Did Housing Jump the Shark?

Interest in housing stocks has risen from the basement to the attic.

TRI Pointe Homes (NYSE: TPH) began trading today after boosting the size of its offering by 17% earlier in the week to 13.7 million shares. Imagine that! A real estate developer erects a successful IPO. The shares priced at $17 last night -- above the expected range of $14-$16 -- and that still wasn't enough.�TRI Pointe Homes began its publicly traded life this morning by opening at $19.56.

The news has clearly been uplifting for the industry this week.

Shares of D.R. Horton (NYSE: DHI  ) soared 12% on Tuesday after posting better than expected results. Profitability more than doubled as closings and orders were up 26% and 39%, respectively. D.R. Horton's backlog has grown 62% over the past year.

PulteGroup (NYSE: PHM  ) shares did open lower today, but that was only because the homebuilder's 27% uptick in new orders trailed what its peers had reported earlier this earnings season. You won't see Pulte shareholders complaining. The stock has popped sixfold since bottoming out in late 2011.

The market warmed up to developers last year, and the housewarming party led to the shares of several leading builders -- Pulte included -- more than doubling in 2012.

However, it often pays to be a contrarian.

Residential real estate builders may have healthy order backlogs at the moment, but we saw how cancellations spiked when home prices faltered during the market's collapse.

That doesn't seem likely to happen now. The S&P/Case-Shiller index that tracks home prices in 20 major cities revealed earlier this week that home prices have soared 5.5% over the past year. It's the strongest year-over-year showing since the summer of 2006.

That's good news, but how exactly did that bubble work out?

If mortgage rates begin to inch higher or if young homebuyers continue to move away from the suburbs and opt for existing properties in metropolitan hubs, then do you really think home prices will continue to move higher?

There are no signs that housing has peaked, but ask any investor that was burned the last time that the climate got this frothy and developers had their shares bid up this high. It pays to get out before the rest of the neighborhood.

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What to Expect from BP

BP (NYSE: BP  ) is expected to report Q4 earnings on Feb. 5. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict BP's revenues will increase 1.5% and EPS will compress -51.7%.

The average estimate for revenue is $94.82 billion. On the bottom line, the average EPS estimate is $1.15.

Revenue details
Last quarter, BP booked revenue of $90.59 billion. GAAP reported sales were 5.0% lower than the prior-year quarter's $95.38 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at $1.63. GAAP EPS of $0.28 for Q3 were 7.7% higher than the prior-year quarter's $0.26 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 14.8%, 250 basis points better than the prior-year quarter. Operating margin was 7.1%, 120 basis points better than the prior-year quarter. Net margin was 6.0%, 70 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $355.62 billion. The average EPS estimate is $5.52.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 4,907 members out of 5,230 rating the stock outperform, and 323 members rating it underperform. Among 1,131 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,080 give BP a green thumbs-up, and 51 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on BP is outperform, with an average price target of $48.53.

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DST Systems Crushes Earnings Estimates

DST Systems (NYSE: DST  ) reported earnings on Jan. 31. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), DST Systems beat expectations on revenues and crushed expectations on earnings per share.

Compared to the prior-year quarter, revenue grew and GAAP earnings per share shrank.

Margins dropped across the board.

Revenue details
DST Systems logged revenue of $487.0 million. The four analysts polled by S&P Capital IQ predicted net sales of $471.9 million on the same basis. GAAP reported sales were 5.6% higher than the prior-year quarter's $623.4 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $1.19. The five earnings estimates compiled by S&P Capital IQ anticipated $0.98 per share. GAAP EPS of $0.82 for Q4 were 5.7% lower than the prior-year quarter's $0.87 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 15.0%, 720 basis points worse than the prior-year quarter. Operating margin was -0.1%, 950 basis points worse than the prior-year quarter. Net margin was 5.8%, 50 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $468.3 million. On the bottom line, the average EPS estimate is $1.02.

Next year's average estimate for revenue is $1.88 billion. The average EPS estimate is $4.34.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 116 members out of 124 rating the stock outperform, and eight members rating it underperform. Among 43 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 42 give DST Systems a green thumbs-up, and one give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on DST Systems is outperform, with an average price target of $65.00.

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Can Scotts Miracle-Gro Meet These Numbers?

Scotts Miracle-Gro (NYSE: SMG  ) is expected to report Q1 earnings on Feb. 5. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Scotts Miracle-Gro's revenues will compress -5.5% and EPS will remain in the red.

The average estimate for revenue is $199.6 million. On the bottom line, the average EPS estimate is -$1.13.

Revenue details
Last quarter, Scotts Miracle-Gro reported revenue of $401.2 million. GAAP reported sales were 0.5% lower than the prior-year quarter's $381.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at -$0.59. GAAP EPS were -$0.66 for Q4 against -$0.87 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 28.4%, 280 basis points worse than the prior-year quarter. Operating margin was -9.2%, 670 basis points worse than the prior-year quarter. Net margin was -10.6%, 340 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $2.88 billion. The average EPS estimate is $2.63.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 219 members out of 249 rating the stock outperform, and 30 members rating it underperform. Among 105 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 96 give Scotts Miracle-Gro a green thumbs-up, and nine give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Scotts Miracle-Gro is hold, with an average price target of $40.75.

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Can Life Technologies Meet These Numbers?

Life Technologies (Nasdaq: LIFE  ) is expected to report Q4 earnings on Feb. 4. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Life Technologies's revenues will grow 1.8% and EPS will grow 4.7%.

The average estimate for revenue is $987.9 million. On the bottom line, the average EPS estimate is $1.11.

Revenue details
Last quarter, Life Technologies reported revenue of $911.2 million. GAAP reported sales were 1.8% lower than the prior-year quarter's $928.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at $0.92. GAAP EPS of $0.37 for Q3 were 29% lower than the prior-year quarter's $0.52 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 65.6%, 40 basis points worse than the prior-year quarter. Operating margin was 20.1%, 110 basis points worse than the prior-year quarter. Net margin was 7.2%, 320 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $3.79 billion. The average EPS estimate is $3.98.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 221 members out of 237 rating the stock outperform, and 16 members rating it underperform. Among 79 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 74 give Life Technologies a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Life Technologies is outperform, with an average price target of $52.00.

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What Was Behind the Dow’s Decline on Wednesday?

Unwelcome numbers from the Commerce Department drove the markets lower Wednesday; Wall Street was disappointed to see that GDP actually fell in the fourth quarter. It's the first time that the GDP has fallen since the recession officially ended, sparking fears that economic woes may not be fully behind us. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) fell 44 points, or 0.32%, to close at 13,910.�

Confidence from management at embattled defense giant Boeing (NYSE: BA  ) helped shares to rally 1.3% today to lead all Dow components. Not only did Boeing's CEO say that the company had no plans to slow down on airplane production, but he said all was "business as usual." Oh, Boeing also reported earnings that exceeded analyst expectations, boasting a backlog of orders that set a company record. That helped, too.

The weak macroeconomic news didn't help industrial goods behemoth General Electric (NYSE: GE  ) , as it fell 1.2%, to lead all laggards in the 30-company blue chip index. Although no company-specific news can be asserted as the main reason for the decline today, it's a testament to the state of technology and market expectations that GE should fall on a day where the company announced a "robotic-enabled intelligent system which could save patients' lives and hospitals millions," according to a humbly titled press release.�

Outside of the Dow, big news from Research in Motion (NASDAQ: RIMM  ) �-- including a name change, proposed ticker symbol change, and a brand new product offering that defines the company's future -- wasn't enough for Wall Street. In fact, the stock fell 12%, as investors yawned at RIM's new-look BlackBerry 10 models, one of which comes without the company's signature keyboard. The company also changed its name from Research in Motion to, simply, BlackBerry; the ticker will change from RIMM to BBRY.

Beleaguered oil and natural gas mainstay Chesapeake Energy (NYSE: CHK  ) was another one of the day's big movers, seeing shares rise 6% above yesterday's close. If CEO Aubrey McClendon didn't know he was loathed before, he does now, as the spike comes immediately after the embattled executive announced his retirement. Chesapeake investors were happy to see the Motley Fool's Worst CEO of the Year nominee for 2012 leave the very company he founded.�

Energy investors would be hard-pressed to find another company trading at a deeper discount than Chesapeake Energy. Its share price depreciated after negative news surfaced concerning the company's management and spiraling debt picture. While these issues still persist, giant steps have been taken to help mitigate the problems. To learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand new premium report on the company. Simply click here now to access your copy and, as an added bonus, you'll receive a full year of key updates and expert guidance as news continues to develop.

