An earnings followup

Orbitz

The bookings question: overall, bookings rose to $3B, or 4%. This was a tale of two stories: international jumped 41% to $476M; domestic remained basically flat at -1% growth, or $2.6B. The air side of the bookings did less well, down 13% due to a decline in U.S. volume.

This segment of the travel business is tough: margins are negative, returns on equity capital are decreasing and I'm not sure what edge they have over the competition.

Would I like to run the business over the next five years? No. What would I do as a competitor to erode Orbiz' business, I'm not sure. I'd take a pass on this company though fundamentally it doesn't look like a bubble stock.



Cowen

The company is trading at close to cash because of the deterioration of its model. The future of the super-small boutique firm is looking not so hot as panicked companies and investors seek the comfort of larger and more established banks (though their blunders as of late have been huge). At an industry high employee compensation-to-revenue ratio of 60% +, any reduction of business (investment banking is down 32%), cash on hand will get eaten up as the Cowen continues to operate as a going concern. If I were management, I'd look for a bigger player to buy me.



Papa John's

Wheat and cheese prices are rising fast (100%+ and 26% year-over-year). 35-40% of Papa's cost is cheese. The pizza world is too competitive to pass those price increases on to customers. This will pressure margins. Look for the cheapest (Little Caesar's) and the highest-end niche players (The Pie Pizza where I live) to do less poorly. I love pizza. I'm not to keen on pizza economics.


Perini

It's growing somewhere, oddly enough in Cali. and Vegas. That's saying something in today's environment. Revenue is up 21% and its backlog book of construction business is at $6.8B. With an enterprise value of $400M and $5B in sales, coupled with a pristine balance sheet and $460M in cash in the bank, it may be time to say hello to construction.



Beazer

It's adjusted balance sheet is still a mystery. If you're looking at placing a bet with a home builder, try DR Horton or NVR. Both are in better financial shape and run businesses I'd rather operate. They're also the builders I'd be least enthusiastic about competing against.


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Disclosure: None