<% ' AvantGo:MarketClose %>DJIA 8919.59 +89.85 (+1.02%) S&P 500 1125.72 +8.03 (+0.72%) Nasdaq 1847.99 -3.07 (-0.17%) Value Line ndx 879.34 +0.88 (+0.10%) 30-Year Bond 100 1/32 +1/32 5.25% Yield<% ' AvantGo:End %>
<% ' AvantGo:Heroes %>New Internet IPO on the block theglobe.com Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TGLO)") else Response.Write("(Nasdaq: TGLO)") end if %> surged $54 1/2 to $63 1/2 from an initial public offering of $9 a share. The price had reached as high as $97 during the frenzy. The company's website allows users to build their own free personalized website, visit chat rooms with such names as "Tequila Sunrise" and "Fuzzy Navel," and shop for everything from discount plane tickets to vitamins. theglobe.com's partners include E!Online, Thomson Investors Network, and Reuters. In a note to members, the site's founders, two young guys named Steph and Todd, say "this is merely the beginning" and that they have "many more ambitious plans" for improving the site. Well, that's good to know, considering today's close at seven times its original offering price seems a bit rich for an Internet start-up with a pretty sparse site. Speaking of rich valuations, EarthWeb Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EWBX)") else Response.Write("(Nasdaq: EWBX)") end if %>, which made its trading debut Wednesday, gained another $2 1/4 to $67 after hitting a high of $85 1/16 this morning. Discuss these IPOs on our theglobe.com and EarthWeb message boards.
Go2Net Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GNET)") else Response.Write("(Nasdaq: GNET)") end if %> jumped $9 3/4, or 33%, to $39 1/4 today after reaching as high as $51 3/4 in early trading. The operator of such websites as Silicon Investor, StockSite, MetaCrawler, and Hypermart late yesterday reported fiscal Q4 earnings of $0.02 a share (before charges) compared with a loss of $0.09 the year before and analysts' mean estimate of a loss of $0.10. Revenue grew 47% from the previous quarter to just under $2 million -- which was a 530% increase year-over-year. Gross margins improved to 71.6% this quarter from 69% year-over-year. For the fiscal year, margins reached 62.7% from 56.8% a year ago. Traffic to Go2Net's various websites jumped 22% to 6.7 million average daily page views during September from 5.5 million in June. It now has 227 advertisers, compared with 138 three months ago and just 11 a year ago. CEO Russell Horowitz said the company's main goal for fiscal 1999 is to expand recognition of the Go2Net brand with increased spending on marketing, which in turn may hurt the company's profitability.
QUICK TAKES: PepsiCo <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PEP)") else Response.Write("(NYSE: PEP)") end if %> popped up $1 1/2 to $39 1/2 after its board authorized a plan to spin off the company's bottling operations a la Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %> sometime next spring. For more details, see today's Fool Plate Special... Bank stocks rallied on hopes that aid to Brazil will boost the economy and businesses there. J.P. Morgan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JPM)") else Response.Write("(NYSE: JPM)") end if %> picked up $3 1/4 to $101 7/8, Merrill Lynch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MER)") else Response.Write("(NYSE: MER)") end if %> added $3 1/4 to $62, Lehman Brothers <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LEH)") else Response.Write("(NYSE: LEH)") end if %> jumped $2 15/16 to $39 15/16, Citigroup <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> tacked on $1 7/16 to $43 3/8, Chase Manhattan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMB)") else Response.Write("(NYSE: CMB)") end if %> advanced $2 1/16 to $57 3/16, BankAmerica <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAC)") else Response.Write("(NYSE: BAC)") end if %> climbed $2 11/16 to $58 7/16, and American Express <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXP)") else Response.Write("(NYSE: AXP)") end if %> gained $2 3/16 to $94 9/16... Bankers Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %> rose $2 15/16 to $64 13/16 on talk the investment bank may be acquired by Deutsche Bank AG, the second-largest bank in Europe.
Apple Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> gained $1 11/16 to $35 11/16 on news that sales last weekend of its iMac computer were the highest since the product was first launched thanks to new promotions and $29.99 a month financing... Ford Motor Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %> cruised ahead $1 3/8 to $53 3/8 after filing a shelf registration with the SEC for up to $2 billion in debt securities, which reportedly would be issued to dealers under a program to consolidate auto dealerships... Boston Scientific Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSX)") else Response.Write("(NYSE: BSX)") end if %> added $3 1/8 to $48 after reporting a Q3 loss of $2.60 a share (including charges) versus last year's profit of $0.44 a share. Excluding the charges, EPS was slightly higher than last year and topped analysts' projections of a profit of $0.37 a share.
