Four More Earnings Reports This Morning
Posted by Eddy Elfenbein on July 28th, 2021 at 10:41 am

We had four morning earnings reports this morning.

Let’s start with Moody’s (MCO). The credit-ratings agency earned $3.22 per share for Q2. That’s up 15% from last year. Expectations were for $2.74 per share.

Total revenue was up 8% to $1.6 billion. Breaking that down, Moody’s Investors Service was up 4% to $980 million. Moody’s Analytics was up 15% to $573 million. Moody’s adjusted operating margin was 55.4%.

Now for the best news. Moody’s raised its full-year guidance. They now see full-year earnings between $11.55 and $11.85 per share. The old range was $11.00 to $11.30 per share. This is its second increase in guidance. The original range was $10.30 to $10.70 per share.

“Moody’s impressive second quarter 2021 results reflect the strong demand for our increasingly comprehensive suite of risk assessment offerings as we help our customers make better decisions about a wider range of risks,” said Rob Fauber, President and Chief Executive Officer of Moody’s. “This quarter, Moody’s Investors Service revenue grew in the mid-single-digit percent range, benefitting from economic tailwinds that supported increased leveraged finance and CLO activity. In Moody’s Analytics, continued demand for KYC and compliance solutions, as well as research and data feeds, drove mid-teens revenue growth.”

For the first half of this year, Moody’s has made $7.28 per share. That’s up 31% over last year.

Silgan (SLGN) earned 85 cents per share for Q2. That was the top-end of their guidance which was 75 cents to 85 cents per share.

Silgan had record segment income for Dispensing and Specialty Closures and Custom Containers. Volume increased 10% over last year’s record volume.

Silgan is keeping its full-year range unchanged at $3.30 and $3.45 per share. The company is increasing its free cash flow guidance to $400 million. For Q3, Silgan sees earnings of 95 cents to $1.10 per share. Wall Street had been expecting $1.09 per share.

Stepan (SCL) reported Q2 earnings of $1.81 per share. The was two cents below expectations.

Looking at Stepan’s three divisions, Surfactant operating income was $45.9 million. That’s down from $48.5 million last year. Polymer operating income was $23.0 million compared with $15.5 million last year. The increase was largely due to a 44% increase in global sales volume. Specialty Product had operating income of $7.0 million versus $3.2 million last year.

Forex helped the bottom line by six cents per share.

“The Company had a solid first half of 2021 and delivered record year-to-date results. Both adjusted net income and adjusted EPS were up 35% versus the first half of 2020 which was negatively impact by the Millsdale plant outage,” said F. Quinn Stepan, Jr., Chairman and Chief Executive Officer. “For the quarter, Surfactant operating income was down 5% largely due to higher North American supply chain costs driven by inflationary pressures and higher planned maintenance. A 6% decline in global Surfactant sales volume, mostly related to our consumer product business, was more than offset by improved margins, product and customer mix. Our Polymer operating income was up 48% on the strength of 44% global sales volume growth. The Polymer growth was driven by both the INVISTA acquisition and organic market growth. Our Specialty Product business results were up due to higher volume and improved margins.”

During Q2, Stepan paid out nearly $7 million in dividends and bought back close to $10 million in shares.

Thermo Fisher Scientific (TMO) said that its Q2 earnings rose 44% to $5.60 per share. That beat the Street by 11 cents per share. Quarterly revenue grew 34% to $9.27 billion. Adjusted operating margin was 29.0%, compared with 27.0% in the second quarter of 2020.

Thermo is raising its revenue guidance for this year by $300 million to $35.90 billion. That’s a growth rate of 11%. Thermo is also raising its earnings guidance by 10 cents to $22.07 per share. That translates to growth of 13%.

Morning News: July 28, 2021
Posted by Eddy Elfenbein on July 28th, 2021 at 7:08 am

China Bond Bulls Unfazed as Growing Crackdowns Spook Markets

Will the Delta Variant Wreck the Recovery?

Fed to Stress Patience on Scaling Back as Virus Threat Lurks & Blip or Bad Moon Rising?

