Trefis Helps You Understand How a Company's Products Impact Its Stock Price
COMPANY OF THE DAY : YAHOO
Marissa Mayer's Yahoo splashed out $1.1 billion for Tumblr, a blogging site with 100 million users.
This is a calculated move by Yahoo to tap into a social media site that has strong user engagement and a built-in community of users who follow others and reshare posts, videos, pictures and other media. This move echoes similar motivations of Facebook's and Google's acquisitions of Instagram and Youtube respectively.
See Complete Analysis for Yahoo
This is a calculated move by Yahoo to tap into a social media site that has strong user engagement and a built-in community of users who follow others and reshare posts, videos, pictures and other media. This move echoes similar motivations of Facebook's and Google's acquisitions of Instagram and Youtube respectively.
See Complete Analysis for Yahoo
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FORECAST OF THE DAY : WAL-MART U.S. REVENUE PER SQUARE FOOT
Wal-Mart reported weak results and comparable store sales declined 1.4% in its U.S. operations due to delayed tax refund amd the prolonged winter which prevented shoppers from going to stores and delayed spring spending.
Despite the soft results, the retailer is focused on controlling operating expenses, improving efficiencies such as self-service check outs and growing its online sales to drive sales.
Read more...
Despite the soft results, the retailer is focused on controlling operating expenses, improving efficiencies such as self-service check outs and growing its online sales to drive sales.
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RECENT ACTIVITY ON TREFIS
Vale Lowers Its Mozambican Coal Export Target For 2013
Vale (NYSE:VALE) has announced a 30% reduction in its 2013 target for coal exports out of its Moatize mine in Mozambique. The target has been reduced from 4.9 million tonnes planned earlier to 3.4 million tonnes. The revision follows incidents of labor disruptions and heavy flooding which rendered its railway line unusable temporarily. Infrastructural limitations in Mozambique continue to pose a challenge to Vale, hampering its ability to get the coal produced from pit to port. The reduction in export volumes combined with falling coking coal prices in the international market will impact revenues negatively. However, since the coal division constitutes just 2-2.5% of the company’s total gross operating revenues, the overall impact is expected to be muted. On the other hand, the news exposes the fragility of Vale’s Mozambican business and the significant challenges it faces to diversify away from its iron ore business.
BP Revised To $47: Brighter Production Outlook Outweighs Spill Costs Uncertainty
We recently updated our price estimate for BP Plc (NYSE:BP) to $47 apiece, which implies almost 10% upside to the stock from its current market price. Our estimate is primarily based on expected production volume consolidation by 2014, as the company ramps up production from new facilities that should compensate for asset sales in recent years. Higher crude oil and natural gas prices should drive better profitability in the long run for its upstream and downstream divisions. However, ballooning claims associated with the 2010 Deepwater Horizon disaster continue to cast a gloom over the energy giant’s business outlook. Headquartered in London, BP is one of the world’s leading oil & gas multinationals with operations in more than 80 countries. As a vertically integrated oil and gas major, it has both upstream as well as downstream operations. The upstream division primarily includes exploration and production activities for oil and gas while the downstream division focuses on producing refined petroleum products such as gasoline.
HP Pre-Earnings: Looking For Restructuring Updates Amid Weak PC Market
Hewlett-Packard (NYSE:HPQ) is due to release its Q2 earnings on May 22, and the PC giant’s earnings will reflect the slowing PC market. In the previous quarter, HP reported a 6% y-o-y decline in net revenue to $28.3 billion and a net income of $1.2 billion as turbulent macro economic conditions continued to affect HP’s sales across geographies and verticals. As HP continues to restructure its business according to the detailed turnaround strategy that it had announced in May last year, we expect the company to report lower revenues for its different divisions. Moreover, HP is trying to reinvigorate its product lines by launching new products and increasing its R&D efforts.
Triple-Dip Recession in France…What Now?
