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Wednesday, January 26, 2011

don't judge by its cover

This morning I wake up and see BA's head line EPS of 1.56, and get really excited regarding ATI's earnings. Figuring is BA blew it out of the park, it would mean ATI would too.

Oh how wrong that assumption was.

First, BA's earnings were not a beat. They were really a miss, masquerading in a beat due to a 0.50cent tax benefit. Not cool Boeing. Then, I was disappointed to see ATI's headline number. They missed by 15cents!!! That is huge in my book.

But at a closer look, operationally, they actually beat, by a lot. Inventory did screw them via LIFO charge, as well as start-up and idle facility costs. If these cost were not present, they would have produced an EPS of $0.41.

ATI did provide bullish guidance, which is consistent with the chatter that has drawn me to the name. So the macro-economic thesis to me liking ATI is still intact. My only concern with them now, is whether or not they can overcome these 'charges' quarter after quarter w/their cost cutting efforts.

Hopefully the market does not punish ATI too much today.

Update 9:35am 01/26/2011 - Apparently the market is rewarding ATI nicely. Nice :)
Update 2:36pm 01/26/2011- Needless to say, but I took my profits in ATI.

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