Big Three Earnings May Fall Below Projections

The three companies that helped weave Northwest Arkansas’ economic fabric experienced steady earnings in first half of 2006.
Earnings estimates for all three public companies — J.B Hunt Transports Services Inc., Tyson Foods Inc. and Wal-Mart Stores Inc. — remain positive, but may fall below expectations through the end of the year.
Wal-Mart’s stock has been hot since its shareholders meeting on June 1 when it was announced that the Bentonville-based retail giant would scale back Supercenter growth plans and offer a $15 billion stock repurchase program.
During a meeting with Wall Street analysts last fall, Wal-Mart said it would add between 260 and 275 new Supercenters in fiscal 2008. That was scaled down to 190 to 200 during the shareholders meeting. In the future, Wal-Mart said growth will be curbed to about 170 new stores per year.
The news gave Wal-Mart’s stagnant stock a shot in the arm in the wake of weakening figures. Same-store sales dipped 3.5 percent in April, the company’s worst monthly performance in about 30 years, creating investor concerns. Same-store sales grew just 1.1 percent in May and second quarter earnings may fall below expectations.
Tyson Foods is rebounding well since announcing $200 million in cutbacks a year ago. Its stock has been on the rise as well as a result of a “cost-cutting program,” which aided the Springdale-based company’s $125 million in income during the first six months of the fiscal year. That’s quite an improvement from the $88 million in losses during the same span last year that forced the cutback measures.
Proof of renewed confidence in Tyson by investors can be seen in the company’s stock price. Tyson stock traded at about $15 per share in June of 2006 and was in the $22.50 range at press time.
Tyson lost its claim as the world’s largest protein producer after Brazil-based JBS, Latin America’s largest beef producer, bought Colorado-based Swift Foods, the third-largest U.S. processor of beef and pork, for $1.4 billion in June.
Notwithstanding, Tyson’s stock has been growing in value so much that two of the nation’s top investment firms, Goldman Sachs Asset Management of New York and FMR Corp. of Boston, reported on May 10 they would increase their Tyson holdings by a combined 52.4 million shares worth about $1.3 billion, or about 22.3 percent of the company’s Class A shares.
Lowell-based J.B Hunt’s stock has continued to trend upward despite reporting lower-than-expected revenue during the first six months of the year. The company received another boost in May when it announced it would buy back $500 million in stock. The company said that load volumes were up 13 percent in May when compared to last year and that intermodal freight continues to flourish.
J.B. Hunt’s April growth was 12 percent, which exceeded industry-wide figures that showed intermodal volumes only increasing 1.6 percent in May.
The company’s general truckload segment is expected to decline about 4 percent for the second quarter of 2007.