Imus, Spears, Ethanol under $1 a gallon, Concentration
– Jesus, this stuff is just wrong….
– Wealth and brains, nothing in common
– Could this the answer to oil?
– Whitney Tilson makes a great case for a concentrated portfolio.
Categories
Categories
Dow Chemical’s Earnings Call Notes
Here are the key take aways from the recent call for Dow Chemical (DOW)
CEO Andrew Liveris:
* record equity earnings of $1.1 billion, up 17% from 2006 and topping $1 billion for the first time
* earnings reach has been lifted to well north of $3 per share and that we will not experience the trough in 2010, ’11 (this is up from $2 to $3 earlier).
* Once the PIC JV closes, we will have a very strong cash position to fuel a share buyback if we want to versus our other options. Repeat, we will do share buybacks if we cannot find accretive M&A.
* two-thirds of sales are from outside the United States
* “US economy could go further south, especially through the first half of the year. My belief however, this is more a crisis of faith and not a crisis of markets, and as I stated the last week to the media, there are no signs of a recession in our production chains.”
Liveris in response to a question about the deployment of cash to shareholders:
“Well, I think I was very clear in my prepared remarks. I think this year we are going to have to cross the river, so to speak. It really we’ve been very disciplined on the share buyback and dividend increases. We’ve had lots of organic growth that we are funding. You can see that in our expense increase. We’ve done some bolt-ons. We have targets we are interested in, but frankly if they are not at the right price, then we will just go to the deep old strategy and just keep increasing remuneration of our shareholders and that won’t be several years out, that will be this year.”
Geoffery E. Merszei – Executive Vice President and Chief Financial Officer responding to the same question:
“Well, I mean we will as we complete our current program, we will obviously, I would say, by the again depending on how rapidly we execute the existing $800 million, $850 million, so between now and middle mid-year we will announce another program. I think when Andrew was referring to our priority is as an accretive M&A in order to complete our strategy our transformational strategy, in the event that does not happen, then I think you can count on a sizeable buyback program, which you can relate to the proceeds of our asset-light ballot.”
Bottom line? the market will not commit to Dow until they say “we are doing “x” on “y” date. Then they will pile into the shares. But, has Liveris done anything up until this point that would lead anyone to believe that either a major acquisition or a massive repurchase is not going to happen this year?
Dow currently sports a $35 billion market cap and by the time they get the $9.5 billion payment from Kuwait, they ought to be sitting on almost $12 billion (assuming no large acquisition before then). That would repurchase a whole boat load of shares. Maybe a special $3 a share dividend? With under 1 billion shares outstanding, it would cost less than $3 billion dollars and still leave plenty to repurchase shares.
This is going to happen, investors in this environment are just to skittish to commit until they are told “it will happen on this date”. It is ok, I’ll just sit back, collect my 4.5% dividend in the form of more shares and wait.
If this thing dips to $35 or $36 again, I think I may be a buyer. It is just too cheap at those levels.
Disclosure (“none” means no position): Long Dow
To: All Sears Holdings (SHLD) Associates
From: Edward S. Lampert, Chairman of the Board
“Today we announced that Bruce Johnson, currently our executive vice president for supply chain and operations, will serve as Sears Holdings’ interim chief executive officer and president, replacing Aylwin Lewis, who will step down in February.
I want to thank Aylwin for his dedication and leadership since joining as the chief executive officer of Kmart beginning in October 2004. He led the integration of Kmart and Sears and helped meld these two cultures. He has exemplified the qualities that are core to our company and its principles: hard work and ethical leadership. I have enjoyed working with Aylwin over the last three years and I appreciate his contributions to the company and the support he has provided me personally.
Indeed, we appreciate the hard work and efforts of all Sears Holdings associates. We know we are facing a difficult macroeconomic and retail environment, but we also expect to come out of these challenging times as an improved and stronger company. As we recently explained, we are implementing some significant changes to our organizational structure which will bring us to the next phase in our company’s history. In light of these changes, the Board and I believe that now is the right time to put in place new leadership to take the company forward and therefore we have begun a formal search for a new chief executive.