Stamp auction house Greg Manning Auctions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GMAI)") else Response.Write("(Nasdaq: GMAI)") end if %> was bid up $2 17/32 to $13 after reaching as high as $21 3/4 even as the company's CEO dismissed speculation about a possible takeover of the company. Its subsidiary Teletrade auctions coins, sports cards, and memorabilia on the Internet (that's the magic word here)... Natural foods grocer Whole Foods Markets <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WFMI)") else Response.Write("(Nasdaq: WFMI)") end if %> shopped up another $1 5/16 to $41 3/8 after turning in pro forma fiscal Q4 EPS of $0.40, beating last year's $0.33 figure (excluding charges) and falling in line with market estimates. The company's shares plummeted early this week in anticipation of the earnings report... Drug developer Immunex Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IMNX)") else Response.Write("(Nasdaq: IMNX)") end if %> rose another $6 1/8 to $77 3/8 after its new treatment for rheumatoid arthritis was demonstrated to be safe and effective in a two-year study involving 51 patients.
Cable assemblies and wire harnesses maker JPM Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JPMX)") else Response.Write("(Nasdaq: JPMX)") end if %> jumped $2 3/16 to $11 3/8 after saying it expects a new program with a new telecommunications customer to start making a "significant contribution" of roughly $9 million to its annual revenues... Electronics manufacturing equipment maker Electro Scientific Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ESIO)") else Response.Write("(Nasdaq: ESIO)") end if %> added $2 to $29 5/8 after NationsBanc Montgomery raised its rating on the company to "buy" from "hold," citing improvement in ESI's business... Insurance and financial services firm Fremont General Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FMT)") else Response.Write("(NYSE: FMT)") end if %> finished up $1 5/16 to $46 3/4 after announcing a 2-for-1 stock split payable Dec. 10.
Argentine supermarket Disco SA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DXO)") else Response.Write("(NYSE: DXO)") end if %> American depositary receipts gained $5 1/16 to $20 9/16 as Royal Ahold NV and Argentina's Velox Retail Holdings announced plans to bid for the remaining 48% stake in the company for about 159 million Argentine pesos ($159 million)... Property management and investing firm Kennedy-Wilson Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KWIC)") else Response.Write("(Nasdaq: KWIC)") end if %> was up $13/16 to $11 11/16 after announcing it has purchased a block of 90,000 of its shares for $10.08 a share in a private transaction with a former officer and director.
Earnings Movers
Pep Boys -- Manny, Moe & Jack <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PBY)") else Response.Write("(NYSE: PBY)") end if %> up $7/8 to $16 1/2; Q3 EPS: $0.20 (excluding charges) vs. $0.38 last year; Estimate: $0.22
PharmaPrint Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PPRT)") else Response.Write("(Nasdaq: PPRT)") end if %> up $1/2 to $10 7/8; fiscal Q2 EPS: loss of $0.59 vs. loss of $0.58 last year; Estimate: profit of $0.03
Unifab International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UFAB)") else Response.Write("(Nasdaq: UFAB)") end if %> up $3/8 to $10 5/8; fiscal Q2 EPS: $0.38 vs. $0.33 last year; Estimate: $0.39
WHX Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WHX)") else Response.Write("(NYSE: WHX)") end if %> up $5/8 to $12 1/2; Q3 EPS: $0.61 (excluding gain) vs. loss of $4.49 last year; Estimate: $0.43<% ' AvantGo:End %>
<% ' AvantGo:Goats %>Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> fell $5 1/4 to $63 15/16 after reporting another quarter of solid results last night. The company reported a 51% year-over-year increase in Q4 revenues of $4.82 billion and a 65% increase in EPS of $0.28. That amounts to sequential growth of 11%, which translates into annualized growth a percentage point better than the 52% year-to-date revenue growth the company also reported. Capital productivity again was stellar, with return on invested capital (ROIC) of 190%. If anything could be argued on this score, it would be that ROIC for the quarter was down from last quarter's 217%. With a company that is building infrastructure so quickly, though, a 27 percentage point decrease in ROIC can't be that badly criticized, as infrastructure never grows in a fully linear fashion. Lots of noise has been made today about the negative call Piper Jaffray analyst Ashok Kumar made on the company's desktop unit growth slowing during the quarter. The story for the quarter isn't just desktops, but overall sales and unit growth in all categories, including laptops, workstations, and servers. Which is more important: 11% sequential growth in units for $1,800 desktops, or 16% sequential growth in laptop unit sales and 29% sequential growth in enterprise unit sales? Dell can hardly be faulted on its desktop unit performance when you look at the overall product mix and maintenance in average selling price sequentially, especially when a shortage of Xeon chips held back enterprise growth during the quarter. The slowing-desktop-unit-growth thesis as a bottom line assessment of the quarter is way off the mark and is blind to the real story of how well Dell did this quarter.