VIX Up 21%, Options Traders Lovin’ It

Good for options traders, bad for stock investors

Volatile volatility may indeed be back.

While that’s bad news for stock investors, options traders love it.

For the past 18 months or so, implied volatility, the secret sauce for profitable options trading, has declined as the stock market has grinded higher. This cost many options traders mucho dinero in real
dollars and missed opportunity.

In the past week, implied volatility has spiked higher several times in reaction to falling stock prices. If this trend continues, options traders will once more have the�chance to make real money.

By midday Tuesday, the Chicago Board Options Exchange’s Market Volatility Index (VIX) was up 21%, or 4.5 points, at about 24.50.

For options traders, this is a sign that�implied volatility is up for all stocks in the Standard & Poor’s 500 Index.

For stock investors, the sharp rise in VIX means that the options market has markedly increased the cost of buying defensive�puts on major stocks.

If stock prices rebound, as they have in the past week after sharp declines, the strategy for options traders will be trying to buy “volatility” low and selling it high. If stock prices fail to snap�back, the game has changed, and volatility will likely increase as stock investors decide they need to hedge their portfolios.

Bottom line: the message from the options market is that the stock market is at a cross roads. The next few days will provide important clues.

VIX rockets back to levels of February

3 Red Flags for American Capital Agency

As many investors start to move toward the seemingly attractive high dividend yield mortgage REIT space, Motley Fool financial analyst Matt Koppenheffer offers some words of caution. He takes a look specifically at one of the more popular mREIT agencies to invest in, American Capital Agency (NASDAQ: AGNC  ) , and gives investors three things that he sees as potential red flags with this company.�

One company often compared to American Capital is Annaly.�Annaly Capital Management� (NYSE: NLY  ) has a history of paying huge dividends to shareholders. But there are some crucial issues investors have to understand about Annaly's business model before buying the stock. In this�brand-new premium research report�on the company, our analyst runs through these absolute must-know topics, as well as the future opportunities and pitfalls of their strategy.�Click here now to claim your copy.�

Northrop Grumman Beats Up on Analysts Yet Again

Northrop Grumman (NYSE: NOC  ) reported earnings on Jan. 30. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Northrop Grumman beat expectations on revenues and crushed expectations on earnings per share.

Compared to the prior-year quarter, revenue was unchanged and GAAP earnings per share grew slightly.

Gross margins grew, operating margins increased, net margins contracted.

Revenue details
Northrop Grumman notched revenue of $6.48 billion. The 15 analysts polled by S&P Capital IQ hoped for revenue of $6.33 billion on the same basis. GAAP reported sales were 0.5% lower than the prior-year quarter's $6.51 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $2.14. The 18 earnings estimates compiled by S&P Capital IQ predicted $1.75 per share. GAAP EPS of $2.14 for Q4 were 2.9% higher than the prior-year quarter's $2.08 per share. (The prior-year quarter included -$0.01 per share in earnings from discontinued operations.)

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 24.1%, 200 basis points better than the prior-year quarter. Operating margin was 12.7%, 40 basis points better than the prior-year quarter. Net margin was 8.2%, 20 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $6.03 billion. On the bottom line, the average EPS estimate is $1.71.

Next year's average estimate for revenue is $24.36 billion. The average EPS estimate is $6.96.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 792 members out of 855 rating the stock outperform, and 63 members rating it underperform. Among 260 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 247 give Northrop Grumman a green thumbs-up, and 13 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Northrop Grumman is hold, with an average price target of $65.80.

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Did the Market Just Make Its 2013 High?

After opening lower, stocks quickly found their footing and registered solid gains for the day, with the S&P 500 (SNPINDEX: ^GSPC  ) and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES: ^DJI  ) both rising by half a percentage point. The steady rise suited the VIX (VOLATILITYINDICES: ^VIX  ) well, pushing it down by 1.9%, to close at 13.31. The VIX is derived from S&P 500 option prices and reflects investors' expectations for stock market volatility over the next 30 days.

Is that all there is?
Speaking on CNBC today, hedge fund manager Doug Kass said:

"The market probably has a fair value 80 or 90 S&P 500 points lower than where it is now, so that would imply a decline of 6% or 7%, but I think the more important statement I'm making is that we are likely to be in the process of making a yearly high for the year."

He had that the wrong way around: The more important statement concerns the market's fair value, not what it will or won't do over the next 12 months. Why? Because it's possible to make a useful statement about market valuation and stocks' long-term returns. (In other words, you can make a statement with a fair degree of confidence.) On the other hand, a statement about the market's behavior over the next 12 months is basically useless -- the degree of randomness that will affect the outcome over such a short time period is much too high to make any sort of credible prediction.

Kass is perhaps best known for calling the market bottom in March 2009, but I think that was mainly a fluke. While it was possible to say the market was cheap on March 9, 2009, it was impossible to know whether it would recover or become still cheaper from that point on.

In fact, in "15 Surprises for 2013," published on Jan. 9, Kass wrote:

"I believe that the U.S. stock market will make its 2013 high in the first two weeks of January, be in a yearlong range of 1275-1480 and close the year at 1425, and that the 10-year U.S. note will be below 2.00% in the first six months of 2013."

We know the high did not occur in the first two weeks of the month. Today's update of that prediction reminds me a bit of the Doomsday cults that repeatedly push forward their predicted date for the Apocalypse in the face Earth's continued existence. Why bother making worthless predictions in the first place?

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Why Seagate Shares Crashed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Seagate (NASDAQ: STX  ) have plunged 10% today following earnings that, while surpassing analyst expectations on the top and bottom lines, contained unwelcome downbeat guidance and executive comments that indicated that the current quarter would be more difficult.

So what: Seagate's fiscal second quarter saw revenue of $3.7 billion and adjusted earnings per share of $1.38, beating the consensus by $120 million and $0.10 per share, respectively. However, investors have focused on guidance for the in-progress third quarter, which forecasts revenues in the range of $3.25 billion to $3.45 billion, below analyst expectations even on the high end and well below the year-ago third quarter's result of $4.45 billion. Margins are also expected to weaken, with the expectation now that Seagate will hit the low end of its 27% to 32% margin range. CEO Stephen Luczo also admitted that it might be difficult to forecast demand, and CFO Pat O'Malley told TheStreet this morning that the PC slowdown and Windows 8 were putting additional pressure on the hard drive market.

Now what: This news prompted a downgrade from FBN Securities from buy to hold, although analyst Shebly Seyrafi increased his target price to $40 a share regardless. Reduced margins may be bad news in the near term, but Seyrafi pointed out that this indicates a willingness to battle chief competitor Western Digital�on prices. A successful outcome would gain Seagate more market share, which would be worth the short-term weakness. Seagate also announced a small $40 million investment into flash memory maker Virident, which helps expand its product lineup. Additionally, its dividend remains strong, although it won't be paid out for a while, as the company accelerated payment into year-end 2012 to avoid the fiscal cliff.

While Seagate Technology pays a significant and growing dividend and seems able to generate the cash flow to support it, a global slowdown in demand for digital memory storage has begun to put pressure on margins. Is Seagate worthy of your investment consideration (and dollars)? The Motley Fool answers this question and more in our most in-depth Seagate research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.

Steel Dynamics Beats Analyst Estimates on EPS

Steel Dynamics (Nasdaq: STLD  ) reported earnings on Jan. 28. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Steel Dynamics met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue shrank and GAAP earnings per share expanded significantly.

Margins grew across the board.

Revenue details
Steel Dynamics notched revenue of $1.71 billion. The 14 analysts polled by S&P Capital IQ expected to see revenue of $1.69 billion on the same basis. GAAP reported sales were 8.3% lower than the prior-year quarter's $1.86 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.19. The 15 earnings estimates compiled by S&P Capital IQ predicted $0.15 per share. GAAP EPS of $0.27 for Q4 were 93% higher than the prior-year quarter's $0.14 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 10.6%, 200 basis points better than the prior-year quarter. Operating margin was 5.6%, 120 basis points better than the prior-year quarter. Net margin was 3.6%, 200 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.91 billion. On the bottom line, the average EPS estimate is $0.27.

