Archive for April, 2016

  • Bed Bath & Beyond Earns $1.85 per Share
    , April 6th, 2016 at 4:30 pm

    Bed Bath & Beyond (BBBY) just reported fiscal Q4 adjusted earnings of $1.85 per share (officially $1.91 but that included a six-cent benefit). That beat Wall Street’s estimate by four cents per share. Earlier, BBBY said they saw Q4 earnings ranging between $1.72 and $1.86 per share.

    Quarterly net sales rose 2.4% to $3.4 billion. In constant currency, that’s an increase of 2.8%. Same-store sales rose by 1.7% which was 2.1% in constant currency.

    For the year, Bed Bath made $5.04 per share in adjusted earnings. That’s down a tad from the $5.07 per share they made last year.

    “We are pleased to have completed another successful year,” said Steven H. Temares, Chief Executive Officer and Member of the Board of Directors of Bed Bath & Beyond Inc. “Our fiscal 2015 financial performance reflects the benefit of the significant investments in our business, steady progress on our strategic initiatives, and the return of more than $1.1 billion to our shareholders through share repurchase.”

    Temares added, “We reported fiscal 2015 net earnings per diluted share of $5.10 including a $.06 net benefit for certain non-recurring items. Excluding this net benefit, we were at $5.04, which marks the fourth year in a row that we have been in this four-and-a-half to just over five dollar range since we entered a heavy investment phase several years ago, and we believe we can again achieve earnings per share at the high end of this range this year and, in the event our comp is higher than the 1% to 2% range we’re modeling, exceed it.”

    But here’s the big news. They’ve initiated a dividend. Just 12.5 cents per share to start.

    Directors has authorized today a quarterly dividend program, and declared an initial quarterly dividend of $.125 per share, to be paid on July 19, 2016 to shareholders of record as of June 17, 2016.

    The stock is up 4.5% after hours.

    Here are some quarterly financial stats going back a few years.

