Friday, April 20, 2012

Kforce Beats Up on Analysts Yet Again

Kforce (Nasdaq: KFRC  ) reported earnings on Feb. 7. Here are the numbers you need to know.
The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Kforce beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded, and GAAP earnings per share expanded significantly.
Gross margins contracted, operating margins shrank, and net margins were steady.
Revenue details
Kforce reported revenue of $285.6 million. The eight analysts polled by S&P Capital IQ expected revenue of $281.7 million. Sales were 10% higher than the prior-year quarter's $258.5 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
EPS details
EPS came in at $0.20. The eight earnings estimates compiled by S&P Capital IQ averaged $0.19 per share. GAAP EPS of $0.20 for Q4 were 25% higher than the prior-year quarter's $0.16 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
Margin details
For the quarter, gross margin was 31.2%, 70 basis points worse than the prior-year quarter. Operating margin was 4.1%, 20 basis points worse than the prior-year quarter. Net margin was 2.5%, about the same as the prior-year quarter.
Looking ahead
Next quarter's average estimate for revenue is $285.3 million. On the bottom line, the average EPS estimate is $0.15.
Next year's average estimate for revenue is $1.19 billion. The average EPS estimate is $0.86.
Investor sen! timentThe stock has a five-star rating (out of five) at Motley Fool CAPS, with 87 members rating the stock outperform and 10 members rating it underperform. Among 37 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 35 give Kforce a green thumbs-up, and two give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Kforce is outperform, with an average price target of $15.38.
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Thursday, April 19, 2012

Few Tips Before Purchasing Your Stock

Financiers who acquired during the pinnacle of the frothy commodities rally are now panicking or kicking themselves. Neither activity helps a speculator or trader think straight. Below are 1 or 2 tips in handling the present market shakeout.
1. If you think you invested in the right stock (s), then turn off your personal computer and do something pleasurable. Exercising is a great stress reliever. The market has started its shakeout. If you did not get stopped out, or didn’t place earlier stops, your best opportunity lays ahead in picking up additional shares at a much lower price. Almost all of the mavens we’ve interviewed let us know the following rally should start sometime between late July and Work Day. In an effort to interview the uranium guru James Dines in late May, we were told, “Call back in two months.” That was a beneficial clue the markets were less than exciting. Mr. Dines is typically enthusiastic to be interviewed, but lately he wasn’t.
2. Do you suspect the basics which engendered the commodities boom have changed? If they have not, then the bullishness is only taking a breather. We do not see any elemental change in the markets. Russia still wants nuclear power, and its oil production might be topping. China has not said the end of its nuclear enlargement program. India wants to spend $40 bill on new nuclear reactors. If you’re invested in uranium stocks, spot uranium jumped another buck to $45 / pound this past week.
3. If you stress about your investment in one stock or another, then stop watching the ticker and target the company fundamentals. Is the tale still true or has it modified? See seven A, B and C below.
4. There’s an old clich? The time to buy is when you’re feeling like junking everything you own in the class. At the precise moment you would like to sell your whole portfolio of uranium stocks, it could be wiser to contribute to your holdings. This applies prin! cipally to the retail financier. The majority of the execs did dump at the top and are now slowly amassing the paper of the nave who waited till the disaster to start to sell off.
5. Has a major, earth-shattering event happened? The last bull cycle in uranium stopped with 3 Mile Island (TMI). The last decent rally in the expensive metals markets dropped off a cliff after it was found Bre-X Minerals had committed a crime about its gold ‘discovery ‘ in Indonesia. Something heavy and newsworthy always transpires, and it’s also wide-ranging. That’s the trigger. As with TMI and Bre-X, those were the 1st shots which launched a later chain reaction to finish those bull markets.
6. Before pulling the sell trigger, ask: Do I need to give up these shares to a deal cellar hunter, who will make a lot of money on my losses?
7. Since the majority of you’ll still panic, please review the following basics for any of the uranium firms you have read about:
A) How much money does the Firm have in the bank? During shakeouts, money is king. Prescient firms, which finished their financings in the current and powerful rally, are sitting pretty. They can weather the short term tempest and are well-oiled to progress when this correction bottoms and reverses. Those corporations are the most powerful ones to test out when this correction looks most gloomy.
B) Has the management stayed the same? Unless the top money and / or technical folk blew out the door, recently, the story possibly has not changed much. Corporations which constructed a robust technical team are adaptable and powerful. They’re going to move forward.
C) Have the properties come up dry? One reason you invested in a uranium company was as it claimed it had “pounds in the ground.” Some firms have more than others. Some went to the cost and difficulty of completing a Nationwide Instrument 43-101, which independently confirmed the quality and quantity of the uranium resource. If that modified! – and the company said, “Sorry, nothing there after all,” or voiced, “Hey, we were kidding,” that’s one thing. If you have not heard that, or read a press release announcing that, then the uranium did not walk away or move onto a competitor’s property. It’s still there.
Next time, when the markets are racing higher, and you are feeling like you won the lotto, think about this bit of biblical guidance. The old joke goes, “at what point did Noah build his ark?” The answer naturally is: Before it started to rain.
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Wednesday, April 18, 2012


