Archive for November, 2019

• Fiserv Earned $1.02 per Share
  Eddy Elfenbein, November 6th, 2019 at 4:39 pm

  Fiserv (FISV) earned $1.02 per share for Q3.

  “We delivered strong financial and sales results in the third quarter while focusing on providing differentiated value for clients across the new Fiserv,” said Jeffery Yabuki, Chairman and Chief Executive Officer of Fiserv. “Our primary market focus is to enhance the manner in which consumers and business engage in banking, commerce and financial services to produce meaningful value for all of our stakeholders.”

  Adjusted revenue increased 5% to $3.62 billion in the third quarter and 4% to $10.73 billion in the first nine months of 2019 compared to the prior year periods.

  Internal revenue growth, on a constant currency basis, was 6% in the third quarter, with 7% growth in the First Data segment, 6% growth in the Payments segment and 4% growth in the Financial segment.

  Internal revenue growth, on a constant currency basis, was 6% in the first nine months of 2019, with 7% growth in the First Data segment, 5% growth in the Payments segment and 4% growth in the Financial segment.

  Adjusted earnings per share increased 17% to $1.02 in the third quarter and 16% to $2.87 in the first nine months of 2019 compared to the prior year periods.

  Adjusted operating margin increased 130 basis points to 29.8% in the third quarter and increased 100 basis points to 29.1% in the first nine months of 2019 compared to the prior year periods.

  Free cash flow increased 13% to $2.3 billion in the first nine months of 2019 compared to $2 billion in the prior year period.

  Actual sales results were up 15% in the quarter and up 8% in the first nine months of 2019 compared to the prior year periods.

  The company reinstated its share repurchase program late in the third quarter and repurchased 341 thousand shares in the quarter, and 2 million shares in the first nine months of 2019, for $35 million and $156 million, respectively.
  Outlook for 2019

  Fiserv now expects internal revenue growth of 6% for the full year and expects adjusted earnings per share in a range of $3.98 to $4.02, or growth of 16% to 17% for the period.

  “We believe our financial performance along with early synergy benefits should translate to strong full year results and set a foundation for an even better 2020,” said Yabuki.

• The Market Expects the Fed to Pause
  Eddy Elfenbein, November 6th, 2019 at 2:40 pm

  Fed Chairman Jay Powell said that these recent rate cuts are merely “mid-cycle” adjustments. It looks like the market believes him. The Fed may leave interest rates alone for a few months.

  According the latest futures prices, the odds of a rate cut next month are just 8%. In fact, the futures market doesn’t see the Fed changing interest rates until July 2020. That’s at the earliest.

  Also, the two-year yield has stabilized (kind of) around 1.5% to 1.7%. The two-year can sometimes be a good advanced “tell” of what the Fed will do.

  The yield curve is now almost perfectly flat until three years out. After that, it slopes upward.

• Broadridge Earns 68 Cents per Share
  Eddy Elfenbein, November 6th, 2019 at 7:56 am

  Broadridge Financial Solutions (BR) today reported financial results for the first quarter ended September 30, 2019 of its fiscal year 2020. Results compared with the same period last year were as follows:

  

  “Broadridge reported solid first quarter results and is well-positioned to deliver a strong fiscal year 2020,” said Tim Gokey, Broadridge’s Chief Executive Officer. “Recurring revenues rose 8% and we generated record first quarter Closed sales. We also continued to make targeted M&A investments in each of our core franchises, further positioning us for long-term growth. As expected, event-driven revenues returned to normalized levels from last year’s record first quarter.

  “We are reaffirming our fiscal year 2020 guidance, including recurring fee revenue growth of 8-10% and Adjusted EPS growth of 8-12%,” Mr. Gokey added. “Broadridge is well on-track to achieve our three-year objectives laid out at the 2017 Investor Day, including the high end of our Adjusted EPS objectives.”

  

• Morning News: November 6, 2019
  Eddy Elfenbein, November 6th, 2019 at 7:06 am

  France Is Europe’s New Economic Growth Engine

  Ray Dalio Says the ‘World Has Gone Mad’ With So Much Free Money

  U.S. Recession Chances Inch Down to 26% Within Next 12 Months

  Investors Left Exposed as Trump’s SEC Gives America Inc a Helping Hand

  How California Became America’s Housing Market Nightmare

  How Is a Wealth Tax Like a Cigarette Tax?