Jumping Prices and the Ghost of 2013’s Market Meltdown Loom Over the Fed

Credit Suisse Probe Finds Severe Due Diligence Failings in $5.5 Billion Archegos Capital Losses

Spiraling Debt Crisis Confronts Evergrande Billionaire — and Xi

Japan’s Olympic Medal Haul Lifts a Group of Unusual Stocks

Google’s Profits Soar As Revenue Rises 62%

Microsoft Had Its Most Profitable Quarter

Apple’s Profits Nearly Doubled in the Latest Quarter

Deutsche Bank Smashes Estimates for the Second Quarter Despite Slide in Trading Revenues

Walmart Announces a Commercial Alliance With Adobe

Walmart to Pay College, Book Costs for Full and Part-Time Staff

Unilever Disavows BDS; Ben & Jerry’s Board Chair: ‘I Am Not Antisemitic’

DOJ Seized the Gilgamesh Dream Tablet – A Portion of the Epic of Gilgamesh – from Hobby Lobby

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Sherwin-Williams Misses but Raises Guidance
Posted by Eddy Elfenbein on July 27th, 2021 at 10:55 am

Sherwin-Williams (SHW) said it made $2.65 per share for Q2. That was just below expectations of $2.67 per share. Despite the miss, it was a decent quarter for the paint people. Sales rose 16.9% to $5.38 billion. EBITDA was 19.5% of sales.

Sherwin raised its full-year earnings range to $9.15 to $9.45 per share. The old range was $8.80 to $9.07 per share.

“We delivered solid performance in the second quarter driven by robust architectural paint demand in The Americas Group and strong demand across our industrial end markets, which more than offset the return to more normal DIY end market demand levels,” said Chairman, President and Chief Executive Officer, John G. Morikis. “Along with the strong demand, we also implemented pricing actions to offset the significant, sustained raw material inflation that pressured our gross margin in the quarter. Despite the near-term gross margin compression, we delivered 11.8% adjusted diluted net income per share growth and 7.4% EBITDA growth in the quarter. Our cash generation remained strong, which enabled us to continue investing in long-term strategic growth initiatives, repurchase 3.1 million shares in the second quarter, and open 25 new stores.

“In The Americas Group, sales in all of our end markets, except DIY, were up double-digit percentages in the quarter, led by residential repaint. As expected, sales to our DIY customers were down double-digits, driven by difficult comparisons to the prior year as consumer demand returned to more normal levels. These lower North America DIY demand trends also impacted our Consumer Brands Group in the quarter. Supply chain constraints in the quarter impacted our architectural businesses similarly in The Americas and Consumer Brands Groups. In Performance Coatings Group, all divisions delivered strong double-digit growth, led by industrial wood and general industrial.”

Fiserv Earns $1.37 per Share
Posted by Eddy Elfenbein on July 27th, 2021 at 10:05 am

We had two more Buy List earnings reports this morning. First up is Fiserv (FISV). The payments company reported Q2 earnings of $1.37 per share. That topped Wall Street’s consensus by nine cents per share, and it was up 47% over last year’s Q2. I was very impressed by these numbers.

Quarterly revenue increased 20% to $3.86 billion. Internal revenue growth was 18%. That was led by 41% growth in the Acceptance segment, 5% in Fintech and 7% in Payments.

“We had a very strong quarter driven by both macroeconomic tailwinds and the execution of our business strategy focused on winning business with new and existing clients,” said Frank Bisignano, President and Chief Executive Officer of Fiserv. “Our assets and continued innovation position us well to grow faster with financial institutions, fintechs and businesses of all sizes.”

For the first six months of this year, Fiserv earned $2.54 per share. That’s up 32% so far this year. Some more details from the earnings report:

Adjusted operating margin increased 510 basis points to 33.9% in the second quarter and 440 basis points to 32.7% in the first six months of 2021 compared to the prior year periods.

Free cash flow increased by 4% to $1.72 billion in the first six months of 2021 compared to $1.66 billion in the prior year period.

The company repurchased 5.0 million shares of common stock for $588 million in the second quarter and 10.2 million shares of common stock for $1.20 billion in the first six months of 2021.

Now for the best news. Fiserv increased its full-year guidance. The company now expects full-year earnings between $5.50 and $5.60 per share. The previous range was $5.35 to $5.50 per share. That’s growth of 24% to 27%. Fiserv also bumped up the low end of its estimate for internal revenue growth by 1%. The new range is 10% to 12%.

“Given our strong financial results in the first half of the year, coupled with our continued business execution, we are again raising our internal revenue growth outlook as well as our overall adjusted EPS outlook,” said Bisignano. “Our agility, speed of implementation and new product launches should continue to accelerate our growth.”

