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VIDEOTicker Shock: Whole Foods Looking Fresh; HP Doesn't Compute
Thursday's top stories and stocks with potential to move.
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Asian stocks rose overnight. The Hang Seng and the Nikkei both closed up, but well under 1%. Meanwhile, European stocks were in the green earlier this morning as well. Here in the US, we're currently trading higher.
Here’s what has my interest this morning:
Whole Foods Market (WFMI):
I think it’s important to give credit where credit is due, so take a gander at the organic supermarket’s first-quarter earnings. In the period ended January 18, the Texas-based company earned $0.20 a share. In the comparable period last year, it turned in $0.28 - nonetheless, it was way better than the $0.15 a share analysts were looking for. In this environment, that’s bound to raise a few eyebrows.
To boot, the company indicated that it’s looking to earn between $0.71 and $0.76 a share for the 2009 year. And that’s decent news because the estimate I’m seeing is for $0.65.
Here’s the thing, though: I’m not a buyer. Sorry, Whole Foods bulls - but with all the competition in organic foods (and the fact that consumers aren’t ponying up bucks like they used to), I think there are better opportunities out there.
Hewlett Packard (HPQ):
The PC giant was out with its first-quarter release and unfortunately, things didn’t quite compute.First-quarter earnings, excluding items, came in at $0.93 a share, which was in line with expectations. However, revs came in at $28.8 billion, which was shy of expectations.
Moreover, it indicated it’s looking for $3.76 to $3.88 a share in ’09. That’s not too sharp given that the Street is at $3.77, and that when it released its fourth-quarter results, it had been looking for $3.88 to $4.03 a share.
Long story short: I think the shares could get nicked on the news. At the same time, I have to say that I like this company. Longer-term, I think it's going to be a big winner. Plus, I’d point out that it trades at about 9 times management’s revised outlook. I’d say that’s a bargain considering its size, operating history and earnings potential in more normalized times.
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