  SoftBank Takes a $4.6 Billion Hit From WeWork. Its C.E.O. Remains Defiant.

  ‘Game-Changer’ Warrant Let Detective Search Genetic Database

  Tesla Plans After-Sales Network Expansion in China as Shanghai Factory Spins Up

  What A Potentially Private Walgreens Would Mean for Markets

  Krispy Kreme Ordered a Student to Stop Reselling Its Doughnuts. His Response Is a Master Class in Emotional Intelligence

  Nick Maggiulli: Realistic Investment Results

  Ben Carlson: The Hierarchy of Stock Market Losses

  Michael Batnick: “Should We Be Selling Short?”

  Roger Nusbaum: Gen-X Has Less Than 10% Of What It Needs For Retirement

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• Becton, Dickinson Beats by a Penny per Share
  Eddy Elfenbein, November 5th, 2019 at 11:50 am

  This morning, Becton, Dickinson (BDX) reported earnings of $3.31 per share for its fiscal Q4. That beat by a penny per share. Becton now sees revenue growth for next year of 4% to 4.5%, which is 5% to 5.5% on a currency neutral basis. Becton sees 2020 EPS ranging between $12.50 and $12.65. That’s below Wall Street’s forecast of $12.94.

  “We are very proud of our accomplishments in fiscal year 2019. Our performance this year demonstrates our ability to overcome multiple headwinds and deliver on our financial and operational goals,” said Vincent A. Forlenza, chairman and CEO. “We enter fiscal 2020 with continued optimism. There are significant opportunities ahead to leverage the capabilities we’ve built to better serve our customers and their patients around the world. It has been a privilege to lead BD and our global team of talented associates. I’m confident that under Tom Polen’s leadership the company will further accelerate its impact as BD enters its next phase of value creation.”

  For the year, Becton made $11.68 per share. The shares are down about 3% in today’s trading.

• Morning News: November 5, 2019
  Eddy Elfenbein, November 5th, 2019 at 7:18 am

  Xi Zeroes In on Trump Trade Deal as China Acts to Steady Markets

  Companies Cut Back, but Consumers Party On, Driving the Economy

  Goldman CEO Sees Small Chance of U.S. Recession

  Microsoft Tried a 4-day Workweek in Japan. Productivity Jumped 40%

  China’s TikTok Blazes New Ground. That Could Doom It.

  How Will Apple, Disney, AT&T and Netflix Retain Streaming Subscribers?

  SoftBank Says WeWork Japan Can Become Profitable ‘In Near Future’

  Shell to Buy French Offshore Wind-Power Developer

  Uber Posts $1.2 Billion Loss as Growth Improves

  It’s Back: 8chan Returns Online

  Facebook Wants You To Know It Owns Instagram and WhatsApp So It’s Changing Its Logo

  Mystery Swiss Trader May Link Insider Groups on Two Continents

  Cullen Roche: The Permaeverything Approach

  Joshua Brown: Manager of Managers

  Jeff Carter: The Health of A Startup Community

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• The Stock Market and Unemployment
  Eddy Elfenbein, November 4th, 2019 at 9:21 am

  I thought this was an interesting chart. This is a 24-year look at the stock market (red) and the unemployment rate (black):

  

• Stryker to Buy Wright Medical Group
  Eddy Elfenbein, November 4th, 2019 at 9:16 am

  Big news this morning. Stryker (SYK) has agreed to buy Wright Medical Group (WMGI) for $4 billion. Stryker is offering $30.75 for each share of WMGI. That’s nearly a 50% premium to Friday’s closing price.

  The deal is expected to close in the second half of next year. Stryker expects the deal to have no impact on its earnings. Stryker looks to open a little lower this morning while Wright looks to open much, much higher.

  Here’s the press release:

  Stryker (SYK) announced today a definitive agreement to acquire all of the issued and outstanding ordinary shares of Wright Medical Group N.V. (WMGI) for $30.75 per share, or a total equity value of approximately $4.0 billion and a total enterprise value of approximately $5.4 billion (including convertible notes). Wright Medical, which was founded in 1950, is a global medical device company focused on extremities and biologics.

