Tag archive for "fundamental analysis"

By the Numbers

Daily Market Wrap

No Comments 03 February 2014

The Barron’s 400 Index tumbled 14.49 points and 2.94 percent to 478.01 on Monday to start February in a down note, reflecting a broad stock market decline, as investors focused on weak manufacturing data, an inconclusive earnings season and emerging market ills.

Year to date, the B400 gauge is off 6.70 percent. Only 10 of the index’s 400 components rose in Monday’s sell-off.

The Institute for Supply Management (ISM) said its factory index fell to 51.3 in January from 56.5 the prior month, but was quick to say bad weather during the month was responsible for at least part of the decline.

Among the top percentage decliners were Anika Therapeutics, United Rentals, BofI Holding, Methode Electronics and Apollo Global Management.

Apollo Global Management (APO), an asset manager, dropped 5.42 percent to $30.69. The company’s McGraw-Hill Education unit agreed to buy Engrade’s K-12 educational platform.

Medical tissue producer Anika Therapeutics (ANIK) fell 11.39 percent to $29.48.

United Rentals (URI) lost 8.01 percent to $74.46.

Internet banking concern BofI Holding (BOFI) declined 6.56 percent to $77.32.

Methode Electronics (MEI) fell. 6.30 percent to $31.54.

On the positive side, the leading percentage gainers Monday included TASER International, American Vanguard, On Assignment, Ellington Financial and Medifast.

Stun-gun maker TASER (TASR) jumped 5.23 percent to $16.90 after it was announced the stock will be added to the S&P Small Cap 600 Index as of the close of trading on Feb. 4.

Chemical maker American Vanguard added 2.54 percent to $23.83.

On Assignment (ASGN), a scientific and technical staffing firm, rose 0.47 percent to $29.82.

Mortgage asset firm Ellington Financial (EFC) gained 0.59 percent to $23.82.

Weight management company Medifast (MED) rose 0.64 percent to $26.70.

Other major indexes also took sharp falls Monday

The Dow Jones Industrials lost 326 points to 15,373’ the Nasdaq dropped 107 points to 3,997; and the S&P 500 fell 41 points to 1,742.

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By the Numbers

Daily Market Wrap

No Comments 13 January 2014

The Barron’s 400 Index (B400) tumbled 8.80 points and 1.72 percent to 501.96 Monday in a rocky session for U.S. stocks.

Investors showed concern about valuations in the broader stock market  and about the pace of economic stimulus withdrawal by the Federal Reserve.

Leading percentage decliners included Stamps.com, AmTrust Financial, U.S. Silica, Pier 1 Imports and TASR International.

Stamps.com (STMP) slumped 7.42 percent to $39.31.

Property and casualty insurer AmTrust Financial lost 7.70 percent to $32.13.

U.S. Silica (SLCA), an industrial supplier of sand, fell 7.56 percent to $29.46. The SEC asked the company to clarify disclosures in its proxy statement for the company’s 2013 annual meeting.

Home furnishings retailer Pier 1 Imports (PIR) dropped 6.33 percent tin heavy trading.

Stun-gun maker TASER International (TASR) lost 6.37 percent to $17.49.

On the plus side, top percentage advancers Monday included Multimedia Games, F5 Networks, Gold Resource Corp., AFC Enterprises and Skyworks Solutions.

Multimedia Games (MGAM), a casino games maker, rose 5.89 percent to $33.24. Janney Montgomery Scott raised its rating on the stock from neutral to buy.

F5 Networks (FFIV) gained 3.94 percent to $92.01. William Blair raised its rating on the stock from market perform to outperform, citing better execution, a new product cycle and higher customer demand to conclude the company has “turned the corner.”

Gold Resource (GORO), a precious metals miner with holdings in Mexico, added 3.22 percent t. $4.81.

Fast food operator AFC Enterprises (AFCE), owner of the Popeyes chain, rose 2.23 percent to $40.30. The company raised FY 2013 guidance to $1.42 to $1.43 of adjusted earnings per share, versus its earlier estimate of $1.39 to $1.42.

Semiconductor company Skyworks Solutions (SWKS) gained 2.49 percent to $28.44 following favorable comments by iStock Analyst.

