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COMPANY OF THE DAY : CHARLES SCHWAB

Brokerage firm Charles Schwab witnessed a strong start to the year, with total daily trades standing at nearly 580,000 through the quarter ended March. However, volumes fell by about 4% year-on-year in April. The brokerage added over $200 billion worth of client assets last year and has kept up the momentum in 2015 thus far. In a recent note we take a look at some of Schwab's key trading and operating metrics and our forecasts for them.

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FORECAST OF THE DAY : NETFLIX'S INTERNATIONAL STREAMING SUBSCRIBERS

Netflix has been working tirelessly in order to bring its international expansion plans to fruition. The company has reportedly held talks with Chinese online broadcasting companies about bringing its content to China. The company also posted strong numbers in its quarterly earnings announcement, with subscriber growth exceeding expectations. We expect the company's international subscriber count to double over the next two years.

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6 Stocks to Avoid This Grilling Season
  • By , 5/27/15
  • tags: TSN BUD
  • Submitted by Wall St. Daily as part of our contributors program 6 Stocks to Avoid This Grilling Season By Chris Worthington, Editor-in-Chief of Income   I hope you had an enjoyable Memorial Day holiday. It’s now (unofficially) summer! If you’re like me, you spent some time grilling with friends and family this weekend. Indeed, all across the country, people were chowing down on burgers, sausages, and chicken ( maybe even a few vegetables). And since barbecue season is now upon us, it’s worth asking: Are the companies providing our summer fare a “Buy” right now? Purveyors of Fine Food and Drink The food and beverage industries offer a number of dividend-paying stocks, including the six below, which are some of the biggest names in the business. First is Tyson Foods ( TSN ), the world’s second-largest processor and marketer of chicken, beef, and pork. Its brands include Tyson (of course), as well as Hillshire Farm, Jimmy Dean, Ball Park, and Sara Lee. Next is Hormel Foods ( HRL ), famous for introducing Spam. Hormel owns its namesake brand in addition to Black Label, Lloyd’s, Saag’s, and Wholly Guacamole. It also owns a few other popular but less barbecue-related brands like Skippy and Chi-Chi’s. Kraft Foods Group ( KRFT ) – which recently merged with Heinz – is virtually inescapable at any barbecue. Among its brands, Kraft counts A1 steak sauce, Country Time Lemonade, Cracker Barrel cheese, Kraft Mayo, JET-PUFFED Marshmallows, Kool-Aid, Oscar Mayer meats, and Heinz condiments. Now, in my opinion, a good barbecue isn’t complete without a few beers. And when it comes to beer, there’s no company quite like Anheuser-Busch InBev ( ABI.BR ). This massive conglomerate owns everything from Budweiser to Stella Artois to Corona. It also owns Beck’s, Leffe, and Hoegaarden. And it even owns craft breweries like Goose Island and Elysian. SABMiller ( SAB.L ) is the world’s second-largest beer company, though its $58-billion market cap is just one-third of Anheuser-Busch’s. SAB owns Miller, Coors, Blue Moon, Grolsch, Foster’s, Keystone, and Leinenkugel’s, among many, many others. Finally, there’s Heineken ( HEIA.AS ), the Dutch brewery that also owns Amstel, Sol, Murphy’s, and many other brands across the globe. With a $46-billion market cap, Heineken is the world’s third-largest beer company. Big Valuations, Small Dividends Let’s start by looking at the current valuation of these companies compared to their median 10-year average: As a group, these stocks are trading at a significant premium right now. In fact, only Tyson and AB-InBev are trading at even somewhat justifiable valuations. The rest are prohibitively expensive. Thus, we’ll narrow our focus to hot dogs, sausages, and beer. Next, let’s take a look at the dividends paid by Tyson and ABI. The latter yields a pretty respectable 2.7% and, with a dividend payout ratio of 68.5%, it’s well below our 80% threshold. Unfortunately, Tyson’s indicated yield is a meager 0.9% – better than nothing, but not what we’re looking for as income investors. That leaves us with just one out of six companies, Anheuser-Busch. And it does have a lot going for it. Total revenue has grown for six consecutive years, including by more than 8% in 2014. It has a decent yield, and the dividend has grown substantially since 2009, when it was cut by 90%. However, the company is still expensive relative to its 10-year median – and perhaps most importantly, the U.S. market is facing increasing pressure from craft beer sales. Consider this: By the end of 2014, craft beer sales were responsible for 11% of the total market in the United States. That’s up from just 2.6% in 1998, an incredible rise. The trend isn’t slowing, either. Last year, craft beer dollar sales grew 22%, faster than in any previous year. Once a niche market, craft beer is now a $20-billion-a-year industry. So, while ABI does pay a decent dividend, it’s on the wrong end of a growing market trend. Plus, the stock isn’t exactly cheap right now. Bottom line: Go ahead and enjoy some sausages, hot dogs, and beer this summer – but don’t bother with these major food and beverage stocks. Good investing, Chris Worthington The post 6 Stocks to Avoid This Grilling Season appeared first on Wall Street Daily . By Chris Worthington
    U.S. Dollar Sends Harley-Davidson Shares Down
  • By , 5/27/15
  • tags: SPY TLT HOG
  • Submitted by Wall St. Daily as part of our contributors program U.S. Dollar Sends Harley-Davidson Shares Down By Richard Robinson, Ph.D., Equities Analyst   Just last quarter, the U.S. Dollar Index rose about 10% against most foreign currencies . . .  