We are fortunate that we have such a strong interim leader in Bruce Johnson. Bruce will begin implementing the important organizational changes that will allow our business units to operate with greater independence, focus, and efficiency. Bruce is an experienced retail executive. He joined Kmart in 2003 after five years at French retail chain Carrefour, where he served as director, organization and systems and as a member of the management board. Before that, Bruce spent 16 years at Colgate-Palmolive in various positions. Bruce has worked hard not only to integrate and improve our supply chain and increase our direct sourcing of product, but in 2006 took responsibility for store operations as well. As interim CEO, Bruce will oversee the separate business units we announced last week.
I will continue to lead the Office of the Chairman and focus on identifying and attracting talented executives to our company, including the search for a new chief executive officer. I will also work to ensure that our new structure supports our objectives of greater accountability, faster decision-making, and increased profitability. I believe the reorganization will allow our leaders to be more productive and efficient and allow us to attract talented executives who are eager to take on the challenges of running their own businesses. As a result of these structural changes, I will no longer have any direct reports.
Given the number of changes that we have announced in recent weeks, I would like to provide you with some context for what is happening both at our company and within the markets generally and remind you of what we have accomplished thus far.
Most of you know from the news that the U.S. economy is facing significant difficulties and we are seeing a broad-based retail slowdown. We have also experienced disappointing financial performance in our business in this current fiscal year. However, we have significant opportunities and we must remain steadfast and resolute in our goal of becoming a great retailer.I never underestimated the enormity of the challenges facing Kmart and Sears and the hard work it would take to achieve our goal. I remain confident in our ability to ultimately succeed, even if there are steps backward along the way. We have been willing to make tough decisions and choose a different path from many of our peers and continue to do so. The leadership changes and the reorganization are examples of the important and necessary next steps to achieve our goals.
As you all know, both Kmart and Sears have been through many years of struggles. Those of you who were at Kmart before 2003 helped the company emerge from bankruptcy, despite the predictions of virtually all retail experts at the time. In fact, many of these experts predicted that the company would not survive at all. Instead, Kmart went from a company that lost over $1 billion in both 2001 and 2002 to a company that made almost $1 billion in 2004. Now, almost five years after emergence, Kmart still operates over 1300 stores throughout the United States, making it one of the largest retail companies in the country.
For the past three years, all of us have been charged with the very challenging task of integrating two very large companies. Each of you has made important contributions to this enormous endeavor. While we have a long way to go, you should take great pride in what you have accomplished to date. In fact, since May 2003, shares of what is now Sears Holdings have increased in value by almost ten times. It is easy to lose sight of how much value has been created over the past five years during a time of stock market uncertainty and tumult. Sure, our stock is off its highs, just like many department stores and other retail companies, but our shareholders have been richly rewarded over the past half decade.
While we continue to recognize and address the challenges ahead of us, we can also be proud that, thanks to our collective efforts, we saved almost 150,000 jobs in taking Kmart out of bankruptcy, a fate from which many retailers have failed to recover. Importantly, we also continue to believe that we can mold Sears Holdings into a successful, sustainable, and exciting company that will offer a compelling choice to customers. There will be many difficult decisions to come and the recent economic downturn which has affected practically all retail companies has set back our progress. However, it has not deterred us and we will continue to move forward with our strategy and take all appropriate actions to stabilize our business.
Sears Holdings is one of the largest retail companies in the world, one of the largest employers in the world, and one of the most profitable retail companies in the world. We remain focused on the creation of long-term value for our shareholders and have shown our ability to deliver since Kmart’s emergence from bankruptcy. We feel that we have been very successful so far, yet success doesn’t come without setbacks. We intend to make decisions to increase the probabilities of success in the future, although certainly not all decisions will lead to the outcomes we expect.
Our belief in our company is reinforced by the fact that we have invested over $4 billion since the third quarter of 2005 in repurchasing our own shares, while at the same time paying down debt and funding our pension plan. We have believed that investing in our own company stock has been a superior alternative to acquiring other businesses, and it has not prevented us from making investments in our stores and infrastructure. During that time we have also made significant investments in information technology as well as in building our design and online capabilities. However, making these investments requires us to believe that we will earn a return on them. We are not going to simply throw money at problems, as some have suggested and as others have done unsuccessfully. Instead, we are going to test and learn and when we find things that we believe can make a difference – such as Lands’ End shops inside Sears for example — we will roll them out aggressively and iterate along the way.
