Consumer electronics powerhouse Matsushita Electric (NYSE:MC) -- better known in the U.S. for its Panasonic brand -- reports fiscal Q4 and full-year 2006 earnings results tomorrow. Want to know what Wall Street expects to see? Read on. Want to know what really matters? Read on a bit more.
What analysts say:
- Buy, sell, or waffle? Eighteen analysts follow Matsushita. Of these, 13 think the stock's a buy, four call it a hold, and one says sell.
- Revenues. Only a couple of these analysts have estimates on record with FirstCall, and even those estimates are only for annual sales and earnings. Lucky for us, tomorrow's news will be on Matsushita's end-of-year results. Sales are projected to come in at $75.5 billion.
- Earnings. Net profits are predicted to more than double since last year, to $0.49 per share.
What management says:
Matsushita's February review of operations through the first three quarters of fiscal 2006 was heavy on descriptions of the world economic environment, but light on specifics about the company itself. What was revealed, however, suggests that Matsushita views reducing inventories and controlling costs as two of its highest priorities going forward. Matsushita also noted that its strongest growth business in 2006 so far has been audio-visual consumer products, with an emphasis on digital cameras and plasma television sets. Finally, the company announced one more element of its restructuring plan -- specifically, its exit from the movie business. Matsushita is selling its 7.66% interest in Universal Studios Holding to current majority owner Vivendi (NYSE:V).
What management does:
If "slow and steady wins the race," then bet on Matsushita to accomplish a successful turnaround. Its metrics may not be improving rapidly, but improving they definitely are. Over the last year and a half, the rolling gross margin has climbed 170 basis points. On an operating basis, the company is more than 20% more profitable now than it was 18 months ago. And it has steadily grown its rolling net margins over the last four quarters, despite incurring pretty hefty charges for restructuring its business.
|
Margins % |
9/04 |
12/04 |
3/05 |
6/05 |
9/05 |
12/05 |
|---|---|---|---|---|---|---|
|
Gross |
28.9 |
28.6 |
29.1 |
29.3 |
30 |
30.6 |
|
Op. |
3.2 |
3.3 |
3.5 |
3.5 |
3.6 |
3.9 |
|
Net |
0.9 |
1 |
0.7 |
0.7 |
0.8 |
0.9 |
One Fool says:
Regarding a couple of Matsushita's other objectives, over the last six months we've seen the company reduce its inventories by more than 3% on average, year over year. Not bad, considering that sales grew 2% in the same period. And although the company didn't specifically state this as one of its primary objectives, I can't help but notice that Matsushita managed to reduce accounts receivable by an impressive 9% at the same time -- all of which speaks to improving management of working capital.
The one area that Matsushita has targeted for improvement that hasn't shown a lot of movement is controlling costs. There, selling, general, and administrative expenses rose 8% against the last six months' 2% sales growth. Tomorrow, we'll see whether the company can begin to check that point off of its to-do list as well.
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Fool contributor Rich Smith does not own shares of any company named above.
