TRI Stock of the Day (MA)

Mastercard Inc. (MA) closed at $273.98 a new 52 week high giving the stock a PE of 40.83.  The stock price is up 27.62% year to date.  1st quarter earnings came in at $2.59/share ex. items topping analysts estimates by 29.5%.  2008 Earnings growth are expected to grow at a clip of 51%. 

TRI Stock of the Day (BIG)

Big Lots, Inc. (BIG) closed up $.98 or 3.81% to $26.73/share following a JP Morgan analyst upgrade.  The analyst upgraded Big from neutral to overweight and also increased his earnings estimate for the year to $1.81/share.  Big Lots is the nation’s largest broadline closeout retailer and is headquartered in Columbus, OH.  The computed profit margin from Big’s last quarter was 6.5%.  Year to date Big’s stock price has returned 71.87%.  The companies listed below all pay dividends ranging from .8%-1.7% except for Big Lots.

Discount Variety Store Industry	Big Lots (big)	Walmart (wmt)	Target (tgt)	Costco (cost)	Ind. Avg.
PE	17.3	18.35	16.17	26.7	20.59
ROE	17.10%	20.42%	18.42%	13.38%
Earn. Growth 08′	23.40%	9.60%	5.70%	13.70%
Prior 4Qs Avg. Earn. Surp.	33.10%	-0.08%	-0.83%	2.40%

TRI (big) end of year price target:  Estimated 08 EPS = 1.74 x earnings surprise rate of 12% = 08 EPS of 1.94 x PE of 20 = Price of $38.80/share.  Big Lots has a growth rate that is higher than many of the companies in the industry but is trading at a multiple lower than the industry average. 

Also on a side note the GDP number for the first quarter (economists are predicting .2%) will be released on Wednesday in addition the federal reserve meets and is expected to cut rates for the seventh time since last year. 

TRI Stock of the Day (DECK)

Deckers Outdoor Corporation (deck) was up $24.86/share or 21.28%.  For all those long DECK you were coupled with great news after Thursday’s close.  1-the company beat earnings estimates and 2-deckers raised their guidance for the year, as a shareholder you couldn’t possibly ask for anything more.

Deckers Outdoor Corporation (deck) is headquartered in Goletta, California and operates in the consumer goods sector.  Its products are footwear under the names of Simple, Teva, and UGG.  Or you may know these brands better as Teva sandals, Simple shoes, and UGG boots.   

The 1Q 2008 results has Deckers off to a great start this year.  Earnings per share were reported at .86/share 1Q 08′ vs. .73/share 1Q 07′.  Analysts expected earnings of .76/share which results in beating expectations by 13.15%, the results are not bad at all considering the operating environment all of the consumer discretionary companies are operating in. 

Deck also raised guidance.  They previously estimated earnings to grow at a clip of 21% above 07 earnings, they raised that figure to 27%.  In addition they raised the 08 revenue growth rate from 25% to 31%. 

The average earnings surprise from the past four quarters is 31.52%.  Companies can either surprise to the upside or the downside based on the analyst’s expectations. 

Deckers new EPS is 5.22 and based off of Friday’s closing price the stock is trading at a multiple of 27.34.  The apparel footwear and accessories industry average PE is 14.47 but the quarterly revenue growth is 56.2% for Deck vs. 5.2% for the industry.  Deckers is a growth monster and with this 1st quarter results in the bag it hushed the critics who thought UGGs were just a fad like Crocs.

An important note to add is the last three quarters of 2007 DECK did an outstanding job of increasing its profit margin from 4.29% to 14.94% to 18.2%. 

And for those who still don’t believe 

DECK	Beginning Price	Ending Price	% Return
1 year	$71.50	$142.76	99.66%
2 year	$42.71	$142.76	234.25%
5 year	$5.98	$142.76	2287.29%

If you would have invested $1,000 five years ago into DECK it would be worth $23,872 today and $10,000 would of gotten you $238,729.  The key is to find the next Deckers.

 

   

There seems to be some perverse human characteristic that likes to make easy things difficult.  -Warren Buffet