In the majority of cases, a public company financial filing is a financial statement that is filed with the United States Securities & Exchange Commission (SEC) from a company who has shares that trade on a public exchange. However, there are circumstances where other firms must also file with the SEC. This can include private companies as well as foreign firms. There are a number of important implications for investors as they analyze companies and look to gain an edge in their research process. (For more, see Policing The Securities Market: An Overview Of The SEC.)
Leading property and casualty insurer Travelers (NYSE:TRV) ended the full year firmly in the black and reported a number of very solid financial metrics. These included a double-digit ROE and double-digit growth in book value. Its operating results were also sound and, despite a strong run since the end of last year, the share price valuation remains reasonable.
Diversified health care giant Johnson & Johnson (NYSE:JNJ) saw continued fallout from a flurry of product recalls and concerns over its manufacturing controls as investors sent the stock towards its lows over the past year. The company also didn’t bother to provide a full balance sheet or cash flow statement during its fourth quarter results, leaving investors to wonder about its finances and cash flows until it files full-year financial statements with the Securities and Exchange Commission.
If you think the “lost decade” of stock returns seen in the United States since 2000 is bad, you probably haven’t been paying attention to Japan.
Japan’s stock market officially peaked on December 29, 1989, and has yet to recover more than 20 years later. But many companies in the country have continued to do well despite the suffering of the overall stock market. Japanese stocks used to be expensive, with the average stock trading for a price-to-earnings (P/E) ratio of nearly 50 at the market peak in 1989, and an eye-popping 70 as the bursting of the bubble hit earnings in the mid-1990s. Valuations have declined since, and are now trading for an average P/E of 15.6.
A phrase attributed to Winston Churchill is an apt description for those trying to discern Bank of America’s (NYSE:BAC) investment appeal. It is a riddle wrapped up in a mystery inside an enigma. Insight into its fourth quarter and full year results were released on Friday, details of which were provided in a 22 page press release, 50 page presentation and 70 page information supplement.
By most measures, the U.S. economy is in a steady recovery mode. The national unemployment rate fell to 9.4% in December and many cyclical industries, including airlines, industrial manufacturing and even automobiles are reporting improving operating trends. Home foreclosure rates continue to drop, as do credit card delinquencies.
The gambling industry remains in the dumps, though. While unemployment rates in the rest of the country are falling, they recently rose in Las Vegas, hitting 14.9%. Las Vegas is a bellwether for the gambling space, as it has the highest gambling revenue in the country, and conditions continue to look grim.
Tyco Electronics (NYSE:TEL) has been an independent firm for a few years now, and it is still working toward consistent sales and profit growth. First quarter results released Thursday were strong, and the firm boosted its forward guidance, but it will take more time to convince investors it can sustain this recent strength.
Online marketplace and payment transaction firm eBay (Nasdaq:EBAY) reported fourth quarter and year-end results on Wednesday after the market close. The PayPal processing unit continued growing impressively while a turnaround at the namesake and related websites may be occurring. Overall, the share price valuation is looking rich, though there could be further upside from PayPal and especially if the company considers splitting itself in two.
Back in the 1980s, Peter Lynch, the famed head of Fidelity’s flagship Magellan fund, stumbled across an industry that he found to be undervalued and underfollowed by Wall Street. To paraphrase his analysis in his popular Beating the Street book, Wal-Mart (NYSE: WMT [1]) and Philip Morris had nearly 50 analysts covering their stocks, but the stocks he found received scant analyst attention because they were seen as too small and boring to follow.
Bank of New York Mellon (NYSE:BK) is not like most banks. It doesn’t specialize in taking in deposits and making loans, but instead focuses on earning fees from taking custody of assets from other financial institutions and helping them run other key back-office functions. Its results were still hit severely during the financial crisis, but fourth quarter results releases on Wednesday showed that it is recovering nicely. Better yet, the stock has further room to run.
