Posts by Michael Santoli
- Michael Santoli at Yahoo Finance1 day ago
By the end of this decade, new Teslas will be more popular than Volvos, and Tesla Motors Inc. (TSLA) will be more profitable than Chrysler.
Drivers of the sleek plug-in electric cars will be able to go cross-country at no cost, thanks to a network of Supercharger stations — and battery costs might even improve enough for Teslas to be less expensive to own, in total, than a gasoline car.
This, at least, is the ambitious vision of our automotive future that's captivating Wall Street and has propelled Tesla’s stock-market value above $30 billion, before the company has sold even 30,000 cars in a year. Tesla now has more than half the market value of General Motors Corp. (GM), which this year will sell more than 9 million vehicles.
A polarizing company
The combination of an impressive product line, dramatic hype about a post-petroleum economy, the lionization of capitalist hero and founder Elon Musk and the lack of real profits to date has made Tesla a matter of fierce disagreement among investors and consumers alike.
- Michael Santoli at Hot Stock Minute2 days ago
Sears Holdings Corp. (SHLD), parent of the struggling Sears and Kmart chains, is not a retail turnaround story. It’s not even really a retail story.
Sears reported another wretched quarter, losing $574 million, or $5.39 a share, on a steep 9.7% decline in sales. Though almost 40% of that sales decline is from the loss of transactions recorded by Lands’ End Inc. (LE), which Sears spun off in April, the retail business continues to lose market share due to its aging store base.
While Sears extolls the 73% of eligible sales occurring through its Shop Your Way customer-loyalty program, the company is discounting heavily to draw that business and margins have dropped precipitously. Sure, online sales keep growing as a percentage of the whole, and same-store sales at core Sears domestic stores stabilized the past two quarters. But Kmart remains a mess, with few apparent options for fixing itself.
- Michael Santoli at Yahoo Finance5 days ago
America is nearing “peak dollar store.”
A bidding war for Family Dollar Stores Inc. (FDO) burst into the open Monday, with Dollar General Corp. (DG) offering $9.7 billion in cashto best Dollar Tree Inc.’s (DLTR) $9.2 billion cash-and-stock offer.
Wall Street is exultant over the billions being slung among downmarket retailers, pushing Dollar General shares up by 10% and sending Family Dollar stock above the latest $78.50 offer price, with a session high so far of $80.90. First suitor Dollar Tree was down around 2% in afternoon trade.
The deal frenzy has plenty of room to carry on a bit further, for sure. The fact that Family Dollar shares have surpassed the Dollar General bid price means traders assign a pretty high probability that Dollar Tree will attempt to best it; or Dollar General will go higher in a negotiated deal; or perhaps another player such as Walmart Inc. (WMT) will become involved.
- Michael Santoli at Yahoo Finance7 days ago
When a new CEO arrives at a financially strapped American manufacturer in the thick of a nasty recession, paying factory workers better is usually not one of the boss’s first priorities.
But it was one of the first things Ron Kaplan did after taking over Trex Co. (TREX), the big maker of composite decking, in early 2008, as the company struggled with a brutal economic downturn and self-inflicted financial difficulties.
In June of that year, Kaplan and the management team he recruited met with production employees and handed out special cash bonuses worth a few hundred dollars each, and told them it could become a regular monthly occurrence under a new incentive-bonus program based on production goals.
In addition to competitive hourly wages, which were maintained, the company set monthly targets for producing its wood-and-plastic decking materials at lower cost per pound while maintaining quality and safety standards. Since 2008, Trex has paid bonuses “the vast majority of months,” says chief financial officer James Cline. The average payout has been $325 per employee per month.
Regular payouts, strong bottom line
- Michael Santoli at Yahoo Finance9 days ago
It turns out it’s not the best idea to buy everything the smart money is selling.
The 32% plunge in SeaWorld Entertainment Inc. (SEAS) shares Wednesday — after a disappointing earnings report and fears of a lasting backlash against its treatment of animal performers — was an extreme dousing for a once-coveted stock.
Yet the fact that SeaWorld was controlled by buyout firm Blackstone Group LP (BX) until its April 2013 initial stock offering offers a good excuse to note that the recent crop of IPOs from private-equity-backed companies has performed appreciably worse than all newly public companies as a group.
IPOs of companies that had previously been acquired by buyout shops have been a prominent element of the strong new-issue market over the past couple of years. The 20 largest private-equity-backed IPOs since January 2013 raised $21 billion in aggregate. Shares of those IPOs since January 2013 have appreciated by 25.3%, on average, from their offer price (which, of course, only institutions and plugged-in wealthy individuals can typically access.)