Courier delivery services company Dispatch Management Services' <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DMSC)") else Response.Write("(Nasdaq: DMSC)") end if %> falling stock price since May wrecked some potential acquisitions and took a bite out of third quarter earnings. Dispatch Management lost $3 15/32 to $6 3/32 today after it reported Q3 EPS of $0.14 (before charges), well below Wall Street's $0.23 estimate. The company bought six courier companies with combined revenues of $22 million during the quarter, but it lost out on some other deals involving the company's stock that would have represented a "significantly greater" financial windfall, the firm said. In a statement, CEO Linda Jenkinson said her company invested in infrastructure in accordance with projected revenues from several purchases. However, some of those deals didn't close because of "conditions in the capital markets during August and September." Unimpressed, CIBC Oppenheimer and Friedman, Billings, Ramsey & Co. downgraded the firm today.
Investors no doubt had unpleasant thoughts about Think New Ideas <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: THNK)") else Response.Write("(Nasdaq: THNK)") end if %> today after the Internet marketing firm reported fiscal first quarter results that badly underperformed the company's own warnings. Think dropped $3 1/2 to $9 1/8 today after turning in fiscal Q1 losses of $0.17 per share, down from profits of $0.01 per share last year and nearly double Wall Street's expected loss of $0.09 per share. While investors anticipated CEO Ron Bloom's comment that "economic uncertainties here and abroad had the effect of freezing certain client, new business and licensing-related decisions" -- he suggested as much in a September earnings warning -- it was additional news of unexpected postponed orders that dragged down both Think's earnings and share price today. Bloom tried to soothe investors by saying several of the delayed orders are "still in play."
QUICK CUTS: PC direct marketer Gateway Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTW)") else Response.Write("(NYSE: GTW)") end if %> lost $3 3/4 to $52 7/8 today. Last night Gateway said it would include two Micrografx Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MGXI)") else Response.Write("(Nasdaq: MGXI)") end if %> graphics software titles in two of its bundling packages... Telecommunications equipment and software company Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> descended $2 3/16 to $83 5/8. The firm said its venture capital arm, along with private investment firm Greylock, made an unspecified investment in privately owned cellular equipment and services company PrairieComm Inc... Healthcare software and services company HBO & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HBOC)") else Response.Write("(Nasdaq: HBOC)") end if %> coughed $2 5/16 to $22 7/8 after it said President, co-COO and CFO Jay Gilbertson is leaving "to pursue other opportunities." President Al Bergonzi will become COO and will assume all of Gilbertson's other responsibilities.
Entertainment and consumer products retailer and direct marketer K-tel International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KTEL)") else Response.Write("(Nasdaq: KTEL)") end if %> retreated $8 1/4 to $19 3/4 following its announcement of fiscal Q1 losses of $0.37 per share (including charges), down from net income of $0.15 per share last year... Other Internet-related stocks also fell today, including three portal companies: Yahoo <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> dropped $5 1/4 to $168, Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> calmed down $2 15/16 to $49 7/16, and Lycos <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %> lost $2 1/16 to $51. Online auctioneer eBay <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EBAY)") else Response.Write("(Nasdaq: EBAY)") end if %> returned $2 1/16 to $123 15/16 while music retailer N2K <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NTKI)") else Response.Write("(Nasdaq: NTKI)") end if %> screeched $2 1/8 to end at $8 3/4, and N2K's merger partner CDNow <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CDNW)") else Response.Write("(Nasdaq: CDNW)") end if %> closed down $2 1/8 at $11 1/2. Retailer CyberShop <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYSP)") else Response.Write("(Nasdaq: CYSP)") end if %> refunded $1 13/16 to $11 9/16.
