June 7, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of AMERCO (Nasdaq: UHAL ) , the parent company of do-it-yourself moving company U-Haul, Oxford Life Insurance, Repwest Insurance, and Amerco Real Estate, have had a wild ride today. Following its fourth-quarter results, shares quickly rallied 13% after the market open, then traded down 8% just hours later, and now are trading near the flat line.
So what: It was another blowout quarter for AMERCO which has made a habit of crushing Wall Street's estimates over the past four quarters. Overall profit was $1.29 while revenue rose 7% to $523.4 million. Now compare this to the mean estimates of just $0.38 in profit and $503.5 million in revenue and you'll see why AMERCO popped so strongly after the market opened. The weakness looks like a mixture of cautious comments from management regarding the challenging environment its business segments are operating in and the fact that it's a thinly traded stock, which makes it vulnerable to wider price swings.
Now what: Although AMERCO has made a habit of crushing estimates, it should be noted that only one analyst covers the stock (and who notoriously underestimates earnings); therefore its results should be taken with a grain of salt. AMERCO has solid cash flow and has performed well given challenging economic conditions, but its large pile of debt continues to turn me off on the company as a whole.
Craving more input? Start by adding AMERCO to your free and personalized watchlist so you can keep up on the latest news with the company.
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