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COMPANY OF THE DAY : APPLE

Apple is expected to announce at least one new iPhone on September 9th, with speculation about additional product announcements gaining steam. There has been speculation about an iWatch launch as well as a potential payments partnership with American Express.

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FORECAST OF THE DAY : VERIZON'S U.S. WIRELESS MARKET SHARE

According to a recent report by RootMetrics, Verizon's wireless network remains the best in the U.S. in terms of network speed, network reliability, call performance and data performance. The company's upgraded XLTE network allowed it to build a significant lead in terms of speed. We expect the carrier's network advantage to allow it to defend its market share amid increasing price competition from smaller rivals.

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RECENT ACTIVITY ON TREFIS

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Comcast's Cable Networks Are Trending Well As Distribution Revenues Continue To Grow
  • by , 1 hours ago
  • tags: CMCSA FOX DIS CBS TWX VIA
  • Comcast ‘s (NASDAQ:CMCSA) cable networks include USA Network, CNBC, Syfy, MSNBC, Bravo, Oxygen, mun2, CNBC World, Chiller, Sleuth and Universal HD. The networks derive revenue primarily from two sources, distribution of programming and advertising. Distribution accounts for more than 50% of cable networks revenues. Both, distribution and advertising have been trending well for the company over the past few years. NBCUniversal has been focused on original programming, thereby providing a boost to the ratings for its networks in the past. However, 2014 has been tough for the media industry at large, as ratings were softer at many networks. USA Network in 2014 has seen ratings drop of more than 30% in some of its popular shows such as While Collars in 18-49 demographic. Going forward, we believe that the company’s focus on original programming and new content will drive the ratings upwards. We also expect advertising marketplace to improve in the coming months primarily due to an increase in political spending amid midterm elections.
    ORCL Logo
    Oracle Unlikely To Challenge TomorrowNow Verdict
  • by , 2 hours ago
  • tags: ORCL SAP
  • In a recent verdict, a federal appeals court vacated the $1.3 billion  in penalties and damages awarded to database leader  Oracle (NYSE:ORCL) by a jury in a trial arising our of German rival  SAP SE ‘s (NYSE:SAP) acquisition in 2007 of  Tomorrow Now.  The jury award had been reduced by the trial judge as excessive, a ruling Oracle appealed. A three-judge federal bench upheld the judge’s ruling and awarded approximately $357 million in damages, with about $121 million in lost profits for Oracle and $236 million in infringement profit for SAP, stating the previous award was “based on undue speculation”. The federal bench directed the trial judge to offer a new trial for Oracle if the company rejected the lower award. However, the company has been barred from presenting hypothetical license damages in case it goes ahead with a new trial. Oracle sued TomorrowNow, an enterprise software services company acquired by SAP in 2007, when it became known that the acquired company had previously and illegally downloaded copies of Oracle software to provide transitional maintenance service to customers migrating from Oracle to SAP applications. See Our Complete Analysis For Oracle Corp. and SAP SE Oracle Is Unlikely To Contest Verdict; SAP To Close the Books a Messy Deal The original lawsuit from Oracle claimed that TomorrowNow illegally downloaded its software for products such as Seibel, J.D. Edwards and PeopleSoft at lower rates than Oracle, hoping to convince them to become SAP customers. A joint discovery statement states that Oracle has brought serious claims of intellectual property theft, including claims for violation of criminal statutes, infringement of numerous copyrights and a cover-up by SAP’s executive board of directors. Oracle states that TomorrowNow had been utilizing software of companies it acquired allegedly from as far back as 2002, to provide support for services such as Individual Client Fixes, Critical Support Updates, Financial Updates, Master Fixes, Sync-Up Bundles and Retrofit Tax Updates for PeopleSoft software stored on TomorrowNow servers. In September 2011, the trial judge awarded Oracle with compensatory damages of approximately $272 million, lower than the $1.3 billion the jury provided in November 2010. However, SAP stated in its Q2’14 report that Oracle challenged the September 2011 verdict and appealed to seek higher damages. Now that the company has been awarded about $357 million in damages, it remains to be seen if Oracle challenges the verdict and starts with another new trail, which seems less likely. At the end of Q2’14 (ends June 30, 2014), SAP had litigation provisions of approximately €514 million (~$674 million) for the TomorrowNow and Versata lawsuits. See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
    MRK Logo
    Weekly Pharma Notes: Bristol-Myers Squibb, Pfizer, Merck And Roche
  • by , 2 hours ago
  • tags: BMY MRK PFE RHHBY
  • It was another eventful week for pharmaceutical companies studded with acquisition announcements, investors expecting potential bids, alliances and new therapeutic agents getting regulatory approval. There wasn’t a lot of movement in share prices, though, as the events were not too significant. However, S&P Pharmaceuticals Select Industry Index went up slightly last week as Pfizer, Merck and Bristol-Myers Squibb saw their shares inch up. In this report, we present some of the key events over the last week related to the biggest pharmaceutical companies.
