The stock market can be fickle. Body Central Corp.’s stock has been a favorite of investors since its initial public offering in October 2010, but one disappointing earnings forecast sent its stock tumbling down on Friday.
The stock, which sold for $13 in its IPO, had reached a record high of $30.93 on Tuesday. Investors had been sold on the continued strong sales results from the Jacksonville-based retailer of young women’s fashions.
But after its latest forecast, which came after the stock market closed Thursday, Body Central’s stock plunged by $11.64 to $17.28 at Friday’s opening bell.
The stock continued to fall and ended up losing almost half its value on the day, closing at $14.88.
Body Central reported first-quarter earnings of 36 cents a share, two cents higher than last year. But it also forecast second-quarter earnings to be between 26 cents and 28 cents, well below the average analysts’ forecast of 36 cents, according to data compiled by Thomson Financial. It also forecast full-year earnings of $1.34 to $1.38, below the average forecast of $1.52.
“Our sales trends softened in April and as a result, we are revising our expectations for 2012,” CEO Allen Weinstein said in a conference call with analysts.
Weinstein said Body Central’s direct sales business (catalog and Internet) and its new stores are doing well, but the company is lagging in comparable-store sales, which are sales at stores open more than one year.
Comp sales are considered a key indicator of a retailer’s performance. Body Central impressed with an 11.3 percent increase in comp-store sales in 2011.
But in the first quarter, while total sales rose 11.8 percent to $82.7 million, comp sales fell by 1.4 percent. The company is forecasting a comp sales drop of 5 percent to 7 percent in the second quarter.
All six analysts following Body Central had been rating the stock the equivalent of a “buy,” according to Thomson. But at least three of them lowered their ratings to the equivalent of “hold” after the earnings report.
“The second quarter guidance blindsided expectations,” Avondale Partners analyst Mark Montagna said in his downgrade note.
“We now believe that original expectations of an isolated, quickly fixable merchandise miss in the first quarter may have morphed into an issue that could take several quarters to remedy,” William Blair & Co. analyst Sharon Zackfia said in her downgrade note.
“While we see value for longer-term investors from an aftermarket valuation of roughly 15 times our new 2012 estimate, we are by no means certain that downward earnings revisions are over and prefer to move to the sidelines pending greater sales and earnings visibility,” she said.
Web.com impresses market
After completing a major acquisition in the fall, Web.com Group Inc. continued to impress investors by posting strong first-quarter results.
Jacksonville-based Web.com, which provides Internet site development services for small and medium-sized business, reported adjusted first-quarter earnings of 35 cents per diluted share, up from 21 cents the previous year and four cents higher than the average forecast of analysts surveyed by Thomson.
Web.com’s stock jumped as much as $3.57 to a record-high $16.43 Wednesday after the earnings report.
“This was the first full quarter post the transformative Network Solutions deal, and the combined entity appears to have delivered across the board,” FBR Capital Markets analyst David Hilal said in a research note.
Web.com has grown its business significantly by acquiring competitors Register.com in 2010 and Network Solutions last year.
One key note in the company’s results was a net gain of 1,600 subscribers to its services to a total of 2.96 million.
“Our return to positive net subscriber additions is both earlier than we previously anticipated and a significant accomplishment, considering that Register.com and Network Solutions were losing approximately 20,000 and 15,000 subscribers per quarter, respectively, prior to their acquisitions by Web.com,” CEO David Brown said in a news release.
“This return to positive subscriber growth was two quarters ahead of our expectations,” Hilal said.
Craig-Hallum Capital Group analyst Mitchell Bartlett said in a note Wednesday that he raised his rating from “hold” to “buy” on the stock “after posting two solid quarters of increasing organic growth and reversing the quarter sub losses to a net gain in the first quarter.”
Atlantic Coast Financial chairman resigns
Atlantic Coast Financial Corp. said in a Securities and Exchange Commission filing Thursday that Chairman Jay Sidhu has resigned.
Sidhu said in his resignation letter that Atlantic Coast’s board of directors had failed “to act to mitigate or significantly reduce risks facing the bank and the company.”