Next year's average estimate for revenue is $7.63 billion. The average EPS estimate is $1.23.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 929 members out of 967 rating the stock outperform, and 38 members rating it underperform. Among 207 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 198 give Steel Dynamics a green thumbs-up, and nine give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Steel Dynamics is outperform, with an average price target of $15.44.

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Why Panera Will Rise in 2013

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, bakery-cafe operator Panera Bread (NASDAQ: PNRA  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Panera and see what CAPS investors are saying about the stock right now.

Panera facts

�	�
Headquarters (founded)	St. Louis, Mo. (1981)
Market Cap	$4.7 billion
Industry	Restaurants
Trailing-12-Month Revenue	$2.1 billion
Management	Co-Founder/Chairman/Co-CEO Ronald Shaich Co-CEO William Moreton
Return on Equity (average, past 3 years)	14.8%
Cash/Debt	$289.9 million / $0
Competitors	Chipotle Mexican Grill (NYSE: CMG  ) Einstein Noah Restaurant Group (NASDAQ: PNRA  ) Starbucks (NASDAQ: SBUX  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 90% of the 1,530 members who have rated Panera believe the stock will outperform the S&P 500 going forward.

Just last week, one of those Fools, tiomiguel, brought a few of Panera's tasty numbers to our community's attention: "P/E below 3-year average; > 20% ROE last year; no debt; double-digit sales/EPS growth last 5 years; net and operating margins > industry averages."

Of course, this short pitch doesn't even come close to telling the entire story of Panera. You're in luck, though. The Fool's brand-new premium report on Panera tells all sides of the story for one of the most compelling restaurant plays in the market. You can grab your copy now, which comes with free updates for 12 months, by just clicking here.

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Pfizer, Merck, Post-Mergers, Both Beat Q1

Shares of Pfizer (PFE) and Merck (MRK) are both up slightly this morning after the two drug giants comfortably beat Q1 revenue and profit estimates.

Both companies were sprinting from gigantic mergers completed last fall, so this was the first quarter of results with their new partners.

Pfizer shares rose 32 cents, or 2%, to $17.23, while Merck was up 73 cents, or 2%, at $36.

Both companies forecast profit this year that was a bit light of estimates on the Street.

Pfizer sales rose 54% to $16.75 billion, ahead of $16.6 billion expected, yielding a profit per share of 60 cents, 7 cents better than expected.

Pfizer’s specialty care sales of $3.5 billion were up a whopping 141% in the first full quarter of its acquisition of drug maker Wyeth. The company credited Wyeth drugs such as “Premarin” for menopause with leading a 38% rise in biopharmaceutical drugs.

Merck revenue rose 7% to $11.42 billion, beating the $11.2 billion estimate, yielding profit per share of 83 cents, 8 cents ahead of expectations.

Merck touted sales of its drug for type-2 diabetes, Januvia, which saw sales grow 60% outside the U.S. versus 13% at home.

For this year, Pfizer sees $67 billion to $69 billion in revenue, about in line with the average $68.1 billion estimate, and profit per share of $2.10 to $2.20, a tad below the average $2.18 estimate.

Pfizer reduced its 2012 revenue target by $800 million, to $65.2 billion to $67.7 billion, thanks to increased costs from U.S. healthcare legislation.

Merck forecast this year’s revenue per share at $45.4 billion to 46.4 billion, with profit at $3.27 to $3.41 per share, which in line with the average $45.9 billion on the top line but below analysts’ $3.40 profit estimate.

This was the first full quarter for Merck after acquiring Shering Plough in November. Management reiterated a forecast for single-digit growth in earnings through 2013.

Tupperware Q4 Sales and Dividend Rise

Tupperware's (NYSE: TUP  ) just-released Q4 and 2012 results revealed that the company's net profit came in at $74.5 million ($1.34 per diluted share), against the nearly $87 million ($1.50 diluted EPS) it posted the same quarter the year before. Sales amounted to $711 million, compared to Q4 2011's $676 million.

For the full year, net income was $193 million ($3.42 diluted EPS), a 12% year-over-year decline. Sales were $2.6 billion.

Although profit in both instances was lower on an annual basis, the company announced a sharp increase in its dividend. It will pay $0.62 per share April 5 to shareholders of record as of March 20. That amount is a 72% increase over the previous payout of $0.36.

These Stocks Helped Keep the Dow Below 14,000

The Dow Jones Industrials (DJINDICES: ^DJI  ) have been on an incredible run this January, going from just over 13,000 to the brink of 14,000 in less than a month. A combination of optimistic economic news, grudging accomplishments from the U.S. government in getting tax rates settled for the time being, and decent earnings have investors excited about the future for the first time in a while. That optimism continued today, with the Dow gaining another 72 points to 13,954, just over 200 points shy of what would be a new all-time closing record for the average.

Yet even on a good day for the Dow, Hewlett-Packard (NYSE: HPQ  ) managed to lead the average's components on the downside, with a loss of more than 3%. As Fool contributor Doug Ehrman noted this morning, the company has to be worried about a potentially closer relationship between Microsoft and Dell (NASDAQ: DELL  ) , with Microsoft reportedly involved in the group of investors seeking to take Dell private. For HP, the episode is yet another distraction from its core task of getting its own business in order through its restructuring efforts.

Outside the Dow, Ford (NYSE: F  ) plunged nearly 5% as it announced that it expects to lose another $2 billion on its European operations in 2013. After worse-than-expected losses in Europe of about $1.75 billion last year, Ford CFO Bob Shanks said that the likelihood of a European recession will make things even more troubling this year. The interesting thing, though, is that investors have ignored what was largely a favorable showing domestically and elsewhere in the world. That could give investors a buying opportunity for Ford right now.

Finally, VMware (NYSE: VMW  ) dropped more than 21% as its first-quarter guidance disappointed investors. With sales pegged to come in between 5% and 7% below consensus and a plan to cut 900 jobs, VMware's better-than-expected fourth-quarter results went largely ignored as the company needs to demonstrate continuing growth potential in order to justify its valuation.

Can Ford drive higher?
Notwithstanding its European experience, Ford has done very well lately. But is Ford a buy after its swoon today? Find out everything you need to know about the auto giant in our premium research report on Ford, in which our top auto analyst looks at the massive forces affecting Ford's worldwide operations. Simply�click here to get instant access to this premium report.

Why B of A Is Floundering Today

It isn't often that shares of Bank of America (NYSE: BAC  ) aren't either up or down by at least 1%. As a result, when they do stick close to home, there are probably both positive and negative news items that traders and investors are working to digest. Today is no different.

The good news
On the positive side, or at least I think it's positive, the Federal Reserve announced yesterday that the results from the 2012 stress tests will be released on March 7. They'll be followed a week later by the results of the Comprehensive Capital Analysis and Review examination, which determines whether and to what extent the nation's largest banks, including JPMorgan Chase (NYSE: JPM  ) , Wells Fargo (NYSE: WFC  ) , and B of A, can increase their dividends and/or share repurchase programs.

Although B of A's request for a dividend increase was denied by regulators in 2011, and the bank didn't submit a request last year, many analysts believe that it's much better positioned this year to receive the long-awaited green light. Former B of A bears Meredith Whitney and Tom Brown have both spoken up in this regard, and I made the case back in October of last year.

As I discussed earlier today, the reason for this is twofold. First, B of A has now built its capital levels up to industry-leading levels. And second, it's effectively resolved a considerable portion of its liability dating back to the financial crisis -- and specifically the regrettable acquisition of mortgage-originator-cum-criminal-enterprise Countrywide Financial in 2008.

The bad news
Alternatively, the news that's weighing heavily on all stocks, not just B of A, concerns a report suggesting that consumer confidence has plunged in the United States. The Conference Board reported earlier today that its consumer confidence index fell to 58.6 this month, down from 66.7 at the end of last year. The move erased all of 2012's gains and is consistent with a variety of similar studies of consumer sentiment.

