsa, Oklahoma. Its property portfolio includes a shopping center, interest in a residential condominium, two service centers, and a multi-tenant warehouse space. The company was founded in 1920, currently employs more than 6,000 people and is based in Tulsa, Oklahoma.
At the same time, HP is making money hand over fist with their oil drilling and real estate assets. While the major gas distributors like BP (BP) and Exxon-Mobile (XOM) are facing decreasing margins due to the volatility of gas prices, the drillers are still making money hand over fist. Their long history of profits and forward movement puts them ahead of the competition in terms of dollars earned per rig and per day. Within the past year, Helmerich & Payne has outperformed their peers, both in terms of profit margin, 26%, and stock price, a 67% increase over the past twelve months. Consistent with their recent momentum, H&P reported earnings recently that beat Wall Street's estimates by several cents. In their latest earnings report, posted in late January, the company earned $107.8M, or $1.02 per share, compared with a year-ago profit of $110.8M, or $1.06 per share. Despite falling short of the previous-year’s levels, HP still managed to beat expectations of $0.94 a share. Revenues during this time, increased 18% to $456.7M from $386.4M, in the same quarter a year-ago.
It is becoming clear, natural gas demand and prices will rise. Currently the energy ratio between oil and gas is 6:1. Meaning the energy content for a barrel of oil is 6X that of natural gas. So as of today, natural gas is vastly under priced; natural gas prices are equivalent to an 8, meaning that the gas equivalent would be about $50, almost half the cost of oil. Not only is natural gas a cheaper alternative to crude oil, it is also a cleaner one. In fact, dirty coal-fired power plants and air pollution power plants are a major source of air pollution, with coal-fired power plants spewing 59% of total U.S. sulfur dioxide pollution and 18% of total nitrogen oxides every year. Coal-fired power plants are also the largest polluter of toxic mercury pollution, the largest contributor of hazardous air toxics, and they release about 50% of all particle pollution. Additionally, power plants release over 40% of total U.S. carbon dioxide emissions, a prime contributor to global warming. On the flip side, HP produces one of the most effective oil rigs in the drilling industry. A FlexRig is a device which is used to pump oil from underground to the surface, which is both safer and much more efficient than the traditional oil rig. HP’s FlexRigs reach efficiency ratios up to 53% better than traditional rigs, and its average daily cost of use is around $6,000 less than the traditional rig. The company is also able to increase performance, along with market share, while constantly satisfying their increasing customer base. Because the company has consistently delivered for customers over a number of years now, they are able to continue to extract unusually long contracts from customers even as market conditions soften. This, in turn, should mean big bucks for HP investors.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Monday, February 25, 2008
BetterTrades looks at Genentech Inc.
Genentech Inc. (DNA) shares rose in trading Monday after the Food and Drug Administration (FDA) approved Genentech's drug Avastin to treat metastasized breast cancer. The FDA's conditional approval, which came late Friday, surprised some analysts, and they said the ruling could increase sales by billions. The agency granted Avastin accelerated approval, and will review data from several additional clinical trials before granting full approval. The ruling was the latest twist in Avastin's progress. Last year, Wall Street was caught off guard when an FDA panel reviewed the drug and recommended against approval. Some doctors already use Avastin against breast cancer, although it was approved only to treat lung and colon cancer. Rodman & Renshaw analysts upgraded the stock to "Market Outperform" from "Market Perform" on the news, and set a price target of $90 per share. The company, Rodman & Renshaw, also raised their 2009 through 2015 sales estimates by more than 50% per year, which would give the company close to $4B in additional revenue. Jefferies & Co.’s analysts, who raised their price target to $78 per share from $67, said the approval will increase sales by $1.34B over the next three years. The company< Jefferies & Co., also thinks that Avastin will receive full FDA approval, but said that will not come until early 2009 or later, until then, some risk still remains. Avastin is a biotech drug made from living cells that are genetically engineered to replicate the body's own weapons, in this case, an antibody that blocks production of vessels that feed tumors.
Genentech, Inc. engages in the discovery, development, manufacture, and commercialization of biotherapeutics in the United States. It markets Avastin (bevacizumab) for treating metastatic cancer of the colon or rectum and metastatic non-squamous non-small cell lung cancer. The company also commercializes Rituxan (rituximab) to treat B-cell non-Hodgkin's lymphoma; Herceptin (trastuzumab) for treating node-positive breast cancer; and Lucentis (ranibizumab) to treat neovascular (wet) age-related macular degeneration. It markets Xolair (omalizumab) for adults and adolescents with asthma; Tarceva (erlotinib) for the treatment of metastatic non-small cell lung cancer, as well as in combination with gemcitabine chemotherapy for the first-line treatment of metastatic pancreatic cancer; and Nutropin and Nutropin AQ growth hormone products for treating growth hormone deficiency in children and adults, growth failure associated with chronic renal insufficiency prior to kidney transplantation, short stature associated with turner syndrome, and long-term treatment of idiopathic short stature. The company also offers Activase for acute myocardial infarction (heart attack), acute ischemic stroke (blood clots in the brain), and acute massive pulmonary embolism (blood clots in the lungs); TNKase (tenecteplase) to treat heart attack; and Cathflo Activase for the restoration of function to central venous access devices in adult and pediatric patients. In addition, it provides Pulmozyme for cystic fibrosis; and Raptiva (efalizumab) for treating chronic moderate-to-severe plaque psoriasis in adults. The company sells its products to wholesalers, specialty distributors, or directly to hospital pharmacies. It has collaborations with F. Hoffmann-La Roche; Biogen Idec, Inc. (BIIB); Novartis Pharma AG (NVS); Tanox, Inc.; Altus (ALTU); Seattle Genetics, Inc.(SGEN); OSI Pharmaceuticals, Inc.(OSIP); XOMA, Ltd.(XOMA); and Dako A/S. The company was founded in 1975 and is headquartered in South San Francisco, California.
Technically, the FDA granted "accelerated approval" to Avastin in breast cancer. This means the agency wants to see additional clinical data to support the drug's clinical benefit in these patients before it will grant full approval for the new use. Genentech will provide that supportive data in two ways. The first comes from data from the successful "AVADO" trial that has already been shared with the agency. A second study of Avastin in breast cancer, known as RIBBON-1, will be ready later this year. Data from AVADO and RIBBON-1 have to be positive, of course. Whether the FDA wants to see additional clinical benefit in the form of progression-free survival or overall survival is not clear. A confirmed benefit in progression-free survival, with a trend toward longer overall survival, should be enough. That shouldn't be too hard for Genentech to produce. Breast cancer affects 1.2M people a year globally and kills 500,000, according to the World Health Organization. Of 45,000 U.S. women diagnosed with metastatic breast cancer each year, an estimated 38,000 women could benefit. Avastin costs about $7,700 a month, or $84,700 for an average 11-month course for breast cancer. However, with FDA approval, Genentech will enact a $55,000-a-year price cap.
In the afterglow of the approval of Avastin in breast cancer, Genentech's stock is going higher. It should trade back into the $80s on this news as investors and analysts add $1B-plus in incremental Avastin sales back into their financial models. After closing at $71.60 Friday, the stock leapt $5.80 to $77.40 in the after-hours trading session. At that price, Genentech is now up 15% for the year. It's nice to see the stock in the green once again after finishing each of the past two years with negative returns. Annual revenue growth at Genentech slowed to 26% in 2007 from 40% in 2006. Before Friday's Avastin decision, the Street had Genentech’s revenue growth cooling off further to 10% this year and another 10% in 2009. Genentech's earnings guidance for 2008 currently stands at $3.30 to 3.45 a share, with the Street consensus right in the middle at $3.38 a share. That equates to 15% earnings growth this year, down from 32% growth in 2007. At the close of trading session, shares of DNA closed higher by nearly 9%, up $6.36 at $77.96.
There's more to come from Genentech. Next up will be results from a large study of Avastin as a catalyst treatment for colon cancer. This study has super-blockbuster growth implications for Avastin and the company, as in $2B to $3B in additional revenue in the U.S. alone. Results from this study could be ready in late 2008 or early 2009. Genentech's other big growth opportunity to keep in mind is Rituxan, which has phase III studies in lupus and multiple sclerosis expected later this year. Rituxan sales have also slowed, but the lupus study, in particular, if successful, could provide a huge burst of new growth that isn't factored into many investor models these days.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Genentech, Inc. engages in the discovery, development, manufacture, and commercialization of biotherapeutics in the United States. It markets Avastin (bevacizumab) for treating metastatic cancer of the colon or rectum and metastatic non-squamous non-small cell lung cancer. The company also commercializes Rituxan (rituximab) to treat B-cell non-Hodgkin's lymphoma; Herceptin (trastuzumab) for treating node-positive breast cancer; and Lucentis (ranibizumab) to treat neovascular (wet) age-related macular degeneration. It markets Xolair (omalizumab) for adults and adolescents with asthma; Tarceva (erlotinib) for the treatment of metastatic non-small cell lung cancer, as well as in combination with gemcitabine chemotherapy for the first-line treatment of metastatic pancreatic cancer; and Nutropin and Nutropin AQ growth hormone products for treating growth hormone deficiency in children and adults, growth failure associated with chronic renal insufficiency prior to kidney transplantation, short stature associated with turner syndrome, and long-term treatment of idiopathic short stature. The company also offers Activase for acute myocardial infarction (heart attack), acute ischemic stroke (blood clots in the brain), and acute massive pulmonary embolism (blood clots in the lungs); TNKase (tenecteplase) to treat heart attack; and Cathflo Activase for the restoration of function to central venous access devices in adult and pediatric patients. In addition, it provides Pulmozyme for cystic fibrosis; and Raptiva (efalizumab) for treating chronic moderate-to-severe plaque psoriasis in adults. The company sells its products to wholesalers, specialty distributors, or directly to hospital pharmacies. It has collaborations with F. Hoffmann-La Roche; Biogen Idec, Inc. (BIIB); Novartis Pharma AG (NVS); Tanox, Inc.; Altus (ALTU); Seattle Genetics, Inc.(SGEN); OSI Pharmaceuticals, Inc.(OSIP); XOMA, Ltd.(XOMA); and Dako A/S. The company was founded in 1975 and is headquartered in South San Francisco, California.
Technically, the FDA granted "accelerated approval" to Avastin in breast cancer. This means the agency wants to see additional clinical data to support the drug's clinical benefit in these patients before it will grant full approval for the new use. Genentech will provide that supportive data in two ways. The first comes from data from the successful "AVADO" trial that has already been shared with the agency. A second study of Avastin in breast cancer, known as RIBBON-1, will be ready later this year. Data from AVADO and RIBBON-1 have to be positive, of course. Whether the FDA wants to see additional clinical benefit in the form of progression-free survival or overall survival is not clear. A confirmed benefit in progression-free survival, with a trend toward longer overall survival, should be enough. That shouldn't be too hard for Genentech to produce. Breast cancer affects 1.2M people a year globally and kills 500,000, according to the World Health Organization. Of 45,000 U.S. women diagnosed with metastatic breast cancer each year, an estimated 38,000 women could benefit. Avastin costs about $7,700 a month, or $84,700 for an average 11-month course for breast cancer. However, with FDA approval, Genentech will enact a $55,000-a-year price cap.
In the afterglow of the approval of Avastin in breast cancer, Genentech's stock is going higher. It should trade back into the $80s on this news as investors and analysts add $1B-plus in incremental Avastin sales back into their financial models. After closing at $71.60 Friday, the stock leapt $5.80 to $77.40 in the after-hours trading session. At that price, Genentech is now up 15% for the year. It's nice to see the stock in the green once again after finishing each of the past two years with negative returns. Annual revenue growth at Genentech slowed to 26% in 2007 from 40% in 2006. Before Friday's Avastin decision, the Street had Genentech’s revenue growth cooling off further to 10% this year and another 10% in 2009. Genentech's earnings guidance for 2008 currently stands at $3.30 to 3.45 a share, with the Street consensus right in the middle at $3.38 a share. That equates to 15% earnings growth this year, down from 32% growth in 2007. At the close of trading session, shares of DNA closed higher by nearly 9%, up $6.36 at $77.96.
