Morning News: October 27, 2017
Posted by Eddy Elfenbein on October 27th, 2017 at 6:05 am

Nordic-Style Designs Sit at Heart of French Labor Plan

It’s Going to Stay a Yellen Fed No Matter Who Gets the Job

How to Profit From Behavioral Economics

What Worries? Big Tech Companies Post Glowing Quarterly Profits

Wall Street Loves Electric Cars, America Loves Trucks

Amazon Threat Causes Shakeout in the Health-Care Industry

A CVS-Aetna Deal Is Logical But Also a Stretch

Activist Investors Torpedo $20 Billion Clariant, Huntsman Merger

SUVs Come to the Rescue for VW

Celgene, Bristol-Myers Drop on Poor Earnings as Big Pharma Takes It on the Chin

Comcast and Charter Lost a Ton of Cable Customers Last Quarter

Zenefits Founder Parker Conrad Will Pay $500,000 to Settle SEC Charges Alleging He Misled Investors

Howard Lindzon: The Cloud Bubble!

Jeff Carter: Should You Own Your Data?

Mark Hines: Stock Exchange: Do Not Invest In Bitcoin, Trade It!

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Axalta Earns 26 Cents per Share
Posted by Eddy Elfenbein on October 26th, 2017 at 1:28 pm

Axalta Coating Systems (AXTA) reported earnings of 26 cents per share.

Axalta Coating Systems Ltd. on Thursday reported third-quarter net income of $54.9 million, after reporting a loss in the same period a year earlier.

The Philadelphia-based company said it had profit of 22 cents per share. Earnings, adjusted for one-time gains and costs, were 26 cents per share.

The results beat Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of 23 cents per share.

The high-performance coating system maker posted revenue of $1.1 billion in the period, which matched Street forecasts.

Morning News: October 26, 2017
Posted by Eddy Elfenbein on October 26th, 2017 at 7:05 am

A Chinese Puppet Show for Markets

Saudi Crown Prince Backs Extending OPEC Cuts Into 2018

ECB Tapering: The Beginning of The Beginning of The End for Quantitative Easing

Yellen Wonders If Fed Inflation Credibility Dented on Her Watch

Trump Is Betting That Claims He’s Helping Out Big Banks Won’t Stick

Everything to Know About President Donald Trump’s New Drone Program

Hurricanes Dent Profits at Insurance Giant Munich Re

Tesla Muzzling Model 3 Buyers

New Uber Visa Credit Card From Barclays Coming Next Week

Walgreens to Shutter Almost 600 Rite Aid Stores as Part of Megadeal

McDonald’s Puzzles Chinese Customers With Name Change

Amazon Key is Silicon Valley at its Most Out-of-Touch

Ben Carlson: Bull & Bear Market Volatility Look Very Different

Roger Nusbaum: Retire On Less Than One Bitcoin a Month!

Cullen Roche: Beware of Extremist Bond Calls

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AFLAC Earns $1.70 per Share
Posted by Eddy Elfenbein on October 25th, 2017 at 4:36 pm

AFLAC (AFL) just reported Q3 operating earnings per diluted share of $1.70. Wall Street had been expecting $1.63 per share.

A few items. That includes an after-tax benefit of four cents per share. Also, the yen/dollar exchange rate knocked off seven cents per share last quarter. So, excluding the impact of the weaker yen, operating earnings per diluted share rose 1.7% to $1.77.

In July, the duck stock said to expect Q3 earnings to range between $1.51 and $1.69 per share. That assumes the yen averages between 105 and 115.

AFLAC also raised their quarterly dividend by two cents to 45 cents per share.

The company is also raising its full-year forecast.

“Having completed the first nine months of the year, I am pleased with the company’s overall results. We believe those results, combined with our outlook for the remainder of 2017, well-position Aflac for another year of solid financial performance. We continue to expect increased spending in the fourth quarter in support of initiatives designed to drive future growth. I am extremely pleased that we are upwardly revising our 2017 operating earnings per diluted share outlook from a range of $6.40 to $6.65 to a higher range of $6.75 to $6.95, both of which exclude the impact of the yen. If the yen averages ¥110 to ¥115 to the dollar for the fourth quarter, we would expect operating earnings, a non-GAAP measure, to be approximately $1.42 to $1.66 per diluted share in the fourth quarter, making full-year operating earnings approximately $6.62 to $6.86 per diluted share.”

CR Bard Earns $3.02 per Share
Posted by Eddy Elfenbein on October 25th, 2017 at 4:24 pm

CR Bard (BCR) reported Q3 earnings of $3.02 per share. Wall Street had been expecting $2.95 per share.

Timothy M. Ring, chairman and chief executive officer, commented, “After over 110 years of operations, with 54 years as a public company, we believe this to be our last quarterly report as a stand-alone company, as we expect the merger with Becton, Dickinson and Company (“BD”) to be completed before the next reporting cycle. I want to thank our employees and directors for their tireless work and commitment to excellence over the years. I also want to thank our investors for their outstanding support. We believe the merger with BD will create a unique combination that will deliver meaningful benefits for customers and patients and provide long-term shareholder returns.”

Also in conjunction with the third quarter results, the company is increasing its 2017 reported revenue guidance and increasing its adjusted diluted earnings per share guidance. For the full year 2017, net sales are forecasted to increase between 5.5 percent and 6 percent on an as-reported basis. The company is maintaining its prior full-year constant currency revenue guidance. Full year 2017 diluted earnings per share, after adjusting for amortization of intangibles and certain items that affect comparability between periods are projected to be between $11.85 and $11.90, representing growth between 15 percent and 16 percent compared to full year 2016 results.