    Quarter Sales Gross Profit Operating Profit Net Profit EPS
    May-99 $356,633 $146,214 $28,015 $17,883 $0.06
    Aug-99 $451,715 $185,570 $53,580 $33,247 $0.12
    Nov-00 $480,145 $196,784 $50,607 $31,707 $0.11
    Feb-00 $569,012 $238,233 $77,138 $48,392 $0.17
    May-00 $459,163 $187,293 $36,339 $23,364 $0.08
    Aug-00 $589,381 $241,284 $70,009 $43,578 $0.15
    Nov-01 $602,004 $246,080 $64,592 $40,665 $0.14
    Feb-01 $746,107 $311,802 $101,898 $64,315 $0.22
    May-01 $575,833 $234,959 $45,602 $30,007 $0.10
    Aug-01 $713,636 $291,342 $84,672 $53,954 $0.18
    Nov-02 $759,438 $311,030 $83,749 $52,964 $0.18
    Feb-02 $879,055 $370,235 $132,077 $82,674 $0.28
    May-02 $776,798 $318,362 $72,701 $46,299 $0.15
    Aug-02 $903,044 $370,335 $119,687 $75,459 $0.25
    Nov-03 $936,030 $386,224 $119,228 $75,112 $0.25
    Feb-03 $1,049,292 $443,626 $168,441 $105,309 $0.35
    May-03 $893,868 $367,180 $90,450 $57,508 $0.19
    Aug-03 $1,111,445 $459,145 $155,867 $97,208 $0.32
    Nov-04 $1,174,740 $486,987 $161,459 $100,506 $0.33
    Feb-04 $1,297,928 $563,352 $231,567 $144,248 $0.47
    May-04 $1,100,917 $456,774 $128,707 $82,049 $0.27
    Aug-04 $1,273,960 $530,829 $189,108 $120,008 $0.39
    Nov-05 $1,305,155 $548,152 $190,978 $121,927 $0.40
    Feb-05 $1,467,646 $650,546 $283,621 $180,980 $0.59
    May-05 $1,244,421 $520,781 $150,884 $98,903 $0.33
    Aug-05 $1,431,182 $601,784 $217,877 $141,402 $0.47
    Nov-06 $1,448,680 $615,363 $205,493 $134,620 $0.45
    Feb-06 $1,685,279 $747,820 $304,917 $197,922 $0.67
    May-06 $1,395,963 $590,098 $148,750 $100,431 $0.35
    Aug-06 $1,607,239 $678,249 $219,622 $145,535 $0.51
    Nov-07 $1,619,240 $704,073 $211,134 $142,436 $0.50
    Feb-07 $1,994,987 $862,982 $309,895 $205,842 $0.72
    May-07 $1,553,293 $646,109 $154,391 $104,647 $0.38
    Aug-07 $1,767,716 $732,158 $211,037 $147,008 $0.55
    Nov-08 $1,794,747 $747,866 $203,152 $138,232 $0.52
    Feb-08 $1,933,186 $799,098 $259,442 $172,921 $0.66
    May-08 $1,648,491 $656,000 $118,819 $76,777 $0.30
    Aug-08 $1,853,892 $739,321 $187,421 $119,268 $0.46
    Nov-08 $1,782,683 $692,857 $136,374 $87,700 $0.34
    Feb-09 $1,923,274 $785,058 $231,282 $141,378 $0.55
    May-09 $1,694,340 $666,818 $142,304 $87,172 $0.34
    Aug-09 $1,914,909 $773,393 $222,031 $135,531 $0.52
    Nov-09 $1,975,465 $812,412 $245,611 $151,288 $0.58
    Feb-10 $2,244,079 $955,496 $370,741 $226,042 $0.86
    May-10 $1,923,051 $775,036 $225,394 $137,553 $0.52
    Aug-10 $2,136,730 $874,918 $296,902 $181,755 $0.70
    Nov-10 $2,193,755 $896,508 $305,110 $188,574 $0.74
    Feb-11 $2,504,967 $1,076,467 $461,052 $283,451 $1.12
    May-11 $2,109,951 $857,572 $288,948 $180,578 $0.72
    Aug-11 $2,314,064 $950,999 $371,636 $229,372 $0.93
    Nov-11 $2,343,561 $958,693 $357,020 $228,544 $0.95
    Feb-12 $2,732,314 $1,163,669 $550,765 $351,043 $1.48
    May-12 $2,218,292 $887,199 $313,398 $206,836 $0.89
    Aug-12 $2,593,015 $1,032,669 $365,137 $224,330 $0.98
    Nov-12 $2,701,801 $1,074,010 $361,649 $232,750 $1.03
    Feb-13 $3,401,477 $1,394,877 $598,034 $373,872 $1.68
    May-13 $2,612,140 $1,032,971 $323,101 $202,490 $0.93
    Aug-13 $2,823,672 $1,113,484 $389,766 $249,304 $1.16
    Nov-13 $2,864,837 $1,121,690 $374,647 $227,197 $1.12
    Feb-14 $3,203,314 $1,297,437 $527,073 $333,299 $1.60
    May-14 $2,656,698 $1,030,885 $300,701 $187,052 $0.93
    Aug-14 $2,944,905 $1,134,045 $368,741 $223,953 $1.17
    Nov-14 $2,942,980 $1,128,974 $352,683 $225,408 $1.23
    Feb-15 $3,336,593 $1,325,875 $532,168 $321,061 $1.80
    May-15 $2,738,495 $1,044,133 $273,269 $158,451 $0.93
    Aug-15 $2,995,469 $1,140,950 $350,194 $201,678 $1.21
    Nov-15 $2,952,031 $1,115,311 $292,858 $177,816 $1.09
    Feb-15 $3,417,892 $1,319,916 $498,582 $303,544 $1.91

  • The Fed’s Minutes
    , April 6th, 2016 at 2:22 pm

    The Federal Reserve just released the minutes from their meeting three weeks ago. The Fed passed on raising interest rates, but is considering it soon.

    Here’s Jon Hilsenrath at the WSJ:

    Federal Reserve officials were leaning against raising short-term interest rates at their April policy meeting when they last gathered to consider the outlook for monetary policy, minutes from the Fed’s March meeting show.

    They expected headwinds to the economy to subside only slowly and didn’t want to appear to be in a rush to push U.S. interest rates higher.

    “A number of participants judged that the headwinds restraining growth and holding down the neutral rate of interest were likely to subside only slowly,” the Fed said in the minutes. “In light of this expectation and their assessment of the risks to the economic outlook, several expressed the view that a cautious approach to raising rates would be prudent or noted their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate.”