We are early in the game, and thanks to all your efforts, we have a great chance of victory. On behalf of the leadership of our company, thank you for your hard work and commitment, and we look forward to building a great company with your help.”
The basic summation of the letter around the web is that this letter is an admission of Lampert’s failure. That he will “no longer have any direct reports” somehow means that his vision has not succeeded.
What is missed is that shareholders who have been with him are still up ten-fold in their shares. Lampert and his discipline were precisely what both Sears and Kmart needed when he bought them. Let’s not forget (it seems to have been) that both of these chains were on the road to extinction 5 years ago. Now they produce $50 billion in sales.
What the letter means is that Lampert recognizes he has taken the chain as far as he can. He knows what his strengths are and also is, as Berkshire Hathaway’s (BRK.A) Warren Buffett has said, “smart enough to know what I don’t know”. Now, was this “the plan” all along? Who knows. But, if you look at how far Sears seems to be in the process already, one can only assume that this has been in the works for a while.
My gut says Lampert knew this day was coming and had the reorganization plans “on the back burner”. The current state of retail in general and the US economy as a whole probably expedited their implementation.
Far from being an admission of failure, Lampert’s move is simply a very smart man placing ego aside and doing what is best at this time for his company. Why is that a bad thing?
Disclosure (“none” means no position): Long Sears
Categories
Wednesday’s Upgrades and Downgrades
Upgrades
Evergreen Solar (ESLR)= Janco Partners Mkt Perform » Buy
Virgin Media (VMED)= Citigroup Hold » Buy
El Paso Electric (EE)= Soleil Hold » Buy
Chattem (CHTT)= Stanford Research Hold » Buy
Sysco (SYY )= Piper Jaffray Neutral » Buy
Zoran (ZRAN)= Needham & Co Buy » Strong Buy
CGI Group (GIB)= RBC Capital Mkts Sector Perform » Outperform
Toyota Motor (TM)= HSBC Securities Underweight » Neutral
Medivation (MDVN)= Stanford Research Hold » Buy
Estee Lauder (EL)= UBS Neutral » Buy
Sonic (SONC)= Credit Suisse Neutral » Outperform
Stealthgas (GASS)= Citigroup Hold » Buy
Novell (NOVL)= Jefferies & Co Hold » Buy
Flamel (FLML)= Merriman Curhan Ford Neutral » Buy
Take-Two (TTWO)= Lehman Brothers Underweight » Equal-weight
Con-way (CNW)= JP Morgan Neutral » Overweight
Arris (ARRS)= UBS Neutral » Buy
Geron (GERN)= UBS Neutral » Buy
ArQule (ARQL)= UBS Neutral » Buy
ADC Telecom (ADCT)= UBS Neutral » Buy
Downgrades
Union Banc (UBSH)= Ferris Baker Watts Buy » Neutral
American Community Bancshares (ACBA)= Stanford Research Buy » Hold
Sterling Banc (SBIB)= Morgan Keegan Outperform » Mkt Perform
Blue Nile (NILE )= AmTech Research Neutral » Sell
Morgan Stanley (MS)= Deutsche Securities Buy » Hold
VMware (VMW)= Caris & Company Buy » Average
PMI Group (PMI)= Wachovia Outperform » Mkt Perform
Triad Guaranty (TGIC)= Wachovia Outperform » Mkt Perform
Journal Register (JRC)= Wachovia Mkt Perform » Underperform
McClatchy (MNI)= Wachovia Outperform » Mkt Perform
Molex (MOLX)= Credit Suisse Neutral » Underperform
Walt Disney (DIS)= Citigroup Hold » Sell
Westamerica Banc (WABC)= Sterne Agee Buy » Hold
McDonald’s (MCD)= Bear Stearns Outperform » Peer Perform
NYMEX (NMX)= Citigroup Buy » Hold
Categories
"Fast Money" for Wednesday
Wednesday’s Picks
Pete Najarian said that Crocs (CROX) $30.61 was looking attractive again after losing more than half its value since that ugly sell-off in November.
