Dog Day Afternoon

Well, we are now in the thick of the dog days of August. I suppose all of Wall Street must be on vacation by now. Doesn't stop Forbes from writing what appears to be stupid things. Disclaimer: I have been a Forbes disbeliever ever since Steve Forbes was on CNBC eight months ago explaining why oil was going back to $35 a barrel.

Here is what Forbes says about FTO:

Frontier Oil (nyse: FTO - news - people ) shares could see a boost in trading volume on Monday following the company's second-quarter earnings report. The Wall Street consensus calls for the oil and gas refiner to post a profit of $1.05 per share on sales of $1.38 billion, compared with year-ago earnings of 59 cents per share on sales of $982 million. Credit Suisse maintained an "underperform" rating and $52 price target on the stock in June.

Now I just have to assume that this is sloppy editing. When I saw Forbes reporting a CS price target of $52 I got excited as the stock is at $35. How could CS rate that as "underperform"? Well, I think the answer is that FTO split in the end of June when it's price was hovering around $52, so Forbes is showing the pre-split price target.

OK, enough bashing. FTO just came out with their results. Looks like a blow-out to me (Frontier Oil Reports Most Profitable Quarter in Company History), but PTEN looked good as well and then proceded to drop $2.00. Here are some key facts:

• $1.26 per share vs estimate of $1.05.
• Revenues up 35% Y o Y.
• Net income up from 58 cents to $1.26 Y o Y.
• Operating margin at Cheyenne Refinery was $15.19 pb vs $14.15 pb in 2005.
• BPD actually dropped slightly from 156,352 to 153,972

Outlook seems positive as well as CEO siad:

"Our results continue to be outstanding. The second quarter of 2006 was our most profitable quarter ever, which allowed us to continue our share repurchase program and execute a 2-for-1 stock split during the quarter. Our crack spreads and crude oil differentials remain incredibly strong and we believe our third quarter 2006 results will be excellent."

They don't seem to be repurchasing many shares as shares outstanding from a year ago are pretty much unchanged.

Quick comment at end of the day. Not a very good day for my MFI. And I was right about FTO, it did drop 80 cents... these oil & gas companies have been spectacular but recently even spectacular gets the ho-hum from the market.