VitalStocks Blog

VitalStocks Blog Relocated

2008-10-31T13:37:00.000-07:00

Blog Relocated

Dear Readers,

We are moving our VitalStocks blog content posts to our new consolidated investing blog: Stock Blog Hub.

Here is a direct link to the posts which you would normally find at this VitalStocks Blog

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(MOV) - Movado Group - growth prospects are attractively priced with a PEG ratio of 0.76

2008-10-24T07:03:00.001-07:00

Movado Group Inc. (MOV) as seen sharp increases in estimates over the past quarter. Year-over-year earnings growth is currently projected at 27% for the next fiscal year.

Company Description

Movado Group is a designer, manufacturer and distributor of quality watches with prominent brands sold in almost every price category comprising the watch industry. The company's watch brands include Movado, Concord, and ESQ. Movado operates 30 boutiques and 32 outlet stores.

The company is headquartered in Paramus, N.J., carries a market cap of $335 million, and has 1,500 employees.

Earnings Estimates Surge

Earnings estimates for the current year are up 6.5%, to $1.81, in the past 2 months. The consensus for next year is $2.30 per share, up dramatically from $1.91. Given theses levels growth rates for this year and next are 6% and 27%, respectively.

The growth prospects are attractively priced with a PEG ratio of 0.76.

Full-Year Expectations Unchanged

On Sep 4 Movado announced second-quarter results that included net sales of $130 million. In a tough economy, sales only slid 1.1%, when excluding discontinued products.

Movado has been able to cut costs and saw an increase in gross profit margin to 64.75 of sales, up from 59.8%

Earnings per share for the quarter were 39 cents. Analysts were expecting 41 cents making the a disappointment, but the company reaffirmed its full-year guidance. Movado expects earnings per share to be between $1.65 and $1.72 for the year.

The Chart

Shares have been sold off sharply and could present a tremendous value. The stock is currently trading at multi-year lows.

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(SHW) - Sherwin-Williams - return on equity (ROE) of 38% also tops the industry average of 20%

2008-10-24T07:00:00.000-07:00

Sherwin-Williams Co. (SHW) recently posted third-quarter earnings of $1.50 per share, exceeding the consensus estimate by 18%. Sales climbed 3.3% to a record $2.269 billion. The company hiked its full-year earnings guidance, and analysts followed suit, boosting 2008 forecasts by 5% in just the past week.

Company Description

Sherwin-Williams Co. manufactures, develops, distributes and sells coatings and related products to professional, industrial, commercial, and retail customers. The company manufactures products under well-known brands such as Sherwin-Williams®, Dutch Boy®, Krylon®, Minwax®, Thompson’s® Water Seal®, and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams® branded products are sold exclusively through a chain of more than 3,000 company-operated stores and facilities, while the company’s other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Global Finishes Group distributes a wide range of products in more than 30 countries around the world.

Growth Reflected in Third-quarter Results

The company recently posted third-quarter earnings of $1.50 per share, exceeding the consensus estimate by 18%. Sales climbed 3.3% to a record $2.269 billion. The company hiked its full-year earnings guidance, and analysts followed suit, boosting 2008 forecasts by 5% in just the past week.

In fact, Wall Street’s view is a little more bullish than Sherwin-Williams’ outlook. Analysts boosted full-year 2008 earnings estimates to $4.26 per share from last week’s $4.07. For the following year, analysts increased forecasts to $4.42 per share from last week’s $4.40.

Sherwin-Williams’ higher full-year guidance ranges between $3.97 and $4.17 per share.

Commenting on the third quarter and first nine months results, Christopher M. Connor, Chairman and Chief Executive Officer, said, “We continue to manage our business through the challenging environment of the U.S. and global economies. We are experiencing an unprecedented downturn in the U.S. housing market that has severely depressed paint demand in the domestic new residential, residential repaint, DIY and commercial markets. During the third quarter, the strong paint demand we had enjoyed in many foreign markets began to subside and we anticipate increasing softness in the months ahead. Despite these conditions, we are pleased with the progress of our operating segments in producing record sales performance and strong cash generation.

More Signs of Growth

SHW’s earnings per share are expected to grow by 12% over the next 3 – 5 years, which is above the industry average of 9%. The company’s return on equity (ROE) of 38% also tops the industry average of 20%.

Solid Income

A few days before reporting, the company declared a regular quarterly dividend of 35 cents per share. SHW noted that the dividend is payable on December 5 to shareholders of record on November 14. The company is yielding 2.5%, which is in line with the industry.

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(ALGT) - Allegiant Travel - one of the few bright spots from the airline industry

2008-10-24T06:58:00.000-07:00

Allegiant Travel Co. (ALGT) just reported third-quarter results in which revenue was up sharply from last year. Net income, however, slumped. But with crude prices continuing to fall and Allegiant's cost cutting initiatives taking hold, the company looks well positioned for growing profits moving forward.

Company Description

Allegiant Travel Company is a niche player in the airline industry, providing one-way flight services from small towns across the U.S. to Las Vegas, Florida and Arizona. The company was founded in 1997 and has a market cap of $753 million.

Second-Quarter Results

Allegiant is proving to be one of the few bright spots from the airline industry after the company reported respectable third-quarter results on Oct 22.

Revenue was up big, increasing 35% to $116.9 million. Fuel costs surged during the quarter as crude advanced to $147 per barrel, putting a dent in income, which came in at $4.9 million, a 30% drop from last year.

Fuel Costs

Spending on fuel increased 55% from last year to $56.8 million. But the good news is that since this quarter ended, crude prices have dropped by more than 50%. So with robust top-line growth, Allegiant stands to score big gains in profit with fuel prices receding.

Allegiant noted that it reacted to higher fuel costs by butting capacity, boosting occupancy rates and reducing long-haul flying.

The CEO Speaks

CEO Maurice Gallagher expressed the same opinion, saying that, "The recent moderation in the price of oil, should it continue, bodes well for the remainder of 2008 and 2009."

Analyst Estimates

The dip in crude prices has also expressed itself in analyst estimates. The next-year estimate is up to $2.63 per share from $1.29 60 days ago.

The Chart

Shares of ALGT have been rallying since the middle of July after bottoming out below $16. Since then, this stock has advanced above $37, a new high for the year.

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(LDK) - LDK Solar Company - surprised on earnings 3 out of the last 4 quarters on average of 36.54%

2008-10-24T06:56:00.000-07:00

LDK Solar Company Ltd. (LDK) isn't seeing any signs of an economic downturn as the company recently raised third-quarter guidance as wafer shipments soared.

