Archive for April, 2019

• Morning News: April 24, 2019
  Eddy Elfenbein, April 24th, 2019 at 7:02 am

  Europe Not Feeling Much Pain From Trump Tariffs, Central Bank Says

  SoftBank Bets $1 Billion on Battered Payments Firm Wirecard

  Blockbuster Battle Between Steven Spielberg and Netflix Fizzles

  Behind Airbnb’s Bet on Show Business to Hook Travelers

  Adding to Ghosn Woes, Nissan Slashes Profit Outlook to Near-Decade Low

  Samsung Plans $116 Billion Investment in Non-Memory Chips to Challenge TSMC, Qualcomm

  Want to Make Millions and Pay No Taxes? Try Real Estate

  John McAfee Vows to Unmask Bitcoin’s Satoshi Nakamoto

  Made in China, Exported to the World: The Surveillance State

  Verizon Beats on Earnings as Wireless Sales Hit $22.7 Billion

  Mario Batali’s Former Empire Is Thriving—as Long as He Stays Away

  Walgreens Raises Tobacco-Buying Age to 21, Strengthening a Consensus

  Nick Maggiulli: The Problem With Most Financial Advice

  Lawrence Hamtil: The Low Volatility – Momentum Barbell: S&P vs MSCI Indices

  Cullen Roche: Was the GFC a Once-in-a-Lifetime Event?

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• Earnings from Sherwin-Williams and Stryker
  Eddy Elfenbein, April 23rd, 2019 at 6:13 pm

  We had two earnings reports today. Before the opening bell, Sherwin-Williams (SHW) reported Q1 earnings of $3.60 per share. That was below estimates of $3.69 per share. Sales rose 1.9% to $4.04 billion. Importantly, the company didn’t alter its full-year outlook of $20.40 to $21.40, which excludes acquisition costs. That compares with $18.53 per share a year ago. For Q2, Sherwin expects sales to rise by 2% to 5%. For the full year, they expect sales to rise by 4% to 7%.

  Commenting on the first quarter, John G. Morikis, Chairman and Chief Executive Officer, said, “We made good progress on our pricing initiatives across all segments during the quarter and effectively managed SG&A spending, but volumes fell short of expectations due to a slower start to the architectural painting season in North America and continued challenging conditions in many end markets outside North America. Despite the volume shortfall and higher year-over-year raw material costs, consolidated Company adjusted gross margin, which excludes acquisition-related costs, improved sequentially and was flat year-over-year. We expect the positive trend in gross margin and operating expense control to continue as the year progresses, and volume growth should also improve over the balance of the year, particularly in the back half.

  “Looking at our performance by segment, in The Americas Group, despite a strong backlog and project pipeline reported by many of our professional customers, volume growth in the quarter was slower than expected. We continued to invest by opening 15 net new store locations in The Americas Group during the quarter. In our Consumer Brands Group, most of the softness in demand in the quarter was in markets outside North America. Consumer Brands Group adjusted segment operating margin in the first quarter expanded sequentially and year-over-year, and we are very well positioned across all North American retail channels heading into the important spring selling season. Performance Coatings Group achieved modest sales growth and increased adjusted segment operating margin in the quarter against year-over-year raw material pressure.

  Shares of SHW looked like they were going to drop on Tuesday, but the shares closed higher by 1.9% on the day.

  Stryker (SYK) reported Q1 earnings of $1.88 per share, which beat the Street by four cents per share. That’s an increase of 11.9% over last year. Net sales rose 8.5% to $3.5 billion, and organic net sales increased by 7.3%. For the quarter, Stryker’s adjusted operating margin was 25.1%.

  Based on our first quarter performance we now expect 2019 organic net sales growth to be in the range of 6.8% to 7.5% and expect adjusted net earnings per diluted share to be in the range of $8.05 to $8.20.

  For the second quarter we expect adjusted net earnings per diluted share to be in the range of $1.90 to $1.95.