Although this may not seem as relevant to a bank as, say, a retail store, nothing could be further from the truth. For the past five years, lenders like JPMorgan, Wells Fargo, and B of A have all sought to improve the quality of their loan portfolios, which have suffered since the financial crisis. The improvement won't occur, however, until overall consumer spending and thus employment and housing values pick up, all of which are driven in large part by the level of consumer confidence.

And in other news...
Reuters got its hand on a letter written by B of A's CEO Brian Moynihan and sent to the homes of the bank's nearly 270,000 employees. In it, Moynihan stresses the importance of improving customer service.

Suffice it to say, the letter couldn't have come too soon. A report issued by the American Customer Satisfaction Index last month ranked B of A fourth among the four too-big-to-fail banks -- the three already mentioned, and Citigroup, the nation's third largest bank by assets. In addition, according to Reuters, it was the only one of the four "whose score had not matched or eclipsed pre-crisis levels."

Beyond simply addressing a much-needed area of improvement, however, the letter adds further emphasis to a point that B of A's CFO Bruce Thompson made in the bank's third-quarter earnings release in October of last year. After acknowledging the bank's progress on the capital front, Thompson said: "With these gains, we have turned our attention to driving core earnings."

Now, while that may not seem revolutionary to you, believe me when I say that it is. Prior to that point, B of A's top brass had been understandably focused on one thing: reducing liability and losses related to the financial crisis. With a redirection of this energy, in turn, B of A's shareholders are bound to see the benefits on the bottom line through initiatives like the one Moynihan has evidently launched with the aforementioned letter.

Want to learn more about B of A?
To learn more about the most talked-about bank out there, check out our�in-depth company report on Bank of America. The report details Bank of America's prospects, including three reasons to buy and three reasons to sell. Just�click here�to get access.

Is Microsoft the Next Apple Empire?

Apple's (NASDAQ: AAPL  ) success can be largely attributed to the mobile computing revolution, brought on by advent of smartphones and tablets. What started as a twinkle in Apple's eye grew into over 75% of Apple's revenue last quarter. To date, Microsoft (NASDAQ: MSFT  ) has yet to capitalize on the mobile computing revolution in a meaningful way for investors. As a result, shares have remained stuck in a range-bound rut for nearly a decade, and are likely to continue doing so until Microsoft proves that it can deliver new growth. The hope is that Microsoft's Windows 8 product lines will unify the experience between desktop, tablet, and smartphone, ultimately driving new users to its ecosystem. The million-dollar question: Are Microsoft's efforts enough to build an Apple-like mobile empire?

A tablet-sized opportunity
According to IDC, tablets will remain a high-growth area for years to come. The firm estimated that 122.3 million tablets shipped worldwide last year. By 2016, it's expected that worldwide shipments will more than double to 282.7 million. It's believed that Microsoft held 2.9% of the tablet market in 2012, which IDC anticipates will grow to 10.3% by 2016. At that time, Microsoft will be poised to benefit from the shipment of over 29 million Windows tablets. This growth will likely come at the expense of Google (NASDAQ: GOOG  ) Android and Apple iOS. Of the three ecosystems, Microsoft is seen growing the most rapidly -- at a pace of 69.2% compounded annually -- well above the 23.3% industry average. In other words, IDC sees that Windows 8/RT will ultimately be well received over the longer term.

The future is emerging
In case you haven't heard, Android is the current victor in the smartphone war since it commands an estimated 68.3% of the market. Android won by employing a worldwide OEM-driven distribution model, in which manufacturers offer an abundance of sub-$250 unsubsidized Android smartphones. This has allowed Android to become wildly popular within emerging markets, an area where Microsoft is currently gearing up for battle. Compared to developed markets, emerging markets have a larger untapped growth potential, which could help Microsoft quickly gain share in a short period of time.

Microsoft has reportedly teamed up with Qualcomm (NASDAQ: QCOM  ) to develop a Windows Phone 8 reference design in order to attract a larger base of emerging-market OEMs. It's expected that low- and mid-range smartphones based off this design will be released in the second half of this year. The hope is that this effort will plant the seeds necessary to drive emerging-market growth for both Microsoft and Qualcomm.

Like Android, the strength of Windows Phone 8 lies within the size and support of its OEM distribution network. Should a price war erupt between Android and Windows Phone OEMs, both Microsoft and Google wouldn't bear the full burden of margin pressures. For Microsoft and Google, it's mainly about market share gains, not a device's profitability. Granted, Microsoft charges a licensing fee to OEMs for Windows Phone 8, giving Android's free license model a slight edge in an all-out price war situation.

Two segments to watch

Segment	Fiscal Q2 2013 Revenue	Change (YOY)	Percentage of Total	Percentage of Profit
Windows division	$5,881	24%	27%	42%
Entertainment and devices division	$3,772	(11%)	18%	8%

Source: Microsoft quarterly earnings press release. All dollar figures in millions.

Naturally, the Windows division is responsible for sales of the Surface and Windows RT licenses. The year-over-year increase was driven largely in part by the release of Windows 8 during the quarter. Although the entertainment and devices division is mainly accountable for Microsoft's Xbox 360 business, it's also home to Windows Phone sales. If it weren't for an increase of $546 million in sales related to Windows Phone, the segment would have suffered a steeper year-over-year decline.

Combined, these two segments are the key to Microsoft's mobile computing future and perhaps the end of a lost decade. If Windows Phone can gain significant market share, it's almost a given that the entertainment segment would become a larger contributor to Microsoft's bottom line. Together, these two areas could be the ticket to a winning strategy for Microsoft investors. It appears the second act of the mobile computing revolution is about to begin.

Firing on all cylinders?
It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

Solta Medical to Acquire Sound Surgical

On Tuesday, medical aesthetics equipment maker Solta Medical (NASDAQ: SLTM  ) announced that it has agreed to acquire privately held peer Sound Surgical Technologies for $30.5 million -- $5 million cash, plus $25.5 million worth of Solta's own stock. Solta also may pay Sound Surgical's shareholders up to $9.5 million more in "earn outs" based on the company's performance in 2013.

Sound Surgical grew revenues 40% to $23 million in 2012, generating more than $2 million in earnings before interest, taxes, depreciation, and amortization. Solta says the acquisition should be accretive to earnings, exclusive of purchase and integration costs, within a year after closing.

Solta expects to close the transaction in Q1 2013. Sound Surgical CEO Daniel S. Goldberger has agreed to stay on as a consultant for six months post-acquisition to assist with the integration of the two companies.

At a maximum purchase value of $40 million, Solta is paying approximately 1.74 times sales for Sound, a significant premium to the 1.3 times sales valuation its own shares command. These shares closed up 0.4% Tuesday, by the way, at $2.62 ahead of the announcement.

National Grid Reiterates "Positive Outlook"

LONDON -- The shares of�National Grid� (LSE: NG  ) (NYSE: NGG  ) dropped a penny to 700 pence during early London trade after the company confirmed it was "well positioned to deliver another year of good operating and financial performance."

National Grid, which operates the country's electricity and gas transmission networks, said today that the last four months had witnessed "continued solid performance reflecting good financial delivery and sustained investment in attractive long-term growth assets."

The FTSE 100 member also revealed its capital investment during the current year would be �3.6 billion, and that it recently raised �1 billion by issuing new long-term debt.

Steve Holliday, National Grid's chief executive, said: "Our businesses made further progress toward delivering our priorities for the year, underpinned by good financial performance. Sustained investment in transmission and distribution infrastructure, combined with a strong focus on efficiency has resulted in another solid operational performance."

Sadly, today's statement provided no clue as to the future of National Grid's dividend, with the payout policy remaining under review as the company continues to study fresh regulatory proposals from Ofgem.

National Grid said it would respond to the watchdog's proposals, which recommend the FTSE company embark on a "significant" investment program during the next eight years, by early March. The firm's new dividend policy is expected to be revealed within May's full-year results.

Published during November, National Grid's first-half results revealed its dividend had been lifted 4% to give a trailing twelve-month payout of 39.84 pence per share. The yield is therefore 5.7%, assuming the upcoming dividend review does not recommend a "rebasing."

If you are looking to buy -- or already own -- National Grid shares, the Motley Fool has published�this exclusive in-depth report�about the company. The report evaluates National Grid's finances and risks, and places�an 850 pence value�on the shares. Just�click here�to read this special National Grid report while it still remains free and available.