Other major indexes also fell sharply Monday.

The Dow Jones Industrials dropped 179 points to 16,258, the Nasdaq fell 62 points to 4,113, and the S&P 500 lost 23 points to 1,819.

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By the Numbers

Daily Market Wrap

No Comments 10 January 2014

The Barron’s 400 Index (B400) rose 2.13 points and 0.42 percent to 510.76 Friday, overcoming a weaker than expected jobs report from Washington, D.C.

For the year to date, the B400 is down marginally by 0.30 percent.

Analyst upgrades and downgrades propelled some of the index’s biggest winners and losers Friday, as Wall Street jockeyed ahead of earnings reports.

The top percentage gainers included Francesca’s Holdings, American Pacific Corp., Intuitive Surgical, Triangle Capital and EPL Oil & Gas.

Boutique clothing retailer Francesca’s Holdings (FRAN) vaulted 24.45 percent to $22.50. The company raised its Q4 revenue forecast, citing holiday sales performance. The company also said it expects Q4 earnings of 27 to 29 cents per share, vs. its earlier guidance of 25 to 29 cents.

American Pacific (APFC) jumped 18.81 percent to $46.48 on news it will be acquired by H.I.G., a global PE firm.

Intuitive Surgical (ISRG) gained 8.63 percent to $420.15 on a pair of analyst upgrades. Wedbush raised its rating to outperform with a price target of $514 per share. SunTrust Robinson raised its rating to a buy with a $450 price target.

Triangle Capital (TCAP) climbed 7.14 percent to $28.66. Keefe Bruyette & Wood raised its rating on the stock from market perform to outperform.

EPL Oil & Gas (EPL) rose 6.51 percent to $28.32. Cannacord Genuity upped its ranking on the stock from hold to buy with a $37 price target, citing the quality of the company’s assets and financial strength.

The leading percentage decliners Friday included Natural Resource Partners, Ambarella, Zumiez, Wisdom Tree and Shutterstock.

Natural Resource Partners (NRP) sank 18.39 percent to $16.60 after Stifel Nicolaus downgraded the stock from buy to hold.

Ambarella (AMBA) fell 8.89 percent to $29.31. Deutsche Bank downgraded the stock from buy to hold with a $32 price target, saying investor hopes for wearable camera growth are overblown in the near term.

Zumiez (ZUMZ) dropped 5.08 percent to $22.97. Mizuho lowered its price target on the stock from $25 to $24, and Davidson lowered its target from $28 to $27.

Wisdom Tree (WETF) lost 3.15 percent to $16.91. Goldman Sachs downgraded the stock from buy to neutral.

Digital imagery marketplace Shutterstock (SSTK) fell 2.62 percent to $84.08.

Other major indexes were mixed on Friday.

The Dow Jones Industrials fell 8 points to 16,437; the Nasdaq added 19 points to 4,175; and the S&P 500 rose 4 points to 1,842.

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By the Numbers

Daily Market Wrap

No Comments 07 January 2014

The Barron’s 400 Index (B400) rose 4.40 points and 0.87 percent to 509.03 on Tuesday, with technology shares leading the gainers and cyclicals showing weakness. The broad U.S. market benefited from news that the nation’s trade deficit narrowed.

For 2014 to date, the B400 approached positive territory, but is still down 0.64 percent on the year.

Top percentage gainers in Tuesday’s session included Synaptics, FLIR systems, VMware, TripAdvisor and Synergy Resources.

Synaptics (SYNA) crossed above significant resistance to finish up strongly, jumping 9.33 percent to $53.19.

FLIR Systems (FLIR) ascended 9.67 percent to $31.80 after announcing development of new micro thermal imaging technology.

Cloud infrastructure play VMware (VMW) rose 6.21 percent to $94.60. The company said it hired a new strategy team and also received a new virtual infrastructure patent.

TripAdvisor (TRIP), continuing a new bout of volatility, added 5.64 percent to $84.91.

Oil & gas operator Synergy Resources (SYRG) gained 6.76 percent after announcing Q1 EPS that was in-line with analysts’ estimates at 0.08 cents per share.

