Erie Indemnity Company reported operating earnings of $0.67 for the fourth quarter, $0.14 above our estimate of $0.53, as a modest margin upside and higher earnings from limited partnerships drove the earnings out-performance. The franchise continues to have great top-line momentum and an enviable business model, and we continue to see longterm upside in the name, but near-term results are likely to be choppy as the company reinvests for the future, and the valuation remains stretched. We are increasing our 2014 EPS estimate from $3.20 to $3.30, up 8% versus 2013, based on 9% revenue growth and modest margin expansion,…
Author: Jessica Swanson
Urban Outfitters’ fourth-quarter EPS rose 7%, to $0.59, ahead of consensus of $0.55 and our estimate of $0.54, largely due to a $0.04 benefit from a lower-than-expected tax rate. With sales already reported, a bright spot was gross margin, which rose 10 basis points, to 36.7% (versus consensus expectations for a 20-basis-point decline, to 36.4%) as a significant improvement in Anthropologie’s markdown rate (merchandise margins were close to an all-time high for the fourth quarter) was partly offset by increased markdowns at Urban Outfitters, deleveraging on occupancy, and preopening expenses related to three large New York City Urban Outfitters stores…
AstraZeneca reported strong fourth-quarter results that exceeded both our expectations and those of consensus, partly driven by a low tax rate. However, the company also issued 2013 guidance of a mid-to-high singledigit decline in sales with a faster decline in earnings, which is slightly lower than projected declines for sales and earnings. While AstraZeneca is launching several potential blockbusters with Onglyza (diabetes), Brilinta (cardiovascular) and Forxiga (diabetes), patent losses will likely cause overall sales to fall more than 5% in 2013. We expect this trend to continue for several years as the firm faces one of the longest patent cliffs…
Taylor Morrison delivered solid second-quarter results after factoring out IPO-related expenses and settlement of tax matters. The home builder reported adjusted earnings per share of $0.27 on revenue of $509 million (up 60% year over year). Higher mortgages rates’ impact on home buyer activity unsurprisingly dominated the conference call discussion, and the company was emphatic that it has not seen an impact to date. Investors were encouraged by this commentary and believe this speaks to the company’s higher-end customer base (its U.S. average selling price was $381,000 versus $252,000 for D.R. Horton), which is less sensitive to higher rates than…
Ixia (XXIA) shares declined Friday after the networking equipment company said it received a new notice from the Nasdaq stock exchange that its stock no longer complies with listing requirements because it has not filed its 2013 annual report on time. The company earlier this month said an internal audit initiated after XXIA’s former CEO quit in a flap over his credentials and other personal details also identified several mistakes in the timing of when certain revenues were recognized in recent quarters. The company’s chief financial officer also has since quit and XXIA said it was working quickly to determine…
Shares in United Rentals (URI) climbed to a record peak on Monday after the equipment rental company said over the weekend it has signed an agreement to acquire specialty pump rental firm National Pump in a $780 million cash-and-stock transaction. URI was up last up 4.1% at $92.11 with the session and record peak at $92.79. The stock now has 52-week range of $44.85 to $92.79. After the acquisition closes National Pump will become part of the United Rentals Specialty division. The transaction includes the acquisition of general rental business GulfCo and the payment of $765 million in cash and…
BHP Billiton reported strong fourth-quarter production with iron ore a highlight, sales volumes up 21%. The performance reflects successful commissioning of infrastructure for the Western Australian iron ore (WAIO) Iinner Harbour Expansion, and de-stocking of mine and port inventory. The result was considerably ahead of forecast and sees fiscal 2014 WAIO production guidance increased to 217 million tonnes (100% basis), from 200 million tonnes in fiscal 2013. Despite this, iron ore is not all encompassing at BHP, like it is for Rio Tinto, and a weaker-than-expected fourth-quarter petroleum performance means our group fiscal 2013 earnings forecast is little changed at…
Tyson Foods reported strong third-quarter results, as easing input cost pressures and strong chicken demand are allowing the company to reap the full benefits of operational improvements. While reported revenue (up 5%) was in line with our expectations, beef segment profitability (segment margin came in at 3.1%, versus 2.0% reported in the previous year and a loss in the second quarter) was better than anticipated. Analysts think the strong beef performance reflects solid execution coupled with reduced industry supply (because of a competitor’s plant closure). Chicken segment performance was also very strong, with sales increasing more than 10% and segment…
Michelin reported first-half diluted earnings per share (EPS) adjusted for one-time items of EUR 3.91, down EUR 1.02 from the same period a year ago. Management confirmed its full-year guidance that operating income before special items will be stable year over- year, free cash positive after approximately EUR 2.0 billion in capital expenditures, and greater than 10% return on capital employed. Our EUR 80 fair value estimate is less sanguine than management’s guidance. Management is expecting greater decline in raw rubber commodity pricing, improved product mix, and better operating leverage in the second-half of 2013 with an upturn in demand.…
New Jersey Resources reported fiscal third-quarter 2013 earnings adjusted for non-cash items of $0.23 per share, more than double adjusted EPS of $0.10 for the prior year period. The improvement was driven entirely by a swing from a net loss to positive earnings at the company’s energy services subsidiary, where colder weather and greater volatility in the natural gas market created margin opportunity for wholesale gas management. The relative strength in wholesale results offset a modest decline in NJNG’s regulated earnings, as lost margin from volumes knocked out by Sandy damage and higher operating costs dropped quarterly earnings 27%. NJR…
Colfax experienced continued weak demand levels during the second quarter, consistent with what we have heard from other diversified industrial companies’ results. Year-over-year organic revenue was flat though represented a positive inflection from 3% down quarters the past two quarters. Margin gains were impressive, with year-over-year adjusted operating margin expansion of 160 basis points (to 10.9%), up from a 120-basis-point expansion in the prior quarter. Analysts have raised operating margin assumptions at fabrication technology, or ESAB, by 50 basis points across our forecast years (to 12% mid-cycle) given the solid progress to date in applying its Colfax Business System to…
Mosaic reported fourth-quarter and full-year results that met our expectations, and we don’t expect to change our fair value estimate or moat rating based on the quarterly performance. Sales volumes for potash (up 26% year over year) and phosphate (up 2% year over year) both increased in the quarter, but were more than offset by price declines. Phosphate prices sank 8% compared with the prior-year period, and potash prices dipped 21% year over year. Altogether, Mosaic’s revenue dropped 4.5%. Improved operating rates compared with the prior-year period helped costs per metric ton to decline for both phosphate and potash. But…