Public companies getting back to business as usual

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Published: March 27,2006

After the shakeout of the last few years, Mississippi is back to business as usual with its public companies.

“About half are banks and financial institutions,” said Nancy Anderson, CFA, president of New Perspectives Inc. in Ridgeland, and “with interest rates remaining low, these have all fared well over the last year. Most are close to their 52-week highs, and they all pay rich dividends … nice capital gains and a fat dividend, what’s not to like?”

Collectively, Mississippi’s nine publicly traded banks accounted for $2.1 billion in sales, with BancorpSouth reporting $758.7 million, followed by Trustmark ($558.8 million). They are BancorpSouth (NYSE: BXS), Britton & Koontz (NASDAQ (SC): BKBK), Citizens Holding (AMEX: CIZ), First M&F (NASDAQ: FMFC), Hancock Holding (NASDAQ: HBHC), Knobias Inc. (OTC:KNBS), NBC Capital (AMEX: NBY), Peoples Financial (NASDAQ (SC): PFBX), Renasant Corporation (NASDAQ: RNST, formerly Peoples Holding AMEX: PHC), and Trustmark (NASDAQ: TRMK).

“Even the banks on the Coast continue to do well, in spite of or maybe because of the storm,” said Anderson. “Hancock Holding has been a standout in this group,” she said. “Of course, their fate depends on interest rate movement. As long as rates remain low and business activity is brisk, banking in Mississippi will be good.”

Last year, Hancock Holding Company, which owns Hancock Bank (Mississippi), Hancock Bank of Louisiana and Hancock Bank of Florida, reported sales of $355.4 million, signifying a 12% year-over-year growth despite enduring hurricane-ravaged third and fourth quarters. Residential mortgages comprise the largest portion of the banks’ loan pie, which also includes consumer, nonresidential real estate, business, construction and home equity loans. Other subsidiaries offer insurance, discount brokerage services and mutual funds.

The state’s two publicly traded real estate investment trusts (REITs), Parkway Properties (NYSE: PKY) and EastGroup (NYSE: EGP), remain among America’s best performing REITS in total return to shareholder.

“Our two REITS have done well, also as a result of low interest rates,” said Anderson. “Eastgroup is beating Parkway on the cap gain side, but Parkway has a richer dividend.”

Last year, EastGroup reported sales of $126.8 million, a 10.5% increase over 2004. For the same time period, Parkway reported sales of $198.4, reflecting a 16.4% one-year sales growth.

Mixed bag?

“Our three agricultural-type companies are a mixed bag,” said Anderson. “Delta and Pine remains strong, but Cal-Maine and Sanderson are lagging the overall market. What’s left is one retailer: Hancock Fabric. They aren’t doing well at all. I went through one of their stores last week and was surprised at the limited product offerings. I think they may just be in the wrong business. After all, who sews anymore?”

Baldwyn-based Hancock Fabrics (NYSE: HKF), the nation’s second-largest fabric chain, posted 2005 sales of $426.7 million, reflecting a 3.8% decrease over the previous year.
For the fiscal year ended in August, Scott-based Delta & Pine Land (NYSE: DLP), the nation’s top cottonseed breeder and producer, reported net income of $42.6 million, a whopping 703.8% one-year sales growth.

Cal-Maine Foods (NASDAQ: CALM) of Jackson, the largest fresh egg producer in the U.S., with 13% of the market, reported fiscal year-end sales last May of $375.3 million, a 34.4% sales decrease from 2004.

Sales for Laurel-based Sanderson Farms (NASDAQ: SAFM) topped the $1 billion mark again in 2005, although posting a 4.4% decrease over the previous year.

“We also have a casino in the mix, still a good moneymaker, and an oil and gas company, Callon Petroleum,” Anderson pointed out.

Based in Biloxi until CEO Bernard Goldstein officially moves the company headquarters to St. Louis, Mo., Isle of Capri Casinos Inc. (NASDAQ: ISLE), the state’s only publicly held casino, reported 2005 sales of $1.1 billion, a .1% drop over the previous year.

Callon Petroleum Company (NYSE: CPE), the Natchez-based corporation that owns working and/or royalty interests in about 231 producing oil wells and 242 producing gas wells, reported 2004 sales of $119.8 million, a 62.6% increase over the previous fiscal year.

“The industries which seem to be leading the way right now and offer the most potential for the future are missing from our list,” said Anderson. “There’s no technology, no telecommunications, no pure Internet company and no healthcare. We’re back to boring and old-line, which has been good to us lately, but what about the future?”

Jeremy Nelson of Pinnacle Trust in Jackson said overall, 2006 “is off to a relatively good start for Mississippi-based companies.”

“We’ve seen stock prices for some of our regional banks recover after hitting more than two-year lows last fall. Utilities companies, Mississippi Power and Entergy, are recovering from the hurricane and have actually outperformed the Dow Jones Utilities Average over the past three months. Nissan, a company that is not based out of Mississippi but remains a big part of the state, is a shining star in a dwindling automobile sector. A Mississippi company that is being hit hard right now is Sanderson Farms. Declining international and domestic demand due to the ‘bird flu’ has really taken its toll on a company that incurred hurricane-related expenses of well over $3 million.”

Look for continued growth out of Mississippi-based companies over the next few years, said Nelson.

“The rebuilding effort on the Gulf Coast is going to continue to bring in a lot of outside money, and the Hurricane Relief Act has created some great opportunities for development in the state,” he said. “I personally believe that Mississippi has a bright future.”

Contact MBJ contributing writer Lynne W. Jeter at Lynne.Jeter@gmail.com.

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