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business newsTicker Shock: Four Reasons Not to Roll the Dice with MGM Mirage
Monday's top stories and stocks with potential to move.
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Asian stocks were mixed overnight. The Hang Seng was up 1.14% while the Nikkei ended lower by 0.04%. European stocks, however, were in positive territory earlier this morning. And here in the US, we're currently trading higher.
Here’s what I’m seeing this morning:
MGM Mirage (MGM):
After a quick look at the casino company’s second-quarter numbers, it appears it lost $0.15, excluding items. The estimate I’m seeing is for a loss of $0.09. My thoughts:
1. I like the company and its odds (get it?) longer-term, but it’s hard to get overly excited looking at all the red chips the Street expects it to spit out this year and next. Note that 90 days ago, the estimate for 2010 was for a loss of $0.49, and now it’s for a loss of $0.56. Not exactly where I want to see things headed.
2. When will Vegas turn? With the economy on its way back, maybe some gamblers will be more willing to roll the dice, but I’m not expecting the good times to be really rolling any time soon. With Bellagio, MGM Grand, Mirage, and a slew of other properties under its belt in Sin City, it’s something I want to see before I warm to it in any big way.
3. I’m not saying it’s going to get there (it’s actually up as I write this), but if it punches through that $5 mark on the downside, it could be a problem. And what’s going to happen come tax-loss selling time?
4. To all of you out there that argue the results weren’t as bad as they could have been, you’re right. But somehow that doesn’t inspire me to slip my coins in the slot.
For my previous take on MGM Mirage, click here.
Clorox (CLX): The company that needs no introduction managed to edge ahead of estimates in its fourth quarter. But I was most focused on the part in the release where it confirmed its outlook for fiscal 2010: It calls for $4 to $4.15 in EPS. My thoughts:
1. At right around 15 times the fiscal 2010 estimate it offered up, its not crazy cheap. But it's a decent value for a company that’s expected to grow at a high single-digit clip per annum in the next 5 years.
2. It's been knocking out the earnings estimate quarter after quarter, which leads me to believe that the range it offered for fiscal 2010 could be on the conservative side. I also believe that fence-sitting retail and institutional players will probably take notice.
3. Not too many people are chatting about it, but don’t forget that dividend.
I think this company is great and the shares deserve a nice little goose, given the outlook and its ability to consistently outperform the Street.
For my previous take on Clorox, click here.
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