Wednesday, February 25, 2009

Bookkeeping: Closing Kendle (KNDL) on Earnings/Chart

Kendle (KNDL) is not a name we've talked about much of late - I only had a 0.2% stake and am going to close it out today for a whopping $43 gain. The company reported earnings this morning and there was a 1x issue that adversely affected results; however they guided down below analyst estimates for 2009 - more importantly the chart has taken a turn for the worse.

I keep repeating myself but this market punishes almost any person who buys breakouts - I feel like a broken record. Two weeks ago the stock had a beautiful chart... Kendle was breaking out - your training is to BUY THAT CHART. If you did, you were hammered. (we did not in this case) The few times I've bought any breakouts I'm getting demolished. It's just not working unless it's gold/silver. There is no trend trading or riding a wave anymore - very difficult conditions because the main way to make money is buy extremely beaten down stocks and hope you bought somewhere near a bounce point - and when it bounces you cannot stick around for long and must sell. Just a hard way to make money consistently on the long side. I am just bewildered watching so many breakouts fail. Everything is intraday daytrading... that's a very small niche of investors.

Since this is such a minor position and I can "buy" a similar type of (broken) chart (to trade around) with other stocks we already own there is no reason to have this around in this type of market. Hence the sale. Still a nice solid company which is profitable, and very cheap on trailing earnings (10x) - but that means nothing in this environment. With that sale, this ends our grand experiment in trying to buy a basket of contract research organizations [Aug 13, 2008: Bookkeeping - Creating a CRO Basket] Even healthcare is no "slam duck" as a niche investment - you just lose money in a slower fashion in that sector.
  • Clinical research company Kendle International Inc. said Wednesday its profit fell 22 percent in the fourth quarter due to problems with a study for one of its customers. Kendle reported a profit of $5 million, or 33 cents per share, compared with $6.4 million, or 43 cents per share, in the year-ago quarter. Profit in Kendle's latest quarter was reduced by 18 cents to 20 cents per share due to a programming issue that affected one of the studies Kendle ran, the company said.
  • Net service revenue rose 5 percent to $109.2 million from $104.3 million.
  • The programming issue cost the company $2.3 million in revenue during the quarter. Kendle said insurance will allow it to recover some of those funds.
  • Reimbursable out-of-pocket revenue rose to $52.1 million from $50.4 million. Revenue from early stage clinical testing jumped 70 percent to $9.7 million from $5.7 million. Late stage revenue rose 4 percent to $98.5 million from $94.6 million.
  • Kendle reported $163 million in net new business for the quarter, down from $174 million in the same quarter a year ago.
  • For the full year, the company earned $29.4 million, or $1.96 per share, up 53 percent from $18.7 million, or $1.26 per share, in 2007. Revenue increased 19 percent to $678.6 million from $568.8 million.
  • Kendle forecast a profit of $1.55 to $1.85 per share for this year. Excluding one-time items, the company expects profit of $2.01 to $2.31 per share. Kendle also forecast $510 million to $530 million in net service revenue.
  • Analysts expected a profit of $2.32 per share and $521.6 million in revenue, according to a survey by Thomson Reuters.
[Oct 28, 2008: Contract Research Organizations Being Taken to Woodshed]

No position

Disclaimer: The opinions listed on this blog are for educational purpose only. You should do your own research before making any decisions.
This blog, its affiliates, partners or authors are not responsible or liable for any misstatements and/or losses you might sustain from the content provided.

Copyright @2012