Checkout AEO's report . Guidance for the teen apparel company has been cut . As usual there will be winners and losers in apparel each and every year. KSS this Christmas ? It's anybody's guess
If you look at the competition you'll see that the big players are on a roll. RIG and ESV are faring as well as DO in revenues and earnings . While RIG still digs out of the Gulf disaster hole it put itself in , ESV has , like DO, decided to pay a rather large( REGULAR not special )dividend to shareholders. All 3 companies have beat earnings estimates over the last year , with the exception of DO's stumble last quarter with a deadbeat customer ,and RIG 's 2nd quarter that missed by $.07. In general, there seems to be alot of confidence in the industry; enough confidence to raise dividends by ESV and pay (regular) special dividends by DO. You probably wouldn't be paying out these increased sums if you expected a less than promising outlook for future business. With this last quarter's earnings debacle, DO expectations remain low , but it looks like an opportunity if you can get to the second half of next year when the currently idle deepwater rigs begin to contribute to top and bottom lines. I admit , I like this company (as well as ESV , which you should also give a look at). I like DO's finacials(the balance sheet and cashflow statement). I like how management likes to take care of shareholders with dividends. I like the potential for future business as deepwater becomes the next frontier for oil and gas.
or not so hot earnings , revenue , and guidance can make this stock price fall.KSS has some very financially powerful believers. I can't say they are wrong . The company remains a cashflow cow(or golden goose), using generated cash to buyback stock and pay a decent dividend. And as Barron's alluded to , KSS is making changes in the product mix and bringing in popular brand named merchandise.So who am I to argue ? And even if I could say I disagree with the management strategy , what would be the alternative strategy to what is being done right now ? Personally, I think this is exactly what you do with an apparel retailer . Eventually they get it right !
Expansion of plant and equipment is underway. This could take a year or two. One consolation is that competitors are in the same situation , building new production facilities while operating at full capacity. And while manufacturing costs have gone up , demand for subsea equipment appears to be outstripping supply, so prices will have to rise for subsea equipment. As long as deepwater drilling continues to grow, FTI should be alright . They have an ever growing backlog of orders , which would bode well if they could guarantee delivery . But with the lack of production facilities and maxed out production capacity,they are going to struggle for while.
DO is no doubt one of the better deepwater drillers . The financials are some of the best. Cashflow is allowing for the special dividend , which they seem to do regularly once business firms up.BUT, there are problems which account for the recent selloff. The first was the most recent earnings report. Actual earnings came in about half of estimates as a result of a couple of customers not paying what they owe DO. That does't mean the money is lost , but most likely delayed.The other problem is the refitting of several rigs in drydock,which are taking longer than planned to refit. That will cost DO money in extra costs associated with the delay, and lost revenue as rigs remain nonproducing. Finally ,but not the least of which is the cost of oil per barrel. As long as oil remains $93 a barrel , deepwater drilling may become less attractive to major oil companies and or deepwater drilling rates may fall significantly. If you are patient , DO should see a turnaround as refitted rigs come back to service along with an increase in oil prices .And with an expectation of greater revenue and earnings in the future, you can expect more of these special dividends too.
"The global oil industry is in the midst of the fastest rush of orders for new deep-water rigs since the advent of such drilling in the 1970s. Last year’s 52 ultra-deepwater discoveries around the world, in about 7,500 feet (2,286 meters) or more of water, made for a record year in the offshore industry, David Williams, CEO at Noble Corp., told analysts and investors in a presentation earlier this year.
Cameron expects fourth-quarter earnings-per-share to be in the range of 95 cents to $1, lower than the $1.12 average of 30 analysts’ estimates compiled by Bloomberg. Revenue for next year is expected to be about $11 billion, lower than the $11.5 billion average of 26 analysts’ estimates.
FMC’s operating profit margin for its subsea-technology unit is expected to be 11 percent this year, Chief Financial Officer Maryann Seaman said yesterday on a conference call. That’s down from the 12 to 13 percent forecast in September.
“When plant utilization spikes to effectively 100 percent, which has occurred given the backlogs collected by both, then stress rises from manufacturing delays and cost overruns pressuring margins,” Scott Gruber, an analyst at Sanford C. Bernstein & Co. in New York, wrote in an e-mail message." FTI's problems are clearly not demand , but production.Of course FTI will be able to raise prices as subsea equipmen tbecomes harder to buy from limited production capacity. But near term, it won't help FTI since they cannot keep up with demand. FTI will have to ramp up production to meet the current ever expanding backlog of subsea equipment. I see a company with great products , but one lacking production capacity which will restain growth across the board. Near term , price increases for subsea stuff will be the only way FTI can grow top and bottom lines . With this in mind I'm going to wait and see if FTI will present an even better buying opportunity for the stock.
