Most Arkansas-based Stock Prices Up In 2012

Share prices improved during the first nine months of 2012 for nine of the 15 publicly-held companies based in Arkansas, with the two retailers who serve different ends of the demographic spectrum posting impressive gains.

Bentonville-based Wal-Mart Stores Inc. sloughed off an April revelation of bribery allegations of key execs and in July began to set record prices. Wal-Mart shares (NYSE: WMT) closed Friday at $73.80, down 18 cents on the day, but up 22.3% from its Jan. 3 closing price of $60.33

Revelations of the scandal first hit Wal-Mart on April 21 when the New York Times reported a “campaign of bribery” that was allegedly managed by former Wal-Mart de Mexico CEO Eduardo Castro Wright. The bribery schemes allowed Wal-Mart to obtain construction and other permits quicker than its competitors.

The media was apparently the only party interested in the Mexico problem. Investors clamored toward the discount retailer as it began showing improvements in key areas — especially in same-store sales. The rationale for the share price to remain above $70 was reinforced on Aug. 16 when the company reported solid earnings for its second fiscal quarter. The company pocketed $1.18 per share, up from $1.04 a year ago. Revenue for the quarter ending July 27 topped $113.5 billion, up 4.5% over a year ago.

Little Rock-based Dillard’s has continued to gain investor favor, and the high-end retailer’s share price has continued from its recovery that began in 2010. Dillard’s shares (NYSE: DDS) closed Friday at $72.32, down 26 cents, but up more than 64% from a Jan. 3 closing price of $44.07.

John Taylor, senior vice president in Fort Smith for Sterne Agee & Leach Inc., said the Dillard’s share price reflects a company that has fixed its inventory control and logistics issues, and is also benefitting from miscues at Sears and JCP.

Taylor said Dillard’s “has a good enough merchandise mix” to attract a broader demographic while still appealing to the high-end market.

“They seemed to have gotten their merchandising act together,” Taylor said.

MARKETS
The Dow Jones Industrial Average on Friday closed at 13,437.13, down 48.84 points on the day, but up 8.5% compared to the Jan. 3 close.

The broader S&P 500 closed Friday at 1,440.67, down 6.48 points, but up 12.8% compared to its Jan. 3 close.

Taylor, with Sterne Agee & Leach, doesn’t believe the equities markets reflect economic reality.

“The markets are on a sugar high. You know what happens when you give a kid a bag of skittles and some apple juice. Well, in this case, the one handing out the skittles and apple juice happens to be a bald-headed guy named Ben Bernanke,” Taylor said, referring to the Fed Chairman’s decision to maintain historically low interest rates. “I don’t see any way that the fundamentals of this economy can support the direction of the markets.”

However, the third quarter of 2012 did not end well for the equity markets. Overall equity prices were down for the fourth day of the week on fears of a U.S. slowdown, political uncertainty and uncertainty with the European economy.

“The focus is back on Europe at this point,” Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital in Greenwood, S.C., said in an interview with Bloomberg News. “It’s this ebb and flow of crisis-response-complacency. You get everything fine for a while and then increase in stress.”

TRANSPORTATION SECTOR
Of the 15 publicly-held companies based in Arkansas, four are in the trucking and transportation sector — not factoring in Wal-Mart and its large private fleet of trucks. Of those four, two were up and two were down during the first nine months of the year with respect to share prices.

Lowell-based J.B. Hunt Transport Services, which continues to generate impressive quarterly revenue and income reports, saw its shares (NASDAQ: JBHT) close Friday at $52.04, up from the Jan. 3 closing price of $45.26.

Tontitown-based P.A.M. Transportation Services has improved its finances. For the first six months of 2012, P.A.M. reported net income of $1.6 million compared to a $1.28 million loss during the first six months of 2011. The long-haul carrier’s share price (NASDAQ: PTSI) closed Friday at $9.97, slightly above the Jan. 3 close of $9.60.

Fort Smith-based Arkansas Best Corp. continues to struggle with lower freight volumes and union problems.

For the first half of 2012, Arkansas Best has lost $6.321 million, an improvement over the $7.51 million loss during the same period of 2011. The company posted 2011 net income of $6.159 million, a huge swing from the $32.693 million loss during 2010. The 2011 financials marked the end of two consecutive years of income losses.

ABF, the primary subsidiary of Fort Smith-based Arkansas Best Corp., employs around 10,000, with roughly 7,600 of those falling under a collective bargaining unit represented by the International Brotherhood of Teamsters. Arkansas Best has twice been denied action on a $750 million lawsuit against the Teamsters and less-than-truckload competitor YRC. Arkansas Best alleges that the Teamsters violated contract agreements in giving YRC wage concessions for its unionized drivers.

Arkansas Best shares (NASDAQ: ABFS) closed Friday at $7.93, well below the Jan. 3 closing price of $19.37.

In the midst of lower freight volume, Van Buren based USA Truck has struggled through a takeover attempt and a botched rollout of new freight management software. For the first six months of 2012, the company lost $8.359 million, more than the $2.118 million lost during the same period of 2011.

USA Truck posted a 2011 net income loss of $10.777 million, more than triple the loss during 2010 and in a year when other trucking companies began to see improved financials. Also, 2011 marked the third consecutive year of losses for USA Truck.

Shares of USA Truck (NASDAQ: USAK) closed Friday at $3.64, less than half the value of the Jan. 3 closing price of $7.92.