Which of These Stocks Have the Strongest Earnings Trends?

American Eagle Outfitters (NYSE:AEO) reported record sales for the fourth quarter as well as fiscal year 2012. Adjusted EPS grew 41 percent in the fourth quarter and 43 percent annually. The company raised the quarterly dividend and authorised a buyback of 20 million shares. For the 14 weeks ended February 2, 2013, adjusted EPS was $0.55 per share, missing expectations by $0.01. Quarterly revenue rose 9 percent to a record $1.12 billion, which was in line with consensus. Gross profit was up 27 percent $461 million and up by 600 bps to 41.2 percent is a percentage of sales. The company cited macroeconomic headwinds and unfavourable weather during February for providing muted guidance for the first quarter. EPS is expected in the range $0.16-$0.19, down from $0.22 last year and based on comparable store sales in the negative mid-single digit range, against 17 percent increase in the year ago quarter. The company raised the quarterly cash dividend by 14 percent to $0.125 per share. Robert Hanson, chief executive officer stated, “In a competitive and volatile consumer environment, we drove a strong top line on leaner inventories, reduced markdowns and achieved cost leverage.”

Staples, Inc. (NASDAQ:SPLS) announced fourth quarter sales of $6.6 billion, up 3 percent over the year ago period, and earnings per share of $0.46. For the full year 2012 the company reported sales of $24.4 billion, down 1 percent, and earnings per share of $1.39. Comparable store sales in the North American stores and Online segment grew 5 percent over 2011 in the fourth quarter and was up 2 percent for the year as a whole. Sales grew 7.2 percent during the fourth quarter, and 1.7 percent for the year as a whole at the North American Commercial Segment. Sales at the International Operations segment were up 3.9 percent for the quarter and 10.2 percent for the year. The company forecast full-year 2013 sales to increase in the low single digits compared to 2012 sales on a 52-week basis. Full-year EPS is expected to be in the range $1.30-$1.35.

Big Lots, Inc. (NYSE:BIG) reported EPS of $2.09 per diluted share for the fourth quarter ended February 2, 2013, of fiscal 2012. The company had issued guidance in December 2012 expecting EPS in the range $1.91-$2.10 for this quarter. EPS therefore grew 19 percent over 2011. Quarterly operating profit was $197 million, up 3 percent over 2011. Sales jumped 5 percent to $1.8 billion. The Canadian operations turned in their first quarter in the black after acquisition in July 2011. For the year as a whole, the company reported adjusted EPS of $2.99 per diluted share, and sales of $5.4 billion, up 3.8 percent compared to 2011. 87 new stores were opened in the US and as at the end of the year 1574 stores were operating in the US and Canada. The company issued 2013 guidance for EPS in the range $3.05-$3.25 and sales growth of 2-3 percent. First quarter EPS is expected to be in the range $0.53-$0.65 per diluted share, based on comparable store sales decreasing 1-3 percent, and a total sales increase in the range of 1-3 percent in the quarter.

Petrobras (NYSE:PBR), Brazil’s state-owned oil company, announced a hike in the wholesale price of diesel fuel by 5 percent effective midnight as it moved to stem losses from selling the fuel at controlled prices that were below international market levels. The government, which is the majority shareholder, forces the company to sell diesel, the country’s most used motor fuel, at an economical prices in an effort to curb inflation. Mounting losses meant the company could effect two increases in 2012, and a third in January 2013, yet prices were still 14 percent below world market levels. Worse, capacity constraints and rising demand meant the company had to import the fuel at market prices and sell them at controlled levels, thereby incurring cash losses. These few subsidies lead to a loss of $11 billion for Petrobras in 2012.

The Special Committee entrusted with the evaluation of strategic alternatives available to Dell Inc (NASDAQ:DELL) concluded after five months that the sale of the company would be the best alternative for stockholders. It issued a statement today saying, “We negotiated aggressively to ensure that stockholders received the best possible value and agreed to a $13.65 per share transaction that provides value certainty at a 37 percent premium above the average price for the 90 days before rumors regarding the transaction surfaced.” The committee also claimed it had implemented special provisions in the transaction to protect and ensure value for shareholders, including an incentivized ‘go-shop’ process and low breakup fee. The committee also claimed credit for a requirement that holders of a majority of the shares not held by Mr. Dell or members of management approve the transaction before it could be completed.

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