LDK has surprised on earnings 3 out of the last 4 quarters on average of 36.54%. The stock has been punished during the market sell-off, however. It's now an attractive value pick trading at only 4.4x forward earnings.

Company Description

LDK Solar manufactures multicrystalline solar wafers for the solar industry which are used in solar cells and solar modules.

On Oct 20, LDK Solar expanded its presence in Europe when it announced a 7-year wafer supply contract with Italian-based Helios Technology.

The contract, which allows for LDK to deliver 70 MW of multicrystalline silicon solar wafers, begins in 2009 and extends through 2015. Helios will make a prepayment towards a portion of the contract's value.

On Oct 14, LDK provided an update on the construction of its new 1,000 MT polysilicon plant. The company remains confident of its construction progress and plans to produce between 5,000 and 7,000 MT of polysilicon in 2009.

LDK Raises Third-Quarter Revenue Forecast

LDK is bullish about the third quarter as shipments exceeded prior optimistic expectations. The company raised revenue guidance on Oct 8 to a range of $530 million and $540 million from $486 to $496 million. Shipments will have a total capacity of 230 to 240 megawatts up from 210 to 220 megawatts.

The company is operating on all cylinders in production capacity. It reached 1.2 gigawatts by the end of the quarter when it had previously had that target for the end of 2008.

Second-Quarter Revenue Soars 345.9%

On Aug 11, LDK Solar reported second-quarter earnings that blew by Wall Street estimates by 131.71%. Net income was $149.4 million up from $49.8 million in the first quarter of 2008.

Revenues surged 345.9% to $441.7 million from $99.1 million in the second quarter of 2007. Revenues were also up 89.2% quarter-over-quarter as wafer capacity expansion exceeded the company's projections. Customer demand remained strong during the quarter.

Consensus Estimates Rise Sharply

Estimates for the third quarter and the full year jumped after the company raised revenue and capacity guidance in early October. Third quarter estimates are up 32 cents to 74 cents in the last 3 months. The full year estimates rose 93 cents to $2.63 in the same period.

Value Fundamentals

LDK Solar is a Zacks #1 Rank (Strong Buy) stock. It's dirt cheap at only 4.4x forward earnings. It has a price-to-book of 2.85. LDK has an outstanding 1-year return on equity (ROE) of 35.96%.

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(USPH) - U.S. Physical Therapy - operates 364 clinics in 41 states

2008-10-23T09:34:00.000-07:00

U.S. Physical Therapy, Inc. (USPH) has acquired controlling stakes in 2 rehabilitation practices in the past 4 months. Earnings remain strong and are projecting growth rates around 19%.

Company Description

U.S. Physical Therapy, Inc. operates outpatient physical and occupational therapy clinics which provide post-operative care and treatment for a variety of orthopedic-related disorders and sports-related injuries.

As of August, the company operates 364 clinics in 41 states. US Physical has more that 1,600 employees, is head quartered in Houston, Texas, and has a market cap of $158 million.

Acquired Stake in Rehab Management Group

On Oct 8 U.S. Physical announced an acquisition of a 65% interest in Rehab Management Group. RMG focuses on nerve and muscle function with services including electro-diagnostic analysis, intra articular joint, and lumbar osteoarthritis programs. The majority stake in RMG, which produces $800 thousand in earnings, was purchased for $3.1 million in cash.

The company also acquired a 65% interest in a Mid-Atlantic outpatient group in June. The group operates 9 clinics, producing over $5.5 million in annual revenue.

Coming Off of 4 solid Quarters

U.S. Physical announced its second earnings surprise in the past 4 quarters on Aug 7. The company met expectations in the other 2 quarters. Earnings per share were 24 cents, while analysts had forecast 23 cents.

Net income rose 24% year-over-year to $2.9 million. An increase of 28% in patient visits drove net revenues up 34% to $47.4 million.

Clinic operating costs rose slightly from 73.6% in the second quarter last year to 74.7% this quarter.

During the first half of the year, the company added a net total of 15 clinics.

Estimates are strong

The consensus estimate has been slowly rising as the U.S. Physical approaches its third-quarter announcement on Nov 6. Estimates for the current year climbed 2 cents over the past 3 months and are now averaging 89 cents per share.

The projections would yield a growth rate of almost 19%. Next years forecast also calls for nearly 19% growth to $1.06 per share.

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(CSX) - CSX Corp - 9 of its 10 market segments produced revenue gains despite ongoing softness in the economy

2008-10-23T09:31:00.000-07:00

CSX Corp. (CSX) recently posted record third-quarter results, noting that its resilient business portfolio and disciplined operations continue to generate substantial earnings growth. The company offers a dividend yield of 2%, which is in line with its industry average.

Company Description

CSX Corp. is a transportation company that provides rail, intermodal and rail-to-truck transload services. The company's transportation network spans approximately 21,000 miles, with service to 23 eastern states and the District of Columbia. CSX connects to more than 70 ocean, river and lake ports.

Record results in the Third Quarter

The company recently posted record third-quarter results, noting that its resilient business portfolio and disciplined operations continue to generate substantial earnings growth.

Revenue came in 18%, or $3 billion, above the year-prior. CSX said 9 of its 10 market segments produced revenue gains despite ongoing softness in the housing and automotive sectors of the economy. “Those gains were led by shipments of export coal, grain, ethanol and metals, as well as strong yields and fuel recovery in all markets,” commented CEO Michael J. Ward.

Revenue growth translated into an operating income increase of 31% to $733 million, despite the impact of recent storms. CSX state that the operating ratio improved 250 basis points to 75.2%, which represents a third-quarter record.

"CSX has momentum in our business and confidence in our ability to produce good results, even in periods of economic uncertainty," said Ward. "In today's environment, manufacturers and distributors are highly focused on gaining greater efficiency in their supply chains and railroads offer them the best transportation alternative. Combine that with our strong performance in safety, service and productivity, and CSX is well positioned to deliver shareholder value in the near- and long-term."

Solid Dividend

The company pays out an annual dividend of 88 cents per share, which includes an increase of 22% that occurred a few months ago. CSX’s dividend yield of 2% is in line with its industry average.

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(CHD) - Church and Dwight - generated $113.7 million in free cash flow, up from $49.7 million in the same period last year

2008-10-23T09:29:00.000-07:00

Church and Dwight, Inc. (CHD) has surprised and beaten analyst estimates in each of the last four quarters, highlighting the company's ability to grow its earnings in a very challenging market.