There's more to come from Genentech. Next up will be results from a large study of Avastin as a catalyst treatment for colon cancer. This study has super-blockbuster growth implications for Avastin and the company, as in $2B to $3B in additional revenue in the U.S. alone. Results from this study could be ready in late 2008 or early 2009. Genentech's other big growth opportunity to keep in mind is Rituxan, which has phase III studies in lupus and multiple sclerosis expected later this year. Rituxan sales have also slowed, but the lupus study, in particular, if successful, could provide a huge burst of new growth that isn't factored into many investor models these days.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Friday, February 22, 2008
BetterTrades looks at Calgon Carbon Corp.
Calgon Carbon Corp. (CCC), which provides water and air purifying products, announced Friday that the company managed to post a profit from a previous loss in the 4Q on higher carbon products demand, after an impairment charge hurt last year’s 4Q results. For the quarter, the company earned $3.8M, or $0.08 per share, compared with a loss of $8.4M, or $0.21 per share, a year ago. The 2006 fourth-quarter and year included a goodwill impairment charge of $6.9M for the company's ultraviolet light business unit. Meanwhile, revenues increased 19% to $94.8M from $79.4M, benefiting partly from the stronger Euro and British pound. Carbon and service segment sales grew 23% on higher prices and volume, while equipment sales sagged 7.2%. Analysts polled, on average, expected profits of $0.06 per share, on revenues of $84.5M. For the full year of 2007, the company earned $15.3M, or $0.31 per share, compared with a loss of $7.8M, or $0.20 per share, a year earlier.
Calgon Carbon Corporation provides services, products, and solutions for purifying water and air in the United States and internationally. It has three segments: Activated Carbon and Service, Equipment, and Consumer. The Activated Carbon and Service segment manufactures granular activated carbon to remove organic compounds from water, air, and other liquids and gases. It also provides leasing, monitoring, and maintenance services of carbon adsorption equipment. In addition, this segment provides carbon reactivation, handling, transportation, perchlorate removal services for groundwater treatment, and resin exchange services with disposal of the spent resins. The Equipment segment offers systems to purify air and water. Its equipment employs activated carbon and ion exchange resins for purification, separation, and concentration; and proprietary ISEP (Ionic Separator) continuous ion exchange units for the purification of products in the food, pharmaceutical, and biotechnology industries. Its carbon equipment is used for volatile organic compound (VOC) emissions control, air stripper off-gases, and landfill gas emissions, as well as for process purification, wastewater treatment, groundwater remediation, and dechlorination. The ISEP units are also used to remove nitrate and perchlorate contaminants from drinking water. This segment also offers UV equipment to disinfect drinking and waste water, as well as produces odor control equipment to control odors at municipal wastewater treatment facilities and pumping stations. The Consumer segment manufactures and sells carbon cloth for the medical and specialty markets, as well as offers PreZerve storage products to protect and preserve jewelry, and AllGone to adsorb odors and impurities from the air. Calgon Carbon Corporation serves potable water, industrial process, environmental water and air, food, and specialty markets. The company was founded in 1942, currently employs more than 800 workers and is based in Pittsburgh, Pennsylvania.
Calgon has shown a strong potential over the past 12-months that the company could turn into a stellar growth stock. Since February of last year, the company’s stock has managed to increase more than 145% based solely on a sound business model. Dating back to last February, the stock was in the mid-$6 range with no major movement for the entire month, while March would bring an 18% increase in price to bring its shares up to the low $8 level. The month of May would bring the biggest jump as the company would report their 1Q earnings and see the stock’s price increase more than 24% by the end of the month. In their earnings report, the company earned $2M, or $0.05 a share, on revenues of $83M, while analysts were expecting earnings of $0.01 a share on revenues of $82M. During the year-earlier quarter, the company reported a loss of $1.4M, or $0.04 a share, on revenues of $76.6M. Over the next five months, the price of CCC would gain another 35% while establishing a trading high of $15.88 in mid-October. Despite a downturn in November, more than a $2 loss in price, the company managed to close out the year on a positive note as the stock broke through the $16 mark.
For the company to continue with their success in the New Year, they need to rely on a strong business practice and make stride within their industry to set themselves apart from others. In January, the company received a $1.5M contract from Huntsman Textile Effects Co. Ltd. to supply wastewater treatment equipment and services at a facility in China. The company said it will supply activated carbon adsorption equipment and will provide reactivation services at Huntsman's manufacturing facility in Qingdao, China, while also being responsible for removing, transporting and reactivating the spent activated carbon and for providing replacement carbon for the adsorption system. This particular facility provides synthesis standardization and drying of textile dyes. There very well may be a bright future for Calgon in the increasingly attractive global water infrastructure space. The company's best shot might be to take a cue from General Electric and sell off the commodity business. Higher-margin services are where it's at, after all. It appears the company is presently breaking even on equipment sales, but cash flows from long-term service contracts could likely support a leaner business model. Even if Calgon does manage to reinvent itself, it's a very small player compared to international giants Suez (SZE) and Veolia (VE), but with more potential for growth. As urban populations around the world increase and the demand for potable water outstrips the supply of services offered to clean that water, these global-service providing companies will be in the best position to dominate the industry.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Calgon Carbon Corporation provides services, products, and solutions for purifying water and air in the United States and internationally. It has three segments: Activated Carbon and Service, Equipment, and Consumer. The Activated Carbon and Service segment manufactures granular activated carbon to remove organic compounds from water, air, and other liquids and gases. It also provides leasing, monitoring, and maintenance services of carbon adsorption equipment. In addition, this segment provides carbon reactivation, handling, transportation, perchlorate removal services for groundwater treatment, and resin exchange services with disposal of the spent resins. The Equipment segment offers systems to purify air and water. Its equipment employs activated carbon and ion exchange resins for purification, separation, and concentration; and proprietary ISEP (Ionic Separator) continuous ion exchange units for the purification of products in the food, pharmaceutical, and biotechnology industries. Its carbon equipment is used for volatile organic compound (VOC) emissions control, air stripper off-gases, and landfill gas emissions, as well as for process purification, wastewater treatment, groundwater remediation, and dechlorination. The ISEP units are also used to remove nitrate and perchlorate contaminants from drinking water. This segment also offers UV equipment to disinfect drinking and waste water, as well as produces odor control equipment to control odors at municipal wastewater treatment facilities and pumping stations. The Consumer segment manufactures and sells carbon cloth for the medical and specialty markets, as well as offers PreZerve storage products to protect and preserve jewelry, and AllGone to adsorb odors and impurities from the air. Calgon Carbon Corporation serves potable water, industrial process, environmental water and air, food, and specialty markets. The company was founded in 1942, currently employs more than 800 workers and is based in Pittsburgh, Pennsylvania.
Calgon has shown a strong potential over the past 12-months that the company could turn into a stellar growth stock. Since February of last year, the company’s stock has managed to increase more than 145% based solely on a sound business model. Dating back to last February, the stock was in the mid-$6 range with no major movement for the entire month, while March would bring an 18% increase in price to bring its shares up to the low $8 level. The month of May would bring the biggest jump as the company would report their 1Q earnings and see the stock’s price increase more than 24% by the end of the month. In their earnings report, the company earned $2M, or $0.05 a share, on revenues of $83M, while analysts were expecting earnings of $0.01 a share on revenues of $82M. During the year-earlier quarter, the company reported a loss of $1.4M, or $0.04 a share, on revenues of $76.6M. Over the next five months, the price of CCC would gain another 35% while establishing a trading high of $15.88 in mid-October. Despite a downturn in November, more than a $2 loss in price, the company managed to close out the year on a positive note as the stock broke through the $16 mark.
For the company to continue with their success in the New Year, they need to rely on a strong business practice and make stride within their industry to set themselves apart from others. In January, the company received a $1.5M contract from Huntsman Textile Effects Co. Ltd. to supply wastewater treatment equipment and services at a facility in China. The company said it will supply activated carbon adsorption equipment and will provide reactivation services at Huntsman's manufacturing facility in Qingdao, China, while also being responsible for removing, transporting and reactivating the spent activated carbon and for providing replacement carbon for the adsorption system. This particular facility provides synthesis standardization and drying of textile dyes. There very well may be a bright future for Calgon in the increasingly attractive global water infrastructure space. The company's best shot might be to take a cue from General Electric and sell off the commodity business. Higher-margin services are where it's at, after all. It appears the company is presently breaking even on equipment sales, but cash flows from long-term service contracts could likely support a leaner business model. Even if Calgon does manage to reinvent itself, it's a very small player compared to international giants Suez (SZE) and Veolia (VE), but with more potential for growth. As urban populations around the world increase and the demand for potable water outstrips the supply of services offered to clean that water, these global-service providing companies will be in the best position to dominate the industry.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, February 21, 2008
BetterTrades looks at Denbury Resources Inc.
Denbury Resources Inc. (DNR) today announced its 4Q and full year 2007 financial and operating results. The Company posted record annual earnings for the full year 2007 of $253.1M, or $1.05 per share, 25% higher than 2006 net income of $202.5M, or $0.87 per share. Fourth-quarter 2007 net income of $106.0M, or $0.44 per share, was also a record, which was 92% higher than the 2006 4Q net income of $55.1M, or $0.23 per share. Analysts expected a profit of 36 cents per share on revenue of $304.2 million. The higher net income in the 2007 periods was attributable to record high quarterly and annual production levels, higher oil prices and incremental net cash receipts on the company’s derivative contracts. Denbury also managed to increase production 38% last quarter as oil prices hit new records, while cash flow from operations for 2007 was $570.2M, a record annual amount, as compared to $461.8M for 2006.
Denbury Resources, Inc. engages in the acquisition, development, operation, and exploration of oil and natural gas properties in the Gulf Coast region of the United States, primarily in Louisiana, Mississippi, Alabama, and Texas. It holds interests in the Barnett Shale area in north central Texas, land and marshes of south Louisiana, and carbon dioxide reserves in the east of the Mississippi river. As of December 2006, the company had 721 gross oil producing wells and 402 gross natural gas producing wells, and approximately 126,185 MBbls (million barrels) of proved oil reserves and 288,826 MMcf (million cubic feet) of proved natural gas reserves. CO2 is one of the efficient tertiary recovery mechanisms for crude oil. The Company focuses to acquire properties where it is thought that additional value can be created through a combination of exploration and marketing, including secondary and tertiary operations and acquire properties that will give it a majority working interest and operational control. Denbury Resources’ 16 largest fields constitute approximately 93% of its total proved reserves. Within these 16 fields, the Company owns a weighted average 92% working interest and operates all of these fields. The concentration of value in a relatively small number of fields allows it to benefit substantially from any operating cost reductions or production enhancements it achieves and allows it to manage the properties from its two primary field offices. Denbury Resources was founded in 1951, currently employs more than 660 people and is headquartered in Plano, Texas.
The price of oil has pulled back from the century mark recently on slowing economic prospects, but investors still have an eye on the sector, and in recent years, this means watching the moves. The factors that drive oil prices are complex and numerous. Denbury falls right into this category. Over the past 12-months, the company has been able to increase their market share along with their market cap. During that span, DRN shares have increased more than 115% in price, which helps the company post a market cap of over $7.78B. In February of ’07, the company’s stock was trading near $28 a share, and before a stock split, announced in September and exercised in December, the stock had risen nearly 55% to trade at a 52-week high of $61.12, in early November. This progression in the company’s price earnings was a steady rise since last March. In March, the stock’s price increased 4%, and 10% in April and 9% in May, while September and October brought the biggest gains for the company, 11% and 21% for those months respectfully. During this time, Denbury had developed a highly promising technique to extract the last drops of oil from old wells. The company injects carbon dioxide into the wells, and pressure from the gas squeezes out any remaining oil. Despite their challenges, exploration and production companies are likely to continue earning healthy profits as long as oil prices remain high. High prices allow the firms to generate handsome profit margins despite their high cost of operations.
