Tag Archives: Fool Travis Hoium

Business, Finance, Occupation & Industry

Apogee Earns a Lot, but Where's the Cash?

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By Rich Smith, The Motley Fool

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I won’t deny it: I’ve been a longtime fan of glassmaker Apogee Enterprises . Years ago, when the company decided to forgo some revenue by exiting the market for automotive windshields and focus instead on making higher-margin glass for building windows and picture framing, I thought that was the right call.

I haven’t been in the stock for a while, however, because Apogee first got caught up in a weak construction market (driving down sales) and then recovered faster than I expected (driving up the stock price). But now that things have settled down a bit, post-Financial Crisis, I’m taking a closer look at Apogee once again … beginning with last week’s fiscal 2013 earnings report.

So what has Apogee been up to lately? Here’s a quick rundown:

  • Full-year sales through March 2 rose 6%, with strong architectural glass performance driving growth.
  • Cost of goods sold rose only 2%, leading to an improved gross profit margin.
  • Muted growth in selling, general, and administrative costs further helped to improve operating income, which surged 619% year over year.
  • Net profits nearly quadrupled to $0.67 per share, diluted.

Sound good so far? Great. Now, here’s where it gets bad. A year ago, Apogee’s weak GAAP net earnings number belied rather strong cash production at the company. Today, we’re the reverse: Apogee’s inflated GAAP net income overstates true cash profitability.

Free cash flow at Apogee for fiscal 2013 came to just $6 million, a mere one-third of the headline “net income” number. Consequently, even after last week’s post-earnings 10% sell-off in the stock, Apogee looks seriously overvalued at today’s prices. The company’s 42 P/E ratio is only the beginning of the problem. Valued on free cash flow, Apogee now costs a staggering 125 times free cash flow.

Granted, Apogee’s weak free cash flow owes largely to the fact that, as CEO Joseph F. Puishys noted, Apogee spent $35 million on capital investments to help drive “future growth.” Sadly, though, that’s the punchline to my fellow Fool Travis Hoium’s analysis of Apogee’s performance last week.

Crunching the numbers, Travis notes that “the company will need to continue to grow” to justify its share price. Unfortunately, analysts tracking the stock believe Apogee will be lucky to achieve grow its profits at even 7% per year over the next five years. That’s not fast enough to justify the stock‘s valuation even if it spent nothing at all on capex.

It’s not nearly enough to entice me back into the stock, either.

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The article Apogee Earns a Lot, but Where’s the Cash? originally appeared on Fool.com.

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From: http://www.dailyfinance.com/2013/04/14/apogee-earnings/

Business, Finance, Occupation & Industry

Led by Microsoft, Big Tech Pulls Stock Market Higher

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By Matt Thalman, The Motley Fool

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Investors have been waiting for earning season to officially begin, and last night it finally happened. Alcoa report better-than-expected earnings, but slightly lower revenue than what most analysts wanted to see. While this didn’t overexcite many investors, it also didn’t send very many market participants into a selling frenzy this morning. And by the time the closing bell rang, most investors had already turned their attention to other matters, with the markets closing on a high note for the second day in a row.

Stocks rose across the board today and the indexes followed behind. The Dow Jones Industrial Average managed to rise by 59 points, or 0.41%, and closed just a stone’s throw away from 14,700, at 14,673. The S&P 500 performed slightly worse, rising 0.34% and resting at 1,568, while the Nasdaq managed to best the rest, pulling itself higher by 0.48%.

Intel’s stock rose 3.13% today. The company recently introduced a faster version of the Thunderbolt, and has its chips in the new Hewlett-Packard server line called Moonshot. Both Intel and HP have suffered lately as PC sales lagged behind mobile computing devices such as tablets and smartphones, but with the server business steaming up and both companies heavily involved, we should see profits begin to rise.  

The biggest Dow winner today was Microsoft , whose shares rose by 3.57%. A number of my colleagues have attributed today’s move to the attacks Microsoft has launched against Google. The argument against Google is that its open-source operating system gives the company an unfair advantage over the competition that charges for its operating systems. Fool Travis Hoium went further by saying he believes that, if Microsoft and a group of other technology companies can convince the EU to take action against Google, it may be a huge win for Big Softy and its shareholders.  