Company Description

Church and Dwight Co. Inc., together with its subsidiaries, develops and manufactures personal care and specialty products for households in the United States and internationally. The company owns such well-known products as Arm & Hammer laundry detergent and baking powder and has a market cap of $3.76 billion.

Second-Quarter Results

Church and Dwight posted impressive second-quarter results on Aug 4, driven by increased sales, new products and higher prices. Revenue was up 9% from last year to $594 million. Profit jumped to $45.8 million from $40.5 million last year, producing earnings of 66 cents per share, ahead of analyst estimates by three cents.

Consistent Results

This was the fourth time in the last four quarters that the company has outpaced analyst estimates, having done so by an average of 7 cents, or 12.48%.

Gross Margin Improvement

Church and Dwight reported that its gross margin improved to 40.8% from 39.7% through cost cuts and higher prices, helping it to offset higher commodity costs.

Free Cash Flow and Debt

Due to their strong operational results, Church and Dwight was able to strengthen its financial standing. For the first six months of the year, it generated $113.7 million in free cash flow, up from $49.7 million in the same period last year.

This has enable the company to pay down its debt load, which now stands at $484 million compares to $606 million at the end of 2007.

Guidance and Estimates

After the solid quarter Church and Dwight lifter their full-year guidance to $2.83 to $2.85 from $2.77 earlier in the year.

The analyst community is bullish on the company as well, with the next-year estimate pegged at $3.25 per share, a 14% earnings growth projection.

The Chart

Shares of CHD have been resilient in 2008, recently surging higher after dropping on overall market weakness. Stocks from the consumer staples sector have been holding up fairly well compares to other companies, making them an attractive destination for investors fleeing volatility in other areas of the market.

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(TX) - Ternium - Analysts expect strong 2008 year-over-year earnings growth of 54.35%

2008-10-23T09:27:00.000-07:00

Ternium SA (TX) is riding out a tough steel market by betting on strong Mexican demand. The company has surprised on estimates 3 out of 4 quarters by an average of 18.97%. TX is cheap. It trades at only 2x forward earnings.

Company Description

Ternium manufactures flat and long steel products in Argentina, Mexico, Guatemala and the United States. The company is one of the largest steel production companies in Latin America with production capacity of 10.8 million tons. Its primary place of operations is in Mexico and Argentina.

Ternium extracts iron ore from its own mines to process semi-finished steel, flat-rolled products, long products, welded tubes and beam and roll-formed products.

Growth in Mexico

The company sees growing demand in Mexico for flat-steel products in the medium term, spurred by new construction and industrial development. In early September, Ternium announced a $4.2 billion investment over the next 5 years in a new flat steel plant in Mexico.

The facility will require a total investment of over $2.7 billion for a flat-rolled mini mill which would begin production within 4 years. The second phase, which would be the construction of a cold rolled and galvanizing plant, would be completed by 2013 and would require an addition $1.5 billion.

Ternium Beat Wall Street Estimates by 59.23% in the Second Quarter

On Aug 5, Ternium reported second-quarter earnings and blew by Wall Street estimates by 77 cents. Net income rose 58% to $498.9 million from $315 million in the second quarter of 2007. Earnings per share climbed 75% to $2.07 from $1.18 in the year ago period. Analysts expected $1.30 per share.

Sales increased 89% to $2.4 billion from $1.2 billion in the second quarter of 2007. The increase was due to the effect of the consolidation of Grupo Imsa and higher steel prices. Shipments of flat and long products also increased 29% from the second quarter of 2007.

Demand Remains Strong

In early August, Ternium was forecasting strong demand and prices in the South & Central America regions. The company saw the North American Region softening in the second half of 2008.

Consenus Estimates Rising on Third Quarter and Full Year

Despite the commodities sell-off, analysts are bullish. 2 out of 3 covering analysts have raised full year estimates in the last 30 days to $5.97 from $5.44.

Third quarter estimates have also spiked by 11 cents to $1.40 in the same time period.

Analysts expect strong 2008 year-over-year earnings growth of 54.35%. Ternium reports third-quarter earnings on Nov 11.

Value Fundamentals

Ternium is a Zacks #1 Rank (Strong Buy) stock. It's dirt cheap. TX has a forward P/E of only 2.03. Its price-to-book is just 0.43. The company has an excellent 1-year return on equity (ROE) of 26.74%.

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(KNL) - Knoll - third-quarter results including a 41% year-over-year increase in earnings per share

2008-10-22T12:45:00.000-07:00

Knoll, Inc. (KNL) just announced spectacular third-quarter earnings on Oct 16. EPS rose 41% year-over-year and the stock is still attractively priced.

Company Description

Knoll Inc, a leading designer and manufacturer of branded office furniture products and textiles, serves clients worldwide. The company focuses on innovation and modern design, yielding a comprehensive portfolio of products designed to provide enduring value and help clients shape their workplaces with imagination and vision.

The Pennsylvania-based furniture maker is involved in the green movement through organizations like the U.S. Green Building Council and is a member of the Chicago Climate Exchange. Founded in 1938, the company employs over 4,200 people and carries a market cap of $575 million.

Earnings increase 41%

On Oct 16 Knoll announced third-quarter results including a 41% year-over-year increase in earnings per share. Reported EPS were 52 cents, 11 cents higher than analyst estimates and 15 cents higher than the third quarter of 2007.

Net sales rose 11.6% year-over-year to $284 million. The increase yielded operating income of $41.1 million, a 14.5% increase from the third quarter last year.

Currently the backlog is $203 million, almost 20% higher than the 170 million recorded one year ago.

Estimates Rising

After the fourth earnings surprise in the past 4 quarters, estimates are climbing. The most recent estimate for the current year has come in 5% higher than the consensus, $1.83 compared to $1.75. The consensus estimate would yield an annual growth rate of 19%.

Attractive Valuations

Shares of KNL are currently trading around 8 times next year earnings. Knoll's projected 5-year growth rate is currently 23%, which is fairly price. The company's PEG ratio is 0.53, much lower than the industry average of 1.31.

The Chart

The stock sold off sharply, but saw a nice bounce heading into its earnings announcement on Oct 16. Shares were consolidating under $12, before breaking out post earnings announcement.

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(BGG) - Briggs & Stratton - broken out of a long-term down trend

2008-10-22T12:44:00.000-07:00

Briggs & Stratton Corp. (BGG) has just announced an earnings surprise on Oct 16. The company is also expanding through acquisition in Australia and New Zealand.