Denbury’s 2008 outlook looks very positive and profitable, just as 2007 was for the company. During 2007, the company set new records for earnings, cash flow and production while replacing approximately 250% of their production almost entirely from internal growth. Denbury more than replaced their CO2 production and significantly increased their maximum CO2 productive rates, met or exceeded all of their 2007 original production forecasts and increased the company’s tertiary oil production by 47% year over year. The company also sold their Louisiana natural gas properties at a reasonable price, providing them with incremental capital and allowing them to focus more directly on their tertiary operations. Looking forward in the New Year, Denbury’s current budgeted program includes an estimated $245M to acquire the 24-inch pipe and right-of-ways for its proposed CO2 pipeline from Louisiana to Texas, known as the “Green Pipeline”, and another $80M for the CO2 pipeline from Tinsley to Delhi Fields, the “Delta Pipeline”. The Company expects to spend an additional $450M constructing the Green Pipeline during 2009, making its current anticipated total cost for that line approximately $700M. Currently, over 50% of the remaining portion of the company’s 2008 budget is expected to be spent on other tertiary related operations.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Denbury Resources, Inc. engages in the acquisition, development, operation, and exploration of oil and natural gas properties in the Gulf Coast region of the United States, primarily in Louisiana, Mississippi, Alabama, and Texas. It holds interests in the Barnett Shale area in north central Texas, land and marshes of south Louisiana, and carbon dioxide reserves in the east of the Mississippi river. As of December 2006, the company had 721 gross oil producing wells and 402 gross natural gas producing wells, and approximately 126,185 MBbls (million barrels) of proved oil reserves and 288,826 MMcf (million cubic feet) of proved natural gas reserves. CO2 is one of the efficient tertiary recovery mechanisms for crude oil. The Company focuses to acquire properties where it is thought that additional value can be created through a combination of exploration and marketing, including secondary and tertiary operations and acquire properties that will give it a majority working interest and operational control. Denbury Resources’ 16 largest fields constitute approximately 93% of its total proved reserves. Within these 16 fields, the Company owns a weighted average 92% working interest and operates all of these fields. The concentration of value in a relatively small number of fields allows it to benefit substantially from any operating cost reductions or production enhancements it achieves and allows it to manage the properties from its two primary field offices. Denbury Resources was founded in 1951, currently employs more than 660 people and is headquartered in Plano, Texas.
The price of oil has pulled back from the century mark recently on slowing economic prospects, but investors still have an eye on the sector, and in recent years, this means watching the moves. The factors that drive oil prices are complex and numerous. Denbury falls right into this category. Over the past 12-months, the company has been able to increase their market share along with their market cap. During that span, DRN shares have increased more than 115% in price, which helps the company post a market cap of over $7.78B. In February of ’07, the company’s stock was trading near $28 a share, and before a stock split, announced in September and exercised in December, the stock had risen nearly 55% to trade at a 52-week high of $61.12, in early November. This progression in the company’s price earnings was a steady rise since last March. In March, the stock’s price increased 4%, and 10% in April and 9% in May, while September and October brought the biggest gains for the company, 11% and 21% for those months respectfully. During this time, Denbury had developed a highly promising technique to extract the last drops of oil from old wells. The company injects carbon dioxide into the wells, and pressure from the gas squeezes out any remaining oil. Despite their challenges, exploration and production companies are likely to continue earning healthy profits as long as oil prices remain high. High prices allow the firms to generate handsome profit margins despite their high cost of operations.
Denbury’s 2008 outlook looks very positive and profitable, just as 2007 was for the company. During 2007, the company set new records for earnings, cash flow and production while replacing approximately 250% of their production almost entirely from internal growth. Denbury more than replaced their CO2 production and significantly increased their maximum CO2 productive rates, met or exceeded all of their 2007 original production forecasts and increased the company’s tertiary oil production by 47% year over year. The company also sold their Louisiana natural gas properties at a reasonable price, providing them with incremental capital and allowing them to focus more directly on their tertiary operations. Looking forward in the New Year, Denbury’s current budgeted program includes an estimated $245M to acquire the 24-inch pipe and right-of-ways for its proposed CO2 pipeline from Louisiana to Texas, known as the “Green Pipeline”, and another $80M for the CO2 pipeline from Tinsley to Delhi Fields, the “Delta Pipeline”. The Company expects to spend an additional $450M constructing the Green Pipeline during 2009, making its current anticipated total cost for that line approximately $700M. Currently, over 50% of the remaining portion of the company’s 2008 budget is expected to be spent on other tertiary related operations.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Wednesday, February 20, 2008
BetterTrades looks at the Delta and Northwest Airlines Merger
Some corporate mergers have little effect on customers. But when big airlines merge, it changes life for travelers, leading to higher ticket prices, poorer service and maybe even a switch in the credit card you carry. Delta Airlines Inc. (DAL) and Northwest Airlines Corp. (NWA) are on the verge of joining forces as the third-and-fifth largest carriers appear on the brink of becoming unified. One of the major stumbling blocks for the $20B merger was still up in the air, as talks this past weekend fizzled out while pilot leaders from the two sides are still at opposite ends on a method to consolidate their local unions. The agreement between the two local chapters of the Air-Line Pilots Association at Delta and Northwest calls for a pilot representative on the combined board and a 7% equity stake in the merged airline, and it sets out terms for joining the two seniority lists as well.
But the biggest peril for consumers is poorer service, late flights, lost baggage, confusion at airports, ticketing troubles and changes in frequent-flier program rules. The intent of the representative plan was to avoid the level of internal disputes that arose following the 2005 merger of America West and US Airways (LCC). Despite work force turmoil and botched reservation system integrations, the merger did achieve some notable successes. It combined two weak carriers into one that produced unusually strong revenue per available seat mile, especially in its first year, as a result of reduced capacity and an enhanced ability to gather passengers at hubs.
In the past, internal Delta consolidation studies have concluded that a merger with Continental would make the most sense, while a deal with Northwest could also have value because it would provide access to the Pacific, according to sources who are familiar with the situation. Delta bid unsuccessfully for Continental in 1998, then acknowledged it was again studying a merger effort in 2000. Since the internal studies were done, Delta has dramatically built their hubs at New York's Kennedy Airport and Newark Liberty International Airport, as well as their trans-Atlantic service from the two hubs.
Delta and Northwest don't need a labor agreement between their pilots unions before announcing a combination, but having one in place now could help them speed up the integration of the two carriers down the line. Should Delta and Northwest decide to link up, could that trigger another takeover? The second- and fourth-largest carriers, United Airlines (UAUA) and Continental Airlines Inc. (CAL) have begun their own conversations on the topic of a possible merger. Shareholders are clearly excited as airline stocks are up 34% since January. Continental is up around 71% and United stock is up around 62%. If Delta and Northwest merge, everyone else has to get bigger to compete. Delta and Northwest combined would have an enterprise value of $31.6B, while Continental and United together would be worth $21.9B. Continental cannot merge with another airline because of a "golden share" held by Northwest, which could block a deal. If Northwest agrees to a deal with any airline, Continental could buy back that stock for $100 and be free to merge with whomever they wish.
There are also talks across the pond that European airlines may put some of their capital behind these merger talks. Deutsche Lufthansa, the second largest airline in Europe, has stated that they are talking about placing an equity stake in United and investing in the merger between United and Continental Airlines. At the same time, Air France-KLM, the world’s largest airline company, in terms of total operating revenues, has already announced that they would invest in the merger between Delta and Northwest Airlines. Their stakes would be limited by federal law which prohibits foreign companies from owning more than 25% of U.S. airlines.
Airline mergers help stockholders and the company, but not the consumers. Travelers could see big changes in frequent-flier programs. For example, Delta has its mileage program tied to American Express Co., while United miles are earned using J.P. Morgan Chase & Co. cards, and Northwest is aligned with U.S. Bancorp. Typically in airline mergers, customers of the acquired carrier have to switch credit cards to the surviving airline's program. Combining frequent-flier programs could make it tougher for travelers to score free seats and upgrades.
One factor favoring consolidation is that the market has changed significantly since 2001. Low-cost carriers such as Southwest Airlines (LUV), JetBlue (JBLU), and AirTran Airways (AAI) account for a much larger percentage of the domestic market than they did in 2001. At the same time, an agreement between the United States and European Union that takes effect this year promises to open airports and lower airfares for travel between U.S. and European cities that were historically restricted by pacts with a single country. Historically, for instance, only PanAm and TWA could fly into London's Heathrow airport, the rights purchased by American Airlines and United. But the new pact would open these travel routes to all competing airlines.
Continental taking over United would be the move to really change the airline industry. When putting these two companies together with their route networks, you've got the Pacific, the West Coast, the Midwest, the Southwest, the East Coast, New York, Europe and Latin America. They would be all around the world and they would be able to compete with Lufthansa, British Airways, and Singapore Airlines. They would be a powerhouse. But is this what this country needs, because if you are going to compete globally, and open up the skies to make it a global marketplace, you better have global reach.
At the release of this article, Airline shares crept mostly higher Wednesday as oil prices backed away from the $100 mark as investors held out hope that consolidation will shore up the struggling industry. Airline shares often move in opposite shifts of crude prices because fuel represents one of the industry's biggest costs. The Amex Airline Index advanced 0.4% to 36.41 at the close of the trading day after falling earlier in the session. Price targets have been raised on airline stocks to account for the effect of multiple deals on the sector including "Buy" recommendations on Northwest, Delta and United Airlines parent UAL Corp., as well as Continental Airlines Inc.
On the day, Delta shares added $0.04, or 0.2% to $16.81, while Northwest advanced $0.25, or 1.5%, to $17.22. UAL increased $1.33, or 3.7%, to $37.14, and Continental shares gained $0.38, or 1.3%, to $29.86.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
But the biggest peril for consumers is poorer service, late flights, lost baggage, confusion at airports, ticketing troubles and changes in frequent-flier program rules. The intent of the representative plan was to avoid the level of internal disputes that arose following the 2005 merger of America West and US Airways (LCC). Despite work force turmoil and botched reservation system integrations, the merger did achieve some notable successes. It combined two weak carriers into one that produced unusually strong revenue per available seat mile, especially in its first year, as a result of reduced capacity and an enhanced ability to gather passengers at hubs.
In the past, internal Delta consolidation studies have concluded that a merger with Continental would make the most sense, while a deal with Northwest could also have value because it would provide access to the Pacific, according to sources who are familiar with the situation. Delta bid unsuccessfully for Continental in 1998, then acknowledged it was again studying a merger effort in 2000. Since the internal studies were done, Delta has dramatically built their hubs at New York's Kennedy Airport and Newark Liberty International Airport, as well as their trans-Atlantic service from the two hubs.
Delta and Northwest don't need a labor agreement between their pilots unions before announcing a combination, but having one in place now could help them speed up the integration of the two carriers down the line. Should Delta and Northwest decide to link up, could that trigger another takeover? The second- and fourth-largest carriers, United Airlines (UAUA) and Continental Airlines Inc. (CAL) have begun their own conversations on the topic of a possible merger. Shareholders are clearly excited as airline stocks are up 34% since January. Continental is up around 71% and United stock is up around 62%. If Delta and Northwest merge, everyone else has to get bigger to compete. Delta and Northwest combined would have an enterprise value of $31.6B, while Continental and United together would be worth $21.9B. Continental cannot merge with another airline because of a "golden share" held by Northwest, which could block a deal. If Northwest agrees to a deal with any airline, Continental could buy back that stock for $100 and be free to merge with whomever they wish.
There are also talks across the pond that European airlines may put some of their capital behind these merger talks. Deutsche Lufthansa, the second largest airline in Europe, has stated that they are talking about placing an equity stake in United and investing in the merger between United and Continental Airlines. At the same time, Air France-KLM, the world’s largest airline company, in terms of total operating revenues, has already announced that they would invest in the merger between Delta and Northwest Airlines. Their stakes would be limited by federal law which prohibits foreign companies from owning more than 25% of U.S. airlines.
Airline mergers help stockholders and the company, but not the consumers. Travelers could see big changes in frequent-flier programs. For example, Delta has its mileage program tied to American Express Co., while United miles are earned using J.P. Morgan Chase & Co. cards, and Northwest is aligned with U.S. Bancorp. Typically in airline mergers, customers of the acquired carrier have to switch credit cards to the surviving airline's program. Combining frequent-flier programs could make it tougher for travelers to score free seats and upgrades.
One factor favoring consolidation is that the market has changed significantly since 2001. Low-cost carriers such as Southwest Airlines (LUV), JetBlue (JBLU), and AirTran Airways (AAI) account for a much larger percentage of the domestic market than they did in 2001. At the same time, an agreement between the United States and European Union that takes effect this year promises to open airports and lower airfares for travel between U.S. and European cities that were historically restricted by pacts with a single country. Historically, for instance, only PanAm and TWA could fly into London's Heathrow airport, the rights purchased by American Airlines and United. But the new pact would open these travel routes to all competing airlines.