Submitted by Sizemore Investment Letter as part of our contributors program The numbers came in last week: France is in recession again, for the third time in five years. A triple-dip recession. Sacre bleu! There is some debate as to whether this is a double-dip or a triple-dip recession; that mini-recession in 2012 was questionable. But there is no escaping the broader point here. France has a serious growth problem, and so does most of the rest of Europe. As a block, the Eurozone’s economy has been shrinking for six consecutive quarters, and the unemployment rate has crept up to 12.1%. Ever the country to outdo its neighbors, Italy has seen its economy shrink for seven quarters in a row. Even the German economy—the engine that is supposed to be driving the rest of the continent—is showing weakness, growing at a pitiful 0.1%. Years of policy paralysis and a broken banking system have taken their toll. The European economy has official ground to a halt. The upside? Well, to start French President Francois Hollande has promised an “offensive” to bring “more growth and less austerity.” Wow, that’s brilliant. Why didn’t anyone think of that before? Clearly, all Europe needs to get out of its on-again / off-again, five-year recession was for the President of France to go on an offensive. (Please feel free to insert the joke of your choice about French military prowess in the last two world wars, Vietnam and Algeria here.) Ok, now the real upside. Mr. Hollande’s impotent pronouncements about “offensives” aside, serious pressure is mounting on France to reform its labor markets and relax some of the bureaucracy that makes doing business in France so miserably difficult. Being a man of the left, Hollande has a better chance of actually ramming the reforms through in the sense that only an American foreign policy right-winger like Richard Nixon could normalize relations with Red China. The French state is so resistant to change, that if it is going to happen it has to led by “one of their own.” Is Hollande up to the task? We’ll see. But he is at least starting to say the right things, such as indicating that French workers would have to work longer in order to qualify for their pensions. Let’s hope he’s serious. The world economy needs a strong Europe, and Europe needs a strong France. The broader issue of Europe’s banking system being broken also has some promising developments. In the “bad news is good news” world of central bank policy, the European Central Bank promised to keep its loose monetary policy in place for “quite a long time.” As John Maynard Keynes pointed out decades ago, stimulative monetary policy in the absence of real aggregate demand is akin to “pushing on a string.” That is basically where we are today. Credit is being made available, but it’s not making its way into the real economy or having much of an effect. Part of this is due to lack of demand, but certainly not all. Small and medium-sized companies in Spain and Italy—the companies most needed to hire new employees and get the economy moving again—are being starved of capital because the funds that the ECB are making available are not flowing through the local banking systems and into their treasuries. Desperate times call for desperate measures, and that is exactly what ECB President Mario Draghi has promised to deliver. Draghi has publically suggested lowering the deposit rate than the ECB pays on bank deposits to below zero, meaning that the ECB would effectively be taxing Europe’s banks for not lending. Will it spur the banks to lend to one another…and to the corporate borrowers that need the funds the most? We shall see. But the ECB’s willingness to go to extreme means to shock the system out of stasis is a major positive. And finally, we come to Germany. Germany’s low growth rate is disturbing, but all of the news on that front isn’t bad. The low overall growth was affected by low levels of investments and masked a strong performance by German consumers, who have been criticized throughout the crisis for being too frugal. The situation in Europe looks bad, but I continue to believe that things are moving in the right direction there, even if it is slowly and in fits and starts. And in the meantime, I continue to be bullish on European equities. European equities tend to have better exposure to emerging markets than their American counterparts and particularly to the emerging markets I find most promising, such as Africa. European equities are also attractively priced at the moment. The iShares MSCI France ETF ( $ EWQ ) trades for just 12 times earnings and is dominated by some real gems, including fashion powerhouse LVMH Moet Hennessey Louis Vuitton ( $ LVMUY ), food products company Danone ( $ DANOY ) and international oil major Total ( $ TOT ), among others. If you believe, as I do, that Europe will muddle through this crisis intact, then keeping an allocation to European shares makes sense at current prices. I expect most major European indices to outperform their first-world rivals in North American and Japan over the next five years. Sizemore Capital is long EWQ and LVMUY.
