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The week in preview: Have consumers turned to comfort food and used cars?

While the earnings crunch for this quarter is all but over, there is still plenty of action in the earnings arena this coming week. For instance, analysts surveyed by Thomson Financial are expecting America's Car Mart Inc. (NASDAQ: CRMT) and Campbell Soup Co. (NYSE: CPB) to be among this week's top earnings gainers.

Bentonville, Ark.-based America's Car Mart is expected to post net income of 38 cents per share (up 52.6% from the same period a year ago) on revenue of $73.8 million (up 25.8%). The used car dealer chain has tended in recent quarters toward positive surprises -- by 21 cents per share, or 73.5%, in the previous quarter. The long-term EPS growth forecast is 15%, about the same as the S&P 500. The consensus recommendation of analysts is to buy CRMT.

Campell is tentatively scheduled to report this week, and the world's biggest soup maker is expected to post net income of 25 cents per share (up 44.0% from a year ago) on revenue of $1.7 billion (up 7.5%). The Camden, N.J.-based company has just missed earnings estimates in the past three quarters. Its long-term EPS growth forecast is 7.5%, which is less than the industry average, but about the same as rivals Kraft Foods (NYSE: KFT) and Heinz (NYSE: HNZ). The analysts' consensus recommendation is currently to buy Campbell.

Other anticipated double-digit earnings gainers scheduled to report this week include brand name apparel maker Guess Inc. (NYSE: GES), mining equipment maker Joy Global (NASDAQ: JOYG), and chip maker National Semiconductor (NYSE: NSM). And Take-Two Interactive Software (NASDAQ: TTWO) is expected to swing to a profit.

Continue reading The week in preview: Have consumers turned to comfort food and used cars?

H&R Block rocks expectations for its fourth quarter


H&R Block (NYSE: HRB), whose colleagues include Intuit (NASDAQ: INTU) and Jackson Hewitt (NYSE: JTX), reported Q4 and full-year earnings on Monday. The numbers looked pretty good to me. For Q4, revenues increased 11% to $2.6 billion and earnings per diluted share from continuing operations increased 17% to $2.11. According to this article, analysts' expectations were beat by $0.08. For the full year, the top line expanded by 10%, coming in at $4.4 billion. Earnings per diluted share from continuing operations jumped 21% to $1.39.

The tax specialist said it worked with 23.5 million clients, the most ever in its corporate history. That's a nice indication of health for the company, I suppose, but here's a better one. The board decided to juice the dividend. The annual payment will now be $0.60 per share, translating to a 5% increase. Okay, 5% isn't too exciting, I'll grant you, but H&R Block has now increased its payments to shareholders every year for over a decade.

But, as the company stated in its release, although it intends on repurchasing shares over the next few years, it will remain "particularly disciplined" about the subject in the next fiscal year. Essentially, that means shareholders should not expect a lot of share repurchases for a while. H&R Block is reacting to the fact that it is still rebooting itself after being victimized by the subprime mortgage crisis. I'd rather hear a more aggressive stance in terms of buyback plans, but I'd say there is prudent motive in such posture given the company's state.

Continue reading H&R Block rocks expectations for its fourth quarter

The week in preview: End of the quarter earnings

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.

Continue reading The week in preview: End of the quarter earnings

Earnings expectations: Take-Two, Lululemon, Williams-Sonoma, Toll Bros. and others

Here's a peek at what analysts surveyed by Thomson Financial are expecting from companies scheduled to report quarterly results in the first week of June, 2008.

The following companies are expected to post earnings growth, compared to the same period in the previous year:

Continue reading Earnings expectations: Take-Two, Lululemon, Williams-Sonoma, Toll Bros. and others

Earnings highlights: Blockbuster, Costco, H&R Block, Walgreen, Saks and others

Here are some highlights from this past week's earnings coverage from BloggingStocks:

Also, see Timothy Sykes's take on Warren Buffett's annual letter to Berkshire Hathaway (NYSE: BRK.A) shareholders. Zac Bissonnette is interested in where earnings actually come from. And Saks, Costco, and other retailers saw stronger February same-store sales despite recession concerns, but JC Penney Co. (NYSE: JCP) didn't feel the love.

Upcoming results to watch for include Kroger Co. (NYSE: KR), Boston Beer Co. (NYSE: SAM), J. Crew Group Inc. (NYSE: JCG), Jones Soda Co. (NASDAQ: JSDA), Blackstone Group (NYSE: BX), and Men's Wearhouse Inc. (NYSE: MW).

Visit AOL Money & Finance for more earnings coverage.