Continental taking over United would be the move to really change the airline industry. When putting these two companies together with their route networks, you've got the Pacific, the West Coast, the Midwest, the Southwest, the East Coast, New York, Europe and Latin America. They would be all around the world and they would be able to compete with Lufthansa, British Airways, and Singapore Airlines. They would be a powerhouse. But is this what this country needs, because if you are going to compete globally, and open up the skies to make it a global marketplace, you better have global reach.
At the release of this article, Airline shares crept mostly higher Wednesday as oil prices backed away from the $100 mark as investors held out hope that consolidation will shore up the struggling industry. Airline shares often move in opposite shifts of crude prices because fuel represents one of the industry's biggest costs. The Amex Airline Index advanced 0.4% to 36.41 at the close of the trading day after falling earlier in the session. Price targets have been raised on airline stocks to account for the effect of multiple deals on the sector including "Buy" recommendations on Northwest, Delta and United Airlines parent UAL Corp., as well as Continental Airlines Inc.
On the day, Delta shares added $0.04, or 0.2% to $16.81, while Northwest advanced $0.25, or 1.5%, to $17.22. UAL increased $1.33, or 3.7%, to $37.14, and Continental shares gained $0.38, or 1.3%, to $29.86.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Tuesday, February 19, 2008
BetterTrades looks at Marvel Entertainment Inc.
Marvel Entertainment Inc. (MVL), which licenses comic book characters for films and consumer products, announced early Tuesday that 4Q earnings more than doubled on higher licensing revenue and toy profit. Marvel, whose characters include Spider-Man, The Incredible Hulk and Captain America, stated that net income grew to $27.6 million, or $0.35 per share, from $11.7M, or $0.14 per share, in the year-ago period. The result exceeded expectations on Wall Street, where analysts projected profits of $0.29 per share. Sales jumped 28% to $109.3 million from $85.2 million last year. Demand for Spider-Man products pushed up merchandise licensing sales more than two-fold to $58.5M, offsetting a decline in the company’s toy sales. The decrease in toy sales came as Marvel switched toy production to a licensed manufacturer. The move led to higher segment profits despite the lower sales total. For the year, profits rocketed to $139.8M, or $1.70 per share, from $58.7M, or $0.67 per share, while sales added 38% to $485.8M.
Marvel Entertainment, Inc. engages in the licensing, publishing, toy making, and film production businesses with a proprietary library of approximately 5,000 characters. Its library of characters include Spider-Man, Iron Man, The Incredible Hulk, Captain America, Thor, Ghost Rider, The Fantastic Four, X-Men, Blade, Daredevil, The Punisher, Namor, Nick Fury, The Avengers, Silver Surfer, and Ant-Man. The company operates in four segments: Licensing, Publishing, Toys, and Film Production. The Licensing segment licenses its characters for use in various consumer products, including toys, apparel, and video games, feature films, television programs, DVD animated feature films, theme parks, shopping malls, special events, promotions, and publications. The Publishing segment publishes and sells comic books and custom comics to the direct market and the mass market, as well as to teenagers and young adults through comic book specialty stores and retail outlets, including bookstores and newsstands. This segment also sells advertising and subscriptions. The Toys segment designs, develops, creates, markets, and distributes character-based toys, such as Most Marvel and Spider-Man, as well as based on licensed-in characters, such as Curious George and characters from Code Lyoko and TNA wrestling. This segment markets its products through specialty toy retailers, mass merchandisers, mail-order companies, and variety stores, as well as independent distributors worldwide. The Film Production segment develops, produces, and distributes films. Marvel Entertainment, Inc., formerly known as Marvel Enterprises, Inc., was founded in 1988, employs more than 250 people and is based in New York, New York.
If you have the chance to look at Marvel’s year-chart, you will be able to conclude that the company’s stock is very fickle. In fact, since February of ’07, the stock is trading nearly at the exact same price. Much of Marvel’s highs and lows are solely based on the company’s earning reports. From March through mid-May of last year, the stock gained nicely as the price traded as high as $30, while trading as low as $26, a 14% gain. The start of the downfall for Marvel was the company’s 1Q earnings, in May, which sent the stock down more than 8% the day the report was released. The biggest hit the company took was the decline in free cash flow which declined more than 73%, due to the absence of a $50M upfront payment, the year before, for the Spider-Man joint venture with Sony (SNE). Most analysts were expecting that Spider-Man 3 licensing revenues would be recorded in the 2Q when the movie was released. From there forward, shares of MVL would continue a downward trend that would see the price of the stock decrease by more than 21% leading up to the company’s August earnings report. The second short-coming for the company, came after the company reached that $30 mark, was when Marvel announced 2Q earnings which came in below analysts’ expectations. While Wall Street was projecting earnings of $0.39 a share, while MVL posted earnings of $0.34, which sent the shares down that day, more than 5%. Second-quarter revenues at the company's toy segment declined 24% to $19.3M from the same quarter a year ago.
The turnaround for the company came in October, after the company had been trading within a small channel for much of August, and all of September. The first positive for the company came when their stock increased nearly 14% in two days, at the beginning of October. Despite a downturn after those productive days, the stock would fall back to the level it was trading at the end of September. But, in early November, the stock would rocket up more than 19% on the company’s 3Q earnings report. In the report, the company posted an EPS increase of more than 62%, from $0.58 a share on $99M in revenues, to $0.95 a share on $161M in revenues. The 3Q results were lifted by a favorable tax adjustment of $29.6M, or $0.17 per share. Marvel’s apparent success would be short-lived. Once again, the stock would begin another channel of trading before taking a fall at the start of the New Year, mainly due to the high volatility of the markets. The latter-half of January would prove beneficial to MVL shares as the stock would increase 15%, leading into the current trading month.
Looking ahead, the company has decided to go it alone in the movie industry and finance new superhero films through an innovative loan structure. First up will be Iron Man and another, presumably less artsy, look at The Incredible Hulk. The profits from those movies will start out paying back the money borrowed to make the pictures, namely HSBC (HBC) and GE (GE), in the first place, and the rest will go straight into Marvel's coffers. Marvel, then envisions about $46M in new operating income from the first two movies in 2008 but nearly $180M in 2009 as the second wave comes out and the first two movies go into heavy rotation on pay-per-view and HBO-style movie channels. Marvel also expects to earn $1.30 to $1.50 per share, better than Wall Street’s estimate of $1.26 per share. But the company’s projected sales of $360M to $400M are well below analysts’ expectations of $463M because the company didn’t include revenue from its Incredible Hulk and Iron Man movies soon to be released. Let's see how much Marvel, the company that envisioned the characters in the first place, truly can make when it can reap all of the producer fees from movies made under its own total creative control.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Marvel Entertainment, Inc. engages in the licensing, publishing, toy making, and film production businesses with a proprietary library of approximately 5,000 characters. Its library of characters include Spider-Man, Iron Man, The Incredible Hulk, Captain America, Thor, Ghost Rider, The Fantastic Four, X-Men, Blade, Daredevil, The Punisher, Namor, Nick Fury, The Avengers, Silver Surfer, and Ant-Man. The company operates in four segments: Licensing, Publishing, Toys, and Film Production. The Licensing segment licenses its characters for use in various consumer products, including toys, apparel, and video games, feature films, television programs, DVD animated feature films, theme parks, shopping malls, special events, promotions, and publications. The Publishing segment publishes and sells comic books and custom comics to the direct market and the mass market, as well as to teenagers and young adults through comic book specialty stores and retail outlets, including bookstores and newsstands. This segment also sells advertising and subscriptions. The Toys segment designs, develops, creates, markets, and distributes character-based toys, such as Most Marvel and Spider-Man, as well as based on licensed-in characters, such as Curious George and characters from Code Lyoko and TNA wrestling. This segment markets its products through specialty toy retailers, mass merchandisers, mail-order companies, and variety stores, as well as independent distributors worldwide. The Film Production segment develops, produces, and distributes films. Marvel Entertainment, Inc., formerly known as Marvel Enterprises, Inc., was founded in 1988, employs more than 250 people and is based in New York, New York.
If you have the chance to look at Marvel’s year-chart, you will be able to conclude that the company’s stock is very fickle. In fact, since February of ’07, the stock is trading nearly at the exact same price. Much of Marvel’s highs and lows are solely based on the company’s earning reports. From March through mid-May of last year, the stock gained nicely as the price traded as high as $30, while trading as low as $26, a 14% gain. The start of the downfall for Marvel was the company’s 1Q earnings, in May, which sent the stock down more than 8% the day the report was released. The biggest hit the company took was the decline in free cash flow which declined more than 73%, due to the absence of a $50M upfront payment, the year before, for the Spider-Man joint venture with Sony (SNE). Most analysts were expecting that Spider-Man 3 licensing revenues would be recorded in the 2Q when the movie was released. From there forward, shares of MVL would continue a downward trend that would see the price of the stock decrease by more than 21% leading up to the company’s August earnings report. The second short-coming for the company, came after the company reached that $30 mark, was when Marvel announced 2Q earnings which came in below analysts’ expectations. While Wall Street was projecting earnings of $0.39 a share, while MVL posted earnings of $0.34, which sent the shares down that day, more than 5%. Second-quarter revenues at the company's toy segment declined 24% to $19.3M from the same quarter a year ago.
The turnaround for the company came in October, after the company had been trading within a small channel for much of August, and all of September. The first positive for the company came when their stock increased nearly 14% in two days, at the beginning of October. Despite a downturn after those productive days, the stock would fall back to the level it was trading at the end of September. But, in early November, the stock would rocket up more than 19% on the company’s 3Q earnings report. In the report, the company posted an EPS increase of more than 62%, from $0.58 a share on $99M in revenues, to $0.95 a share on $161M in revenues. The 3Q results were lifted by a favorable tax adjustment of $29.6M, or $0.17 per share. Marvel’s apparent success would be short-lived. Once again, the stock would begin another channel of trading before taking a fall at the start of the New Year, mainly due to the high volatility of the markets. The latter-half of January would prove beneficial to MVL shares as the stock would increase 15%, leading into the current trading month.
Looking ahead, the company has decided to go it alone in the movie industry and finance new superhero films through an innovative loan structure. First up will be Iron Man and another, presumably less artsy, look at The Incredible Hulk. The profits from those movies will start out paying back the money borrowed to make the pictures, namely HSBC (HBC) and GE (GE), in the first place, and the rest will go straight into Marvel's coffers. Marvel, then envisions about $46M in new operating income from the first two movies in 2008 but nearly $180M in 2009 as the second wave comes out and the first two movies go into heavy rotation on pay-per-view and HBO-style movie channels. Marvel also expects to earn $1.30 to $1.50 per share, better than Wall Street’s estimate of $1.26 per share. But the company’s projected sales of $360M to $400M are well below analysts’ expectations of $463M because the company didn’t include revenue from its Incredible Hulk and Iron Man movies soon to be released. Let's see how much Marvel, the company that envisioned the characters in the first place, truly can make when it can reap all of the producer fees from movies made under its own total creative control.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, February 14, 2008
BetterTrades looks at Incyte Corporation
Drug developer Incyte Corp. said Thursday that the company’s 4Q loss widened on higher research and development costs. The company lost $21.8M, or $0.26 per share, compared with a loss of $20.5M, or $0.24 per share, during the same period a year ago. Revenues increased 38% to $9.7M from $7.1M along with the company stating that a $3M milestone payment from development partner Pfizer Inc. (PFE) boosted revenue. Analysts polled were expecting a loss of $0.28 per share based on revenues of $8.7M. Expenses, which hurt the bottom-line, jumped 40% to $37.2M, driven mainly by higher research and development costs. For the full year, the company lost $86.9M, or $1.03 per share, compared with a loss of $74.2M, or $0.89 per share, in 2006. Revenues, for the year, increased to $34.4M from $27.6M. Looking ahead, the company said it expects net income in 2008 to range from $3M to $3.5M, though that excludes funds from drug development partnerships. Analysts expect 2008 revenues for Incyte to be around $26.4M. Despite a disappointing earnings report, shares of Incyte continue to stride forward, as its stock gained on the day, up $0.25, or 2.1% to close the day at $12.44, just off its 52-week high of $12.72.
Incyte Corporation (INCY) is a Wilmington, DE-based drug discovery and development company with a focus on oral compounds to treat HIV, inflammation, cancer, and diabetes. The company has transformed from a genomic-based information supplier to a fully integrated drug discovery and development organization. The new corporate culture is evident by the company s name change from Incyte Genomics to Incyte Corporation, showing the new emphasis on drug development. The company's lead internal compound, INCB3284, is a proprietary, oral CCR2 antagonist in phase II development that may have therapeutic value in a number of chronic inflammatory diseases. Incyte has several other early drug discovery programs underway, including INCB7839, an oral sheddase inhibitor for cancer, in phase II development. Incyte also had a proteomic information business, which was sold to a Germany-based company named Biobase in January 2005. The company employs nearly 200 professionals worldwide.