The company is currently paying over 4% dividend. While RYN earns the dividend ,on further inspection of the cashflow statement, the dividend is much safer than that , as cashflow from operations covers the dividend almost 2 times annually. The company raises the dividend between 7 and 10% pretty much annually and price appreciation of RYN has prompted stock splits of 3 for 2 every 3 to 4 years or so for the past decade. Go to RYN's website and checkout the dividend history which include stock splits. Current pulp price problems should be somewhat offset by other parts of RYN's businesses, according to a recent S&P report on RYN. Basically RYN is going to pay you around 4% to wait until they reload and start growing top and bottom lines again. And with their track record of adapting to business climates, we shouldn't have to wait too long.
It's not a disaster for KSS , but adjustments to merchandise will have to be made . It's a tough retail environment (and we've heard it a million times ) but peolpe are buying at other apparel retailers, with the exception of AEO( , who , like KSS is on sale with an extra safe 3% dividend , no debt on the balance sheet and cashflow up the wazoo( alot of casflow)).The right clothes , at the right price, at the right time should cure what ails KSS. It's not brain surgery.
but this analyst quote doesn't help "Kohl’s said sales at stores open at least a year fell by 1.6% " and these are the newest freshly remodeled stores . It indicates that the product mix is really screwed up ,contradicting the Barron's article , that new brand names and remodelling would propel KSS. I can't stress how f***ed up this kind of report is, especially since others are rebounding , including M ,GPS, AEO.
I'm not putting too much stock in Barron's estimate of Kohl's ability to grow revenue and earnings thru product mix.. Not that they are wrong ,but KSS's strategy of putting cashflow into buying back shares has been significantly important to overall strategy of growing share price . The product mix prediction may or may not happen , but you will always be able to rely on the buyback , large dividend payout and payout increases from cash generation . Of course you need products people want , at the right price , at he right time , but this is a difficult retail environment, so expect the worst , namely , a clean balance sheet with low dedt , strong cash generation , with outstanding share reduction and divdend increases from cashflow, accompanied by flat revenue and net income . Or hope for what Barrons says will happen.
By most metrics , Dow's report was pretty good . Revenues inched up less than 1% and earnings per share were up $.08 over the previous year same quarter . But if you miss Wall Street expectations , you are summarily taken out to the woodshed and shot by firing squad. But the numbers , disappointing to Wall Street as they may be, are heading in the right direction . Revenue was up , barely , but up. EPS was up 19% or there abouts .And it wasn't smoke and mirrors, since net income rose almost $100 million from the previous year, about a 20 to 25% increase. The company continues to generate cashflow , which they dedicate a large portion of to paying down debt. Oh, total volumes shrank from the previous year. Well, get used to it as the company sells off least or no profit divisions of the business. What do you expect when you divest yourself from a portion of the volume of total sales . The report makes it sound like sales are falling from operations and not from divesture. Anyway the point is , the company appears to still be heading in the right direction and Wall Street's reaction may well be an over reaction to a compny still in the process of reinventing itself .
GES looks like it's spinning it's wheels and going nowhere. Id like to see them put cashflow to work in the form of stock buybacks . Fundamentals appear solid , but with slow growth antcipated , it would be nice to do something for stockholders and buyback shares to increase earnings per share and in effect make the shares worth more as they earn more per share .They have't raised the dividend in a few years , but it appears they paid special dividends in the last several years , one of $2 per share and another of $1.6 per share . Instead of these one time lucky wind falls they should invest cashflow in buybacks and steady dividend increases in order to reward investors .. This would increase EPS and the cash return to stockholders over time This approach usually is accompanied by price appreciation of the stock.. Surely management would benefit from such a strategy as well since they are usually large stockholders.
I concur. I am basically a fundamentalist. KSS is across the board a solid company , according to financial statements.Little debt on the balance sheet and a stock buyback plan that keeps earnings per share in a groth pattern, not to mention that the buybacks are predominately paid for with cashflow and not debt. KSS should float at this price range until apparel retail returns . Then watchout .