Analyst downgrades: Thornburg Mortgage, Whirlpool, Jackson Hewitt

MOST NOTEWORTHY: Thornburg Mortgage, Whirlpool and Jackson Hewitt were today's noteworthy downgrades:
  • Jefferies downgraded shares of Thornburg Mortgage (NYSE: TMA) to Hold from Buy to reflect the ongoing dislocation of the mortgage markets and lowered their target to $3.75 from $14. While they believe Thornburg will probably survive its current liquidity crisis, they think the company's capital structure will be impaired further.
  • JP Morgan downgraded Whirlpool (NYSE: WHR) to Underweight from Neutral, citing valuation, higher steel prices, the difficult macro environment and competition.
  • Stephens cut Jackson Hewitt (NYSE: JTX) to Equal Weight from Overweight to reflect the company's recent results and concerns over the issues that have impacted the basic business.
OTHER DOWNGRADES:
  • Merrill lowered Bank of Montreal (NYSE: BMO) to Sell from Neutral.
  • Lehman downgraded PDL BioPharma (NASDAQ: PDLI) to Equal Weight from Overweight.
  • Friedman Billings downgraded Tessera (NASDAQ: TSRA) to Market Perform from Outperform.

Jackson Hewitt tumbles on profit decline

So far, tax season as not been kind to the number two tax preparer in the U.S., Jackson Hewitt Tax Service Inc. (NYSE: JTX). A slow start to the season led to a sharp decline in fiscal third-quarter earnings, the company reported today. Net income in the quarter ended January 31 fell 34% to $18.2 million, or 61 cents per share, from the year-ago period. Revenue was down 15% to $97.6 million. Analysts surveyed by Thomson Financial had expected profit of 99 cents per share on revenue of $118.4 million.

Jackson Hewitt shares dropped more than 30% on Tuesday, reaching a new multi-year low of $13.51, and closed at $13.68.

The leading U.S. tax preparer, H&R Block Inc. (NYSE: HRB), is scheduled to report fiscal third-quarter results tomorrow. It has missed earnings estimates in three of the past four quarters. For the current quarter, analysts polled by Thomson Financial expect earnings of 6 cents per share, compared to 8 cents in the year-ago quarter.

H&R Block's earnings per share growth forecast for this year is 19.5%, better than the industry average of 13.7%, as well as Jackson Hewitt's 16.3%. The analysts' consensus recommendation is to buy HRB. Shares have risen from the 52-week low of $16.89 in January, but today continued their recent slide to close at $17.82.

Analyst downgrades: NVS, AIG, DEO and BEAS

MOST NOTEWORTHY: Novartis, AIG, Diageo, and BEA Systems were today's noteworthy downgrades:
  • HSBC downgraded Novartis (NYSE: NVS) to Underweight from Neutral, as they believe the company's mid-single digit pharma sales growth is not sustainable.
  • AIG (NYSE: AIG) was downgraded to Market Perform from Outperform by Keefe Bruyette due to their concerns about the company's deteriorating profit trends.
  • Diageo (NYSE: DEO) was lowered to Neutral from Buy by Goldman Sachs to reflect a lack of near-term catalysts.
  • Deutsche Bank downgraded BEA Systems (NASDAQ: BEAS) to Hold from Buy, as they believe it is likely that the acquisition will close in April.
OTHER DOWNGRADES:

Option update: Volatility levels for tax preparers HRB, JTX

H&R Block (NYSE: HRB) closed at $18.47 Tuesday.

Soleil Securities has a Buy rating on HRB.

HRB overall option implied volatility of 45 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Jackson Hewitt (NYSE: JTX) closed Tuesday at $21.65, near a 30-month low.

Soleil Securities has a Hold rating with an $18 price target on JTX.

JTX overall option implied volatility of 59 is above its 26-week average of 43 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Investing in New Jersey: Jackson Hewett (JTX), Cognizant (CTSH) and others

Its location among the mid Atlantic states has made New Jersey a transportation hub, a manufacturing and commerce center, and a source of plenty of investment opportunities. Twenty-four Fortune 500 companies are headquartered there. And four companies from New Jersey made Fortune's 2007 list of the fastest growing companies in the U.S.: Cognizant Technology Solutions (NASDAQ: CTSH), Celgene Corp. (NASDAQ: CELG), inVentiv Health Inc. (NASDAQ: VTIV), and Jackson Hewitt Tax Service Inc. (NYSE: JTX).

Cognizant has been on Fortune's list of fastest growing companies for the past five years. This Teaneck-based member of the S&P 500 is a global IT services firm with clients in the health care, financial services, and manufacturing industries. Cognizant's three-year annual revenue growth rate was 56 percent; its three-year annual earnings per share growth rate was 55 percent. The consensus of analysts surveyed by Thomson Financial is that Cognizant is a buy, and the company has beat Wall Street expectations for the past four quarters. The share price of $85.79 at close on Friday is up from the 52-week low of $67.60 in September. The price has risen since Cognizant announced a stock split and share repurchase program in September, and the Motley Fool has since dubbed Cognizant a hypergrowth stock.