Guy Adami called Merck (MRK) $48.01 a “compelling” trade after its earnings Wednesday.
Tuesday’s Results
Guy Adami recommends the NYSE Euronext (NYX) $78.04 Close $79.68 GAIN
Karen Finerman prefers Goldman Sachs (GS) $196.25 Close $195.05 LOSS
Pete Najarian likes Nasdaq (NDAQ) $44.07 Close $45.49 GAIN
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 3-1
Jeff Macke= 6-4
Tim Seymore= 2-1
Guy Adami= 5-7
Pete Najarian= 4-5
Karen Finerman= 5-5
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Karen Finerman= 40-30 = 57%
Categories
52 Week Low’s 1/29
(TVHU) Media & Entmt Holding …
(TOMO) Tomotherapy Inc
(TKPU) Polaris Acquisition Corp
(STKL ) Sunopta Inc
(RLH ) Red Lion Hotels Corp
(RCRC) Rc2 Corp
(IKN ) Ikon Office Solutions Inc
(IIIU ) Information Services …
(ICUI ) ICU Medical Inc
(HMG ) HMG/Courtland Propert …
(HLDU ) Secure Amer Acquisiti …
(CZFC ) Citizens First Corp
(CPI ) Capital Properties, Inc
(CPBC ) Community Partners Ba …
(CCU ) Clear Channel Communi …
(AVRX) Avalon Pharmaceutical …
(AMLN ) Amylin Pharmaceutical …
Disclosure (“none” means no position):
Wal-Mart (WMT) got the jump on retailers like Target (TGT) during the holiday season by starting deep discounts in October. Now it has beaten them again for a piece of the upcoming stimulus plan.
Wal-Mart announced Tuesday that it will cut prices between 10 to 30% this week on groceries, electronics and other home-related products in an effort to “help with added savings throughout the year, focusing especially on what people want, when they need it,”.
The initial cuts come during the build up to the Super Bowl and will focus on game related items. How big is the Super Bowl pie? Try $9.5 billion. This will be a blow to retailers like Costco (COST) and BJ’s (BJ).
“We will have more of these during the busier shopping periods of the year like Valentine’s Day and Easter,” Wal-Mart spokeswoman Melissa O’Brien said.
Here is the genius of the plan. Wal-Mart said “it will offer no interest for 18 months on purchases of $250 or more with a Wal-Mart Credit Card. Now, folks can add and those who are looking at $300 per person can go to Wal-Mart and get a jump spending that money. Wal-Mart will be smart and keep most folks limits below $500 so that the bills can easily be paid when the checks come in.
Not only will Wal-Mart enable folks spend those checks and get a great value for them, they will front them the cash to do so.
Brilliant…
Disclosure (“none” means no position): Long Wal-Mart, None
Categories
Tuesday’s Links
McCain, Bloggystyle, HC, Apple
– The reason you cannot vote for McCain, he MUST get this stuff
– Adam’s latest effort
– Funny how she calls a truce only when the barbs get turned on her.
– When a stock is at lofty levels and questions get raised, it gets whacked..
12 days ago I documented the results of the first two auction of the Fed. In the latest auction, rates fell almost a full point.
On January 28, 2008, the Federal Reserve conducted an auction of $30 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:
Stop-out rate: 3.123 %
Total propositions submitted: $37.452 billion
Total propositions accepted: $30.000 billion
Bid/cover ratio: 1.25
Number of bidders: 52
The simple analysis of the results means that banks like Citigroup (C), Bank of America (BAC), Well Fargo (WFC) and Wachovia (WB) are getting access to capital well below what they can then turn around and lend it.
Disclosure (“none” means no position):Long Wachovia and Citigroup, None
Sooner or later investor are going to catch on to the fact that Sherwin Williams (SHW) is not a “housing stock”
First the results:
— Consolidated net sales increased 2.5% in the year to a record $8.01 billion
— Diluted net income per common share increased 12.2% in the year to a record $4.70 per share including a goodwill impairment charge of approximately $.08 per share
— Earnings before interest, taxes, depreciation and amortization increased $100.7 million in the year to a record $1.148 billion
— Net operating cash increased $58.7 million in the year to a record $874.5 million
— Seven acquisitions completed during 2007 increased consolidated net sales 1.4% in the year and 2.9% in the quarter.
