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business newsIntuit Profits From Taxing Times
By
Justin Sharon
Feb 18, 2011 4:50 pm
Today's top S&P 500 stock finished up 7.28% after the California company reported impressive quarterly per share earnings.
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Today’s top S&P 500 stock finished up 7.28% after the California company reported impressive quarterly per share earnings. Adjusted second-quarter EPS of $0.32 beat Street consensus by $0.02 while annualized revenues rose 5% to $878 million at the outfit best known for its Quicken personal finance and TurboTax software. Although January activity was relatively sluggish, more real-time reads are engendering optimism, with filings for the period from February 1-12 tracking 11% above year-ago levels.
Going forward, Intuit is now guiding third-quarter adjusted earnings of between $2.22 and $2.30, the upper end of which is encouragingly above the average analyst estimate of $2.24. It has boasted better retention rates of late, and its Cloud revenues among small- and medium-size business rose to almost $1 billion. This now represents roughly one-quarter of total income, a fact that perhaps remains under the radar of many investors.
Risks include heightened competition from H&R Block (HRB), which recently bolstered its own offerings with the acquisition of a digital preparation business. Indeed, Intuit CEO Brad Smith conceded yesterday that once fully up and running this “will be a win for” its rival. Shares, now up almost 80% in 12 months, are nearing nosebleed multiples. And with our tax code becoming ever more complex, some clients will undoubtedly flee to the arms of professional accountants.
Today, however, shareholders are entitled to crow about their capital gains in the name. And for everyone still waiting to file -- procrastinate later, for there’s no time like the present. Even if this year our benevolent old Uncle Sam is kindly arranging for April 15 to arrive three days late.
Please see Intuit Indicates Health of Markets and Economy, The Cheek Defense: Why It Didn’t Work for Wesley Snipes, and Will You Need a License to File Your Taxes?
Any aspiring Bob Vila’s out there who will eschew 1040′s and instead break out the power tools this Presidents’ Day have to be happy with the performance of our headline upgrade. Shares of Stanley Black & Decker (SWK) are partying like it’s 1999, the year Home Improvement was wrenched off air, and stand at fresh all-time highs. This after analysts at UBS assigned a Buy rating and $83 price objective on an outfit that invented the portable electric drill in 1917 and has since given us all sorts of saws, sanding products, hedgetrimmers, chisels, and knives.
It's a firm that has certainly come far from humble hardware beginnings in 1843 Connecticut. Very far in fact, for NASA’s Apollo 15 astronauts used nine of their Lunar Surface Drills at $30,000 a pop to take back multiple moon rocks. The DIY darling pays a decent 2.16% dividend yield, having hiked it earlier in the week, and beat Street earnings estimates in all of 2010 even amid a still-squishy economy for the rebuilding industry. Its arguably excessive dependence on Home Depot (HD) has been happily diminished in recent years, with now only about 12% of sales concentrated at the big-box retailer. Since acquiring HSM Protection Services four years ago, Stanley has wisely broadened its product offerings in the comparatively fast-growing security segment.
Its core buisiness is however relatively mature and increasingly commodified, which accounts for several lukewarm Hold ratings among Wall Street researchers.
Also check out Retail Sales Are Up, But So Is Theft, Do Home Depot’s Earnings Signal a Housing Recovery?, and Is Tim “More Power” Allen the Right Spokesman for Fuel-Sipping Chevy Cruze?
As far as I know Nordstrom (JWN) has never set up shop on the moon, although it apparently goes to great lengths to have its models look like otherworldly aliens from Avatar. Stock in the 110-year-old upscale Seattle department store operator is anything but earthbound at the moment, up another 1% at a new 52-week peak following a well-received earnings announcement.
Fourth-quarter net income of $242 million translates to $1.04 on a per share basis and beat Street projections by $0.04, driven by better-than-expected gross margin and lower SG&A expenses. Its low-cost Rack division racked up a strong 24% year-on-year sales increase, to $93 million, and Nordstrom is now guiding full-year fiscal 2011 earnings in a range of $2.95 to $3.10; analysts have been forecasting $3.06.
President Blake Nordstrom said, “Our regular-priced selling is back to historical high levels” but headwinds for the company, which also operates clearance stores and boutiques, include ever-increasing commodity costs, especially cotton. Shares trade at a premium to peers and gross margin is forecast to be anemic at best this year, one which will see the chain open a non-profit outpost on Broadway. Shareholder profits may similarly be harder to come by going forward.
Four Retailers Reaping Benefits of Consumer Spending, Gift Card Sales Backfire, and The Shopping Bag: Nordstrom, Target, Costco… have more.
Green ink for Red Robin Gourmet Burgers (RRGB), which ended up more than 12%. The 42-year-old Colorado casual dining outfit may not offer anything quite like that $175 gold-flaked hamburger whose 2008 debut on Wall Street marked a market top, but today they can afford to. It earned $2.2 million, $0.14 per share, for the fourth quarter, well above respective year-ago amounts of $1.6 million and $0.10. The Street stood at only $191.8 million and $0.03 for the firm, which owns or franchises about 440 restaurants in 40 US states and Canada.
As any New Yorker who sees long lines snaking out of Danny Meyer’s Shake Shack even in the dead of winter can tell you, people will pay up for a good burger, and this company boasts some impressive Zagat ratings. Same-store sales growth was good, and traffic ticked up 1.1% in the final three months of 2010. Rising food costs will take a bite but management plans a 1.5% price hike on its menus in April, the first such increase for almost three years.
Red flags are abundant however. Operating margin fell 40 basis points, the company is quite concentrated in ailing California, and it needs to more effectively rein in expenses.
Read related content at The Origins of Cult-Favorite Fast Food Restaurants: Five Guys Burgers and Fries and Three Restaurant Picks for Your Portfolio.
No positions in stocks mentioned.
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