Notes on a couple of stocks
There are a couple of stocks I follow about which I would like to make a few comments. Tetra Technologies Inc. (TTI: 13.07 -0.23 -1.73%) released their first quarter earnings recently and City Bank (CTBK: 1.03 -0.22 -17.60%) has released nothing to tell me why the stock price is acting the way it is.
First, TTI: First quarter earnings were disappointing, off 68% from the previous year at a dime a share, actually worse than very low expectations. The stock price was hardly affected and has moved up nicely from about $15 at the end of March. On the conference call, management repeated their claim that recent restructuring will start to show in the 2nd and 3rd quarters with profits surpassing anything the company has done for several years. Management repeated their April earnings guidance of $1.30 to $1.55 for the year so the next few quarters need to show some serious gains. TTI earned 38¢ for all of 2007. If they start making their projected numbers, the stock has the opportunity to clear $25 later in 2008.
City Bank’s share price devaluation has me seriously perplexed. The stock started the year around $22 and has eroded ever since. CTBK is at the top of it’s peer group as far as banking ratios go and has 30+ years of profitable management. Only 37% of the float is institution owned, who, according to Reuters have been net adding to their positions. So it must be individual investors who are dumping their shares. Do they know something, or just running scared due to the share price? Earnings projections for 2008 remain stable at $2.20 to $2.40 per share and the 60¢ dividend will probably get a year end $1.00 boost if earnings are as predicted. These numbers give a current PE of 7 and a yield over 10%. I am tempted to add to my position, but worry that there is some unknown (to me) info out there that will seriously affect the bank’s earnings.
Final note: TTI is in oil services and CTBK is in banking, maybe that alone is causing one to go up and the other to falter.
Note: I have a long position in CTBK, none in TTI.
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