  If foreign currency exchange rates hold near current levels, we expect net sales in the second quarter will be negatively impacted by approximately 1.5% and full year will be negatively impacted by approximately 1.0%, and net earnings per diluted share will be negatively impacted by $0.01 to $0.03 in the second quarter and negatively impacted by $0.05 to $0.10 in the full year.

  Stryker raised the low end of 2019 guidance by five cents per share. Wall Street had been expecting $1.96 per share for Q2, and $8.13 per share for the entire year.

• Morning News: April 23, 2019
  Eddy Elfenbein, April 23rd, 2019 at 7:05 am

  A Vicious, Untreatable Killer Leaves China Guessing

  Oil Climbs Toward $75 in London After Trump Tightens Screws on Iran

  Fed Seems Resigned to Bubble Risk in Effort to Extend Expansion

  After the Bust, Are Bitcoins More Like Tulip Mania or the Internet?

  China’s Starbucks Challenger Files for U.S. IPO

  Elon Musk Predicts Tesla Driverless Taxi Fleet Next Year

  Lyft Underwriters Hail Promising Future as Uber Looms

  This Estonian Start-Up Has Become a Thorn in Uber’s Side

  China’s Bytedance Says India TikTok Ban Causing $500,000 Daily Loss, Risks Jobs

  Beyond Meat Details Plans for Initial Public Offering

  Cell Tower REITs: 5G’s True Killer App

  Samsung Retrieving All Galaxy Fold Samples After Defect Reports

  Ben Carlson: A Bad Year in the Bond Market is a Bad Day in the Stock Market

  Joshua Brown: The Crucible

  Howard Lindzon: India and The Internet…

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• Morning News: April 22, 2019
  Eddy Elfenbein, April 22nd, 2019 at 7:04 am

  U.S. Ending Iran Waivers Could Affect Oil Markets and Beyond

  Free Speech Puts U.S. on ‘a Collision Course’ With Global Limits on Big Tech

  Financial Market ‘Pause Party’ Makes Fed Rate Cut Less Likely

  Trump’s Washing Machine Tariffs Stung Consumers While Lifting Corporate Profits

  The Fed Is in Worse Shape Than the Economy as Post-Crisis Expansion Reaches a Decade

  Uber, Lyft IPOs May Lead to Higher Fares

  Huawei First-Quarter Revenue Grows 39% to $27 Billion Amid Heightened U.S. Pressure

  Qualcomm: Why The Success Story Just Begins

  Clorox and Unilever Want the Booming Bacteria Business to Thrive

  Tesla Investigates Video of Parked Model S Exploding in Shanghai

  America’s Elderly Are Twice as Likely to Work Now Than in 1985

  Japanese Prosecutors Bring New Charges Against Carlos Ghosn

  Joshua Brown: Investing in the Real World – Not a Backtest!

  Roger Nusbaum: A New Tool For Considering Life Expectancy In Retirement Planning? & Healthspan & Financialspan

  Michael Batnick: How to Stay Out of Debt & Why Didn’t You…

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• CWS Market Review – April 19, 2019
  Eddy Elfenbein, April 19th, 2019 at 7:08 am

  “Selling your winners and holding your losers is like cutting the flowers and watering the weeds.” – Peter Lynch

  First-quarter earnings season is here, and we’re getting a good idea of what the first three months of the year were like. As with any earnings season, some stocks are soaring (like Qualcomm) and others falling on hard times (Bank of New York).

  We’ve already had the first of our stock reports. Some companies have done well. Others, not so well. In this week’s issue of CWS Market Review, I’ll run down all of our Buy List earnings reports.

  Next week will be even busier as seven of our Buy List stocks are due to report. On top of that, we’ll also get our first look at the Q1 GDP report. Before I get to this week’s earnings news, let’s look at the big jump we got from Disney.

  Disney Soars to an All-Time High

  I have to apologize for only briefly discussing Disney (DIS) last week. I don’t believe I gave their investor presentation the coverage it was due. Please forgive me. I hope the 11.5% price surge helped ease some of the pain.

