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Microcap & Penny Stocks : Ames Department Stores (AMES) -- Ignore unavailable to you. Want to Upgrade?

To: Arthur Tang who wrote (981)	2/28/1998 4:31:00 PM
From: RBattman	Read Replies (1) \| Respond to of 1911

I just posted this on Yahoo, forgive the repetitive nature for those who follow both threads. I just wanted to see if someone following this stock longer than I can answer this. Help me understand why earnings will move this stock. In doing my due diligence I came upon a series of 8K's filed by the company. It appears that since AMES is required to give detailed financial info to a significant number of trade, bank and institutional creditors, they have also filed the same info in the form of 8k's. The last 8k covers the five week period thru 12/27, the end of the retain season(and the time when the bulk of the company's sales are recorded). It shows net income of $28.1m or $1.26 per share. According to first call the quarter is estimated to come in at $1.24/sh. The company isn't likely to improve its quarter in the period from 12/27 thru the end of january. That seems to indicate that AMES will beat estimates by a penny or two, but you can hardly call that an earnings surprise since its been a matter of public record for more than 30 days. The reports indicate other improvements, gross margins improved from %27.2 to %27.9, current asset growth, inventory growth. However, most of the earnings improvements are due to expense reductions, not sales growth (although there is some year over year sales growth). Don't get me wrong all of these are good things, and the company's PE around 9 is deeply discounted from the industry PE around 20, but what I'm trying to understand is why would earnings release move this stock one way or another?