Nike 3Q net income up but misses expectations

PORTLAND, Oregon: Nike Inc. reported lower net income than expected for its third quarter as the athletic shoe and clothing company struggled with higher costs for materials, labor and freight.

The news shocked investors, who are used to Nike consistently outperforming Wall Street's expectations. The company's shares plunged in after-hours trading Thursday.

Nike's net income rose 5 percent to $523 million, or $1.08 per share, from $497 million, or $1.01 per share, in the same period a year earlier. Its revenue rose 7 percent to $5.08 billion as sales rose in most markets around the globe.

The company, which is based in Beaverton, Oregon, warned investors in December that rising costs would cut into its profit margins in the second half of the year even as revenue rose. But analysts had anticipated stronger margins. On average, they forecast earnings of $1.12 per share on revenue of $5.17 billion, according to FactSet.

Nike executives said higher costs will continue to hurt its profitability into 2012. It plans to raise prices on a broad array of products beginning this spring and control its costs, but those moves may not pay off until much later.

"Whatever may be unknown in the global economy, you can be absolutely certain that we'll continue to invest in our single biggest competitive advantage: our fixation on innovation that benefits consumers and shareholders," CEO Mark Parker said.

Company leaders said sales rose in nearly every market worldwide, in part with the introduction of new products.

But that growth was uneven: Revenue rose 9 percent in North America and 21 percent in China but fell 2 percent in Western Europe and 8 percent in Japan. Excluding the impact of currency fluctuations, revenue rose in all markets except Japan, where Nike has long struggled with sluggish sales.

Japan is a relatively small market for Nike, however.

The company said its employees in Japan all are accounted for, and it extended its sympathies to the country as it struggles with the impact of the earthquake and tsunami. The company said it is working with relief agencies to assist any way it can.

Nike said demand would continue to grow around the globe. It said orders for the upcoming season, which many investors look to for insight into the company's near-term strength, rose 11 percent.

"While the headwinds we face are the same for everyone, the competitive advantages we have are ours alone," Parker said.

Shares of the company fell $4.81 - 5.6 percent - to $80.60 in after-hours trading. They had ended regular trading up 59 cents and have traded between $66.34 and $92.49 the past 52 weeks.

Nike's quarterly earnings haven't fallen below analysts' average forecast for nearly eight years, according to FactSet. - AP

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EPF buys third London property for £148mil - StarProperty.my

EPF buys third London property for £148mil - StarProperty.my

EPF buys third London property for £148mil

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Whitefriars in Fleet Street has a yield of 5.75%.

PETALING JAYA: The Employees Provident Fund (EPF) has bought a commercial building in central London from Union Investment for £148mil. It marks the EPF’s third property investment there since announcing an allocation of £1bil for British property purchases, Savills Rahim & Co said.

EPF confirmed the deal.

Union Investment, a Germany-based fund, is one of Europe’s leading asset managers for private and institutional clients.

EPF, in just seven months of unveiling the buy-British plans in August, has spent £485mil of the £1bil allocation.

The central London and international team of London-based property consultancy Savills handled the sale of the 225,000-sq-ft office building, Whitefriars.

The building is located at 65, Fleet Street, London EC4. It is currently used by law firm Freshfields Bruckhaus Deringer as its headquarters until 2021. It has a yield of 5.75%.

EPF’s other two property purchases are One Sheldon Square in Paddington Central, which was bought for £156mil, and 40 Portman Square near Oxford Street which was acquired for £180mil. The two properties have yields of 5.75% and 5.55% respectively.

Notable buildings close to Whitefriars include Goldman Sachs’ campus HQ (Peterborough Court & River Court), Deloitte’s headquarters, Land Securities’ development at New Street Square and the Royal Courts of Justice.

Whitefriars was developed by Kumagai Gumi and completed in November 1989. It provides approximately 232,825 sq ft of net internal air-conditioned office, retail and public house accommodation in two office buildings, as well as 24-car parking spaces.

The space benefits from excellent natural light and the upper floors overlooking central London, River Thames, the London Eye and the Houses of Parliament. In property jargon, it was developed to Grade A specification.

The purchase is part of EPF’s strategy to diversify its portfolio of income-generating assets and to increase its exposure to the property sector.

So far, equities have been its largest contributor, representing 45.45% of the fund’s total gross investment income.Last year, EPF’s gross investment income reached a historial high of RM24bil, of which RM11bil was earned from equities, and RM103mil from property and miscellaneous income.

On the possibility of buying properties in Australia, a source close to EPF said this “may be in the pipeline in the future. But we are focused on UK right now.”

The prime central London market has been recovering strongly since the first quarter of 2009. Prime yields are currently around 4% in the West End and 5.25% in the City, compared with about 3.5% and 4.25% respectively prior to the crash in 2007.

