Take that, demon dogs of September! After a painful start to the week, the markets rebounded today to post positive gains across the board. At least for a day, investors breathed a sigh of relief. September has historically been a bad month for stocks, and with the anniversary of Sept. 11 looming, a sluggish economy, and an ongoing debate over invading Iraq, expect to see a market that operates on delirium tremens for the next month or so. Where it will go, nobody knows (er, if you do know, tell us -- "Fool Psychic" would look great on your resume).
The Motley Fool 50 gained nearly 2% today.
In today's Motley Fool Take:
- Oakley Lowers Shades
- Quote of Note
- Much Ado at GE
- Discussion Board of the Day: General Electric
- Boeing Loses Ground
- Shameless Plug: Choosing Stocks With The Motley Fool
- Quick Takes: Papa John's , Philip Morris , CVS , more
- And Finally...
Beware of cute ticker symbols. When Oakley
The future isn't looking too bright for Oakley. With sales growth coming in lower than expected, the company now sees third-quarter profits coming at just $0.16 a share. Back in July, Oakley figured it would be good for about $0.27-a-stub in earnings for the period. The company is also hosing down its fourth-quarter outlook.
While the market trounced the stock today, reacting as if in a state of shock, not everyone was fooled. Back in April, our own Matt Richey pointed out Oakley's troubling trends of growing receivables faster than growing the top line and posting hefty inventory levels. While his cash flow concerns may not have been the sum of the company's recent undoing, it certainly served up some hearty warning signs.
All hope is not lost. Sales are moving in the right direction, and the brand remains as viable as it does popular. But that's not enough if the results don't bleed down to the bottom line. Oakley spokesman and board member Michael Jordan may have been a Bull in Chicago, but it was the bears that scored this last shot on the company.
"Fashion is a form of ugliness so intolerable that we have to alter it every six months." -- Oscar Wilde (1854 - 1900)
GE management explained, "This strategic move expands GE Commercial Finance's global reach in project financing, particularly in the energy, transportation, and infrastructure sectors" -- and particularly in Europe.
Glance at GE's press releases from just the past month or two, and you'll see what this large but growing company has been up to lately: acquisitions, new products, new big contracts, awards, increased sales, and so on. It's also adjusting to its new CEO, Jeffrey Immelt, in the wake of legendary Jack Welch's retirement.
Does all this activity mean that the company is a good buy right now? Perhaps. It's certainly a better buy now than it was two years ago, when its share price was about twice today's price. Still, it's important to remember how huge the firm is, and that it can be difficult for huge firms to be nimble or grow quickly. Here are a few more numbers, courtesy of SmartMoney.com. Draw your own conclusions:
Current 5-Yr Low 5-Yr High Industry
Trailing P/E 18.70 19.10 49.60 26.20
Price/Sales 2.23 1.77 4.73 1.33
Price/Cash Flow 13.40 12.80 30.20 12.40
Price/Book 4.82 4.55 12.32 3.12
Return on Equity 25.80% 23.80% 25.80% 13.10%
Return on Assets 2.80% 2.60% 2.90% 2.50%
Debt/Total Capital 80.00% 80.00% 80.00% 70.00%
Things haven't been the same at General Electric since Jack Welch retired. Was it merely coincidence, or was he vital to the company's success? Will GE bring good things to life again? All this and more -- in the General Electric discussion board. Only on Fool.com.
Boeing shipped 30 jetliners in July, down from an average 37 per month for the first six months of the year. The company has delivered 273 jets out of the planned 380 for 2002. If Boeing's to reach its delivery goal this year, it will have to ship between 26 and 27 jetliners a month between now and the end of the year.
Meeting that goal could be difficult if the company doesn't avert a possible strike from its 25,000 machinists. The March 2000 low point of jetliner delivery for Boeing, when just 15 planes were delivered, was a result of the 40-day strike by Boeing's engineers' union.
Now Boeing is trying to convince its machinists' union to accept what the company calls its "best and final" offer. The machinists' current contract expired this past Sunday night at midnight. Workers did report for work yesterday, in advance of Boeing and union officials' meeting today with federal labor negotiators. Boeing is adamant that it will not renegotiate the contract; union leaders are equally adamant that they won't accept Boeing's offer.
At stake here, from the machinists' point of view, is job security. The union wants Boeing to guarantee jobs tied to a production schedule, revenues, or some other measure. Between a quarter and a third of the union's members have been laid off this year, and it wants to protect the rest. The contract offered by Boeing included pay raises and bonuses, but the company refused to change language concerning job security. Given the state of the commercial airline industry, Boeing likely wants to leave itself room to lay off more workers, if necessary.
A strike from its machinists would certainly hurt Boeing's production for the year, if the company sticks to its goal of 380 jetliners. But given the ill health of the airline industry, the company may not have the demand needed for its goal. Should demand for jetliners further drop this year, a workers' strike may not greatly concern Boeing.
No company welcomes a strike, but for Boeing, the real problem right now is the ailing airline industry, not the workers.
It's been a long, hot, dismal summer in the stock market. We're glad it's unofficially over, and we look forward to getting back to school -- back to the basics of choosing stocks, in any market. Our online seminar is better than a September college pep rally -- and potentially more lucrative, too. Join us in Choosing Stocks With The Motley Fool. We promise it'll be more fun than Chem 101.
There's a temporary ceasefire in the chocolate war. A judge in Pennsylvania has issued an injunction to prevent the trust that controls Hershey
USA Today says free pizza delivery will soon become a thing of the past. Already, such heavyweights as Yum! Brands'
There appears to be no end in sight to the automobile finance wars. General Motors
Drugstore retailers CVS
In local news, Mrs. Miller's cat, "Tuffy," finally came down out of the oak tree after two days. Mrs. Miller, a retired teacher, is reportedly relieved. Tuffy refused to comment.
Today on Fool.com: Bill Mann wonders when the other shoe will fall.... Whitney Tilson goes fishing for tech stocks.... Turn pocket change into big returns, in Fool's School.... And do these four principles guide your investing?
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