Summit-based Celgene is a biopharmaceuticals firm involved in cancer treatment and stem cell research. Its three-year annual revenue growth rate was 48 percent; its three-year annual earnings per share growth rate was 33 percent. The consensus of analysts surveyed by Thomson Financial is that Celgene is a buy. The share price reached a 52-week high of $72.91 on Friday. The Motley Fool recognized Celgene for its sustainable competitive advantage over its rivals, and Jim Cramer also likes Celgene.

Continue reading Investing in New Jersey: Jackson Hewett (JTX), Cognizant (CTSH) and others

Feds expand inquiry into Jackson Hewitt

The federal inquiry into Jackson-Hewitt Tax Services (NYSE: JTX) has expanded amid allegations that more than 125 of the company's offices knowingly helped tens of thousands of its customers file fraudulent tax returns to obtain $70 million in refunds. Last week, the company disclosed that it was being investigated by the IRS.

The company's stock has not tanked on news, partly because the announcement is just an expansion of the current investigation. For now, the accusations of wrongdoing are limited to the company's franchisees, but that could of course change.

Even if Jackson-Hewitt itself isn't charged, this raises serious questions about the company's internal controls, training, and oversight of its franchisees. The company said in a filing that it "intends to complete the internal review promptly and to implement a variety of enhancements in the areas of compliance and monitoring for the 2008 filings season."

This raises many questions.

Will the scandals hurt the company's growth? Will potential franchisees want to associate themselves with a company that is the subject of such a scandal?

The shares haven't tumbled that much on the news of the investigation and I think the market may be underestimating the effect this will have on the company's growth.

Analyst downgrades 3-19-07: RadioShack cut to Underweight at Morgan Stanley

MOST NOTEWORTHY: RadioShack Corp (RSH), Juniper Networks, Inc (JNPR), H.B. Fuller Co (FUL) and Sepracor Inc (SEPR) were today's more notable downgrades:
  • Morgan Stanley downgraded RadioShack (NYSE: RSH) to Underweight from Equal-Weight on concerns over the company's wireless fundamentals and top-line growth.
  • Juniper Networks (NASDAQ: JNPR) was downgraded to Strong Sell from Buy at Matrix USA. The firm sees downside to the intrinsic value calculation of $12 given the company's deteriorating fundamentals.
  • H.B. Fuller Co (NYSE: FUL) was cut to Sell from Hold at Gabelli following a meeting with management to reflect the recent management exists and the broker's expectation for a challenging first-half of 2007.
  • Sepracor (NASDAQ: SEPR) was cut to Underperform from Market Perform at Friedman Billings, as the firm believes generic availability of Ambien may be a bigger challenge to Seprecor's Lunesta than investors expect.
OTHER DOWNGRADES:
  • Jackson Hewitt Tax Service Inc (NYSE: JTX) was cut to Underweight from Market Weight at Thomas Wiesel as they believe the potential near-term competitive trends coupled with potential issues with rising financial product contribution will weigh on valuation.
  • Bear Stearns cut Cerner Corp (NASDAQ: CERN) to Peer Perform from Outperform.
  • Matrix USA downgraded InfoSpace, Inc (NASDAQ: INSP) to Hold from Buy on valuation.
  • Prudential cut Unilever plc (NYSE: UL) to Neutral from Overweight.
  • Breen Murray downgraded Century Casinos, Inc (NASDAQ: CNTY) to Hold from Buy.
  • Cowen downgraded PeopleSupport, Inc (NASDAQ: PSPT) to Neutral from Outperform based on near-term visibility concerns.
Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Top franchises -- are they also good stocks to own?

Franchising has been the saving grace for many small business owners who would like to launch their own businesses while getting help on key start-up decisions like location, equipment, inventories, sales and marketing, and operational logistics.

In fact, many franchises are extremely affordable (all things considered) ways to go into business for yourself, from home-based franchises (like Jani-King), to location-based franchises (like Jackson Hewitt or McDonald's). (Check out Entrepreneur Magazine's 2007 list of the top 100 franchises if you're in the market for a new business.)

If not, a far easier and lower cost way to get involved with some of these top franchises is to buy the stocks. I looked at Entrepreneur's list with an eye toward figuring out which ones would have also been good investments for your portfolio.

Continue reading Top franchises -- are they also good stocks to own?

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Last updated: September 08, 2008: 06:12 AM

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