Warren Buffett's Latest Buys and Sells | Berkshire Hathaway Q1/2013 Fund Portfolio
Submitted by Dividend Yield as part of our contributors program . Warren Buffett – Berkshire Hathaway Q1/2013 Fund Investing Strategies By Dividend Yield – Stock Capital, Investment . Recently, Warren Buffett, the Oracle of Omaha published his quarter results and released its recent buys and sells. Below is a current portfolio update of Warren Buffett’s – Berkshire Hathaway – portfolio movements as of Q1/2013 (March 31, 2013). In total, he has 41 stocks with a total portfolio worth of USD 85,001,344,000. Buffett bought two new companies and added nine additional stocks to his fund. The most important buys were Wells Fargo and Chicago Bridge & Iron Company. In return, Buffett reduced three stocks and closed two positions completely. The biggest changer on the short side was General Dynamics. Warren Buffett’s Best Yielding Buys: Wells Fargo ( WFC ) has a market capitalization of $213.38 billion. The company employs 274,300 people, generates revenue of $48.391 billion and has a net income of $19.368 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $35.295 billion. The EBITDA margin is percent (the operating margin is 33.07 percent and the net profit margin 22.50 percent). Financial Analysis: The total debt represents 12.97 percent of the company’s assets and the total debt in relation to the equity amounts to 117.14 percent. Due to the financial situation, a return on equity of 13.16 percent was realized. Twelve trailing months earnings per share reached a value of $3.53. Last fiscal year, the company paid $0.88 in the form of dividends to shareholders. Warren Buffett increased the WFC stake by 4.16 percent. Market Valuation: Here are the price ratios of the company: The P/E ratio is 11.38, the P/S ratio is 2.47 and the P/B ratio is finally 1.46. The dividend yield amounts to 2.99 percent and the beta ratio has a value of 1.39. Wal-Mart Stores ( WMT ) has a market capitalization of $256.50 billion. The company employs 2,200,000 people, generates revenue of $469.162 billion and has a net income of $17.756 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $36.302 billion. The EBITDA margin is 7.74 percent (the operating margin is 5.93 percent and the net profit margin 3.78 percent). Financial Analysis: The total debt represents 26.65 percent of the company’s assets and the total debt in relation to the equity amounts to 70.91 percent. Due to the financial situation, a return on equity of 23.02 percent was realized. Twelve trailing months earnings per share reached a value of $5.07. Last fiscal year, the company paid $1.59 in the form of dividends to shareholders. Warren Buffett increased the WMT stake by 3.68 percent. Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.27, the P/S ratio is 0.54 and the P/B ratio is finally 3.36. The dividend yield amounts to 2.43 percent and the beta ratio has a value of 0.34. U.S. Bancorp ( USB ) has a market capitalization of $64.98 billion. The company employs 64,486 people, generates revenue of $12.883 billion and has a net income of $5.490 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $9.734 billion. The EBITDA margin is percent (the operating margin is 38.51 percent and the net profit margin 27.36 percent). Financial Analysis: The total debt represents 14.64 percent of the company’s assets and the total debt in relation to the equity amounts to 132.87 percent. Due to the financial situation, a return on equity of 16.41 percent was realized. Twelve trailing months earnings per share reached a value of $2.89. Last fiscal year, the company paid $0.78 in the form of dividends to shareholders. Warren Buffett increased the USB stake by 0.32 percent. Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.14, the P/S ratio is 3.24 and the P/B ratio is finally 1.92. The dividend yield amounts to 2.22 percent and the beta ratio has a value of 1.04. Intl. Business Machines ( IBM ) has a market capitalization of $230.19 billion. The company employs 434,246 people, generates revenue of $104.507 billion and has a net income of $16.604 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $26.556 billion. The EBITDA margin is 25.41 percent (the operating margin is 20.96 percent and the net profit margin 15.89 percent). Financial Analysis: The total debt represents 27.91 percent of the company’s assets and the total debt in relation to the equity amounts to 176.40 percent. Due to the financial situation, a return on equity of 85.15 percent was realized. Twelve trailing months earnings per share reached a value of $14.50. Last fiscal year, the company paid $3.30 in the form of dividends to shareholders. Warren Buffett increased the IBM stake by 0.01 percent. Market Valuation: Here are the price ratios of the company: The P/E ratio is 14.32, the P/S ratio is 2.20 and the P/B ratio is finally 12.30. The dividend yield amounts to 1.83 percent and the beta ratio has a value of 0.69. Related Ticker: *Subscribe my Blog via RSS Feed or E-Mail . Alternative, you can follow me on Facebook or Twitter
