Regional Stocks Hit Lull in 2nd Quarter : Market: Fifty-nine percent of local companies post declines or are unchanged from the year’s first reporting period.
Stocks of regional companies put in a less-than-stellar performance during the second quarter, with 40 stocks, or 59%, posting declines or remaining unchanged from the end of the first quarter, while 28 stocks posted gains for the quarter.
The lack of momentum in local stocks mirrored the lull in the overall market. Despite hitting a record high of 3,035 early last month, the Dow Jones industrial average has since retrenched, finishing the quarter at 2,906.75 on Friday. Overall, the Dow declined less than 1% during the second quarter.
Meanwhile, the NASDAQ Composite Index, which measures prices of over-the-counter stocks, slipped about 1% during the second quarter to 475.91. The survey of regional stocks covered companies with headquarters from Ventura to Glendale, and the data were compiled by Media General Financial Services of Richmond, Va. (Stocks valued at less than $1.50 a share on March 31 were not included in the survey.)
Many of the companies whose stocks declined during the quarter were hurt by the weak economy and other developments that soured their earnings prospects. Even many of the companies with the biggest stock increases haven’t reported huge profit gains. Rather, some of these companies say, investors are probably looking toward better times ahead.
One company that defied the downward trend in earnings was California Amplifier Inc., a Camarillo maker of home satellite dishes and other telecommunications products. The company saw its stock rise 42% to $2.13 a share in the second quarter, making it the biggest gainer for the quarter among regional stocks.
California Amplifier recently reported that its profit for the three months that ended June 1 more than doubled from a year earlier to $127,000, while revenues rose 4% to $3.68 million. The company attributed the higher earnings to increased sales of its satellite dishes and systems that transmit television signals over long distances without cables.
Another big gainer for the quarter was American Ecology Corp., an Agoura Hills hazardous waste disposal company. Shares of American Ecology rose 41% to $13 each.
American Ecology received a piece of good news last month when an Illinois judge dismissed claims by state officials against the company in a case involving a hazardous waste site in Sheffield, Ill. The ruling ended 11 years of litigation between the state and American Ecology, in which Illinois had sought to force the company to pay cleanup costs in addition to the $13 million American Ecology must pay under an agreement with the federal government.
American Ecology also reported a $493,000 profit in the first quarter ended March 31, compared to a $278,000 loss a year earlier. Revenues rose 37% to $11 million.
Matthews Studio Equipment Group, which makes, sells and rents film production equipment, saw its stock rise 32% in the quarter to close at $3.38 a share. The Burbank company has shown steady earnings growth. In the fiscal second quarter that ended March 31, Matthews reported a 20% increase in net income to $142,000 from $118,000 a year earlier. Revenues rose 8% to $5.08 million.
The stock of Superior Industries International Inc., a Van Nuys-based maker of automotive wheels, rose 31% to $26.75 a share, despite a 54% decline in profits to $1.69 million in the first quarter ended March 31, from $3.69 million a year earlier. Revenues were down 13% to $55 million, reflecting a weak domestic car market.
Responding to tough industry conditions, Superior has been cutting costs through layoffs, shorter work weeks and temporary plant closings. R. Jeffrey Ornstein, Superior’s chief financial officer, said investors are probably anticipating a rebound in auto sales.
Otra Securities Group in Glendale, which runs a clearinghouse for small stock brokerages, saw its own stock rise 25% to $5.63 a share during the second quarter. Otra’s profit jumped to $108,507 in the first quarter that ended March 31 from $16,869 a year earlier, while revenues increased 6% to $2.55 million. It also recently announced plans to start its own retail stock brokerage and expand its business-valuation services.
The stock of New Image Industries, a Canoga Park company that makes computer systems that generate before-and-after video images used by hairstylists, designers and dentists, rose 23% to $2.38 a share in the second quarter.
Despite the gain, New Image’s stock is still well below its high of more than $15 a share in late 1989. The stock has languished since the company acknowledged last year that its sales to beauty parlors had slowed and a deal to sell its systems to a diet center had fallen through. In the fiscal second quarter that ended Dec. 31, New Image lost $196,000, compared to a $413,000 profit a year earlier, while revenues rose 32% to $4.27 million.
Robert Gurevitch, New Image’s chief executive, said the company’s stock may be starting to rebound because investors are betting on a new service that would allow consumers to go to a New Image center and directly use computers for before-and-after images.
