• Sherwin-Williams Earns $5.68 per Share
    Posted by on October 25th, 2018 at 7:36 am

    Sherwin-Williams (SHW) made $5.68 per share for Q3. That’s seven cents below Wall Street’s estimate.

    Consolidated net sales increased 5.0% in the quarter to $4.73 billion.

    Net sales from stores in U.S. and Canada open more than twelve calendar months increased 5.2% in the quarter.

    Diluted net income per share increased 11.7% to $3.72 per share in the quarter compared to $3.33 per share in the third quarter of 2017. Third quarter 2018 included a charge for the California public nuisance litigation and acquisition-related costs of $1.09 and $0.87 per share, respectively, and third quarter 2017 diluted net income per share included acquisition-related costs of $1.42 per share.

    Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) from continuing operations increased 16.9% in the nine months to $1.99 billion.

    Narrowing FY18 adjusted EPS guidance to $19.05 to $19.20 per share, excluding acquisition-related costs, the charge for the California litigation and environmental provisions, compared to $15.07 per share on a comparable basis in FY17.

    Commenting on the third quarter, John G. Morikis, Chairman, President and Chief Executive Officer, said, “We continue to make great progress on the integration of Sherwin-Williams and Valspar into a faster growing, more profitable enterprise, but our results in the third quarter don’t fully reflect that progress. Revenue growth slowed from the pace set in the second quarter, due primarily to slower growth in some North American architectural businesses, a sequential slow-down in some of our industrial businesses in China and Europe and unfavorable currency translation rate changes. The price increases implemented over the past 12 months have largely kept pace with accelerating raw material inflation on a consolidated basis, but some of our Performance Coatings businesses continue to lag in that effort. During the quarter, our Global Supply Chain team incurred incremental costs in an effort to keep pace with load-in demand during what is traditionally our peak sales volume quarter. These unfavorable impacts were mostly offset by a lower than anticipated effective tax rate on both a reported and adjusted basis. Our effective tax rates on reported net income and adjusted net income were 14.9 percent and 18.5 percent, respectively. While our results in the quarter fell short of our initial expectations, we remain confident in, and excited about, the long term value created by the combination of these two great companies.

    “For the fourth quarter, we anticipate our consolidated net sales will increase a mid-single digit percentage compared to last year’s fourth quarter. For the full year 2018, we expect our consolidated net sales will increase by a high teen percentage, including incremental Valspar sales of $1.85 billion for the first five months of 2018, compared to the full year 2017. With annual sales at this level, we are updating our full year 2018 diluted net income per share to be in the range of $13.85 to $14.00 per share, including charges of $3.86 per share for acquisition-related costs, $1.09 per share for the California litigation, and $.25 per share for environmental expense provisions. Diluted net income per share in 2017 was $18.67 per share, including a one-time benefit of $7.04 per share from deferred income tax reductions, a one-time charge of $.44 per share for discontinued operations and a charge of $3.00 per share for acquisition-related costs. The incremental supply chain costs incurred in the third quarter make it unlikely we will reach the higher end of the full year adjusted diluted net income per share range provided last quarter. We are therefore narrowing our full year 2018 adjusted diluted net income per share to be in the range of $19.05 to $19.20 per share, excluding acquisition costs, the charge for the California litigation, and environmental expense provisions, compared to $15.07 per share on a comparable basis in 2017. We now expect our 2018 effective tax rate to be approximately nineteen to twenty percent.”

  • Morning News: October 25, 2018
    Posted by on October 25th, 2018 at 7:01 am

    Europe Stocks Climb With U.S. Futures Ahead of ECB

    U.S. Dairy Farmers Get Little Help From Canada Trade Deal

    How Trump’s Attacks on Powell Are Helping the Fed

    Comcast Beats Profit Estimates as Broadband Growth Accelerates

    Tesla Profit Blowout Reverses Much of Musk’s Damage to Stock

    Ford Motor Company Profit Slips 37% on China Woes

    AB InBev Plunges as Brewer Cuts Dividend Payout in Half

    Apple’s Radical Approach to News: Humans Over Machines

    Twitter Monthly Usage Drops, Company Warns It Will Fall Again

    UBS Targets American Wealth for Growth as Investment Bank Shines

    Microsoft Rides Cloud to Impressive Earnings Beat; Markets Focus on Amazon Q3

    AT&T Stumbles in Its First Quarter With Time Warner

    Michael Batnick: Seven Minute Charts

    Ben Carlson: Can the Stock Market Predict The Next Recession? & The Next Subprime

    Blue Harbinger: Will You Adjust Your Strategy, Or Go Down With The Ship?

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  • Torchmark Earned $1.59 per Share for Q3
    Posted by on October 24th, 2018 at 4:18 pm

    After the close, Torchmark (TMK) reported Q3 operating earnings of $1.59 per share. That beat Wall Street’s forecast of $1.53 per share. That’s up from $1.23 one year ago.

    Here are some highlights from the quarter:

    Net income as an ROE was 12.4%. Net operating income as an ROE excluding net unrealized gains on fixed maturities was 14.7%.

