Posts tagged NKE
The market tanked at the end of the session like Money McBags’ day which has caused today’s column to be late, short, and in need of one more read through, but it is what it is. You see, Money McBags was cranking away at his terminal, busily breaking down the news, perusing 10Ks for cheap stocks, and most importantly scouring the interweb for just the right picture of Kelly Brook, when life got in the way and he was called out to the cruel cruel world to fix some dumb shit. With dumb shit marginally fixed, Money McBags is drained of his energy and thus will be publishing his halfway done column today. It ain’t Shakespeare or Fante, but luckily it also isn’t Santelli, Colmes, or Bartiromo, and so it goes…
New claims for unemployment came out today and they were down 19k, or 15k, depending on if you want to use the number reported last week as your baseline or the “revised/manipulated” number released today. Last week new claims were 472k and this week claims were supposedly down 19k to 457k. Once again, if you do the math you get an equal sign more confused than Helen Keller’s dogs (because how the fuck would they know to sit, stay, or roll over when every command sounded like “arhgahgaha.”). Analysts guessed new claims would come in at 460k, so they were close enough that one might be deluded in to thinking their regression models actually regress to something believable and that this week’s close call was not just luck caused by a random fluctuation, but Money McBags knows better and knows that those models have no clothes (though he is usually in favor of clothes-less models). Either way, the job market remains more challenged than a bus driver in El Salvador or a color blind synesthiac. 4.55MM people remain on traditional unemployment, another 5.3MM remain on extended unemployment, and another 10MM remain on no employment and must subsist off the heat generated from their dying hopes and dreams. Luckily there was news out today that was portrayed as slightly positive with durable goods orders excluding transportation (and durable goods are anything expected to last for 3+ years like cars, machinery, and Savannah Stern‘s chest) rising by .9% after a .8% decrease in April bringing orders slightly above where they were in March. So in honor of tonight’s NBA Draft and the great Derrick Coleman, “whoop-de-dam-do.” Additionally, orders for non-defense capital goods excluding aircraft, rose by 2.1% which gives a bit of confidence to the markets that businesses will still be operating in a month.
Internationally, Greek default swaps reached record highs as common sense creeps back in to the market. Eventually Greece isn’t going to be able to roll over their debt so we can either make like math doesn’t exist and time doesn’t move linearly (Einstein’s relativity be damned) and live in a happy world where Greece can function in perpetuity despite a debt level so fuck awful that even Stephen Baldwin laughs at it, or we can just buy the fuck out of Greek CDS and get our fiddles ready so we can pull a Nero when Athens burns. In other international news, Australia elected their first female prime minister in Julia Gillard who was born in Wales, is a lawyer by trade, and though never married, dates a male hairdresser which I believe makes him a well trimmed beard. Gillard promises to work with mining companies and be tough on spending to keep Australia’s economy from going down under (eat your heart out on that one Jay Leno).
In earnings news, Nike just did it, well that is if “it” is missing analyst guesses of revenues. NKE profit was up 53% which was inline with guesses but revenues of $5.08B were up only 4% (ex. currency flucutations) and missed analyst guesses of $5.15B. Orders were up 9% though and the company did earn $1.04 per share so while the stock sold off ~4% today, it’s not like they totally shit the bed or perhaps more appropriately, it’s not like they shit on the cold floor in the corner of the room where 20 sweat shop workers sleep on the hour they have off in between shifts of sewing fucking swooshes on canvas sneakers. In other earnings news, Discover found their way to a strong quarter with profit up 14% thanks to improving credit trends, increased customer spend, and the House financial reform bill not having been passed yet. Charge-offs were up year over year to 8% from 7.5% but down sequentially from 8.5% so depending on what trend you want to use, card users are acting better or worse.
In small cap news today KIRK was down ~7% today and as Money McBags said yesterday, he thinks this is a good entry point (though not as good of an entry point as the gap in Jessica Hart’s teef). That said, Money McBags refuses to catch falling knives and this stock is clearly falling as investors take profits on shit that has gone up as the market now falls, so wait for this to settle before jumping in as fundamentally it remains as strong as Money McBags’ belief in truth, honesty, and Hayley Atwell.
There was a flurry of economic data released today but unfortunately it was less decisive than a sugar addict with a severe case of ADD in a candy store with only $.50 to spend. Consumer prices remain unchanged, rising only .1% sequentially excluding food and fuel (or as they’re better known as, essentials). Consumer prices are now up 2.1% since last year but that is not enough for policy makers to be concerned about inflation as they they continue to test their thesis that if they ignore it, it will just go away. In other macro news, the index of leading economic indicators was up .1% which was the smallest gain in a year and could signal slower growth ahead. Of course since this is a ridiculous metric Money McBags could give a shit what it says. He cares about as much about the leading economic indicators index as he does about creationism, show tunes, or Roseanne Barr’s vagina. New claims for unemployment also came out and were down 5k to 457k which is still too high to signal a recovery (though no longer as high as Ron Washington during the seventh inning stretch). Unemployment remains stagnant but at least the volatility has abated for now which is good news for anyone who still has a job, though remains bad news for those looking for one. Finally, manufacturing in the Philadelphia region rose again and at the fastest pace this year which should be good for handgun owners and anyone brave enough to drive into Philly to pick up whatever is being produced there.