  Disney had a great rollout of its streaming service. I think the news on Disney has been so negative for so long that anything positive can help propel the shares. This week, the stock touched a new all-time high.

  

  The company is serious about taking Netflix on, and they have an impressive service in Disney+. It’s also very competitive price-wise: $7 per month or $70 per year. Not only did Disney’s stock surge, but it held on to its gains and even pushed a little higher.

  I supposed investor sentiment has been negative on Disney for years since it’s hard for some people to look positively on Disney. Even Disney critics have been impressed with Iger’s strategy. Content really is king, and it will be hard to compete against the Mouse House. This week, I’m raising my Buy Below on Disney to $135 per share. The next earnings report is due on May 8.

  This Week’s Buy List Earnings Reports

  Here’s a look at our Q1 Earnings Calendar so far.

  Company	Ticker	Date	Estimate	Result
  Eagle Bancorp	EGBN	17-Apr	$1.12	$1.11
  Signature Bank	SBNY	17-Apr	$2.77	$2.65
  Torchmark	TMK	17-Apr	$1.59	$1.64
  Check Point Software	CHKP	18-Apr	$1.31	$1.32
  Danaher	DHR	18-Apr	$1.01	$1.07
  Sherwin-Williams	SHW	23-Apr	$3.69
  Stryker	SYK	23-Apr	$1.84
  Moody’s	MCO	24-Apr	$1.93
  AFLAC	AFL	25-Apr	$1.06
  Cerner	CERN	25-Apr	$0.61
  Hershey	HSY	25-Apr	$1.46
  Raytheon	RTN	25-Apr	$2.47
  Fiserv	FISV	30-Apr	$0.82
  Church & Dwight	CHD	2-May	$0.66
  Cognizant Technology Solutions	CTSH	2-May	$1.04
  Continental Building Products	CBPX	2-May	$0.35
  Intercontinental Exchange	ICE	2-May	$0.90
  Disney	DIS	8-May	$1.55
  Becton, Dickinson	BDX	9-May	$2.58
  Broadridge Financial	BR	TBA	$1.50

  Now let’s dive in. Signature Bank (SBNY) kicked off earnings season for us on Wednesday morning when the New York-based bank reported Q1 earnings of $2.65 per share. That was 12 cents below Wall Street’s consensus. Traders were not pleased. The shares fell 5.9% during Wednesday’s trading.

  For the quarter, net interest margin was 2.75%. That’s down 11 basis points from a year ago. Total assets now stand at $48.55 billion. That’s an increase of 9.3% over last year’s Q1. Last quarter, the bank was hurt by a $9.4 million decline in pre-payment penalty income. Overall, this was a weak quarter for SBNY.

  During the quarter, Signature bought back 173,193 shares for $22.9 million. While I’m not happy with Signature’s results last quarter, I’m still willing to stick by them. The stock slid about 5% on Wednesday, but we’re still doing well with SBNY this year (+22.9%). Signature Bank remains a buy up to $140 per share.

  After the close on Wednesday, Eagle Bancorp (EGBN) reported adjusted earnings of $1.11 per share. That was one penny below estimates. That’s up from $1.04 per share one year ago.

  Eagle is currently going through a transition after the former CEO, Ron Paul, announced his retirement. Susan G. Riel is the interim President and CEO. About the Q1 results, she noted, “The Company’s assets ended the quarter at $8.39 billion, representing 9% growth over the first quarter of 2018. First-quarter 2019 earnings resulted in a return on average assets of 1.62% (1.85% excluding nonrecurring costs as defined above) and a return-on-average tangible common equity of 13.38% (15.26% excluding nonrecurring costs as defined above).”

  The shares pulled back some in Thursday’s trading, but nothing too severe. Eagle is a buy up to $55 per share.

  I never would have guessed that Torchmark (TMK) would be an earnings standout, but here we are. Also after the bell on Wednesday, the life-insurance company reported Q1 earnings of $1.65 per share.