Coffeehouse operator Starbucks Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SBUX)") else Response.Write("(Nasdaq: SBUX)") end if %> drained $2 1/8 to $42 15/16 after it posted fiscal Q4 EPS of $0.28 versus $0.21 a year ago, in line with the First Call mean estimate. Same-store sales at the Fool Port holding were up 5% during fiscal 1998, although the fourth quarter only saw a 3% year-over-year rise in same-store sales... Enterprise network and data security software company Security Dynamics Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SDTI)") else Response.Write("(Nasdaq: SDTI)") end if %> stumbled $5/8 to $10 7/8 after Prudential Securities cut its rating to "accumulate" from "strong buy"... Insurance, aviation services, and consumer goods company Berkshire Hathaway <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BRK.A)") else Response.Write("(NYSE: BRK.A)") end if %> ticked down $300 to $66,400 after reporting third quarter earnings after the bell yesterday. The Omaha-based company reported Q3 earnings from operations of $212 per share, up 5.5% from last year's $201 per share.
Office supply retailer Staples Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %> misplaced $1 9/16 to $34 despite yesterday reporting Q3 EPS of $0.23, up from $0.17 last year and a penny above market projections. Prudential Securities cut the company to "accumulate" from "strong buy" today... Prepaid calling card company SmarTalk TeleServices <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SMTK)") else Response.Write("(Nasdaq: SMTK)") end if %> hung up $3/16 to $5 1/4 after it brought in Salomon Smith Barney to help evaluate "strategic alternatives." The firm's Q3 net loss was $0.82 per share, far broader than the year-ago loss of $0.14 per share and analysts' consensus estimate of a gain of $0.02 per share... Defense electronics and commercial communications systems maker Esco Electronics Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ESE)") else Response.Write("(NYSE: ESE)") end if %> lost $1 1/16 to $9 7/8 after it reported fiscal Q4 EPS of $0.12, short of last year's $0.28 and the market's expected $0.23. The company expects a "challenging" first half of 1999.
Cable-based information services provider Source Media <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SRCM)") else Response.Write("(Nasdaq: SRCM)") end if %> slid $9/16 to $12 3/4 after it reported a Q3 loss of $0.76 per share compared to the year-ago loss of $0.65 per share and a dime worse than analysts expected. The firm attributed most of its 9% quarter-to-quarter revenue growth to increased advertising sales revenue... Biopharmaceutical company Centocor <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNTO)") else Response.Write("(Nasdaq: CNTO)") end if %> tumbled $1 3/8 to $49 after Donaldson, Lufkin & Jenrette cut its rating on the company to "buy" from "top pick"... Physician practice management company ProMedCo Management Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PMCO)") else Response.Write("(Nasdaq: PMCO)") end if %> lost $1/2 to $5 11/16 after it turned in Q3 EPS of $0.16, a nickel above last year's figure but flat with Street estimates.
Solid waste removal company Waste Management <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMI)") else Response.Write("(NYSE: WMI)") end if %> leaked $1 3/8 to $47 3/8 after it reported Q3 EPS of $0.49 (excluding charges) per share, better than last year's $0.28 but $0.02 shy of market projections. CEO John Drury said the company experienced a 5.4% growth rate in its core North American solid waste business during the quarter... Independent oil and gas exploration firm Forcenergy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FEN)") else Response.Write("(NYSE: FEN)") end if %> was forced down $15/16 to $6 3/16 after it reported a Q3 loss of $0.79 per share, compared with a profit of $0.79 per share a year ago. The mean estimate of nine analysts surveyed by First Call was a loss of $0.52 per share... Lumberyard operator Wolohan Lumber <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WLHN)") else Response.Write("(Nasdaq: WLHN)") end if %> splintered $3/8 to $12 1/8 on its announcement of a restructuring plan that includes the closing of five stores and the divestiture of six others.<% ' AvantGo:End %>
FOOL
ON THE HILL
An Investment Opinion
by
Warren Gump
Rising Profits at Pizzeria Uno
<% ' AvantGo:FOTH %>Time once again to let Mr. Stomach lead me to another investing idea. You will probably notice that many of my ideas are consumer related. This is no crazy conspiracy to introduce you to everything I like. Rather, it is because some of my most successful investing comes from placing money where I am a consumer.