    CHA Logo
    China Telecom Shows Improvement In Subscriber Adds; 4G Likely To Provide Further Boost
  • by , 3 hours ago
  • tags: CHA CHL CHU
  • China Telecom (NYSE:CHA) reported a steady improvement in its performance in the Chinese wireless subscriber market in July, as it gained about 1.45 million new 3G subscribers. This marked the fifth consecutive month of improvement in 3G user adds for the carrier, although it still lags significantly behind rivals  China Mobile (NYSE:CHL) and  China Unicom (NYSE:CHU), which reported gains of about 9 million and 2.5 million high speed (3G and 4G) subscribers, respectively, in the same period. China Telecom has been struggling with subscriber additions since December last year, when China Mobile launched its 4G service and formalized the iPhone deal with  Apple (NASDAQ:AAPL). Increased competition in the 3G market and aggressive 4G network expansion by China Mobile seem to be weighing on China Telecom’s performance. This is evident from the fact that China Telecom has lost over 5.5 million subscribers (net of 2G declines and 3G adds) in the last seven months, and its share in the Chinese wireless market has declined by about 80 basis points to 14.2%. In the same period, China Mobile increased its share by 30 basis points to 62.5% and China Unicom’s share improved 50 basis points to 23.3%. We have a  price estimate of $5 5 for China Telecom, which is about 10% below the current market price.
    Disney Logo
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    EOG Logo
    What's Fueling Crude Oil Production Growth For EOG Resources?
  • by , 4 hours ago
  • tags: EOG-BY-COMPANY EOG COP APC
  • EOG Resources’ (NYSE:EOG) net crude oil production has grown sharply from just around 55,000 barrels per day in 2009 to over 220 million barrels per day (MBD) last year, implying a CAGR of more than 41%. Almost all of this growth in the company’s crude oil production has come from its operations in the Eagle Ford and Bakken shale plays in the U.S. This year, EOG Resources plans to grow its net crude oil production by another 29% over last year. In this article, we take a closer look at what’s fueling this extraordinary growth in the company’s crude oil production. EOG Resources is an independent oil and gas exploration and production company that explores, develops, produces and markets crude oil, natural gas liquids and dry natural gas from major producing basins in the U.S., Trinidad, Canada and the U.K. A vast majority (around 94%) of the company’s total net proved reserves are located in the U.S., while the remaining are spread across other international markets including Trinidad, U.K., Canada, Argentina and China. We recently launched coverage of EOG Resources with a $105/share price estimate, which values it at almost 18.3x our 2014 adjusted diluted EPS estimate of $5.75 for the company. See Our Complete Analysis For EOG Resources Eagle Ford EOG Resources derives more than 96% of its total crude oil production from the U.S., where the recent growth in tight oil production has been phenomenal to say the least. From almost nothing in 2005, the country’s crude oil production from horizontal drilling of relatively impervious rocks has grown to around 3 million barrels per day currently. A large proportion of this growth (almost 40%) has come from increased horizontal drilling in the Eagle Ford shale formation, where EOG Resources holds a very lucrative acreage. The Eagle Ford shale formation in South Texas runs from the U.S.-Mexico border north of Laredo in a narrow band extending northeast for several hundred miles to just north of Houston. It is currently the largest tight oil play in the U.S. by EIA estimates. Its proved crude oil reserves of 3.4 billion barrels are greater than those of the Bakken Formation of North Dakota. EOG Resources is the leading oil producer and acreage holder in the Eagle Ford shale. The company holds 632,000 net acres in the play, a majority of which, around 564,000 net acres fall in the crude oil window of the formation. EOG Resources derives more than 55% of its total crude oil production from the Eagle Ford shale. At the end of the first quarter of this year, the company’s average daily net crude oil production from the Eagle Ford shale stood at 207,000 barrels, compared to just over 30,000 barrels in 2011. During the most recently reported quarter, EOG Resources’ net crude oil production from the formation grew by over 45% year-on-year. Despite the recent run-up, there is still