The price of Cisco’s stock also rose higher. Shares closed up 1.94% on very little news, but the company did announce that a longtime employee, John McCool would be leaving. McCool has been with the company for 17 years, and most recently held the position of senior vice president and chief technology officer for Cisco’s global enterprise unit. McCool grew Cisco’s catalyst line of switches and oversaw development and sales of specific data center products from 2008 to 2011. During that time, his unit increased revenue from $5 million to more than $1 billion.  

McCool will be replaced by Tom Wilburn, who has been with Cisco for eight years.

More on Microsoft’s stock

It’s been a frustrating path for Microsoft investors, who’ve watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

3 Stocks Worse Than the Dow

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By Rich Duprey, The Motley Fool

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So the markets decided the Cyprus bailout plan wasn’t a good thing. It certainly didn’t help that Jeroen Dijsselbloem, the head of the Eurogroup of eurozone finance ministers, said the Cyprus plan was a “template” for future bailouts, too. Oh, sure, he tried to walk back that statement, but you can’t put the toothpaste back in the tube once it’s been squeezed out, and the Dow Jones Industrial Average fell 64 points as a result.

The following three stocks got squeezed for different reasons, but don’t go running over the cliff with them like a bunch of lemmings just yet: This could just be a temporary situation. Let’s first see whether they had good reason to fall, as panic-fueled routs can sometimes lead to excellent buying opportunities.

Company

% Change

Trina Solar

(10.8%)

VirnetX Holding

(10%)

USG

(8.5%)

A dim future
It wasn’t just Trina Solar that collapsed yesterday, but Chinese solar stocks in general tumbled as JA Solar reported losses for the quarter that exceeded analyst expectations. Panel prices continue to fall, leading revenues to plunge 13% and the solar shop to idle capacity.

With Suntech Power’s subsidiary in bankruptcy, the worsening outlook for the industry dragged down Trina and Yingli Green Energy, which fell almost 10% itself yesterday. JA Solar was down 11% as well.

As the Fool’s Travis Hoium pointed out, it doesn’t matter that JA sold greater volumes of panels, because they’re being sold at such a discount it’s actually losing money on every panel that goes out the door. There’s only so long a company can do that, and considering this was the panel maker’s seventh straight quarter of recording losses, there’s plenty of reason to think Suntech won’t be alone for long.

Finger in the dike
Following the split-decision ruling in VirnetX’s patent infringement case against Cisco — the patents were ruled valid, but the equipment maker didn’t infringe on them — the Internet security specialist tumbled again yesterday as rumors swirled that Apple would appeal its decision. In December, a court ruled that Apple infringed on the same patents Cisco was cleared of violating and was ordered to pay $368 million.

Before the Cisco decision, VirnetX had cobbled together a string of victories that began a few years back with a $200 million decision over MicrosoftBut the singular loss has created a crisis of confidence that the wall will crack and the patent dam will crumble. The stock has lost more than 40% of its value in the past two weeks, and there’s nothing on the horizon at the moment that points to a turnaround.

A bitter pill to swallow 
Building-products supplier USG was pushed into bankruptcy protection in 2001 after it was beset with numerous lawsuits over asbestos claims and emerged in 2006 after making a final $3.1 billion payment to a trust set up for those claiming to …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Only One of These Stocks Won't Be a Winner

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By Rich Duprey, The Motley Fool

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Ten days and counting. The Dow Jones Industrial Average added to its string of consecutive days moving higher, notching another 83-point gain to close above 14,500 for the first time ever. Jobless claims came in lower than anticipated yesterday and a bunch more economic data is due out today so we could see the index extend its winning streak to yet another day.

These three stocks had nothing to celebrate, however. But don’t go running over the cliff with them like a bunch of lemmings just yet — this could just be a temporary situation. Let’s first see whether they had good reason to fall as panic-fueled routs can sometimes lead to excellent buying opportunities.

Company

% Change

VirnetX

(27.8%)

LDK Solar

(10.1%)

Navidea Biopharmaceuticals

(7.9%)

That’s nuts
Proving it doesn’t matter if you win the battle only to lose the war, VirnetX announced its patents were validated by a jury, but it nevertheless lost its patent infringement case against Cisco because the jury says it didn’t violate them.