and the effect on revenue estimates is readily apparent. Analysts now expect to see a decline of 3.3% for the current quarter instead of the 2.6% decline predicted at the end of last month. Investors, meanwhile, are understandably concerned for the future of American companies. Just recently, the greenback left one U.S. company to be devoured by foreign competition… or so it appears . Competitors Circle Around Due to the crippling effect of the strong dollar, Harley-Davidson ( HOG ) has become an easy target for its foreign rivals. On Tuesday, the company announced its lower forecast for worldwide shipment. Management now expects to ship between 83,000 and 88,000 units in the second quarter, a 4.5% to 10% reduction from 2014 production. HOG shares dove more than 9.7% on the news. As of Tuesday’s close, shares sit perilously close to their 52-week low of $54.22, which was reached on October 15, 2014. And now, Harley’s competitors are zeroing in. You see, they’ve capitalized on the stronger dollar by cutting into Harley’s domestic sales with lower prices for their own bikes. The stronger dollar makes this easy because foreign manufacturers can lower their prices without having any impact on their own profit margins. In spite of this news, though, shareholders still have reason to be optimistic. The Sunny Side: The Gusto to Persevere Harley-Davidson held up pretty well against some rather discouraging headwinds. In the first quarter, the company reported a total revenue decline of 3.8% to $1.51 billion. This was below analysts’ expectations of $1.59 billion. However, the company’s net income rose by 1.5% to $269.9 million. This translated to earnings of $1.27 per diluted share in the first quarter. Furthermore, the net income beat last year’s first-quarter net income of $265.9 million, or $1.21 per diluted share, as well as analysts’ expectations of $1.25 per share last quarter. The company has undoubtedly shown some vigor in spite of the challenges it faces. Wait Till August to Ride These Shares After all, the currency issues won’t last forever, and Harley will benefit from stronger sales as the riding season hits its peak in the coming months. So expect new models to launch in August. Shareholders and investors alike should wait until the third quarter before buying into or adding to existing share counts. By then, maybe the stronger dollar will quit bullying this hog. Good investing, Richard Robinson The post U.S. Dollar Sends Harley-Davidson Shares Down appeared first on Wall Street Daily . By Richard Robinson
    Incredible Prosthetics Powered by the Mind
  • By , 5/27/15
  • tags: SPY TLT
  • Submitted by Wall St. Daily as part of our contributors program Incredible Prosthetics Powered by the Mind By Chris Worthington, Editor-in-Chief of Income   Robotic limbs controlled by the user’s mind . . .  it sounds like something out of a sci-fi movie. Yet this technology is very much real, and the folks at the Johns Hopkins Applied Physics Lab (APL) have been testing this incredible breakthrough with the help of a man named Les Baugh. Baugh lost both arms in a teenage accident, and he’s been getting by ever since with ingenuity, creativity, and an indomitable will. Indeed, it’s Baugh’s story that helps make the technology so awe-inspiring. In the video above, Baugh lights a fire in his stove, cooks himself a meal, and drives his car – all without the use of arms. Yet once the APL team straps on the bionic arms, Baugh is able to perform a variety of tasks – picking up blocks, taking a drink from a water bottle – just by thinking about doing them. The pioneering technology, which has been under development for more than 10 years, is called Modular Prosthetic Limbs (MPLs). There are only about 10 of these prosthetics in existence, according to Gizmodo. To use the limbs, Baugh went through a surgery called targeted muscle reinnervation. The muscles that once controlled his arms and hands were moved to his chest, where the electrical signals are picked up by sensors on the bionic arms. “It’s a relatively new surgical procedure that reassigns nerves that once controlled the arm and the hand,” Johns Hopkins Trauma Surgeon Albert Chi, M.D. told designboom . “By reassigning existing nerves, we can make it possible for people who have had upper-arm amputations to control their prosthetic devices by merely thinking about the action they want to perform.” Mike McLoughlin is the program’s chief engineer of research and exploratory development, and he says that Baugh could even begin to develop sensations from the prosthetics as his nerves re-map. That’s amazing enough on its own! Now, this technology is still in the early stages of development, and it’s far from prepared for – or affordable enough for – public use. But the bottom line is that these prosthetics hold enormous potential for Baugh, as well as others who have lost their limbs. Good investing, Chris Worthington The post Incredible Prosthetics Powered by the Mind appeared first on Wall Street Daily . By Chris Worthington
    20 Best Stocks to Hold for the Long-Term
  • By , 5/27/15
  • tags: SPY JPM
  • Submitted by Dividend Yield as part of our contributors program . 20 Best Stocks to Hold for the Long-Term Forget about buying and selling stocks within a matter of days or months. Morgan Stanley is out with a new note recommending 30 companies that you should hold until 2018. Below is a list of the 20 top dividend payers . That’s not to say you should then sell them in 2018, it’s to say that Morgan Stanley believes these companies are poised to perform well over the next three years. These are the 5 highest yielding resuts in detail: JPMorgan Chase — Yield: 2.63% JPMorgan Chase ( NYSE:JPM ) employs 241,359 people, generates revenue of $51,531.00 million and has a net income of $21,762.00 million. The current market capitalization stands at $248.68 billion. JPMorgan Chase’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $40,815.00 million. The EBITDA margin is 43.33% (the operating margin is 31.62% and the net profit margin 23.10%). Financials: The total debt represents 21.98% of JPMorgan Chase assets and the total debt in relation to the equity amounts to 244.04%. Due to the financial situation, a return on equity of 9.76% was realized by JPMorgan Chase. Twelve trailing months earnings per share reached a value of $5.46. Last fiscal year, JPMorgan Chase paid $1.58 in the form of dividends to shareholders. Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.18, the P/S ratio is 2.64 and the P/B ratio is finally 1.18. The dividend yield amounts to 2.63%. – Read more here: 20 Best Stocks to Hold for the Long-Term….
    The Dow Chemical Company Logo
  • commented 5/27/15
  • tags: DOW
  • Fluoropolymers Market: Global Industry Analysis and Opportunity Assessment 2015-2025: Future Market Insights

    Fluoropolymer is better known for its durability and being a robust plastic. It is characterized by its strong resistance to bases, solvents and acids. Due to its exclusive high performance and longevity, fluoropolymers find application in variety of industries, including automotive & transportation, aviation, telecommunications, electronics, electrical, chemical processing and others. Also, they are increasingly being used as coatings in non-stick surfaces, seals, gaskets, control cables, space apparel, bushing, pipes and hoses, fluid handling equipment, etc.