    Life underwriting margins increased over the year-ago quarter by 10% and health underwriting margins increased over the year-ago quarter by 8%.

    Life premiums increased over the year-ago quarter by 8% at American Income and health premiums increased over the year-ago quarter by 8% at Family Heritage.

    Net health sales increased over the year-ago quarter by 15%.

    Average producing agent count increased over the year-ago quarter by 6% at Family Heritage.

    Approximately 877,000 shares of common stock were repurchased during the quarter.

    Now for guidance. Torchmark sees 2018 earnings between $6.08 and $6.14 per share. That implies Q4 earnings of $1.51 to $1.57 per share. Wall Street had been expecting $1.56 per share.

    Torchmark also gave initial guidance for next year. Torchmark sees 2019 ranging between $6.45 and $6.75 per share. The consensus on Wall Street was for $6.56 per share.

  • AFLAC Earns $1.03 per Share
    Posted by on October 24th, 2018 at 4:13 pm

    AFLAC (AFL) just released its Q3 earnings report. For the quarter, the duck stock made $1.03 per share which was four cents better than estimates. The yen averaged 111.48 during the quarter, so thankfully, the exchange rate didn’t have a big impact on their numbers.

    For Q3, AFLAC had been expecting earnings of 87 cents to $1.02 per share (a wide range), which assumed an exchange rate of ¥110 to ¥115 to the dollar. So far this year, AFLAC has made $3.11 per share. That’s a 19.6% increase over last year.

    Now for guidance. AFLAC sees itself coming in at the “high end” of its previous guidance which was $3.90 to $4.06 per share. That assumes an exchange rate of ¥112.16 to the dollar.

    If by “high end” AFLAC means $3.98 to $4.06 per share, then that means they see Q4 coming in between 87 cents and 95 cents per share. Wall Street had been expecting 96 cents per share. I think the Street expected them to raise guidance. The shares lost 3.5% today.

  • Check Point Software Earns $1.38 per Share
    Posted by on October 24th, 2018 at 8:10 am

    We have three Buy List earnings reports today. Before the bell, Check Point Software (CHKP) reported Q3 earnings of $1.38 per share. That’s two cents above Wall Street’s estimates. Revenues were $471 million. The company told us to expect earnings between $1.30 and $1.40 per share and revenue between $454 million and $474 million.

    “Third quarter results reached the top end of our projections, with better than anticipated strength coming from the US and Europe,” said Gil Shwed, Founder and CEO of Check Point Software Technologies. “Today we announced the acquisition of Dome9. This new addition to Check Point’s Infinity architecture delivers enhanced Cloud Security with advanced active policy enforcement and multi-cloud protection capabilities. The combination of Dome9 and Infinity CloudGuard product family further differentiates Check Point in the rapidly evolving Cyber Security environment,” Shwed concluded.

    Here are some quarterly highlights:

    Total Revenue: $471 million compared to $455 million in the third quarter of 2017, a 4 percent increase year over year. Revenues were above the midpoint of our guidance.

    GAAP Operating Income: $226 million compared to $225 million in the third quarter of 2017, representing 48 percent and 49 percent of revenues in the third quarter of 2018 and 2017, respectively.

    Non-GAAP Operating Income: $250 million compared to $251 million in the third quarter of 2017, representing 53 percent and 55 percent of revenues in the third quarter of 2018 and 2017, respectively.
    GAAP Taxes on Income: $45 million compared to $44 million in the third quarter of 2017.

    GAAP Net Income and Earnings per Diluted Share: GAAP net income was $198 million compared to $193 million in the third quarter of 2017. GAAP earnings per diluted share were $1.25 compared to $1.16 in the third quarter of 2017, a 7 percent increase year over year.

    Non-GAAP Net Income and Earnings per Diluted Share: Non-GAAP net income was $219 million compared to $215 million in the third quarter of 2017. Non-GAAP earnings per diluted share were $1.38 compared to $1.30 in the third quarter of 2017, a 6 percent increase year over year.

    Deferred Revenues: As of September 30, 2018, deferred revenues were $1,148 million compared to $1,036 million as of September 30, 2017, an 11 percent increase year over year.

    Cash Flow: Cash flow from operations of $249 million compared to $260 million in the third quarter of 2017.

    Cash Balances, Marketable Securities and Short Term Deposits: $4,072 million as of September 30, 2018, compared to $3,865 million as of September 30, 2017.

    Share Repurchase Program: During the third quarter of 2018, we purchased approximately 2.6 million shares at a total cost of approximately $300 million.

    Check Point also said it bought Dome9 in order to boost its position in cloud security.

    On the earnings call, the company said they expect Q4 earnings of $1.56 to $1.67 per share on revenue of $500 million to $528 million. Wall Street had been expecting $1.65 per share on revenue of $515.29 million.

    Previously, Check Point had given full-year guidance of $5.45 to $5.75 per share. Today’s guidance effectively narrows that range to $5.60 to $5.71 per share since CHKP has earned $4.04 per share for the first three quarters.

