As first-quarter earnings hit a midpoint, I can’t help but point out that the majority of earnings reports we’ve covered over the past year have been better than expected. With so many companies reporting during the weeks that comprise earnings season, it’s easy for some earnings reports to fall through the cracks.
| Company | Consensus EPS | Reported EPS | Surprise |
|---|---|---|---|
| Coeur d ‘Alene (NYSE:CDE) | $0.20 | $0.41 | 105% |
| Jack in the Box (NASDAQ:JACK) | $0.39 | $0.55 | 41% |
| Windstream Corporation (NASDAQ:WIN) | $0.13 | $0.11 | (15%) |
Source: Yahoo! Finance.
Coeur d’Alene Mines Corporation (NYSE:CDE)
There’s little denying that precious metal prices (e.g., gold and silver) have been struggling in recent weeks. News from the Federal Reserve last week that it may stop or slow purchases totaling $85 billion of U.S. Treasuries and mortgage securities before unemployment levels reach 6.5% proved enough to spook gold prices to multi-month lows. Despite this, silver and gold miner Coeur d’Alene produced fundamentally solid results in an otherwise challenging environment.
For the quarter, Coeur d’Alene saw net metal sales dip 12% to $895.5 million, but it did realize 3% higher gold production and higher realized gold and silver selling prices. The really exciting news is the expected production increase at its Rochester mine. Production levels are estimated to increase 35% to 50% from 2012 levels to 4.5 million to 5 million ounces of silver and approximately 45,000 ounces of gold, and this production boost is anticipated to continue for seven years. Furthermore, gold cash operating costs are expected to fall significantly from 2012 levels at the Rochester mine. All told, silver production is expected in a range of 18 million to 19.5 million ounces as compared to 18 million ounces in 2012.
With silver being one of the best conductors of electricity, its use in electronics equipment, like RF connectors, is practically unparalleled. A resurgence in tech spending coupled with better operating efficiency should help drive margins higher and place a floor under its realized silver prices. I’d suggest getting Coeur d’Alene on your watchlist sooner rather than later.
Jack in the Box Inc. (NASDAQ:JACK)
I have to hand it to Jack in the Box; that was an amazing first-quarter report! For the quarter, Jack in the Box reported a same-store sales increase of 2.1% at its Jack in the Box locations and a 1.5% boost at Qdoba. Profit also came in well above Wall Street’s expectations, with its 2013 full-year EPS estimate range of $1.48-$1.63 right in line with the $1.55 estimate currently on the Street. In spite of these positives, I still see plenty of reasons to be suspicious of a continued rally in Jack in the Box’s share price.
For one, Jack in the Box alluded to commodity costs rising 2% to 3% this year as compared to the less than 1% commodity costs inflation it suffered in the first quarter. For the remaining three quarters, beef prices are expected to rise 4% and chicken prices are forecast to jump 6%. McDonald’s Corporation (NYSE:MCD) is facing similar commodity price increases, and they tend to hit the golden arches hardest on its value menu. McDonald’s, as much as it would like to boost its value menu prices to counter inflation, really doesn’t have much room to move these prices as they’re the hook that drives many first-time customers into its stores. Raise prices here and you risk sending consumers to your competitors. The same can be said for Jack’s value menu.
