Stein Mart Inc. reported a basically break-even third quarter, which is actually a positive result because the Jacksonville-based fashion retailer typically loses money in that pre-holiday quarter.
Stein Mart reported a small net profit of $28,000, which translates into zero cents per share. In the third quarter of 2012, the company had a net loss of $1.7 million, or 4 cents a share.
As the company previously reported, total sales in the quarter rose 6.1 percent and comparable-store sales rose 4.8 percent. Comparable-store sales, which are sales at stores open for more than one year, are a key indicator of a retailer's performance.
"Our run of comp store sales increases since May of 2012 has outperformed many other retailers — most retailers, in fact," CEO Jay Stein said in the company's conference call with analysts.
"While economic conditions are still challenging — and they are — and consumer confidence is still a bit shaky, we believe that the improvements that we have made to our business, as shown by our results, will continue to drive significant earnings growth," he said.
Stein said he is "cautiously optimistic" that the trends will continue.
"We continue our progress, because everything that we're doing heretofore has been right," he said. "Our formula of offering great value pricing on great merchandise is working, and we believe will continue to work."
Despite the positive third-quarter report, Stein Mart's stock, which reached a 52-week high of $16.17 on Wednesday, fell $1.32 to $14.77 on Thursday. Investors apparently were concerned about the company's forecast that its fourth-quarter gross profit margin will be a percentage point lower than last year.
Avondale Partners analyst Mark Montagna was not concerned about that, saying in a research note that he is more interested in Stein Mart's continued increase in comparable-store sales and a gain in traffic in its stores.
"Strong comps should continue for the next two years, benefiting from housing-related purchases, its branded offering, marketing and expanding its very low penetration of plus and petite sizes," he said.
"We view Stein Mart's 8 percent stock price sell down as a buying opportunity, as off-price brand name product will continue to beat other sectors," he said.
Johnson Rice & Co. analyst David Mann also saw a buying opportunity after the stock drop.
"While management lowered fourth quarter gross margin outlook, we believe that the more conservative assumption could be more than offset by stronger sales," Mann said in his report.
"Stein Mart boasts the key characteristics that should drive outperformance — being an off-price retailer, off-the-mall, with great values on national brands, and in the right geographic markets (i.e. Florida, Texas)," he said.
Activist fund managers take interest in FNF
Two activist hedge fund managers have taken an interest in Fidelity National Financial Inc., according to recent Securities and Exchange Commission filings.
Corvex Management LP, run by Keith Meister, has acquired 2.8 million shares of Jacksonville-based Fidelity and has call options that give it the right to acquire an additional 14.6 million shares, according to a filing Oct. 31.
Last week, Third Point LLC, run by Daniel Loeb, said in a quarterly filing that it has acquired 2.1 million Fidelity shares.
Both Meister and Loeb have a history of taking on the management and boards of companies they invest in when they don't agree on the companies' strategy. So far, neither has indicated unhappiness with Fidelity.
Loeb's interest in Fidelity is unknown. The 2.1 million shares represent less than 1 percent of Fidelity's nearly 250 million shares outstanding, so Third Point was not required to provide more information.
However, Corvex would own 7 percent of Fidelity if it exercises the call options, so that fund had to file a more detailed disclosure.
The Corvex filing said Meister and other officials believe Fidelity's shares "are undervalued and are an attractive investment."
They also "are supportive of the Issuer's announced acquisition of Lender Processing Services and the associated equity offering, transitioning the Issuer into a leading real estate services and technology company," it said.
Corvex officials have met with Fidelity's management and board of directors, it said, and "are pleased with their conversations to date." They may have more conversations in the future.
"These discussions have reviewed, and may continue to review, options for enhancing shareholder value through various strategic alternatives including, but not limited to, monetizing and highlighting the value of non-core assets, focusing capital allocation on core real estate services, return of capital to shareholders, enhancing disclosure and investor communications, and general corporate matters," the filing said.