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Will Techne Beat These Analyst Estimates?

Techne (Nasdaq: TECH  ) is expected to report Q2 earnings around Jan. 31. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Techne's revenues will grow 2.1% and EPS will increase 1.3%.

The average estimate for revenue is $76.2 million. On the bottom line, the average EPS estimate is $0.77.

Revenue details
Last quarter, Techne booked revenue of $75.0 million. GAAP reported sales were 3.3% lower than the prior-year quarter's $77.6 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at $0.75. GAAP EPS of $0.70 for Q1 were 5.4% lower than the prior-year quarter's $0.74 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 75.8%, 220 basis points worse than the prior-year quarter. Operating margin was 52.1%, 340 basis points worse than the prior-year quarter. Net margin was 34.2%, 130 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $318.4 million. The average EPS estimate is $3.28.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 268 members out of 276 rating the stock outperform, and eight members rating it underperform. Among 85 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 84 give Techne a green thumbs-up, and one give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Techne is hold, with an average price target of $77.20.

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Are You Missing Something Easy at AEP Industries?

Margins matter. The more AEP Industries (Nasdaq: AEPI  ) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. Healthy margins often separate pretenders from the best stocks in the market. That's why we check up on margins at least once a quarter in this series. I'm looking for the absolute numbers, so I can compare them to current and potential competitors, and any trend that may tell me how strong AEP Industries's competitive position could be.

Here's the current margin snapshot for AEP Industries over the trailing 12 months: Gross margin is 15.9%, while operating margin is 4.9% and net margin is 2.0%.

Unfortunately, a look at the most recent numbers doesn't tell us much about where AEP Industries has been, or where it's going. A company with rising gross and operating margins often fuels its growth by increasing demand for its products. If it sells more units while keeping costs in check, its profitability increases. Conversely, a company with gross margins that inch downward over time is often losing out to competition, and possibly engaging in a race to the bottom on prices. If it can't make up for this problem by cutting costs -- and most companies can't -- then both the business and its shares face a decidedly bleak outlook.

Of course, over the short term, the kind of economic shocks we recently experienced can drastically affect a company's profitability. That's why I like to look at five fiscal years' worth of margins, along with the results for the trailing 12 months, the last fiscal year, and last fiscal quarter (LFQ). You can't always reach a hard conclusion about your company's health, but you can better understand what to expect, and what to watch.

Here's the margin picture for AEP Industries over the past few years.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of seasonality in some businesses, the numbers for the last period on the right -- the TTM figures -- aren't always comparable to the FY results preceding them. To compare quarterly margins to their prior-year levels, consult this chart.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

Here's how the stats break down:

• Over the past five years, gross margin peaked at 21.5% and averaged 15.4%. Operating margin peaked at 8.1% and averaged 3.8%. Net margin peaked at 4.2% and averaged 1.8%.
• TTM gross margin is 15.9%, 50 basis points better than the five-year average. TTM operating margin is 4.9%, 110 basis points better than the five-year average. TTM net margin is 2.0%, 20 basis points better than the five-year average.

With recent TTM operating margins exceeding historical averages, AEP Industries looks like it is doing fine.

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Are You Expecting This from Manitowoc?

Manitowoc (NYSE: MTW  ) is expected to report Q4 earnings on Jan. 31. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Manitowoc's revenues will grow 5.2% and EPS will expand 71.4%.

The average estimate for revenue is $1.09 billion. On the bottom line, the average EPS estimate is $0.24.

Revenue details
Last quarter, Manitowoc logged revenue of $955.7 million. GAAP reported sales were 2.2% higher than the prior-year quarter's $935.4 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, EPS came in at $0.17. GAAP EPS of $0.17 for Q3 were 5.6% lower than the prior-year quarter's $0.18 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 24.7%, 80 basis points better than the prior-year quarter. Operating margin was 7.4%, 10 basis points worse than the prior-year quarter. Net margin was 2.3%, 20 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $3.91 billion. The average EPS estimate is $0.73.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 1,716 members out of 1,769 rating the stock outperform, and 53 members rating it underperform. Among 461 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 455 give Manitowoc a green thumbs-up, and six give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Manitowoc is outperform, with an average price target of $16.29.

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Can hhgregg Beat These Numbers?

hhgregg (NYSE: HGG  ) is expected to report Q3 earnings on Jan. 31. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict hhgregg's revenues will compress -3.3% and EPS will wane -13.3%.

The average estimate for revenue is $802.0 million. On the bottom line, the average EPS estimate is $0.52.

Revenue details
Last quarter, hhgregg logged revenue of $587.6 million. GAAP reported sales were 5.0% lower than the prior-year quarter's $618.6 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, EPS came in at $0.11. GAAP EPS of $0.11 for Q2 were 31% lower than the prior-year quarter's $0.16 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 29.6%, 100 basis points better than the prior-year quarter. Operating margin was 1.1%, 60 basis points worse than the prior-year quarter. Net margin was 0.6%, 40 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $2.50 billion. The average EPS estimate is $0.75.

Investor sentiment

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on hhgregg is hold, with an average price target of $8.52.

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Fees Drop on 18 Vanguard Funds

Expense ratios fell on 11 target-date funds from Vanguard. (Photo: AP)

Vanguard said Monday that 18 of 28 funds had slightly lower expense ratios, according to the latest reports shared with investors this month. Of the other 10 funds, the fees of eight remained unchanged, while two had small increases.

(The popular fund family released the figures for Admiral and Investor shares, as well as for Institutional and Institutional Plus shares.)

For instance, 11 target-date retirement funds (2010-2055) had a 0.01% decrease in expenses. The fee ratio on the Target Retirement 2030 Fund dropped from 0.18% to 0.17%.

Two funds experienced an increase of 0.01%: Growth and Income Fund, both Admiral and Investor shares, and the Growth Equity Fund’s Investor shares.

Each percentage point in an expense ratio represents an annual charge of $100 against every $10,000 invested, according to the fund giant. Thus, a fund with a 0.17% expense ratio charges its shareholders $17 for every $10,000 invested, and a reduction from 0.18% to 0.17% means a savings of $1 for every $10,000 invested.

“A fund's expense ratio may change from year to year in response to changes in its assets and/or changes in the cost of managing it,” Vanguard said in an online report. “For example, economies of scale resulting from an increase in assets due to market appreciation or investor cash flow can result in a reduction, while a decline in assets can cause the expense ratio to rise.”

Vanguard says that because its corporate entity is owned by the funds themselves (rather than any private or public interests), it has been able to reduce its funds' average expense ratio by more than 77%—from 0.89% in 1975 to 0.20% as of Dec. 31, 2011.

According to Morningstar's latest estimates, Vanguard continues to dominate the open-end mutual fund industry. It had $1.6 trillion in open-fund assets as of Dec. 31, 2012, representing a nearly 17% market share. Its 2012 inflows totaled $86.1 billion.

Still, PIMCO had flows of $62.7 billion in 2012, including inflows of $5.3 billion in December—when Vanguard had $55 million of net outflows. PIMCO has a roughly 6% overall market share of the open-fund marketplace with $563 billion in assets.

Economists Growing More Upbeat About Year Ahead

NEW YORK (AP) -- Economists are increasingly, but still cautiously, optimistic about growth in the year ahead with the hiring expected to pick up in coming months.

A quarterly survey by the National Association for Business Economics released Monday shows half of the economists polled now expect real gross domestic product -- the value of all goods and services produced in the United States -- to grow between 2 and 4 percent in 2013. That's up from 36 percent of respondents who felt the same way three months earlier.

About half expect sluggish or negative performance, down from 65 percent in October.

The latest survey was conducted between Dec. 20 and Jan. 8 and asked 65 economists and others who use economics in the workplace about conditions at their firms or industries. It found that 34 percent of firms now expect to expand their payrolls in the next six months, the highest percentage since April of last year. Meanwhile, 2 percent said they expect their companies to cut payrolls through layoffs, while 14 percent see payrolls trimmed through attrition.

A quarter of respondents also said employment grew at their firms in the fourth quarter, which is comparable to the levels seen in the first half of 2012. The same percentage also reported a rise in wages at their firms in the final three months of the year, up 10 percentage points from the last survey.

