Archive for April, 2013

  • The Meltdown in Cognizant
    , April 24th, 2013 at 3:50 pm

    Shares of Cognizant Technology Solutions ($CTSH) have dropped sharply over the past few weeks. The stock closed at $77.66 on April 11th, and including today, it’s dropped for nine days in a row. Today’s low was $61.80.

    So what’s going on? The company doesn’t report Q1 earnings until May 8th. The problem is that Infosys ($INFY), a similar company, recently gave terrible guidance, so traders are convinced CTSH will do the same. The earnings miss from IBM ($IBM) also dinged the sector.

    There are also concerns that, in light of recent events, upcoming legislation may impact the status of foreign workers. I really can’t weigh any of these events at the moment because they don’t impact the company directly but are instead tangential concerns. I don’t mean to downplay them, but we can’t say yet if they will impact CTSH’s first-quarter results.

  • Ford Earns 41 Cents Per Share
    , April 24th, 2013 at 12:29 pm

    This morning, Ford Motor ($F) reported pretty good earnings for Q1. The automaker made 41 cents per share which was four cents more than Wall Street’s expectations. The company made 35 cents per share one year ago. Sales rose to $33.9 billion which beat estimates by $400 million.

    As expected, Ford continues to do very well in North America but Europe still remains weak. The key driver of Ford’s results is the success of the Fusion. I was glad to see Ford given an ambitious production forecast for Q2; 800,000 vehicles in North America and 390,000 in Europe.

    For the quarter, Ford made $2.4 billion in North America but lost $462 million in Europe. That’s about three times what they lost one year ago. The company expects to lose $2 billion in Europe this year. Right now, the company is trying to right itself in the same way they turned around in the U.S. In South America, Ford lost $218 million. They expected to lose $300 million.

  • Lousy Durable Goods Report
    , April 24th, 2013 at 10:28 am

    From Reuters:

    Orders for long-lasting manufactured goods recorded their biggest drop in seven months in March and a gauge of planned business spending rose only modestly, signs of a slowdown in economic activity.

    Durable goods orders slumped 5.7 percent as demand fell almost across the board, the Commerce Department said on Wednesday. The drop last month in orders for these goods, which range from toasters to aircraft, followed a 4.3 percent increase in February.

    Economists polled by Reuters had expected orders to fall only 2.8 percent. Excluding transportation, orders declined 1.4 percent after falling 1.7 percent the prior month.

    From transportation to primary metals and machinery, orders were weak, the latest indication of cooling in a sector that has played a pivotal role in the economy’s recovery from the 2007-09 recession.

    “Overall, the weak tone of this report underscored the emerging narrative of a considerable slowing in economic growth momentum in March,” said Millan Mulraine, senior economist at TD Securities in New York.

    This was the report for March. On Friday, the government will release its first estimate for Q1 GDP growth. The current consensus is for 3.2% but that may come down after today’s durable goods report.

  • Wells Fargo Raises Dividend 20%
    , April 24th, 2013 at 10:06 am

    Last month, the Federal Reserve approved a 30-cent dividend for Wells Fargo ($WFC). The bank just announced that it’s raising its dividend from 25 cents to 30 cents per share.

    This is the second dividend hike this year. In January, WFC raised their dividend from 22 cents to 25 cents per share. Going by yesterday’s close and the new dividend, the stock yields 3.23%.

  • Morning News: April 24, 2013
    , April 24th, 2013 at 7:42 am

    German Business Sentiment Falls

    India’s Jet Airways in $379 Million Stake Sale to Etihad

    P&G Forecasts Profit Below Street View, Shares Fall

    FedEx Wins $10.5 Billion Postal Contract as UPS Shut Out

    Jon Corzine Sued By MF Global Bankruptcy Trustee

    Ford Profit Tops Estimates as Fusion Boosts Record North America

    Wealthiest Americans Only Winners in Recovery, Pew Says

    Barclays Posts Bigger-Than-Estimated Investment Banking Profit

    Daimler Lowers Profit Forecast After First-Quarter Drop

    AT&T Misses Estimates as It Struggles to Keep Pace With Verizon

    Barrick Profit Tops Estimates as Costs Rise Less Than Expected

    WellPoint Earnings, Sales Rise, Lifts Outlook

    Does Apple’s Dividend Make It Microsoft 2.0?

    Joshua Brown: I Survived the Flash Crash of ’13

    Jeff Carter: Hackers Do The Work That Used to Be Done By Wall Street

    Be sure to follow me on Twitter.

  • Bard’s Conference Call
    , April 23rd, 2013 at 10:29 pm

    Here are some highlights of Bard‘s ($BCR) conference call:

    Diluted shares for the period were 82.5 million, as we purchased 1.5 million shares during Q1. The net result is adjusted EPS of $1.44 at the top end of our guidance range for the quarter.

