U.S. adds 209,000 jobs in July to keep hot streak intact
MARKETWATCH 9:27 AM ET 08/01/14
WASHINGTON (MarketWatch) -- The U.S. in July gained more than 200,000 jobs for the sixth straight month, signaling the economy is likely to sustain its momentum through the summer months.
The economy added 209,000 jobs last month outside the farm sector, the Labor Department said Friday. Although hiring tapered off after a 298,000 gain in June, the U.S. has generated at least 200,000 jobs in six straight months for the first time since 1997.
Every major sector of the economy added jobs and hiring was particularly strong in the professional ranks, construction and manufacturing -- all sectors that pay above the average national wage.
The unemployment rate, meanwhile, rose slightly to 6.2% from 6.1% despite another strong month of hiring, according to government data. More people entered the labor force in search of work to push the rate higher, but that's usually a good thing. It typically a sign that people think more jobs are available.
U.S. stock futures (SPY) wavered and were slightly weaker, coming off a day in which the Dow Jones Industrial Average sank by 317 points. Economists polled by MarketWatch had expected a 235,000 increase in new jobs last month.
In the first seven months of 2014 the economy has gained an average of 230,000 jobs. That's the best stretch of job creation since the recession ended in mid-2009 and 19% faster than the pace of hiring in 2013.
Nor does it look like businesses are about to hit the brakes on hiring. The nation's largest small-business lobbying group, for instance, said employment has risen 10 straight months for the first time since 2006. And a weekly report that tracks how many people apply for jobless benefits recently hit a 14-year low.
The acceleration in hiring has fueled renewed optimism that the U.S. is ready to experience a more rapid phase of expansion after years of agonizingly slow growth and a prolonged period of high unemployment.
Yet the July employment report wasn't entirely positive. Wages barely grew, for instance, and there was little change in the number of people who've been out of work for at least six months or who can only obtain part-time work. Sluggish wage growth is a big reason why the economy continues to grow well below its historical average of 3.3% a year.
Inside the report
In July, companies that employ professionals in areas such as technology and administration were the leaders in job creation once again. Business services added 47,000 new positions, though about one-fifth were temp positions.
The manufacturing sector gained 28,000 jobs and construction companies added 22,000 workers.
Average hourly wages, however, rose just a penny to $24.45. They have risen 2% over the past 12 months, but that's unchanged from the start of the year. Analysts say wages have to rise much faster to speed up an economy that has grown at a lackluster 2% annual pace since 2011.
The number of hours people work each week, another telltale sign of economic progress, was unchanged in July at 34.5. Hours worked are at a postrecession high but still a touch lower compared to prerecession levels.
Even with hiring on the upswing, millions of Americans still can't find work or they have to work part-time to get by.
The number of long-term unemployed -- those without a job for six months or longer -- was virtually flat at 3.2 million. The number has been falling steadily since hitting an all-time high of nearly 7 million a few years ago, but it's still markedly higher than the previous precession record.
Some 7.5 million Americans also say they can only find part-time jobs. That's also much higher than the historical average.
The so-called U6 unemployment rate that includes people who can only find part-time work and those who recently gave up looking rose to 12.2% from 12.1%.
The labor force participation rate, meanwhile, climbed a tick to 62.9%, the first increase in four months. The participation rate reflects the percentage of people who hold a job or are looking for one.
Employment gains for June and May were revised up by a combined 15,000, the Labor Department said.
Some 298,000 new jobs were created in June, up from a preliminary 288,000, based on newly available data. May's gain was revised up to 229,000 from 224,000.
Smith & Wesson First Quarter Fiscal 2015 Financial Release and Conference Call Alert
PR NEWSWIRE 8:00 AM ET 08/12/14
Symbol Last Price Change SWHC 12.63 0 (0%) QUOTES AS OF 04:00:00 PM ET 08/11/2014
SPRINGFIELD, Mass. , Aug. 12, 2014 /PRNewswire/ -- Smith & Wesson Holding Corporation(SWHC) today announced that it plans to release its first quarter fiscal 2015 financial results on Tuesday, August 26, after the close of the market. The full text of the press release will be available on Smith & Wesson's(SWHC) web site at http://www.smith-wesson.com under the Investor Relations section.
On Tuesday, August 26, 2014, Smith & Wesson(SWHC) will host an analyst conference call that may include forward-looking statements. The conference call will be web cast live and is scheduled to begin at 5:00 p.m. Eastern Time. The live audio broadcast and replay of the conference call can be accessed on Smith & Wesson's(SWHC) web site at http://www.smith-wesson.com (Windows Media is required). Those interested in listening to the conference call via telephone may call directly at 857-244-7304 and reference conference code 73268897. No RSVP is necessary.
