Arkansas Companies Post Solid Earnings in First Quarter

Although there are still a few stragglers, most of the 23 public companies based in Arkansas have filed their first-quarter reports with the Securities & Exchange Commission.

And most have performed quite well, although forward-looking investors don't seem to have faith that such results will continue.

Take Alltel Corp., for instance. It racked up solid growth in the first quarter, with net income rising 65 percent to $313 million, or $1.03 a share, compared with $189.8 million, or 61 cents a share, a year ago, thanks to growth in its wireless business and a special dividend on Fidelity National Financial shares it later sold. Quarterly revenue was up 8 percent to $2.13 billion from $1.96 billion in the same quarter last year.

Without the special cash dividend, Alltel's earnings from current business were 84 cents a share. Those results were still better than expected for Wall Street analysts, who predicted earnings of 82 cents a share on revenue of $2.09 billion.

Alltel added more than 174,000 wireless customers during the quarter and increased its wireless operating income by 29 percent to $271.6 million.

Despite the steady growth at Alltel and its potential for that to continue, the share price of its stock has gone down. It entered the new year at $58.73 and ended the quarter at $54.85, a decline of 6.6 percent. April has seen its stock price recover to more than $57 a share.

Of course, Alltel can't control the market. For the first quarter, all of the major market indices declined. The S&P 500 and the Dow Industrials were both off more than 2 percent, and the Nasdaq Composite was down 8 percent.

Analysts say there's a big disconnect between the earnings reports coming out and the market.

It also shows up with Baldor Electric Co., the Fort Smith maker of industrial electric motors, drives and generators. Its first-quarter income rose 21 percent to $9 million, or 27 cents a share, up from $7.4 million, or 22 cents a share, a year earlier, which was in line with what analysts had expected. Net sales were up 12 percent to $170.6 million from $152.8 million.

Despite that excellent report, the price for Baldor's stock fell 5.2 percent for the quarter, from $27.23 on the first trading day of the year to $25.81 on the final day of the quarter. Even last week, it was slightly above $25.

Not even Bank of the Ozarks Inc., which has reported record net income in 31 out of the past 33 quarters, escapes the market-earnings gap.

The rapidly growing Little Rock bank reported first-quarter income of $7.3 million, or 44 cents a share, up more than 22 percent over the $5.9 million, or 36 cents a share, it reported during the same quarter last year.

The company's earnings beat analysts' estimates by a penny a share. So how's the stock doing? It was down 8.9 percent for the quarter — on Jan. 3 the stock price was $34.86; on March 31 it was $31.75. It's still languishing around $32 a share.

Simmons First National Corp. of Pine Bluff posted record first-quarter net income of $5.8 million, or 40 cents a share, which was 8.3 percent over the $5.4 million, or 37 cents a share, it reported during the same quarter last year.

Its share price, however, fell 11.5 percent to $24.82 at the end of the quarter after starting the year at $28.06. Last week it was $23.27.

First Federal Bancshares of Arkansas Inc. of Harrison said first-quarter net income was up 12 percent to $2 million, or 37 cents a share, compared with $1.8 million, or 34 cents a share, for the first quarter of 2004.

During the quarter its stock price gained less than a buck, rising to $23.68 from $22.73. Last week it closed at $24.19.

Wal-Mart Stores Inc., which sets its fiscal year from Jan. 31 to Jan. 31, won't have its quarterly report out until this month. Despite steady, if unspectacular, sales growth at the world's largest retailer, the company's stock has been tanking. Its stock price on the first trading day of the year was $53.35. By the end of March it was down 6.1 percent to $50.11, and last week it had fallen to a hair over $47, a decline of 11.9 percent.

Tyson Foods Inc., which also has a nontraditional fiscal year, posted its first-quarter results in February. Earnings were $48 million, or 14 cents a share, down from $57 million, or 16 cents a share, for the first quarter of fiscal 2004.

From the start of the calendar year, Tyson's stock was down 7.4 percent for the first three months, to $16.68 from $18.01. Last week it was listed at $16.29.