    The balance sheet, as of March 31, reflects cash, restricted cash and short-term investments of $905.3 million versus $921.3 million at December 31. For the quarter, accounts receivable days were down 2.3 days, and inventory days were down 0.2 days. Capital expenditures totaled $13.2 million for the quarter.

    On the liability side, total debt was $1.4 billion as of March 31, no change from December 31. Debt to total cap at the end of the quarter was about 43%, and total shareholder investment was $1.9 billion at March 31, 2013.

    In looking at Q2, we’re expecting to see similar constant currency sales growth to what we saw in Q1. Given the previously discussed first half headwinds, we told you that our revenue growth expectations for the start of the year was flattish, and we don’t see any reason to change that.

    From an EPS standpoint, excluding items affecting comparability, we see the second quarter in the range of $1.35 to $1.39, as we continue to aggressively ramp our investment spending in both SG&A and R&D, consistent with our strategic plan.

    Wall Street had been expecting $1.46 per share.

  • CR Bard Earns $1.44 Per Share
    , April 23rd, 2013 at 4:14 pm

    CR Bard ($BCR) just reported Q1 earnings of $1.44 per share. Sales were $740.3 million. That’s up 1% from a year ago. Wall Street had been expecting earnings of $1.42 per share on sales of $728.45 million.

    C. R. Bard, Inc. today reported 2013 first quarter financial results. First quarter 2013 net sales were $740.3 million, an increase of 1 percent over the prior-year period on a reported basis. Excluding the impact of foreign exchange, first quarter 2013 net sales also increased 1 percent over the prior-year period.

    For the first quarter 2013, net sales in the U.S. were $498.5 million, essentially flat to net sales of $496.2 million in the prior-year period. Net sales outside the U.S. were $241.8 million, an increase of 3 percent over the prior-year period on a reported basis. Excluding the impact of foreign exchange, first quarter 2013 net sales outside the U.S. also increased 3 percent over the prior-year period.

    For the first quarter 2013, net income was $90.7 million and diluted earnings per share were $1.08, a decrease of 35 percent and 33 percent, respectively, as compared to first quarter 2012 results. Adjusting for items that affect comparability between periods as detailed in the tables below, first quarter 2013 net income was $120.7 million and diluted earnings per share were $1.44, a decrease of 13 percent and 11 percent, respectively, as compared to first quarter 2012 results.

    Timothy M. Ring, chairman and chief executive officer, commented, “We are off to a strong start executing on our strategic investment plan that we announced last quarter. It’s a credit to our teams around the world that we have been able to hit our initial targets on such a broad and ambitious endeavor. The organization is energized and committed to improve the long-term growth trajectory of the business.”

  • The Market Plunges on Twitter Hacking
    , April 23rd, 2013 at 1:20 pm

    Shortly after 1 p.m., the stock market plunged about 1% after the AP’s twitter feed was hacked. The hackers said that the White House had been attacked. Fortunately, the report was bogus and the stock market quickly got back to normal.

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    By the way, this is one of the reasons why I’m not a big fan of stop-losses (though I do use them occasionally). In the short-term, the market is highly irrational and you can get stopped out of good stocks for no good reason.

  • Preview of Ford’s Earnings Report
    , April 23rd, 2013 at 11:32 am

    From Bloomberg:

    Ford probably earned a record $2.7 billion pretax profit in North America during the first three months of the year, according to analyst estimates at Morgan Stanley and JPMorgan Chase & Co. If those predictions hold up, the strong financial performance is largely thanks to a well-received lineup of new cars, led by the mid-size Fusion and compact Focus. And with renewed demand for pickups, the company has earned the biggest U.S. sales gain among top automakers in the quarter.

    It’s early in the year and Ford faces numerous challenges, chief among them cratering demand in Europe, a weakening yen that’s giving Japanese automakers a boost in the U.S. and a poor showing in the luxury market. Still, Dearborn, Michigan-based Ford continues to impress with its ongoing reinvention of its cars and trucks.

    “The double benefit of new product in the car segments and the very strong industry pickup demand created what seems like a picture-perfect quarter for Ford in North America,” Itay Michaeli, an analyst at Citigroup Inc. who recommends buying the shares, said by phone. “They’re really in a sweet spot.”

    First quarter North American profit margin may have topped 12 percent, according to Morgan Stanley and JPMorgan. To stay there, Chief Executive Officer Alan Mulally needs to keep Ford’s vehicle lineup fresh as he strives to make further gains in the car and utility segments. That won’t be easy as a weakening yen gives Toyota Motor Corp. and Honda Motor Co. an edge.

  • Q1 Earnings Season So Far
    , April 23rd, 2013 at 10:59 am

    The latest numbers are that 131 of the 500 companies in the S&P 500 have reported so far this earnings season. Of those, 73% have beaten estimates.

    The S&P 500’s price/earnings ratio recently got to 16.22 which was its highest in nearly three years. Eighteen months ago, the market’s P/E dropped down to 11.61 which was a 20-year low.

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