Staples Sees Revenue Surge From Corporate Express Acquisition
reported its third-quarter profit fell 43% on related acquisition charges. It made $156.7 million, or 22 cents per share, down from $274.5 million, or 38 cents per share, during the same period last year.
The company beat EPS estimates by a penny, as sales increased 35% to $7 billion from $5.17 billion a year ago. The company saw a revenue surge in its delivery and international divisions, which recorded increases largely due to sales from Corporate Express. On the downside, the company's same-store sales did fell 8% in the quarter.
We have avoided shares of Staples since our early June coverage began and the stock was trading at $23.23. The company has a dividend yield of 2.18%, based on last night's closing stock price of $15.12. The company is clearly the leader in the office retail segment, but the same-store sales drop is a concern. On a technical level, the stock does have room to fall to the $8-$9 level, which it last saw in the early 2000s. We would like to see some more consolidation in the stock before we feel the company is ready to move higher.
Staples is not recommended at this time, holding a Dividend.com Rating of 3.2 out of 5 stars.
Sears Holdings Continues Earnings Slide
reported a third-quarter loss of $146 million, or $1.16 per share, compared with a profit of $4 million, or 3 cents per share, in the same period last year.
Sales fell more than 8% to $10.66 billion from $11.62 billion. The company's Sears same-store sales dropped 10.6% in the U.S. Kmart same-store sales were down 7%.
Management intends to continue cutting inventory and reducing expenses, as well as promoting layaway programs at Kmart and Sears locations.
The company has had quite a turn of events, trading as high as $193 a share in April of last year. That was about the time real estate began to peak and the game plan to sell some of the company's real estate holdings started to look a bit unrealistic. We see the stock has some support at the $23 level if the stock continues to slide. Beyond that, it appears $15 would be the last level of solid support. The retail sector has been rocked, so a bounce in the shares can't be ruled out. We would look elsewhere for better investment opportunities.
Sears Holdings does not currently pay a dividend.
GE's Slightly Revised Guidance Not Enough to Stop the Shares From Rallying
is rallying today, despite the company saying it expects fourth-quarter net income of 50 cents to 52 cents a share, the bottom of its previously announced range of 50 cents to 56 cents a share.
General Electric reiterated plans to pay a dividend of $1.24 a share in 2009 for what seems to be the fifth time in the last couple of months. Management is focused on reducing leverage to 6-1, lower outstanding commercial paper balance to $50 billion and reduce its overall funding needs, as the company heads into 2009.
There were some cautious comments going around yesterday that GE Capital would offer some disappointing guidance. We were a bit skeptical that the rumors were nothing more than potential bear traps. Today's action seems to convince us that the trap seemed to work perfectly as the stock is approaching the $17 level again. We remain cautious on the shares, but still think a dividend cut would not necessarily be a bad event for the shares. Unfortunately management continues to come out defending any such dividend cut, so a cut would likely upset market watchers.
General Electric is not recommended at this time, holding a Dividend.com Rating of 3.3 out of 5 stars.
Beazer Homes Losses Triple
reported a fourth-quarter loss that tripled to $473.9 million, or $12.29 per share, compared with a year-ago loss of $155.2 million, or $4.03 per share.
The company's revenue for the quarter dropped 35% to $712.6 million from $1.09 billion as home closings tumbled 38%. Management blamed the results on low consumer confidence, falling prices, high levels of unsold new and existing homes and less access to mortgage financing.
This real estate cycle will likely not bottom until some publicly traded companies do some sort of prepackaged bankruptcy. It may be one of the only options that companies have, unless market demand unexpectedly begins to pick up. We are still avoiding shares of homebuilders at this point.
Beazer Homes does not currently pay a dividend.
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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
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