Stock analysis

Walgreens ratios - latest quarter

2011-07-09T11:46:00.000-04:00

It's been a while since I update this blog. Gotta work harder. I've added a small position on Walgreens and here are some ratios. Will keep working on the annual/quarterly report.

Universal Display PANL

2011-05-18T21:51:00.000-04:00

It had a great run already for the past year but I think the stock might still have greater potential and worth watching.
OLED technology for displays. Its technology has been used in a few phones and the potential lies mainly in its improved technology, cost reduction and then of course the big guys' adoption (Samsung, etc).

S&P 500 3/25/2011

2011-03-26T13:26:00.000-04:00

The market did bounce back after 3/16 and if you bought then and now you could have 50~60 points on SP500. where will the market go now? Not sure. I want to be bullish as the economy recovery is definitely there. And there are still money on the sidelines. However, the inflation, rate increases upcoming should impact the economy negatively as I see it. In addition, when the QE2 ends, will there be enough money pushing the market higher?

Market summary - 3-16-2011

2011-03-16T20:13:00.001-04:00

treasuries are gaining support once again as people rush out of the equity market.

Tech is hit the hardest and you should also look forward to a stronger comeback when this correction is over.

It's really messy for the past days: "oil crisis" & nuclear threat. And the worst part is the uncertainty. You can read it from SP500 chart easily. It seems the topping process was confirmed.

http://mzexcel.blogspot.com/2011/02/market-summary-2-22-2011.html

Then technicians will say it's just the due correction people have been waiting for. I agree with them: market rally too much too fast. So far it's about 100 points off the 1350 high. The downside is still there and I'm guessing maybe another 30 points off might yield a bottom. Well, it's just an optimistic guess. In case Japan's situation turns to the worst scenario this correction should last longer.

However, in my opinion, this really is the time to be bullish and watch your favorite stock and buy when the panic hit your stocks.

Buffalo wild wings analysis (3-6-2011)

2011-03-06T12:49:00.000-05:00

BWLD has PE over 20 and viewed as a growth stock. The restaurant looks really sporty and as their own words put it: wings, beer, & sports. I hope they can eventually adopt the healthy idea of organic chickens:). Well, you know, Chipotle does it and investors are really buying into it. But I'm not worried about Buffalo wings not being too healthy as I assume the value proposition leans on sports environment more than just wings.

The restaurant just released their latest quarterly and 2010 yearly results.
http://phx.corporate-ir.net/phoenix.zhtml?c=146403&p=irol-newsArticle&ID=1526559&highlight=
The numbers are pretty good and the recent Super bowl does help the outlook of the chain. And it plans to open 100 new stores in 2011 (both owned and franchised). The historical data shows that they own 35% of stores and franchise 65%. The royalty fee is about 5% of the franchise sales. I'm graphing the number of stores and the new open for the past few years.

The table in the graph just listed the Same Store Sales (also called comps). Retail industry view this measure as very important. It essentially tells you how a store's sales performed compared with last same period (A store has to be opened for over a year to be counted)

BWLD's comps are trending down although most of time in the positive territory which is a good thing: growth is still there. Considering the recession impact their performance looks good. And if you believe in the consumer confidence's coming back the comp sales should start to go north.

Now let's look at the financial summary.

Most of the number looks good and top line growth is consistent there. There are two type of sales growth: same store sales growth and addition of new stores. 2010's growth is mainly the new stores they added. And the growth strategy is intact. If there is one thing investors should be concerned I would say the chicken price as you see the food price inflates all over the world now. Increase of chick cost would depress BWLD's margin for sure. Then the counter argument depends on the consumer's spending capability to see if the restaurant can pass on the cost to consumers. I say they can but we'll see.

The stock price spikes after the earning report but then start to pull back (see graph below). The short ratio is pretty high on the stock ~16.4% (from Yahoo Finance) and institution holding is around 87%. So it looks like there are many believers but also quite some disbelievers being short on it.

I'm still bullish on it in the long term based on what the numbers are telling me. So I'll hold my long position. However if you take BWLD as trading stock, swing trade seems works pretty well. (Just personal opinions/observations, as always, your money your decision:)

Market summary - 2-22-2011

2011-02-22T20:44:00.000-05:00

Oil increases significantly and 10 year bond yield goes back to below 3.5% level as the equity market sold off badly today. It's one of the days you see some of your mutual funds change over 4%. If this kind of fluctuation continues you might consider this a topping process based on my past observations.

Monthly return by sectors 1-28-2011

2011-01-30T14:18:00.000-05:00

Despite last week's turmoil, most sectors still finish the month positively (still one trading day left though). Energy did come up to the top as I guessed last time and I think it will stay outperform others.