    Browse Full Report@ http://www.futuremarketinsights.com/reports/details/fluoropolymers-market

    Fluoropolymers Market: Drivers & Restraints

    Opportunities are emerging for fluoropolymers as its qualities make it a viable option for use in applications that need exposure to harsh environmental conditions. Advanced physical and chemical properties, such as the ability to withstand high temperature, electrical insulation, corrosion and chemical resistance etc., are the major driving factors for the global fluoropolymer market. Conversely, cost related concerns, environmental impact and health issues can act as a restraining factors for the global fluoropolymer market.

    Fluoropolymers Market: Segmentation

    On the basis of product type, the global fluoropolymer market is segmented into,

    - Polytetrafluoroethylene (PTFE)

    - Polyvinyl fluoride (PVF)

    - Polychlorotrifluoroethylene (PCTFE)

    - Polyvinylidene difluoride (PVDF)

    - Fluorinated ethylene – propylene (FEP)

    - Perfluoroalkoxy polymer (PFA)

    - Others

    The demand for PVDF in fluoropolymer market is anticipated to be high due to its growing application in the lithium-ion batteries, solar cells and architectural coatings.

    On the basis of application, the global fluoropolymer market is segmented into

    - Chemical

    - Automotive

    - Telecommunication

    - Electrical & electronics

    - Healthcare

    - Aerospace & aircraft

    - Construction

    - Others

    Request Sample@ http://www.futuremarketinsights.com/reports/sample/rep-gb-453

    Fluoropolymers Market: Region-wise Outlook

    Global fluoropolymer market is anticipated to witness the highest growth in Asia Pacific, especially in China, India and Japan. Rising demand of wire and cable is anticipated to boost the demand for fluoropolymer in North America and Europe. Global fluoropolymer market is expected to expand at a steady CAGR in terms of volume through 2020.

    Fluoropolymers Market: Key Players

    Some of the market participants in the global fluoropolymer market are DuPont, Asahi Glass Co. Ltd, 3M, Saint-Gobain, Arkema SA, Honeywell,Dongyue Group Ltd, Halopolymer OJSC, Solvay SA, Kureha Corporation and Gujarat Fluorochemicals Ltd. (GFL). [ less... ]
    Fluoropolymers Market: Global Industry Analysis and Opportunity Assessment 2015-2025: Future Market Insights Fluoropolymer is better known for its durability and being a robust plastic. It is characterized by its strong resistance to bases, solvents and acids. Due to its exclusive high performance and longevity, fluoropolymers find application in variety of industries, including automotive & transportation, aviation, telecommunications, electronics, electrical, chemical processing and others. Also, they are increasingly being used as coatings in non-stick surfaces, seals, gaskets, control cables, space apparel, bushing, pipes and hoses, fluid handling equipment, etc. Browse Full Report@ http://www.futuremarketinsights.com/reports/details/fluoropolymers-market Fluoropolymers Market: Drivers & Restraints Opportunities are emerging for fluoropolymers as its qualities make it a viable option for use in applications that need exposure to harsh environmental conditions. Advanced physical and chemical properties, such as the ability to withstand high temperature, electrical insulation, corrosion and chemical resistance etc., are the major driving factors for the global fluoropolymer market. Conversely, cost related concerns, environmental impact and health issues can act as a restraining factors for the global fluoropolymer market. Fluoropolymers Market: Segmentation On the basis of product type, the global fluoropolymer market is segmented into, - Polytetrafluoroethylene (PTFE) - Polyvinyl fluoride (PVF) - Polychlorotrifluoroethylene (PCTFE) - Polyvinylidene difluoride (PVDF) - Fluorinated ethylene – propylene (FEP) - Perfluoroalkoxy polymer (PFA) - Others The demand for PVDF in fluoropolymer market is anticipated to be high due to its growing application in the lithium-ion batteries, solar cells and architectural coatings. On the basis of application, the global fluoropolymer market is segmented into - Chemical - Automotive - Telecommunication - Electrical & electronics - Healthcare - Aerospace & aircraft - Construction - Others Request Sample@ http://www.futuremarketinsights.com/reports/sample/rep-gb-453 Fluoropolymers Market: Region-wise Outlook Global fluoropolymer market is anticipated to witness the highest growth in Asia Pacific, especially in China, India and Japan. Rising demand of wire and cable is anticipated to boost the demand for fluoropolymer in North America and Europe. Global fluoropolymer market is expected to expand at a steady CAGR in terms of volume through 2020. Fluoropolymers Market: Key Players Some of the market participants in the global fluoropolymer market are DuPont, Asahi Glass Co. Ltd, 3M, Saint-Gobain, Arkema SA, Honeywell,Dongyue Group Ltd, Halopolymer OJSC, Solvay SA, Kureha Corporation and Gujarat Fluorochemicals Ltd. (GFL).
    Yingli Green Energy Logo
  • commented 5/27/15
  • tags: YGE
  • Oil and Gas Accumulator Market: Global Industry Analysis and Forecast Till 2025 by FMI

    The global oil & gas accumulator market is expected to grow significantly in coming years, despite recent plummeting of crude oil market. With an increase in crude oil prices, the drilling activities across the globe are expected to pick up pace, resulting in an increase in the global oil & gas accumulator market.

    An accumulator is a device used to store potential energy. The energy is stored in the form of compressed gas, spring or a raised weight, which is used to exert force on incompressible liquid. The global oil and gas accumulator market report assesses various aspects and importance of accumulators in the oil and gas industry.

    Browse Full Report@ http://www.futuremarketinsights.com/reports/details/oil-and-gas-accumulator-market

    Oil & Gas Accumulator Market: Drivers
    The crude oil and natural gas production is increasing so as to satisfy the ever increasing demand for energy. The increase in production is one of the key drivers for the global oil and gas accumulator market, as increased production requires more number of rigs. Within the global oil & gas accumulator market, accumulators are used in drilling rigs as well as in Blow-Out Preventers (BOPs). An increasing number of wells results in growing demand for accumulators.