Company Description

Briggs & Stratton is one of the world's largest producers of air cooled gasoline engines for outdoor power equipment. The company designs, manufactures, markets and services these products for original equipment manufacturers worldwide. These engines are primarily aluminum alloy gasoline engines.

Beat The Street

On Oct 16 Briggs & Stratton announced first quarter of fiscal 2009 results. While the net result was a loss of 4 cents per share, analysts were expecting a loss of 23 cents. The company also guided full-year earnings to between 81 cents and $1.01 for 2009.

Engine sales were $259 million, a 24% year-over-year increase. Power products saw a spike of 36% year-over-year to $256 million.

Briggs & Stratton warned of possible risk involving consumer spending on lawn care and pressure washing products, but also saw a spike in generator sales during the hurricane season.

Strong Growth Projections

Analysts are expecting the company to earn 84 cents per share in 2009, up drastically from the 1 cent loss in 2008. The consensus estimate of $1.00 per share in 2010 would be a 20% increase.

Projected revenue growth for Briggs & Stratton is 25% year-over-year for the first quarter.

Acquisistion Down Under

Briggs & Stratton announced the acquisition of Victa Lawncare Ltd on June 30. The Australian manufacturer with similar power lawn and garden products at Briggs & Stratton was purchased for $24.8 million in cash.

Victa posted net sales of $57 million in the 12 months preceding June 30.

The Chart

Shares of BGG have broken out of a long-term down trend. The stock seems to be establishing a level of support near $13 per share.

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(ABT) - Abbott Laboratories - Worldwide sales jumped 17.6% on a year-over-year basis

2008-10-22T12:41:00.000-07:00

Abbott Laboratories (ABT) recently posted strong results for the third quarter. Earnings per share of 79 cents surpassed the year-prior 67 cents and exceeded the consensus estimate by 3%. Worldwide sales jumped 17.6% on a year-over-year basis. The company hiked its full-year guidance, and analysts followed suit.

Company Description

Abbott is a global, broad-based health care company that develops, manufactures and markets pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs more than 68,000 people and markets its products in more than 130 countries. The company is headquartered in north suburban Chicago.

Healthy Growth in the Third Quarter

The company recently posted strong results for the third quarter. Earnings per share of 79 cents surpassed the year-prior 67 cents and exceeded the consensus estimate by 3%. Worldwide sales jumped 17.6% on a year-over-year basis.

”All of Abbott's businesses are performing exceptionally well, ahead of expectations," said Miles D. White, chairman and chief executive officer, Abbott. "Abbott remains well-positioned, with strong core growth franchises, including our emerging vascular business, which is rapidly becoming a significant contributor to Abbott's growth."

Higher Estimates

The company hiked its full-year guidance for 2008, and analysts followed suit. ABT increased its guidance to an adjusted earnings per share range of $3.31 - $3.33 from $3.24 - $3.28. All 10 covering analysts responded by issuing full-year forecasts of $3.32 per share, up from last week’s $3.27.

Continues to Reward Shareholders with Income

In mid-September, the company declared a quarterly dividend of 36 cents per share, noting that this was the 339th consecutive quarterly dividend paid out by Abbott since 1924. ABT said the dividend is payable November 15, 2008, to shareholders of record at the close of business on October 15, 2008.

The dividend translates into a yield of 2.6%, which stands high above the yields offered by its peers as most companies within ABT’s industry group offer no dividend

Abbott stated that it increased its dividend payout for 36 consecutive years, which included a 10.8% increase earlier this year. Also, since the debut of the S&P 500 in 1957, Abbott explained that it has had the second-highest average annual return of all originally listed companies, in part because of its dividend yield.

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(HRS) - Harris - return on equity (ROE) of 21% continues to stand high above the industry’s average of 8%

2008-10-22T12:39:00.000-07:00

Harris Corp. (HRS) boasts an excellent track record of beating analyst estimates. While the company missed the consensus earnings expectation by a penny last quarter, it turned in only 1 other miss over the past 4 years. HRS is scheduled to report fiscal first-quarter results on October 29.

Company Description

Harris is an international communications and information technology company serving government, defense and commercial markets in more than 150 countries. Headquartered in Melbourne, Florida, the company has annual revenue of over $5.3 billion and 16,500 employees - including nearly 7,000 engineers and scientists.

Recent Events

The company, a Zacks #1 Rank (“strong buy”) name, recently announced that it received a series of new orders totaling $6 million from the U.S. Department of Defense for its RF-7800W High-Capacity Line-of-Sight radio, a new product that expands Harris’ leadership in tactical communications.

HRS Increased Income Payouts

The company hiked its quarterly dividend to 20 cents per share from a previous 15 cents in late August. This dividend was paid out September 17. The higher income translates into a dividend yield of 2.2%, which is competitive within Harris’ industry as most of its peers pay no income.

The annual dividend rate is now 80 cents per share versus the prior 80 cents. Harris note that the higher income payout is consistent with its long-term target of sustained dividend payouts in the range of 20% of net income.

"We are very pleased to announce this substantial annual increase in our quarterly dividend," said Howard L. Lance, chairman, president, and CEO. "We reported excellent financial results for fiscal year 2008, with strong earnings and cash flow. Our track record of improving financial performance over the past five years has allowed Harris to provide consistent annual dividend increases. New orders and a robust pipeline of opportunities in the markets we serve are giving us confidence that fiscal 2009 will be another year of strong financial performance. This dividend increase further demonstrates the company's ongoing commitment to increasing shareholder value."

Fundamentals Reflect Solid Growth

Harris’ fourth-quarter non-GAAP earnings per share totaled 95 cents per share, which came in above the year-prior result but missed the consensus earnings expectation by a penny. Factoring in this miss, the company exceeded Street estimates by an average of 3% over the past 5 consecutive quarters. HRS turned in only 1 other miss over the past 4 years.

Harris is scheduled to report fiscal first-quarter results on October 29.

The company’s return on equity (ROE) of 21% continues to stand high above the industry’s average of 8%.

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(EPB) - El Paso Pipeline Partners - In spite of all the economic turmoil and lower energy prices, analyst estimates are up

2008-10-22T12:35:00.000-07:00

El Paso Pipeline Partners, LP (EPB) share price recently rebounded after dipping lower with crude and natural gas prices. In the meantime, analyst estimates have continued to advance, creating a unique value opportunity for momentum investors.

Company Description

El Paso Pipeline Partners owns and operates natural gas pipelines and storage facilities in the US. The company has a market cap of $1.41 billion and is based in Houston, Texas.