Greek ministers will go to Brussels to meet with EU officials about restructuring of debt, but several details have not been resolved. (Reuters)
Groupon�(NASDAQ: GRPN) posts earnings that trouble Wall St. and its shares fall by 10%. (Reuters)
A deal on mortgage data and foreclosures between five banks and state attorneys general is close to being done. The amount of the settlement will be about $25 billion. (Reuters)
Credit Suisse (NYSE: CS) posts a drop in Q4 results. (Reuters)
Rio Tinto�(NYSE: RTP) posts poor results due to metal prices. (Reuters)
Levovo beats earnings forecasts as its market share rises, and it will produce a TV product for Chinese consumers. (Reuters)
Google (NASDAQ: GOOG) to launch a cloud storage product. (WSJ)
The House probably will approve a bill to regulate insider trading by members of Congress and their staffs. (WSJ)
China and Canada to increase official trade relations. (WSJ)
China�s CPI rises to 4.5% in January — up from 4.1% in December. (WSJ)
Some car companies press sales in Indonesia as the number of drivers there surges. (WSJ)
Chrysler may set a deal with banks for consumer and dealer loans that would replace its relationship with Ally. (WSJ)
Apple (NASDAQ: AAPL) tightens it approval process for apps used on the iPad and iPhone. (WSJ)
Petrobras�(NYSE: PTR) estimates of its reserves and the P&L they may create could be too optimistic. (WSJ)
Goldman Sachs (NYSE: GS) buys much of AIG�s (NYSE: AIG) troubled bond portfolio, which dates back to 2008. (WSJ)
Two million homeowners could benefit from a $25 billion settlement over mortgages reached between five banks and the government. (NYT)
Car sales in China fall 24% in January. (NYT)
Young people are watching TV more and more on PCs. (NYT)
BP (NYSE: BP) is conversing with the U.S. government over claims from the Deepwater Horizon oil spill and may settle. (Bloomberg)
Sarkozy�s approval ratings in Fra! nce are near all-time lows for a president. (Bloomberg)
Douglas A. McIntyre