    It wasn’t a unanimous view. Some officials said they might want to raise rates as soon as April “if the incoming economic data remained consistent with their expectations for moderate growth in output, further strengthening of the labor market, and inflation rising to 2% over the medium term.”

    Here are the minutes.

    The Fed minutes are an exercise in indefinite pronouns; some said this, many said that, a few believe x. In today’s Fed minutes, I counted the word “somewhat” 14 times.

    The Fed meets again in three weeks. The futures market thinks there’s a 5% chance of a rate hike.

  • Morning News: April 6, 2016
    , April 6th, 2016 at 7:03 am

    IMF Warns of Rising ‘Systemic Risk’ From Insurers

    Dollars and Shares Lick Wounds Ahead of Fed Minutes

    April Could Be a Crucial Month for the Yen and Japanese Stocks

    How Stricter Rules for Brokers Will Affect Retirement Savers

    The Panama Papers’ Sprawling Web of Corruption

    Pfizer Walks Away From Allergan Deal

    Nokia to Cut as Much as 14% of Workforce After Alcatel Deal

    Walmart Is the Latest Retailer to Make a Cage-Free Egg Vow

    Elon Musk Tears A Page From Michael Dell’s Playbook

    Glencore Agrees to Sell Minority Stake in Agriculture Business

    EBay Will Sell Its Own Boxes to Kick Up Its Brand Awareness

    Peugeot Citroën Plots Return to the U.S.

    China’s Anbang Resumes Overseas Push with Deal to buy Allianz’s South Korean Business

    Jeff Carter: Sales is Everything

    Howard Lindzon: It’s the Returns Stupid…And Don’t Steal

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  • A Stock Picker’s Market
    , April 5th, 2016 at 10:20 am

    Some interesting numbers from Bloomberg:

    An index maintained by Goldman Sachs Group Inc. of the 50 stocks in which mutual fund managers are the least invested has gained 5.3 percent this year, compared with a 3.1 percent decline in a gauge tracking the most popular ones. That’s near the biggest gap in three years, according to data compiled by Bloomberg.

    Research from Bank of America Corp. research shows a starker picture: in the first quarter, just 19 percent of mutual funds beat the S&P 500, the fewest since at least 1998, strategists at the bank wrote in a note Monday. That happened even as one measure of variation among stock returns has increased this year.

    A mathematical indicator known as dispersion, which measures how far individual equities swing relative to the market, has ticked up. According to data compiled by Bloomberg, the typical year-to-date stock return in the S&P 500 is 12 percentage points above or below the average, the most since 2012. In March, a measure of implied correlation among stocks plunged to the lowest level in a year.

    Still, active managers are coming up short as their favorite trades lag behind. One strategy, chasing gains in the market’s biggest winners, backfired on mutual fund and hedge fund managers alike as the stocks in the S&P 500 that did the worst in 2015 added 8.2 percent in the first quarter of 2016, according to Bespoke Investment Group LLC.

    (…)

    Managers erred in avoiding utility and consumer staples companies, according to Goldman’s index data, which pulls from 489 mutual funds with $1.6 trillion under management. There wasn’t a single utility among managers’ top 50 overweight positions in the first quarter, when the group posted the quarter’s second-best return. At the same time, financials were the second-most represented industry. That group is down 5.3 percent in 2016, the worst return in the S&P 500.

    The three most-favored stocks by managers invested in big companies were Alphabet Inc., Visa Inc. and JPMorgan Chase & Co, all of which have trailed the S&P 500.

  • The Surging Yen
    , April 5th, 2016 at 10:14 am

    After being weak for a long time, the Japanese yen is rallying. It just hit a 17-month high.

    big04052016

    The yen is nearing 110. Earlier this year, AFLAC (AFL) said “Our objective is to produce stable operating earnings per diluted share of $6.17 to $6.41, assuming the average exchange rate in 2015 of 120.99.”

    Very roughly speaking, for every one point the exchange rate goes below 121, that adds three cents per share to AFL’s annual EPS.