On the negative side, leading percentage decliners included Fox Factory Holdings, Winnebago Industries, Gold Resources, American Railcar and C&J Energy Services.

Fox Factory (FOXF), a maker of vehicle suspension products, dropped 2.48 percent to $16.93.

Winnebago (WGO) lost 2.97 percent to $25.77.

Gold Resource Corp. (GORO), a precious metals miner with holdings in Mexico, fell 1.04 percent to $4.75.

American Railcar (ARII) lost 2.28 percent to $45.37.

Fracking services company C&J Energy (CJES) fell 2.40 percent to $21.55. Guggenheim lowered its rating on the stock from buy to neutral.

Other major indexes also gained Tuesday.

The Dow Jones Industrials advanced 106 points to 16,531, the Nasdaq rose 39 points to 4,153, and the S&P 500 added 11 points to 1,838.

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Barron's 400 Diary

For B400 Companies, Returns Are a Many-Splendored Thing

No Comments 20 December 2013

Barron’s 400 Index companies earn stellar returns, compared to the 6,000 they are selected from.

The kinds of returns we mean are not just profits, but profits in relation to the companies’ assets, equity capital and total investment capital. Returns on assets (ROA), equity (ROE) and investment (ROI) rank high among the metrics that investors and analysts consult when evaluating and comparing companies.

To compute ROA, the trailing 12-month net income is divided by total assets (liabilities plus shareholders’ equity) for the most recently reported period. ROE is trailing 12-month net income dividend by total shareholders’ equity. ROI is trailing 12-month operating income divided by total invested capital.

These three are usually viewed together because each presents just part of the return picture, which varies by industry and by company. For example, ROE can be inflated for a company that borrows a lot of its capital, for which ROA and ROI restore perspective. ROA is affected by whether the assets remain bolted in place or walk out the door each evening.

Here is how the Barron’s 400 companies compare with the “universe”:

Mean 12.36% 33.62% 26.40%
Median 10.92% 21.20% 22.12%
Universe ROA ROE ROI
Mean -6.00% -26.85% -5.62%
Median 1.21% 4.28% 6.16%

The contrast couldn’t be starker. The medians for the Barron’s 400 companies are three to nine times higher than for the universe. Those negative averages for the universe are testimony to how slow and ragged the economic recovery has been—as well as how skillfully the Barron’s 400 companies have negotiated those challenges. Don’t fail to notice, by comparing the means with the medians, that the Barron’s 400 companies tilt higher while the universe tilts lower.

Such are the basic data. They are just three of the two dozen that MarketGrader tracks in assessing companies for the Barron’s 400. They are important indicators but not the last word in security analysis. When you dig down into specific circumstances you find that investing can be anything but straightforward.

Terra Nitrogen Co., a limited partnership that manufactures and distributes nitrogen fertilizer products, has the highest ROA in the Barron’s 400—88%. Terra Nitrogen does well in this measure because it has no debt and minimal other liabilities. The lack of debt also means the company ranks high in ROE (132%) and ROI (which at 233% also is the highest in the Barron’s 400), based on shareholder equity of $253.8 million at the end of the third quarter.

These ratios show that Terra Nitrogen does a very effective job of transforming invested capital into a stream of profits. As good as that is, however, it is not the whole story. Terra Nitrogen’s sales and earnings have been under pressure because of falling prices for its product, which is made in part from increasingly plentiful natural gas. As a result, its stock price has dropped 47% from a high this year of $254 to $135 a share recently.

The moral of Terra Nitrogen’s current story is that while financial strength can enable a company to weather adverse market forces, it can’t trump them.

By contrast, Entravision Communications Corp. has the lowest ROA (minus 2%) and ROE (minus 171%) in the Barron’s 400. The diversified Spanish-language media company has lots of debt ($371 million in the third quarter) and total liabilities ($461 million). Its shareholder equity has sunk to a deficit of $5.6 million at the end of the third quarter from a positive $5.4 million a year earlier.

Moreover, revenue and profit are being hurt by a sharp fall-off in political advertising from 2012. And yet Entravision’s stock jumped 237% this year from $1.66 to $5.59 a share recently, and had climbed as high as $7.20.