    Oil & Gas Accumulator Market: Segmentation
    The global oil & gas accumulator market has been segmented according to regions across the globe, as North America, Latin America, Eastern Europe, Western Europe, Asia-Pacific and Middle East & Africa. Due to high drilling activities in the North American region as compared to other regions across the globe, the global oil & gas accumulator market represents an increased usage of accumulators in the North American market in 2014.

    As far as the type of accumulators are concerned, the global oil & gas accumulator market has also been segmented according to the types of accumulators used in the oil & gas industry such as bladder type, piston type, diaphragm type and spring type. The bladder type accumulators are most widely used type of accumulators in the global oil & gas accumulator market. The bladder type accumulators are also expected to be one of the fastest growing accumulators when compared on the basis of annual growth rate with other accumulator types.
    For applications in the oil and gas industry, the global oil & gas accumulator market has been segmented into applications such as in BOPs, mud pumps and others. BOPs account for most wide application of accumulators in the global oil & gas accumulator market. This is due to the fact that accumulators possess the capability to operate BOPs in case of a power failure, which is one of the key reasons for its dominance the global oil & gas accumulator market in coming years.

    Request Sample@ http://www.futuremarketinsights.com/reports/sample/rep-gb-450

    Oil & Gas Accumulator Market: Market Players
    In the global oil & gas accumulator market, key global market players include companies such as Bosch Rexroth AG, Eaton Corporation, Parker-Hannifin Corporation, Tobul Accumulator Inc., and Nippon Accumulator Co. Ltd.
    [ less... ]
    Oil and Gas Accumulator Market: Global Industry Analysis and Forecast Till 2025 by FMI The global oil & gas accumulator market is expected to grow significantly in coming years, despite recent plummeting of crude oil market. With an increase in crude oil prices, the drilling activities across the globe are expected to pick up pace, resulting in an increase in the global oil & gas accumulator market. An accumulator is a device used to store potential energy. The energy is stored in the form of compressed gas, spring or a raised weight, which is used to exert force on incompressible liquid. The global oil and gas accumulator market report assesses various aspects and importance of accumulators in the oil and gas industry. Browse Full Report@ http://www.futuremarketinsights.com/reports/details/oil-and-gas-accumulator-market Oil & Gas Accumulator Market: Drivers The crude oil and natural gas production is increasing so as to satisfy the ever increasing demand for energy. The increase in production is one of the key drivers for the global oil and gas accumulator market, as increased production requires more number of rigs. Within the global oil & gas accumulator market, accumulators are used in drilling rigs as well as in Blow-Out Preventers (BOPs). An increasing number of wells results in growing demand for accumulators. Oil & Gas Accumulator Market: Segmentation The global oil & gas accumulator market has been segmented according to regions across the globe, as North America, Latin America, Eastern Europe, Western Europe, Asia-Pacific and Middle East & Africa. Due to high drilling activities in the North American region as compared to other regions across the globe, the global oil & gas accumulator market represents an increased usage of accumulators in the North American market in 2014. As far as the type of accumulators are concerned, the global oil & gas accumulator market has also been segmented according to the types of accumulators used in the oil & gas industry such as bladder type, piston type, diaphragm type and spring type. The bladder type accumulators are most widely used type of accumulators in the global oil & gas accumulator market. The bladder type accumulators are also expected to be one of the fastest growing accumulators when compared on the basis of annual growth rate with other accumulator types. For applications in the oil and gas industry, the global oil & gas accumulator market has been segmented into applications such as in BOPs, mud pumps and others. BOPs account for most wide application of accumulators in the global oil & gas accumulator market. This is due to the fact that accumulators possess the capability to operate BOPs in case of a power failure, which is one of the key reasons for its dominance the global oil & gas accumulator market in coming years. Request Sample@ http://www.futuremarketinsights.com/reports/sample/rep-gb-450 Oil & Gas Accumulator Market: Market Players In the global oil & gas accumulator market, key global market players include companies such as Bosch Rexroth AG, Eaton Corporation, Parker-Hannifin Corporation, Tobul Accumulator Inc., and Nippon Accumulator Co. Ltd.
    ABX Logo
    Why Barrick Is Selling The Cowal Mine
  • By , 5/26/15
  • tags: ABX NEM FCX VALE SLW
  • Barrick Gold Corporation (NYSE:ABX), the world’s largest gold producer, has announced that it has reached an agreement for the sale of its fully-owned Cowal gold mine to Evolution Mining for $550 million in cash. Located in New South Wales, Australia, the Cowal mine is one of Barrick’s low-cost gold mines. Despite that, the company has decided to sell off the mine, with debt reduction and a greater focus on its American gold mining operations constituting Barrick’s strategy going forward. In this article, we will take a look at why Barrick Gold has decided to sell off the Cowal mine. Gold Prices (Gold Prices in 2014, Source: Kitco) (Gold Prices in 2015, Source: Kitco) Gold prices have fallen over the course of the last year, reacting to cues pertaining to the tapering of the Federal Reserve’s Quantitative Easing (QE) program. Gold as an investment is often viewed as a hedge against inflation and economic weakness. The tapering of QE implied strengthening U.S. economic growth, which reduced the investment demand for gold and led to a fall in prices of the metal. Going forward, the Fed’s outlook on the U.S. economy is important as far as gold prices are concerned. With the economy strengthening, the Fed is expected to raise interest rates sometime in 2015. However, the exact timing of an interest rate hike is contingent upon the pace of economic and jobs growth in the U.S. An interest rate hike is likely to limit the upside to gold prices, as investors shift towards higher yielding assets. The subdued gold pricing environment was reflected in Barrick’s Q1 results. The company’s average realized price for gold sales stood at $1,219 per ounce in Q1 2015, around 5% lower as compared to the average realized price in the corresponding period of 2014. Divestment of Non-core Assets and Debt Reduction Given that low gold prices are expected to persist in the near term, the company is looking for ways to boost its financial flexibility