  Wright Medical brings a highly complementary product portfolio and customer base to Stryker’s trauma and extremities business. With global sales approaching $1 billion, Wright Medical is a recognized leader in the upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets, which are among the fastest growing segments in orthopaedics.

  Wright Medical’s leading upper extremity portfolio and advanced preoperative planning technology will significantly add to Stryker’s offering. Additionally, Wright Medical’s lower extremity and biologics will complement Stryker’s portfolio and strengthen the company’s position in this high-growth segment.

  “This acquisition enhances our global market position in trauma & extremities, providing significant opportunities to advance innovation, improve outcomes and reach more patients,” said Kevin Lobo, Chairman and Chief Executive Officer, Stryker. “Wright Medical has built a successful business, and we look forward to welcoming their team to Stryker.”

  “We believe this transaction will provide truly unique opportunities and will create significant value for our shareholders, customers and employees,” said Robert Palmisano, Executive Director, Chief Executive Officer and President of Wright Medical. “By merging our complementary strengths and collective resources, we will be able to advance our broad platform of extremities and biologics technologies with one of the world’s leading medical technology companies that shares our vision of delivering breakthrough and innovative solutions to improve patient outcomes.”

  Under the terms of the agreement, Stryker will commence a tender offer for all outstanding ordinary shares of Wright Medical for $30.75 per share, in cash. The boards of directors of both Stryker and Wright Medical have approved the transaction. The closing of the transaction is subject to receipt of applicable regulatory approvals, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright Medical shareholders, completion of the tender offer and other customary closing conditions.

  The acquisition of Wright Medical is expected to close in the second half of 2020 and is expected to have no impact to Stryker’s net earnings per diluted share and adjusted net earnings per diluted share in 2019. There is no change to Stryker’s previously announced expected adjusted net earnings per diluted share for the full year, which is a range of $8.20 – $8.25. Assuming a September 30, 2020 closing, the transaction is expected to have no impact to Stryker’s adjusted net earnings per share in 2020, $(0.10) dilution in 2021 and will be accretive thereafter.

• Morning News: November 4, 2019
  Eddy Elfenbein, November 4th, 2019 at 6:42 am

  Flood of Oil Is Coming, Complicating Efforts to Fight Global Warming

  Asia-Wide Trade Pact on Course Despite India, Thailand Says

  Equity Trading to Only Get Bloodier in Europe After Macquarie Exit

  We Just Wanted to Talk E.U. Farm Policy. Why Was Someone Always Looking Over Our Shoulders?

  Aramco Starts IPO With Prince’s Economic Vision at Stake

  An Energy Breakthrough Could Store Solar Power for Decades

  Morgan Stanley Sees Market Returns Tumbling Over Next 10 Years

  Teens Love TikTok. Silicon Valley Is Trying to Stage an Intervention.

  Apple Pledges $2.5 Billion to Fight California Housing Crisis

  McDonald’s Fires CEO Steve Easterbrook Over Relationship With Employee

  Under Armour Plunges After Disclosing U.S. Accounting Probe

  Jeff Miller: Weighing the Week Ahead: A Time for Investors to Act

  Roger Nusbaum: Confronting Unexpected Circumstances

  Michael Batnick: Guru Grades

  Ben Carlson: Will We Ever See Another Great Depression? & Refinancing Gains in Real Estate

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• October NFP = +128,000
  Eddy Elfenbein, November 1st, 2019 at 8:42 am

  The October jobs report is out.

  The U.S. economy created 128,000 jobs last month. This is despite the GM strike.

  There was also 95,000 in upward revisions (51,000 in August and 44,000 in September).

  Drilling down some, the private sector added 131,000 jobs in October.

  Average hourly earnings rose six cents in October to $28.18. That’s a 0.2% increase for the month and a 3% increase for the year.

  The unemployment rate ticked up to 3.6%. The U-6 rate rose to 7.0%.

  The labor force participation rate is 63.3%. That’s the highest since August 2013. It’s also higher than every month from 1948 until 1978.

  The jobs-to-population ratio is up to 61.00%. That’s the highest since November 2008.