So financial strength, while clearly a good thing, is not all that Mr. Market looks at when deciding which stocks to favor. It sure helps to be in the right place at the right time, which seems to be where Entravision is with this country’s growing Spanish-speaking population.

Nonetheless, ROA, ROE and ROI provide invaluable insight into how well a company is running its business. That these returns are collectively so high for the Barron’s 400 companies validates the selection process for this growth-focused index.

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By the Numbers

Daily Market Wrap

No Comments 18 December 2013

The Barron’s 400 Index (B400) climbed  6.30 points and 1.28 percent to 499.34 on the heels of the Federal Reserve tapering Wednesday, with energy and homebuilders leading a broad advance.

Year to date, the B400 is up 36.47 percent, ahead of some of the other major indexes.

With Wednesday’s performance, the B400 is approaching its all-time high of 503.94, set on November 29.

Top percentage gainers included Renewable Energy, Kodiak Oil & Gas, Standard Pacific, Sanderson Farms, Louisiana-Pacific and The Ryland Group.

Renewable Energy (REGI) ascended 5.11 percent to $11.10. The biodiesel maker is acquiring Syntholeum and all of its assets, including a 75 million gallon biodiesel factor in Louisiana, for about $40 million in Renewable Energy stock.

Kodiak Oil & Gas (KOG) gained 2.85 percent to $10.83. The company’s board approved a $940 million capital expenditure budget aimed at driving a 45 percent increase in production in the Williston Basin.

Homebuilder and mortgage finance firm Standard Pacific (SPF) rose 3.49 percent to $8.31. Compass Point reiterated a buy rating on the stock.

The Ryland Group (RYL), another homebuilder, added 4.43 percent to $40.74, also benefiting from a reiterated buy from Compass Point.

Building products maker Louisiana-Pacific Corp. (LPX) tacked on 4.27 percent to $18.05.

Poultry processor Sanderson Farms (SAFM) rose 4.30 percent to $71.36.

Leading percentage losers Wednesday included AmTrust Financial, American Vanguard, Terra Nitrogen, American Pacific, Synergy Resources and Lear Corp.

AmTrust Financial (AFSI), a property and casualty insurance firm, slumped 12.50 percent to $28.67. Short-sellers are very active in the stock and have taken as much as a 29 percent position in the shares according to estimates.

A pair of chemical manufacturers declined smartly. American Vanguard (AVD) fell  9.53 percent to $23.84 and American Pacific (APFC) lost 2.81 percent to $39.38.

Fertilizer maker Terra Nitrogen (TNH) declined 4.16 percent to $139.22.

Oil & gas operator Synergy Resources (SYRG) fell 4.18 percent to $8.72.

Lear Corp. (LEA), a global automotive supplier, lost 2.0 percent to $81.01.

Other major indexes also rose briskly in Wednesday’s trade.

The Dow Jones Industrials rose 293 points to 16,168, the Nasdaq ascended 46 points 4,070, and the S&P 500 added 30 points to 1,811.

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By the Numbers

Daily Market Wrap

No Comments 16 December 2013

Prospects for a year-end stock market rally – a cherry on the top of a stellar year for equities — improved Monday. The Barron’s 400 Index (B400) gained 4.66 points and 0.95 percent to 494.15.

Analysts said there is an expectation among many investors that the Federal Reserve will not reduce its easy-money stimulus at its December meeting this week, despite recent spates of favorable economic data.

Year to date, the B400 is up 35.05 percent, a stronger performance than some other major U.S. stock indices.

Stocks closely tied to the deeper economic cycle did well in Monday’s trade. Leading percentage gainers included TASER International, Hyster-Yale Materials, Lumber Liquidators, Lindsay Corp., Hollyfrontier and CVR Energy.

TASER International (TASR) surged 8.89 percent to $16.90. JP Morgan upgraded the stun-gun security device maker from neutral to overweight with a price target of $18.50.

Hyster-Yale Materials (HY), a maker of lift trucks and vehicle parts, ramped up 7.23 percent to $87.91

Lumber Liquidators (LL) gained 5.53 percent to $94.44. Goldman Sachs upgraded the shares from neutral to buy.

Lindsay Corp. (LNN) advanced 3.36 percent to $79.67. Gabelli initiated coverage with a buy rating and a $110 price target saying the company is a beneficiary of global food demand.