  • Morning News: October 24, 2018
    Posted by on October 24th, 2018 at 7:05 am

    E.U. Rejects Italy’s Budget, and Populists Dig In

    Trump Threats, Demands Spark ‘Existential Crisis’ at WTO

    Trump Says He ‘Maybe’ Regrets Picking Fed’s Powell

    Trump Is Not Going to Cut Middle-Class Taxes This Year, Despite What He Says

    Here’s How $260 Billion of Tariffs Are Biting Third-Quarter Profit

    Mom and Pop Are Buying the Dip in Stocks While the Pros Stay Put

    When Sears Flourished, So Did Workers. At Amazon, It’s More Complicated.

    Tesla’s Third Quarter Earnings: The Brass Ring Is Within Grasp

    GM’s Driverless Car Bet Faces Long Road Ahead

    Dunkin’ Takes Shot at Starbucks With Less-Expensive Espresso

    Ford Hires New China Chief to Tackle Daunting Turnaround Task

    In A Bid to Fill Office Buildings, Landlords Offer Kegs and Nap Rooms

    Nick Maggiulli: A Change in Perspective

    Roger Nusbaum: Further Defensive Action Initiated

    Jeff Carter: Seed Investing Is Human Investing

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  • Turnaround Tuesday
    Posted by on October 23rd, 2018 at 11:39 pm

    The Dow opened today 279 points lower. It then dropped another 270 points. The index reached a low during the 10 o’clock hour. Then the Dow rallied back 423 points to close down just 126 points.

    The internals of the market were weak. In the S&P 500, there were three new highs and 85 new lows. The index fell as low at 2,691.43. That’s 8.5% below the intra-day peak from September 21.

    Our Buy List trailed the market today: -0.62% for us compared with -0.55% for the S&P 500. Obviously, Ingredion (INGR) hurt us a lot. INGR finished the day down -7.6%. At one point, it was down more than 11%. Without Ingredion, our Buy List would have lost -0.42%. That one stock cost the whole portfolio 20 basis points.

  • Ingredion Down 9%
    Posted by on October 23rd, 2018 at 9:14 am

    Shares of Ingredion (INGR) are currently down about 9% today. The company warned that Q3 earnings will be about $1.70 per share. Wall Street had been expecting $1.96 per share.

    Previously, Ingredion had stood by its full-year guidance of $7.50 to $7.80 per share. Now INGR expects $6.80 to $7.05 per share.

    From the press release:

    During the third quarter, the Company experienced significant FX headwinds caused by weakening foreign currencies primarily in Argentina, Brazil and Pakistan, as well as the impact of Argentine peso devaluation with the adoption of hyperinflation accounting. In North America, the Company experienced several unplanned power outages at Argo, its largest sweetener plant, and these operating events resulted in unforeseen higher manufacturing and supply chain costs.

    “Our performance this quarter was impacted in part by the rapid pace and magnitude of FX currency devaluations in Argentina and Pakistan. As a result we expect our business model will require more than a quarter to recover,” said Jim Gray, executive vice president and chief financial officer.

    Jim Zallie, president and chief executive officer, said, “We are disappointed with the impact these unexpected circumstances had on our results during the latter half of the quarter, and remain focused on aggressively driving operational improvements and structurally reducing supply chain costs. We are making steady progress in addressing production and supply chain challenges while delivering on our customer experience commitments.”

    Ingredion also announced that its Board of Directors has authorized the repurchase of up to an additional 8 million shares of the Company`s common stock from November 5, 2018 through December 31, 2023. Zallie said, “The Board`s increased share repurchase authorization reflects its confidence in the Company`s ability to generate strong cash flow from operations, support strategic investments, and fulfill its commitment to return capital to shareholders.”

  • Morning News: October 23, 2018
    Posted by on October 23rd, 2018 at 7:07 am

    Olympic Steel Is Overlooked And Undervalued

    Saudi Sees Deals Worth $50 Billion at Investment Conference Despite Boycotts

    Paul Volcker, at 91, Sees `a Hell of a Mess in Every Direction’

    Stocks Deepen Losses as Investors Flock to Havens

    Unemployment Looks Like 2000 Again. Wage Growth Doesn’t.

    Trump’s Tax Push to Help Middle Class Could Help Top Earners Too

    What Happens When Banks Smear Their Exiting Brokers

    Apple Supplier AMS Plummets Most in a Decade

    Judge Denies Monsanto’s Request to Scrap $250 Million Punishment — But There’s a Catch

    Why Goldman Sachs’s Marriage Of Marcus And Investment Management Makes Sense

    Johnson & Johnson Makes $2.1 Billion Offer to Buy Out Japan Cosmetics Firm Ci:z

    The Trade War’s Latest Casualties: China’s Coddled Cats and Dogs

    Lawrence Hamtil: Global Discounts By Region & Sector

    Michael Batnick: Higher Highs and Lower Lows

    Momentum Monday – Lower Prices Ahead

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  • Crumbling Materials
    Posted by on October 22nd, 2018 at 3:39 pm

    The Materials sector has lagged the S&P 500 for more than ten years. Lately, however, it’s really gotten hammered.

    In the last year, the S&P 500 is up just over 7% while the Materials are down 10%.