New name for WJXT owner
After selling its flagship newspaper last month, The Washington Post Co. needed a new name.
The company last week announced it is changing the name to Graham Holdings Co., reflecting the name of the family that maintains a controlling interest.
Along with the name change, which takes effect Friday, the company's ticker symbol will change from "WPO" to "GHC."
Graham Holdings sold the Washington Post newspaper to Amazon.com founder Jeff Bezos on Oct. 1.
Its main remaining businesses are education company Kaplan, a cable television company and six television stations, including WJXT TV-4 in Jacksonville.
The company hasn't announced a new name for the broadcast television division but it needs one.
It's currently called Post-Newsweek Stations and in addition to selling the Washington Post newspaper, it sold off Newsweek magazine three years ago.
The broadcast division reported third-quarter revenue fell 18 percent to $87.1 million and operating income fell 33 percent to $36.3 million, due to the loss of political advertising it saw in the third quarter of 2012 and Summer Olympics-related ad revenue at its NBC-affiliated stations last year.
Overall, the company reported income from continuing operations (which exclude the newspaper business) was $7.53 a share in the quarter, down slightly from $7.58 last year.
Rayonier gets upgrades
After a disappointing third-quarter earnings report last month, three analysts downgraded their ratings on Rayonier Inc. and its stock fell sharply.
With the stock down, two analysts decided last week it was time for an upgrade, including one who had just downgraded the stock after the earnings report.
RBC Capital Markets analyst Paul Quinn upgraded the Jacksonville-based forest products company from "sector perform" to "outperform," in part because of the recent drop in the stock's price.
"With the stock down 25 percent since the third-quarter call on October 24 (vs. 2.5 percent increase in the S&P 500) we believe current valuation offers an attractive entry point," Quinn said in his report.
Investors have been concerned about a couple of issues that came up in Rayonier's third-quarter conference call. One is possible price declines next year for the company's cellulose specialties products. The other is a delay in seeing the full benefits of a major upgrade project at Rayonier's mill in Jesup, Ga.
Quinn said "we could always look past the longer transition" of the Jesup mill but "the magnitude of price declines for CS in 2014 had been our biggest concern holding us back at sector perform until now."
Quinn said after discussions with trade sources, he doesn't think the 2014 price declines will be as bad as the market has anticipated.
"As such, we expect the shares to see significant upside from current levels by the time Rayonier reveals its 2014 CS prices on its fourth-quarter conference call in late January," he said.
Mark Wilde of Deutsche Bank still has concerns about CS pricing, which prompted him to downgrade Rayonier to "sell" in October, but he upgraded his rating back to "hold" last week.
"It's hard to know for certain where cellulose specialty prices will settle out," Wilde said in his note.
"For now, we think the valuation approach laid-out in our Oct. 25 note remains valid. However, given the current price of Rayonier, we are upgrading from sell to hold," he said.
Rayonier's stock was trading in the upper $50s before the earnings report last month and has been trading in the mid-$40s recently. Wilde's price target for the stock is $47.
Atlantic Coast Financial selling stock
Atlantic Coast Financial Corp. last week launched an offering of $42 million in additional common stock.
The parent company of Atlantic Coast Bank is selling stock to raise additional capital to meet regulators' requirements. In a recent SEC filing, the company said the stock sale would raise its ratio of tier 1 capital to assets from 4.88 percent to an estimated 9.78 percent.
Tier 1 capital, which consists basically of a bank's shareholders' equity, is one of several methods regulators use to measure a bank's capital.
Medtronic earnings rise
Medtronic Inc. last week reported adjusted earnings rose by 3 cents to 91 cents a share in the second quarter ended Oct. 25. Sales rose 3.3 percent to $4.19 billion, after adjustments for foreign exchange fluctuations.
Minneapolis-based Medtronic's surgical technologies division, which is headquartered in Jacksonville, grew sales by 11 percent to $377 million.
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