Baldor, Dillard’s see largest share price gains in 2010

Economic conditions were certainly mixed and uncertain in 2010, but share price moves among the 16 Arkansas-based publicly held companies monitored by The City Wire indicate a good year for shareholders.

Of the 16 shares, only three were unable to post a share price gain in 2010 — Fort Smith-based Arkansas Best Corp.; Conway-based Home Bancshares; and Bentonville-based Wal-Mart Stores Inc.

BIG GAINS
Thanks to a late November acquisition announcement, Fort Smith-based Baldor Electric Co. posted the largest share price gain in 2010. After Swiss-based ABB offered to buy Baldor in a $4.2 billion deal that placed a $63.50 (40% premium) price on each share, Baldor shares (NYSE: BEZ) closed out the year at $63.04 — a 118.35% move from the Jan. 4, 2010, closing price of $28.87.

The ABB-Baldor deal remains under review by the U.S. Department of Justice, but is expected to close in January. ABB has said it will use Baldor’s headquarters in Fort Smith and its North American corporate base.

Another surprise was the turnaround of Little Rock-based Dillard’s, a national high-end retail chain that struggled to remain financially viable in previous years. Company shares (NYSE: DDS) closed out 2010 at $37.94, up almost 103% over the Jan. 4, 2010 closing price of $18.69.

DILLARD’S TURNAROUND
It wasn’t easy for the company to improve its financial situation. Dillard’s had to significantly cut costs to stay afloat. Since 2008, the retailer has closed six stores and introduced new strategies to manage inventory. These started paying off in 2009, when the company pulled in a net gain of $68 million, compared to a net loss of $241 million the year before. These moves continue to pay off. At the start of 2010, Dillard’s reported net income of $48.8 million in the first quarter, compared to net income of $7.7 million in the prior year.

And to top it off, Dillard’s also made a recent announcement that will add 300 new jobs to the Arkansas economy by locating an Internet Fulfillment Center in Maumelle.

Rounding out the top five gainers for 2010 are Little Rock-based Bank of the Ozarks (NASDAQ: OZRK), up 45.19% to close the year at $43.35 per share; Springdale-based Tyson Foods Inc. (NYSE: TSN), up 40.68% to close the year at $17.22; and El Dorado-based Murphy Oil (NYSE: MUR), up 33.3% to end with a per share price of $74.55.

PRICE DECLINES
The biggest decliner among the 16 companies monitored was Conway-based Home Bancshares, which saw its share price close 2010 at $22.03, down 10.8%. The decline may be tied to investors waiting to see if a recent bank-buying spree by Home Bancshares will be profitable.

Home Bancshares CEO Johnny Allison said recently that his bank is well-positioned after acquiring several Florida banks.

Arkansas banks seem to have found a feeding frenzy for failing financial firms in Florida, where 27 banks went out of business in 2010. Together, Home Bancshares and Bank of the Ozarks have assumed the assets of six failing Florida banks, or nearly one-fourth of the FDIC financial failures in the Sunshine State.

TRUCKING, RETAIL WOES
Arkansas Best, the parent company of ABF Freight System, continues to struggle with low freight demand and an inability to acquire wage concessions from its union drivers. Shares of Arkansas Best (NASDAQ: ABFS), the nation’s second largest less-than-truckload carrier, closed 2010 at $27.42, down 3.89% for the year.

U.S. District Court Judge Susan Webber Wright (Eastern District of Arkansas) recently granted a motion to dismiss a $750 million lawsuit filed by Fort Smith-based Arkansas Best Corp. against YRC and the International Brotherhood of Teamsters. The suit sought damages from alleged violations of a National Master Freight Agreement (NMFA) by the Teamsters and others.

Arkansas Best, which employs about 9,500 nationwide, posted a 2009 net income loss of $127.52 million, compared to a $29.168 million gain in 2008. However, the 2009 income loss includes a non-cash accounting charge of $64 million for the impairment of goodwill. Total revenue in 2009 was $1.472 billion, a 19.6% dip from 2008 revenue of $1.833 billion. For the first half of 2010, the company posted a  net income loss of $28.836 million, an improvement compared to the $33.521 million net loss in the 2009 period.

Wal-Mart, which has seen its share price hover between $40 and $60 per share since 2000, continued to see same-store sales slump. The company’s stock (NYSE: WMT) closed 2010 at $53.93, down 0.55% for the year. Gains in non-domestic markets and from new store openings kept the world’s largest retailer profitable, but investors appear to believe that future earnings are fully accounted for in the share price.