Over the past twelve months, shares of Incyte have been able to make a formidable run in the company’s market share. Going back to the start of ’07, INCY shares were trading as high as $7.70 a share, and as low as $6 a share. For much of the first half of the year, Incyte traded within this channel until a strong downtrend which began in early May. With the downtrend, in trading, lasting until the middle of August, some of the company’s ill fortunes can be attributed to the volatility in the markets and the economy, but most of the blame has to put to the company itself. During this time in which the stock price was retreating, INCY shares managed to lose nearly 42% of their market value. Much of the blame for the downturn was the company’s release of 3Q earnings, posting a loss just as they had in their most recent fourth-quarter. During this time, the company had five drugs in the early-stages of clinical trials. With the company spending most of its resources on R&D, $290M in free cash, the company will live and die by its clinical trials. For this, investors have taken that to heart and the stock’s price responded accordingly. From the beginning of September, until its current trading price, the stock had been able to advance their stock’s position by 55%.
Incyte derives its revenues mainly from collaborations and royalties from its genetic information business. In 2006, total revenues were $27.6M with a net loss of $64.3M on an adjusted basis. In the 3Q of 2007, revenue was $6.7M with a net loss of $24.5M. Quarterly revenues will continue to fluctuate due to the variations of collaboration. Due to the early or middle stage of all its clinical programs, Incyte doesn’t expect any products on the market before 2010. Thus, the company will continue to incur losses in the coming years. As of September, 2007, Incyte had $266M in cash, cash equivalents and marketable securities. In December 2007, the company received $8.5M as a result of the sale of Velocity 11, a privately-held life sciences technology company in which Incyte held an ownership position. Incyte also holds $120M in convertible senior notes and $257M in convertible subordinated notes as of September 2007. Without a foreseeable candidate on the market before 2010, the company is under further financing pressure for its ongoing operations. Although the recent deal with Pfizer, effective in Jan 2006, has provided the company with an upfront payment of $40M, the company might need to access the capital market some time in 2008, especially if Incyte is going to pursue external acquisitions. Many analysts have continued to have a “hold” position on Incyte with a target price of $11.50 a share. At the current share price, the risk/reward scenario is relatively balanced for all investors in Incyte.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Incyte Corporation (INCY) is a Wilmington, DE-based drug discovery and development company with a focus on oral compounds to treat HIV, inflammation, cancer, and diabetes. The company has transformed from a genomic-based information supplier to a fully integrated drug discovery and development organization. The new corporate culture is evident by the company s name change from Incyte Genomics to Incyte Corporation, showing the new emphasis on drug development. The company's lead internal compound, INCB3284, is a proprietary, oral CCR2 antagonist in phase II development that may have therapeutic value in a number of chronic inflammatory diseases. Incyte has several other early drug discovery programs underway, including INCB7839, an oral sheddase inhibitor for cancer, in phase II development. Incyte also had a proteomic information business, which was sold to a Germany-based company named Biobase in January 2005. The company employs nearly 200 professionals worldwide.
Over the past twelve months, shares of Incyte have been able to make a formidable run in the company’s market share. Going back to the start of ’07, INCY shares were trading as high as $7.70 a share, and as low as $6 a share. For much of the first half of the year, Incyte traded within this channel until a strong downtrend which began in early May. With the downtrend, in trading, lasting until the middle of August, some of the company’s ill fortunes can be attributed to the volatility in the markets and the economy, but most of the blame has to put to the company itself. During this time in which the stock price was retreating, INCY shares managed to lose nearly 42% of their market value. Much of the blame for the downturn was the company’s release of 3Q earnings, posting a loss just as they had in their most recent fourth-quarter. During this time, the company had five drugs in the early-stages of clinical trials. With the company spending most of its resources on R&D, $290M in free cash, the company will live and die by its clinical trials. For this, investors have taken that to heart and the stock’s price responded accordingly. From the beginning of September, until its current trading price, the stock had been able to advance their stock’s position by 55%.
Incyte derives its revenues mainly from collaborations and royalties from its genetic information business. In 2006, total revenues were $27.6M with a net loss of $64.3M on an adjusted basis. In the 3Q of 2007, revenue was $6.7M with a net loss of $24.5M. Quarterly revenues will continue to fluctuate due to the variations of collaboration. Due to the early or middle stage of all its clinical programs, Incyte doesn’t expect any products on the market before 2010. Thus, the company will continue to incur losses in the coming years. As of September, 2007, Incyte had $266M in cash, cash equivalents and marketable securities. In December 2007, the company received $8.5M as a result of the sale of Velocity 11, a privately-held life sciences technology company in which Incyte held an ownership position. Incyte also holds $120M in convertible senior notes and $257M in convertible subordinated notes as of September 2007. Without a foreseeable candidate on the market before 2010, the company is under further financing pressure for its ongoing operations. Although the recent deal with Pfizer, effective in Jan 2006, has provided the company with an upfront payment of $40M, the company might need to access the capital market some time in 2008, especially if Incyte is going to pursue external acquisitions. Many analysts have continued to have a “hold” position on Incyte with a target price of $11.50 a share. At the current share price, the risk/reward scenario is relatively balanced for all investors in Incyte.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Wednesday, February 13, 2008
BetterTrades looks at First Solar Inc.
Solar modules maker First Solar Inc. (FSLR) said Wednesday that the company’s 4Q earnings skyrocketed on increased production and lower costs. The results, which beat expectations, sent shares up more than $52, or 30%, to $228.46 on the day’s trading session. The company earned $62.9M, or $0.77 per share, compared with $8M, or $0.12 per share, in the year-ago quarter. Revenues almost quadrupled to $200.8M, from $52.7M in the 2006 period. Analysts expected profit of $0.53 per share on revenues of $179.6M. For the full-year, the company posted profits of $158.4M, or $2.03 per share, compared with $4M, or $0.07 per share, in 2006. Revenues jumped to $504M, from $135M a year earlier. Analysts predicted earnings of $1.19 per share on sales of $483.4M for the year.
First Solar, Inc. and its subsidiaries engage in the design, manufacture, and sale of solar electric power modules. The solar module is a polycrystalline thin film structure that employs cadmium telluride semiconductor material to convert sunlight into electricity. The company sells its products to solar project developers and system integrators primarily in Germany. The company was founded as First Solar Holdings, LLC in 1999 and changed its name to First Solar Holdings, Inc. Further, it changed its name to First Solar, Inc. in 2006. The company is headquartered in Phoenix, Arizona and currently employs nearly 750 workers. Each solar module is approximately 2 feet × 4 feet and had an average rated power of approximately 64 watts during fiscal 2006. The Company's solar module is a single-junction polycrystalline thin film structure that employs cadmium telluride as the absorption layer and cadmium sulfide as the window layer. Cadmium telluride has absorption properties that are matched to the solar spectrum. Its thin film technology also has high-energy performance in low light and high-temperature environments. First Solar has approximately 10,000 solar modules installed worldwide at test sites designed to collect data for field performance validation. Using data logging equipment, the Company also monitors approximately 172,000 solar modules, representing approximately 10 megawatt of installed photovoltaic systems, in use by the end-users that have purchased systems using its solar modules.
With the company’s stock being publicly traded for a little over a year now, First Solar has been able to make tremendous strides within their market standing. Over the past 52-weeks, First Solar shares have increased a whopping 412% during such time. Within that time, there have been several big moves made by the stock which has sent it upwards towards where it trades at today. Its first big move came almost a year to the day when the company announced earnings for their fiscal 4Q wherein quarterly revenues were $52.7M, up from $40.8M in the 3Q of fiscal 2006 and up from $13.6M in the 4Q of fiscal 2005. Net income for the quarter of fiscal 2006 was $8.0M or $0.11 per share, compared to net income of $4.3M or $0.06 per share for the 3Q of fiscal 2006 and a net loss of $7.2M for the 4Q of fiscal 2005 or $0.11 loss per share. The following day, shares of FSLR jumped 22% and would start an up-swing that would flow into the company’s next reported earning in early July. Leading up to the previously mentioned earnings report, shares of FSLR would increase 55% and were trading in the mid-$90 range. July’s big jump, of nearly 20%, was directly related to the company entering into five agreements for the manufacture and sale of solar modules totaling 685 Megawatts which would total nearly $1.28B between 2007 and 2012.
From the end of July through the start of the New Year, First Solar would increase their market share another 58% while trading in the upper-$260 level. Just before the end of the year, First Solar announced 3Q earnings that beat Wall Street’s expectations, sending its shares up 34.3%, or $57.31, to $224.43. That left it trading with a jaw-dropping valuation of 253-times its trailing 12-month earnings, and 158-times analysts' 2008 projections. Investors may have had to do a double take when reading its earnings, which grew 969.8% to $46.0M, or $0.58 per share, from the $4.3M, or $0.07 per share, reported last year. Looking forward, First Solar projects to sell between 400 and 430 megawatts of it thin solar modules in 2008 while expecting revenues from those sales to be in the $900M and $950M range, from $504M in 2007 and prior estimates of $760M to $800M. First Solar predicted an operating margin between 25% and 27% of sales, while currently possessing a 19% operating margin as of today. Shares of First Solar, which sells most of its products in Germany, France and Spain, were the best performing last year of any small or midsize company traded in the U.S amid rising oil prices and investor enthusiasm about alternative sources of power. Clean energy represents the biggest set of new market opportunities to come along in a long time. In the U.S., electricity demand outpaces generating and grid capacity, and uncertainty clouds our heavy reliance on coal and peak power demand is expected to grow about 18% in the next 10 years, while grid capacity is expected to grow 8.4%. This leaves First Solar in the driver’s seat to gain more on their market position. A study by the Cambridge Energy Research Association (CERA), reported that the predicted climate changes that are to take place in the coming future, will provide more than $7 trillion in clean energy investments by 2030, providing First Solar with ample incentives to market and improve on current and future products.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
First Solar, Inc. and its subsidiaries engage in the design, manufacture, and sale of solar electric power modules. The solar module is a polycrystalline thin film structure that employs cadmium telluride semiconductor material to convert sunlight into electricity. The company sells its products to solar project developers and system integrators primarily in Germany. The company was founded as First Solar Holdings, LLC in 1999 and changed its name to First Solar Holdings, Inc. Further, it changed its name to First Solar, Inc. in 2006. The company is headquartered in Phoenix, Arizona and currently employs nearly 750 workers. Each solar module is approximately 2 feet × 4 feet and had an average rated power of approximately 64 watts during fiscal 2006. The Company's solar module is a single-junction polycrystalline thin film structure that employs cadmium telluride as the absorption layer and cadmium sulfide as the window layer. Cadmium telluride has absorption properties that are matched to the solar spectrum. Its thin film technology also has high-energy performance in low light and high-temperature environments. First Solar has approximately 10,000 solar modules installed worldwide at test sites designed to collect data for field performance validation. Using data logging equipment, the Company also monitors approximately 172,000 solar modules, representing approximately 10 megawatt of installed photovoltaic systems, in use by the end-users that have purchased systems using its solar modules.
With the company’s stock being publicly traded for a little over a year now, First Solar has been able to make tremendous strides within their market standing. Over the past 52-weeks, First Solar shares have increased a whopping 412% during such time. Within that time, there have been several big moves made by the stock which has sent it upwards towards where it trades at today. Its first big move came almost a year to the day when the company announced earnings for their fiscal 4Q wherein quarterly revenues were $52.7M, up from $40.8M in the 3Q of fiscal 2006 and up from $13.6M in the 4Q of fiscal 2005. Net income for the quarter of fiscal 2006 was $8.0M or $0.11 per share, compared to net income of $4.3M or $0.06 per share for the 3Q of fiscal 2006 and a net loss of $7.2M for the 4Q of fiscal 2005 or $0.11 loss per share. The following day, shares of FSLR jumped 22% and would start an up-swing that would flow into the company’s next reported earning in early July. Leading up to the previously mentioned earnings report, shares of FSLR would increase 55% and were trading in the mid-$90 range. July’s big jump, of nearly 20%, was directly related to the company entering into five agreements for the manufacture and sale of solar modules totaling 685 Megawatts which would total nearly $1.28B between 2007 and 2012.