Second-Quarter Results

El Paso reported strong second-quarter results on Aug 6 that demonstrate the company's growing profile. Revenue increased to $34.6 million, up from $26.9 million last year.

Net income totaled $23 million, a 21% jump from last year. This produced earnings of 29 cents per share, outpacing analyst estimates by 4 cents.

Strong Earnings Trend

It was the second time in the last two quarters that El Paso has surprised and beaten estimates, having done so last quarter by 28%, or 7 cents.

Capital Expenditures

For the first six months of the fiscal year, El Paso has invested $57.7 million in growth capital in order to increase reliability and shipping capacities.

El Paso Pipeline has now completed its $736 million purchase to increase its stake in assets purchased from its general partner, El Paso Corp. It is purchasing an additional 30% stake in Colorado Interstate Gas Co., bringing its total to 40%, and an additional 15% stake in Southern Natural Gas Co, increasing its total to 25%.

The additional stakes are expected to boost El Paso's earnings, with management requesting that the board of directors increase the quarterly cash distribution to 32 cents per unit beginning in the first quarter of 2009.

Analyst Estimates

In spite of all the economic turmoil and lower energy prices, analyst estimates are up, with the current-year estimate climbing to $1.24 per share from $1.15 30 days ago.

The next-year estimate is bullish, standing at $1.42 per share, a 15% earnings growth projection.

Valuations

Based upon the current-year estimate, this stock has a forward P/E multiple of 13.7X, in line with the overall market.

The Chart

Shares of EPB have recently traded lower as crude and natural gas prices have dropped. During the same time, estimates have held in higher ground, creating a value proposition to potential investors. More recently, this stock has rebounded aggressively from a short-term low.

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(RAH) - Ralcorp Holdings - attractive to investors seeking shelter from volatility in other areas of the market

2008-10-22T12:30:00.000-07:00

Ralcorp Holdings, Inc. (RAH) is operating in a segment of the market that is proving to be resilient when consumers spend less. Estimates are up and the company's share prices has been advancing since early July.

Company Description

Ralcorp Holdings, through its subsidiaries, manufactures and distributes store-brand food products. The company has a market cap of $1.70 billion and is based in St. Louis, Missouri.

Resiliant Earnings

Ralcorp is proving to be resilient in a challenging market, scoring big gains in both revenue and income in its most recent quarter, reported in late July. Revenue was up 13% to $658.6 million. Profit sky-rocketed, jumping 295% to $45.8 million. This produced earnings of $1.73 per share, easily outpacing estimates of $1.21.

Ralcorp booked a gain of $21.7 million, or 53 cents per share, on a forward sales contract related to its investment in Vail Resorts (MTN).

Ralcorp's core business in food and snacks is holding up well at a time when the credit markets are tight and consumers are strapped for cash and spending less.

Analyst Estimates

Because of this dynamic, analysts remain bullish on the company. The current-year estimate is up 3 cents in the last week to $3.65 per share. The next-year estimate is projecting 16% earnings growth.

In order to hit these numbers Ralcorp will have to deftly navigate volatile commodities markets. The company carries heavy exposure to input costs like corn and wheat.

Valuations

Based upon the current-year estimate, this stock has a forward P/E multiple of 18X. This is a premium to the overall market but stocks from this segment of the market have recently become more attractive to investors seeking shelter from volatility in other areas of the market.

The Chart

Shares of RAH have been advancing along a trend line since early July, climbing from less than $50 to $66. The short-term high is at $74.

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(ELNK) - Earthlink - Earthlink Beat Wall Street Estimates by 45.71%

2008-10-22T12:28:00.000-07:00

Earthlink, Inc. (ELNK) continues to thrive on the basic building block of providing Internet service. It has surprised on estimates 3 out of the last 4 quarters by an average of 19.82%. The company is cheap. It's trading at only 5.2x forward earnings.

Company Description

Earthlink provides Internet services nationwide. The company was founded in 1994 in the infancy of the dot-com boom. It was among the first internet providers, in the mid-1990s, to offer flat-rate unlimited Internet service for only $19.95.

The company, a Zacks #1 Rank (Strong Buy), now provides dial-up, high-speed, voice, web hosting, wireless or "EarthLink Extras" like home networking or security across the country.

Earthlink Beat Wall Street Estimates by 45.71%

On July 29, Earthlink announced second quarter results that easily surprised by 16 cents a share. Income from continuing operations was $57.7 million, or 51 cents, compared to a loss of $(7.0) million, or a loss of 6 cents, in the second quarter of 2007. The year ago loss was due to $40.1 million in equity losses related to Helio.

The company's second quarter 2008 results included a loss of $4.4 million from discontinued operations for the municipal Wi-Fi assets compared to a loss of $9.3 million for the same segment in 2007.

Revenues fell 21.2% to $245.6 million from the same period a year ago. The company has been instituting a strategy of retaining tenured Internet access subscribers rather than simply growing the subscriber base. The tenured users have significantly lower support cost profiles compared to newer subscribers which should benefit the company over the long-term.

Full Year Guidance Raised

Due to an improved cost structure and better than expected improvements in average monthly customer churn, Earthlink raised its full year guidance to free cash flow of $250 million to $270 million.

The company sees favorable trends in many areas of the business through the remainder of the year but doesn't expect the same strong growth as it recently experienced.

Third Quarter and Full Year Estimates Rise

Covering analysts responded to the bullish full year guidance by raising estimates for the third quarter and the full year. Third-quarter estimates rose 5 cents to 40 cents a share in the last 90 days. For the full year, estimates are up 16.4% to $1.77 in the same period.

Earthlink reports third-quarter earnings on Oct 28.

Value Fundamentals

Earthlink is trading at only 5.2x forward earnings. Its price-to-book is 2.06. The company has a 5-year average return on equity (ROE) of 10.21%.

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(SDTH) - ShengdaTech - surprised on estimates 3 out of the last 4 quarters by an average of 21.18%

2008-10-22T12:25:00.000-07:00

ShengdaTech Inc. (SDTH) has that rare combination of strong growth and value characteristics. The stock is cheap. It trades at only 6.4x forward earnings and yet earnings are expected to grow 20.67% over the next 5 years.

Company Description

ShengdaTech manufactures nano precipitated calcium carbonate (NPCC) and coal-based chemicals. The company also converts limestone into NPCC using proprietary technology. NPCC is used in tires, paints, and polyvinyl chloride building materials. The coal-based chemical products include ammonium bicarbonate, liquid ammonia, methanol and melamine.