A pair of petroleum refiners had steep gains. Hollyfrontier (HFC) rose 5.23 percent to $47.69 and CVR Energy (CVI) gained 5.00 percent to $39.45.

On the negative end, top percentage decliners included Cooper Tire & Rubber, Terra Nitrogen, Proto Labs, PGT Inc. and Cirrus Logic.

Cooper Tire (CTB) sagged 5.10 percent to $21.60. Bloomberg reported Cooper accused Apollo Tyres of violating a merger contract between the companies.

Terra Nitrogen (TNH), a fertilizer maker, fell 3.13 percent to $148.10.

ProtoLabs (PRLB) declined 2.77 percent to $66.60.

Building products maker PGT Inc. (PGTI) lost 3.65 percent to $9.50.

Chip-maker Cirrus Logic (CRUS) fell 1.84 percent to $19.23. Oppenheimer downgraded the stock to underperform from perform, expressing concern about lack of diversification and high exposure to Apple.

Other major indexes also gained smartly in Monday’s session. The Dow Jones Industrials jumped 130 points to $15,885, the Nasdaq gained 29 points to 4,030, and the S&P 500 added 12 points to 1,787.

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By the Numbers

Daily Market Wrap

No Comments 21 November 2013

The Barron’s 400 Index (B400) snapped a three-day losing streak with strong gains Thursday, as a dip in jobless claims and heavy capital inflows into mutual funds cheered investors.

The B400 climbed 7.38 points and 1.51 percent to 496.35.

For the year to date, the index is ahead 35.65 percent, one of the better performances among major indexes.

Top percentage gainers included Green Mountain Coffee Roasters, American Pacific Corp., Synergy Resources, Medidata Solutions and Williams-Sonoma.

Green Mountain Coffee (GMCR) jumped 14.14 percent to $70.57. The company reported Q4 EPS of 0.89 cents per share vs. analyst estimates of 0.75 cents. The company also announced a new share repurchase authorization of up to $1 billion. Janney upgraded the stock from neutral to buy with a price target of $80 per share.

Volatile American Pacific (APFC), a chemical firm, rose 8.38 percent to $40.87.

Colorado oil & gas operator Synergy Resources (SYRG) gained 816 percent to $9.81.

Medidata Solutions (MDSO) rose 7.99 percent to $117.10. Deutsche Bank initiated coverage with a buy rating and a price target of $133, saying the company should win more share than other vendors in the clinical research IT market. The company raised its long-term revenue growth target to 20-25 percent.

Williams-Sonoma (WSM) gained 7.66 percent to $59.76 after reporting Q3 EPS of 0.58 cents per share vs. consensus estimates of 0.55 cents. The company raised its profit forecast on strong same-store sales and said its see comparable brand revenue growth in Q4 in the range of 3 percent to 6 percent.

The top decliners in Thursday’s B400 trade were hit by unfavorable analyst comments.

Raymond James cut its outlook on a pair of railcar stocks. American Railcar (ARII) lost 7.13 percent to $41.78 after being downgraded from outperform to underperform. Trinity Industries (TRN) fell 5.38 percent to $50.65, also on a downgrade from outperform to underperform.

Ligand Pharmaceuticals (LGND) dropped 2.84 percent to $51.99 after an unfavorable note from Bank of America/Merrill Lynch.

Amgen Inc. (AMGN) lost 2.87 percent to $112.24 on the same note from Bank of America/Merrill Lynch.

Dollar Tree (DLTR) fell 4.48 percent to $56.28. The company announced Q3 EPS of 0.58 cents vs. estimates of 0.60, and revenue of $1.88 billion vs. estimates of $1.91 billion. The company said it sees FY 2013 EPS of $2.72-$2.78 per share vs. estimates of $2.82.

Other major indexes also gained ground on Thursday.

The Dow Jones Industrials rose 109 points to 16,010, the Nasdaq gained 48 points to 3,969, and the S&P 500 added 15 points to 1,796.

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By the Numbers

Daily Market Wrap

No Comments 06 November 2013

The Barron’s 400 Index slipped 1.53 points and 0.31 percent to 485.44 in Wednesday’s session as investors parsed generally favorable quarterly earnings reports and awaited a big jobs report on Friday.