in order to operate competitively in a subdued gold pricing environment. Barrick Gold intends to focus on its mining operations in the Americas going forward. The company management is of the opinion that Barrick’s technical and exploration expertise and partnerships with host governments give it a competitive advantage in Nevada and the Andean region of South America. These regions account for a majority of Barrick’s operations, with over 80% of the company’s proven and probable gold reserves located in the Americas. Most of Barrick’s low-cost mines are also located in the Americas. Thus, the company is looking to selectively divest its assets located in other parts of the world, which in some cases would help it lower its average costs of production. Since mid-2013, the company has reduced its portfolio of mines from 27 to 19. These include the sales of the Darlot, Granny Smith, Lawlers, Plutonic, and Kanowna mines in Australia, the Tulawaka mine in Tanzania, the Marigold mine in Nevada, and the closure of the Pierina mine in Peru. Further, the company also sold a 10% equity stake in its subsidiary, African Barrick Gold. Lastly, the company also sold off its oil and gas business, namely Barrick Energy, in 2013. The combined proceeds of these asset sales total approximately $1 billion. The focus of the company’s portfolio optimization efforts has been getting rid of its high-cost, non-core mines. This is reflected in the All-in Sustaining Cost (AISC) metric for these mines. The AISC metric includes the total cash cost, sustaining capital expenditures, general and administrative costs, minesite exploration and evaluation costs, mine development expenditures, and environmental rehabilitation costs. It provides a comprehensive view of costs related to a company’s current mining operations. In 2013, the AISC figures for the Australia Pacific mines segment, African Barrick Gold, and the Pierina mine, stood at $994 per ounce, $1,362 per ounce, and $1,349 per ounce, respectively. The reportable segment of North American mines, which includes the Marigold mine, reported an AISC of $1,235 per ounce. All of these figures are higher than the company-wide AISC of $915 per ounce for Barrick’s gold mining operations. Asset sales helped lower Barrick’s AISC for its gold mining operations from $915 per ounce in 2013, to $864 per ounce in 2014. The sale of the Cowal mine is a continuation of the company’s strategy to reduce its footprint outside of the Americas. However, in this case, it is one of Barrick’s low-cost gold mines with an AISC of $787 per ounce in 2014, as compared to $825 per ounce for the company’s overall gold mining operations. Barrick intends to use the proceeds from the sale of the Cowal mine for the reduction of its debt. It has a $3 billion debt reduction target for 2015, as it looks to adapt to an environment of low gold prices. The company’s net debt stood at $10.4 billion at the end of 2014 and around $10.6 billion at the end of Q1 2015. Thus, the proceeds from the sale of the Cowal mine will go some way towards achieving the company’s debt reduction target. Barrick Gold is also looking for ways to offload its Porgera mine, which is also located in the Australia Pacific region, as it seeks to reduce its operational footprint outside the Americas. View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
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    Skill-Based Slot Machines To Provide A Win-Win Situation For Casinos & Gaming Industry
  • By , 5/26/15
  • tags: ATVI ERTS LVS MGM WYNN
  • In December 2014, the Association of Gaming Equipment Manufacturers (AGEM) proposed a bill (Senate Bill 9) that allows adding an element of skill to the slot machine games in Nevada casinos. It requires the Nevada Gaming Commission to adopt regulations relating to the development of technology in gaming, as well as to allow flexibility in payout percentages or a game’s outcome. The passing of the bill would result in the entry of slot machines with arcade-game elements, skill-based games, and other unique features, which would require more skill and less luck. AG Burnett, chairman of the Nevada Gaming Control Board, announced his support of the bill and, after the clearance of the bill by both the Senate and Assembly Judiciary, it has finally been passed on to the Governor of the state, Brain Sandoval, on May 18, for approval. The bill is aimed at introducing arcade-game style gambling and video game technology in Nevada casinos. This means that if a player masters certain skills included in these games, his/her chances of winning would improve. Changing Revenue Composition of Las Vegas Casinos The U.S. casino industry has been witnessing the entry of new casinos in the nation over the last 5 years. However, the contribution of gaming revenues as a percentage of net profits has dipped significantly over the last two decades. In the early 90s, gaming revenues contributed close to 60% of the total casino revenues. However, the trend changed gradually, as non-gaming revenues, which include revenues from shows, food, and other attractions, has surpassed revenues from floor games and slot machines. In 2012, non-gaming revenues accounted for more than 60% of the casinos’ net revenues. With time, these casinos and hotels have matured and evolved into a luxury segment and the non-gaming operations have become significantly important. On one hand, the food and beverage industry was booming during this period, and customers were spending more at restaurants and on food items. Vegas was turning into a hub for premium restaurants and hotels, entertainment, retail, and other shows & attractions. On the other hand, hotel rooms in these casinos started demanding higher average daily rates, making them some of the most expensive hotels in the industry. Furthermore, revenue from slot machines has been on a declining trend since 2006, with $8.4 billion in revenues in 2006, down to $6.7 billion in 2014. However, revenues from table games and card games have been stagnant over the same period. Growth in the gaming segments for some casino operators is a hard task now. Source: Nevada Gaming Commission What The Bill Has In Store For Casinos As mentioned earlier, the trend suggests that the customers are drifting away from the slot machines. Many customers know that the chance of winning on slot machines is low. Over the last 10 years, the winning percentage of casinos on the slot machines has improved from 6% in 2006 to 6.4% in 2014. Source: Nevada Gaming Commission As a result, gamblers who get tired of losing money shift to other floor games. This trend has affected the casinos’ revenue stream from slot machines. If the state of Nevada passes the SB 9, we can see more skill-based games as part of the casinos’ slot machines. There are currently 45,000 slot machines on the Las Vegas Strip. However, declining revenues from slot machines indicate that the gaming segment requires some new gaming ideas on the floor to spur interest.  