ShengdaTech's coal-based products are used in chemical fertilizers and raw materials in the production of organic and inorganic chemical products, especially formaldehyde and pesticides.

Acquisition of Jinan Fertilizer Company

In September, the company announced that it expects to close on the acquisition of Jinan Fertilizer Company before Oct 31 because ShengdaTech is under government mandate to close its Tai'an City facility by that same date. ShengdaTech is transferring production from the closing facility to the Jinan facilities.

In the event that the acquisition is not completed by the date the government closes the Tai'an facility, the company said it intends to continue production by renting facilities from Jinan Fertilizer and expects a smooth transition from renting production to ownership.

The company has stated that the government's closing of the Tai'an facility was not the result of any safety violations but was due to China's increased environmental enforcement reform as a result of food safety scares and the facility's nearby proximity to residential and non-manufacturing areas.

Revenue Jumped 75.7% in the Second Quarter

On Aug 15, ShengdaTech reported second-quarter earnings that beat Wall Street estimates by 28.57%. Net income rose 66.3% to $10 million, or 18 cents, from $6 million, or 11 cents in the second quarter of 2007.

Revenues surged 75.7% to $39.8 million from $22.7 million in the year ago period. The company attributed the growth to higher selling prices and increased demand for both chemical and NPCC products.

ShengdaTech added 3 new stainless steel NPCC production lines in April 2008 which boosted NPCC production capacity to 190,000 metric tons compared to 90,000 metric tons from a year ago. The increase in production boosted revenue from NPCC products by 76.4% to $19.1 million from $10.8 million in 2007.

During the second quarter, the company added 6 new domestic clients as well as expanded its international reach by adding a Korean tire manufacturer, Vietnamese and Israeli polyethylene manufacturers and a Singapore automobile undercoating company to its customer list.

Full Year 2008 Estimates Rise

Consensus estimates for the third quarter have been stable in the past 90 days, holding at 15 cents per share. Consensus estimates for the full year are up 4 cents to 64 cents in the last 3 months.

ShengdaTech reports third-quarter earnings on Nov 17. It has surprised on estimates 3 out of the last 4 quarters by an average of 21.18%.

Value Fundamentals

ShengdaTech is an attractive value play, with a forward P/E of 6.49. Its price-to-book is 2.45. The company has an outstanding 1-year return on equity (ROE) of 34.66%.

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(ULTA) - Ulta Salon, Cosmetics & Fragrance - reasonable PEG ratio of 0.58

2008-10-20T08:15:00.000-07:00

Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) continues to aggressively expand its footprint across the U.S. The beauty retailer and salon is also coming of off its third earnings surprise and is priced at a reasonable PEG ratio of 0.58.

Company Description

Ulta provides full-salon services in addition to both prestige and mass salon products. The salons offer the experience and environment of a specialty retailer at the value and convenience of a beauty superstore. Products include cosmetics, skin care, bath and beauty products, fragrances, and much more.

Currently the company operates more than 280 locations in 32 states and also sells through its Web site. Ulta is headquartered in Bollingbrook, Illinois, has 4,000 employees, and carries a market cap of $580 million.

A Third Consecutive Surprise

On Sep 4 the company announced its third earnings surprise in as many quarters, averaging 13% per surprise. The compnay reported Earnings per share of 6 cents while analysts were expecting a nickel.

ULTA reported net sales of $249 million, a 24% year-over-year increase. The company opened more than 70 new locations since the second quarter of 2007 and also saw same-store sales increase 3.7%.

Impressive Growth

Full-year earnings estimates for the next fiscal year are currently 69 cents per share, a growth rate of 28%. While the stock is trading at a slightly high P/E for its industry, near 15 times earnings, the 25.7% long-term growth rate yields a great PEG ratio of 0.58.

In a Sep 25 Reuters article, CEO Lyn Kirby reiterated plans to increase Ulta's store count to 1,000 by 2017, more than triple the current number of locations.

The Chart

Ulta went public in Oct 2007 and sold off sharply with the market. It is common to see high volatility in new issues, but shares seem to have calmed down and developed a support level near $10 per share.

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(CASY) - Casey & General Stores - Favorable Comparison and Higher Expectations

2008-10-20T08:12:00.000-07:00

Casey & General Stores (CASY) has been trading ahead of the broader market amid recent turmoil and over the long-term. While grocers and food retailers have been slowing down, convenience stores like CASY have been outperforming. CASY has been consistently outperforming the Dow Jones ($DJI), S&P 500 (SPX) and the Nasdaq (COMP). The company offers a dividend yield of 1.2%, while the majority of its industry peers pay no dividend at all.

Company Description

Casey & General Stores, Inc. together with its subsidiaries, operate convenience stores under the Casey’s General Stores name in the Midwest states. It has operations in Iowa, Missouri, Illinois Kansas, Minnesota, Nebraska, South Dakota, Wisconsin, and Indiana. The company was founded in 1959 and is headquartered in Ankeny, Iowa.

Solid Growth

The company reported an all-time high in earnings for the first fiscal quarter, surpassing the consensus estimate by nearly 18% and noting that the record quarter gave CASY a solid foundation for meeting its annual performance goals. During the past 5 consecutive quarters, the company missed analyst forecasts only once and on average topped estimates by 11%.

First-quarter sales were up 16.8% to $1.3 billion. Same-store gallons sold increased by 0.50%. Grocery and other merchandise same-store sales climbed 4.7%, and prepared food and fountain drinks same-store sales jumped 12.3 percent.

Favorable Comparison and Higher Expectations

CASY offers a dividend yield of 1%, which exceeds the industry average as CASY’s industry group pays little to no income. The company’s return on equity (ROE) is 13%, which beats industry average of 5%.

Analyst earnings estimates for the year ending April 2009 of $1.58 per share are above last month’s expectations of $1.56. The most accurate projection of $1.63 per share is a more bullish one.

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(BTU) - Peabody Energy - beaten analyst estimates over the last four quarters by an average of 40%

2008-10-20T08:11:00.000-07:00

Peabody Energy Corp. (BTU) just posted amazing third-quarter results. The company's share price is trading sharply lower on the year, creating an opportunity to purchase shares in this growth stock at a discounted price.

Company Description

Peabody Energy Corp. engages in the exploration and production of coal worldwide. The company owns interest in 31 coal operations in the United States, Australia and Venezuela. Peabody has a market cap of $7.7 billion.