The stock has been up as much as 4.8% today.

Morning News: July 27, 2021
Posted by Eddy Elfenbein on July 27th, 2021 at 7:10 am

China Doesn’t Care How Much Money You Lose

China Stock Rout Spreads Amid Fears of Foreign Investor Exodus

China’s Tech Regulator Orders Companies to Fix Anticompetitive, Security Issues

Bitcoin Tumbles After Reaching $40,000 on Amazon Speculations

Inflation Has Arrived, but Washington Isn’t Racing to Limit Price Pops

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GE Lifts Full-Year Free Cash Flow Target on Recovery Hopes

Tesla Overcomes Chip Shortage to Post Record Profit

Elon Musk Says He Is Done with Regular Earnings Calls. Tesla Investors Are Better Off.

Jeff Bezos Offers to Cover Billions in Costs for NASA Contract

Activision Blizzard Employees Sign Petition Denouncing Company’s ‘Abhorrent’ Response to Lawsuit

The Pandemic Changed How We Spent Our Time

Utah Farm Draws a Rare Breed: The American Shepherd

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Check Point Software Earns $1.61 per Share
Posted by Eddy Elfenbein on July 26th, 2021 at 9:40 am

This morning, Check Point Software (CHKP) reported Q2 earnings of $1.61 per share. That beat the Street by five cents per share. Quarterly revenues increased 4% to $526 million. That beat Wall Street’s forecast of $523.77 million.

Previously, CEO Gil Shwed said he expected Q2 revenues to range between $510 million and $535 million. For earnings, Check Point has been expecting $1.50 to $1.60 per share. So Check Point exceeded its own earnings guidance.

“We had a good second quarter. Strong execution drove double-digit growth across CloudGuard and Harmony, and triple-digit growth in Infinity platform sales. Overall we grew our security subscription revenues by 12 percent,” said Gil Shwed, Founder and CEO of Check Point Software Technologies. “We’ve seen a 93 percent increase in ransomware attacks, as Gen V attacks are now the new norm. We believe organizations can stop the next cyber pandemic by adopting a prevention-first approach to security across the network, cloud and remote users.”

Here are some details from the earnings report:

Non-GAAP Operating Income: $257 million compared to $253 million in the second quarter of 2020, representing 49 percent and 50 percent of revenues in the second quarter of 2021 and 2020, respectively.

Non-GAAP Net Income: $217 million compared to $225 million in the second quarter of 2020.

Non-GAAP Earnings per Diluted share: $1.61 compared to $1.58 in the second quarter of 2020, a 2 percent increase year over year.

Deferred Revenues: As of June 30, 2021, deferred revenues were $1,472 million compared to $1,338 million as of June 30, 2020, a 10 percent increase year over year.

Cash Balances, Marketable Securities and Short Term Deposits: $4,002 million as of June 30, 2021, compared to $3,959 million as of June 30, 2020.
Cash Flow: Cash flow from operations of $264 million compared to $252 million in the second quarter of 2020, a 4 percent increase year over year.

Share Repurchase Program: During the second quarter of 2021, the company repurchased approximately 2.7 million shares at a total cost of approximately $325 million.

On the earnings call, the company said that subscription revenues rose by 12%.

Also on the earnings call, Shwed said he sees Q3 earnings ranging between $1.54 and $1.64 per share on revenue of $515 million to $540 million. Wall Street had been expecting $1.58 per share on revenue of $527.98 million.

CHKP didn’t alter its previous full-year earnings range of $6.45 to $6.85 per share. That’s a little surprising to me. Given the first two quarters and Q3 guidance, I think they could have narrowed guidance, or raised the low end.

Morning News: July 26, 2021
Posted by Eddy Elfenbein on July 26th, 2021 at 7:08 am

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Leaders in Cryptocurrency Industry Move to Curb the Highest-Risk Trades

The Blocksize War: The Book That Explains Bitcoin’s Religious Schism

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China’s New Private Tutoring Rules Put Billions of Dollars at Stake

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Sorry to Say: You Probably Shouldn’t Claim Social Security at 62

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A Painting or an NFT of It: Which Will Be More Valuable?

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1,000-Fold in 89 Years
Posted by Eddy Elfenbein on July 23rd, 2021 at 1:10 pm

The S&P 500 is up to another new all-time intra-day high today. The S&P 500 has been as high as 4,407.54 today.