Overall sales growth was stable in the fourth quarter with results mixed across industries. For instance, growth slowed in the services, finance, insurance, and real estate sectors, but rose in the transportation, utilities, information, and communications sectors.

Timothy Gill, chair of NABE's survey committee and director of economics at the National Electrical Manufacturers Association, noted that sales growth was stable despite "widespread uncertainty surrounding the potential impact of the fiscal cliff."

The "fiscal cliff" refers to the steep tax hikes and spending cuts that were to take effect Jan. 1 unless the White House and Congress reached an agreement to avoid them. The survey found that 27 percent of respondents postponed at least some hiring and capital spending during the quarter as a result, while 72 percent said the issue didn't affect hiring.

Despite stable sales growth, survey respondents noted that profit margins deteriorated in the fourth quarter, with 25 percent saying their margins increased, down from 27 percent in October. On the flipside, 18 percent reported declining profit margins, compared with 15 percent a year ago. Over the next three months slightly more than a third said they expect primary non-labor costs to rise. That's down from 43 percent in the previous survey.

Expectations for capital spending over the next year weakened from the last survey. Only 40 percent expect their firms to grow capital spending, down from 52 percent.

For consumers, the survey suggests modest inflation could be in the works, with two-fifths of respondents -- the highest share over the past year -- saying they expect prices to rise in coming months. Most of those expecting hike prices think the increases will be less than 5 percent.

Apple Updates iPhone, iPad Software

NEW YORK (AP) -- Apple (NASDAQ: AAPL  ) has released a software update for iPhones and iPads that speeds up data downloads on some major overseas telecom networks and a handful of small U.S. carriers.

Apple says iOS version 6.1 adds the ability to access the "LTE" networks of 36 additional iPhone carriers. Those include Alaska Communications (NASDAQ: ALSK  ) , Bluegrass Cellular of Kentucky and C Spire of Mississippi. Internationally, they include major carriers in Italy, Denmark, Finland, Croatia, Portugal, Saudi Arabia, and South Africa.

The update also includes the ability buy U.S. movie tickets through the "Siri" voice-controlled assistant feature. Also, subscribers to "iTunes Match" will now be able to download individual songs from their online lockers to their phones.

The update is compatible with the iPod Touch as well.

Tellabs, in the Spotlight Soon

Tellabs (Nasdaq: TLAB  ) is expected to report Q4 earnings on Jan. 31. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Tellabs's revenues will wane -20.7% and EPS will wither -100.0%.

The average estimate for revenue is $251.2 million. On the bottom line, the average EPS estimate is $0.00.

Revenue details
Last quarter, Tellabs booked revenue of $264.4 million. GAAP reported sales were 20% lower than the prior-year quarter's $329.8 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at $0.02. GAAP EPS were -$0.01 for Q3 compared to -$0.36 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 39.2%, 210 basis points worse than the prior-year quarter. Operating margin was 0.5%, 340 basis points better than the prior-year quarter. Net margin was -1.5%, 3,790 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $1.06 billion. The average EPS estimate is -$0.02.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 388 members out of 434 rating the stock outperform, and 46 members rating it underperform. Among 108 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 101 give Tellabs a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Tellabs is hold, with an average price target of $4.03.

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Roper Industries Hits Estimates in Solid Quarter

Roper Industries (NYSE: ROP  ) reported earnings on Jan. 28. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Roper Industries met expectations on revenues and met expectations on earnings per share.

Compared to the prior-year quarter, revenue grew and GAAP earnings per share grew significantly.

Margins grew across the board.

Revenue details
Roper Industries reported revenue of $815.9 million. The five analysts polled by S&P Capital IQ looked for sales of $819.2 million on the same basis. GAAP reported sales were 9.6% higher than the prior-year quarter's $739.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $1.48. The nine earnings estimates compiled by S&P Capital IQ predicted $1.46 per share. GAAP EPS of $1.44 for Q4 were 17% higher than the prior-year quarter's $1.23 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 57.6%, 270 basis points better than the prior-year quarter. Operating margin was 27.8%, 250 basis points better than the prior-year quarter. Net margin was 17.7%, 120 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $796.8 million. On the bottom line, the average EPS estimate is $1.30.

Next year's average estimate for revenue is $3.31 billion. The average EPS estimate is $5.69.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 121 members out of 130 rating the stock outperform, and nine members rating it underperform. Among 45 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 42 give Roper Industries a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Roper Industries is outperform, with an average price target of $113.50.

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Callaway Golf, in the Spotlight Soon

Callaway Golf (NYSE: ELY  ) is expected to report Q4 earnings on Jan. 30. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Callaway Golf's revenues will decrease -19.6% and EPS will remain in the red.

The average estimate for revenue is $123.7 million. On the bottom line, the average EPS estimate is -$0.50.

Revenue details
Last quarter, Callaway Golf logged revenue of $147.9 million. GAAP reported sales were 15% lower than the prior-year quarter's $173.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at -$0.50. GAAP EPS were -$1.33 for Q3 versus -$1.01 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 21.1%, 990 basis points worse than the prior-year quarter. Operating margin was -36.0%, 1,410 basis points worse than the prior-year quarter. Net margin was -58.7%, 2,260 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $837.8 million. The average EPS estimate is -$0.78.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 232 members out of 280 rating the stock outperform, and 48 members rating it underperform. Among 76 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 64 give Callaway Golf a green thumbs-up, and 12 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Callaway Golf is outperform, with an average price target of $8.00.

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4 Black Swans That Could Jolt the Market in 2013

A few weeks into the New Year, investors seem to be in a carefree mood. The traditional measures of volatility remain at extremely low levels. After all, the European economic crisis has calmed, budget negotiations in Washington aren't front page news at the moment, and earnings season is unfurling without much drama (except for Apple's (Nasdaq: AAPL) sobering near-term outlook).

How little volatility is there in the market? The Volatility Index (VIX), which uses options trading activity as a gauge of investor fear, is at its lowest level in two years.

  Though investors were a bit spooked in late December in the face of the budget crisis (which temporarily spiked the VIX), the long-term volatility trend has been gliding lower. Simply put, investors know the typical risks that can derail the market, and they are expecting little drama in coming months.

But what about the types of issues that investors can't see coming? Nassim Taleb, an author focused on randomness, probability and uncertainty, calls these unforeseen events "Black Swans." When one of these occurs, the market can take a fairly significant hit. 

Here are four possible Black Swans that may roil the market in 2013.

1. Iran deepens its nuclear enrichment program and the U.S. responds

The issue of Iran's nuclear ambitions has been in the news for so long, that investors seem to have forgotten about it. Although the U.S.-led sanctions are having a major effect on the Iranian economy, there has been little movement by the Iranian government to seek a face-saving compromise. Iran will be voting for a new president this summer, as Mahmoud Ahmadinejad's term expires in August. If his successor is a hand-picked choice of the Ayatollah Khamenei, then global strategists may well conclude that Iran will maintain or deepen its hard line stance. And looming military tensions between Iran and the West would trigger the possibility of a closure of the Strait of Hormuz, which is the only open sea passage from the Persian Gulf to the ocean. In such a scenario, oil prices would quickly spike much higher, dealing a major headwind to the global economy -- and stock markets.

 

2. The Federal Reserve shifts its footing

Chairman Ben Bernanke has wisely sought to calm the markets by repeatedly stressing that the Fed won't start raising rates until the U.S. economy shows greater vibrancy. Although the bank is unlikely to start raising rates in 2013, the official statements released after Fed meetings could start to shift in tone. The current language of perpetual monetary accommodation could eventually be replaced by language that hints of groundwork for eventual tightening. And once investors start to see a shift coming into focus, they may lose their appetite for equities. In some -- but not all -- instances when the Fed has moved to boost interest rates, the stock market has weakened. In addition to this tightening scenario, there is always the possibility that existing Fed policy starts to lose its effectiveness. The Fed's various Quantitative Easing (QE) measures have generally helped the bond and stock markets, but the Fed's balance sheet is now so stressed, that we simply don't know how the market will respond to any interest rate hiccups as the effects of the various QE programs start to wane.