a significant growth opportunity for EOG Resources in the Eagle Ford shale. At the end of last year, the company’s net proved reserves in the play stood at 765 million barrels of oil equivalent. This means that if the proportion of crude oil in its total oil equivalent production and the average daily hydrocarbon production rate from the play remain constant at 2013 levels, the company can continue to tap the play for at least 13 more years. It should also be noted that proved reserves represent only a small fraction of the company’s total reserve potential in the Eagle Ford shale, which is around 3.2 billion barrels of oil equivalent or almost 4.2x its net proved reserves in the play at the end of last year. EOG Resources has currently identified 7,200 drilling locations in the Eagle Ford shale. This year, the company plans to drill around 520 wells in the area employing as many as 26 rigs. Permian EOG Resources also holds some very lucrative acreage in the Permian Basin. The Permian region in western Texas and extending into southeastern New Mexico, has been one of North America’s major oil and natural gas producing regions for nearly a century. It accounts for about two-thirds of crude oil production in Texas and nearly 15% of EOG Resources’ entire U.S. acreage in both the Delaware and Midland basins in the Permian region. In the Delaware basin, the company holds 207,000 net acres spread over Leonard and Wolfcamp shale. In the Leonard shale, EOG Resources holds 73,000 net acres that hold net proved hydrocarbon reserves of around 63 million barrels of oil equivalent. The company has identified around 1,600 drilling locations in its acreage in the Leonard shale. This year, it plans to employ two rigs to drill around 40 net wells in the area with average after-tax rate of return (ATROR) of more than 100%. Bakken In addition to the Eagle Ford and Permian, EOG Resources is also ramping up its operations in the Bakken shale play located in Eastern Montana and Western North Dakota, as well as parts of Saskatchewan and Manitoba in the Williston Basin. Oil was initially discovered in the Bakken play in 1951, but was not commercial on a large scale until the past 10 years. The advent of modern horizontal drilling and hydraulic fracturing helped make Bakken oil production economic. According to latest EIA estimates, the Bakken tight oil play holds 3.2 billion barrels of technically and economically recoverable crude oil. EOG Resources holds 110,000 net acres in the play. At the end of last year, the company held net proved hydrocarbon reserves of 221 million barrels of oil equivalent in the play. This year, EOG Resources plans to drill around 86 wells in the area employing 6-7 rigs in total. International Outside the U.S., EOG Resources plans to bring a new project online in the U.K., which would further boost its crude oil production in the coming years. The company is the operator of the Conwy field situated on Block 110/12 in the East Irish Sea. It is expected to come online by the end of this year and have a net peak production rate of around 20,000 barrels of oil per day. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
    RIO Logo
    Rio Tinto To Cut Jobs At Australian Coal Mine To Reduce Costs In Subdued Coal Pricing Environment
  • by , 4 hours ago
  • tags: RIO VALE MT CLF
  • Rio Tinto (NYSE:RIO) has decided to cut up to a hundred jobs from its Kestrel coal mine in Queensland, Australia. Rio had only recently announced the opening of the Kestrel mine extension in October last year. However, continuing adverse market conditions for coal have shifted the focus towards controlling costs. This move is the latest in a series of efforts by Rio to cut costs and restructure its coal portfolio, in order to maintain the competitiveness of its coal business in an environment of subdued prices. See our complete analysis for Rio Tinto here Coal Prices The prevailing coal pricing environment is characterized by subdued prices of both metallurgical and thermal coal. Metallurgical coal is a major input in steelmaking. Thus, demand for metallurgical coal is indirectly influenced by the demand for steel. China is the largest consumer of metallurgical coal in the world. There has been weak demand for the commodity by the Chinese steelmaking industry, along with subdued demand from other major consumers such as Japan and the EU. Flagging demand for metallurgical coal from China in the wake of an economic slowdown earlier on in the year, put downward pressure on