Sell Titan International (TWI)
On December 9 Titan International (TWI) told Wall Street to expect sales for 2011 to be around $1.4 billion (that’s slightly below the Wall Street consensus of $1.48 billion) and 2012 sales of $1.7 billion to $1.9 billion (the Wall Street consensus for 2012 stood at $1.82 billion)
Nothing wrong with those numbers—or with Wall Street’s estimates of a whopping 194% increase in earnings for 2011 from 2010 or with the 59% earnings growth rate projected for 2012.
But as anyone who bought this stock when I recommended it in my Jubak’s Picks portfolio http://jubakpicks.com/the-jubak-picks/ on July 1, 2011 knows, Titan International is an extremely volatile stock that rises and falls with fear and hope about growth and earnings in the commodities sector. Since that purchase date the stock has traded as low as $13.83 on October 3 and as high as $24.81 on January 24. That’s not unexpected of a company that sells tires to the makers and users of giant earth moving equipment used in mining (as well as tires for farm equipment and construction), but it does give me pause. Read more
If there’s a global slowdown, Joy Global is hardly feeling it so far
In another market worried about other things, Joy Global (JOYG) shares would probably have tumbled yesterday. However, the shares closed up 1.3% after being up as much as 4.8% during the day. And that performance carryied shares of competitors higher too. Shares of Caterpillar (CAT) were up 2.9%.
Before the stock market opened on August 31, the company announced fiscal third quarter results that beat on earnings—earnings of $1.61 a share were 7 cents above an analyst projections—but fell short on revenue. Revenue climbed 34% from the third quarter of 2010 to $1.14 billion. That was below the $1.21 billion consensus.
And then the company issued tepid guidance for the rest of fiscal 2011. (The company’s fiscal year ends in September.) Earnings, the company said, would be $5.70 to $6 a share (compared with the current consensus estimate of $5.78 a share); revenue would be $4.3 billion to $4.5 billion versus the current $4.58 billion consensus.
In a normal market that kind of revenue miss followed by revenue guidance below analyst expectations would earn a stock at least a brief spanking.
But in a market worried that global economic growth—and demand for commodities—is about to drop off a cliff JoyGlobal’s third-quarter report was great news. Read more
Update Joy Global (JOYG)
As bad quarters go, this one was really good.
Apparently investors temporarily forgot that Joy Global’s (JOYG) fiscal first quarter is always the worst of the year for the mining equipment maker. So when on March 2 the company announced a mere 19% increase in sales from the first quarter of fiscal 2010 and a jump in net income to 96 cents a share from 73 cents a share in the year earlier period (that’s 32% growth if you’re following along at home), the shares dropped 2.9% to $94.32 from $97.17. The next day investors reconsidered and the shares closed at $97.33.
The key number to look at in Joy Global’s quarterly results is always bookings. Read more
Aussie floods push price of coal for steelmaking toward new record
Local officials are saying that the floods in the northern Australian state of Queensland have reached “biblical proportions.” The floods, a result of the wettest spring on record, have struck an area bigger than France and Germany combined. Flooding from six rivers in the area has forced the evacuation of tens of thousands of people.
The flooding is hitting coal mines too. “Some open-cut pits are now looking more like dams than mines,” Michael Roche, head of the Queensland Resources Council, told Bloomberg. With railroads under water there wouldn’t be any way to get the coal to ships for transport to markets in Asia even if companies could get it out of the ground.
Which is a big deal for Asia’s steelmakers. Read more
Update Joy Global (JOYG)
Reporting fiscal fourth quarter earnings December 15 before the market opened in New York, Joy Global (JOYG) beat analyst earnings expectations by 23 cents a share with quarterly earnings of $1.39. Revenue of $1.05 billion, up 9% from the fourth quarter of fiscal 2009, beat projections of $920 million.
Moving to the world of “That’s nice but what have you done for me lately?” Joy Global raised guidance for the fiscal 2011 year that ends in October 2011 to earnings per share of $5.00 to $5.30 from the previous guidance of $4.10 to $4.15 a share. (The Wall Street consensus was at $4.79 before today’s report.) Joy Global raised its guidance for fiscal 2011 revenue to $3.9 billion to $4.1 billion from its previous projection of $3.86 billion.
Frankly that guidance still sounds conservative to me. Bookings in the fourth quarter grew by 48% and the order backlog climbed to $1.8 billion from $1.5 billion as of October 30, 2009.
The global mining industry is raising capital-spending budgets for 2011 and beyond as fast as it can to fill an anticipated gap between supply and demand. A survey of global mining executives by the Financial Times puts mining capital spending at $115 billion to $120 billion in 2011. That would be a new record, surpassing the peak of $110 set in 2010.
The stock climbed 8% on December 15 on the news to a high of $86.95 during the day before pulling back a bit. That high put the price at 16.4 to 17.3 times the company’s guidance for fiscal 2011. Read more