From the end of July through the start of the New Year, First Solar would increase their market share another 58% while trading in the upper-$260 level. Just before the end of the year, First Solar announced 3Q earnings that beat Wall Street’s expectations, sending its shares up 34.3%, or $57.31, to $224.43. That left it trading with a jaw-dropping valuation of 253-times its trailing 12-month earnings, and 158-times analysts' 2008 projections. Investors may have had to do a double take when reading its earnings, which grew 969.8% to $46.0M, or $0.58 per share, from the $4.3M, or $0.07 per share, reported last year. Looking forward, First Solar projects to sell between 400 and 430 megawatts of it thin solar modules in 2008 while expecting revenues from those sales to be in the $900M and $950M range, from $504M in 2007 and prior estimates of $760M to $800M. First Solar predicted an operating margin between 25% and 27% of sales, while currently possessing a 19% operating margin as of today. Shares of First Solar, which sells most of its products in Germany, France and Spain, were the best performing last year of any small or midsize company traded in the U.S amid rising oil prices and investor enthusiasm about alternative sources of power. Clean energy represents the biggest set of new market opportunities to come along in a long time. In the U.S., electricity demand outpaces generating and grid capacity, and uncertainty clouds our heavy reliance on coal and peak power demand is expected to grow about 18% in the next 10 years, while grid capacity is expected to grow 8.4%. This leaves First Solar in the driver’s seat to gain more on their market position. A study by the Cambridge Energy Research Association (CERA), reported that the predicted climate changes that are to take place in the coming future, will provide more than $7 trillion in clean energy investments by 2030, providing First Solar with ample incentives to market and improve on current and future products.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Monday, February 11, 2008
BetterTrades looks at Charles River Laboratories International Inc.
As of this morning's open, the Biotechnology industry has earned a PowerRating of 10. When it comes to PowerRatings, whether they are PowerRatings for Investors, for Traders or for Industries, earning a rating of 10 is as good as it gets. Industries with PowerRatings of 10 have outperformed the average industry by significant margins. Based on research going back to 1995, it has been found that industries with a rating of 10 have produced average annualized returns of 35.27%. Compare this performance to that of the average industry, which produced average annualized returns of 14.61% over the same time period from 1995-2006. Charles Rivers Laboratories is at the top of the list of biotechnology stocks. Charles Rivers Laboratories (CRL) specializes in drug discovery and development, as well as providing animal research models for drug and medical device testing and therapies. The company trades at a P/E of 28.15, and is just 9% off its 52-week high of $69.04. Charles Rivers Laboratories has a PowerRating of 10. Stocks with 10 PowerRatings have been the best stocks for investors to own going back to 1995. The research, based on thousands and thousands of simulated trades, reveals that stocks with a 10-rating not only tend to be higher one year later 81% of the time, but also these stock have averaged annual returns of more than 20%. Compare this to the average stock which is higher one year later less than 68% of the time. The average stock has also tended to gain 12% to 13% after a year, several basis points lower than the stock with the PowerRating of 10.
Charles River Laboratories International, Inc., together with its subsidiaries, provides solutions that advance the drug discovery and development process, including research models and associated services, and outsourced preclinical services worldwide. It operates in two segments, Research Models and Services (RMS) and Preclinical Services (PCS). The RMS segment involves in the production and sale of research models, principally genetically and virally defined purpose-bred rats, mice, and other rodents for use by researchers to pharmaceutical and biotechnology companies, government agencies, and hospitals and academic institutions. It also offers research model services, including transgenic, laboratory, consulting and staffing, and preconditioning services. This segment also offers vaccine support and in vitro technology products for testing of medical devices and injectable drugs. The PCS segment engages in the discovery and development of new drugs, devices, and therapies. It offers toxicology studies, pathology services, bio-analysis, pharmacokinetics, and drug metabolism services, discovery support, biopharmaceuticals services, and clinical services, including Phase I trials in healthy normal and special populations. Charles River Laboratories was founded in 1947, currently employs over 8,000 people and is headquartered in Wilmington, Massachusetts.
The technical pattern of the stock is positive, reflecting the positive fundamental points of the company as well. During much of last summer’s trading, shares of CRL maintained a trading channel that fluctuated between $51 and $55 a share. In late August, the company announced 2Q earnings which increased 47% to $38M, or $0.55 a share, as pharmaceutical and biotechnology customers continued demanding research models and outsourced services. Excluding certain one-time items, the company earned $0.64 a share with revenues totaling $307.4M, up from $267.9M a year ago. After their report, the company’s stock would begin a strong climb in price that would last through the start of the New Year. Its price, in August, was at $51 a share before the release of their EPS, increased steadily through the next four months, at which time, the stock closed out 2007 at $65.80. In those four months, the stock gained 29% in price which was also bolstered by the company’s 3Q earnings released in early November.
In its 3Q earnings report, Charles River Labs reported that they posted a net profit of $42.8M, or $0.62 a share, in the 3Q from a net loss of $16.6M, or $0.24 a share, in the year-earlier period. Revenues in the quarter totaled $314M, up from $264.7M a year ago. These two earnings reports helped propel CRL shares upwards to new trading highs. In fact, CRL recorded a new record high of $69.04 which was achieved in mid-January. There was a major break out of a multiyear base back in May of 2007. After this occurred, the stock formed what is called a base-on-a-base configuration, increasing the initial rally to new highs while establishing a new base from which the advance could continue. The stock emerged from that basing process and has been trending higher over the last three months. Near term, the stock has gotten a bit extended and in that, the stock retreated a bit in late January. Looking ahead, there should be further strength in the stock’s rebound which could propel the stock into the low $70s and establish a new support level in the low $60 range.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Charles River Laboratories International, Inc., together with its subsidiaries, provides solutions that advance the drug discovery and development process, including research models and associated services, and outsourced preclinical services worldwide. It operates in two segments, Research Models and Services (RMS) and Preclinical Services (PCS). The RMS segment involves in the production and sale of research models, principally genetically and virally defined purpose-bred rats, mice, and other rodents for use by researchers to pharmaceutical and biotechnology companies, government agencies, and hospitals and academic institutions. It also offers research model services, including transgenic, laboratory, consulting and staffing, and preconditioning services. This segment also offers vaccine support and in vitro technology products for testing of medical devices and injectable drugs. The PCS segment engages in the discovery and development of new drugs, devices, and therapies. It offers toxicology studies, pathology services, bio-analysis, pharmacokinetics, and drug metabolism services, discovery support, biopharmaceuticals services, and clinical services, including Phase I trials in healthy normal and special populations. Charles River Laboratories was founded in 1947, currently employs over 8,000 people and is headquartered in Wilmington, Massachusetts.
The technical pattern of the stock is positive, reflecting the positive fundamental points of the company as well. During much of last summer’s trading, shares of CRL maintained a trading channel that fluctuated between $51 and $55 a share. In late August, the company announced 2Q earnings which increased 47% to $38M, or $0.55 a share, as pharmaceutical and biotechnology customers continued demanding research models and outsourced services. Excluding certain one-time items, the company earned $0.64 a share with revenues totaling $307.4M, up from $267.9M a year ago. After their report, the company’s stock would begin a strong climb in price that would last through the start of the New Year. Its price, in August, was at $51 a share before the release of their EPS, increased steadily through the next four months, at which time, the stock closed out 2007 at $65.80. In those four months, the stock gained 29% in price which was also bolstered by the company’s 3Q earnings released in early November.
In its 3Q earnings report, Charles River Labs reported that they posted a net profit of $42.8M, or $0.62 a share, in the 3Q from a net loss of $16.6M, or $0.24 a share, in the year-earlier period. Revenues in the quarter totaled $314M, up from $264.7M a year ago. These two earnings reports helped propel CRL shares upwards to new trading highs. In fact, CRL recorded a new record high of $69.04 which was achieved in mid-January. There was a major break out of a multiyear base back in May of 2007. After this occurred, the stock formed what is called a base-on-a-base configuration, increasing the initial rally to new highs while establishing a new base from which the advance could continue. The stock emerged from that basing process and has been trending higher over the last three months. Near term, the stock has gotten a bit extended and in that, the stock retreated a bit in late January. Looking ahead, there should be further strength in the stock’s rebound which could propel the stock into the low $70s and establish a new support level in the low $60 range.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, February 07, 2008
BetterTrades looks at Terra Industries Inc.
Terra Industries Inc. (TRA) announced today net income for the 2007 4Q of $69.7M, or $0.66 per share, up from net income of $11.6M, or $0.11 per share, for the same period in 2006. Terra reported 2007 4Q operating income of $131.4M, compared to operating income of $38.8M for the same quarter in 2006. The 2007 earnings improvement was mostly due to higher selling prices. For 2007, Terra posted net income available to common shareholders of $196.8M, or $1.90 per share, on revenues of $2.4B. For 2006, Terra recorded a net loss to common shareholders of $0.9M, or $0.01 per share, on revenues of $1.8B. The 2007 net income was reduced by $77.8M, $49.8 million, net of tax, or $0.47 per share, for debt retirement and asset impairment charges. Revenues for the 2007 4Q totaled $570M compared to $450M for the last quarter of 2006. The $121M revenue increase from the prior year was due primarily to higher nitrogen selling prices. Ammonia, nitrogen solutions (UAN) and ammonium nitrate (AN) selling prices improved 16%, 69% and 20%, respectively, over those of the same period last year. The improved selling prices reflected strong demand resulting from improved commodity grain prices while Terra’s customers are in need of securing supplies for the 2008 spring planting season.
Terra Industries, Inc., together with its subsidiaries, engages in the production and marketing of nitrogen and methanol products for agricultural and industrial markets in the United States, Canada, and the United Kingdom. It operates in two segments, Nitrogen and Methanol. The Nitrogen segment offers fertilizers, such as anhydrous ammonia, urea ammonium nitrate solutions, ammonium nitrate, and urea, as well as nitric acid, carbon dioxide, and dinitrogen tetroxide. The Methanol segment manufactures methanol, which is used as a raw material in the production of various chemical derivatives, as well as in the production of methyl tertiary butyl ether (MTBE), an oxygenate and octane enhancer for gasoline. Terra owns nine manufacturing facilities in North America and the U.K. capable of producing nitrogen products. The principal raw material used to produce manufactured nitrogen products and methanol is natural gas. Terra's operations are subject to various federal, state and local environmental, safety and health laws and regulations, including laws relating to air quality, hazardous and solid wastes and water quality. Terra Industries sells its products to national agricultural retail chains, farm cooperatives, independent dealers, and industrial customers. The company was founded in 1964, currently employs more than 1,200 people and is headquartered in Sioux City, Iowa.
If one is able to look at the current chart for Terra Industries, one will be able to see that over the past six months or so, that the company’s stock, and market position, has increased exponentially during such time. As the markets turned volatile last summer, Terra’s shares took a hit, price wise, as many other companies did as well. Once the markets began to stabilize, Terra’s stock started an upward trend that would last until the middle of January. In August, shares were trading as low as $17.70, just over $3 off of their 52-week low set last February. From its rebound in August, Terra shares increased more than 125% over September, October and into November. The main accelerant to the company’s market push was the outstanding earnings report for the 3Q which was posted in late October. During which quarter, Terra’s earnings more than quadrupled from $10.3M, or $0.10 per share, to $54.4M, or $0.51 a share from the previous year’s quarter. The company’s revenues also increased, by nearly 28% to $593.7M. In addition to Terra being able to post robust earnings, the company also is able to post other outstanding financial figures. Included are, quarterly earnings growth of 425% year-over-year, solid margins numbers related to industry standards like profit margins, 6.5%, operating margins, 15.5%, and gross margins of 19.2%. The company has also been able to maintain a relatively low debt/equity ratio, 0.51, while generating more than $2.2B in revenues, along with a solid levered free cash flow of $393.5M
Looking ahead, Terra plans to restart its Donaldsonville, Louisiana ammonia plant during the third quarter of 2008. The output of this facility will replace 400,000 tons per year of purchased imported ammonia at more favorable gross margins. The facility will undergo turnaround and startup activities during the first half of 2008. The facility ceased production in December 2004. However, Terra has maintained the facility for a potential restart and retained the skilled workforce needed to operate it. As Terra looks forward to the first half of 2008, the company anticipates continued demand for their products as supported by the record level of customer prepayments the company has received for delivery. Grain prices continue to be robust, providing ample incentive for growers to optimize yields along with the increasing demand and improved margin realization for upgraded nitrogen products. Terra’s management is evaluating projects to increase the upgrading capacity at several of their facilities including additional investments to their upgrading capacity that will enhance their strong market position within their operations and improve Terra’s long-term earnings capability.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Terra Industries, Inc., together with its subsidiaries, engages in the production and marketing of nitrogen and methanol products for agricultural and industrial markets in the United States, Canada, and the United Kingdom. It operates in two segments, Nitrogen and Methanol. The Nitrogen segment offers fertilizers, such as anhydrous ammonia, urea ammonium nitrate solutions, ammonium nitrate, and urea, as well as nitric acid, carbon dioxide, and dinitrogen tetroxide. The Methanol segment manufactures methanol, which is used as a raw material in the production of various chemical derivatives, as well as in the production of methyl tertiary butyl ether (MTBE), an oxygenate and octane enhancer for gasoline. Terra owns nine manufacturing facilities in North America and the U.K. capable of producing nitrogen products. The principal raw material used to produce manufactured nitrogen products and methanol is natural gas. Terra's operations are subject to various federal, state and local environmental, safety and health laws and regulations, including laws relating to air quality, hazardous and solid wastes and water quality. Terra Industries sells its products to national agricultural retail chains, farm cooperatives, independent dealers, and industrial customers. The company was founded in 1964, currently employs more than 1,200 people and is headquartered in Sioux City, Iowa.
