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business newsNo One Lost Their Shirt On Phillips-Van Heusen Today
By
Justin Sharon
Mar 29, 2011 4:55 pm
The designer reatailer is running rings around most other stocks this afternoon, up 8.36% on impressive Q4 profit.
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I realize the stuffed shirts at AMC have made this a depressing day for Don Draper, but while he won’t now be coming home with lipstick on the collar until 2012, at least Mad Men‘s main man can take some comfort in knowing Madison Avenue based Phillips-Van Heusen Corp. (PVH) is running rings around most other stocks this afternoon. Shares ended up 8.36% at the apparel outfit, whose designer dress shirts have been outfitting a certain sliver of America since 1876. It was among today’s top NYSE performers, having earlier posted its best intra-day increase since the start of September, on a highly impressive fourth quarter profit report. Q4 earnings increased to $52.2 million, up from only $27 million one year earlier. Meanwhile total revenue rose to $1.4 billion from $614.6 million in the three month period just ended, a time frame which encompassed two noteworthy centenaries. Most tragically, New York’s Triangle Shirtwaist Factory fire and, more happily, what would have been the 100th birthday of Ronald Reagan, a noted fan of Phillips. On a per share basis, adjusted quarterly earnings jumped more than 90% to $0.93, easily beating Street estimates of only $0.82.
Its May 2010 acquisition of the Tommy Hilfiger brand for $3 billion is already reaping handsome rewards and this label alone helped add an incremental $705 million in revenues, again ahead of expectations. Going forward, the Calvin Klein owner also gave good full-year guidance. It now expects 2011 per-share adjusted earnings of between $4.70 to $4.95; consensus currently stands at $4.77. Peter Wahlstrom at Morningstar lauded the “good job” the company has done, while cautioning higher cotton prices represent a future headwind. While cotton pickers point to rising commodity cost inflation, nitpickers note Phillips’ results were boosted by about $0.09 a share from a favorable tax rate. Still, today at least it was certainly dressed for success.
Also read How to Play the Continuing Commodities Bull Market.
The Home Depot, Inc.
Merrill Lynch once fired an analyst for prematurely disclosing his future intentions on The Home Depot, Inc. (HD). Today however, no clairvoyants were necessary to explain why it lead all Dow advancers. The biggest DIY improvement retailer was indicating sharply higher as early as last night after revealing $2 billion in senior debt issuance. This Atlanta outfit subsequently ended up 2.86% for its biggest gain of 2011, with the 33-year old firm further cheering investors by reaffirming earnings estimates and announcing an additional $1 billion in stock buybacks. Brian Nagel at Oppenheimer regards these developments “very favorably” and Goldman’s Matthew Fassler cites “market share momentum” in continuing to favor Home Depot over its smaller rival Lowe’s (LOW).
Incidentally, on a day its fellow Blue Chip member Walmart (WMT) finds itself embroiled in a sexual discrimination class-action lawsuit involving 1.5 million women, Home Depot provides a happy contrast. Its shares -- up 15% in a year -- have easily outperformed the Bentonville behemoth -- down -6% during the same time -- having made a conscious pitch for females by enlisting everyone’s favorite domestic diva/insider trading inmate to appeal to the gender. (Click carefully, for as of 2:00PM yesterday this article now counts towards your Times 20.) For the year, Home Depot now expects sales to be up about 2.5%, yielding EPS of $2.20 ex-items. While such paltry growth rates -- and today’s scary S&P/Case-Shiller housing data -- show the boom years are undeniably over, a 2.66% dividend yield is enough to tide many investors over.
Also check out Floored By Home Depot and Home Depot Says, “You Can Do It,” But In This Case Do You Really Want Them to Help?
McCormick & Co. Inc.
Sugar and spice and all things nice, so the song said. Well, two out of three ain’t bad, in the words of Meatloaf. (Who knew columns could be so calorific?) Imperial Sugar (IPSU) surged 8.05% today but McCormick & Co. Inc. (MKC), maker of spices and seasonings since 1889, ended down 1.69% in an up market. The Sparks firm failed to catch fire despite earnings which beat Street forecasts for the fifth straight quarter. The Q1 EPS of $0.57 on income of $76.8 million came in $0.03 ahead of consensus, primarily due to an 11% increase in sales to Asia, which knows all about Silk Roads and spice routes. Other areas were admittedly more of a mixed bag -- you know what they say about variety -- with the Middle East and Europe tumbling 10%.
Though today’s results were certainly respectable, CEO Alan Wilson hinted at inflationary challenges ahead at the flavorings company during a conference call with equity analysts. He noted an “unprecedented increase in the cost of…herbs, along with higher costs for…wheat and soybean oil, and increases in plastics, another packaging materials.” With shares having performed well prior to today, the stock looks fairly rich especially amid such an uncertain commodity environment. But at least we won’t have to deal with one insufferable ex-Spice Girl for much longer.
Uproar Over Food Inflation has related research. Though the hot topic won’t surprise you, the date it was written — three years ago this week — very well may.
Apollo Group Inc.
The appallingly misnamed “for profit” education group handed investors more steep losses today, with Apollo Group Inc. (APOL) leading the pack in a downward spiral. Today’s worst S&P 500 stock slumped 4.25%, dragging the entire sector down with it. Maybe there’s a reason why Apple Inc (AAPL) is headed by a college dropout, Lula da Silva -- until recently president of booming Brazil -- only had a fourth grade education, and Abraham Lincoln was home schooled. (Although someone obviously forgot to inform similarly slumping Lincoln Educational (LINC) of this fact.) While Apollo, an Arizona based provider of education services since 1973, actually beat some Street estimates, it still swung to a fiscal second quarter loss. Worryingly, degree enrollment at its University of Phoenix slid 12% to 405,300 on a 45% plunge in new students.
The sector has been in detention several times before of course; it fell sharply in August amid regulatory concerns over student loan debt. Apollo shares are now down over 35% in the past year alone; if any pupil turned in this sort of performance they would surely risk expulsion. In a still-soft economy these should be salad days for the space, as perpetual student types hide out a sluggish job market in ivory towers. Try telling that to shareholders however, many of whom have likely now reached breaking point with the industry. The company’s commercials implore us to “escape the classroom" but investors would be better advised to flee the stock.
Raise your hand if you want to read Will Higher Education Be the Next Bubble to Burst?
Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
No positions in stocks mentioned.
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