How this Q earnings are coming along
I’ve had three companies report so far. I’ll tell you my take on the results, and I’ll start each discussion with an excerpt from the brief review of the company that I just did.
Signature Bank (SBNY)
This remains one of the best banks in the world! By the way, I’m not exaggerating about this. Forbes rates the 100 largest banks in America on a series of metrics, weights them mathematically, explains explicitly how they rated them, and publishes the results as “The Best Banks in America” or some such. SBNY has been one of the top ten banks for six years running. They were number two in the Americas in 2014. They were first, number one (!) of 100 banks, last year. And they were rated number six this year. The best of the big four banks was Wells Fargo at about number 34, as I remember.
SBNY is my 4th biggest position at 8.3% of my portfolio, with a PE of 18.6 at the current price of $142.
Here’s what their March earnings looked like:
Earnings were up 23% from $1.64 to $1.97.
Twelve month trailing earnings were also up 23% from $6.20 to $7.63, so they have been very consistent.
Book Value was $62.85, which was up 10.7% sequentially, up 21.6% from a year ago, and up 56.7% from two years ago.
Efficiency Ratio of 32.2% was just incredible (!), even better than the 35.1% a year ago.
Net Interest Margin was 3.32%, slightly better than the very good 3.26% a year ago.
Non-accrual loans were 0.42% of total loans and 0.30% of total assets.
There were some concern over their exposure to taxi medallion loans in New York City, but those are only about 4% of their total loans, and they discussed the issue at length in the CC.
The stock price ran up from $134 two weeks ago to $147 before earnings, and settled back after earnings, closing Friday at $141.70 (up 5.7% from two weeks ago).
This company is a dominant and innovative figure in railroad car construction. When the oil boom was on they were booming too. Now that oil isn’t booming for the time being, they are priced as if no one will ever use a railroad again. They have a backlog that should last for a couple of years and only about 10% of it is energy related. I bought shares a few weeks ago at a PE of less than 4(!) and a price of $27. When they announced earnings just where they said they would be, and re-confirmed their outlook for the fiscal year at about $5.90, the price went up to $32, but it’s now settled back to $29.70. I’m keeping it a very small position (1%) as I’m not really a value investor.
Here’s what their quarter looked like:
Revenue was $669 million, up from $505 million a year ago, but down sequentially from $802 million.
Earnings were $1.41, down from $1.57 a year ago, and from $2.15 sequentially.
Twelve month trailing earnings were $6.91, up 49% from $4.64 a year ago. (Yahoo has them at $7.06 in earnings but I’ll use mine, which are a few cents lower).
Backlog for 34,100 railroad cars. They deliver about 5,000 per quarter, and got in 3,000 orders in the quarter in spite of all the bad karma in the industry, so that backlog should last for a long, long time.
Generated $192 million in cash in fiscal 2015, up from $136 million the year before.
They pay a dividend of about 2.6%, are repurchasing shares, and are at a PE of 4.3.
Outlook: They are now half way through their fiscal year, with $3.55 in the bank, and they reaffirmed $5.90 at the midpoint for full fiscal year earnings. They feel they can do fine eating away at their backlog until the cyclical railroad industry comes back to life. It was a good, confident conference call.
This company is doing wonderfully, with no obvious threat in sight. It sold off for no particular good reason, except that the price had risen a lot this year. I’m comfortable with it as one of my big three largest, and oversized, positions. It’s currently about 13.4% of my portfolio, at a price of $32.75, and a PE of 17.8. This is a great company, and selling at a very low price when compared to other companies in the same field.
Here’s what their quarter looked like:
Revenue was $979 million, up 27.5% from $768 million a year ago. International Revenue was up 47%, and revenue growth from China keeps coming in at over 100%.
Earnings were 63 cents, up 70% from 37 cents a year ago.
Twelve month trailing earnings were $1.84, up 57% from $1.17 a year ago.
Owned same store comps were +9.8%.
They opened more than 80 stores in the quarter.
They are enlarging and automating their European Distribution Center, expanding throughout the world, and don’t see any impediment to future expansion and growth.
Last year some of the Mar quarter got pushed into Jun quarter because of a West Coast long shoreman strike. This year, some of June quarter got pulled into March because Easter came so early, so they say June won’t be up by nearly as much as March, but no one seemed to care as the stock price rose more than 6%.
By the way, think of this:
Nike revenues last quarter grew 4% (compared to Skechers which grew 27.5%!).
Nike trailing earnings grew 22% (Skechers trailing earnings grew 57%).
Nike has a PE of 29 (Skechers has a PE of 17.8).
Does SKX have room for price appreciation? You figure it out. (And that’s not even comparing to UA with a PE of 45).
Hope this helps,
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