As a result, skill-based arcade games are expected to replace the old gaming style of gambling. The bill is aimed at gaining the interest of the younger demographic, who is more interested in arcade-style games. The Nevada casinos have already upgraded their integrated resort offerings, including the finest dining and entertainment. For the gaming segment to keep up, the old gambling style has to be replaced or augmented. The new gaming style, which includes more skill and social elements to the slot machines, might encourage younger customers to spend more time on the slot machines. This move might, on one hand, improve customer footfall in the casinos and, on the other, increase a customer’s engaging time on a slot machine. Eventually, it might translate into better gaming revenues for the Nevada casinos. See Our Complete Analysis For Las Vegas Sands | Wynn Resorts | MGM Resorts International What’s In Store For The Gaming Industry? The gaming industry has undergone a major change in the last 5 years, with the focus of game developers shifting towards the digital segment. On the other hand, physical sales of software titles has been decreasing, forcing game developing companies to look for new markets. The entry of arcade style gaming in the casinos can be one of those huge potential markets. Slot machine gambling in Nevada is alone a $7 billion market. Major U.S. game developers, such as Electronic Arts (NASDAQ:EA), Activision Blizzard (NASDAQ:ATVI), and Take-Two Interactive, have already entered into the small mobile arcade games market. Some of the slot machine manufacturers, such as Bally Technologies and Gamblit Gaming, have already introduced video game-like products in casinos. Moreover, this move fits exactly into the business model of these gaming companies, i.e. to make games for the younger demographic. The more the demand for these arcade style skill-based games, the more the growth opportunities for these game developers. The top U.S. game developing companies already have experience in making such games that cater to the younger demographic, with mobile based games, such as Plants Vs Zombies and Angry Birds. The entry of gaming companies into this market can provide incremental revenues and further boost their top-line growth. Additionally, these arcade games generally do not require much investment and R&D costs, and, as a result, they might boost the companies’ margins as well. Below are the Trefis revenue forecasts for Electronic Arts and Activision Blizzard. See Our Complete Analysis For Electronic Arts | Activision Blizzard Macau and Singapore Casinos generate far more revenues than Las Vegas Casinos annually. In the future, these bigger casino markets might also adopt this new gambling style. In that scenario, game developing companies will have a wider, and a far more profitable, market to tap into. However, the gaming companies might take at least six  months to develop these games, and that means even if the bill is passed by the Nevada Governor in the next two months, we won’t be able to see this new gambling style before the holiday period of 2015. View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
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    Gap Inc Earnings: Premium Brands Revival Efforts Not Enough To Energize 2015 Outlook
  • By , 5/26/15
  • tags: GPS ARO URBN
  • Gap Inc (NYSE:GPS) recently reported its Q1 fiscal 2015 earnings with its net sales falling behind the consensus estimates and earnings per share coming inline. The company’s net sales fell 3% to $3.66 billion, while analysts polled by Thomson Reuters were expecting the figure to be around $3.75 billion. Earnings per share settled inline with the consensus estimates at $0.56, falling 3% from the year ago period. Gross margins shrunk 100 basis points year over year to 37.8% weighed down by promotional discounts and currency headwinds. Operating income declined to $386 million from $443 million in the same quarter last year. Gap Inc’s disappointing growth is mainly attributable to its struggling premium brands and negative impact of exchange rates. Gap and Banana Republic reported comparable sales decline of 10% and 8%, respectively, partially offset by 3% growth at Old Navy . Strengthening dollar had a negative impact of almost $90 million on net revenues. The retailer even said that the residual effect of West Coast port delays also had a negative impact on the company’s topline growth. Looking ahead at the remainder of the year, Gap Inc reiterated its EPS guidance of $2.75-$2.80, indicating that Q1 results were mostly inline with its expectations. As far as the near term performance is concerned, currency headwinds will continue to trouble Gap Inc, as a significant portion of its revenues come from outside the U.S. A near-term turnaround for Gap and Banana Republic is unlikely though they have shown some positive results, mainly in men’s business and new collection. However, the retailer is confident that Old Navy will sustain its growth momentum throughout the year. Our price estimate for Gap Inc is at $52, implying a premium of about 35% to the market price. However, we are in the process of updating our model in light of the recent earnings release.
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    Sina's Recent Results Were Driven By Weibo As Core Business Continues To Face Challenges
  • By , 5/26/15
  • tags: SINA
  • Sina’s (NASDAQ: SINA) net revenues rose by 8% annually to $184.6 million in Q1 2015. This was driven by ongoing strength on the Weibo platform, even as the core portal business continued to face a decline owing to reduced PC usage. In addition, the company’s non-GAAP diluted EPS came in at $0.04, compared to $0.15 in a similar period year ago. Heavy growth in personnel costs and marketing expenses weighed on the company’s margins during the quarter. Going forward, we expect Sina to be driven by continued momentum in the Weibo business, which will partially be offset by weakness in the portal business. We expect mobile advertising revenues on both Weibo and portal to rise sharply in the coming quarters and account for a larger share of the company’s overall advertising revenues.
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    Will Menthol Cigarettes Become Uncool In The U.S.?
  • By , 5/26/15
  • tags: MO PM
