Thursday, February 25, 2010

Intra-day action (CCE, KO, TRLG, PALM)

Tough day for stocks, down due to the very weak durable goods orders reported earlier.  After bottoming at 10,195ish, the DJIA has spiked a bit, down down just 93points on the day.  Still, only Walmart and Alcoa are positive among the 30....

Despite the down market, there are some good gainers today.

Leading the upside is Coca-Cola Enterprises, Inc (CCE) - NOT to be confused with The Coca-Cola Company (KO).  CCE is the bottling operation, and the stock is up 32% on news it will sell the North American bottling business to KO, while agreeing to buy KO's bottling business in Norway and Sweden.  KO already owns about 34% of CCE outstanding shares.  Complex enough for ya?  Oh they will also exchange each share of CCE for a new CCE structure based solely on Europe, and will receive $10 per share in cash.  KO shares are down 4% on the news.

Another winner today is jeans outfit (ha, outfit!) True Religion (TRLG), up 17% after reporting upside to earnings.  It's one of those stories where people give the company little credit (by way of a tiny P/E), yet the company keeps out-earning the expectations, proving the short sellers wrong.  New store openings go from 23 to about 28, and comp sales (sales in stores open at least a year) blew away estimates.  2010 earnings guidance however, is very conservative, leaving management room to beat again.  Based on 2010 EPS guidance of 2.05, a PE of 14 would be a stock price of $28.70.  Add in $4.43 in cash per share, and the stock has another $9 in upside easily...

Among losers is Palm, Inc. (PALM), down after giving upcoming quarterly guidance that missed consensus estimates by a country mile.  They see about $300million in revenue, versus expectations near $425million, as they're having a tough time getting sales of new products to ramp up:

"Revenues for the quarter and full year are being impacted by slower than expected consumer adoption of the company’s products that has resulted in lower than expected order volumes from carriers and the deferral of orders to future periods. Accordingly, Palm expects fiscal year 2010 revenues to be well below its previously forecasted range of $1.6 billion to $1.8 billion. The company will provide more detail on its financial results during Palm’s third-quarter financial results conference call currently scheduled for Thursday, March 18.
“Palm webOS is recognized as a groundbreaking platform that enables one of the best smartphone experiences available today, and our work to evolve the platform and bring industry-leading technology to market continues. However, driving broad consumer adoption of Palm products is taking longer than we anticipated,” said Jon Rubinstein, chairman and chief executive officer. “Our carrier partners remain committed, and we are working closely with them to increase awareness and drive sales of our differentiated Palm products.”

Copyright 2010 AlphaNinja

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