About Smith & Wesson(SWHC) Smith & Wesson Holding Corporation (SWHC) is a U.S.-based leader in firearm manufacturing and design, delivering a broad portfolio of quality firearms, related products and training to the consumer, law enforcement, and military markets. The company's brands include Smith & Wesson®, M&P® and Thompson/Center Arms(TM). Smith & Wesson(SWHC) facilities are located in Massachusetts, Maine, and Connecticut. For more information on Smith & Wesson(SWHC), call (800) 331-0852 or log on to www.smith-wesson.com.
Symbol Last Price Change VGR 21.99up 0 (0%) RAI 57.7up 0 (0%) LO 60.63up 0 (0%) BRK/A 202850up 0 (0%) QUOTES AS OF 04:02:36 PM ET 08/14/2014
Cigarettes are bad for your health. And for some investors, that's enough of a reason to stay away. But for those who do not object to tobacco stocks on moral grounds, they have been beneficial to portfolios, in no small part because of their generous dividends.
Take Vector Group(VGR) ), a holding company that owns Liggett Group, the fourth-largest tobacco manufacturer in the nation, among other cigarette brands. With market capitalization just over $2 billion, Vector is often in the shadow of its larger rivals, but it produces steady, high-quality cash flow and has a diversified revenue stream thanks to an unusual asset: It owns 70% of Douglas Elliman, the fourth-largest real-estate company in the U.S.
The market, however, is underappreciating these holdings--as well as the chance Vector could be snapped up in ongoing consolidation in the tobacco sector.
"Vector is a largely underfollowed company with a highly competent management team and numerous ways to unlock value," says Oppenheimer analyst Ian Zaffino, who recently initiated coverage of the stock with a Buy rating. He notes that the company has been able to consistently increase Ebitda (earnings before interest, taxes, depreciation and amortization)-- at a 29% compound annual growth rate in the past half decade--and has been aggressively expanding its real-estate presence.
Yet despite this growth, the stock doesn't get much attention from analysts or investors, leading to a valuation gap.
Investors may be put off by Vector's nose-bleed price/earnings ratio: It trades at 27.8 times forward earnings estimates. But P/E is misleading as it doesn't account for the company's nonconsolidated real-estate holdings and equity in joint ventures. On an enterprise value to Ebitda basis--a widely used metric given the company's asset mix--Vector trades at 11 times, compared to an average of 14 for the tobacco group. Its dividend yield, 7.3%, is meaningfully above its peers, whose payouts average 4%.
"Vector is trading well below its intrinsic value," says David Bechtel, principal at Barrow Street Advisors, who notes that the company has increased its dividend by a factor of 10 in the past 20 years. "Management has clearly shown its dedication to sharing corporate cash flows...and given the cash that this company kicks off, that dividend is secure." To wit: At the end of the second quarter, Vector had more than $740 million in cash and equivalents on hand--nearly double its total at the start of the year--thanks to strong operational income and refinancing.
Tobacco (including e-cigarettes) accounts for nearly two-thirds of Vector's sales, with the remainder coming from real estate. While tobacco use is on the wane in the U.S., Vector has an advantage: A number of its brands are exempt from making payments under the 1998 Master Settlement Agreement between tobacco firms and state governments, as long as Vector's brands remain below a certain percentage of the market.
This alone gives Vector as much as 65 cents of price advantage on each pack of cigarettes it sells, Bechtel estimates- -before factoring in manufacturing efficiencies and lower advertising costs--a major advantage in the discount cigarette space where it competes.
Even if a bigger tobacco company doesn't snap up Vector for its brands, it could benefit from any disruptions in the market stemming from Reynolds American's(RAI) ) purchase of Lorillard(LO) (LO(LO)).
Given recent Senate hearings, some market observers expect the government to reclassify pipe tobacco, subjecting it to higher taxes, which could be another potential catalyst. Without a tax advantage, many pipe tobacco users would switch to low-cost cigarettes, Oppenheimer's Zaffino believes, playing right into Vector's core market.
Its real-estate prospects are bright, too. Douglas Elliman has been rapidly expanding in highly populated areas including New York, Florida and Southern California. Vector also has stakes in many nonconsolidated real-estate projects that won't show up on the books until they are finished, but are quite valuable. Zaffino estimates that the sale of these projects could bring in close to half a billion dollars.
Vector isn't without risks. Although cigarette litigation is largely behind the sector, a big settlement would eat into its robust cash hoard. E-cigarettes are a wild card at this point, as that nascent industry is in flux, and while Vector's Zoom brand is a very small part of its business, the stock could suffer headline risk from negative e-cigarette news.
Yet Vector's future looks bright, given its strong balance sheet and efficient tobacco operations. Insiders own close to 30% of Vector's stock, suggesting that management is aligned with shareholders.
Nor could its tobacco operations be the only takeover target. As Bechtel notes, "Berkshire Hathaway(BRK/A) ) is snapping up real estate brokerages across the country." Even on its own, as the largest real-estate brokerage in New York City, Douglas Elliman--and by extension Vector--enjoy "a large percentage [of the business] in all five boroughs. That's like owning a piece of the city."
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