Last week was chock-full of corporate earnings, with six Jacksonville-based companies reporting quarterly results. The results were mostly positive, with four of the companies beating analysts’ forecasts.
The big winner was probably Landstar System Inc. The trucking company’s earnings of 64 cents per diluted share were 15 cents higher than last year’s adjusted third-quarter earnings and 2 cents higher than the average forecast of analysts surveyed by Thomson Financial.
Landstar also projected fourth-quarter earnings of 62 cents to 67 cents, higher than the average Thomson forecast of 60 cents.
“As I have said many times before, Landstar’s operating leverage comes from its ability to grow revenue and gross profit dollars from its safety performance and its ability to control costs,” CEO Henry Gerkens said in a conference call with analysts.
“We continue to drive our model and we have yet to leverage and take full advantage of our supply chain technology. Over the next several years, I anticipate Landstar would create even more operating leverage as additional revenue is added over our cost structure,” he said.
Landstar’s stock rose $1.56 to $45.76 last Monday after the report.
“We believe the company’s business model has demonstrated resilience in the presence of the loss of a large contract, more than offsetting the impact with growth in other areas,” Stifel Nicolaus analyst John Larkin said in a research note.
Larkin has a “buy” rating on the stock with a $53 price target.
But Robert W. Baird analyst Jon Langenfeld downgraded the stock to “neutral” after the earnings report, despite saying that Landstar is “executing well.”
“Moderating industry trends and the potential for further deceleration to pricing growth create a potential near-term headwind for truckers, Landstar included, and Landstar’s strong year-to-date performance leaves risk/reward more balanced,” Langenfeld said in his report
RailAmerica stock drops despite beating forecasts
RailAmerica Inc. also had a strong third quarter, with adjusted earnings per share of 24 cents, 6 cents higher than last year and 2 cents higher than the average Thomson forecast. But its stock fell 20 cents to $13.88 Wednesday after the late Tuesday report.
Dahlman Rose & Co. analyst Jason Seidl thought the market’s reaction to RailAmerica’s earnings was not “well-founded.”
“We believe that by having reported several consecutive quarters with in-line or better-than-expected results following two lackluster quarters after its October 2009 IPO, RailAmerica has set the bar higher for itself,” Seidl said in a research note.
“Indeed, the company’s execution has been solid in the last six quarters, without a single continuing operations earnings miss to Street expectations,” he said.
RailAmerica operates 43 short-line railroads in 27 states and Canada.
Rayonier’s strategy produces strong results
Rayonier Inc. last week said its planned CEO succession will not impact the forest product company’s strategy. And why should it?
Just a few days after announcing that Paul Boynton will succeed Lee Thomas as CEO in January, Rayonier reported adjusted third-quarter earnings of 71 cents a share, 20 cents higher than last year and 17 cents higher than the average Thomson forecast.
“Rayonier, more than any of its timber REIT peers, is truly in growth mode, as evidenced not only by the biological growth of its trees but by the consistent growth in its dividend, timberland ownership and specialty cellulose capacity,” D.A. Davidson analyst Steven Chercover said in a research note.
“We remain big fans of the Rayonier story and reiterate our $50 price target and buy rating,” he said.
But on a down day in the overall market, Rayonier’s stock fell $1.29 to $40.08 Tuesday after the earnings report.
LPS earnings down, but above forecast
Your view of Lender Processing Services Inc.’s third quarter depends on whether you’re a glass half-empty or half-full kind of person.
On the one hand, its earnings of 59 cents a share were 30 cents lower than last year’s third quarter. But it was 5 cents higher than the average Thomson forecast.
LPS also projected fourth-quarter earnings of 57 cents to 59 cents, better than the Thomson forecast of 54 cents.
LPS, which provides processing services for mortgage lenders, continues to be hurt by the slow housing market and the nationwide stall in the foreclosure process. But D.A. Davidson & Co. analyst John Kraft saw some bright spots from the company during its conference call.
“New CEO Hugh Harris suggested internal optimism is increasing. Regarding the company’s many legal and regulatory headwinds, while they are far from resolved, we are incrementally more optimistic that the company is making progress,” Kraft said in a research note.
LPS has been under investigation from state and federal regulators for more than a year and has been facing lawsuits regarding its role in the foreclosure mess, with allegations that one of its subsidiaries falsified foreclosure documents for its clients.
During the company’s conference call, Chief Financial Officer Tom Schilling said LPS is making progress on a consent order from federal regulators issued in April requiring the company, along with the nation’s largest mortgage lenders, to review its procedures.
Schilling said the process will last into the first half of 2012, but he is encouraged about the eventual outcome of the review.
“At the conclusion of this process, LPS will be the only provider of technology and services to the mortgage industry that has undergone the same thorough examination as the 14 largest servicers. We believe this will serve us well as the industry moves forward under new regulations and new servicing standards,” he said.
PSS matches forecasts
PSS World Medical Inc.’s earnings of 37 cents a share for its second quarter ended Sept. 30 were 2 cents higher than last year, matching the average Thomson forecast.
PSS, which distributes medical supplies to doctors’ offices and elder care facilities, rose $1.22 to $22.27 Thursday after its report on a day when the overall stock market rallied.
“Against low expectations and in a friendly tape, the market found relief in management tone and commentary, progress with strategic initiatives, healthy working capital management, robust/accretive capital deployment and fiscal year 2012 guidance reiteration, “ said Robert W. Baird analyst Eric Coldwell in a research report. Coldwell has an “outperform” rating on the stock.
William Blair & Co. analyst John Kreger said he is maintaining a “market perform” rating on PSS.
“While we are encouraged by the strong growth in the physician business and impressed by management’s ability to execute in this challenging environment, we are concerned that lower utilization trends across health care could affect results in the coming quarters,” Kreger said in his research note.
Another loss for Atlantic Coast Financial
Atlantic Coast Financial Corp. has no current analyst coverage, but it was not a surprise that the company reported a third-quarter net loss of $1.4 million, or 55 cents a share. The parent company of Atlantic Coast Bank has lost money every year since 2008.
Atlantic Coast said the bank’s core capital-to-assets ratio of 6.22 percent exceeds the normal regulatory requirement of 5 percent.
However, the company said under an Individual Minimum Capital Requirement agreement in May with the U.S. Office of Thrift Supervision, the bank was required to have a 7 percent capital ratio as of Sept. 30.
So it expects to be notified by the federal savings bank regulatory agency that it will have to submit a plan to raise its capital level above 7 percent.
Web.com completes acquisition
Web.com Group Inc. last week completed its acquisition of Network Solutions, creating an Internet services company that is expected to produce combined revenue of about $450 million this year.
Jacksonville-based Web.com paid $405 million in cash and issued 18 million shares of its stock to acquire privately owned Network Solutions. With the new stock issuance, the former owners of Network Solutions now own 37 percent of Web.com.