Wednesday, July 29, 2009

Banco Santander Disappoints; Barron's Vs. Minyanville

In the next-before-last issue of Barron's, there was a bullish article on Banco Santander. Today, before the bell, it announced second-quarter earnings that were down 4% from 2Q '08's. An increase in provisions for non-performing loans was the drag-down. The rest of its segmentation shows profit increases.

Because the number of Santander's common shares has shot up recently, EPS figures declined more rapidly than net income itself. 2Q '08's diluted EPS was 0.35 euros. Assuming that the number of shares of Santander was the same on June 30th as it was on March 31st., 2Q '09's diluted EPS would be about 0.284 euros. That drop of 0.066 euros, if accurate, means that Santander's 2Q EPS has dropped about 18% from the same quarter a year ago. The 0.284-euro estimate may be optimistic, given that the number of Santander's common shares has increased in each of the last three quarters.

The stock is well above the price it opened at as of the Monday after that Barron's article. Although Santander closed down 1.65% today, and lost a further 1.20% in after-hours trading, its after-hours closing price of $13.69 is 66 cents above July 20th's opening price of $13.03.

Run-ups attract other kinds of hopefuls, though. In the article "Have We Reached A Top?", Minyanville's James Kostohryz disclosed that he was short the stock as of the time of that article's posting (yesterday afternoon). Santander's dropped more than 50 cents per share since the posting of that Minyanville article. Odd that both articles can have a gain attributed, but that's what difference in timing gives you.

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