SAN DIEGO ( TheStreet) -- Here's what you may have missed over the past week on Reality Check, my Herb on TheStreet blog and even social media.
-- What I'm Hearing on Harley
-- What ITT Education Didn't say
-- Boulder Brands, Valeant, MercadoLibre report
-- Clean Harbors Gets Dirty
-- RealPage gets Ripped
-- Buffett Tells Investors to Get Real
-- Assorted Twitter comments
HEARING ON HARLEY: From one of my contacts:
"Any way you look at it, they are stretching to get the revenue dollars and they are able to charge those marginal credits. More so, the numbers look great at the outset -- but look out down the road if you haven't planned on a huge increase in (credit) losses."
WHAT ITT DIDN'T SAY: ITT Education, in a press release, told the Consumer Financial Protection Bureau it has no business suing the for-profit education company. But, notes Brad Safalow of PAA Research, a longtime for-profit schools analyst: "I think it's telling that they didn't deny the grievances identified by the CFPB, but just referenced that those practices are regulated by other entities."
GLUTEN-FREE EARNINGS ROLL-UP: Meanwhile, Watch List companies Boulder Brands, Valeant Pharmaceuticals and MercadoLibre reported.
As I wrote:
- Boulder, the gluten-free play: "Adjusted EPS would have missed but instead beat after adding back restructuring and relocation-related charges, which added 2.5 cents to earnings per share. Without it the company would have missed by $0.01. "This is the second quarter in a row BDBD has pulled tricks to spin a miss into a beat," according to the notes from one of Reality Check's contacts. "Last quarter, they pulled forward $5 million in Udi's sales and introduced adjusted EPS when guidance and expectations had been for purely GAAP EPS. Adjusted EPS had never been mentioned." Still, the stock skyrocketed.
- Valeant, a pharma roll-up: The best news for Valeant -- its organic growth excluding generic drugs showed signs of improvement. That should be expected as the company acquires non-generic drug companies. But as even bullish analysts who cover the company have privately told investors, numbers don't matter here. The stock barely budged.
- MercadoLibre, the Amazon of Latin America: The company steers investors to look at "units sold" rather than actual numbers because it strips out currency issues. Well, units sold rose by 20%, which is less than analysts had expected." Investors ignored it and bid the stock higher, anyway.
CLEAN HARBORS' MESS: Watch-list company Clean Harbors lowered guidance -- not what the investors were expecting. With the new guidance, the stock is actually more expensive now, trading at 26x EPS vs. 20.5x coming into today. As I noted, its stock got clobbered and analyst after analyst downgraded.
REALPAGE RATTLED: Not only did the apartment-management software company miss fourth-quarter revenue and earnings expectations, but it missed and guided down on perhaps the most important metric of all: organic growth (and not in a small way).
From the Herb on TheStreet blog:
BUFFETT: "When Wall Streeters tout EBITDA as a valuation guide, button your wallet."
And from Twitter:
Valeant 10-K out, 2013 FCF is less than $3.00/shr, well below the $8.00 "cash earnings" that Pearson keeps crowing about. (My retweet of another.)
FTC (summarized): "Can't say what action we may/may not take re Herbalife. " True bureauspeak!
As I noted on ULTA, these SEC reviews can cause companies to get more conservative. http://stks.co/c0Gk6 Can't believe Tesla will care.
My fave point on SEC letter to $TSLA is No. 11 on GAAP vs. Non-GAAP is actually significant. http://stks.co/f0KUt.
Over and out.
-- Written by Herb Greenberg in San Diego