  • Morning News: April 5, 2016
    , April 5th, 2016 at 7:05 am

    IMF’s Lagarde Says Risks to Weak Global Recovery Are Increasing

    Panama Papers Probes Opened, China Limits Access to News on Leaks

    The President of Transparency International Chile Resigns After Being Named in the Panama Papers

    With Repo Cut and MCLR, Money is Significantly Cheap Now: RBI Governor Raghuram Rajan

    Don’t Cry for Argentina’s Investors

    Gulf Spill Settlement Could Save BP Billions In Tax Breaks

    New U.S. Inversion Rules Threaten Pfizer-Allergan Deal

    Disney’s Not Alone in Successing Woes

    Peugeot Tumbles as Expansion Spending Weighs on Profit Margins

    Amazon Will Announce a New Kindle Next Week

    Amazon Mulls Fintech Acquisitions as Valuations Fall

    ValueAct Suit Reveals U.S.’s Dim View of Halliburton Deal

    Siemens Said Among Parties Interested in Emerson Power Unit

    Joshua Brown: Simple Vs. Complex

    Roger Nusbaum: First Quarter Ends With a Meh!

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  • How Containerization Changed the World
    , April 4th, 2016 at 10:28 pm

    Here’s a fascinating video on containerization. It may be the most influential invention that you’ve never heard of.

  • Two Evening Reads
    , April 4th, 2016 at 8:16 pm

    I wanted to highlight two exceptional posts I read today. The first is from Josh Brown on the importance of simplicity in investing. Josh nails it.

    Here’s a sample:

    It should not come as any surprise that a sophisticated investment thesis will appeal to funds whose reputations are steeped in the aura of being able to solve market puzzles before the crowd. Sometimes it works beautifully but sometimes the consequences are disastrous. I’ve come to learn that, for most investors, the entire enterprise is completely unnecessary. Year after year, decade after decade, portfolios with simple building blocks and transparent mechanics get the job done. A bet that this will not be the case in the future because of (name your reason) is a low probability one.

    Check out the whole thing.

    I’ve noticed how often people in finance will make what they do needlessly complex. Even with wording. A simple phrase like “more money” becomes “net capital inflows.” A lower share price becomes “consolidation.” This serves a purpose of scaring away novices.

    Investing is routinely made out to be far more complicated than it is. Not only is simple investing easier to understand, but it’s often better as well. I’ve talked about the great performance of JM Smucker (SJM). They make jelly and then sell said jelly for more than it cost them to make it. Simple, easy to understand and insanely profitable.

    If something sounds highly complex, there’s a good chance that someone is hiding something.

    The other post comes from Cullen Roche who takes aim at a talking point I don’t like. I often hear people dismiss earnings buybacks as somehow being illegitimate. People speak of it as distorting a company’s results. That’s simply not true.

    Here’s Cullen:

    Corporations are buying back shares because profits are very high and they have determined this to be an efficient way to return capital to investors during a time when they have more cash than they know what to do with. So, every time you read a headline about buybacks “propping up the stock market” you can rewrite that as “Corporate Profits are Propping up the Stock Market”. Of course, that makes for a far less sexy headline, but it’s a much more accurate description of the current state of the stock market.

  • Coke and McDonalds
    , April 4th, 2016 at 4:07 pm

    Time for Inflation Protection?

  • Morning News: April 4, 2016
    , April 4th, 2016 at 6:58 am

    BOJ Negative Rates Risk Destroying Loan Market as Freeze Deepens

    China’s Companies Poised to Take Leap in Developing a Driverless Car

    Insider’s Account of How Graft Fed Brazil’s Political Crisis

    Greek Bonds Drop as IMF Says Deal on Additional Loans Is Far Off

    Euro-Area Unemployment Declines to Lowest Since 2011

    What to Know About the ‘Panama Papers’ Leak

    Iceland PM Faces No Confidence Vote Amid Panama Report Leak

    Collapse of Orange-Bouygues Deal Adds Poison to Bad Blood

    Blackstone Is Buying Indian IT Outsourcer MphasiS From HP Enterprise

    A Renewable Energy Boom

    Amazon Plans Big Push to Expand Prime Now Fast Delivery

    After a Disastrous Year, These Bond Traders Become World-Beaters

    Apple’s Push to Flood India With Used iPhones Ignites Backlash

    Jeff Miller: Weighing the Week Ahead: Is the Fed Too Optimistic?

    Cullen Roche: My “Wisdom” on the Being an Optimist About the Future

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