  The key figure is net operating income which came in at $1.64 per diluted common share. That beat estimates by five cents per share compared with $1.47 per diluted common share from a year ago. The details look pretty good. Net income as an ROE was 12.9%. Net operating income as an ROE, excluding net unrealized gains on fixed maturities, was 14.7%.

  Last quarter, Torchmark bought back 1.1 million shares. This quiet stock is now a 19% winner for us this year. Buy up to $91 per share.

  Check Point Software (CHKP) had a decent earnings report, but poor guidance caused traders to knock 7.4% off the share price on Thursday. For Q1, the cyber-security firm earned $1.32 per share. That beat estimates by one penny per share. CEO Gil Shwed said, “We had good results in the first quarter with 13 percent growth in our security subscriptions including advanced solutions for Cloud and Mobile as well as SandBlast Zero day threat prevention.”

  For the current quarter, Check Point said it sees revenues coming in between $474 million and $500 million. The consensus on the Street was for $486 million. But for earnings, CHKP sees EPS ranging between $1.32 and $1.40. Wall Street had been expecting $1.38 per share. I know the price drop is painful, but don’t be rattled. This is a good company. Buy up to $130 per share.

  On Thursday, Danaher (DHR) reported Q1 earnings of $1.07 per share. That beat the street by six cents per share. Previously, the company had given us a range of $1 to $1.03 per share. This is an important time for Danaher. The company recently announced that it’s buying GE’s biopharma unit for $21.4 billion. The company also plans to spin off its dental business later this year.

  

  For Q2, Danaher expects earnings to range between $1.13 and $1.16 per share. Danaher lowered its full-year guidance from $4.75 – $4.85 per share to $4.72 – $4.80 per share. There’s nothing wrong. This reflects the share dilution to buy GE Biopharma. The deal should close sometime in Q4.

  Danaher’s CEO said, “During the first quarter, we achieved 5.5% core-revenue growth and believe we expanded our market-leading positions across a number of our businesses. Combined with high-single-digit adjusted-earnings-per -growth and good cash-flow generation, our performance is a testament to our team’s focused execution and the power of the Danaher Business System.”

  The shares rallied 1.5% after the earnings report. Danaher is a buy up to $136 per share.

  Next Week’s Earnings Reports

  We have several earnings reports coming our way next week. On Tuesday, Sherwin-Williams and Stryker are due to report.

  A few months ago, Sherwin-Williams (SHW) warned us that they weren’t going to have a good Q4, and they were right. The good news is that sales improved in December, but not by enough to make up the difference.

  For 2019, Sherwin sees net sales rising 4% to 7% and earnings coming in between $20.40 and $21.40 per share. That’s a pretty good forecast, and it tells me the issues they had in Q4 may be over. Wall Street’s consensus for Q1 is for $3.69 per share.

  For Q1, Stryker (SYK) sees earnings coming in between $1.80 and $1.85 per share. I think there’s a good chance for an earnings beat. Last earnings season, the orthopedics company beat earnings by three cents per share, and the stock jumped 11%. The company noted that they had the best organic growth in a decade. Stryker’s operating margins rose to 27.5%. That’s quite good. For the full year, they see earnings between $8 and $8.20 per share.

  Moody’s (MCO) is our #1 performer this year, with a 35% gain. The credit-ratings agency reports earnings on Wednesday. The Q4 report wasn’t especially good, but it wrapped up a solid 2018 for Moody’s.

  For 2019, Moody’s sees earnings of $7.85 to $8.10 per share. Wall Street had been expecting $7.94 per share. In February, the company bumped up its dividend by 14% to 50 cents per share. The company also announced that a $500 million accelerated share-repurchase program is expected to be completed during Q2. The consensus for Q1 is for $1.93 per share.

  

  We have four Buy List stocks due to report next Thursday.

  The last AFLAC (AFL) earnings report was quite good. The duck stock beat expectations and raised its dividend. That was its 36th consecutive annual dividend hike.

  For 2019, AFLAC is looking for earnings of $4.10 to $4.30 per share. That assumes the yen trades at ¥110.39 to the dollar. AFLAC didn’t provide Q1 guidance, but Wall Street expects $1.06 per share.