If one is able to look at the current chart for Terra Industries, one will be able to see that over the past six months or so, that the company’s stock, and market position, has increased exponentially during such time. As the markets turned volatile last summer, Terra’s shares took a hit, price wise, as many other companies did as well. Once the markets began to stabilize, Terra’s stock started an upward trend that would last until the middle of January. In August, shares were trading as low as $17.70, just over $3 off of their 52-week low set last February. From its rebound in August, Terra shares increased more than 125% over September, October and into November. The main accelerant to the company’s market push was the outstanding earnings report for the 3Q which was posted in late October. During which quarter, Terra’s earnings more than quadrupled from $10.3M, or $0.10 per share, to $54.4M, or $0.51 a share from the previous year’s quarter. The company’s revenues also increased, by nearly 28% to $593.7M. In addition to Terra being able to post robust earnings, the company also is able to post other outstanding financial figures. Included are, quarterly earnings growth of 425% year-over-year, solid margins numbers related to industry standards like profit margins, 6.5%, operating margins, 15.5%, and gross margins of 19.2%. The company has also been able to maintain a relatively low debt/equity ratio, 0.51, while generating more than $2.2B in revenues, along with a solid levered free cash flow of $393.5M
Looking ahead, Terra plans to restart its Donaldsonville, Louisiana ammonia plant during the third quarter of 2008. The output of this facility will replace 400,000 tons per year of purchased imported ammonia at more favorable gross margins. The facility will undergo turnaround and startup activities during the first half of 2008. The facility ceased production in December 2004. However, Terra has maintained the facility for a potential restart and retained the skilled workforce needed to operate it. As Terra looks forward to the first half of 2008, the company anticipates continued demand for their products as supported by the record level of customer prepayments the company has received for delivery. Grain prices continue to be robust, providing ample incentive for growers to optimize yields along with the increasing demand and improved margin realization for upgraded nitrogen products. Terra’s management is evaluating projects to increase the upgrading capacity at several of their facilities including additional investments to their upgrading capacity that will enhance their strong market position within their operations and improve Terra’s long-term earnings capability.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Tuesday, February 05, 2008
BetterTrades looks at Hewitt Associates Inc.
Human resources services firm Hewitt Associates Inc. (HEW) announced Tuesday that the company’s fiscal 1Q earnings more than doubled due to narrowing losses in its business process outsourcing unit and income growth in its benefits outsourcing division. Net income for the quarter surged to $63.9M, or $0.59 per share, from $30.1M, or $0.27 per share, during the same period the previous year. Hewitt's revenues increased 10% to $819M. Analysts polled, on average, forecasted earnings of $0.39 per share for the quarter on revenues of $758M. Hewitt was able to narrow its losses in its human resources business process outsourcing unit to $27.3M during the quarter, from $42.2M during the final quarter in 2006. Consulting revenues increased 18%, and human resources business process outsourcing revenues advanced 11%. Benefits outsourcing revenue climbed 4% and income in the segment increased 52% in the first quarter, to $120.2M, compared with $78.8M in the prior-year quarter.
Hewitt Associates, Inc. provides human resource benefits, outsourcing, and consulting services in the United States, the United Kingdom, and internationally. It operates in three segments: Benefits Outsourcing, Human Resource Business Process Outsourcing (HR BPO), and Consulting. The Benefits Outsourcing segment offers health and welfare plan administration, defined contribution plan administration, and defined benefit plan administration services. The HR BPO segment offers talent management services, which include recruiting, learning and development, performance management, and succession planning; workforce management services that comprise compensation administration, total rewards, workforce administration, domestic relocation, leave management, and mobility; and core process management services, which include payroll services, benefits services, and payments services. The Consulting segment provides benefits consulting services, including retirement and financial management consulting, and health care consulting; and talent and organization consulting services. It provides an array of consulting and actuarial services covering the design, implementation, communication and operation of health and welfare, compensation, and retirement plans, as well as human resources programs and processes. The company was founded in 1940 and is based in Lincolnshire, Illinois.
Over the past several months, Hewitt Associates has been able to increase their company’s market share quite nicely. Since the company went public a little more than a year ago, shares have increased nearly 46% during such time. Going back as little as six months, right after the high volatility of the markets last summer, HEW shares were trading on a downturn at $29.50 a share with much of it based on the current market conditions. As August began, signs of a reversal for Hewitt started with the stock gaining 6.6% after they posted better-than-expected 3Q results. The company earned $47.5M, or $0.43 a share, on revenue of $742.3M. Analysts had expected earnings of $0.29 a share on revenue of $738.1M. From that point on, August through much of October, the company managed to raise their stocks price up to $35.80, a 20% increase in just over ten weeks.
With a slight downtrend in trading that started in late October, there would be more news to help boost stocks in the coming days. That news would be the release of the company’s 4Q earnings report. As the company released the numbers associated with the report, many were taken back by the company posting a 4Q loss. The loss totaled $265.6M, or $2.51 a share, but the positive news was that the company’s quarterly revenues increased by 6%, from $727.6M to $768.2M, beating Wall Street’s estimates by more than $18M. As for the losses, the total operating expenses grew to $1.05B from $685.2M. The current period's results included a $280M goodwill impairment charge, a $36M asset impairment charge mostly related to the human resources business process outsourcing business and other items. This event did little to discourage investors. The same day the company’s earnings report was released, shares of HEW jumped 6%, and the following day, shares added another 7% to trade at $36.80 a share. The following weeks and months would show that HEW could maintain a strong market share along with showing a strong fortitude to withstand rocky market conditions. Despite the high volatility of the markets in late January, Hewitt was able to steadily increase their stock’s price leading up to today’s earnings report. Along with their EPS report, Hewitt Associates proclaimed that their 2008 earnings should be above analysts’ expectations. Hewitt expects 2008 net income between $1.70 and $1.80 per share on mid-single digit revenue growth, while analysts surveyed predict a 2008 profit of $1.64 per share on sales of $3.05B. Along with a strong forecast, Hewitt is in the midst of a share repurchase program, and to date, the company has bought back 6.1M share and has currently purchased $205M of the projected $750M worth of shares, thus helping boost the stock’s price even further.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Hewitt Associates, Inc. provides human resource benefits, outsourcing, and consulting services in the United States, the United Kingdom, and internationally. It operates in three segments: Benefits Outsourcing, Human Resource Business Process Outsourcing (HR BPO), and Consulting. The Benefits Outsourcing segment offers health and welfare plan administration, defined contribution plan administration, and defined benefit plan administration services. The HR BPO segment offers talent management services, which include recruiting, learning and development, performance management, and succession planning; workforce management services that comprise compensation administration, total rewards, workforce administration, domestic relocation, leave management, and mobility; and core process management services, which include payroll services, benefits services, and payments services. The Consulting segment provides benefits consulting services, including retirement and financial management consulting, and health care consulting; and talent and organization consulting services. It provides an array of consulting and actuarial services covering the design, implementation, communication and operation of health and welfare, compensation, and retirement plans, as well as human resources programs and processes. The company was founded in 1940 and is based in Lincolnshire, Illinois.
Over the past several months, Hewitt Associates has been able to increase their company’s market share quite nicely. Since the company went public a little more than a year ago, shares have increased nearly 46% during such time. Going back as little as six months, right after the high volatility of the markets last summer, HEW shares were trading on a downturn at $29.50 a share with much of it based on the current market conditions. As August began, signs of a reversal for Hewitt started with the stock gaining 6.6% after they posted better-than-expected 3Q results. The company earned $47.5M, or $0.43 a share, on revenue of $742.3M. Analysts had expected earnings of $0.29 a share on revenue of $738.1M. From that point on, August through much of October, the company managed to raise their stocks price up to $35.80, a 20% increase in just over ten weeks.
With a slight downtrend in trading that started in late October, there would be more news to help boost stocks in the coming days. That news would be the release of the company’s 4Q earnings report. As the company released the numbers associated with the report, many were taken back by the company posting a 4Q loss. The loss totaled $265.6M, or $2.51 a share, but the positive news was that the company’s quarterly revenues increased by 6%, from $727.6M to $768.2M, beating Wall Street’s estimates by more than $18M. As for the losses, the total operating expenses grew to $1.05B from $685.2M. The current period's results included a $280M goodwill impairment charge, a $36M asset impairment charge mostly related to the human resources business process outsourcing business and other items. This event did little to discourage investors. The same day the company’s earnings report was released, shares of HEW jumped 6%, and the following day, shares added another 7% to trade at $36.80 a share. The following weeks and months would show that HEW could maintain a strong market share along with showing a strong fortitude to withstand rocky market conditions. Despite the high volatility of the markets in late January, Hewitt was able to steadily increase their stock’s price leading up to today’s earnings report. Along with their EPS report, Hewitt Associates proclaimed that their 2008 earnings should be above analysts’ expectations. Hewitt expects 2008 net income between $1.70 and $1.80 per share on mid-single digit revenue growth, while analysts surveyed predict a 2008 profit of $1.64 per share on sales of $3.05B. Along with a strong forecast, Hewitt is in the midst of a share repurchase program, and to date, the company has bought back 6.1M share and has currently purchased $205M of the projected $750M worth of shares, thus helping boost the stock’s price even further.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Monday, February 04, 2008
BetterTrades looks at Humana Inc.
Health insurer, Humana Inc. (HUM), announced today that the company posted a 57% jump in 4Q earnings from its surging government segment. Along with beating the Street’s projections, Humana has also raised their profit outlook for 2008. As for their earnings, Net income for the quarter increased to $243.2M, or $1.43 per share, from $155M, or $0.92 per share, a year ago. Analysts surveyed had expected profit of $1.32 per share on revenue of $6.22B. Fourth-quarter revenues advanced 12% to $6.34B, from $5.66B, with total premium and administrative services fees up 12% year-over-year driven by higher average Medicare Advantage membership. For the year, revenues jumped 18% to $25.3B. Medicare Advantage membership was 1.14 million at the end of last year, up 14% from a year ago and essentially unchanged from the end of September 2007. The Medicare Advantage plans offer comprehensive health coverage. The company said its Medicare Advantage premiums rose 22% to $2.8B in the quarter compared to a year ago, primarily due to higher average membership.
Humana, Inc. provides health insurance coverage and related services through various traditional and consumer-choice plans for employer groups, government-sponsored programs, and individuals in the United States. It operates in two segments, Government and Commercial. The Government segment consists of members enrolled in government-sponsored programs. These programs include Medicare, a federal program that provides hospital and medical insurance benefits to persons of age 65 and over, and some disabled persons under the age of 65; TRICARE, which provides health insurance coverage to the dependents of active duty military personnel and to retired military personnel and their dependents; and Medicaid, a federal program that enables the delivery of health care services primarily to low-income residents. The Commercial segment consists of members enrolled in products marketed to employer groups and individuals. Its products comprise Consumer-Choice products, including health maintenance organization products that provide prepaid health insurance coverage to its members through a network of independent primary care physicians, specialty physicians, and other health care providers; and preferred provider organization products, which are marketed primarily to employer groups and individuals; as well as offer administrative services only products to employers who self-insure their employee health plans. This segment also provides various specialty products, including dental, life, and short-term disability. The company has approximately 11.3 million members in medical benefit programs and approximately 1.9 million members in specialty products programs. The company was founded in 1964, currently employs more than 22,000 people and is headquartered in Louisville, Kentucky.