Amazing Third-Quarter Results

Peabody pleased its shareholders by stepping up and reporting amazing third-quarter results just yesterday, Oct 16. Revenue increased to $1.9 billion from $1.2 billion last year. Net income sky-rocketed to $369 million from $32.3 million last year. This produced earnings of $1.36 per share, blowing past analyst estimates of 87 cents.

Consistent Earnings

Peabody has been able to produce consistent and reliable income over the last four quarters, having surprised and beaten analyst estimates over the last four quarters by an average of 40%.

Guidance Raised

After the great quarter, Peabody raised its full-year earnings guidance to between $3 and $3.25 per share, up from the previous range between $2.50 and $3.

Analyst Estimates

The analyst community is bullish on Peabody's longer-term prospects, with the next-year estimate pegged at $6.18 per share, a 114% earnings growth projection.

Valuations

Based upon the current-year estimate, this stock is trading at a discount to the overall market, carrying a forward P/E multiple of 9.4X.

The Chart

Shares of BTU have taken a beating this year, but this downward pressure belies the companies strong fundamental composition. Peabody just posted an awesome quarter, and at these levels, this stock looks like a bargain.

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(LAYN) - Layne Christensen Co - analysts responded to the second quarter earnings surprise by raising estimates

2008-10-20T08:08:00.000-07:00

Layne Christensen Company (LAYN) has seen its stock fall in the market sell-off despite posting record revenues that grew 23.8% in the second quarter. LAYN has surprised on earnings 3 out of the last 4 quarters on average by 19.18%. Layne has a forward P/E of 8.05.

Company Description

Layne Christensen, a Zacks #1 Rank (strong buy), provides drilling services in four markets: water resources, mineral exploration, geoconstruction and energy services and production.

Its customers include a large cross section of industries from municipalities, industrial companies, miners, oil and gas companies and consulting firms. The company operates in the U.S., Canada, Mexico, Australia, Africa and South America.

Layne has several different revenue streams, including Layne Energy, an exploration and production company with over 400 wells in the Mid-Continent Cherokee Basin.

Its Water Resource Division provides water related services including hydrological studies, well design, drilling and pump installation. The segment constructs water treatment facilities and sells products that treat contaminants such as nitrates, arsenic, and radon in groundwater.

The Mineral Exploration Division provides above ground and underground drilling activities for miners.

The GeoConstruction Division specializes in ground modification and specialized structural support to the heavy civil construction sector. This division works on major construction projects such as dams, tunnels, and shafts. It works to improve weak and unstable soils and groundwater control during excavation.

Second Quarter 2009 Revenues Jump 23.8%

On Aug 28, Layne Christensen reported second-quarter fiscal 2009 earnings that blew by Wall Street estimates by 25.81%. Net income rose 58% to $15.09 million, or 78 cents per share, from $9.57 million, or 60 cents. Analysts expected 62 cents.

Revenues grew 23.8% to a record $269.6 million from $217.8 million in the year ago period. All 4 divisions saw double digit revenue growth. Revenues in the Water Resources Division rose 22%. The backlog for the water infrastructure division also jumped to $477.6 million as of July 31, 2008 compared to $364.2 million at the end of the second quarter of 2007.

The Mineral Exploration Division grew 28.4% mainly due to high gold and base metal prices. The Energy Division gained 28.6% from increased production and higher gas pricing.

While it was an outstanding quarter and continued the company's streak of 18 consecutive quarters with year-over-year quarterly improvements, Layne is aware the future may look different.

"Overall, the economy has been getting increasingly difficult and presents a continuing challenge for the Company going forward," said Andrew Schmitt, President and CEO.

Consensus Estimates Rise for Third Quarter 2009 and the Full Year

Covering analysts responded to the second quarter earnings surprise by raising estimates for the third quarter and the full year. Third-quarter estimates are up a penny to 68 cents in the last 30 days. Full year 2009 estimates are up 4 cents to $2.61 per share.

Value Fundamentals

Layne Christensen's stock has been pummeled in the market sell-off and is now cheap. It trades with a forward P/E of 8.05. Its price-to-book is only 0.94. It has a 5-year average return on equity (ROE) of 10.43%.

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(PRGO) - Perrigo Company - largest manufacturer of store brand over-the-counter pharmaceutical products

2008-10-16T06:28:00.000-07:00

Perrigo Company (PRGO) has acquired 2 more laboratories this quarter in a focused effort on growth in existing markets. The company is also coming off of a record quarterly earnings report.

Company Description

Perrigo is the nations largest manufacturer of store brand over-the-counter pharmaceutical products and also manufactures store brand nutritional products. Store brand products are sold by national and regional supermarket, drugstore and mass merchandise chains under their own labels and compete with nationally advertised brands.

The Company's products include analgesics, cough and cold remedies, antacids, laxatives, feminine hygiene and smoking cessation products, and vitamins, nutritional supplements and nutritional drinks.

Acquired Mexican Manufacturer

On Oct 6 Perrigo announced that it acquired Laboratorios Diba S.A. in an all-cash transaction for $25 million. The manufacturer is expected to add $15 million in sales per year.

Perrigo has been in Mexico for over 60 years, but the deal will provide the company with 150 new formulas and 50 new trademarks.

The company also acquired JB Laboratories for $44 million in another all-cash transaction. The Michigan based lab is expected to produce $70 million in sales.

Lawsuit Dropped

A patent infringement lawsuit brought on by Johnson & Johnson was dismissed on Sep 18. Perrigo can now pursue FDA approval of its cream that will be sold as a generic form of Monistat-1. Once on shelves it will be under store brand names.

Record Annual Results

Perrigo announced record annual results on Aug 18 in its fourth quarter earnings announcement. Revenue for full-year 2008 was $1.8 billion, a record level, and a 26% increase from 2007. Net income was $1.58 per share, an 81% increase.

Management projects 2009 earnings to be between $1.90 and $1.98.

The Chart

Share of PRGO have developed 2 levels of support, at $32 and $34, over the past 6 months. The stock has struggled to maintain $34 per share, but has strong support just below, at $32.

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(FDO) - Family Dollar Stores - benefited from the effect of the government stimulus checks distributed this summer

2008-10-16T06:26:00.000-07:00

Family Dollar Stores, Inc. (FDO) is outperforming the market on a record fourth quarter. Analysts are upbeat on earnings forecasts for the year ending August 2009. The company is faring well amid the market mayhem. It continues to outpace the Dow Jones ($DJI), S&P 500 (SPX) and the Nasdaq (COMP).