A Dead Cat Bounce for Gold Prices
Submitted by SK Options Trading as part of our contributors program . On Monday, May 13, 2013 we wrote that Gold Prices would Re-Test $1350/oz level and so they did, trading sub $1340/0z at one stage. Gold had fallen for 7 straight days from $1470/oz before the slide was arrested earlier today with a bounce that pushed gold up to $1391/oz. This move correlates inversely with the 7 day winning streak put in by the US$, which also came to an abrupt halt today when it fell 0.50% to close at 83.93 on the US$ Index. As far as we can ascertain there was a few frantic minutes of buying that moved gold higher by around $30.00. Such quick movement suggests that someone who was short wanted to close and close quickly, as gold was climbing slowly but surely at the time. The snap shot below depicts the day’s action: This looks to us to be more of a Dead Cat Bounce for gold prices rather than a substantial change in direction. The Gold Chart: This capitulation in gold prices wasn’t a total capitulation as gold rallied and tried to break through $1500 and challenge the 50dma. Gold then faded until today when it managed to bounce from below $1350 to close at $1391 as the chart indicates. Having tested the support level of $1350 on two occasions and survived one could be tempted to feel a little more optimistic about the future price of gold and silver for that matter. After all QE is still the order of the day in the US and Japan has embarked on its own version of easing which has seen the Yen fall by 20% or so. The UK also has a bond buying programme and the ECB could soon follow suit. We should not be surprised if Mario Draghi announces such a plan of action just when the market is not expecting it. All of these actions are inflationary and therefore good for the price of gold. However, the official figures for what they are worth suggest that inflation has not raised its ugly head and the need for gold as a safe haven is not necessary. Conclusion This is not the best time of the year for gold as seasonally the summer doldrums arrive and gold prices drift lower until August. Today’s performance by gold is a one off event and should be viewed in the context of a bounce in falling gold market. The long term bull market is not over, but we do need to recognize that there is a short term downward trend in place and it should be taken seriously and acted upon in order to generate profits. The time to go aggressively long is somewhere in the distance and could prove to be a wonderful buying opportunity for those who have the patience to wait for this down trend to exhaust itself. Meanwhile we can still turn a profit by utilizing this downward phase to our advantage. You no doubt have formed an opinion as to which of the mining stocks you consider to be top quality and those that you wouldn’t buy even if we gave you the money. The latter group of stocks offers the opportunity to either ‘short’ them or enter the options market and purchase a few Puts on them. This strategy has enabled us to build cash at a time when the precious metals market is heading south. When the turnaround comes we will have a healthy balance sheet and be in a position to pounce on undervalued stocks. If you are not sure which stocks to short then you could take a look at some of the funds that are currently suffering as prices deteriorate. They should broadly reflect the markets movements. The order of the day is to think short for the short term and wait until we are convinced that the bottom is in before reversing position and hitting the acquisition trail. If you still believe in the precious metals bull market then the next few months should present you with some astonishingly low priced opportunities. The selection of quality mining stocks should remain a top priority as they will outperform the sector significantly. So, you have the time right now to do the work in preparation for a resumption of the gold bull market, consider it a gift, as your very own due diligence will pay off handsomely. Take care. Bob Kirtley URL: www.skoptionstrading.com URL: www.gold-prices.biz Email: bob@gold-prices.biz Disclaimer: www.gold-prices.biz or www.skoptionstrading.com makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents our views and replicates trades that we are making but nothing more than that. Always consult your registered adviser to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this letter. Options contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. Past performance is not a guide nor guarantee of future success.