  I’m still enjoying the nice 10% pop we got from Cerner (CERN) last week. The company announced that it had reached an agreement with Starboard Value. As part of the agreement, Cerner will start paying a dividend. The company also increased its buyback authorization by $1.5 billion.

  For Q1, Cerner expects earnings between 60 and 62 cents per share on revenue of $1.365 billion to $1.415 billion. For all of 2019, the company is looking for earnings between $2.57 and $2.67 per share on revenue of $5.65 billion to $5.85 billion.

  Hershey’s (HSY) last earnings report wasn’t so sweet. Comparable-sales growth was flat. In North America, comparable sales fell 0.3%. Earnings came in at $1.26 per share, which was a penny below estimates. For the moment, the problem is pricing pressure. Quarterly sales rose 2.5% to $1.99 billion.

  For 2019, Hershey sees earnings ranging between $5.63 and $5.74 per share. The consensus for Q1 is $1.46 per share.

  Also on Thursday will be Raytheon (RTN). The CEO noted that Raytheon ended last year with record bookings and backlog which positions them “well for 2019 and beyond.”

  For 2019, Raytheon expects EPS of $11.40 to $11.60 on sales of $28.6 to $29.1 billion. That’s a little light; I had been expecting $11.50 to $12 per share. Still, business is going well. For Q1, the consensus on Wall Street is for earnings of $2.47 per share.

  That’s all for now. The news next week will again be dominated by earnings. Also, there will be some economic news. On Monday, the existing-home sales report comes out. That’s followed on Tuesday by the new-home sales report. Thursday is jobless claims and durable goods. Then on Friday, we get the first look at Q1 GDP. I’m expecting a number close to 2%. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• Morning News: April 19, 2019
  Eddy Elfenbein, April 19th, 2019 at 7:05 am

  Some Better-Than-Expected China Data Can’t Save the World Economy

  Socialist! Capitalist! Economic Systems as Weapons in a War of Words

  D.E. Shaw Is to Buck Industry Trend With 3-and-30 Fees

  Amazon Gives Up on Chinese Domestic Shopping Business

  Amazon Launches Free Music Streaming to Juice Alexa-Device Sales

  Merger Talks of Deutsche Bank and Commerzbank Roil Emotions

  I.P.O. Day for Pinterest and Zoom Ends With Shares Sharply Higher

  National Enquirer to Be Sold to James Cohen, Heir to Hudson News Founder

  U.S. Refiners Planning Major Plant Overhauls in Second Quarter

  What This Week’s Apple-Qualcomm-Intel Dance Means for the Future of 5G

  Nissan Slams Output Cut Report as ‘Completely Incorrect’

  Ben Carlson: Recessions vs. Bear Markets & Money Made By Chance

  Jeff Carter: Some Tips on Angel Investing

  Jeff Miller: What Is Your Trading Timeframe Now?

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• Morning News: April 18, 2019
  Eddy Elfenbein, April 18th, 2019 at 6:27 am

  Stocks Erase Week’s Gains After Weak Manufacturing Surveys

  Business Quietly Returns to Saudi Arabia After Khashoggi’s Murder

  Treasury Issues Rules on Tax Breaks for Opportunity Zones

  U.S. Antitrust Scrutiny Tests T-Mobile’s $26 Billion Bet on Sprint

  Pinterest Prices I.P.O. at $19 a Share, for a $12.7 Billion Valuation

  Lyft Investors Sue Over Slump, Claiming IPO Was Overhyped

  Amazon, Facing Entrenched Rivals, Says to Shut China Online Store

  First Japan-Built Airliner in 50 Years Takes on Boeing and Airbus

  The Cult Japanese Retailer Making Billions Breaking All the Rules

  Powerful New iPhone Expected After Apple’s Embarrassing Surrender

  JPMorgan Shuffles Roles at Top

  The Last Place for Traders to Earn Real Money

  Cullen Roche: Hard Truths for the Inflation Truthers

  Jeff Miller: What Is Your Trading Timeframe Now?

