Among the biggest losers in Thursday's early trading are
Prestige Brands (
PBH
)
,
Amedisys (Nasdaq: AMED)
,
Gentiva (Nasdaq: GTIV)
,
Almost Family (Nasdaq: AFAM)
and
Allied Nevada (
ANV
)
.
|
Top Percentage Losers -- Thursday, May 13,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
% Loss
|
52-Week High
|
52-Week Low
|
Prestige Brands
(
PBH
) |
$8.39 |
-15.2%
|
$9.99 |
$5.40 |
| Amedisys (Nasdaq:
AMED) |
$52.30 |
-7.0%
|
$64.28 |
$28.90 |
| Allied Nevada (
ANV
) |
$20.44 |
-6.0%
|
$22.92 |
$5.69 |
| Gentiva (Nasdaq:
GTIV) |
$28.20 |
-5.2%
|
$30.88 |
$14.50 |
Almost Family
(Nasdaq: AFAM) |
$40.45 |
-5.0%
|
$44.12 |
$21.90 |
| LHC Group (Nasdaq:
LHCG) |
$35.49 |
-1.7%
|
$37.49 |
$20.69 |
| *Table
includes companies with minimum market capitalizations of
$200 million and three month trading volumes of at least
100,000 shares. All percentage returns are listed as of
11:10AM Eastern Standard Time. Click on ticker symbols for
up-to-the-minute price quotes and percentage gain data. |
Prestige Brands Pushing Hard to Stay in Place
Product managers must often wrestle with how much to spend on
advertising to support their products. If you spend too much, then
profits could disappoint. And if you underspend, sales may suffer.
Management at
Prestige Brands (
PBH
)
had little choice, as sales for its line of cleaning and personal
care products have barely budged in recent years. But heavy
spending on ads and promotions in its fiscal fourth quarter (ended
in March) more than offset any sales gains the company could
conjure. Though sales may have exceeded forecasts by a small margin
, per-share profits slumped badly, roughly 30% below the consensus,
to $0.15 a share. Shares, which had been near the 52-week high, are
off more than -15% in this morning's trading.
This is a troubling sign for a company that has been unable to
meaningfully boost sales in recent years. Don't blame the
recession. Prestige's products are not recession-sensitive. By
trying to boost sales through marketing and promotion efforts,
Prestige only managed to reduce annual profit without showing a
meaningful top-line gain. This raises the question of whether sales
for the fiscal year that ended in March (and which were released
this morning), would have shown more severe drops had spending
efforts not been so robust.
At this point, Prestige Brands is simply a "cash cow" and not a
growth stock. So is it a value play on that cash generation? The
company is generating $59 million in annual free cash flow , and
sports an enterprise value of $693 million. In other words, it is
trading for around 12 times free cash flow. That's twice the
multiple typically garnered by mature cash cows. Unless Prestige
Brands has some new, as yet unforeseen growth drivers up its
sleeves, shares may be overvalued by half, even after today's
sell-off.
------------------------------------
Healthcare-waste Scrutiny Weighs on these
Companies
Shares of
Almost Family (Nasdaq: AFAM)
,
Amedisys (Nasdaq: AMED)
, and
Gentiva (Nasdaq :GTIV)
are all off more than -5% this morning on news that lawmakers are
looking at their books to see if they unlawfully boosted the number
of home visits their staffs made to house-bound patients simply to
inflate their Medicare billings. As we saw in the recent healthcare
debate, waste and unnecessary spending are big factors behind our
unsustainably expensive health care system. If lawmakers conclude
that Amedysis, Almost Family, Gentiva and
LHC Group (Nasdaq: LHCG)
defrauded Medicare, they may be liable to pay back erroneous
claims, pay out hefty fines and reduce forward revenue
expectations.
Indeed, the bi-partisan group of Senators examining the issue may
look to make a lesson out of these four firms. In that vein, you
may want to sell your stakes in these companies as the Thursday
morning stock drops could just be the beginning. This isn't likely
to have a deep-lasting impact on these businesses, which provide
vital services. But shares can easily fall another -10% to -20% as
the hearings continue.
------------------------------------
Dilution Concerns Pressure Allied Nevada Gold
You can't blame
Allied Nevada Gold (
ANV
)
for getting while the getting's good. The company's shares have
been on a tear since April 28 on the heels of a powerful rally in
the price of gold, and management quickly lined up investors on
Wednesday to buy almost $300 million of freshly-issued stock.
Shares are off more than -5% in Thursday trading in a knee-jerk
reaction to dilution fears. But since the stock was issued at an
all-time high for this gold exploration firm, the pain of dilution
was greatly minimized. Put another way, if the company had raised
the capital last fall when gold was first rallying, then the
company would have had to issue 26 million shares instead of the 13
million that were actually issued. Investors should also be pleased
that the deal was priced just a tick below Wednesday's closing
price.
The fresh cash should enable Allied Nevada to more quickly tap its
various gold and silver mines. The company is sitting on more than
two million ounces of unmined gold and 32 million ounces of unmined
silver. With expectations of further spikes in precious metals
prices in the quarters and years to come, an expedited mining
approach makes sense.
-- David Sterman
Contributor
StreetAuthority
Disclosure: David Sterman does not own shares of any security
mentioned in this article.