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O'Reilly Auto leads SWMO Big 4 stocks

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In a year when the Standard & Poor’s 500 index grew by 2 percent and the Dow Jones Industrial Average recorded an increase of roughly 5 percent, O’Reilly Automotive Inc. stock sparkled with a 30 percent gain.

Springfield-based O’Reilly (Nasdaq: ORLY) started 2011 at $60.69 per share Jan. 3 and shot to an all-time high of $82.17 per share Dec. 27. The gains are in line with the last three years, as O’Reilly stock has quadrupled from the $21 mark in October 2008, when the stock market was plummeting.

Also scoring double-digit gains last year were shares of Monett-based Jack Henry & Associates Inc. (Nasdaq: JKHY), which responded from a midyear slump to rise by more than 13 percent.

Meanwhile, Joplin-based Empire District Electric Co. (NYSE: EDE) – saddled with more than $20 million in expenses responding to the May 22 EF-5 tornado – ended the year with earnings down 5.3 percent, and Carthage-based Leggett & Platt Inc. (NYSE: LEG) settled virtually where it started, at about $23 a share.

‘Defensive holding’
John Neff, an O’Reilly stock analyst for Middleburg, Va.-based Akre Capital Management, said the nearly $6 billion auto parts retailer and distributor has uniquely benefited from uncertain market conditions because investors see it as a safe option.

“While we look at O’Reilly as an all-weather business model, meaning it will perform well in any economy, I think it tends to be viewed as a defensive holding in a sluggish economy,” Neff said. “2011 ushered in a new era for O’Reilly, and that (comprises) additional leverage, although still very low, and buying back significant amounts of stock.”

In January 2011, the company announced its $500 million stock repurchase program, which was extended in August and then again in November, bringing the total up to $1.5 billion. To put the buyback program in perspective, O’Reilly’s market capitalization – the total value of its outstanding shares – is $10 billion, said Neff, who expects the company to continue the buyback program to increase the value of its shares. “We think it will continue to provide support, and I think the stock is poised to be a solid performer in 2012,” Neff said.

According to analyst estimates, O’Reilly Automotive is projected to grow 2012 revenues by 7 percent to $6.23 billion and to realize earnings per share of $4.37.

On the rebound
In August, Jack Henry shareholders were staring at a $23 stock price, down from the $33 per share recorded in April. The dip paralleled a drop on Wall Street, but the computer systems processor for banks and credit unions finished the year strong, netting a 52-week high of $34.50 in late December.

Fiscal 2012, which started July 1, 2011, kicked off with a bang as the company posted record revenue of $248.3 million and gross profits of $104.4 million in the quarter. “We had about 6 percent organic growth last year, and are tracking at about that same level this year,” Jack Henry CEO Jack Prim said of fiscal 2011 and the first half of fiscal 2012.

Despite a customer base with financial institutions that have weathered a difficult economic environment, Prim said 80 percent of Jack Henry revenue is from sales to existing customers. “While we are still in a tough economic environment and there is lots of uncertainty, it’s not nearly as dire as it was in 2008, and people are starting to loosen the purse strings a little bit,” Prim said.

Jack Henry revenue increased 5.8 percent July–September 2011, and earnings were up 14.8 percent in the quarter, in part due to growth in the credit union sector. In fiscal 2011, the company worked with 37 new credit union clients, up more than 30 percent from the number of credit unions added the previous fiscal year. In the first half of fiscal 2012, the number of new credit union clients is up 16 percent, Prim said.

Correcting the swings
On news of the tornado damage in Empire District Electric’s backyard, its stock dove four points May 25–26. The stock has since recovered half of that loss, and the utility’s third-quarter earnings rose 9.6 percent compared to the same period in 2010.

The company, which serves more than 200,000 electric, natural gas and water customers in four states, reported an $8 million increase in profits during the previous 12 months through the end of the third quarter. Earning for the 12 months prior to Sept. 30 were $54.7 million, or $1.31 per share.  

In response to the expected revenue losses due to the storm, Empire District suspended the company’s quarterly dividends for the third and fourth quarters.

At Leggett & Platt stock, the year’s stock activity can be summed up in a 10-cent change. However, 2011 was marked by a seven-point slide that bottomed out Aug. 8 at $17.87. Shares have since climbed and finished Dec. 30 at $23.04. The manufacturer of engineered components for homes, furniture and automobiles started the year at $23.14 per share.

David DeSonier, Leggett & Platt’s corporate strategy and investor relations executive, cited economic uncertainty for the stock’s flat performance. “The biggest factor is the economy and consumer confidence, which drive sales of products that contain our components,” DeSonier said in an e-mail.

Third quarter sales increased by 9 percent, but officials said the growth did not pull up profits – 31 cents per share – due to inflation, currency rate fluctuations and changes to its steel mill production.

Unit demand in the third quarter was essentially flat due to factors that included competitive pricing pressure in certain product categories, customers switching to lower cost components and reduced production, company officials said. Analysts expect Leggett & Platt revenue to increase by 3 percent this year, to $3.72 billion and earnings to rise by $1.42 per share.[[In-content Ad]]

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