Markets & Finance

Movers: Alcoa, Merrill Lynch, Bank of America, Wal-Mart


Stocks in the news Wednesday

From Standard & Poor's Equity ResearchAlcoa (AA) posts $0.33, vs. $0.63 a year ago, third quarter EPS (including items) on 5.3% sales drop. Says aluminum prices have fallen steeply, demand has softened further, while input costs remain high. Says given sharp decline in metal prices, increasingly soft demand in its key markets, AA is stopping all non-critical capital projects, making targeted reductions to match market conditions, adjusting its mfg capacity to meet demand. Suspends buyback program. S&P downgrades to sell from buy. FBR Capital cuts ests, target, keeps outperform.

Merrill Lynch (MER) and other financials are seen under pressure on report Federal Reserve Bank of Philadelphia President Charles Plosser said today that it will not be easy for the central bank to unwind many of its liquidity providing efforts. "We have expanded our interventions" on a wide variety of fronts and "it is going to be a challenge" to reverse some of those initiatives when conditions improve, Plosser said.

Bank of America (BAC) announces that its offering of $10 billion, or 455 million shares, of common stock, was priced at $22 per share. S&P Equity Research notes that the offering price is well below where the company had originally anticipated; S&P cuts estimate, target, maintains hold.

Bank of New York Mellon (BK) enters agreement with JPMorgan Chase (JPM) to buy all issued and outstanding shares in JPMorgan Trust Bank Limited in Japan. Terms of the deal were not disclosed. The transaction is a result of BK's acquisition of JPMorgan Chase's global corporate trust business in 2006.

Wal-Mart Stores (WMT) posts 2.4% higher September same-store sales without fuel, 2.8% higher with fuel, 5.8% higher total company sales. Expects U.S. same-store sales growth for October to be between 1% and 2%. Maintains third quarter EPS from continuing operations guidance of $0.73-$0.76.

Citigroup downgrades General Motors (GM) and Ford Motor (F) to sell from hold. Citigroup cites deteriorating global credit conditions and unappealing valuations.

Monsanto Company (MON) posts $0.32 fourth quarter loss, vs. $0.52 loss from continuing operations, on a 33% sales rise. Street was looking for $0.09 fourth quarter loss. Sees fiscal year 2009 EPS, on as-reported basis, of $4.20-$4.40, expects free cash flow for fiscal year 2009 of $1.8 billion.

MetLife (MET) sees $0.83-$0.93 third quarter operating EPS on about 16% higher premiums, fees and other revenues. Street was looking for $1.44. For third quarter, it expects $490 million, net, in credit-related losses, including impairments. About $375 million net, or 77%, of the credit-related impairments were related to major financial services credits such as Lehman Brothers, Washington Mutual and AIG. Given current volatility, MET withdraws 2008 EPS guidance. Plans to offer 75 million shares. S&P maintains hold.

Citigroup (C), Wachovia (WB) and Wells Fargo (WFC), in consultation with the Federal Reserve, announce the extension until 8 a.m. ET on Friday, October 10, 2008, of their standstill agreement of October 6, 2008.

J.C. Penney (JCP) cuts third quarter EPS guidance to $0.50-$0.60 from $0.70-$0.75 on low-double digit decline in same-store sales. Expects October comp-department store sales to decrease in low-double digits. Posts 12% lower September same-store sales (vs. previous guidance for sales to decrease mid- to high-single digits), 11% lower total sales. JCP cites further weakening of economic climate, unprecedented events in finl markets, falling consumer confidence and spending levels.

BJ's Wholesale Club (BJ) posts 11% higher September comp club sales, 12% higher total sales.

Target (TGT) posts lower-than-expected Sept. same-store sales fell 3.0%, while total sales rose 2.5%. Says third quarter EPS may fall slightly below current First Call median estimate of $0.52. Expects fiscal year 2009 EPS to meet or exceed last year's full year EPS of $3.33, assuming essentially flat y/y comps in fourth quarter, continuation of recent write-off rate trends through the remainder of this year.

California Pizza Kitchen (CPKI) reaffirms third quarter 2008 EPS guidance of $0.18-$0.21 and reports revenues rose 7.4% to $174M from $162M in third quarter 2007. However, CPKI also reports third quarter comparable restaurant sales decreased about 2.4% from a year earlier, a slightly deeper decline than the 2% drop CPKI had previously forecast.

Dillards's (DDS) posts 12% lower September same-store sales, 12% lower total sales. Says Hurricane Gustav and Hurricane Ike disrupted operations in many of its stores during the five week period.

Service Corp. International (SCI) announces that has withdrawn its $11-per share bid for Stewart Enterprises (STEI). SCI says it cannot agree to accept all financing risk of a transaction, accept all regulatory risk on antitrust clearance and, in addition, increase its $11/share proposal.

Helen of Troy Ltd. (HELE) posts $0.34, vs. $0.54 a year ago, second quarter EPS on 2.8% sales decline.

Mothers Work (MWRK) posts 1.3% lower September same-store sales on reported basis, 5.8% lower total sales. Says with sales at low end of its guidance range, lower-than-planned gross margin for fourth quarter, restructuring and management transition charges, now sees fourth quarter loss of $0.77-$0.83, wider than July guidance for $0.30-$0.46 loss, which did not include mgmt transition charge of about $0.26.

LDK Solar (LDK) raises $486-$496 million third quarter revenue guidance to $530-$540 million, 210MW-220MW wafer shipments to 230MW-240MW. Says it reached annualized wafer production capacity of 1.2 GW by end of third quarter 2008, ahead of its publicly announced plans to reach this target by end of 2008.

Cache (CACH) posts 6% lower September same-store sales, 8% lower total sales.

YRC Worldwide (YRCW) reaffirms that it expects to have positive free cash flow in both third quarter and fourth quarter 2008 with a significant debt reduction for the year. YRCW also expects to remain in full compliance with all terms of its credit agreement, including the leverage ratio.

YUM Brands (YUM) posts $0.58, vs. $0.50, third quarter EPS (before special items) on 10% worldwide system sales growth. Confirms 2008 EPS growth forecast of 12% to $1.89, excluding special items.

Sealy (ZZ) posts $0.12, vs. $0.22, third quarter EPS on 9.3% lower sales. The Street was looking for $0.08.


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