Sherwin-Williams Paints It Up

Sherwin-Williams (SHW) reported EPS at way over guidance. The actual EPS was $.32 compared to guidance of $.05 to $.25. As controversial as guidance is, how can you miss by such a wide mark and then not report any significant factors contributing to the variance. Sales are down. They are having trouble getting their SG&A down as quickly and foreign exchange went against them. Almost any company is saying this.

Lets have a close read of the earnings release.

"Net sales in the Paint Stores Group of $898.4 million in the quarter were 12.9% lower than last year's first quarter due primarily to weak paint sales volume and corresponding weakness in non-paint sales categories." That's rich; the paints store group sales were down because paint sales are down. and oh there are a few non paint categories and they were also down. I cannot believe the senior officers and board of directors would accept a comment of this nature as acceptable; if thats what the operating group tried to report.

Therefore investors should not be satisfied either.

The earnings release does not let investors understand the company. Perhaps its because the executive do not have a firm handle on whats going on.

Schwab Declares Itself Strong

Charles Schwab (SCHW) declared Q1 results and in a masterful exercise of Reg FD compliance declared in the press release headline the results are strong. So strong that in the lead paragraph they explained how they lost so much money. Given the state of the markets it is not unusual to print red ink. Essentially for the time being the business model is how to cut costs quickly as your revenues disappear. There was some nostalgia for the old days as they refer to some glimmers of hope in March and modest signs of life and growth.

While markets are cyclical they do not rebound automatically. Every recovery is different; paradigms shift. The question is cost reduction enough or do we need some really new thinking to go forward into the future. So far Schwab seems to be focused on cost control exclusively.

Cargill Dance of Seven Veils

Cargill a privately held company with over 160,000 employees announced their results and of course let everyone know profits are down but still insanely positive. As they are privately owned there is no obligation to dance with the SEC. But given their size they are a major player in commodities, specifically agriculture. I am a firm believer that everything has a reason. So why does Cargill do it? To gain stature in the commodities business and show that they are still a dominant player? To preposition the market for a potential public offering when conditions warrant? As inheritances continue the stock ownership becomes fragmented and the estate taxes are probably significant.

JNJ Foreign Exchange Lament

Johnson and Johnson (JNJ) reported results and made much of foreign exchange issues. Q1 sales are down 7.2%. The negative impact of currency was 6.0%. International sales were down 9.6% and negative currency impact was 12.6%. Which means as their press release pointed out there was real growth of 3%. Which means as their press release did not point out that it is possible to achieve real growth. The press release did not discuss any substantive aspects of the real growth.

The press release also starts to beg the foreign exchange question. When currencies reverse as they will one day will JNJ revenues suddenly surge and hide a variety of operational difficulties.

Market Closed Friday SEC Open For Filings

Last Friday was one of those rare days when the stock market was closed, but the SEC was open for filings. So if you are at all a suspicious type I would check to see if anyone you have doubts about actually filed anything substantial. If you read this blog with any regularity I assume you are skeptical and or suspicious.

Kona Grill Fails Revenue Expectations

Kona Grill (KONA) announced results and soft pedalled the miss on revenues. They were proud of cost controls and their impact on the bottom line. The fact of the matter is that this is a new company with a new restaurant concept. People are losing homes, jobs and their cars. So maybe a new sushi concept is not the best investment. At least management has not made a compelling case at the present time with any information that they are choosing to release. The question becomes what is the burn rate and how long can they last. None of which was discussed in the earnings release.

Books A Million Slips One By

Books- A-Million (BAMM) made a mistake with their financial statement and sent out a press release to correct the problem. The press release was issued at 0401 ET on Friday April 10 which was a Statutory Holiday in a three day long weekend. Mistakes can happen but it took them 22 calender days to realize they had made the mistake and then sneak out a press release when no one is really looking. Why do investors not get a sense of comfort and trust on this one.