In international news, Greece is dong a worse job of staying out of headlines than Peggy Eaton in 1829 (and for the record, Money McBags would love to have seen her petticoat). Oh Greece, Money McBags thought he was done with you but you keep coming back like indigestion from a saganaki appetizer. We all really wanted to believe in your austerity plan and the EU’s tacit promise to back you up (thus figuratively taking you the Greek Way), but now there are doubts that the EU will really bail you out and Money McBags is stuck trying to think of more jokes about Hellenic culture. Ugh. Honestly, Money McBags may be more tapped out than Pheidippides during the Persian Wars. So please EU, just bail these fuckers out or let them collapse but finish it already. Otherwise Money McBags is going to have to start dipping into his Socrates pedophile jokes (“Did you know Socrates tried to start a clown college? Yeah, he let his students juggle his balls.”) and noboby wants to hear those. Making things worse is Greek Prime Minister George Papadapolis trying to engage in some type of bail out game of chicken with the EU and German leader Angela Merkel (who in this pic gives a new definition to Merkle’s boner) by claiming if the EU does not commit to a bail out plan, he will run like a jilted lover to the IMF to get some of that sweet sweet sugar. The IMF coming to bail out Greece would be a blow to the solidarity of the Euro Union and not a delightful full tongue and lip blow, but one with lots of teeth. In other international news, US ambassador to China John Huntsman spoke to students in China and said that China needs to let their currency rise because with the renminbi pegged to the US dollar, Chinese exports remain cheaper than Gary Coleman’s rate sheet.
In stock news, Nike just did it (see look, Money McBags can write lame mainstream puns as well as anyone employed by Jay Leno) by putting up a huge quarter and reporting a jump in future orders (see, another mainstream pun). Nike beat analysts estimates of $.89 eps by posting earnings of $1.01 per share as sales in the US and China were robust as more people are walking places after having their cars reposessed. Also, Teva is buying German drug maker Ratiofarm for $5B and the rights to their leading generic drug scatagra which is said to increase bowel movements and thus is widely used in Germany’s top industry of scat film making. Finally, telecom company Vimpel was popped like a puss filled whitehead after missing analyst earnings estimates by $.14 per share.
In small cap news, Money McBags’ short WGO announced their Q and surprised the whole investing world by actually putting up a profit of a whopping $.02 if you read the headlines. Though apparently those same headline writers gave you Dewey defeats Truman and Four Stars for Ishtar because WGO only earned a profit due to a tax benefit of $2.2MM. Take out the tax benefit and the company had an operating loss of $.07 which plays in to Money Mcbags thesis which he broke down for you all in December which is that this company will not make money in 2010. Sure they put up a decent Q on the top line (short of analyst estimates though above Money McBags’ estimates) as revenues were up 247% to $110.5MM as a result of increased orders for Class A vehicles (A standing for “Absolutely ridiculous that anyone would buy one of these things new,” as the used market is more flooded than Faye Reagan‘s eye socket after the final scene of her last bukakke film). WGO’s sales order backlog was also up 250% and they now have $50MM in cash and short term investments thanks to the plethora of government tax benefits. Even with this seemingly strong balance sheet (though apparently strong in the way that Richard Simmons is strong), they filed a shelf to raise $35MM. Ummm, excuse me? Guess what people, you don’t dilute equity holders to raise $35MM of cash if the business is turning around. It’s not like they’re going to acquire a smaller company so why do they need the $35MM? Are they going to have a blow out night at Rick’s Cabaret or are they going to try to blow up their vertical integration and build out more nimble production facilities? Their overall cash was up $5MM in the past 6 months but if you strip out the $15MM tax benefit and the $5MM from sale of securities, they blew through $15MM. With only $50MM left on the balance sheet (or a year and half worth at this rate), it’s no wonder they are seeking to raise capital. Inventories and receivables alone in the past 6 months have been a negative $21MM hit to their cash flow which I guess is good in that they are taking orders and building back up, but it’s bad from you know, a fucking working capital standpoint. Not only that, but their EBITDA was $0 for the Q which is better than the negative EBITDA they have been running but you know what zero EBITDA buys you? It buys you a mix tape of Vern Troyer’s greatest basketball dunks or a copy of Jessica Simpson‘s MENSA acceptance letter. Look, it’s good for their business that the Class A market is seemingly coming back, and it’s good that they no longer have negative gross margins, but if anyone can tell Money McBags what valuation metric gets this company to their current $13.50 price (other than a 30x P/E multiple on FOS estimates, with FOS of course being “full of shit,” or the new DCF type-valuation where the terminal value denominator is determined by picking the smallest known positive number), he’ll buy you a share of ZAGG. Look, Money McBags does not think WGO is going out of business, especially if they can raise another $35MM, but unless you think the recovery will be strong and unless you are using 2015 made-up estimates, there is just no way to defend the current valuation. Fuck, Jim Bowie had an easier time defending the Alamo than anyone can in defending the WGO valuation. Money McBags maintains that this is a $7 to $8 stock based on at best 15x their not going to make $.50 2011 EPS. Money McBags has yet to listen to the call, so perhaps they shed light on the equity raise but he would rather own a used Magic Johnson leaky condom than WGO.