Arizona stock performance looks pretty good for the past quarter and since the start of 2009, but looking back to the start of the recession in late 2007 paints a gloomier picture.
Thirteen of the state’s billion-dollar public companies saw stock prices move up during the fourth quarter and 15 posted gains for the year as the market rallied following a recession low for stock indexes in March.
But for the period from Dec. 31, 2007, to Dec. 18, 2009, only four of the 21 companies posted gains, according to a Phoenix Business Journal analysis.
P.F. Chang’s China Bistro (Nasdaq:PFCB) outdistanced the other winners with a 69 percent gain despite the recession’s impact on many retail and restaurant chains.
Also posting gains since December 2007 were: Meritage Homes Corp. (NYSE:MTH), 19 percent; PetsMart Inc. (Nasdaq:PETM), 17 percent; and Tucson’s UniSource Energy Corp. (NYSE:UNS), 6.6 percent.
The recession’s impact has been very industry-specific said Chip Fisher, managing director and head of the Arizona office for Green Holcomb & Fisher. The pet industry has done well, but many in the restaurant industry have had a tough time.
P.F. Chang’s is among winners in the restaurant sector remaining profitable through the third quarter, although seeing profits shrink. The Asian restaurant chain chain has tightened its belt and closed underperforming locations while continuing modest growth, including new sites in the Middle East. In August, the Scottsdale chain announced a deal with consumer products giant Unilever to brand a line of frozen entrees.
Analysts expect to see its earnings per share hit $1.74 for 2009 and rise to $1.90 in 2010, compared with $1.45 in 2008.
But Barry Ziskin, president of Z Seven Fund in Mesa, says those earnings are significantly higher than the more conservative number reported to the IRS. And with the number of closures offsetting growth, the stock price may be ahead of itself.
He also cautions that PetsMart is feeling pressure from online retailers such as Petmed Express as well as veterinarians.
While Meritage Home Corp. stock moved up 19 percent since the end of 2007, it remains a long way from its peak during the housing boom, when it neared $100 a share in summer 2005 payday loans for bad credit.
The Scottsdale homebuilder continues to feel the sting of the industry implosion, with January-September revenue down from $1.1 billion in 2008 to $683 million this year. Net loss for the nine-month period, however, has tightened to $3.52 per share from $7.37 in 2008. Analysts see that number moving down to just 16 cents for all of 2010.
Leading the list on the negative side for the two-year period as well as for the past quarter and all of 2009 was Mesa Air Group Inc. (Nasdaq:MESA). The Phoenix-based short-hop airline’s stock ended 2007 at $3.09 per share but slipped to the penny-stock range a few months later and has not recovered, trading at just 11 cents as of Dec. 18. In 2006, shares had traded at more than $10.
Mesa has faced not only the recession’s tepid travel, but also a prolonged legal push from Delta Air Lines to sever ties and paid $52.5 million in 2008 to settle a dispute with Hawaiian Airlines.
Fisher said 2009 was a difficult year for most public companies, especially those with a limited stockholder base and analyst coverage.
The new year should bring more money into stock markets and improve values for small-cap as well as larger companies, he said, but not to 2007 levels.
“It’s going to be a long time until we return to those values,” said Fisher. A lot of small companies shouldn’t even be public, he said, adding his company has helped a number of those go private or delist from stock markets over the past year.
Green Holcomb has added staff in Phoenix, he said. “We expect the mergers and acquisitions market to be very active in 2010 and beyond.”
The two-year period saw the Dow Jones Industrial Average plummet from 13,265 to a March 2009 pit of 6,440 before starting a comeback to hit 10,329 Dec. 18. The Nasdaq Composite remains down nearly 17 percent for the two-year period closing at 2,212 Dec. 18.
As for the market in general, opinions vary from the nine-month rally topping off to a continued rise before a crash later in the year and worries about the impact of a major event somewhere in the world.