The company with the biggest stock decline for the quarter was Ventura Entertainment Group Ltd., a money-losing North Hollywood film and television production company. The company’s stock plunged $1.13 to $1.38 a share a few weeks ago after news leaked out that a securities firm that performed investment banking services for Ventura Entertainment was being investigated by the Securities and Exchange Commission. Ventura Entertainment’s stock has since rebounded to $2 a share, but overall the stock declined 50% in the second quarter.
Micropolis Corp. was also a big loser for the quarter, with its shares tumbling 49% to $6.38 a share. Just a few months ago, the Chatsworth maker of computer disk drives sold an additional 2 million shares of stock to the public for $13.50 each.
But Micropolis’ stock nose-dived last month after the company announced that its second-quarter profit would trail year-earlier levels. The slowdown, which the company blamed on slumping orders from computer customers and competitive price-cutting, is a setback to Micropolis’ recovery. After losing a combined $69.2 million in 1988 and 1989, the company rebounded last year with a profit of $7.9 million on sales of $380.6 million.
Martin Lawrence Limited Editions Inc., a Van Nuys-based operator of art galleries that has suffered from the recession and the slump in the art market, fell 40% to $1.50 a share. The company reported a $2.09-million loss in the first quarter ended March 31, compared to a year-earlier profit of $2.01 million. Revenues declined 48% to $6.93 million.
Everest & Jennings International Ltd., a financially troubled Camarillo-based wheelchair maker, narrowed its losses to $1.31 million in the first quarter ended March 31 from $4.11 million a year earlier, while revenues fell 9% to $29.4 million. But despite the smaller loss, investors shied away from the company’s stock, which declined 38% in the second quarter to $1.63 a share.
Mortgage & Realty Trust, which recently emerged from bankruptcy proceedings, saw its stock fall 30% to $2.88 in the second quarter. The real estate investment trust, which has offices in Burbank and Elkins Park, Pa., reported a $14.1-million loss for its fiscal second quarter ended March 31, compared with year-earlier earnings of $4.67 million. It blamed the loss on the weak commercial real estate market, where Mortgage & Realty invested and made loans.
The stock of Benton Oil & Gas Co., a small Ventura energy exploration and production company, fell 23% to $8.25. Investors were apparently wary about pending litigation that could jeopardize Benton Oil’s interest in a Louisiana energy field.
GlenFed Inc., the Glendale-based parent of Glendale Federal Bank, the nation’s fourth largest thrift, saw its stock price erode by 19% during the quarter, to $5.38. Last week GlenFed, citing a slowdown in California’s economy, said it would lose $140 million in its fourth quarter ended June 30 and projected a $235-million loss for the fiscal year.
The thrift holding company said the big loss was due to $255 million in reserves it is setting aside for possible losses related to medium-sized business loans, the sale of foreclosed real estate in a depressed market and other debt that is not expected to be repaid.
Meanwhile, IHOP Corp., a Glendale-based company that owns and franchises International House of Pancakes restaurants, said it has shelved its initial public stock offering for a week or two because of the sluggish stock market. IHOP hopes to raise about $43 million by selling 70% of its stock at between $12 and $14 a share.
10 Biggest Regional Stock Winners for 2nd Quarter
Closing Price on Percent Stock 6/28/91 Change Line of Business California Amplifier $2.13 +42 Electronics Networks Electronic $4.25 +42 Aerospace American Ecology $13.00 +41 Waste disposal Matthews Studio $3.38 +32 Movie equipment Superior Industries $26.75 +31 Car wheels Semtech $2.88 +28 Electronics Otra Securities $5.63 +25 Clearing house New Image Industries $2.38 +23 Computer imaging Perceptronics $4.88 +22 Automation House of Fabrics $23.00 +19 Fabrics
Note: Excludes stocks whose March 31, 1990, price was below $1.50 a share Source: Media General Financial Services, Inc., Richmond , Virginia 10 Biggest Regional Stock Losers for 2nd Quarter
Closing Price on Percent Stock 6/28/91 Change Line of Business Ventura Entertainment $2.00 -50 Entertainment Micropolis $6.38 -49 Disk drives Martin Lawrence Ltd. Ed. $1.50 -40 Art Everest & Jennings $1.63 -38 Wheelchairs ATI Medical $3.13 -34 Medical equipment Mortgage Realty $2.88 -30 Real estate Summit Health $3.63 -27 Hospitals Tekelec $16.75 -27 Telecomm. Benton Oil & Gas $8.25 -23 Oil Nu-Med Inc. $3.25 -21 Hospitals
Note: Excludes stocks whose March 31, 1990 price was below $1.50 a share
