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3 Earnings Reports That Caught My Attention Last Week

http://www.fool.com/investing/general/2012/10/08/3-earnings-reports-that-caught-my-attention-last-.aspx

Sean Williams
October 8, 2012

As we edge into the fourth quarter, and with three-quarters of the year already in the books, 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.

Company

Consensus EPS

Reported EPS

Surprise

Cal-Maine Foods (Nasdaq: CALM  ) $0.35 $0.39 11%
RPM International (NYSE: RPM  ) $0.64 $0.64 0%
Mosaic (NYSE: MOS  ) $1.15 $1.01 (12%)

Source: Yahoo! Finance.

Cal-Maine Foods
The egg business is far from glorious, but Cal-Maine has made it work for dividend-seeking investors in recent years. The yolk has actually been on the pessimists, who've seen the stock rise by better than 50% over the past year as dividend payments have plumped up in accordance with profits and Cal-Maine has successfully passed along price increases to its customers. In Cal-Maine's first-quarter report released last week, the company reported a tripling in its net income as EPS easily surpassed Wall Street's projections.

As for me, I'm not sold just yet. While my Foolish colleague Dan Caplinger noted last week that specialized egg offerings like organic and cage-free eggs have a premium price point that's relatively free of economic cyclicality, the majority of Cal-Maine's product lineup is very susceptible to rising feed prices. The U.S. drought, while unpredictable, is liable to leave a rather lasting impact on corn and grain prices for many quarters to come. I consider Cal-Maine's current 4.5% dividend yield a utopia scenario and see this figure falling in coming quarters. Unless Cal-Maine can drastically reduce its costs, I'd take this quarter with a grain of salt.

RPM International
RPM International, which manufactures specialty chemical products used in coating and sealing projects by the industrial, commercial, and consumer sectors, reported a 56% drop in its first-quarter profit last week mainly due to a drop in the value of its assets in India and slow improvement in the construction market.

Confused as to why I'm highlighting a company that merely met Wall Street's estimates and saw net income fall 56%? How about because RPM represents a realistic representation of where we are in the housing rebound cycle? Paint and coating specialist Sherwin-Williams (NYSE: SHW  ) has gone straight up and trades at 20 times forward earnings, but investors haven't taken a realistic look at how titanium dioxide pigment prices are going to affect its margins or at the fact that annual home sale rates are still barely off their lows.

RPM is a work in progress that produced 6% revenue growth for shareholders and utilized an increase in sales volume and prices in its consumer segment to buoy its results. It also delivered on the dividend front by boosting its payout for a 39th consecutive year. According to a statement from RPM, if these dividends were reinvested, RPM has outperformed the S&P 500 by 49