— The Global Group’s segment profit improved 23.2% in the year and 34.1% in the quarter
— The Company purchased 3,000,000 shares of its common stock in the quarter and 13,200,000 shares in the year.
— The Company had remaining authorization at December 31, 2007 to purchase 27,000,000 shares (out of 124 million outstanding).
CEO Chris Connor said, “In the first quarter of 2008, we anticipate achieving a low-to-mid single digit percentage increase in consolidated net sales versus the first quarter of 2007. At that anticipated sales level, we estimate diluted net income per common share in the first quarter of 2008 will be in the range of $.72 to $.80 per share compared to $.83 per share earned in the first quarter of 2007. For the full year 2008, we expect to achieve a low-to-mid single digit percentage increase in consolidated net sales over 2007. With annual sales at that level, we anticipate diluted net income per common share for 2008 will be in the range of $5.00 to $5.15 per share compared to $4.70 per share earned in 2007.”
Simply put, at the low end of the earnings range, Sherwin will trade at a PE in 2008 of 11 and will grow EPS 6.3% to 9.5% and sport a 2.2% yield.
Connor and company made some brilliantly timed acquisitions that were immediately accredive in 2007 to earnings due to the prices paid for them. Sherwin sits on plenty of cash for either additional purchases or to finish to share repurchases. Sherwin has averaged about $200 million a year in share repurchases recently and given its cash from operations, that will be easily attainable in 2008 without the addition of debt.
Can you imagine what this company will do when housing does turn?
Disclosure (“none” means no position): Long Sherwin
Categories
Leucadia Now Owns 19.4% of AmeriCredit
In an SEC filing this morning, Leucadia (LUK) disclosed its ownership stake in AmeriCredit (ACF).
From the filing:
As of the close of business on the date of this Schedule 13D (1/29), the
Reporting Persons may be deemed to beneficially own collectively an aggregate of
22,159,300 shares of Common Stock, representing approximately 19.4% of the
shares of Common Stock presently outstanding. All percentages in this Item 5 are
based on 114,162,314 shares of Common Stock outstanding as of October 31, 2007,
as set forth in the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2007.
Disclosure (“none” means no position): None
Categories
Dow Earnings: Vanilla
Dow Chemical (DOW)reported earning this mornings and the results were as expected.
— Sales for Q4 set a new Company record, rising 16
percent from the same period last year to $14.2 billion.
— Earnings for the quarter were $0.49 per share. Excluding certain items,
earnings for the quarter were $0.84 per share. Earnings in the fourth
quarter of 2006 were $1.00 per share. Excluding certain items,
earnings for that quarter were $0.98 per share (see supplemental table
at the end of the release for a description of these items).
— Compared with the same quarter of 2006, price increased 12 percent,
with gains in all operating segments and geographic areas.
— Volume was up 4 percent compared with the fourth quarter of last year,
with improvements in all operating segments and in every geographic
area outside of North America. Asia Pacific recorded volume gains of 10
percent, and Europe 6 percent.
— Purchased feedstock and energy costs climbed $1.7 billion compared with
the fourth quarter of last year, the largest year-over-year increase in
the Company’s history.
— Equity earnings increased 21 percent year-over-year, totaling $294
million for the quarter.
2007 Full-Year Highlights
— 2007 sales increased 9 percent compared with 2006, setting a new record
for the Company of $53.5 billion.
— Dow reported full-year earnings of $2.99 per share. Excluding certain
items, earnings for the year were $3.76 per share. Earnings for 2006
were $3.82 per share. Excluding certain items, earnings for 2006 were
$4.25 per share (see supplemental table at the end of the release for a
description of these items).
— Equity earnings rose 17 percent compared with 2006, to $1.1 billion,
exceeding $1 billion for the first time in the Company’s history.
CEO Andrew Liveris said, “This was a good quarter … a quarter in which our entire organization responded with speed and discipline to an unprecedented run-up in feedstock and energy costs, raising price to mitigate much of the $1.7 billion year over year increase. And our focus on price did not come at the expense of volume. Volume gains were reported in all operating segments, a testament to our price/volume management capabilities.”