Company Description

Family Dollar is a discount retail chain operator in the United States. Family Dollar offers a core assortment of name-brand and quality consumable merchandise supplemented by fashion and seasonal merchandise. A Fortune 500 company that is based in Matthews, North Carolina, FDO operates more than 6,500 stores in 44 states.

A Record Quarter

The company recently posted record fiscal fourth-quarter earnings of 38 cents per share, exceeding last year’s 26 cents and topping the consensus estimate by 12%. During the past 5 straight quarters, FDO missed analyst estimates only once and, on average, was 7% ahead of expectations.

Fourth-quarter sales grew 8.2% on a year-over-year basis, reaching $1.766 billion. Sales in comparable stores increased 5.6%.

Family Dollar generated $515.8 million in operating cash flow, versus the year-prior $415.8 million.

"As expected, fourth quarter sales benefited from the effect of the government stimulus checks distributed this summer. Strong sales of consumables and effective management of inventory risk, combined with disciplined expense control resulted in robust earnings growth," said Howard R. Levine, Chairman and Chief Executive Officer. "After a challenging first half, these results reflect how quickly our team has adapted to the changing macro environment. The investments we made to drive revenue growth delivered strong results, and our Associates did a great job managing expenses and inventory risk in this uncertain environment."

The company said it anticipates that strong sales of consumables combined with tight expense control will result in earnings per share for the first quarter of fiscal 2009 of between $0.38 and $0.42 compared with $0.37 in the first quarter of fiscal 2008.

Analysts are upbeat on earnings forecasts for the year ending August 2009. Estimates of $1.69 per share were upwardly revised from $1.66 over the past 90 trading days.

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(DMND) - Diamond Foods - analyst community is bullish on the longer-term prospects of Diamond

2008-10-16T06:24:00.000-07:00

Diamond Foods Inc. (DMND) has been rallying for most of the year as the company has been able to produce impressive results in a very tough environment. Analysts are bullish on the company, with the next-year estimate projecting 35% earnings growth.

Company Description

Diamond Foods, Inc. is a branded food company specializing in nuts and snack products. The company sells it products directly to retailers. Diamond was founded in 1912 and had a market cap of $461 million.

Fourth-Quarter Results

Diamond Foods is created a buzz on the Street after the company reported impressive fourth-quarter results on Sep 25. Revenue was up 1% from last year to $113.15 million. Net income spiraled higher, climbing to $2.6 million from $774,000 in the same period last year. This produced earnings of 16 cents per share, ahead of analyst estimates by 3 cents.

Consistent Results

This was the fourth time in the last four quarters that Diamond has surprised and beaten analyst estimates, having done so by an average of 3 cents, or 15%.

For the full year, Diamond's profits increased to $14.8 million, or 91 cents per share, compared to last year's figure of $8.4 million, or 53 cents per share.

Guidance and Estimates

After the solid quarter, Diamond went ahead and raised its first-quarter guidance, saying it now expects to earn between 60 and 63 cents per share on sales between $190 and $205 million.

The analyst community is bullish on the longer-term prospects of Diamond, with the next-year estimate pegged at $1.68 per share, a 35% earnings growth projection.

Valuations

Based upon the current-year estimate, this stock is trading with a forward P/E multiple of 21X, a premium to the overall market.

The Chart

Shares of DMND have had a great year, trading deep in the green after advancing from less than $20 to above $31, a new 52-week and all-time high.

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(MED) - Medifast - portion-controlled weight loss products and programs

2008-10-16T06:23:00.000-07:00

Medifast, Inc. (MED) is growing quickly as diet, health and fitness programs stay hot even in a slowing economy. Revenues rose 25% in the second quarter and the company recently said third quarter financials look strong. The company has a forward P/E of 9.97.

Company Description

Medifast sells a portion-controlled weight loss products and programs. It sells the products and programs through the Internet, physicians, medically supervised Medifast Weight Control Centers and the Take Shape for Life direct-selling division.

The company, a Zacks #1 Rank (strong buy), continues to expand its strategy of opening corporate and franchisee owned clinics throughout the United States. On Oct 8, the company announced the opening of the first franchisee-owned Medifast Weight Control Center in Baltimore. It will be the first of four clinics in the Baltimore market.

Medifast currently owns 20-corporate owned clinics, with 10 in Dallas, 8 in Houston and 2 in Orlando.

Medifast Optimistic about the Third Quarter

On Oct 8, the company also provided a business update given the financial crisis griping the country.

Medifast said that it continues to operate at a high level and that financial results for the third quarter will be strong.

"Our Take Shape For Life direct sales segment continues to exhibit strong growth as the number of Health Coaches increases month to month," said Michael S. McDevitt, CEO.

"This increase in Health Coaches is being driven by the unique market potential for our products combined with our strong field organization and the recent tools and the training that we have made available to our coaches," he said.

"The prevailing market conditions may also be a positive factor. During a recession or downturn in the overall economic environment, direct selling business models such as Take Shape For Life often experience accelerated growth as people look for supplemental income opportunities," he added.

Medifast Reports Record Second Quarter Sales

On Aug 7, Medifast reported second quarter earnings that beat Wall Street estimates by 22.20%. Net income was $1.5 million, or 11 cents per share, compared to 7 cents a share in the year ago period. Analysts expected 9 cents.

Revenues rose 25% to $27.5 million from $22 million in the second quarter of 2007. Take Shape for Life was the hottest segment, growing 79% year over year, and was 44% of the overall revenues in the quarter. The number of active health coaches climbed 87% to 2,800 from 1,500 in 2007.

Clinic revenues were also strong. Average monthly revenue per clinic increased 5%, to $41,000 from $39,000 in the second quarter last year.

Medifast Issues Bullish 2008 Guidance

In August, the company was extremely bullish about future growth. It forecast revenue growth in the range of 8-10% for 2008 and earnings per share growth of 30-35%. In its Oct 8 statement, the company said it continues to see strong earnings potential for the third quarter.

Medifast reports third-quarter earnings on Nov 6.

Consensus Estimates rise for the Third Quarter and the Full Year

Covering analysts are equally as bullish as estimates have risen for both the third quarter and the full year. Third quarter estimates rose a penny to 11 cents in the last 60 days. Full year estimates are up 2 cents to 38 in the same time period.

Analysts see 2008 year-over-year earnings growth of 35.71%.

Value Fundamentals

Medifast has a forward P/E of 9.97. Its price-to-book is 1.92. The company has a solid 5-year average return on equity (ROE) of 14.54%.

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