Tuesday, April 17, 2012

5 Reasons to Worry About 2012

As soon as 2011 counted down to zero -- and we began to sing something about old acquaintances -- it was time to get excited about 2012.
The economy isn't perfect, but it's showing some signs of life. Unemployment levels are still high, but companies are operating more efficiently with the folks they have. Surely corporate America is in for a strong year of bottom-line growth, right?
Well, not right.
Every week I single out a few companies expected to post lower quarterly results than they did a year earlier. I follow that up with a list of companies that will thankfully post actual earnings growth.
I'm going to do things a little differently right now. I am going to go over five publicly traded companies that analysts see earning less here in 2012 than they did in 2011. They may be in the minority now as Wall Street generally waxes positive on the profit potential of most companies, but there are more than a few companies to keep an eye on that are going the wrong way.
2011 EPS (estimated)
2012 EPS (estimated)
Annaly Capital (NYSE: NLY  ) $2.41 $2.29 Add
Corning (NYSE: GLW  ) $1.79 $1.71 Add
Dangdang (Nasdaq: DANG  ) ($0.35) ($0.55) Add
Strayer Education (Nasdaq: STRA  ) $8.83 $7.09 Add
Exelixis (Nasdaq: EXEL  ) $0.04 ($0.92) Add
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Annaly Capital.
The real estate investment trust investing in mortgage-backed securities is popular around Fooldom, largely for its chunky 14.2% yield. Yes, that's not a typo. The problem is that the niche itself lost investors money last year, as meaty dividends weren't enough to offset larger losses at some mortgage REITs. More specific to Annaly's situation, what do you think happens to a REIT's yield if its earnings shrink? We may be about to find out this year.
Specialty glass giant Corning has been strumbling lately. Strumbling? Sure, that's when a company is both stumbling and struggling. Look it up. It probably exists. Corning hosed down its fourth-quarter guidance on soft demand for its Gorilla Glass, lower glass prices in general, and losing a contract with a major South Korean customer. Things have to get better? Not really. The pros now see Corning's profitability dipping slightly in 2012.
Dangdang went public a little more than a year ago as a fast-growing Web-based retailer. Books are Dangdang's specialty, though it's been expanding into bigger ticket items. Unfortunately, it's not easy running an e-commerce operation in China where fulfillment costs can be prohibitive. Dangdang seemed to be closing in on profitability early last year, but now the profitless e-tailer is posting widening deficits.
For-profit post-secondary educators have gone from being seen as all-weather recession-resilient darlings to a problematic industry where aggressive marketing, dubious educational accomplishments, and terrible student loan repayment rates are eating away at key players. Strayer's profitability fell in 2011, and the pros see it losing ground again in 2012.
Finally, we have Exelixis. The biotech working on potential cancer treatments has ha! d a year of ups and downs on the regulatory approval front. It did manage to squeeze out a rare profit along the way, but Wall Street's ready for another steep deficit this year. Perhaps even more problematic -- eyeing the next four quarters -- is that analysts see the company's deficits accelerating with every passing quarter.
Why the long face, short-seller?
This doesn't necessarily mean that investors should run the other way from these stocks. Exelixis may finally gain the FDA approval it seeks. Who knows where Annaly will be a year from now if the volatile nature of the mortgage-backed securities market actually improves.
However, as things stand right now, these aren't pretty places to be.
The good news here is that Wall Street already expects these companies to deliver shrinking bottom lines. I wasn't tapping into some secret data bank to pull out the projections for the year that lies ahead. In other words, the bad news is already baked into the shares.
The more I think about it, the less worried I become.
If five reasons to worry aren't enough, let's make your future No. 6. There's a single shocking truth about your retirement that you may not know. It's part of a free report that won't be around forever, so check it out now.

Sunday, April 15, 2012

Six Juicy High Yield Bond ETFs For 2012

Equity markets have gotten off to a solid start in the new year, although looming Euro zone debt woes continue to breed some degree of pessimism and one piece of bad news from overseas is very well capable of sparking a broad sell-off that spills over onto Wall Street. The tug of war between positive economic data releases on the home front and turmoil in Europe continues, paving the way for volatile trading across asset classes as investors struggle to decipher which way the markets will tip next. Amidst the ongoing uncertainty, many investors are gravitating towards dividend-paying securities, particularly in the fixed income corner of the market, in an effort to favorably position themselves as the global financial drama develops in 2012.

High yield bonds, commonly refereed to as “junk bonds”, have taken on great appeal amongst investors looking to beef up their portfolios’ current return and further diversify their bond component [see our Fixed Income ETF Center]. With government debt woes still plaguing confidence in the markets and expectations for interest rates to remain low in the foreseeable future, it’s not much of a surprise to see investors opting for dividend-paying securities in the bond space in lieu of chasing after lucrative stock market returns.

