Pisani: NYSE Stock Near 4-Mo. High
It's Investor Day at the New York Stock Exchange, stock up 1.8 percent, near a four month high. Richard Repetto from Sandler O'Neill, who is the best analyst in this space, told me that the stock was advancing on two pieces of information:
1) expense guidance was lower, especially for 2011, and
2) for the first time, NYSE broke out how much they make in their derivatives business, NYSE Liffe [sic], and it is substantial. Why is that important? Because the NYSE can now use it to argue the stock deserves a higher multiple.
Look at the Chicago Mercantile Exchange. The futures exchange has a P/E multiple close to 20. The NYSE, by comparison, has a multiple of only 11.
And that derivatives business looks like it will only be growing. Remember, all that wackiness with Greece is only creating more hedging, and more derivatives trading.
Elsewhere, while Greece is cooling off, a number of U.S. companies reported positive comments this morning:
1) In the coal business, Joy Global, which makes mining equipment, made bullish comments on coal consumption in the U.S. and China. Their earnings were above consensus. Bookings for equipment have improved, and utilization rates for existing equipment is rising.
2) In airlines, US Air has practically doubled in the past three months because revenues have been improving (this is true of most airlines). Revenue per available seat mile (RASM), a key industry metric, was up 8 percent in February at US Air compared to the same period a year ago. LCC still reported lower traffic levels for February, but the planes were fuller because they have been cutting capacity.
3) In restaurants, Dineequity, which was created when Applebee's and IHOP merged, reported better earnings and decent guidance for 2010. Sales at Applebee's have improved, and the company is generating stronger free cash flow, paying down debt, and improving margins.
4) In furniture, Ethan Allen has seen steadily improving traffic this year. As a result, year-to-date orders have risen 25 percent from the year-ago period.
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