  Michael Batnick” Money Made By Chance

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• Morning News: April 17, 2019
  Eddy Elfenbein, April 17th, 2019 at 7:09 am

  German Economy Heads for Worst Growth in Six Years

  China’s Economy Stabilizes After Beijing Opens the Bank Vaults

  China’s First-Quarter Growth Unexpectedly Steadies, But Too Early to Call Clear Recovery

  China Is Considering Stimulus Measures to Bolster Consumption

  U.S. Restrictions on Qatar Airways Could Lead to Unraveling of Aviation Agreements

  Powell Adopts an Inflation Stance Yellen Shunned

  Truck Drivers See Orders, Miles Fall in Latest U.S. Slowdown Signal

  With AT&T’s Exit, Disney Takes Firmer Control of Hulu

  Apple and Qualcomm Settle All Disputes Worldwide

  The Most Measured Person in Tech Is Running the Most Chaotic Place on the Internet

  IBM’s Mixed Q1 on Slowing Cloud Growth

  Martha Stewart Brand Finds A Buyer, But Even At Cheaper Price, There’s No Guarantee Deal Pays Off

  Nick Maggiulli: The Will to Survive

  Howard Lindzon: Momentum Monday – If The Fed….

  Ben Carlson: The Stephen A. Smiths of Personal Finance

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• Morning News: April 16, 2019
  Eddy Elfenbein, April 16th, 2019 at 7:03 am

  Stocks March on as European Volatility Vanishes

  U.S. Risks Roiling Oil Markets in Trying to Tighten Sanctions

  Chevron Says Dutch Supreme Court Rejects Ecuador’s $9.5 Billion Claim

  France and Belgium Refuse Support for New Trade Talks With the U.S.

  Hulu Spends $1.43 Billion to Buy Back AT&T Stake, Values Streaming Service at $15 Billion

  Netflix Results Face New Pressures With Higher Costs, New Rivals

  The World’s Biggest Electric Vehicle Company Looks Nothing Like Tesla

  After 60,000% Rally, America’s Top Stock Has Suddenly Gone Cold

  Champion Accidentally Hit the Fashion Jackpot

  BlackRock’s Larry Fink Says Market Has Risk of ‘Melt Up’ Not Melt Down

  Goldman Offers Fresh Details on Overhaul Progress as Revenue Slides

  Deutsche Bank Is Subpoenaed for Trump Records by House Democrats

  Joshua Brown: Systems

  Lawrence Hamtil: Stocks Are Still The Better Long-Term Bet

  Michael Batnick: The Acquirer’s Podcast

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• Morning News: April 15, 2019
  Eddy Elfenbein, April 15th, 2019 at 7:10 am

  U.S. Waters Down Demand China Ax Subsidies in Push for Trade Deal

  In Search for Leverage, Trump May Be Undercutting His Own Trade Deals

  Worried a Recession is Coming, U.S. Online Lenders Reduce Risk

  Trump’s Fed Attacks Cast a Chill at Global Finance Gathering

  As Fed Chief, Jerome Powell Navigates an Angry President and Turbulent Markets

  Shocked by Your Tax Refund? Next Year Could Be Worse Unless You Act Now

  In Quest for Electric Supercars, Engineers Head to Start-Ups

  Toyota Sells Electric Vehicle Technology to Chinese Startup Singulato

  ‘Experiential’ Tesla and iPhone Stores Aren’t Really Helping Struggling Malls

  Jack Ma Again Endorses Extreme Overtime as Furor Rages On

  Mass Production of iPhones to Start in India

  Publicis Surges as $4.4 Billion Epsilon Deal Deepens Data Push

  The Smart Gun Doesn’t Exist for the Dumbest Reasons

  Jeff Miller: Weighing the Week Ahead: What Will Q1 Earnings Reveal About Economic Strength?

  Ben Carlson: Prudent Risk Management or Market Timing in Disguise? & Why We’ll Never All Be Happy Again

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