The previous range was $11.70 to $11.90 per share

Healthcare Inflation Fades
Posted by Eddy Elfenbein on October 25th, 2017 at 3:54 pm

Here’s an interesting stat I just noticed. For the first time since 1981, healthcare inflation is running less than core inflation.

I don’t know what’s driving this.

New Home Sales Boom
Posted by Eddy Elfenbein on October 25th, 2017 at 10:36 am

For this morning’s new home sales report, economists had been expecting a drop of 0.9%. Instead, new home sales were up 18.9%. That’s the largest increase in 25 years.

Sales of newly built single-family homes rose 18.9 per cent from the previous month to an annualised pace of 667,000 homes, the US Census Bureau said. That compared with economists expectations for a 0.9 per cent drop to 555,000, according to a Thomson Reuters survey.

That was the biggest monthly increase since January 1992 and marks the highest level in 10 years. Compared with a year ago, new home sales were up 17 per cent.

The increase was boosted by an increase in home sales in the Northeast and Southern US, where they climbed 33.3 per cent and 25.8 per cent respectively. The latter was battered by a string of hurricanes. In the Midwest they climbed 10.6 per cent and in the West the rose a more subdued 2.9 per cent.

Morning News: October 25, 2017
Posted by Eddy Elfenbein on October 25th, 2017 at 7:07 am

Pound Reverses Decline as U.K. Economy Grows More Than Forecast

Michael Bloomberg: Brexit is Stupidest Thing Any Country Has Done Besides Trump

Yellen Finds Unlikely Advocate at White House: Trump

Senate Kills Rule On Class-Action Suits Against Financial Companies

Puerto Rico Lays Out Energy Future With Tesla, Privatization

Amazon Launches ‘Business Prime’ to Bring Quick Delivery to Work

Square, the Twitter Boss’s Other Company, Could Pass It In Value

Toyota Scales Back Mexico Production Plans

Chipotle’s New Normal: Working Hard to Sell Burritos

McDonald’s Traffic Grows Again, Solidifying CEO’s Turnaround

Why Sears Ended a Century-Old Partnership With Whirlpool

AMD Shares Plunge 12% on Concerns About Future Sales

Howard Lindzon: The Facebook Monopoly?

Josh Brown: As Good As It Gets? & QOTD: Einhorn on Equity-Subsidized Business Models

Michael Batnick: I Don’t Think That Means What You Think it Means

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Express Scripts Earns $1.90 per Share
Posted by Eddy Elfenbein on October 24th, 2017 at 4:07 pm

After the closing bell, Express Scripts (ESRX) reported Q3 earnings of $1.90 per share. That was three cents better than expectations.

“We have taken significant steps forward this year to build upon our heritage of industry leadership, client alignment and quality patient care, all of which positions us for growth,” said Tim Wentworth, President and CEO of Express Scripts. “We are transforming Express Scripts to win for the long term through significant investments in technology, launches of novel solutions that address the country’s biggest healthcare challenges, and expanding our role and reach in the broader healthcare market with our agreement to acquire eviCore. Payers and patients want affordable, quality care and access to medicine. No one is better positioned than Express Scripts to put medicine within reach.

Here are some details for the last quarter:

Adjusted claims of 343.6 million, down 1%

GAAP net income of $841.7 million, up 16%

GAAP earnings per diluted share of $1.46, up 27%

Adjusted EBITDA of $1,947.4 million, flat from 2016 EBITDA

Adjusted EBITDA per adjusted claim of $5.67, up 1% from 2016 EBITDA per adjusted claim

Adjusted net income of $1,093.6 million, flat from 2016 adjusted net income

Adjusted earnings per diluted share of $1.90, up 9%

Net cash flow provided by operating activities of $1,899.9 million, up 28%

Now for guidance. Express raised its 2017 range from $6.95 – $7.05 per share to $6.97 – $7.05 per share. The midpoint represents 10% growth over last year. For Q4, Express expects $2.03 to $2.11 per share.

The Stock Market is Very Noisy
Posted by Eddy Elfenbein on October 24th, 2017 at 1:30 pm

One of the difficult points to convey about the stock market is how indiscriminate it is.

I’ll try to make this point with some math.

I looked at the numbers going back to 1955. The S&P 500 gains, on average, about 1/37th of 1% each trading day. In other words, if the market was represented by one $37 stock, it would gain, on average, one penny each day. (Bear in mind that I’m discussing long averages.)

The average standard deviation is almost exactly 1%. That means the stock price swings, on average, 37 times the stock’s value. That’s just the average; it can be a lot more than that. So each day, 36/37th of the market is complete noise.

(Side note: Financial markets are not log-normal but that’s not a big deal for the point I’m trying to make.)

That noise part of trading decreases very slowly. After one month (21 trading days), the market gains an average of 0.57% while the standard deviation rises to 4.49%. There’s still a lot of noise.

At one year (253 days), the average gain is 7.03% with a standard deviation of 15.6%. That means it’s a hardly a big deal to see a market loss in one year.

At four years, the average gain and standard deviation finally become equal at just over 31.2%.

At one decade, the market’s return is about twice its standard deviation (95% to 49%).

Keep this mind the next time you hear someone predict what the market will do over the next few weeks.