Why You Need to Watch These Small Cap Earnings Reports: ALSK, KAR & NLS

On Monday, small cap stocks Alaska Communications Systems Group (NASDAQ: ALSK), KAR Auction Services (NYSE: KAR) and Nautilus (NYSE: NLS) are all scheduled to report earnings after the market closes and each of these earnings reports are worth watching. After all, Alaska Communications Systems Group (ALSK) might be based in one cold place but it also has a hot dividend yield while facing stiffening competition. Meanwhile, KAR Auction Services (KAR) and Nautilus (NLS) look set to deliver solid earnings reports. Hence, here is a closer look at all three small caps and what investors can expect to hear on Monday:

Alaska Communications Systems Group (NASDAQ: ALSK) Has One Hot Dividend Yield

Alaska Communications Systems Group is Alaska’s leading provider of broadband and other wireline and wireless solutions to Enterprise and mass market customers. On Thursday, Alaska Communications Systems Group rose 0.94% to $2.12 (ALSK has a 52 week trading range of $1.73 to $7.85 a share) for a market cap of $96.43 million plus the stock is down 29.6% since the start of the year, down 70.7% over the past year and down 85.8% over the past five years. However, the first thing most people notice about the Alaska Communications Systems Group is its forward dividend of $0.20 for a dividend yield of 9.40%. Even with Yahoo! Finance not providing a payout ratio for that dividend, one should be very cautious. The last time Alaska Communications Systems Group reported earnings, it reported a 5.5% revenue increase to $85.9 million along with EPS of $0.02. Apparently, Alaska Communications Systems Group had to pause pause the build out of its 4G network in order to improve its 3G service because that’s what the Apple iPhone works on plus the company is going to have to pay Apple subsidies for the privilege of having iPhone users suck up all their bandwidth – meaning lower profit margins. To complicate matters further, Verizon (NYSE: VZ) is moving into the Alaska market – meaning things are heating up on the competition front. In other words, there will be plenty to digest when the Alaska Communications Systems Group reports earnings.

KAR Auction Services (NYSE: KAR) Seems to be on the Upswing

KAR Auction Services operates a complete auction solution throughout North America with subsidiaries that include a wholesale used vehicle operation, a salvage auto auction company, a capital funding source for the used vehicle industry and an online auto remarketing auction company. On Thursday, KAR Auction Services fell 0.70% to $15.70 (KAR has a 52 week trading range of $10.92 to $18.57 a share) for a market cap of $2.14 billion plus the stock is up 16.3% since the start of the year, down 11.7% over the past year and down 43.6% since late 2009. However and on Monday, Goldman downgraded KAR Auction Services based on valuation and gave it a price target of $18 while in early June, Robert W. Baird upgraded KAR from Neutral to Outperform and gave it a price target of $21. Nevertheless and the last time KAR Auction Services reported earnings, it reported a 5% revenue increase to $506.9 million while net income fell 35% from $39.8 million (EPS of $0.29) to $26.0 million (EPS of $0.19) due to an effective tax rate of 41.4% verses 2.5%. Nevertheless, sales were up across all segments and KAR Auction Services has been able to maintain strong margins and cash flow plus management felt that fleet sales will continue to benefit the company for the rest of the year and in the years to follow.

Nautilus (NYSE: NLS) Keeps Getting Stronger

Nautilus, whose brand portfolio includes Nautilus, Bowflex, Schwinn Fitness, Universal and CoreBody Reformer, manufactures and markets a complete line of innovative health and fitness products through direct, retail, specialty and international channels. On Thursday, Nautilus closed at $3.18 (NLS has a 52 week trading range of $1.32 to $3.64 a share) for a market cap of $97.89 million plus the stock is up 81.7% since the start of the year, up 69.1% over the past year and down 67.6% over the past five years. The last time Nautilus reported earnings, it reported that net sales rose 6.1% from $48.3 million to $51.3 million but net income rose from $1.6 million to $2.5 million thanks to better sales, improved gross margins and lower general and administrative expenses. Moreover, Nautilus’ CEO said the company expects to continue delivering improved year-over-year financial results plus there were plans for more new product rollouts during the year. In other words, Nautilus looks set to have a solid earnings report.

The Bottom Line. Even if you are not planning to actively trade, keep an eye on small cap stocks Alaska Communications Systems Group (ALSK), KAR Auction Services (KAR) and Nautilus (NLS) and their Monday earnings reports.