It was a bullish, if choppy, market for Southern California stocks in the first quarter, as most companies posted generally good earnings figures figures that were not necessarily reflected in stock prices.
Of 100 companies on the Business Journal list, almost two-thirds 64 reported equal or better earnings in the first quarter, compared with the year earlier period.
But only 58 of the 100 companies were trading at a higher share price at the end of trading on May 6 by which time earnings figures were out than they were at the start of the year.
The reason: With the market at such lofty levels the S & P; 500 is trading at 21 times trailing earnings even good is not always good enough.
“At first, people were concerned that earnings were going to come out poorly, but as they have come out, they have been at estimates or better. In fact, it got to the point if a company reported earnings at estimates, then they got chopped,” said Bud Kruger, president of Westwood Stock Trading Inc. in Westwood.
By estimates, Kruger refers to the estimate of analysts who follow stocks.
“It used to be to have a 10 percent increase in earnings was pretty good. Now it’s like, ‘What am I doing wrong?’ ” added James Zukin, nameplate partner at Century City-based Houlihan Lokey Howard & Zukin, an investment banking shop.
Whatever the reaction on Wall Street, the list is sprinkled with some hefty increases in earnings, or nifty turnarounds from red ink to black.
For example, Torrance-based Imperial Credit Industries Inc., a diversified lender, posted net income of $14.9 million on revenues of $60.7 million, compared with $6.1 million on revenues of $82.9 million in the year earlier period. That’s a 144.3 percent hike in black ink.
“All of our (lending) companies have had a very strong first quarter,” said H. Wayne Snavely, chairman. A generally good economy, and Imperial Credit’s lending policies, “have kept (loan) delinquencies at or below planned levels.”
Too, Imperial is getting a wider spread between borrowing and lending costs in some types of loans.
Imperial is up from the start of the year, from $13.875 to $16.125 at the close of trading May 6.
Another big increase was posted by Times Mirror Corp., parent of the Los Angeles Times and several other newspapers. In the first quarter, Times Mirror posted net income of $45.2 million on revenues of $773.9 million, vs. $26 million on revenues of $806.8 million in the year earlier period.
As widely reported, Chairman Mark Willes has been cutting costs, which helped account for the 74 percent profit rise. From the start of the year to May 6, Times Mirror stock rose from $50.375 to $55.875.
Showing renewed vigor after several tough years, Rancho Dominguez-based discount retailer MacFrugal’s Bargains Inc. known as Pic’N’Save posted net income in its latest reported quarter of $31.5 million on revenues of $251.6 million, compared with $24 million on $251.6 million in the year ago period. That’s a 31 percent bump up in profit.
Another increase was posted by Pasadena-based Avery Dennison Corp., the manufacturer of labels and other office products.
Avery’s profits rose 20.5 percent to $48.2 million on revenues of $828.9 million in the first quarter, compared with $40 million on $796.6 million in the year-earlier period.
Pineapple purveyor Dole Foods Inc. of Westlake Village posted a 40 percent earnings jump to $42 million, compared with $30 million for the like period a year ago.
But just passing muster on the earnings front doesn’t necessarily wow them on Wall Street these days.
For example, Torrance-based Farmer Bros. Co., the coffee distributor, posted net income of $6.8 million, which was up slightly from $6.6 million in the year-earlier period. Such a so-so profit picture resulted in Farmers’ stock falling to $129.125, off 7.8 percent from the start of the year.
Defense contractor Litton Industries of Beverly Hills managed to notch a 10.7 percent hike in net income to $36.2 million compared with $32.7 million in the year ago period. But the stock fell $1 anyway, to $45.125.
That perennial favorite, Burbank-based Walt Disney Co., reported first quarter net income of $333 million, compared with a loss of $25 million in the year earlier quarter. The year earlier loss was due to costs associated with the acquisition of Capital Cities/ABC.
Analysts said this year’s earnings have been inflated by accounting maneuvers stemming from the same purchase.
That hasn’t dampened enthusiasm for the stock, however. Disney romped on Wall Street, with its stock rising to $82.25 on May 6, up 22.1 percent from $67.375 at the start of the year.