1973

Published on May 15, 2017

Last Week:

Corporate earnings reports continued to show strength, while interest rates and volatility both remained subdued. As the first quarter earnings season winded down, the blended growth rate inched up to 13.6% from 13.5% the week earlier, while the yield on the Ten-Year Treasury ticked down one basis point to 2.34%. President Donald Trump’s sudden dismissal of FBI Director James Comey dominated the headlines, engendering comparisons to 1973 and Richard Nixon (a terrible period in the stock market). Whereas it strikes us that there are many similarities between now and then, Barron’s makes the argument that “an examination of history shows the economic and financial backdrop of 1973 is starkly different from now”. At least for now traders seem to agree as the equity markets were very quiet, with the S&P 500 declining 0.35% and the Russell 2000 slipping 1.02%., and the VIX (the so-called “fear index) reaching record low levels.

Happy Mother’s Day to all Moms out there, especially to my very own mother Alma Kuby, who went from her morning exercise class, to brunch, to the Art Institute, to a classical concert, all before 6pm!

This Week:

April industrial production, to be released on Tuesday, will provide a useful insight into how the factory sector is performing. A negative reading might call into question the overall strength of the economy, given the recent soft retail sales and auto numbers. Energy stocks could be in focus, as Saudi Arabia and Russia backed a 9-month extension of the reduced oil production deal.

Stocks in the News:

Truett-Hurst, Inc. (THST): For the three months ended March 31, 2017, total net sales from continuing operations increased 8.9% compared to the same periods in the prior year and totaled $5.3 million.  Consolidated gross margin from continuing operations was 37.9%, an increase of 2.8 margin points over the prior year. (I found the Pinot Noir quite tasty)

Pioneer Power Solutions, Inc. (PPSI): Total revenue for the three-month period ended March 31, 2017 increased to $27.3 million, up 2.6% compared to $26.6 million for the first quarter of 2016. First quarter operating income was $1.2 million compared to $1.1 million for the same period last year.

Hawaiian Telecom Holdco, Inc. (HCOM): First quarter revenue was $94.5 million, compared to $98.8 million in the first quarter of 2016.  Excluding one-time revenues from two large institutional customers recorded in the first quarter of 2016, first quarter revenue declined $2.0 million year-over-year.  Revenue declines associated with legacy voice and low-bandwidth Internet services were partially offset by revenue increases from consumer video, high-bandwidth business data services, and equipment and related services.  Adjusted EBITDA was $27.1 million, a decrease of $1.1 million year-over-year. Most notably, the Company successfully landed the trans-Pacific undersea cable to the Hawaii landing station. The overall system is on track to be completed in the next few months.  A video of the project is available at this link.

Bluebird Corporation (BLBD): Total net sales were $208.7 million for the second quarter of fiscal 2017, an increase of $17.4 million, or 9.1%, from prior year period. Bus unit sales were 2,367 units for the quarter compared with 2,132 units for the same period last year. Second quarter gross profit of $24.6 million represents a decrease of $0.5 million from the second quarter of last year.

U.S. Auto Parts Network, Inc. (PRTS): Net sales in the first quarter of 2017 increased to $80.8 million compared to $80.7 million in the year-ago quarter, despite a slow start to the quarter. Gross profit in the first quarter of 2017 was $23.8 million compared to $24.5 million in the year-ago quarter.

Landauer, Inc. (LDR): Revenues for the second fiscal quarter of 2017 were $39.1 million, a 2.6% increase compared to revenues of $38.1 million for the second fiscal quarter of 2016.  Excluding the Medical Products business which was divested in the third fiscal quarter of 2016, total revenues increased $3.5 million or 9.8% compared to the prior year period. Operating income for the second fiscal quarter of 2017 was $7.8 million, compared to operating income of $7.2 million for the second fiscal quarter of 2016.  Excluding the operating income from the divested Medical Products business, operating income increased $1.0 million compared to the prior year period.

Douglas Dynamics, Inc. (PLOW): In the first quarter of 2017, net sales were $72.2 million, representing a 48% increase over the first quarter of 2016 net sales of $48.8 million. The increase is due to the addition of sales attributable to the Work Truck Solutions segment, which was acquired on July 15, 2016. The Company reported adjusted EBITDA of $5.2 million in the first quarter of 2017 compared to $6.3 million in the first quarter of 2016. The decrease was in part due to lower shipments of equipment and parts and accessories of commercial snow and ice products due to below average snowfall.

Farmland Partners Inc. (FPI): The Company recorded total operating revenues of $7.1 million and net operating income of $5.3 million for the three months ended March 31, 2017, as compared to total operating revenues of $4.7 million and net operating income of $4.3 million for the same period in 2016. The Company has completed nearly $370 million of acquisitions since January 1, 2017.

PetMed express, Inc. (PETS): Net sales for the quarter ended March 31, 2017 were $63.0 million, compared to $55.4 million for the quarter ended March 31, 2016, an increase of 14%. Net income for the quarter ended March 31, 2017 was $7.5 million, or $0.37 diluted per share, compared to net income of $5.4 million, or $0.27 diluted per share, for the same quarter the prior year, an increase to net income of 38%. The Company raised the quarterly dividend to 20 cents a share from 19 cents a share.

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