The first half of 2012 is now in the books, and now that we're more than halfway through the third quarter, I can't help but point out that the majority of reports up until now have been better than expected. With so many companies reporting during the weeks that comprise earnings season, it's easy for some earnings reports to 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'll take a gander at three more companies that reported earnings last week. They may have slid under your radar, but they deserve a look.
Net 1 UEPS Technologies
(Nasdaq: UEPS )
|Big Lots (NYSE: BIG )||$0.41||$0.36||(12%)|
|Trina Solar (NYSE: TSL )||($0.86)||($1.30)||(51%)|
Source: Yahoo! Finance.
Net 1 UEPS Technologies
The company's name just rolls right off the tongue, doesn't it? However, the story behind Net 1 is incredibly intriguing and its earnings results are finally signifying that it may realize its full potential.
Net 1, through its Universal Electronic Payment System, serves under-banked emerging markets in South Africa, Korea, Ghana, and Iraq. The rollout of its payment systems, which include debit cards as well as mobile payment functions and welfare payments, wasn't exactly smooth, resulting in multiple earnings disappointments.
That all changed in January, when Net 1 received a five-year contract from the South African Social Security Administration to distribute social grants. That contract reflected positively in the company's fourth-quarter results. Overall revenue popped 30%, although earnings dropped 31% in U.S. dollars primarily because of negative currency impacts. That still was enough to easily crush Wall Street's expectations. Furthermore, Net 1's new guidance called for at least $1.49 in EPS in fiscal 2013, which was well ahead of the $1.15 Wall Street had expected and places the company at a forward P/E of just 6.6 based on its own low-end forecast. If Net 1 wasn't on your radar prior to this earnings release, make sure it is now!
I hate admitting when I'm wrong, but I haven't even been in the ballpark when it comes to predicting how Big Lots will perform moving forward. Back in March, I noted that Big Lots has had trouble putting together more than a few quarters of growth in a row and ignored that trend when choosing it as an outperform on CAPS. Big mistake!
Big Lots' second-quarter results were nothing short of another disaster. Sales crept up by 1.7%, but its expansion into Canada is weighing on the bottom line, as is its 1.9% dip in U.S. same-store sales. For the second time this year, Big Lots lowered its full-year EPS forecast as it struggles to retain market share against the likes of Wal-Mart and Target (NYSE: TGT ) . These two appear to be the real winners of Big Lots' failures, as Wal-Mart's stock hit decade-long highs just last month, and Target easily surpassed Wall Street's estimates and boosted its full-year guidance on the back of stronger grocery sales and increased customer loyalty.
I'm not quite ready to admit defeat yet on my Big Lots CAPScall, but things will need to improve quickly if the company hopes to save face. For one, Big Lots needs to quit the share buybacks and return capital to shareholders in the form of a dividend already! Also, Big Lots will need to step up its expansion in Canada while minimizing costs. Investors are getting tired of waiting for results and I have to agree that they have every right to be.
One, two, three, four, I declare a pricing war! One year ago, not a single solar company was on solid footing -- especially U.S. solar providers like First Solar (Nasdaq: FSLR ) , which were being dealt blow after blow because of China's low-cost production capabilities.
Fast-forward one year and it appears that the tables have turned. Since reporting its second-quarter results earlier this month, First Solar has been on a tear. The company, through stringent cost-cutting and an uptick in projects, boosted its full-year EPS forecast.
The same can't be said for Trina Solar in China, which missed estimates by a mile for the fourth straight quarter and cautioned that solar panel shipments and its margins would shrink even further this year. Trina has made good strides in reducing its operating costs, but it's not nearly enough to offset the continued glut in panel supply or the looming pricing war developing in China. Although it may look like a bargain here, I'd suggest steering clear of Trina and much of the solar sector.
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 Net 1 UEPS Technologies to My Watchlist.
- Add Big Lots to My Watchlist.
- Add Trina Solar to My Watchlist.
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