Goldman Cashes In Its Remaining Stake In ICBC
Goldman Sachs (NYSE:GS) is finally giving up its remaining stake in the Industrial and Commercial Bank of China (ICBC) to raise $1.1 billion in cash. This is the sixth and the last time that Goldman is selling its stake in the world’s largest bank by market capitalization since it acquired a 4.9% stake in August 2006. Goldman accelerated the sale of ICBC shares over the past year as it went to the market with a sizable ICBC stake last April (see Goldman Raises $2.3 Billion From ICBC Stake Sale ) and again in January 2013 (see Goldman Raises Another Billion From ICBC Stake Sale ). Once the final stake sale is complete, Goldman will have pocketed more than $9.7 billion – a handsome profit given that the investment bank originally acquired the ICBC stake for under $2.6 billion.
Morgan Stanley Exits India's Private Wealth Market In Retrenchment
Morgan Stanley (NYSE:MS) has inked a deal with London-based Standard Chartered to sell its struggling Indian wealth management unit in what comes as the latest step by the global investment bank towards shifting the entire focus of its wealth management business on the U.S. market. Just last month, Morgan Stanley announced the sale of its private wealth management in Europe and the Middle East to Credit Suisse (NYSE:CS) – making an exit from the business in the U.K., Italy and Dubai (see Credit Suisse Expands Private Wealth Reach In Eastern Europe & Middle East ). It took Morgan Stanley a little more than six months to zero in on Standard Chartered as the right suitor for its India wealth unit (see Morgan Stanley Looking To Exit Private Wealth Business In India ). While the financial terms of the sale have not been disclosed, the deal is expected to complete by the end of this year.
A Cold March Will Weigh On Gap's Otherwise Solid Q1 Results
Gap Inc. (NYSE:GPS) is scheduled to release its Q1 fiscal 2013 earnings on May 22. According to a recent press release, the company will report just 2% growth in comparable store sales (CSS) due to weaker-than-expected results in March. While Gap performed well during February and April driven by the strength in its marketing and product offerings, its performance slipped in March due to an unusually cold weather which impacted the demand for seasonal products. However, the overall revenue growth will remain healthy owing to the retailer’s strong direct-to-consumer channel. We’ll also look for any color on Gap’s progress on the international front.
Lowe's Earnings: Housing Market And Hurricane Sandy Effects Will Boost Sales
Home improvement retailer Lowe’s (NYSE:LOW) is scheduled to release its Q1 earnings results on May 22. The company is expected to report solid growth in year-over-year revenues on a recovering housing market as well as continued reconstruction activity after Hurricane Sandy. The positive sentiment is reflected in the company’s stock price due to improvements in key housing data such as record levels of home construction, declining vacancies, lower mortgage default rates and rising home prices. Lowe’s looks to have positioned itself well for the higher demand for homes and home-related products well. Its total sales were up about 0.6% year-over-year in 2012. However, the company’s gross margins dipped marginally by 26 basis points from 2011, primarily due to an unfavorable 19 basis point impact related to its proprietary credit value proposition. In addition, it experienced a 7 basis point unfavorable impact due to to pricing and promotional activity. We think these are one-time items and margins will show an improvement this year, helped in some measure by better pricing due to demand. In short, investors have good reason to look forward to solid results when the company reports its first quarter results on Wednesday.
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