2007 is in the books and 2008 is what we need to focus on now. I had a number of questions yesterday and hopefully on the call at 10 am today they will be answered.
All things considered, with the explosion of oil prices in 2008, management did an outstanding job not letting costs destroy the year. Liveris called 2007 a “transformational year” and as so far as the structure of the company goes, it was. 2008 needs to be the “transformational year” for putting the plan into action and delivering on the bottom line.
Disclosure (“none” means no position): Long Dow
Categories
Sears.com Emphasis a Logical One
for anyone following my retail online tracing posts here, this move by Sears Holdings (SHLD) makes perfect sense.
Sears.com tapped an ex-Microsoft (MSFT) executive to the head of Sears’ newly formed online division. The division will be one of the 5 announced as part of the retailer’s recent realignment. James Barr, a 12-year Microsoft executive and general manager of MSN Shopping and Marketplaces, will take over the online unit effective Feb. 2 as a senior vice president of Sears Holdings.
Barr joins former Walmart.com (WMT) executive, Neil Day, the newly-named Chief Technology Officer for the Sears.com group.
The Sears.com and kmart.com combination ranked just behind both Walmart.com and target.com (TGT) during this recent holiday season. They consistently outdid rivals like JC Penny (JCP), Kohls (KSS) and Macy’s (M). This is a area that Sears is seeing results and to place an emphasis here as they are freeing up their brands to chase results on their own makes perfect sense.
The addition of a walmart.com executive has to encourage investors as the Wal-Mart site has dominated the landscape the for quite some time.
Disclosure (“none” means no position):Long Sears, None
Categories
Harley Davidson’s Earnings Call: 2008 OK
Here are some of the more notable elements of Harley Davidson’s (HOG) conference call.
International shipments:
* 22,114 units were up 20.5% compared to the same quarter last year.
* International shipments grew to 27.2% of total worldwide fourth quarter shipment volume compared to 19.8% in the fourth quarter of 2006.
* International shipments for the full year grew to 26.9% of the mix, up from 21.8% in 2006
* Europe was once again strong with a year-over-year sales increase of 10.9%, Japan was up 4.5%, Canada was up 45.9%, or 605 units, primarily due to better product availability during the quarter. The remaining 45 or so countries where motorcycles are sold were up a collective 28.6% for the quarter.
From the Q % A:
James Hardiman – FTN Midwest
Okay, and then my second question, I was wondering if you could just flesh out a little bit more sort of how you’ve been able to remain so strong internationally, and I guess especially in the Canadian market, and where you expect that to go if — you know, when you look at some of the economies of some of the countries that you do business in, are they correlated to the U.S. market? Sort of what you are seeing internationally and whether or not we can expect that to continue?
James L. Ziemer
I’ll answer that question — on retail sales outside the U.S., we are strong in all the markets outside the U.S. without exception when you look at it on a total year basis, whether it be Canada or Europe or Australia or Japan, and the markets of Latin America.
That’s driven by many different things. Their economies are doing well. Certainly the weak dollar has contributed to some of that but as we continue to build a distribution network and we acquire some of our independent distributors over the last five, six years, I mean, we are doing things and rationalizing the dealer networks in many of the countries we sell into. We’ve acquired in the last year the Australian distributors. We have just recently acquired the distributorship in Mexico, so we continue to take on that strategy so that as we own the distribution network, we can operate that for the long-term health of the business and sell customers the experience that helps make us strong and differentiates us from our competition.
Q & A 2008 Outlook:
Ed Aaron – RBC Capital Markets
A couple of questions; first, you said recently that your guidance for ’08 sort of operated under the assumption that 2008 economic environment would be similar to 2007, but you didn’t change your guidance. Is that still your assumption or are you now planning for a weaker economy in the U.S. but feel better about your international business?
Thomas E. Bergmann
Just to add on, I think Jim’s got it. There is no doubt we think 2008 is going to be a challenging year for us and for the industry. And you know, when we put the guidance out, things — probably the indications have gotten a little, have deteriorated a little further, so it’s going to be a challenging year.
