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After wrapping up an incredibly strong first quarter in terms of earnings reports, it's time to dive headfirst into the second quarter. With so many companies reporting during the weeks that comprise earnings season each quarter, earnings reports can fall through the cracks.
Each week this year, I've taken a look at three companies that could be worth further research after either beating or missing their profit expectations. Today we're going to take a look at three more companies that reported earnings last week. If they slid under your radar, they deserve a look:
|Mitcham Industries (Nasdaq: MIND )||$0.57||$0.77||35%|
|Pep Boys (NYSE: PBY )||$0.12||($0.06)||(150%)|
|Ruby Tuesday (NYSE: RT )||$0.16||$0.07||(56%)|
Source: Yahoo! Finance.
My choice for Wall Street's trounce of the week goes to small-cap seismology imaging company Mitcham, which more than blew away even the most robust expectations.
For the quarter, Mitcham highlighted revenue growth of 88%, led by an 87% jump in leasing revenue. Its profit more than quadrupled from a year-ago period in which EBITDA grew by 147% -- and this was with an additional 2.3 million shares being used to calculate EPS from a share offering in June.
The secret to Mitcham's success is a combination of increased demand for its seismic imaging equipment (stemming from the high price of oil) and its push into international markets, which seems to have caused its profits to gush higher. With management predicting another strong year in fiscal 2013 and the company trading for just eight times forward earnings, I see no reason why this high-growth stock shouldn't be on everyone's watchlist.
Manny, Moe & Jack...you're killing me! It's a darn good thing that private-equity firm Gores Group agreed to purchase the company back in late January, because that was another highly unmemorable earnings report.
For the quarter, Pep Boys reversed two consecutive quarterly profits into a loss, for which it affixed the blame on a few one-time merger-related charges. What stands out to me are years of failed growth opportunities. From a retail sales perspective, AutoZone (NYSE: AZO ) continues to see mid to high single-digit same-store sales growth and is taking customers hand-over-fist from its competition. Pep Boys actually reported a same-store sales contraction of 2.3% in its retail sales segment. Only a 1.3% rise in service-center comparable sales kept the company's EPS from dipping further. Following a decade of stagnant sales, I guess we should be thrilled to kiss this perpetual underperformer goodbye -- I know I am.
This Ruby is looking more like a rhinestone with each passing day (no offense to you January babies out there). Ruby Tuesday shareholders are learning the hard way that if you aren't able to successfully pass along price increases to your consumers, you'll pay for it!
CEO Sandy Bell noted that Ruby's competitors have been able to use their considerably larger advertising budgets to aggressively market to consumers. This is one reason that peer Darden Restaurants (NYSE: DRI ) , despite the challenges, has been able to meet or beat Wall Street's expectations over the past year. Ruby Tuesday, on the other hand, has taken to skimping on its advertising budget and closing 27 underperforming stores in order to remain profitable. Between the rising costs for food and stiff competition, I'd consider sending this one back to the kitchen.
Sometimes an earnings beat or miss isn't as cut-and-dried as it appears. I've given my two cents on what's next for each of these companies; now it's your turn to sound off. Share your thoughts in the comments section below and consider adding these stocks to your free and personalized watchlist.
- Add Mitcham Industries to My Watchlist.
- Add Pep Boys to My Watchlist.
- Add Ruby Tuesday to My Watchlist.
If you'd like the inside track on three more companies that could wind up in the earnings beat column, then I suggest you get a copy of our latest special report, "3 American Companies Set to Dominate the World." Did I mention the best part? This report is completely free, so don't miss out!