In 2007, Humana was able to increase their market share as the company boasted a strong growth in their stock’s price. During the full-year, HUM was able to increase their price by nearly 43%. Over the past six months is when Humana was able to make the bulk of their run upwards. Since August, when the stock was trading between $61 and $68 a share, with the stock dipping to just above $58 mid-month, it is here that Humana’s upswing would begin to take shape. Two acquisitions that Humana made during the last half of 2007, proved to be essential to the company’s future success. First was the purchase of CompBenefits Corporation, an Atlanta, Ga.-based dental and vision benefits company, for cash consideration of $360M, which helped bring in revenues and strengthen their bottom line for the 3Q of 2007. The second deal was the buyout of the insurance holding company KMG America for $137.7M. The benefits of this acquisition resulted in the gaining of more than one million group and individual members nationwide, adding $163M in revenues for the 3Q. In addition to acquisitions, Human was also able to post outstanding earnings’ numbers. For the 3Q Humana stated that net income for the quarter skyrocketed 90%, from $159M to $302M, or $0.95 to $1.78 a share, from a year ago. These numbers also included a 12% increase in total sales of $6.3B. Since reporting their earnings in October, Humana’s shares gained more than 19% in price, leading up to the company establishing a new 52-week high of $88.10 in mid-January.
Other key incentives that Humana brings to the table, for potential investors, is that of their financial standing. The company is able to provide for positive margins, both gross, 19%, and operating, 5%, which are in-line with industry averages. Where Humana excels the most at, is in quarterly revenue growth, 12%, which outpaces all of their big-named competitors. In addition to revenue, Humana was able to post a 90% quarterly earnings growth mentioned in their report earlier today. Increases in revenues, margins and earnings can all be in direct correlation with the company’s expanding consumer base. Included in the expansion are expanded offerings of Medicare in the Colorado, Idaho, Texas, and Utah areas, along with the launching of Health Challenges in the Chicago and Tampa Bay areas. The Humana Health Challenge, which invites anyone to make a change in their health or lifestyle whether or not they belong to a Humana health plan. The challenge will feature health tips and tools and will enable people to link to various health-related Web sites and newsletters containing news and information provided by top medical professionals and healthcare experts. As Humana continues to provide outstanding services to their customers, along with maintaining a profitable bottom line, there appears to be no reason why the company shouldn’t continue to make strong strides within the market place. Looking ahead, the company has also been able to raise its earnings per share outlook for fiscal 2008 to reflect a lower tax rate, which they are now forecasting profits of $5.35 to $5.55 per share on revenue of $28B to $30B, an increase of 9% to 13% over 2007 EPS. Just another sign of how established the company is inside the insurance industry.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Humana, Inc. provides health insurance coverage and related services through various traditional and consumer-choice plans for employer groups, government-sponsored programs, and individuals in the United States. It operates in two segments, Government and Commercial. The Government segment consists of members enrolled in government-sponsored programs. These programs include Medicare, a federal program that provides hospital and medical insurance benefits to persons of age 65 and over, and some disabled persons under the age of 65; TRICARE, which provides health insurance coverage to the dependents of active duty military personnel and to retired military personnel and their dependents; and Medicaid, a federal program that enables the delivery of health care services primarily to low-income residents. The Commercial segment consists of members enrolled in products marketed to employer groups and individuals. Its products comprise Consumer-Choice products, including health maintenance organization products that provide prepaid health insurance coverage to its members through a network of independent primary care physicians, specialty physicians, and other health care providers; and preferred provider organization products, which are marketed primarily to employer groups and individuals; as well as offer administrative services only products to employers who self-insure their employee health plans. This segment also provides various specialty products, including dental, life, and short-term disability. The company has approximately 11.3 million members in medical benefit programs and approximately 1.9 million members in specialty products programs. The company was founded in 1964, currently employs more than 22,000 people and is headquartered in Louisville, Kentucky.
In 2007, Humana was able to increase their market share as the company boasted a strong growth in their stock’s price. During the full-year, HUM was able to increase their price by nearly 43%. Over the past six months is when Humana was able to make the bulk of their run upwards. Since August, when the stock was trading between $61 and $68 a share, with the stock dipping to just above $58 mid-month, it is here that Humana’s upswing would begin to take shape. Two acquisitions that Humana made during the last half of 2007, proved to be essential to the company’s future success. First was the purchase of CompBenefits Corporation, an Atlanta, Ga.-based dental and vision benefits company, for cash consideration of $360M, which helped bring in revenues and strengthen their bottom line for the 3Q of 2007. The second deal was the buyout of the insurance holding company KMG America for $137.7M. The benefits of this acquisition resulted in the gaining of more than one million group and individual members nationwide, adding $163M in revenues for the 3Q. In addition to acquisitions, Human was also able to post outstanding earnings’ numbers. For the 3Q Humana stated that net income for the quarter skyrocketed 90%, from $159M to $302M, or $0.95 to $1.78 a share, from a year ago. These numbers also included a 12% increase in total sales of $6.3B. Since reporting their earnings in October, Humana’s shares gained more than 19% in price, leading up to the company establishing a new 52-week high of $88.10 in mid-January.
Other key incentives that Humana brings to the table, for potential investors, is that of their financial standing. The company is able to provide for positive margins, both gross, 19%, and operating, 5%, which are in-line with industry averages. Where Humana excels the most at, is in quarterly revenue growth, 12%, which outpaces all of their big-named competitors. In addition to revenue, Humana was able to post a 90% quarterly earnings growth mentioned in their report earlier today. Increases in revenues, margins and earnings can all be in direct correlation with the company’s expanding consumer base. Included in the expansion are expanded offerings of Medicare in the Colorado, Idaho, Texas, and Utah areas, along with the launching of Health Challenges in the Chicago and Tampa Bay areas. The Humana Health Challenge, which invites anyone to make a change in their health or lifestyle whether or not they belong to a Humana health plan. The challenge will feature health tips and tools and will enable people to link to various health-related Web sites and newsletters containing news and information provided by top medical professionals and healthcare experts. As Humana continues to provide outstanding services to their customers, along with maintaining a profitable bottom line, there appears to be no reason why the company shouldn’t continue to make strong strides within the market place. Looking ahead, the company has also been able to raise its earnings per share outlook for fiscal 2008 to reflect a lower tax rate, which they are now forecasting profits of $5.35 to $5.55 per share on revenue of $28B to $30B, an increase of 9% to 13% over 2007 EPS. Just another sign of how established the company is inside the insurance industry.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Friday, February 01, 2008
BetterTrades looks at Arch Coal Inc.
Arch Coal, Inc. (ACI) today reported fourth quarter 2007 net income available to common shareholders of $81.3M, or $0.56 per fully diluted share, on income from operations of $75.1M and adjusted earnings before interest, taxes, depreciation and amortization, EBITDA, of $142.9M. In the 4Q of 2006, the company earned net income available to common shareholders of $79.5M, or $0.55 per fully diluted share, on income from operations of $60.5M and adjusted EBITDA of $117.7M. During 2007, Arch Coal achieved their second-best year of earnings in the company's 10-year history as a public corporation. For the full year 2007, Arch earned net income available to common shareholders of $174.7M, or $1.21 per fully diluted share, compared with $260.6M, or $1.80 per fully diluted share, for full year 2006. The company also earned $471.7M of adjusted EBITDA in 2007, compared with $545.0M in 2006, when market conditions were more favorable.
Arch Coal, Inc. engages in mining, processing, and marketing bituminous and sub-bituminous coal with low sulfur content in the United States. As of December 31, 2006, the company operated 21 active mines, and owned or controlled approximately 2.9 billion tons of proven and probable recoverable reserves. Through its national network of mines, Arch supplies the fuel for approximately 6% of the electricity generated in the United States. Its mines are located in southern West Virginia, eastern Kentucky, Virginia, Wyoming, Colorado, and Utah. Arch Coal sells its coal to producers of electric power, steel producers, and industrial facilities. The company, formerly known as Arch Mineral Corporation, was founded in 1969, currently employs more than 4,000 people and is headquartered in St. Louis, Missouri.
Over the past six months or so, Arch Coal has been able to put together a solid run in their company’s stock price, which saw their price increase almost 46% from August through November. During which time, the company established a new 52-week trading high of $41.15 a share. November’s trading brought another downturn for the company which was related directly to the market woes of credit problems with the sub-prime rates. Once the stock rebounded from their downturn, ASI was able to make another price run which culminated in the company setting another new 52-week high of $45.69. The last month of the year for Arch, saw the stock rise more than 21% in December alone after the big run-up the coal industry had at the end of the year. The start of the New Year was a major downturn for the company, as its stock lost nearly 30% within the first two weeks of January, as investors were steadily taking profits out after the sector managed a 38% increase in the 4Q of 2007.
Looking ahead, ACI is optimistic that domestic coal markets will continue to improve in 2008, driven by the strength of international coal markets. The company also expects to deliver a record performance in 2008, with meaningful expansion in operating margins, earnings per share and EBITDA. Arch is expecting fully diluted earnings per share to be between $2.00 and $2.50. Adjusted EBITDA is expected to be in the $680 million to $790 million range. Sales volumes from company controlled operations are expected to be between 135 million to 140 million tons, excluding all purchased coal from third parties. Arch is confident on these figures due to the fact that U.S. coal markets are dynamically responding to the scarcity of coal in the global landscape. With severe supply constraints in traditional coal export nations, including flooding in Australia, power outages in South Africa and coal shortages in China and India, Arch believes that U.S. coal increasingly will be valued for purposes of supply diversification. In fact, Arch estimates that U.S. coal exports have grown by close to 10 million tons in 2007, and conservatively expects another 20-million-ton increase in 2008.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Arch Coal, Inc. engages in mining, processing, and marketing bituminous and sub-bituminous coal with low sulfur content in the United States. As of December 31, 2006, the company operated 21 active mines, and owned or controlled approximately 2.9 billion tons of proven and probable recoverable reserves. Through its national network of mines, Arch supplies the fuel for approximately 6% of the electricity generated in the United States. Its mines are located in southern West Virginia, eastern Kentucky, Virginia, Wyoming, Colorado, and Utah. Arch Coal sells its coal to producers of electric power, steel producers, and industrial facilities. The company, formerly known as Arch Mineral Corporation, was founded in 1969, currently employs more than 4,000 people and is headquartered in St. Louis, Missouri.
Over the past six months or so, Arch Coal has been able to put together a solid run in their company’s stock price, which saw their price increase almost 46% from August through November. During which time, the company established a new 52-week trading high of $41.15 a share. November’s trading brought another downturn for the company which was related directly to the market woes of credit problems with the sub-prime rates. Once the stock rebounded from their downturn, ASI was able to make another price run which culminated in the company setting another new 52-week high of $45.69. The last month of the year for Arch, saw the stock rise more than 21% in December alone after the big run-up the coal industry had at the end of the year. The start of the New Year was a major downturn for the company, as its stock lost nearly 30% within the first two weeks of January, as investors were steadily taking profits out after the sector managed a 38% increase in the 4Q of 2007.
Looking ahead, ACI is optimistic that domestic coal markets will continue to improve in 2008, driven by the strength of international coal markets. The company also expects to deliver a record performance in 2008, with meaningful expansion in operating margins, earnings per share and EBITDA. Arch is expecting fully diluted earnings per share to be between $2.00 and $2.50. Adjusted EBITDA is expected to be in the $680 million to $790 million range. Sales volumes from company controlled operations are expected to be between 135 million to 140 million tons, excluding all purchased coal from third parties. Arch is confident on these figures due to the fact that U.S. coal markets are dynamically responding to the scarcity of coal in the global landscape. With severe supply constraints in traditional coal export nations, including flooding in Australia, power outages in South Africa and coal shortages in China and India, Arch believes that U.S. coal increasingly will be valued for purposes of supply diversification. In fact, Arch estimates that U.S. coal exports have grown by close to 10 million tons in 2007, and conservatively expects another 20-million-ton increase in 2008.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
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