coal prices. According to data from China’s National Bureau of Statistics, growth in investment, factory output and retail sales slowed to multi-year lows in the first two months of the year. A Chinese government crackdown on polluting steel plants has forced many of them to shut down. In addition, the tightening of credit by Chinese banks to steel mills that are not performing well has negatively impacted their prospects. Furthermore, the Chinese leadership has proposed structural reforms of the economy, shifting the emphasis from investment and export driven growth to services and consumption led growth. Such a transformation of the Chinese economy may negatively impact Chinese demand for steel in the long term. Chinese steel demand growth is expected to slow to 3% and 2.7% in 2014 and 2015 respectively, from 6.1% in 2013. Weak demand for steel has indirectly resulted in weak demand for metallurgical coal. Weak demand coupled with an oversupply situation due to expansion in production by major coal mining companies has resulted in plummeting coal prices. Prevailing metallurgical coal stand at around $120 per ton. These are way off their 2011 peak levels of $330 per ton. Thermal coal is primarily used in the generation of electricity. Weak demand from major consumers of thermal coal, China and India, has put downward pressure on thermal coal prices. In addition, Chinese efforts to shift towards natural gas for energy generation may also affect demand going forward. A supply glut due to an increase in production by major coal mining companies has kept prices subdued. Restructuring of the Coal Portfolio In view of the prevailing pricing environment for coal, the company has made efforts to restructure its coal portfolio. The company recently announced the sale of some of its Mozambique coal assets. Earlier in the year, the company announced the completion of the sale of its 50.1% interest in the Clermont Mine for $1.015 billion. In addition, the company has invested capital in projects that would generate long term value. For example, along with the announcement to divest its stake in the Clermont mine, Rio Tinto also announced the opening of the $2 billion Kestrel Mine extension project in 2013. This extension  added 20 years to the life of the Kestrel coal mine. However, with coal prices expected to remain subdued in the near term, the company has decided to cut jobs at the Kestrel mine. The restructuring of its coal portfolio is a part of Rio’s disciplined approach to capital allocation. As a part of its Q2 2014 earnings release, the company lowered its capital expenditure guidance for 2014 by $2 billion to $9 billion. The company intends to maintain capital expenditure at $8 billion for the medium term starting in 2015. This approach to disciplined capital allocation will help Rio Tinto operate competitively in a subdued commodity pricing environment. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis) | Get Trefis Technology
    VZ Logo
    Week In Review: U.S. Wireless Carriers
  • by , 5 hours ago
  • tags: T S VZ
  • The U.S telecom market saw significant activity last week, with Sprint (NYSE:S) and T-Mobile cutting prices sharply and introducing new innovative plans to lure customers. However, there wasn’t a lot of movement in share prices, as it is still unclear whether there will be a full-on price war. A new report comparing the major wireless carriers in the country was recently released by Rootmetrics, which looked at various parameters such as network reliability, call performance, network speed and data performance. The report indicated that Verizon (NYSE:VZ) and AT&T (NYSE:T) are far ahead of T-Mobile and Sprint in overall network performance. Verizon and AT&T currently lead the U.S. wireless market with shares of about 34% each, followed by Sprint and T-Mobile with shares of 16% and 15%, respectively. Below are some significant events pertaining to the top wireless providers that were witnessed last week. Verizon AT&T merged its Mobility and Business Solutions (Enterprise) divisions last week, reflecting the company’s shift to integrating its wireline and wireless operations. The serving President of Emerging Devices for AT&T Mobility, Glenn Lurie, was elevated to the post of CEO of the new division following this merger. The carrier added its high speed 4G LTE service to 12 new markets last week, taking its total coverage to well over 600 markets. Amid all this activity, AT&T was conspicuously silent on the dramatic announcements