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business newsTicker Shock: Four Reasons Why Blockbuster Isn't a Must-See
Friday's top stories and stocks with potential to move.
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Asian stocks rose overnight. The Hang Seng and the Nikkei were both up more than 1%. Meanwhile, European stocks were a bit of a mixed bag this morning. And here in the US, we're currently trading lower.
This is what I’m focused on, on this beautiful Friday morning:
Blockbuster (BBI):
I’ll pass on this flick for now. Take a gander at the rental chain’s first-quarter earnings.
Excluding items, it put up $0.19 a share. Not bad, considering the Street was looking for just $0.15. To boot, this quote in the release from CFO Tom Casey caught my eye: “We remain comfortable with our prior guidance for fiscal 2009, which includes adjusted EBITDA in the range of $305 million to $325 million.”
But there are a few things still causing me to hit the pause button at this point:
1. The stock trades just a smidge north of a buck, which is a turn-off for funds and larger players.
2. The top line was a concern. Revenues came in a little north of $1.12 billion, which was well below the $1.39 billion and change it put up in the comparable period last year, and noticeably lower that the $1.3 billion the Street had been looking for. If these guys want to gain a big following, their gonna need to meet or beat expectations consistently.
3. Its same-store sales were lousy, too. In fact, its worldwide same-store numbers were off 9.6%. That shows it's having a tough go.
4. All things considered, if I were looking to check into either Blockbuster or Netflix (NFLX), I’d have to go with the latter. Although to be clear, that’s not a cheap flick at about 21.7 times the current year estimate of $1.71.
You may see me in Blockbuster tonight, renting a couple videos for the weekend. But you’re not going to see me buying the stock this morning.
Nordstrom (JWN): The well-known Washington-based retailer was out with its first-quarter numbers. Excluding items, it earned $0.31 - a nickel north of expectations. On top of that, the chain also indicated that it's looking to earn $1.25 to $1.50 this year. Not bad, in that it’s a nice little bump up from the prior $1.10 to $1.40 outlook.
My take:
1. I think the bump up in outlook is going to draw eyes, which would be a good thing.
2. The company trades at about 14 times the upper end of that aforementioned outlook range (the $1.50). Not terrible, but not exactly a big bargain either.
3. Its same-store sales were off 13.2%, which demonstrates that all isn't hunky-dory yet.
4. I still think the discounters deserve more attention in this troubled economic environment.
I was happy to see the earnings “beat.” But overall, my interest isn’t piqued enough to want to climb aboard right now. Sorry, JWN bulls.
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