The B400 is up 32.67 percent year to date.

Top gainers in Wednesday’s trade included Open Table, Renewable Energy Group, American Public Education, Axiall Corp. and Ralph Lauren Corp.

Online reservation firm Open Table (OPEN) advanced 12.41 percent to $79.92 on strong earnings, reporting Q3 EPS of 0.50 cents vs. consensus of 0.42 cents. JP Morgan noted the company’s accelerated North American growth, and Craig-Hallum upgraded the shares from sell to hold.

Renewable Energy Group (REGI) gained 10.45 percent to $13.00 after reporting Q3 profits that beat Wall Street expectations and announcing strong biodiesel sales.

American Public Education (APEI) rose 6.17 percent to $42.36 after reporting Q3 EPS of 0.61 cents vs. estimates of 0.56.

Axiall Corp. (AXLL) rose 5.54 percent to $41.88. The company reported in-line Q3 EPS of 0.97 cents, even with consensus of 0.97.

Ralph Lauren (RL) gained 5.40 percent to $180.43. The company said its fiscal 2Q earnings fell 4.2 percent on higher costs, but also raised the lower end of FY revenue guidance, raised its dividend 12.5 percent, and said it expect strong holiday results. The company’s 2Q profits amounted to 2.23 per share vs. estimates of 2.20.

The leading decliners included j2 Global, Verisk Analytics, American Pacific Corp., Hollyfrontier and Ligand Pharmaceuticals.

J2 Global dropped 9.38 percent to $49.95 after reporting Q3 EPS of 0.64 cents vs. consensus of 0.71, and revenue of 127.8 million vs. estimates of 130.4 million.

Information provider Verisk Analytics (VRSK) fell 8.55 percent to $62.00 after reporting quarterly earnings of 0.62 cents vs. estimates of 0.60 cents.

Chemical manufacturer American Pacific Corp. (APFC) lost 7.33 percent to $42.10.

Hollyfrontier (HFC) declined 6.46 percent to $43.43. The company reported Q3 EPS of 0.41 cents vs. estimates of 0.66 cents, and a revenue beat of $5.33 billion vs. consensus of $4.5 billion. The CEO reported margins were under pressure.

Ligand Pharmaceuticals (LGND) fell 6.89 percent to $48.94.

Other major indexes were mixed Wednesday.

The Dow Jones Industrials gained 129 points to 15,747, the Nasdaq dropped 8 points to 3,931, and the S&P 500 added 6 points to 1,769.

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Barron's 400 Diary

Some Early B400 Results Disappoint at Sector Level

No Comments 29 October 2013

While the third-quarter earnings-reporting season is off to a strong start for companies whose stocks are in the Barron’s 400 Index, some soft spots are evident from a sector perspective.

With 28% of the index components announcing results, it’s clear that positive earnings and revenue surprises are beating disappointments by a wide margin. But the majority of companies haven’t spoken yet, so it is a little early to be drawing firm conclusions.

That goes double when looking at surprises along sector lines. Some industries report early and others late, which means the data can be too thin at this point to make valid comparisons. For example, only two materials companies and three energy companies are included in the table below, and none of the three utilities.

With that disclaimer out of the way, here is the sector breakdown of surprises:

Average Surprise
Sector EPS Revenue
Consumer Discretionary 2.16% 0.70%
Consumer Staples 6.31% 3.30%
Energy 12.93% 2.87%
Financials -5.85% 6.27%
Health Care 6.52% -0.63%
Industrials 2.49% -0.89%
Materials 3.97% 1.17%
Technology 7.50% 2.46%
Utilities N/A N/A

Disregarding the numbers themselves, it’s apparent that financials are coming up short in profits—although much of that can be attributed to J. P. Morgan Chase & Co.’s third quarter loss of 17 cents a share. Health care and industrials are running below expectations in revenue.

Whether these vulnerabilities will persist or disappear as more Barron’s 400 components report in coming weeks remains to be seen. As preliminary as these early surprises are, they nonetheless provide a baseline against which we can tally the accumulating third-quarter results.

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