From an earnings standpoint, the state's public trucking companies are doing great. USA Truck Inc. said first-quarter net income rose more than 174 percent to $2.7 million, or 26 cents a share, compared with $997,000, or 11 cents a share, last year. Revenue, meanwhile, rose to $101 million from $84 million during the same quarter last year.

And it is one company whose share price reflects investor confidence: USA Truck's stock price rose 34.6 percent during the quarter, from $17.05 to $22.95 on March 31. It was sitting above $21 last week.

J.B. Hunt Transport Services Inc., the largest trucking company in the state and one of the biggest in the nation, reported first-quarter net earnings of $47 million, or 57 cents a share, compared with 2004's first-quarter earnings of $33 million, or 40 cents a share, a 42.4 percent increase. Operating revenue rose to $790 million for the first quarter, compared with $618 million the first quarter of 2004, a 15 percent increase.

Its stock price was flat for the quarter, having entered the year at $44.09 and ended the quarter at $43.77. It had fallen to less than $42 last week.

J.B. Hunt also announced a two-for-one stock split effective May 23 for shareholders of record as of May 2.

Arkansas Best Corp. said its first-quarter profit more than doubled over last year. It posted earnings of $10.5 million, or 41 cents a share, compared with $4.5 million, or 18 cents a share, in the year-ago quarter. Revenue at the less-than-truckload carrier was up 11 percent to $417.3 million.

Its stock price, however, fell from $44.93 at the start of the year to $37.78 at the end of the quarter — a decline of 15.9 percent. Last week it was trading at $32.63.

P.A.M. Transportation Services Inc. reported net income of $2.9 million, or 26 cents a share, compared with $2.0 million, or 18 cents a share, for the same quarter in 2004. That's a 45 percent increase. Operating revenue excluding fuel surcharges was up 3 percent to $80.1 million, compared with $77.7 million last year.

In the market, though, its share price fell 7.8 percent to $17.20 from $18.66. Last week it was down to below $16.

Murphy Oil Corp. released its first-quarter results after the market closed Wednesday, saying higher energy prices boosted first quarter net income 15.3 percent to $113.2 million or $1.20 a share, compared with $98.2 million or $1.05 a share in the first quarter of 2004. Revenue for the quarter rose 41 percent to $2.4 billion, compared with sales of $1.7 billion last year.

Riding that crest of higher oil prices, Murphy's stock was up 28 percent in the quarter, rising from $76.65 at the beginning of the year to $98.73 at the end of the quarter. It hit a high of $105.40 in March before falling to $92.30 last week.

Deltic Timber Corp., a Murphy spin-off, said first-quarter net income was $2.5 million, or 21 cents a share, which was up 92 percent over the $1.3 million, or 11 cents a share, posted for the same period a year ago. First-quarter sales of $39.4 million were up 42 percent when compared with $27.8 million in revenue for the 2004 period.

Its share price declined 6.6 percent during the quarter to $39.10 from $41.86. Last week it was at $37.40.

The first three months of calendar 2005 was the third quarter of the fiscal year for America's Car-Mart Inc. It reported income of $4.3 million, or 54 cents a share, compared with $2.8 million, or 35 cents a share, during the same quarter last year. With sales up 15 percent, the company announced a three-for-two stock split in mid-April.

Adjusted for the split, the company's stock started the year at $24.78, closed the quarter at $23.37 and last week was listed at $21.90.

Market analysts, while recognizing the wide gap between earnings, up nearly 12 percent on announcements so far, and stock prices, down more than 2 percent, take different views on its cause.

Most pin the blame on the Federal Reserve System, which has continued to raise short-term interest rates; fuel prices that shot up 28 percent to a record high during the quarter; and inflation fears (fueled by the Fed) for creating reluctant investors despite an overall expanding economy.

A few big companies hadn't posted their first-quarter results by the middle of last week, including Dillard's Inc. and Beverly Enterprises Inc. Several smaller corporations will be reporting their results as well.