 

3. Inaction on the deficit leads to further market-rattling debt downgrades

The ticking time bomb has been unplugged for now, as House Republicans voted to extend their timeframe for another government shutdown deadline into the spring. The decision to defer a showdown is ostensibly to buy more time to come to a bipartisan agreement on a path to close the still-massive government budget deficit. But the two sides remain so far apart (and have identified few areas for compromise) that a far-reaching agreement that keeps our government debt from eventually hitting $20 trillion seems increasingly unlikely. Even as the total amount of government spending has grown quickly in each of the past four years, the market has moved higher and higher. So investors have already concluded that the rising level of government debt simply has no bearing on the markets. Yet you can only stretch a rubber band so far, and as long as inaction reigns, the debt load swells higher, and the eventual moves to start paying down our debt will have a much more draconian effect on U.S. economic growth. It's a notion that has been seemingly ignored until this point, but could be the "Black Swan of 2013."

 

4. China starts selling our bonds

China's hefty ownership of U.S. bonds has been remarkably positive to our economy, helping to keep interest rates down and enabling us to keep issuing more debt without any real ramifications.  Yet China's new leadership has given clear signs of shifting its economy in the direction of domestic consumption. If they're serious about stimulating domestic demand, then they would have less incentive to pursue a cheap currency policy. As we saw with Japan in past decades, a weak currency only makes sense in the context of an export-led economy. Chinese policy makers also worry about inflation, and one way to keep price pressures at bay is to let your currency strengthen (which weakens import prices). Lastly, China surely has an eye on the U.S. budget mess, and may eventually follow through on its threat to strongly decrease its ownership of U.S. bonds. Without China, Uncle Sam would be paying much higher interest rates.

 

Further Reading:   [See also: "How to Build the Ultimate "Doomsday Portfolio"]

Nice Hobby! Apple TV Reportedly Selling Out In Many Stores

It’s nice if you can make a little money with your hobby, don’t you think?

Apple (AAPL) seems to have a modest hit on its hands with the new Apple TV box. JMP Research analyst Alex Gauna writes this morning that the device is selling out in many of the company’s U.S. retail stores.

The analyst reports that checks find that “the new Apple TV product has continued to sell out in Apple stores across the nation after its launch last week.”

“We were not particularly surprised when we couldn’t get our hands on the Apple TV over this past introductory weekend in San Francisco, but when the scarcity persisted into this week it got us to checking and we subsequently learned that stores across the nation were selling out of their inventory on the same day as receipt in Boston, Chicago, New York and Washington D.C.,” he writes, “and online representatives corroborated this strength extends beyond our 20+ store checks.”

Gauna believes Apple TV is selling at a pace at least one quarter to one third that of the iPad, or at least 1 million units a quarter. He says the $99 price point “is resonating with consumers.”

Gauna repeats his Market Outperform rating and $335 target on the stock.

AAPL this morning is up $1.26, or 0.4%, to $290.20.

Tempur-Pedic International Beats Expectations But Takes A Step Back Anyway

Tempur-Pedic International (NYSE: TPX  ) reported earnings on Jan. 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Tempur-Pedic International met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped and GAAP earnings per share dropped significantly.

Margins dropped across the board.

Revenue details
Tempur-Pedic International logged revenue of $341.1 million. The 11 analysts polled by S&P Capital IQ expected a top line of $338.7 million on the same basis. GAAP reported sales were 7.0% lower than the prior-year quarter's $366.8 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.60. The 13 earnings estimates compiled by S&P Capital IQ predicted $0.55 per share. GAAP EPS of $0.39 for Q4 were 54% lower than the prior-year quarter's $0.84 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 50.0%, 210 basis points worse than the prior-year quarter. Operating margin was 15.0%, 840 basis points worse than the prior-year quarter. Net margin was 6.9%, 850 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $362.3 million. On the bottom line, the average EPS estimate is $0.68.

Next year's average estimate for revenue is $1.42 billion. The average EPS estimate is $2.63.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 633 members out of 685 rating the stock outperform, and 52 members rating it underperform. Among 219 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 211 give Tempur-Pedic International a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Tempur-Pedic International is hold, with an average price target of $32.57.

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Hedge Fund Converts 1/3 of Assets to Gold

The Pacific Group Ltd., a Hong Kong-based fund founded by a former PaineWebber Inc. trader, just announced plans to convert one-third of its hedge-fund assets into physical gold.

The move is only reinforcing a recent flood of hedge fund money into gold as veteran traders place large bets that prices will go up as governments print more money to pay off debt.

William Kaye, founder and CIO of The Pacific Group Ltd., is following some very famous fund managers into large gold positions.

Soros Fund Management, founded by George Soros, and Paulson & Co., founded by John Paulson already have massive stakes through the SPDR Gold Trust ETF (NYSEARCA:GLD), the biggest gold-backed exchange-traded product.

Soros raised his GLD investment by 49% in the third quarter to about $215 million while Paulson has about $3.6 billion invested in GLD, according to documents filed with the Securities and Exchange Commission.

“Gold, the way we look at it, is anywhere from being undervalued to being seriously undervalued,” said Kaye. “We’re in the early stages, in our judgment, of what would likely be the world’s largest short squeeze in any instrument.”

Ownership of financial instruments based on gold, such as Comex futures contracts, represents more than 100 times the physical gold that exists above ground worldwide.

“All you actually need for a major upward revaluation of gold is for a small fraction of people to physically reclaim from major central banks or other depositories that are holding your gold and using it for their purposes,” Kaye added.

 

Why Rambus Shares Took Off

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of IP licensor Rambus (NASDAQ: RMBS  ) are up by about 7% today after topping out at nearly 11% in the morning. Investors are ignoring weakened revenue and are instead keying in on the company's bottom-line beat.

So what: Rambus posted revenue of $57.4 million and reported adjusted earnings per share of $0.07 for the quarter. Analysts were looking for $60.3 million on the top line, but expected a loss of $0.12 per share. The sizable EPS beat was more than enough to make up for gradually declining revenue, particularly as it reversed a gruesome trend of sagging EPS over the past several quarters. CFO Satish Ron sounded a hopeful note that the company would be positioned for improved profitability for 2013, but we expect such things in conference calls, so guidance is more important.

Now what: Speaking of guidance, Rambus projects first-quarter revenue in the range of $58 million to $63 million, with pro forma net income clocking in in a rather wide range of $4 million to $10 million. The top line is a bit higher than this quarter's number, but with non-GAAP net income from the current quarter clocking in at $8.3 million, the bottom-line projections don't offer much space for growth. Rambus has been stuck in a rut for a while, and despite today's beat on an adjusted basis, there doesn't seem to be a lot of forward momentum yet in store.

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Why P&G Is Leading Stocks Higher

Blue-chip stocks are broadly higher today after consumer products giant Procter & Gamble (NYSE: PG  ) got the day off to a positive start with earnings that handily beat analysts' expectations. With roughly an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is on track to close higher for the fifth and final day this week.

P&G comes out swinging
The proprietor of popular brands such as Pampers diapers, Gillette shaving products, and Tide laundry detergent earned itself some much-needed breathing space with analysts and investors today when the company reported better-than-expected second-quarter earnings before the bell.

For the three months ended Dec. 31, P&G reported profit of $4.06 billion, or $1.39 per share, on $22.2 billion in revenue. The figures represented respective increases of 57% and 2% over the same time period in 2011. Excluding certain one-time charges, the company's core earnings per share of $1.22 easily exceeded the consensus forecast of $1.11.

P&G also raised its outlook for the remainder of 2013. It now expects core annual earnings to fall between $3.97 and $4.07 a share, up from its previous range of $3.80 to $4 a share.

According to P&G CEO Bob McDonald: "Global market share trends improved as we continued to implement our growth strategy and made very good progress against our productivity and cost savings goals. Our strong first half results have enabled us to raise our sales, earnings, and share repurchase outlook for the fiscal year, while we strengthen investments in our innovation and marketing programs."

Why it's such a relief
While positive earnings are arguably necessary for any company, they're particularly important for P&G and CEO McDonald. Over the last year, McDonald has come under pressure from activist investor Bill Ackman, the founder of hedge fund Pershing Capital Management who staked a $2 billion investment in the company last year.

Two weeks ago, Ackman spoke out, saying:

I think it's unlikely that Bob McDonald is the right person for the company based on his track record there. ... I don't think that the senior team frankly at P&G has confidence in [McDonald]. We've heard that time and time again. And I think once you lose the confidence of the senior executives it's hard for him to be effective.