It is important to note, however, that just because you like a product doesn't mean other people will. Investors need to dig behind the numbers to see what is happening at a company. Let's take a look at Uno Restaurant Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UNO)") else Response.Write("(NYSE: UNO)") end if %>. I've loved this restaurant (it operates Pizzeria Uno) since first being introduced to it over a decade ago. It hasn't, however, been a great stock to own. Since the end of 1995, while the S&P 500 has provided an 85% return, little old Uno had the amazing return of zilch!
What happened? After a couple of successful years, Uno had a tough 1996 when EPS fell from $0.58 to $0.13 (included a charge that, taxed at 37%, would be $0.19). The primary culprit of this decline was falling same-store sales, slowed unit openings, and higher food and labor costs due to the rollout of a broadened menu (with numerous entrees outside of pizza). Off the low 1996 base, EPS rebounded modestly in 1997 to $0.22 (including a charge of approximately $0.22), but were still far short of those in 1995.
In the recently completed fiscal year, which ended in September, Uno appears to have finally turned the corner. Same-store sales were actually positive for the year (albeit off of a low base), with company units posting a 1.3% increase. More importantly, sales have been improving steadily since the June systemwide introduction of the company's "bigger, better menu." Management stated that average weekly sales had increased for 23 consecutive weeks since the new menu rollout, with a 7% increase in October that was trending higher in November.
Finally, after much tweaking and reworking, the company's menu changes are positively flowing through to the income statement. Reported EPS for the year ending in September (fiscal 1998) were $0.49, but that included a $0.06 charge related to the way companies expense preopening costs (a much less nefarious hit than the prior charges, which were related to bad investments).
Along with sales increases, margins are moving in the right direction. Comparing fiscal 1998 to the prior year, Uno increased its operating margin (excluding charges) by 0.4 percentage points to 6.6% from 6.2%. Behind this move were two variables. Cost of Goods Sold (food) increased by 0.6 percentage points because of soaring cheese costs and new menu items. At the same time, fixed costs such as occupancy, depreciation, and general & administrative expense decreased 1.7 percentage points as same-store sales and efficiency improved. In the fourth quarter, operating income reached 8.1%, up 0.5 percentage points from the prior year.
Now that store-level operations seem back on track, Uno is looking to again grow the chain. On its base of 96 owned and 64 franchised units, Uno expects to open six to eight new company and 10-12 new franchised units in 1999. Looking out further, the company expects to increase store operating weeks by 10% in 2000 and 2001. Cash from operations should be more than sufficient to cover capital expenditures over the next twelve months.
You may have expected the stock price to have jumped up now that Uno appears back on a growth track. So far, at least, investors have decided to stick to the sidelines. Potentially this is because all the Wall Street analysts have dropped coverage of the stock. (Talk about fair-weather friends!) Without any estimates from wise gurus, we will rely on management's estimates that Uno can improve EPS by 25% in 1999 and at least 20% annually over the next three years. Since management predictions tend to be optimistic, I have tempered my own expectations for the company to 15%-20% growth.
There don't appear to be too many people interested in selling Uno stock below the current price. When the stock dipped down to $6 a share in September, the company announced plans to repurchase 1 million shares for up to $7 in a tender offer. Most of the folks owning Uno stock wanted to stay on board, however, as only 274,721 shares were tendered. Given these results, I would be surprised if the stock were to trade much below $7 a share unless company performance dramatically shifts. As an aside, insiders (primarily Chairman Aaron Spencer) hold over 59% of company stock.
The casual dining segment of the restaurant business is brutally competitive, but can be quite lucrative if executed correctly. Given anemic fundamentals, staying away from Uno stock over the past three years was a great idea. As noted above, just because a product or concept is good doesn't mean the company that produces it is worth investing in. You do, however, have a birds-eye view of changes and can be one of the first in the door when positive trends develop. With the stock trading at 13x trailing earnings (excluding the accounting charge) and a growth rate of 15%-20%, it may be time to bite into more than Uno's great pizza.<% ' AvantGo:End %>
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
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