Given AIR's May fiscal year, in six months, it will certainly be trading based on projected fiscal 2009 earnings (and perhaps beyond). Our projection for AIR for fiscal 2009 is $2.30 per share, fully-diluted; using the average P/E of 16.8 would engender a price of just over $38.64, which would indicate that AIR is a Buy at current levels.
Oxford Industries Fits a Hold
Oxford Industries, Inc.'s (OXM) third quarter stub period results were slightly ahead of expectations thanks to higher-than-anticipated sales. However, it doesn't look like that upside will continue into the first quarter of 2009, as the company maintained its fiscal 2009 guidance.
On March 31, Oxford Industries announced financial results for the two-month stub period and the eight-month transition period ended February 2, 2008. Consolidated net sales for the two-month stub period were $163.4 million compared to $164.4 million in the same period ended February 2, 2007. Diluted net earnings from continuing operations per common share were $0.03 in the two-month stub period compared to $0.16 in the same period ended February 2, 2007.
For the eight-month transition period, consolidated net sales were $695.8 million compared to $739.5 million in the prior year's eight-month period which ended February 2, 2007. For the first quarter, Oxford expects net sales of $265-$270 million and diluted EPS of $0.55-$0.60. For the fiscal year, the company is projecting net sales of $1.01 billion to $1.06 billion and diluted EPS of $2.35-$2.50. However, the company indicated that it now expects EPS at the low end of those ranges.
Oxford shares trade at 11.1x our fiscal year 2009 EPS estimate and 10.1x our fiscal year 2010 EPS estimate. OXM trades at a discount to its industry mean and median. We note that OXM shares have historically traded at a significant discount to the S&P 500. Based on other valuation measures including price-to-book, price-to-sales, and price-to-cash flow, OXM's stock appears to trade at a reasonable valuation. Thus, we rate OXM shares a Hold with a target price of $27, which is 11.6x our fiscal year 2009 EPS estimate.
Higher Attrition Rate for Infosys
Infosys Technologies Ltd. (INFY) is expected to report in-line results for the fourth quarter on April 15th. The company continues to strengthen strategic alliances and reorganize businesses in order to counter the effects of a strong rupee.
The company was able to improve operating margins in the third quarter despite a higher attrition rate, higher wages and appreciation of the rupee, which were likely to pressure margins in the quarter. These effects were offset by SG&A cost savings and a slew of tax and provision reversals.
We maintain our 2008 revenue estimates at the higher end of the guidance range, although wages, currency and attrition remain our major concerns.