High Hopes For “Junk” Debt

Despite the rather unappealing “junk bond” label, high yield corporate debt may be one of the few bright spots in 2012 for those looking to enhance their current return without taking on considerable risk. While U.S. Treasuries are undoubtedly one of the “safest” segments of the bond market, their rock-bottom yields leave much to be desired [see International Bond ETFs: Cruising Through All The Options]. Furthermore, government bonds may come under pressure over the coming year if economic conditions at home continue to improve, which would in turn prompt investors to reallocate capital to more attrac! tive cor ners of the market.
The high yield bond segment is stacked with opportunities in 2012 as this corner of the bond market offers attractive upside potential, while also generating an appealing current return for investors willing to step into the space. Investing in this corner of the fixed income market may appeal to investors for a variety of reasons; first and foremost, the underlying fundamentals of this asset class suggest that the inherent risks are significantly fewer than many might expect. According to Fitch Ratings, the default rate for U.S. companies in the high yield universe is expected to be around 2.5-3%, well below the historical long-term average annual rate of 5.1%. Relatively lower rates of default translates into a more attractive risk/return profile for junk bond investors.
Another compelling piece of evidence from J.P. Morgan is the fact that high yield issuers are becoming more and more profitable, and leverage in the space has been broadly, and steadily decreasing since peaking in late 2009. Additionally, improving economic conditions coupled with robust corporate earnings (and record levels of cash on hand) are two key factors that may further reduce the risks associated with high yield debt notes. Compelling fundamental improvements in the junk bond space make this corner of the market difficult to ignore given the juicy dividends that are sure to impress even the most yield-hungry investors [see our Better-Than-AGG Total Bond Market ETFdb Portfolio].
Below we highlight six intriguing funds from the High Yield ETFdb Category that may perform well in 2012:
  • iShares iBoxx High Yield Corporate Bond Fund (HYG): This is the biggest offering in the space with nearly $11.7 billion in assets under management. HYG holds over 450 high yield, U.S. dollar-denominated corporate debt notes and had a recent 30-day SEC yield of 7.23%. This ETF is well diversified from a sector perspective and is also available commission free to Fideli! ty accou nt holders [see HYG Fact Sheet].
  • SPDR Barclays Capital High Yield Bond ETF (JNK): This ETF features similar exposure to HYG, although it offers a bit less in the way of diversity; JNK’s underlying portfolio consists of roughly 220 holdings and is tilted towards debt notes from companies in the industrial sector [see JNK Holdings]. This ETF had a recent 30-day SEC yield of 7.41% and is also available commission free to TD Ameritrade account holders.
  • PowerShares High Yield Corporate Bond Portfolio (PHB): This ETF separates itself from traditional �junk bond� ETFs by employing a fundamental approach that assigns weights to individual debt holdings based on four factors: book value of assets, gross sales, gross dividends, and cash flow [see Bond ETF Drawbacks: Case For Active Management In Fixed Income Arena]. PHB charges a competitive 0.50% expense ratio and had a recent 30-day SEC yield of 5.47%.
  • PIMCO 0-5 Year U.S. High Yield Corporate Bond Index Fund (HYS): This fund tracks the BofA Merrill Lynch 0-5 Year US High Yield Constrained Index, which consists of 150 U.S. dollar denominated corporate debt securities rated below investment grade with remaining maturities of less than five years. HYS has a recent 30-day SEC yield of 7.16%.
  • Guggenheim BulletShares 2012 High Yield Corporate Bond ETF (BSJC): This bond ETF is unlike the majority of fixed income products as it tracks an index designed to represent the performance of a held-to-maturity portfolio of U.S. dollar-denominated high yield corporate bonds with effective maturities in 2012. BSJC has little in the way of interest rate risk and should bear relatively low credit risk as well seeing as how the principal amounts of the underlying notes will be repaid during the current calender year. This one-of-a! -kind bo nd ETF has a recent 30-day SEC yield of 4.94% [see BSJC Fact Sheet].
  • AdvisorShares Peritus High Yield ETF (HYLD): This actively managed offering from AdvisorShares seeks to generate a high current income with a secondary goal of capital appreciation. The portfolio management team takes a value-based, active credit approach to the markets, largely foregoing new issue participation, favoring instead the secondary market where Peritus believes there is less competition and more opportunities for capital gains. This ETF recently had a very impressive 30-day SEC yield of 9.43% [see HYLD Fact Sheet].