He also said certain recommendations were not implemented “with debate centered on issues of speed of implementation and style rather than performance, shareholder value creation and good governance.”
The SEC filing said a majority of the board disagreed with Sidhu and that recommendations “were considered by the board and not implemented because they were not in the best interests of all shareholders and did not reflect the appropriate strategic direction for the company and the bank.”
Jacksonville-based Atlantic Coast Financial, the parent company of Atlantic Coast Bank, reported a first-quarter loss of $1.7 million, or 69 cents per diluted share, earlier last week.
LPS stock down despite beating forecasts
Lender Processing Services Inc. reported adjusted first-quarter earnings of 59 cents a share, two cents higher than the average Thomson forecast. But its stock still fell $2.10 to $24.94 Thursday after the report.
“Disappointing default volumes coupled with concern over mortgage originations in the second half of 2012 offset a first-quarter beat and modestly better-than-expected second-quarter guidance,” Macquarie Securities analyst Kevin McVeigh said in a research note.
McVeigh has an “underperform” rating on the stock.
LPS, which provides technology services for mortgage lenders, continues to face legal issues resulting from accusations that one of its subsidiaries falsified documents used in foreclosure proceedings. The company did not give any new insight into the legal issues in its report.
D.A. Davidson & Co. analyst John Kraft said he is maintaining a “neutral” rating on the stock with a $27 price target.
“While still somewhat discounted, we believe this valuation adequately accounts for a cloudy industry outlook and the company’s ongoing legal and regulatory risks,” Kraft said in his note.
Regency has good start on financial goals
After laying out its financial goals to shareholders at its annual meeting Tuesday, Regency Centers Corp. on Wednesday indicated that it’s off to a good start in meeting those goals.
The Jacksonville-based shopping center developer said its net operating income, excluding termination fees, rose by 4.2 percent in the first quarter. Regency, which has a goal of increasing that by 3 percent annually, grew its net operating income by only 0.1 percent last year.
Regency also reported that occupancy at its operating properties inched up from 93.5 percent at the end of 2011 to 93.6 percent at the end of the first quarter. The company’s goal is to get occupancy up to 95 percent.
Regency also said its recurring funds from operations in the first quarter were 62 cents a share, up from 59 cents a year ago and seven cents higher than the average Thomson forecast. Regency also increased its FFO forecast for the full year from a range of $2.38 to $2.52 a share to $2.42 to $2.54.
Patriot Transportation earnings down slightly
Patriot Transportation Holding Inc. last week reported earnings from continuing operations rose by a penny in the second quarter ended March 31 to 17 cents a share.
Jacksonville-based Patriot recorded increases in operating profits from its real estate and mining royalties divisions. But operating profits fell 10.6 percent in its biggest segment, transportation.
The trucking business accounted for $25.4 million of Patriot’s $31.3 million in total second-quarter revenue. Patriot said the decrease in the transportation business resulted in part from higher workers compensation claim costs and increases in fuel costs, vehicle repairs and tire costs.
Patriot also announced it has engaged real estate brokerage firm Jones, Lang, LaSalle to explore the market value of its office and warehouse portfolio, which consists mainly of properties in the Baltimore-Washington area. But it didn’t say if the company is considering selling the portfolio.
“We have no preconceived decision regarding the outcome of this exploration,” CEO Tom Baker said in Patriot’s quarterly conference call.
Another loss for St. Joe
The St. Joe Co. last week reported a first-quarter net loss of $874,000, or one cent a share.
The real estate development company, which moved its headquarters from Jacksonville to the Florida Panhandle in 2010, has reported annual losses for four straight years.
St. Joe did not hold a conference call to discuss its quarterly report.
Stein Mart sales drop in April Stein Mart Inc. last week said total sales in the four weeks ended April 28 fell 0.9 percent to $95.2 million and comp-store sales dropped by 1.6 percent.
For the entire first quarter, the Jacksonville-based fashion retailer’s total sales fell 0.1 percent to $303.4 million and comp sales fell by 0.4 percent.