But as Jim said, our guidance was built around a cautious approach to the year and we are going to look at the environment very closely and watch it and we’ll make the appropriate changes if we need to at any point in time.
But the good thing is the international business, as you mentioned, continues to do very well and we are continuing to be very pleased with the progress we are making in the markets and it continues to deliver strong results and we see that continuing in 2008.
In response to another question:
Thomas E. Bergmann
Clearly there’s a lot that goes into the bottom line of delivering our EPS guidance and that’s really management’s challenge this year, is to work through the challenging economy here in the U.S., continue to grow our international business, allocate capital smartly, and the share repurchase activities or other business initiatives to drive growth. And we’re prepared to do that. It’s going to be a challenging year but at this point in time, with all the activities around the 105th and international, we’re at this point in time comfortable with the guidance.
Bottom line? HOG expects the US to be anemic again in 2008 but international operations to continue their upward surge. I have confidence in the 4% to 7% EPS growth estimates and that means shares will trade below 10 times 2008 earnings and continue to yield over 3% at this levels. For a company like HOG, that is a steal.
Disclosure (“none” means no position): Long HOG
Categories
Tuesday’s Upgrades and Downgrades
UPGRADES
NuVasive (NUVA)= SMH Capital Short » Neutral
Dime Community (DCOM)= FTN Midwest Neutral » Buy
Pantry (PTRY)= William Blair Mkt Perform » Outperform
WNS (WNS)= Janney Mntgmy Scott Neutral » Buy
Zoran (ZRAN)= Canaccord Adams Sell » Hold
Bill Barrett (BBG)= Deutsche Securities Hold » Buy
First Charter Corp. (FCTR)= FTN Midwest Neutral » Buy
DaVita (DVA)= Piper Jaffray Sell » Neutral
Whiting Petroleum (WLL)= RBC Capital Mkts Underperform » Sector Perform
UAL Corp. (UAUA )=Soleil Hold » Buy
EnergySolutions (ES0= JP Morgan Neutral » Overweight
Canon (CAJ)= Lehman Brothers Equal-weight » Overweight
Exterran Holdings (EXH)= Citigroup Hold » Buy
Tidewater (TDW)= JP Morgan Neutral » Overweight
Western Refining (WNR)= Credit Suisse Underperform » Neutral
Tesoro (TSO)= Credit Suisse Neutral » Outperform
Holly (HOC)= Credit Suisse Underperform » Neutral
Caterpillar (CAT)= Bear Stearns Peer Perform » Outperform
Eastman Chem (EMN)= UBS Neutral » Buy
Kimberly-Clark (KMB)= Lehman Brothers Equal-weight » Overweight
General Mills (GIS)= Citigroup Hold » Buy
Kellogg (K )= Citigroup Hold » Buy
Merck (MRK)= UBS Neutral » Buy
Plantronics (PLT)= JP Morgan Underweight » Neutral
Gentex (GNTX )= UBS Sell » Neutral
Weatherford (WFT)= Friedman Billings Mkt Perform » Outperform
Medarex (MEDX)= Jefferies & Co Hold » Buy
Cytec (CYT)= Jefferies & Co Hold » Buy
ICF International (ICFI)= Jefferies & Co Hold » Buy
South Fincl Group (TSFG)= Keefe Bruyette Underperform » Mkt Perform
DOWNGRADES
RC2 (RCRC)= Wedbush Morgan Buy » Hold
Old Second Bancorp Inc. (OSBC)= Sandler O’Neill Hold » Sell
H.B. Fuller ( FUL)= KeyBanc Capital Mkts Aggressive Buy » Buy
Raven Industries (RAVN)= Piper Jaffray Neutral » Sell
Allied Irish Banks, plc. (AIB)= UBS Neutral » Sell
Bank of Ireland (IRE)= UBS Buy » Neutral
Molina Healthcare (MOH)= Deutsche Securities Hold » Sell
Noble Corp (NE)= JP Morgan Overweight » Neutral
Shire Pharm (SHPGY)= Bernstein Mkt Perform » Underperform
Walgreen (WAG )= Citigroup Hold » Sell
Fed Investors (FII+ Keefe Bruyette Outperform » Mkt Perform