Aviation electronics firm Rockwell Collins (NYSE:COL) reported first quarter earnings on Thursday that handily beat analyst projections. It is currently riding the wave of strong commercial aerospace demand and should see a coming wave of business demand in the next couple of years, though most of this is already priced into the stock. The government segment will likely suffer due to defense spending cutbacks, which overall means that a few key rivals look more appealing as investments. (For more, see 2010 Wrap-Up: Defense And Aerospace.)
By Ryan Fuhrmann Published 01/17/2011 – 13:00
It’s no secret that the media industry has been deeply affected by the advent of the Internet. It is the most efficient distribution channel ever for consumers to read, listen, and watch content. Newspapers and magazines continue to give way to online content outlets, airwaves are being replaced by Internet radio, and television programs and movies are increasingly being watched on the Internet.
Money center banking giant JPMorgan Chase (NYSE:JPM) reported full-year earnings on Friday that finally exceeded the profits it reported in 2006. It is on pace to exceeding 2007 earnings levels in the coming year and completing what has been a difficult five-year period for all major banks in the country. At current share price levels, further upside potential is somewhat limited, but so is downside risk.
Posted: Jan 14, 2011 09:16 AM by Ryan C. Fuhrmann
Grocery store chain SUPERVALU (NYSE:SVU) just closed the books on an extremely challenging third quarter. A hefty asset write-down sent profits well into negative territory and sales continued to fall. There is upside potential in the stock as free cash flow remains positive, but high levels of debt mean this is a risky turnaround play.
By Ryan Fuhrmann Published 01/13/2011 – 11:30
Last week it was announced that Goldman Sachs (NYSE: GS [1]) and Russian firm Digital Sky Technologies would be investing $500 million in social networking sensation Facebook. Investments by Goldman are rather common, and the amount was a tiny fraction of the company’s nearly $90 billion market cap, but a buzz was created because the stake effectively valued Facebook at a whopping $50 billion. Not bad for a firm that was founded only six years ago.
Small-cap consumer products firm WD-40 Corp (Nasdaq:WDFC) kicked off the first quarter of its fiscal year by reporting earnings that disappointed investors. Sales growth was respectable, but in the single digits and continues a trend of modest overall growth. At the current stock price, larger rivals look more appealing.
In its most recent annual 10-K filing with the Securities and Exchange Commission (SEC), lighting products and fixture manufacturer Acuity Brands (NYSE:AYI) relayed that there could be strong growth in revenue opportunities as buildings renovated and replaced their lighting systems in coming years. Light emitting diode (LED) is a key driver of new systems, as it has a longer life and less power requirements, compared to more traditional incandescent bulbs. The drawback for shareholders is that a current share price run means much of this potential is already priced into the stock, but the company is worth keeping an eye on, as the stock could eventually fall to more reasonable levels.
Posted: Jan 13, 2011 08:54 AM by Ryan C. Fuhrmann
A disappointing earnings release from Strayer Education (Nasdaq:STRA) earlier on Monday sent the share prices of many for-profit educators down early in the day, but Apollo Group (Nasdaq:APOL) helped sentiment improve by posting impressive first-quarter results for its flagship University of Phoenix private education brand. As the largest player in the space, the firm serves as the industry bellwether and is in cost-savings mode until sales trends improve, which likely won’t be for a couple of years.
After a number of years with an acquisitive mindset, wine and spirits firm Constellation Brands (NYSE:STZ) is discovering that some of the brands it acquired are not that appealing. The company has found that its lower-end brands have little pricing power and consumers have little brand loyalty in the wine business. STZ’s beer distribution business and higher-end spirits businesses are faring better, and though overall profits grew nicely during the third quarter, the company remains a work in progress as it jettisons underperforming operations.
By Ryan FuhrmannPublished 01/12/2011 – 14:00
For the most part, the price of a stock does very little in telling investors whether it is a good value or not. Any astute investor will do his or her best to estimate their own fair value for a stock. However, in certain circumstances, an extremely high stock price can be quite telling.
