The stock market version of musical chairs continued, as investors scrambled from Financials, Industrials, and Utilities, into Health Care and Technology shares. The market itself didn’t move much, with the S&P 500 inching up 0.21% and the Russell 2000 gaining 0.57%. Energy stocks were the worst performers, as crude oil sank another 3.9% to its lowest level of the year. The yield on the Ten-Year Treasury slipped one basis point to 2.14%, also at its year low. All the biggest banks in the U.S. were deemed healthy by the Fed’s stress test, leading to hopes that increased dividends and lending may be forthcoming.
The economic calendar includes May readings on Durable Goods, Personal Income, and Consumption, as well as June Consumer Confidence all scheduled for release. Expectations are for the readings to show a modestly slowing economy. It is also anticipated that the latest version of health care reform will fail to muster up enough support to pass, which could (once again) lead to a pivot to the more popular topic of tax reform.
Stocks in the News:
American Software, Inc. (AMSWA): Total revenues for the quarter ended April 30, 2017 were $26.3 million, a decrease of 9% over the comparable period last year. Adjusted net earnings for the quarter ended April 30, 2017, which excludes non-cash stock-based compensation expense, amortization of acquisition-related intangibles, a discrete tax adjustment and the proceeds from the sale of real estate were $2.7 million or $0.09 per fully diluted share compared to $3.3 million or $0.11 per fully diluted share for the same period last year. The overall financial condition of the Company remains strong, with cash and investments of approximately $89.8 million and no debt as of April 30, 2017. During fiscal year 2017, the overall cash and investments balance increased by $11.9 million when compared to April 30, 2016 and the Company paid approximately $12.5 million in shareholder dividends.
Barnes & Noble. Inc. (BKS): Fiscal 2017 consolidated net earnings from continuing operations were $22.0 million, or $0.30 per share, compared to net earnings from continuing operations of $14.7 million, or $0.05 per share, in the prior year. For the full year, Retail generated operating income of $90.7 million, while NOOK incurred an operating loss of $36.4 million, for a total operating income of $54.3 million. In addition to exceeding prior year operating results, excluding non-recurring charges in both years, consolidated EBITDA was $187.2 million in fiscal 2017, in-line with guidance of $180 million to $190 million, versus $185.7 million last year.
Lee Enterprises, Inc. (LEE): Announced an agreement to purchase the assets of the Dispatch-Argus, including QCOnline.com and related publications serving Moline, Rock Island and dozens of other communities in western Illinois. The purchase price is $7.15 million, including an adjustment for working capital. The sale is expected to close later this month. Lee Enterprises is a leading provider of local news and information, and a major platform for advertising, with daily newspapers, rapidly growing digital products and nearly 300 weekly and specialty publications serving 49 markets in 21 states.
New Media Investment Group Inc. (NEWM): Announced that the Company’s Board of Directors authorized the repurchase of up to $100 million of the Company’s common stock over the next 12 months. “We believe our current stock price is at a significant discount to the intrinsic value of our company. We continue to firmly believe in our cash flows that support the dividend, our growth prospects, including our acquisition pipeline, and our long-term strategy,” New Media Chief Executive Officer Michael E. Reed said. “This stock repurchase program announced today demonstrates our confidence in the strength of our business and commitment to delivering value to our shareholders.” New Media supports small to mid-size communities by providing locally-focused print and digital content to its consumers and premier marketing and technology solutions for our small and medium businesses partners. The Company is one of the largest publishers of locally based print and online media in the United States as measured by our 130 daily publications.Tagged: AMSWA, BKS, Chicago, Chicago Investment Management, Eric Kuby, finance, financial commentary, Fund Fact, Gold, Kuby's Commentary, LEE, Market Commentary, NEWM, North Star, North Star Investment Management, NSIMC, Oil, Russell 2000, S&P 500, Stocks In the News, VIX, Wealth Management.
The information provided in this commentary is not an offer to sell or the solicitation of an offer to purchase any security, product, or brokerage service. The information is not intended to be used as the basis for investment decisions, nor should the information be construed as advice designed to meet the particular needs of any investor. This commentary is presented to illustrate examples of the securities that North Star Investment Management Corporation and/or its affiliates (“North Star”) may have bought for client accounts and the diversity of markets in which North Star Investments may invest, and may not be representative of current or future investments. You should not assume that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this commentary will be profitable or will be equal to any corresponding performance levels that might be indicated. Past performance is no guarantee of future results. Investments in securities involve risks including the possible loss of the principal invested. North Star and others associated with it, including employees, may have positions in and effect transactions in securities of companies mentioned or indirectly referenced in this commentary. North Star may buy, sell or hold these securities in proprietary or client accounts. North Star will not be providing regular updates or advising you of any changes in the views expressed herein. Investors should consider their investment objectives, risk tolerance, and financial situation and needs before investing in any security. Tax considerations, commissions, fees and other costs should be carefully evaluated with one’s investment and/or tax advisors. Information provided is obtained from sources deemed to be reliable, but North Star cannot guarantee the accuracy or completeness of the information. This material may not be reproduced, distributed or transmitted to any other person in whole or in part without the prior written consent of North Star. A copy of North Star Investment Management Corporation’s Form ADV Brochure, Privacy Notice and Business Continuity Plan summary can be obtained by calling 312-580-0900.