Aug 27, 2010 10:04 AM PDT
TESO: Stages a Sequential Q2-Q3 Comeback
BGFV: Retailer Posts Q3 Profit Rise of 76% Y-O-Y
AAWW: An 'Upgrade' as Air Cargo Gets Moving Again
Gaining 6.5% this morning is Tesco Corporation, (TESO) http://www.tescocorp.com/ currently trading in the $10.09 range. TESO has a 3-Month average daily trading volume of 265,476 shares and easily surpassed that in early trading.
Fighting back to hold a $10 level, TESO buyers came out today to support share value on news of good Q3 numbers that, for the most part, regained Q2 losses.
A Sequential Achievement
TESO lost a penny per diluted share in Q3 compared with a Q2 loss of a dime. That's a $0.09 turn-around. That doesn't put the Company in plus territory, but its does speak of a bounce back towards the TESO profit levels of Q2 2008 which were a plus of $0.46.
Q3 TESO revenues were $72.6 million, down a little from Q2's $88.4 million, a tad more than half of Q3 08's $140.0 million, but still encouraging. TESO has been there, can they continue to gain lost ground in revenues? Yes.
Julio Quintana, TESO's CEO said, "The continued depressed drilling markets, particularly in North America, have reduced our revenue streams across all our business lines. However, our competitive positioning and balance sheet continue to improve."
In Q3 09, TESO generated positive cash flow and reduced its net debt outstanding to a net cash position of $11.9 million. TESO also reduced capital spending by 70% year over year.
This is a sector recovery story for me. While TESO's Top Drive segment was down 22% in Q3 and its Tubular Services segment was down 13% for Q3, its Casing Drilling segment posted a gain in revenues over Q2. As refineries comeback on-line from their annual autumn cleaning and repair and capacity drilling picks up, so will the need for TESO's oil and gas equipment.
TESO has a 52-week high of $11.48 set last year on November 5. At its current $10.04 range, this is a 'Watch Closely' stock for me. Watch the sector. TESO will follow its lead. TESO has trailing twelve month revenues of $478 million with a parallel diluted EPS of $0.80. As drilling returns, so will TESO. If it can keep that $10 threshold, there's money to be made here as oil and gas come back online.
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TESO
Also gaining 6.5% this morning is S&P 600 SmallCap company Big 5 Sporting Goods Corp., (BGFV) http://www.big5sportinggoods.com/ currently trading in the $16.35 range. BGFV is a heavily trading SmallCap. BGFV is 76 cents off its 52-week high set on 10-21-09 and can set a new high on one piece of good news. I think the floor on this stock is the $15 level and with the holidays ahead, it could break the $20 barrier in the near-term. This is a 'Buy' stock for me. On $869 million in trailing twelve month revenues, BGFV returned a diluted $0.72 profit to its shareholders during the 'great recession'. A very strong performance.
BGFV released its Q3 numbers yesterday after market: Q3 09 EPS were 37 cents vs. Q3 08 of 21 cents, a 76% increase. Not many growth stories during the recession...
BGFV also announced a 5 cent quarterly dividend to be paid Dec. 15 to shareholders of record as of Dec. 1. Dividends? What a boon. Q3 revenues were up 4% and BGFV management decided to pass some of that along to shareholders. Nice. Q3 Same-Store-Sales increased 1.6%.
For Q4, CEO Steven G. Miller said sales trends have continued to improve so far in the fourth quarter and BGFV expects Q4 profits to be in a range of 28 cents to 38 cents per share. As of December 28, 2008, BGFV operated 381 stores in 11 states. Did I mention that BGFV management dropped its bottom-line SG&A expenses during Q3? They did.
"We are pleased to deliver a solid third quarter top and bottom line performance, as our customer value proposition and proven business model continue to produce positive results," said Miller.
BGFV increased same store sales for the second consecutive quarter. Through prudent inventory management, BGFV lowered inventory levels on a per-store basis by approximately 8% at the end of Q3. BGFV generated operating cash flow of $47.4 million in the first nine months of fiscal 2009, a 61% increase from the same period last year. BGFV also continued to reduce debt levels, ending Q3 with $60 million of long-term debt compared to $100 million at the end of Q3 2008. 'Buy'.
BGFV AAWW
Gaining 5% this morning is Atlas Air Worldwide Holdings Inc., (AAWW) http://www.atlasair.com/ currently trading in the $27.11 range. AAWW is a very heavily traded SmallCap. I think AAWW can establish a new floor at $30 as the recovery continues. Its 52-week high is $37.97 set two weeks ago.
When Warren Buffet announced that Berkshire was buying Burlington Northern yesterday for $34 billion and change, he was asked why a railroad and replied, I'm paraphrasing, 'because the moving of goods is back underway'. AAWW is a cargo-jet operation.
Today, AAWW received an upgrade from research house Maxim Group from 'Hold' to 'Buy'. I agree. This is a 'Buy' stock for me. Yesterday, AAWW completed a public offering of 4,600,000 shares at $25.75. Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. served as the joint book-running managers for the offering.
AAWW customers include airlines, freight forwarders, the U.S. military, and charter brokers. It operates in Asia, the Middle-East, Australia, Europe, South America, Africa, and North America. As of December 31, 2007, the company operated a fleet of 37 Boeing 747-400 freighter aircraft.
AAWW has trailing twelve month revenues of $1.07 billion and a trailing twelve month diluted EPS of $5.32. 'Buy'.
If you'd like to know of any changes in our opinion of TESO, BGFV or AAWW
(or if SCN officially recommends them as trades)