Said a Savills source: “With greater demand than supply, we anticipate that prime yields may be sustained, if not compress slightly more.

“Demand for assets is being driven largely by overseas investors attracted to the UK due to the high-quality assets, tenants, long leases, landlord bias legal structure and upward only rent reviews, as well as, historically low interest rates, weak pound sterling and strong rental growth projections over the short to medium term.

“In terms of the prime markets outside London, the recovery is slower while the secondary/tertiary markets remain volatile,” the source said.

5 Amazing Charts.......Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

By: Todd Bunton

March 07, 2011

It has been over 30 years since Len Zacks discovered that:

Earnings estimate revisions are the most powerful force influencing stock prices.

While this is a remarkably powerful short-term indicator, long-term investors should take note too.

An Object in Motion Tends to Stay in Motion

This is because companies with rising earnings estimates are likely to beat earnings expectations in the future. That is, companies with strong earnings tend to produce more strong earnings. Companies with weak earnings tend to produce more weak earnings.

This cycle, or earnings momentum, can go on for quite some time. That’s why it is wise to sell companies with negative earnings revisions as soon as possible.

Investors should also consider that earnings forecasts from both company management and brokerage analysts tend to be overly conservative. The main reason for this is that neither analysts nor company executives benefit from overly optimistic earnings forecasts.

This can result in an interesting trend.

Say business at ABC Corp is picking up and the company posts a strong quarterly earnings report, easily beating the consensus earnings estimate. Analysts then raise their earnings forecasts, albeit conservatively, and the stock goes up.

When the next quarter rolls around, the company delivers another strong quarter (earnings momentum), analysts raise their estimates once again (conservatively), and the stock goes up. This can go on and on for several quarters.

Now that’s a trend I'd like to be a part of!

The Price & Consensus Chart

One of the best ways to visualize a company’s earnings momentum is to look at its Price & Consensus chart. This chart plots a stock’s price along with the Zacks Consensus Estimate over time.

You can check it out yourself at Zacks.com. Just plug in the ticker of your desired stock into the ‘Quote’ box. When it loads, select ‘Price & Consensus’ from the drop-down box.

What you're looking for are positive slopes in the consensus earnings estimates over time. This signals strong earnings momentum, which means more upward earnings revisions - and higher stock prices - could be on the horizon.

One interesting item to look for is how consensus estimates moved during the Great Recession of 2008-2009. Some companies will have strong negative slopes in their 2008 and 2009 consensus estimates and strong positive slopes for 2011 and 2012. These are cyclical stocks.

On the other hand, some stocks will have relatively flat consensus estimates over the last few years but also flat estimates for 2011 and 2012. These are more defensive stocks.

If you happen to find a company with relatively stable consensus estimates during the Great Recession and strong positive slopes for 2011 and 2012 estimates, then you've found a rare stock indeed.

Five Amazing Charts

Below are five stocks with strong positive earnings momentum and impressive Price & Consensus charts.

Take a look:

Apple (AAPL - Analyst Report) is a thing of beauty. Not only did consensus estimates hold up relatively well during the Great Recession, the trend for the 2011 and 2012 consensus estimates have been screaming higher since late 2009.

Valuation is attractive too, with the stock sporting a PEG ratio of just 0.97. It is a Zacks #2 Rank (Buy) stock.

Dorman Products (DORM - Snapshot Report) supplies original equipment dealer automotive replacement parts primarily for the automotive aftermarket. The stock, like a lot of stocks in the automotive replacement parts and service industry, held up well during the Great Recession as drivers held onto their vehicles longer.

The company has delivered 8 consecutive positive earnings surprises, and the consensus estimates for 2011 and 2012 have been soaring:

Shares trade at just 12.4x forward earnings, a discount to the industry average of 13.6x. It is a Zacks #1 Rank (Strong Buy) stock.

CARBO Ceramics (CRR - Snapshot Report) is the world's largest producer and supplier of ceramic proppants for use in the hydraulic fracturing of natural gas and oil wells.

While that company description might make your eyes gloss over, its Price & Consensus chart won't:

Shares trade at a lofty 28.5x forward earnings, but its PEG ratio is only 0.81. CRR is a Zacks #1 Rank (Strong Buy) stock.

TAL International Group (TAL - Snapshot Report) leases intermodal freight containers and chassis, which is definitely a cyclical business. Although the 2009 consensus estimate finished below where it started, estimates for 2011 and 2012 started taking off in the spring of 2010 and haven't slowed down.

Shares are trading at just 10.9x forward earnings, a significant discount to the industry average of 17.0x. Its PEG ratio is an attractive 0.87. TAL is a Zacks #1 Rank (Strong Buy) stock.

