Well, we only heard the word "excited" three times in the conference call, plus once more by one of the analysts calling in. I was hoping for an "excited" fest of political spin!... LOL! Nevertheless, they sure made $50MM in losses plus $30-something million in losses for next quarter almost sound positive. (chuckles again)
The trend is still your friend here!... We should continue higher with only slight resistance at $34.50, the high of this week, and then $36.00 (the price that SODA spiked to on the day of the buyout rumor). Enjoy! :-)
First off, I want to commend you on writing a well-written message (some of the people who post on these message boards write so poorly that I have to give them the benefit of the doubt by assuming English is their second or third language). Anyway, regarding the point of your message, yes, I thought Staples should have bought Office Max before Office Depot ever put in a bid for the company. Now that they are merged, Staples should either try to buy the company now, or try to continue to gain profits, and grow a cash pile. Then wait until the next next recession (the last two have been pretty deep), at which point, they could put in a bid for ODP at a fraction of its high before the recession.
However, Barnes and Noble did not take that route with Borders. They let Borders disappear, and they seem to be taking the same route with Books-A-Million. Since Staples is cutting its number of stores, maybe adding more brick-and-mortar locations by buying all the ODPs would be the opposite direction of where they want to go.
(In Honest Abe's bold voice) Two score minus 38 days ago we brought forth a new upbeat guidance (trailing out of bold powerful voice into a more disappointed voice)... yeah... nevermind that, this quarter's another one to forget. Just pretend it never happened.
Yeah, but it didn't happen!... They just reported a loss of just below $50MM, and they're expecting a loss of $34-37MM next quarter. If Christmas doesn't do well, they will burn $100 MILLION this year.
Hmmm... They've only used the word 'excited' twice so far. I was really hoping for an 'excited' every paragraph. They must not even be excited anymore... Hahaha!
It's going to be funny listening them to try to spin this huge hemorage of cash in a positive light. Let's see how many times they use the world "excited"... "We're gonna lose 100 MILLION DOLLARS this year, but we're EXCITED... blah blah blah...."
Hey Hottie! We meet again on this board again... I think our first encounter was on the Sprint board a couple years ago, and the SPLS board a few months ago, too.
Anyway, I agree that this P/E ratio in the upper-20s is high, but I think all they have to show--at least for now in this tough retail environment--is that they can pay the dividend without dipping into their pile of cash. You yourself just said that you have them earning 50 cents this year, that will cover the dividends without having to dip in their pile of cash. So investors looking for good dividend stocks now see that they have one here (the FED is giving investors nothing right now, so equities are the only option). Investors can earn a 4-plus-percent dividend while waiting for retail to turn around. AEO did have a 7% drop in Same-Store-Sales, but if they can turn that around by next year, the stock can head back to the 20s. I am more bullish than yesterday; it's huge reward with minimal risk (although you know I am a little biased as a long-time long).
Good luck to you, too, Hottie! :-)
The trend is definitely changing direction. AEO has shown it can weather the retail storm much better than the AROs and PSUNs of the world, and it will continue to do so. Everyone can enjoy their 4.2% dividend yield while the stock slowly heads back towards its stock price of last year and two years ago.
I agree with you there. The middle class is getting squeezed. However, the tech-revolution has a lot to do with it, too. Teens and/or their parents who used to spend all their money on clothes are now having to split it between cell phones, tablets, phone contracts, as well as clothing.
$5 million dollar profit is not good... There's no way to spin it positive other than the fact that this is traditionally one of the weaker quarters for retail (no Christmas shopping and too soon for back-to-school). However, they did reiterate their guidance for 17-19 cents per share next quarter, so this shows that the company can pay its big dividend without eating into its pile of cash too much.
Yes, this could be the start of the retail turnaround. The clothing retailers have been beaten down 50-80% this year, and TJX, JCP, URBN and AEO just reported beats, and ARO just stated that they expect to be at the high-end of their guidance, so this is looking better. Also, I like WTSL down below a dollar per share.... If they report a beat, that stock can roar 200 to 400% back to the 3-5 dollar range where it was trading before the plummet. Good luck to you!
AEO is one of the few middle-of-the-mall-clothing retailers that is profitable right now. This earnings beat has shown that they can weather this retail storm. They are almost earning enough profit to pay their dividend without dipping into their huge cash pile (next Qtr they expect to earn 17-19 cents, and their quarterly dividend is only 12 cents), so it also shows that their 4.5% dividend yield is safe going forward. This beat, and the reiterated positive guidance for next quarter, should turn AEO's stock price back up to the mid-teens over the next six months.
Over the last month this stock has been moving higher, making higher highs and higher lows. This upward trending channel after the last positive quarterly report should continue. Coke's deal with Monster only grows the whispers of a potential deal of some sort. This stock got hit really hard, so it has lost its growth-P/E ratio, and now its P/E ratio looks more like a value P/E, but it's still growing revs at a 20-something percent clip year-over-year. The trend should continue upward.
I still have my good-til-canceled buy order for 25k shares @ $.11 from earlier, but I'm pretty sure it won't fill now after this news release. SMDM should continue to trend higher, because this stock does not deserve to stay at this low P/E ratio if it is going to be in this many big-box stores during the Christmas shopping season. Its market cap is already just a fraction of revenues and if it has decent shelf space/visibility in big-box stores going forward, it should continue to grow revenues further. So the market cap should only continue to grow.
Yes, this good news has resulted in a nice pop this Tuesday morning! :-) Now I'm wishing I would have bought more when it fell to $.12 per share, but I was hesitant because I already have a good number of shares so I can just enjoy the ride back up to my cost basis. Hopefully, the Wal-Mart deal will spur long-term top-line and bottom-line growth.
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To repeat... let this baby ride! I'm up $500 in the last two days on this long position, and I have no reason to sell after the earnings beat. This is a fine company to be an owner of, especially at this lower P/E multiple and market cap.
Also, there were a lot of shorts in this name, many of whom still have to close out their short positions. This stock may continue to trend up for months now that the doom-and-gloom is being put to rest. If next quarter is a beat, too, we may head back up to the 52-week high... and squeeze a lot of shorts in the process.
Yes, that's why I used 'cyclical' and 'momentum' in the title of this post. CAT, TEX, MTW, etc. (the construction/industrial names) are so cyclical and move very hard when the market moves.... which is scary if you are stuck holding the stock on the downslide, but great if you want to buy at a better price, or are holding it on an upswing. I hope the DOW doesn't come down another 500, but if it does, I think we'll both be part-owners of this company. :-)