  • Menthol cigarettes are made from menthol that is extracted from a peppermint mint plant or created artificially. Menthol elicits a cooling sensation in the mouth and throat, and is often used in throat lozenges. It was first used in cigarettes in 1920, to reduce the harshness associated with conventional cigarettes and to enhance flavor. While most cigarettes contain some amount of menthol, certain types of cigarettes use it in higher proportions. At a time when demand for traditional cigarettes is falling, menthol cigarettes may become an important source of revenue for cigarette manufacturers. According to an analysis of the tobacco industry between 1965 and 2000, there are two types of menthol smokers – First, those who use the product to tone down the harshness of traditional smoke, comprising of occasional, inexperienced, or young smokers. Second, there are those who like the strong flavor and the physical sensation, which in the U.S. is comprised predominantly of African-American men. In fact, according to one study, tobacco companies often battle a trade-off regarding the menthol content they should use in cigarettes, i.e. should they increase menthol levels to appeal to long-term menthol smokers, or keep it lower to attract inexperienced smokers. In this article, we give some insight into the market for menthol cigarettes and what prospects this product holds for tobacco makers in the U.S. Why are menthol cigarettes an important category for cigarette manufacturers? First and foremost, menthol cigarettes are more flavorful and exude a more pleasant odor in comparison to traditional cigarettes, apart from being less harsh on the throat. Because of these appealing properties, menthol cigarettes gained popularity among U.S. smokers, with over 30%, or 44 million smokers, opting for them as their preferred cigarette type. Second, these type of cigarettes are particularly popular among younger smokers, with close to 57% of the youth smoking menthol, as opposed to only 35% among the total of both young and adult smokers. While older smokers tend to have settled on a brand of choice, younger smokers tend to waver, and are the target audience for tobacco companies. New users are more likely to both try and appreciate menthol cigarettes for its milder properties, and some studies even suggest that youngsters perceive them to be less harmful.  In this case, menthol brands could be the right tool for tobacco companies to build a wider audience and secure volumes going forward. Third, menthol cigarettes are more prevalent among African-American smokers, with over 80% of them choosing the product. Presently, African-Americans account for close to 13% of the U.S. population. However, they have been undergoing higher rates of population growth, in comparison to the U.S. average, and are projected to increase from 42 million presently to 65.7 million by 2050. Given the high prevalence of menthol cigarettes among this group, these demographics show high potential in the market for the sale of the product. Finally, although overall cigarette consumption has been declining, the fall in the menthol category has been almost half that of the non-menthol category. In this situation, tobacco manufacturers with a strong menthol brand in their portfolio definitely stand to benefit to some extent. Are they more harmful than non-menthol cigarettes? While menthol offerings seem to be more promising than non-menthol ones from a business point of view, they are bereft with health implications that invite equal amount of scrutiny from health advocates and regulatory authorities. Although there is little compelling evidence indicating menthol cigarettes to be more harmful than regular ones, many studies suggest that they may be more addictive. According to Canadian Researchers, menthol users smoke almost double the number of cigarettes a week as opposed to non-menthol smokers. Another study by the University of California, San Francisco finds a correlation between menthol-cigarette use and smoking initiation among the youth, and goes on to suggest that ‘Menthol is a prominent design feature used by cigarette manufacturers to attract and retain new, younger smokers.’ Furthermore, there is evidence suggesting that youth that start smoking menthol cigarettes are more vulnerable to progression to regular smoking and nicotine dependence, in comparison to those who start on non-menthol cigarettes. Hence, although both menthol and non-menthol cigarettes are equally capable of increasing the chances of heart attacks, cancer, and other diseases, one could argue that they are more harmful for the simple fact that menthol cigarettes encourage initiation, addiction, and dependence on the stick. Possibility of a ban? The various health concerns associated with menthol cigarettes act as the grounds on which several health advocates around the world have increasingly been appealing for a ban on the product. The first official ban was initiated by Brazil in 2012, following which, the European Union agreed on a directive to phase out all flavored cigarettes (including menthol) by 2022. The latest addition to the list has been Canada, where menthol cigarettes have been banned in Ontario and Nova Scotia. The U.S. presently has not instituted any ban on the manufacture and sale of menthol cigarettes. In October 2009, the Congress passed the Family Smoking Prevention and Tobacco Control Act, which gave the Food and Drug Administration (FDA) the right to regulate tobacco products. Post this, the FDA put a ban on all flavor additives, based on the premise that they increase appeal for smoking among teenagers, although menthol continued to remain exempt. However, of late, menthol cigarettes have come into criticism, with a 2011 report by the FDA’s Tobacco Products Scientific Advisory Committee concluding that “there is strong evidence indicating that adolescent menthol cigarette smokers are more dependent on nicotine than adolescent non-menthol cigarette smokers.” Furthermore, the increasing use of menthol among the African American community is indicative of a “disproportionate harm to that section of society.” Against these arguments, the FDA said that menthol cigarettes could, in fact, pose to be riskier than normal cigarettes and opened a public consultation period, with the aim of eventually banning the product. While a ban of this nature may be in the public interest, it would significantly hurt sales for cigarette manufacturers. Considering that approximately 20% of the net sales for Altria come from menthol cigarettes, a possible ban on the sale of these cigarettes could considerably drag down revenues for the company in the coming years. This is because, even though some customers might switch from menthol cigarettes to regular cigarettes, there could be a sizable proportion of customers who decide to quit or decrease consumption significantly in the event of their choice of cigarette being banned. In a follow up article, we will discuss in detail the possible impact of the ban on Altria, as well as other players in the U.S. tobacco industry, especially when the leader in menthol sales, Lorillard, and the second largest cigarette-maker in the U.S., Reynolds, are considering a merger. We have a price estimate of roughly $47 for the Altria Group, which is slightly below the current market price. See Our Complete Analysis For Altria View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
    EXPE Logo
    Expedia Sells Its Majority Stake In eLong And Enters Into An Alliance With Ctrip
  • By , 5/26/15
  • tags: EXPE PCLN CTRP TRIP TZOO
