Wednesday August 01, 2012
by John Buckingham, editor The Prudent Speculator
There were quite a few negative market-moving earnings announcements out recently. But big swings to the downside in reaction to quarterly results can create nice entry points to pick up names we’d like to own for the long-term.
Certainly, they do not all necessarily bounce back quickly, but here our research team takes a look at four names -- a pet retailer, a gold miner and two tech plays -- that we think deserve investor attention after each posted disappointing results.
Petmed Express (PETS), saw its shares drop by more than 12% after reporting earnings that missed analyst expectations and that included a drop in online and re-order sales.
The company said it earned $4 million, or $0.20 per share, in its fiscal Q1, down from $4.8 million, or $0.22 per share, in the same period a year ago.
PETS, which now yields over 6%, trades for just 12 times earnings while the balance sheet remains rich in cash.
Newmont Mining (NEM), the largest U.S. gold producer, reported Q2 profit that missed analysts’ estimates as costs were higher and production declined more than projected. Profit excluding one-time items was $0.59 per share, less than the $0.93 consensus estimate.
Sales declined 6.5% to $2.23 billion, and the miner dropped the high end of its full year gold production forecast by 100,000 ounces.
Newmont now trades for just 11 times earnings, while yielding more than 3% and offering a value-priced way to own gold in a portfolio.
Surprisingly, given that the stock had already plunged on a recent reduction in guidance, shares of printing and imaging solutions giant Lexmark International (LXK) tumbled anew, dropping another 12% despite turning in Q2 earnings that beat expectations by a penny.
Lexmark is now priced at less than five times the current consensus 2012 earnings per share forecast of $3.71, while the balance sheet boasts plenty of net cash and the dividend yield is pushing 7%.
Gorilla Glass, LCD and electronic component manufacturer Corning (GLW) turned in bottom-line results that were in line with analyst expectations of $0.31 per share, but cautious commentary from CFO James Flaws sank the stock price.
We remain long-term fans of GLW, especially as the stock now changes hands at 8 times earnings and the dividend yield has been pushed up to 2.6%.
Learn more about this financial newsletter at John Buckingham's The Prudent Speculator.