of price cuts by Sprint and T-Mobile. It is probably waiting to see how customers react to these offers before entering into any sort of price competition. We estimate revenues of about $134 billion for AT&T in 2014, with non-GAAP EPS of $2.83, which is slightly higher than the market consensus of $2.48-$2.75, compiled by Thomson Reuters. We currently have a  $38 price estimate for A&T, which is more than 5% ahead of the current market price. Sprint Sprint was arguably the most active wireless carrier last week, with increased marketing and promotional activity to lure new subscribers. Even though the carrier was placed last in overall performance among all major U.S. carriers in the latest Rootmetrics report, it heavily advertised its network performance in some key areas where it did well, such as Tulsa, Vermont, Wyoming, Indianapolis and Atlanta. The carrier also launched an international Wi-Fi calling back service on the Samsung Galaxy S4 with its new Spark program. The company’s stock witnessed a steep fall in the middle of August due to weak investor confidence owing to its declining subscriber base. Thus, our  $8.50 price estimate for Sprint is significantly above the current market price. We estimate revenues of about $36 billion for Sprint in calendar year 2014. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
    CHL Logo
    China Mobile Continues Strong Run In Chinese Wireless Market With Robust 4G Adds
  • by , 5 hours ago
  • tags: CHL CHA CHU
  • China Mobile (NYSE:CHL) continued its strong run in the Chinese wireless market in July, with robust gains in 4G and 3G subscribers. The carrier added over 6.5 million 4G and 2.4 million 3G subscribers in the month, compared to the combined tally of about 4 million additions by rivals  China Unicom (NYSE:CHU) and  China Telecom (NYSE:CHA) in the same period. China Mobile’s 3G/4G subscriber adds were consistent with the carrier’s performance in the last several months, and can be attributed to its aggressive network expansion, improved user handset options and higher subsidy offerings. The company also benefited from the fact that the Chinese government has only recently awarded FDD-LTE 4G licenses to carriers, and the smaller players intend to build and expand their 4G networks using the FDD-LTE standard. The lack of FDD-LTE licenses was preventing China Unicom and China Telecom from rapidly expanding their 4G networks in the country since their existing wireless networks (WCDMA 3G) are more compatible with FDD-LTE, unlike China Mobile’s TD-SCDMA 3G network. China Mobile’s 3G network is compatible with the TD-LTE 4G standard, for which licenses were awarded by the government in December last year. This helped China Mobile grow its 4G subscriber base exponentially from just over 1.3 million users in February to over 20.4 million users at the end of July. China Mobile’s total wireless subscriber base at the end of July was 793.6 million, including over 261 million high speed (3G & 4G) users. The wireless major enjoys a dominant share of 62.5% in the country’s wireless market, reporting an improvement of 30 basis points since the start of the year. It is followed by China Unicom and China Telecom with 23.3% and 14.2% respectively. The steady gain in high speed subscribers also helped China Mobile improve its 3G/4G mix by almost 100 basis points over the prior month to about 33%. We currently have a  price estimate of $56 for China Mobile, implying a discount of about 10% to the market price.
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    Financials Weekly Notes: JPMorgan, Morgan Stanley, BNY Mellon And RBS
  • by , 5 hours ago
  • tags: BK JPM MS RBS GS
  • Bank shares had a rather lukewarm week this time around, with small gains seen over the beginning of the week due to the ECB’s efforts to improve the region’s economic condition being wiped out completely by growing fears of the situation in Ukraine on Thursday. The trend was evident across the equity market, as the S&P 500 reached 2,000 points for the first time ever on Monday, August 25, only to end the week at almost the same level as the prior week. Growing uncertainty over the unrest in Ukraine figured higher in investors’ minds than the positive impact of a better-than-expected Q2 growth figure of 4.2% for the U.S. economy. An improving job situation in the country was also unable to alleviate fears of global repercussions of an armed conflict between Russia and Ukraine.
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