By Ryan FuhrmannPublished 01/10/2011 – 09:00
Emerging market investing focuses largely on Brazil, Russia, India and China, or namely the BRIC countries. As it turns out, an entire continent also has quite a bit of growth appeal. And the fact that it is still in the early growth stages means that smart investors still have time to act before the crowd catches on.
According to a presentation from financial transaction processor Global Payment (NYSE:GPN) at its investor day, payments via credit and debit cards are growing 13% annually and purchase transactions will rise from 49 billion in 2003 to an estimated 163 billion by 2013. The U.S. represents 48% of the market, and the company estimates it is positioned in nearly every part of the market across the globe and holds a top three market share in each of its 11 core markets. In other words, Global Payments is a leading operator in a fast growing market that is very lucrative and operates with minimal capital needs.
Posted: Jan 07, 2011 08:52 AM by Ryan C. Fuhrmann
Retail stocks did quite well during 2010 and stand a good chance at further gains as consumer spending improves along with the economy over the next couple of years. Below is a yearly recap of five large retailers, as well as an overview of sales and earnings expectations for the full-year periods.
Posted: Jan 07, 2011 03:00 AM by Ryan C. Fuhrmann
Restaurant operator Ruby Tuesday (NYSE:RT) reported impressive second-quarter results on Wednesday. The firm’s near-term prospects have improved markedly, but ambitions to diversify into other restaurant concepts are fraught with uncertainty and could destroy value for shareholders. (For background reading about investing in this sector, see Sinking Your Teeth Into Restaurant Stocks.)
Insurance stocks have been largely ignored by investors over the past several years. The property & casualty (P&C) space is no exception. A combination of a tough environment to price insurance properly and low bond yields have squeezed the two primary revenue generators for insurance companies. The credit crisis also hurt investment balance sheets, and though most have been repaired as financial markets have returned to normal, anything in the financial sector remains shunned by many investors.
By Ryan FuhrmannPublished 01/06/2011 – 07:00
In the constant search for high-yielding stocks, the utility space frequently comes up in the conversation. Sure, the sector is pretty boring and slow-growing overall, but it can be counted on for stable returns and above-average dividend yields. This consistency and the search for yield in a low-rate environment are big reasons the industry’s stock returns have been strong lately, but many leading players have seen their share prices take a breather in the current market run-up.
Posted: Jan 06, 2011 09:57 AM by Ryan C. Fuhrmann
n 2007, Zep Inc. (NYSE:ZEP) was spun off from lighting installation firm Acuity Brands (NYSE:AYI). Since that time, Zep is still a work in progress in its ambitions to succeed as an independent firm. The company’s focus is on selling cleaning products, and it has decent organic growth prospects that it is supplementing with acquisitions. Though it remains to be seen whether these acquisitions will pay off, and the stock is pricey at current levels, but it’s still worth watching.
Aspen Insurance Holdings (NYSE:AHL) has caught the eye of a number of high profile value investors in recent years. A stock market run has pushed the shares toward their highs over the past year, but they still trade at a substantial discount to book value and the price-to-book multiples of larger peers. Given the firm’s impressive operating history, the discount is arguably unwarranted and leaves significant upside potential in the stock.
Creative software provider Adobe Systems (Nasdaq:ADBE) reported fourth quarter results on recently that saw sales top $1 billion for the first time. New software releases continued to boost sales, along with the lucrative subscriber and service revenues that go along with the software product sales. The shares also continue to look appealing given the growth prospects and reasonable earnings multiple.
Posted: Jan 04, 2011 09:55 AM by Ryan C. Fuhrmann
Accenture (NYSE:ACN) specializes in providing management consulting services as well as technology and business process outsourcing functions. An improving global economy boosted results during its fiscal first quarter, and though long-term uncertainty remains over the sustainability of strong sales growth, the stock valuation is still pretty reasonable.
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