Amazon.com earning release 1-27-2011

2011-01-30T14:09:00.000-05:00

On 1/28/2011, Amazon's stock price dropped more than 7% to 171 after a concerning earning report. I'm surprised to see Amazon didn't do well comparing with same quarter last year since the weather from holiday season till now favors online shopping. How did the company do anyway? It did well in general except for the efficiency which is really important for companies like Amazon.com and Walmart.

Amazon's sales has a great seasonal pattern so you have to compare within same quarters for different years as you look at ratios. If you look at Asset turnover for 4th quarters you'll find 0.79 vs 0.84, this year vs last year.

Similarly if you look at the inventory turnover ratios for the quarterly results you should find this year's number is not as good as last year. I believe these efficiency numbers are the main driver worrying investors, sending the stock 7% lower. Well, of course, the general market condition is in the correction mood which also encouraged some taking profit.

Now let's take a look at Amazon's earning surprises and market reactions.

It has been the 3rd quarters since Amazon hasn't delivered nice surprises. And the stock price is actually still pretty close to its all time high. If the market goes down from here I would expect Amazon will go down further. However, I personally like the company and I believe it will become more dominant in the future so I'll definitely load its stock when bargain price comes along. When I get more time I'll do a more thorough research on Amazon. It should be worth my time investment:).

Netflix subscriber-1-26-2010

2011-01-26T19:29:00.000-05:00

Alright, another blow-out earning for Netflix. Subscriber's growth is superb, although it's still defined in my linear line shown underneath.

I don't think this quarter changes my thesis:

http://mzexcel.blogspot.com/2010/11/netflix-analysis.html

Latest earning:

http://files.shareholder.com/downloads/NFLX/1145258571x0x437075/925e81c4-3d5d-44b6-ae5e-a70c91251131/Q410%20Letter%20to%20shareholders.pdf

Updated subscriber, acquisition cost, churn, average revenue etc.

Bonds update

2011-01-22T13:46:00.000-05:00

It seems the 10yr yield is peaked around 3.5% in short term (at least there seems to be strong resistance at that level, technically) and the correlation between bonds and equity are getting better.

Quarterly earning release stats

2011-01-22T13:18:00.000-05:00

Over 100 companies have reported earnings for the most recent quarter. Here are some stats which might be interesting.

Apple's latest quarter earnings

2011-01-22T13:10:00.000-05:00

A busy week. Heavy weight tech firms had their leadership shakeup and investors are also busy valuating which banks are better. Apple has a great earning release but Jobs is on sick leave again. Google wants to get the star-up feel back as Eric moves aside to deals, government, and customers duties. HP changes some of board members as the discontent of shareholders towards the handling of Mark Hurd mounts. These board/executive changes can be good or bad but I definitely think loss of Jobs will be a changing point for Apple. Business week has a good article talking about the issue: http://www.businessweek.com/magazine/content/11_05/b4213006664366.htm

“Only Steve Jobs could have had the visionary spirit—and risk tolerance—to turn Apple into a mobile phone company” I totally agree. World’s second large company’s leader bears great pressure and I would be surprised to see Apple without Jobs keeps up with continuous meaningful innovations. Tim Cook is an operations genius which only guarantees profitable operations but probably not the long term super high growth some investors were imagining while holding the company’s stock.

Whatever happens next Apple’s staggering performance should be able to hold for a while I think. Here are some stats on this latest quarter’s earning.

You might think I'm going too academic here.:) but after I read some journal articles about SUE (standardized unexpected earnings) I think it's useful somehow. Google it if you're interested.

an awesome quarter.

Next week

2011-01-16T12:43:00.000-05:00

It should be exciting as Apple, Google, IBM, Ebay, F5 and bunch of banks report their earnings.

BTW, the financial sectors is still leading the way as JP Morgan reported positive development on banking sectors.

As the markets keeps going higher, the possibility of a pull back is increasing in my view. Here is SP500 chart with MACD indicators.

Intel's Earning Release 1-13-2011

2011-01-16T12:26:00.001-05:00

New quarterly/annual reports start as Alcoa kicked off another round of earning releases on 1/10/2011.Intel reported on Thursday with great quarterly and annual results. However, the market reactions was not as great: 1% drop on the share price on Friday (Price is at 21.08).

Intel share price rose ~7.6% since last earning report while S&P500 gained ~10% and Nasdaq gained ~11%. It's sort of funny while investors all look at Intel for the signal of tech sector but just waiting to decide what else they should invest. People could still say it's still good to have INTC as part of portfolio to minimize risk and get dividend. So see if you belong to that group.

I like Intel's thoughts on security issues, plans for cloud computing and mobile computing but I would like to see those things payoff before I start to put it into my growth stock list:).

