On Thursday, Marriott International Inc. (NYSE: MAR) said its third-quarter earnings fell 28% and warned of deteriorating conditions for 2009, and Constellation Brands Inc. (NYSE: STZ) posted a loss of nearly $23 million in its fiscal second quarter due to charges to reduce operations in Australia.
For the quarter ended Sept. 5, Marriott's net income slipped to $94 million, or 26 cents per share. Excluding a $29 million tax planning charge, adjusted income from continuing operations totaled $123 million, or 34 cents per share. Revenue rose 1% to $2.96 billion.
Analysts surveyed by Thomson Reuters had expected earnings of 32 cents per share on revenue of $2.95 billion.
Marriott said its revenue per available room declined in North America, and timeshare sales evaporated due to the tight credit market and cutbacks in business and consumer spending.
The Bethesda, Md.-based hotel company lowered its full-year 2008 earnings guidance to $1.62 to $1.68 per share, from its previous guidance of $1.77 to $1.88 per share. Analysts had forecast 2008 profit of $1.78 per share. For 2009, Marriott said the outlook is uncertain, but it expects the environment to remain challenging. Marriott said it will focus on cash flow by trimming investments and share repurchases.
Marriott shares fell $1.34, or 5.3%, to $23.74 Thursday. The stock price is down 30.5% year to date.
Even if the national headlines weren't already providing enough focus on the economy, plenty of economic data is due out as the month and the quarter wind down. U.S. economic data scheduled to be released this week include:
Constellation Brands (NYSE: STZ) produces and markets more than 250 brands of wine, spirits and beer, in about 150 countries. The Wines division, the largest maker of wine by volume in the world, is responsible for such brands as Robert Mondavi, Inniskillin, Simi, Arbor Mist and Blackthorn (cider). The Spirits division distills such brands as Black Velvet, Chi-Chi's, Fleischmann's, Canadian LTD and Mr. Boston. The Imports division has the right to import, market, and sell Corona Extra, Corona Light, Tsingtao, Modelo Especial, Pacifico and St. Pauli Girl. The firm distributes its products through wholesalers, government beverage control agencies and various retailers. Diageo (NYSE: DEO) and Fortune Brands (NYSE: FO) are major competitors.
The company pleased investors earlier in the week, when it reported fiscal Q1 EPS of 34 cents and revenues of $931.8 million. Analysts had been looking for 31 cents and $906.1 million. The highlight of the quarter was a 24% year over year rise in branded wine net sales. Management also guided FY09 EPS to $1.68-$1.76, versus consensus of $1.70.
The bulls got to lead the first day of the quarter, although we would note that if today was the norm that trading volatility isn't slowing down regardless of the direction. Oil rose again toward session highs on tensions and the usual myriad of reasons we cite for oil rising (yes, it's that routine). Here are today's unofficial closing levels:
We actually saw many financial sector upgrades from research firms today, which sent many of the corresponding shares higher in what feels like a "for once" statement. We would caution that later in the day an analyst report did note other banks would need more capital (again).
Given that it's the end of the quarter, as well as the U.S. Independence Day holiday on Friday, next week looks to be pretty quiet as far as earnings go. But there are a few things of note.
Tax preparation company H&R Block (NYSE: HRB) is scheduled to report its fiscal fourth-quarter results Monday after market close. Analysts surveyed by Thomson Financial on average expect the company to report net income of $2.03 per share on revenue of $2.5 billion. That's an increase of more than 10% over EPS a year ago. H&R Block has tended to fall short of estimates recently, and rival Jackson Hewitt (NYSE: JTX) missed its EPS estimates earlier this month. Still, analysts recommend buying HRB. Shares have risen 12.1% year to date, and the long-term EPS growth forecast is 11.7%.
Alcoholic beverage maker and distributor Constellation Brands (NYSE: STZ) is scheduled to report its fiscal first-quarter results Tuesday morning. Analysts are looking for earnings of 31 cents per share, up 32.3% from the same period of the previous year, on revenue of $906.1 million. Constellation has tended toward positive surprises recently, by 8 cents, or 33.8%, in the previous quarter. However, analysts recommend holding STZ and have for more than 90 days., even though the long-term EPS growth forecast is 12.3%. Although shares have risen 9.0% in the past three months, they are down 16.8% year to date.
Phoenix-based education company Apollo Group (NASDAQ: APOL) is scheduled to report its fiscal third-quarter results late Tuesday. Analysts on average are expecting the company to report net income of 78 cents per share -- the same as in the year ago period -- on revenue of $806.9 million. When it comes to meeting expectations, lately Apollo has a mixed record -- it fell short by 11 cents, or more than 20%, in the previous quarter. Analysts recommend buying APOL and have for more than 90 days. The long-term EPS growth forecast is 14.0%. Though shares have risen 4.2% in the past three months, they are down 31.6% year to date.
A friend of mine recently started a business and she is joined by her sister. So far, things are going fairly well. But, my friend realizes there are lots of potential problems when mixing family with business.
