The City Wire analysis: Arkansas companies cautious after good first quarter results

Arkansas stocks got a recession-busting bounce from better-than-expected first quarter financial results, but most remain cautious after surviving after a Dow Jones’ panic-fed 1,000-point drop and recent sell-off of U.S. equities.

Since early April, the beginning of the Arkansas earnings schedule, each of the 15 publicly traded companies monitored by The City Wire have touched a 52-week high.
However, selling pressure on Wall Street has essentially erased any short-lived gains as the Dow has sunk back near 10,000 points.

At the same time, most Arkansas companies are carefully moving forward by toning down second quarter and year-end forecasts, and keeping capital budgets and hiring levels for 2010 at year ago levels.

According to The City Wire’s first quarter analysis of Arkansas stocks, seven companies easily beat first quarter results from a year ago, six companies fell short of 2009 profits, one company stayed level and another one has yet to report.

The winners list for the quarter included Northwest Arkansas’ “Big Three” — Wal-Mart Stores Inc., J.B. Hunt Transport Services Inc and Tyson Foods.

J.B Hunt kicked off the earnings period in impressive fashion on April 14, posting net earnings of $37.5 million, or 29 cents per share, up 22% from net earnings of $30.8 million, or 24 cents a share a year go.

Nearly a month later, Wal-Mart closed the first quarter session with first quarters profits of  $3.32 billion on sales of $99.1 billion, compared with net income of $3.02 billion and sales of $94.3 billion a year ago. Despite those impress numbers, the world’s largest retailer softened its second quarter earnings forecast to between 93 cents to 98 cents a share. On average, analysts surveyed by Thomson Reuters expected earnings of 98 cents a share.

"Our customers, particularly in the United States, are still concerned about their personal finances and unemployment, as well as higher fuel prices," Mike Duke, Wal-Mart Stores, Inc. president and CEO, said in a statement.

Other first quarter winners include Central Arkansas financial institutions, Home Bancshares and Bank of the Ozarks. Both of the Arkansas regional banks saw their first quarter profits more than double the previous year, getting a first quarter boost from deals with the government to grab cheap financial assets that have landed on the FDIC’s notorious failed bank list.

Still, the biggest first quarter surprise was Little Rock retailer Dillard’s Inc., which not only knocked Wall Street’s estimates out of the park but also produced first quarter profits that were six times better than the previous. After several quarters of struggling retail sales and expense controls, Dillard’s reported its strongest quarterly profit in years posting net income of $48.8 million on revenue of  $1.45 billion.

“We are encouraged by our solid first quarter performance as we report good results in our key operational areas including inventory management and cost control," said the understated Dillard’s CEO William Dillard.

On the losing side, Murphy Oil Corp., Simmons First National Bank and Windstream Corp. all came in below year ago profit levels and under analysts’ expectations.

Although higher international crude prices pushed up Murphy’s first quarter revenues nearly 50 percent to $5.2 billion, weak refining margins, higher corporate costs and foreign currency losses siphoned profits off the Arkansas oil giant’s bottom line. Murphy Oil President and CEO David Wood said he anticipates an active exploration year for the oil and gas producer “with bigger targets ahead.”

“We anticipate full year 2010 production volumes of 200,000 barrels of oil equivalent per day.” Wood said. “At the current time, we expect consolidated earnings in the second quarter to range between $1.15 and $1.25 per diluted share.”

Here are some other highlights from The City Wire’s Arkansas Stock analysis:
• All 15 of the companies monitored by Talkbusiness.net have touched a 52-week high since the beginning of April.

• Truckers Arkansas Best of Fort Smith and Van Buren-based USA Truck are the only Arkansas stocks still operating in the red.

• Ten of the companies listed in the Arkansas Stock table beat the average first quarter estimates of Wall Street analysts.

• Bentonville’s America’s Car-Mart Inc. will release fiscal 2010 fourth quarter and fiscal year financial results for the quarter and year ended April 30, on Thursday, June 3. Wall Street analysts expected the Arkansas car dealer to report fourth quarter earnings of 59 cents per share on revenue of $88.4 million, according to Thomson Reuters.