Now, let's take a look at the financials after Intel's latest report.

Sales growth and margins are all very good.

I guess it's pretty safe to say recession is really over by looking at Intel's EPS trend:). Again, great earnings (some upside surprise as well) but market didn't react well. I would say Intel won't beat the S&P500 by next quarter.

Previous quarterly report analysis on Intel:

http://mzexcel.blogspot.com/2010/10/intels-er.html

Monthly return by sectors

2011-01-07T21:20:00.000-05:00

Notice how financials underperformed for the past few months and started to catch up since November. Also Energy sector has been strong since September, 2010. As economy shows good sign of recovery the energy sector might still lead but as for financials there are still some mortgage related headwinds.

(the monthly return I calculate here is arithmetic sum of daily return not exactly the real return but the difference is negligible)

CGA: another accounting fraud?

2011-01-05T20:42:00.000-05:00

http://www.thestreet.com/story/10963797/1/china-green-drops-on-research-note.html

NEW YORK (TheStreet) -- Shares of China Green Agriculture(CGA _) closed 10% lower Tuesday after a small equities research firm issued a report accusing the company of fraud.

The firm, Beijing-based J Capital, said in its report that it had found "compelling evidence that China Green Agriculture ... has vastly inflated the sales and profit figures it reports to investors."

Just out of curiosity I took a look at the key annual ratios and M-scores for CGA. It does seems likely they manipulated their accounting from M-score. (if M is greater than -2.2 the probability of fraud is high)

you can google M score to know more about it or come here for a quick look: http://www.investopedia.com/terms/b/beneishmodel.asp

it's a shame if this is true. Rio, one I mentioned before, has been delisted.

old post about Chinese ADRs: http://mzexcel.blogspot.com/2010/11/some-thoughts-on-chinese-adrs.html

Reading: Liar's Poker

2010-12-29T20:46:00.000-05:00

I just started to read Liar's poker. So far so good. It does give you a sense of what's going on on the wall street.

China's interest rate increases 25 basis point

2010-12-26T12:09:00.000-05:00

People have been waiting for this move and China arranges it right after Christmas. Some sell-off before new year seems to be unavoidable.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aZK9Y16l72zE&pos=1

Walgreen's latest earning release

2010-12-22T20:49:00.000-05:00

Walgreen (WAG) had a good report today and market reacts positively (5.5%). I'll just list the ratios and some stats first for whoever might be interested in it. I might visit it later for further analysis since I think it may become a good dividend candidate (so far dividend yield: 1.8%) for retirement portfolio.

WAG's recent quarters have good performance despite of down trend of annual results (such as profit margins). I expect next annual report should reverse that trend.

stock performance since earnings review 12/21/2010

2010-12-22T11:55:00.002-05:00

I compared average daily returns for the stocks listed with S&P500's average daily returns. You should be able to tell the outperformed ones from underperformed from the highlight.

SKH update (128% up since last earning release)

2010-12-20T20:34:00.001-05:00

There are recent talks (Bloomberg) about healthcare stocks being severely undervalued.

As for SKH, Citi lifted target price to 10 a week ago and SKH is close to 9 already. Small cap stock is the way to go while shooting for large return:).

http://mzexcel.blogspot.com/2010/11/skilled-healthcare-group-inc-skh-latest_03.html

Research in Motion, Oracle earning releases

2010-12-16T21:15:00.000-05:00

Good earnings came out after-hour today. 2% and 4% up for RIMM and ORCL, respectively. I expect them to continue to outperform the market following the earing reports.

RIMM's international expansion might work out for the company despite of Iphone's erosion of RIMM's market share.

Oracle's stats

Chartgame

2010-12-14T13:06:00.001-05:00

Just learned this site: chartgame.com. it's fun to try your technical analysis skills. I expect most of time you should beat buy and hold however I don't think the transaction cost is taken into consideration.

summary of latest quarter EPS and Revenue growth by industry

2010-12-12T14:43:00.000-05:00

https://spreadsheets.google.com/pub?key=0AvIjckAaik-SdDlxc3RjYi1NdDE1c2k0b003UWRsemc&hl=en&gid=0

Based on briefing.com's latest quarter earning data, I summarize the earning and revenue growth by industry. It should become more useful if more quarter's data are included since a trend analysis can be performed. I'll try to update this data set once a month.

ISM index

2010-12-01T23:10:00.000-05:00

For the past few months, the ISM index released at the beginning of each month seems seldom fail the market. Similarly Chinese PMI is doing well too. (Chinese PMI is always out before the US ISM index) ISM is definitely an important economic indicator.

The book I put on the left of the post is worth reading even though it's kinda dry and boring. It does help to understand more of economic indicators.