VirnetX claims to essentially owns the rights to the entire family of 4G and LTE security standards and has enjoyed a string of victories over industry behemoths such as Microsoft and Apple, the latter of which got socked with a $368 million penalty because its FaceTime software violated VirnetX’s patents. Those are the same ones that Cisco was accused of infringing upon.

But this time the jury ruled that, although VirnetX’s patents are valid over the prior art claims Cisco advanced, the network equipment maker’s routers that run virtual private networks didn’t violate them. Seems a bit of a head scratcher in reasoning, but VirnetX says it’s still going to assert its patents and license the technology and, besides, the Apple decision remains unaffected.

While disappointing certainly, the market‘s reaction seems a bit overblown. After a string of wins, one loss should hardly cause the elimination of more than a quarter of VirnetX’s market cap.

Lights out
With Suntech Power teetering on the brink of bankruptcy because the Chinese government won’t bail it out, the prospects for other solar shops surviving are diminishing as well. LDK Solar suffered a loss on the market yesterday second only to Suntech’s because it could soon be in the same financial crisis as its peer.

Suntech is expected to be pushed into default today over missed bond payments and LDK could face a similar situation next year. The Chinese government has suggested consolidation is needed in the industry and its decision to let Suntech go under rather than throw good money after bad is the first tangible evidence that it was serious.

But other solar shops might face more dire circumstances sooner than LDK, as the Fool’s Travis Hoium points out JA Solar has bonds due in May and Trina Solar follows in July. Not every solar company is on the brink of folding financially, of course, …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Elon Musk's SolarCity Is Electrifying the Energy Industry

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By Tamara Rutter, The Motley Fool

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SolarCity   hit the public market in December, with an initial public offering price of $8 per share. The stock charged ahead in its first day of trading to close at $11.79, or 47% above its initial offering price. The fun didn’t stop there. Shares continued to gain momentum in the months following its IPO. In fact, shares are up more than 55% year to date.

That’s not bad for a company backed by rocket man Elon Musk. If you remember, Musk’s electric-car company, Tesla Motors , was one of the most shorted stocks on the Nasdaq following its IPO. We’ll get back to that in a minute. First, let’s shed some light on where SolarCity is headed in 2013 and see whether this stock is worthy of your portfolio.

Seeing the light
SolarCity, which installs solar panels and helps customers finance them, is trying to survive in a market that has burned investors in the past. Of course, it hasn’t been easy for the company to gain investor confidence when the pain of past failures, such as Solyndra, is still fresh in investors’ minds.

However, SolarCity is somewhat immune to the cost pressures that have unraveled other solar energy companies before it. Unlike names such as First Solar or Trina Solar, SolarCity doesn’t manufacture the solar panels. SolarCity found its niche in leasing panels to corporate and residential customers and overseeing the financing of such installations.

Meanwhile, First Solar and Trina Solar are locked in price and efficiency wars over the panels they produce. In fact, fellow Fool Travis Hoium recently explained in depth how First Solar‘s module manufacturing business is dragging down the company. While it makes sense for a company like First Solar to transition to a solar systems-focused business, it would mean increased competition for SolarCity.

Today, SolarCity stands out as the largest installer of residential solar energy systems in the United States. Still, it hasn’t yet earned a profit. The company just reported a wider-than-expected loss for its fourth quarter, its first as a public company.

SolarCity reported a net loss of $1.10 per share on revenue of $28 million for the period, because of increased operating costs. Analysts on average had estimated a per share loss of $0.54, according to Reuters.

But despite the disappointing earnings, SolarCity has one thing its solar peers don’t: The company’s chairman is billionaire entrepreneur Elon Musk.

Keeping it in the family
As far as betting on green tech goes, Musk is laughing all the way to the bank. The SpaceX and Tesla Motors CEO nearly bankrupted himself getting these companies to where they are today. However, Musk is now the majority shareholder in two of clean tech’s most promising companies: Tesla and SolarCity.

Musk had a big hand in developing the business model for SolarCity. His cousins later founded the company in 2006 and have retained control of SolarCity throughout its public debut: …read more
Source: FULL ARTICLE at DailyFinance