Nobody needs to explain the meaning of loss to eSpeed (NASDAQ:ESPD). It's something that is rooted far deeper than the fact that the electronic bond trading specialist's stock has surrendered roughly two-thirds of its value since its November highs.
Paper losses seem almost inconsequential when you consider what the company lost on 9/11. Along with its parent Cantor Fitzgerald, eSpeed's workforce was decimated perched high atop the World Trade Center that fateful morning.
That's why it's worth noting that the company is battling its resolve and resiliency on a significantly smaller scale these days as it tries to tackle its waning growth. Last night, the company posted second-quarter earnings of $0.16 a share on a modest 9% uptick in revenues.
That news was already baked into the stock's sluggish share price, taking its lumps after the company warned investors about the shortcoming last month. However, the company sees sequential weakness as it expects to close out its fiscal year with taxed operating profits coming in between $0.53 and $0.55 a share.
When David Gardner singled out the stock back in the March issue of Hidden Gems, it was a more optimistic company. It closed out its first quarter in worthy fashion, growing operating profits by 72% and sporting operating margins of better than 40%. Yet there is a downside to taking such big steps. It draws in the competition. Surrendering market share -- and now looking to close out the year with operating margins closer to 30% -- hurts. How can it not? But let's approach eSpeed from another perspective.
On any given day, the Federal Reserve is moving about $500 billion in volume, and eSpeed continues to grab a profitable chunk of that action. Rising interest rates may also spark even more interest in short-term fixed income investments.
Then you come across the company's sparkling balance sheet sporting more than $4 a share in cash; you may want to keep an eye on the stock as a value-hunting opportunity. Over in our Green Gene discussion board, some Community members would gladly point out how the company is really not too far away from its liquidity cushion.
While it may seem ironic that eSpeed -- a company catering to heavy-hitting fixed-income investors -- doesn't pay out a quarterly dividend, it has been buying back its shares. While you may prefer the generous payouts of such companies as Merck (NYSE:MRK), Pitney Bowes (NYSE:PBI), and Sara Lee (NYSE:SLE), it's a tempting value play at this point.
Just don't get me started on how eSpeed knows the meaning of yield.
Do you stop at yield signs? Do you scour for regular payouts from your investments? How will rising rates influence income distributions? All this and more -- in the Investing for Income discussion board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz knows the difference between a government bond and James Bond. He does not own shares in any companies mentioned in this story.
