Back to top

Analyst Blog

Core-Mark Holding Company Inc. (CORE - Snapshot Report) recently posted third quarter 2012 adjusted earnings of $1.01 per share, which were again below the Zacks Consensus Estimate of $1.20. The reported earnings also lagged the year-ago earnings of $1.14 per share.

The company reported net sales of $2.31 billion for the quarter, up 4.0% year over year. The increase in revenue was mainly attributable to the strong presence of the company in the southeast U.S., driven by the Couche-Tard contract in the third quarter of 2011, partially offset by one less day of business in this quarter and a 5.3% slip in comparable cigarette carton sales.

Quarter Highlights

Sales at the Cigarette category crept up 2.0% to $1.6 billion with carton volume being flat. However, excluding the contribution from the new business in the Southeastern U.S., impact of one less selling day and a fall in comparable cigarette carton sales, cigarette sales plunged 5%.

Sales at the Non-cigarette category climbed 9.1% to $718.4 million on the back of same-store sales growth of 4% and additional customers.

During the quarter, adjusted gross profit expanded 3.9% to $125.8 million, attributed to an increase of 6.1% in non-cigarette gross profit.

Total operating expenses climbed 3.9% to $105.0 million due to higher warehousing and distribution expenses. However, as a percentage of net sales, total operating expenses were flat year over year.

Adjusted EBITDA plunged 13.0% to $28.7 million in the reported quarter.

Outlook

The company lowered its earnings outlook for 2012 from its previous expectation range of $2.75 to $2.90 to $2.75 to $2.85. However, it continues to expect net sales of $9.0 billion for 2012, up 11.0% year over year, owing to the benefits from the FCGC acquisition, new contract wins, market expansion and vendor consolidation initiatives. The company expects capital expenditure to be approximately $30 million.

Our Take

The company, which distributes packaged consumer products to the retail industry, reported lower-than-expected third quarter 2012 results and also trimmed its earnings guidance. Hence, we expect estimates to go down in the coming days. The Zacks Consensus Estimates for 2012 and 2013 are pegged at $2.80 and $3.90, respectively.

As a result, we also have a Zacks #4 Rank on the stock, implying a Sell rating over the short term. We also reiterate our long-term Underperform recommendation on the stock. However, one of its peers Farmer Brothers Co. (FARM - Snapshot Report) currently has a Zacks #2 Rank, implying a Buy rating over the short term.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%