Here’s an interesting historical footnote. The index is close to being up 1,000 fold from its Great Depression low. On July 8, 1932, the index closed at 4.41. (Technically, it was the old S&P 90 before 1957.)

On our Buy List, we have new highs from Broadridge Financial Solutions (BR), Danaher (DHR), Moody’s (MCO), Middleby (MIDD), Thermo Fisher (TMO) and Zoetis (ZTS). Also, Intercontinental Exchange (ICE) is very close to a new high.

Morning News: July 23, 2021
Posted by Eddy Elfenbein on July 23rd, 2021 at 7:04 am

Invest in China, but Without Illusions

Investors Eye COVID-19 Spread, Golden Cross to Gauge U.S. Dollar Trajectory

Fed Seen Speeding Taper of MBS in Early-2022 Start to Pullback

‘The B Word’ Bounced Between Boring and Bewildering

Crypto Nomads: Surfing the World for Risk and Profit

‘I Feel Conflicted’: Crypto’s Offshore Trading Moguls Talk Shop

Silicon Valley’s Best Pandemic Ever

For Airlines, It’s Looking More Like 2019 Again

Intel Says Chip Shortage Could Drag into 2023 as Outlook Barely Clears Street View

Zomato Shares Soar in Red-Hot Start for First Indian Unicorn to Go Public

Twitter Posts Fastest Revenue Growth Since 2014 in Pandemic Rebound

‘Change is Coming’ to Streaming, Says Jason Kilar, the WarnerMedia Chief

From ‘Congratulations’ to ‘Fully Canceled’: California Cafe Owners Hit Roadblock

Did Avocado Cartels Kill the Butterfly King?

Why Hasn’t Climate Change Put a Dent in Luxury Real Estate?

Kaseya Gets Master Decryption Key After July 4 Global Attack

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Abbott Earns $1.17 per Share
Posted by Eddy Elfenbein on July 22nd, 2021 at 7:24 am

Abbott Laboratories (ABT) today announced financial results for the second quarter ended June 30, 2021.

Second-quarter sales of $10.2 billion increased 39.5 percent on a reported basis and 35.0 percent on an organic basis, which excludes the impact of foreign exchange.

Second-quarter GAAP diluted EPS was $0.66 and adjusted diluted EPS, which excludes specified items, was $1.17, reflecting 105.3 percent growth versus the prior year.

Abbott continues to project full-year 2021 diluted EPS from continuing operations on a GAAP basis of $2.75 to $2.95 and full-year adjusted diluted EPS from continuing operations of $4.30 to $4.50, reflecting strong, double-digit growth versus the prior year.

Diagnostics sales increased 62.8 percent on a reported basis and 57.2 percent on an organic basis in the second quarter. Global COVID-19 testing-related sales were $1.3 billion in the second quarter.

Nutrition sales increased 11.9 percent on a reported basis and 9.5 percent on an organic basis in the second quarter. Sales performance was led by double-digit growth in Adult Nutrition globally.

Established Pharmaceuticals sales increased 16.4 percent on a reported basis and 14.5 percent on an organic basis in the second quarter. Sales performance was led by double-digit growth in several countries, including India, China, Russia, and several countries across Latin America.

Medical Devices sales increased 51.3 percent on a reported basis and 45.1 percent on an organic basis in the second quarter. Compared to pre-pandemic sales in 2019, Medical Devices sales increased 19.2 percent on a reported basis and 15.6 percent on an organic basis in the second quarter, led by double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Diabetes Care.

“We’re achieving very strong growth across our portfolio,” said Robert B. Ford, president and chief executive officer, Abbott. “Perhaps most impressively, excluding COVID testing-related sales, our sales grew more than 11 percent on an organic basis compared to pre-pandemic levels in the second quarter of 2019, which demonstrates the fundamental strength of our performance.”

(…)

Abbott projects 2021 diluted earnings per share from continuing operations under GAAP of $2.75 to $2.95. Abbott forecasts specified items for the full-year 2021 of $1.55 per share primarily related to intangible amortization, restructuring and cost reduction initiatives, including expenses to align its COVID-19 testing-related business with current and projected demand, expenses associated with acquisitions and other net expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $4.30 to $4.50 for full-year 2021.