Well, this week, the founder of one of the most famous family businesses -- Robert Mondavi -- died this week. He was 94.
Mondavi launched his winery in 1966 and turned it into a global powerhouse. While he was innovative (by adding new computer technologies), he also realized there were some key European techniques that would be key for his success (such as stainless-steel fermentation tanks). He was also a marketing genius (hey, establishing a winery in California was certainly gutsy).
Actually, in 1943, Robert wanted his father to purchase the Charles Krug Winery. He agreed – so long as Robert would run it with his brother, Peter. The operation was in bad shape. But the brothers worked quickly to improve things (for example, they had the smart idea of having a tasting room for visitors).
For the quarter, Constellation Brands said that it swung to a loss of $831.9 million, or $3.90 per share, hurt by a considerable charge related to its Australia and U.K. businesses. Included in the company's numbers was an impairment charge of $807.1 million. Excluding that, the world's biggest winemaker's earnings would have been 34 cents per share. Analysts, on average, were expecting earnings of 25 cents per share for the quarter.
Constellation did post a decline in its fourth-quarter revenue, which slipped 23% to $884.4, down from $1.14 billion a year earlier. The drop in revenue came as the company had to face lower wine sales amid a weak consumer environment. However, Constellation Brands was able to beat analysts' predictions for quarterly revenue of $877.4 million, according to Thomson Financial.
The winemaker had a pretty difficult second half in 2007, as it had to face continued fears over a possible recession. The slumping housing market and credit crises brought a slowdown in consumer spending whose effects were reflected in the company's earnings. Regardless, Constellation Brands' positive earnings figures seem to be enough to enthuse investors and pull the shares up over 2.8% in early trading.
Other companies reporting quarterly results on Tuesday included the following:
Constellation Brands Inc. (NYSE: STZ): Third-quarter profit rose 11 percent, lifted by strong liquor sales, a growth in North American wine business, and acquisition of Svedka vodka. Profit for the quarter ended November 30 rose to $119.6 million, or 55 cents a share, from $107.8 million, or 45 cents a share, a year earlier. Analysts polled by Thomson Financial had expected 55 cents per share on revenue of $1.04 billion. However, Constellation lowered its full-year profit outlook, in part due to costs from its recent acquisition of Fortune Brands Inc.
Acuity Brands Inc. (NYSE: AYI): Fiscal 2008 first-quarter earnings fell 7 percent, as a restructuring charge offset higher pricing and increased sales. The company earned $31.1 million, or 72 cents per share, compared with $33.6 million, or 77 cents per share, in the same quarter a year ago. Analysts had expected profit of 82 cents per share on revenue of $500.6 million, according to analysts polled by Thomson Financial. Revenue increased 7% to $508.9 million, from $477.6 million a year ago. The special charge was related to planned actions to streamline operations as a result of the spin-off of Zep Inc.
Homebuilder KB Home has been hit hard by the housing slump, reporting a loss of $6.19 per share for the third quarter, way off the 75-cent loss estimated by analysts surveyed by Thomson Financial. For the current quarter, analysts expect a loss of $1.08 per share, and a loss of $8.60 for the full year.
While analysts don't expect a profitable quarter in 2008, the narrower losses give KB Home a forecast growth rate of 68.9 percent for the next year, compared to -248.3 percent for the home construction industry average. But the analysts' consensus recommendation is to hold KB Home. The share price has tumbled from its 52-week high of $56.08 last February, and reached a 3-year low of $18.36 on Friday.
For news about KB Home that could influence the earnings results, check out BloggingStocks' KB Home coverage.
MOST NOTEWORTHY: Cognos, MSC Industrial Direct, Fastenal Company, Royal Kpn and Koppers Holdings were today's noteworthy downgrades:
Cognos (NASDAQ: COGN) was downgraded to Neutral from Buy at Goldman and at Broadpoint following the acquisition by IBM (NYSE: IBM).
Baird downgraded MSC Industrial Direct (NYSE: MSM) and Fastenal Company (NASDAQ: FAST) to Neutral from Outperform, as they expect the difficult U.S. manufacturing environment to constrain shares.
Credit Suisse lowered its rating on Royal Kpn (NYSE: KPN) to Neutral from Outperform based on Getronics integration risk and slowing mobile earnings momentum.
Koppers Holdings (NYSE: KOP) was downgraded to Buy from Aggressive Buy at KeyBanc based on valuation and concerns on 1H08 comps.
OTHER DOWNGRADES:
Goldman removed Foster Wheeler (NASDAQ: FWLT) from its Conviction Buy List.
For the quarter ended Sept. 5, Marriott's 
Even if the national headlines weren't already providing enough focus on the economy, plenty of economic data is due out as the month and the quarter wind down. U.S. economic data scheduled to be released this week include:
A friend of mine recently started a business and she is joined by her sister. So far, things are going fairly well. But, my friend realizes there are lots of potential problems when mixing family with business.
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Before the bell: Wall Street headed higher; automakers, retailers in focus
Waiting for the other shoe to drop: The looming credit crisis
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