Polypore International (PPO - Snapshot Report) makes highly specialized polymer-based membranes used in separation filtration processes. Consensus estimates for 2011 and 2012 have been soaring as PPO has delivered an average upside surprise of 68% over the last 4 quarters.

Shares trade at 31.9x forward earnings, a premium to the industry average of 15.3x. It has a PEG ratio of 1.99 which is based on a relatively conservative 16.0% five-year growth rate. If the company continues to crush estimates though, this long-term growth rate could increase and justify the relatively high forward multiple.

PPO is a Zacks #1 Rank (Strong Buy) stock.

Conclusion

Earnings momentum can be a powerful indicator of a stock's future direction. The best way to spot this trend is through the stock's Price & Consensus chart. If you haven't already, add it to your tool bag when researching a stock.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

Zacks Releases Four Powerful ''Buy'' Stocks: Mercer International, TransAlta, MicroStrategy and CAI International

• Topics:

  • Investing Ideas & Strategies

On Thursday March 17, 2011, 8:53 am EDT

For Immediate Release

 

Chicago, IL – March 17, 2011 – Four free stock picks are being made available today on Zacks.com. The industry’s leading independent research firm highlights one Zacks #1 Rank Strong Buy or a Zacks #2 Rank Buy stock for each of the four main styles of investing: Aggressive Growth, Growth & Income, Momentum, and Value.

 

The four highlighted picks are: Mercer International (MERC), TransAlta Corporation (TAC),MicroStrategy, Inc. (MSTR) and CAI International, Inc. (CAP).

 

Today, Zacks is promoting its ''Buy'' stock recommendations. Four daily picks are offered free athttp://at.zacks.com/?id=88

 

Zacks #1 Rank Stocks have nearly tripled the S&P 500 since 1988, producing an average annual return of +26%. Performance has been notable even during volatile and down times. For example, during the last bear market, 2000-2002, the market tumbled

-37.6% – but Zacks #1 Rank stocks gained +43.8%.

 

Here is a summary of today's selected stocks that are now highly rated by Zacks:          

       

Aggressive Growth – Mercer International (MERC)

Mercer International is seeing a sharp turnaround in its earnings trends, leaving shares with not just a great growth story but trading at a value as well.

Zacks Guide to Aggressive Growth Investing (free!): http://at.zacks.com/?id=4309

Growth & Income – TransAlta Corporation (TAC)

TransAlta Corporation is a great choice for investors looking for both growth and income. Analysts project the company will grow earnings per share by 17% in 2011 and 12% in 2012, and the stock yields a juicy 5.7%.

 

Zacks Guide to Growth & Income Investing (free!): http://at.zacks.com/?id=4310

 

Momentum – MicroStrategy, Inc. (MSTR)

MicroStrategy, Inc. recently spiked to a new multi-year high after reporting an awesome 72% Q4 earnings surprise in late January. Estimates have since jumped higher, providing more support and momentum for this Zacks #1 rank stock.

 

Zacks Guide to Momentum Investing (free!): http://at.zacks.com/?id=4311

Value – CAI International, Inc. (CAP)

The container trade continues to be hot. CAI International, Inc. saw nearly 100% utilization rates in the fourth quarter as demand remained high. This Zacks #1 Rank (strong buy) is trading at just 11.5x forward estimates.

 

Zacks Guide to Value Investing (free!): http://at.zacks.com/?id=4312

How to Regularly Access Top Zacks Rank Picks for Free: http://at.zacks.com/?id=7154

           

Underlying the four free stock picks is a simple truth that first appeared in a Financial Analysts Journal articlepublished in 1979. Leonard Zacks, a Ph.D. in Mathematics from M.I.T. found that "earnings estimate revisions are the most powerful force impacting stock prices."  Zacks #1 Rank is awarded to a stock when analysts sharply upgrade their estimates of what the company will earn.

 

Today, Zacks is promoting its stock recommendations by offering four daily picks free to those who register athttp://at.zacks.com/?id=7155  

 

About Zacks

 

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Len Zacks. The company continually processes stock reports issued by 3,000 analysts from 150 brokerage firms. It monitorsmore than 200,000 earnings estimates, looking for changes.

 

Then, when changes are discovered, they’re applied to help assign more than 4,400 stocks into five Zacks Rank categories: #1 Strong Buy, #2 Buy, #3 Hold, #4 Sell, and #5 Strong Sell. This proprietary stock-picking system continues to outperform the market by a nearly 3-to-1 margin.  

   

More Free Stock Picks

 

Each weekday, new Zacks #1 Rank or Zacks #2 Rank stock picks are released on the free email newsletter,Profit from the Pros. Investors are invited to register for their free subscription at http://at.zacks.com/?id=91

 

Follow us on Twitter: http://twitter.com/zacksresearch

 

Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch

 

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

 

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

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