Ackman's main complaint stems from P&G's performance relative to its peers. In the middle of last year, for example, the CEO of Unilever (NYSE: UL  ) Paul Polman, told analysts that his company now leads the domestic market in hair care products through brands like Suave and VO5. In 2011, Unilever commanded only 13% of the market, well behind L'Oreal USA's and P&G's respective market shares of 24% and 22%. If Unilever's claim is true, it would represent a remarkable fall for both of the latter companies.

Another of P&G's competitors, Kimberly-Clark (NYSE: KMB  ) , the corporation behind Kleenex tissues and Viva paper towels, also reported strong earnings today. For the three months ended Dec. 31, the company earned $1.37 per share, beating the consensus estimate by $0.02 thanks in part to a drop in commodity prices. Its shares are nevertheless down by 0.33% at the time of writing.

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This Fast-Growing Company Could Kill the Gasoline Engine

Every now and then, I run across a statistic or a fact that makes me feel really stupid. I kick myself: "Why didn't I already know that?"

What got me is that my red Dodge Ram 1500 is technically classified as a "light truck." I was mortally offended. My pickup has a 5.7-liter HEMI V-8 and is as loud as the Space Shuttle and almost as fuel efficient. It doesn't feel like a light truck. 

But it is. 

The thing that matters more than light trucks, though, are the larger semi trucks that roll down the highway. There are millions of them. They drive a huge amount of miles, and they get about five miles to the gallon. These rigs burn through billions of gallons of diesel a year. 

  Imagine if we could replace diesel with something else... that fuel would be a serious Game-Changer. 

If that fuel were cleaner than gasoline and diesel, then transportation emissions would drastically decrease. And if this new fuel were cheaper, the diesel dominos would begin to fall. Quickly. 

Now, hold on to your hats. Because the reality is, all of those various kinds of light and heavy trucks -- and cars, too -- can get the same energy out of a fuel that costs about half what diesel sells for. 

Let me explain...

Natural gas is abundant, clean and, unlike oil, can be domestically sourced. In fact, there's an entire ocean of natural gas in this country waiting to get tapped. 

As most of you already know, natural gas production is on the rise because of an increase in oil production in the nation's massive shale formations. 

What you may not know is that natural gas has the ability to displace billions of gallons of diesel, not only on the road, but for heavy equipment like cranes and bulldozers and even tractors and combines on the farm.

That's all around the corner. And I've found a stock that is the strongest pure play on this trend.

That stock is Westport Innovations (Nasdaq: WPRT).

This is an area that has several key tailwinds behind it: environmental, governmental, industry support -- such that I think natural gas vehicles are the inevitable future. 

Westport makes natural gas engines that are cost-competitive with diesel engines and have 80% of the parts in common.

Vancouver-based Westport has a market cap of $1.5 billion, which is right in the sweet spot for the types of companies I like to recommend in Game-Changing Stocks, my bi-monthly stock advisory, which focuses on aggressive growth. 

It's growing its top line, and not by a little. The orders for these vehicles are clearly fueling remarkable growth: In the past 12 months, it's booked $371.48 million, according to Bloomberg, a 64% increase from the $226.5 million recorded in fiscal 2011. (And that figure was $100 million more than the year before, in 2010.) 

That's the type of growth Westport is seeing now. 

Today, as we speak, there aren't all that many of these cars on the road in this country. So imagine what that revenue is going to do when consumers learn they can drive a car on fuel that costs drastically less than gas -- or when truckers start buying big rigs that burn clean fuel that lets them sidestep ever-increasing diesel emissions rules. 

> A number of factors have converged to form what looks a lot like the perfect storm for natural gas to become a substantial fuel source. Supply and pricing dynamics, industry support, continuing infrastructure development, strong political support and international opportunity -- it's all there. There's simply too much to say on these points to fit into one article. 

But let me be clear: None of this is theoretical. None of it is on a chalkboard. 

It's here. It's happening.

The trucking industry wants to use natural gas, the truck-stop operators are willing to sell it, and Corporate America is only too glad to embrace the significant cost cuts natural gas will afford. 

Natural gas also clearly has White House and Congressional support, and it is gaining serious traction abroad, especially in China. A prime candidate to invest in the space is clearly the pure play, Westport.

As the Dow Dips: AXL, MEE, GS, BKS, WLP Down

The 30-point drop in the Dow Industrials following this morning’s various economic data — lower-than-expected GDP numbers, a decline in Chicago-area manufacturing activity, and mild improvement in consumer sentiment — has turned into a 135-point route of the index, currently trading at 11,033.

Some of the losers include:

Auto parts supplier American Axle (AXL), off $1.11, or 10%, at $10.63, after the company missed Q1 revenue estimates but said 2010 profit was trending higher than expected;

Massey Energy (MEE), down $4.26, or 10.4%, at $36.90, after it was reported the FBI is looking into the possibility of bribery of regulators in conjunction with a mining disaster that killed 29 employees in West Virginia earlier this month. Massey offered a statement this afternoon, saying it had “no knowledge of criminal wrongdoing.”

Goldman Sachs (GS) is down $15.28, or 10%, at $144.96 after The Wall Street Journal and other sources reported the U.S. attorney general in Manhattan is investigating potential criminal fraud, following on the SEC’s civil suit against the bank; Standard & Poor’s and Merrill Lynch analysts cut their ratings on the stock;

Barnes & Noble (BKS) was down $1.33, or 6%, at $21.89 after the company announced it would provide free express shipping to members for all online orders.

Shares of health insurer Wellpoint (WLP) were down $5.30 after the company said it had decided not to go ahead with a previously announced 39% rate hike in California following wide criticism of the plan.

Dow components were broadly lower, with the biggest percentage dip being Caterpillar (CAT), off $2.27, or 3.2%, at $68.48; Bank of America (BAC) fell 52 cents, or 3%, to $17.78; American Express (AXP) was down $1.10, or 2.3%, at $46.50; and 3M (MMM) was down 38 cents at $70.76.

Merck (MRK) managed to rise a penny to $35.26, and Procter & Gamble (PG) was up 29 cents at $62.49.

Does Marinemax Measure Up?

Margins matter. The more Marinemax (NYSE: HZO  ) keeps of each buck it earns in revenue, the more money it has to invest in growth, fund new strategic plans, or (gasp!) distribute to shareholders. Healthy margins often separate pretenders from the best stocks in the market. That's why we check up on margins at least once a quarter in this series. I'm looking for the absolute numbers, so I can compare them to current and potential competitors, and any trend that may tell me how strong Marinemax's competitive position could be.

Here's the current margin snapshot for Marinemax over the trailing 12 months: Gross margin is 25.4%, while operating margin is 1.0% and net margin is 0.2%.

Unfortunately, a look at the most recent numbers doesn't tell us much about where Marinemax has been, or where it's going. A company with rising gross and operating margins often fuels its growth by increasing demand for its products. If it sells more units while keeping costs in check, its profitability increases. Conversely, a company with gross margins that inch downward over time is often losing out to competition, and possibly engaging in a race to the bottom on prices. If it can't make up for this problem by cutting costs -- and most companies can't -- then both the business and its shares face a decidedly bleak outlook.

Of course, over the short term, the kind of economic shocks we recently experienced can drastically affect a company's profitability. That's why I like to look at five fiscal years' worth of margins, along with the results for the trailing 12 months, the last fiscal year, and last fiscal quarter (LFQ). You can't always reach a hard conclusion about your company's health, but you can better understand what to expect, and what to watch.

Here's the margin picture for Marinemax over the past few years.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of seasonality in some businesses, the numbers for the last period on the right -- the TTM figures -- aren't always comparable to the FY results preceding them. To compare quarterly margins to their prior-year levels, consult this chart.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

Here's how the stats break down:

• Over the past five years, gross margin peaked at 25.4% and averaged 22.6%. Operating margin peaked at 1.0% and averaged -3.2%. Net margin peaked at 0.6% and averaged -6.0%.
• TTM gross margin is 25.4%, 280 basis points better than the five-year average. TTM operating margin is 1.0%, 420 basis points better than the five-year average. TTM net margin is 0.2%, 620 basis points better than the five-year average.

With recent TTM operating margins exceeding historical averages, Marinemax looks like it is doing fine.

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