  • In a major divestment move,  Expedia (NASDAQ: EXPE) ended its 10-and-a-half year relationship with eLong by selling its 62.4% stake in the company to investors, including Ctrip, on May 22nd. The other investors who also purchased a stake in eLong include Keystone Lodging Holdings, Plateno Group and Luxuriant Holdings. The Plateno Group is an association of hospitality brands in China that includes one of China’s largest loyalty programs with 80 million members. Ctrip (NASDAQ:CTRP), the leading Chinese online travel agency (OTA), acquired a 37.6% stake on its erstwhile rival, eLong. Prior to the acquisition, Ctrip’s main competitors in China included Qunar and eLong. eLong is a leading travel service provider in China. Over the years, eLong had bolstered Expedia’s growth in the Chinese market, one of the most important business destinations for the company. However, recently eLong has been floundering in the face of aggressive competition in China. Expedia’s otherwise successful performance in the past few quarters has been dampened by eLong’s losses. In Q4 2014, eLong incurred a $27 million loss in adjusted EBITDA. In Q1 2015, eLong recorded a $33 million EBITDA loss. This in turn dampened Expedia’s EBITDA which grew by 25% excluding eLong, but declined by 5% after including eLong. Prior to the sell-out, Expedia’s management had been vehement about recovering eLong’s growth. The management had earlier spoken about plans to gear up investments in China as it viewed the China market to possess great long-term potential. Our $93 price estimate for Expedia is at over 15% discount to the current market price. See Our Complete Analysis for Expedia Here Is Expedia’s Partnership With Ctrip A Cause For Priceline’s Worries? Priceline (NASDAQ:PCLN) might be a bit uneasy with Ctrip’s agreement with Expedia. In August 2014, Priceline expanded its partnership with Ctrip by investing $500 million. Priceline has an agreement, whereby it can own up to 10% of Ctrip’s stock. In a recent public statement, Priceline has mentioned that its relationship with Ctrip goes back to 2012 and Ctrip’s new partnership with Expedia will help Priceline’s partnership with Ctrip to grow further. Currently, the Expedia-Ctrip partnership is limited to vacation packages and has not been extended to standalone hotels. According to Morgan Stanley’s note to investors, Expedia and Ctrip have decided to share inventory in certain geographies, mainly in the air and packaged tours segment. Priceline, which currently owns 4.66% stake in Ctrip, will remain Ctrip’s primary non-China hotel partner. But the note also said that Expedia and Ctrip are expected to share hotel inventories as well. Expedia had been concentrating on the Asian markets with a presence in India, Japan, Singapore, Thailand, Malaysia, Hong Kong and Korea. More important was its strong emphasis on soon-to-be the largest travel market, China. Its presence in China is in question post the eLong sell-out. However, Expedia maintained that its commercial partnership with Ctrip will enhance its prospects in China. Expedia’s Acquisition Momentum Received A Halt With Its First Sell-Out In 2015 After an eventful 2014, a year in which Expedia acquired the Australian and New Zealand OTA leader, Wotif, the company started 2015 on an aggressive consolidation mode. In January 2015, Expedia acquired Travelocity. The acquisition is a progression from the 2013 strategic agreement between Expedia and Travelocity, wherein Expedia provided content, inventory, customer service and technology to Travelocity’s U.S. and Canadian websites, while Travelocity focused on brand marketing and received a performance-based marketing fee. In February 2015, Expedia announced its intention to acquire Orbitz Worldwide, the Chicago-based online travel agency (OTA) responsible for brands like Orbitz.com and Cheaptickets.com. Expedia expects the deal to close by the second half of 2015, once regulatory approvals are achieved. Expedia might own up to 75% of the U.S. online travel market post the Orbitz acquisition, according to the 2013 market shares provided by PhoCusWright. Online travel agencies (OTAs) together account for 16% of total gross travel bookings from the U.S. In March 2015, Expedia expanded its existing partnership (initiated in 2002) with Latin American Online Travel leader Decolar.com, Inc. This partnership offers Expedia better exposure to the Latin American travelers. By 2016, Latin America is predicted to be one of the leaders in global online travel sales growth. However, eLong’s lackluster performance triggered Expedia’s decision. Not only did it offload a loss-making company but in turn gained partnership with China’s most powerful OTA giant, Ctrip. With a 55.9% share in revenues (as of Q3 2014), Ctrip is the market leader in the Chinese online travel market, followed by Elong and TongCheng with a revenue share of 9.7% and 6.3%, respectively. The market is concentrated with the top three players accounting for 72% of revenues.   Ctrip’s expanded partnership with Priceline strengthened the latter’s position in China. The additional hotel listings from Priceline’s network should contribute to further revenue growth for Ctrip, especially from international markets. At $373 million, Ctrip’s net revenues for Q1 2015 grew by 46% year on year. The main contributors to this growth were accommodation (contributing to 41% of the revenue) and transportation ticketing (contributing 41%). View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap
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    Netflix Price Estimate Revised to $549 Based On International Expansion Potential
  • By , 5/26/15
  • tags: NFLX
  • Netflix (NASDAQ:NFLX) is working tirelessly in order to take its international expansion plans to fruition. The company reportedly held talks with Chinese online broadcasting companies about bringing its content to China. No deal has been made public yet but this development could pave the way for Netflix to enter China’s booming online video industry. The company also posted strong numbers in its quarterly earnings announcement on April 15 th. (You can read our earnings review  here .)  Subscriber growth exceeded expectations as the company added a record 4.9 million subscribers for the first three months of 2015 to take its subscriber total past 62 million globally. User engagement was also at an all-time high and subscribers streamed 10 billion hours in Q1 2015. Netflix is already an established player in the U.S. online streaming industry and we believe that the company will continue to make inroads into the international online streaming space as well. We are revising  our price estimate for Netflix to $549 based on the following analysis.
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    China Makes Sense For Netflix, But It Won’t Be Easy
  • By , 5/26/15
  • tags: NFLX AMZN CMCSA TWC
  • Streaming giant  Netflix (NASDAQ:NFLX) is reportedly in talks with Chinese online broadcasting companies about bringing its content to China. The company has reportedly spoken with Shanghai-based BesTV New Media Co. and Wasu Media Holding Co., a Chinese media company backed by Alibaba Group Holding Ltd. Executive Chairman Jack Ma. No deal has been made public yet but this development could pave the way for Netflix to enter China’s booming online video industry. Netflix had earlier stated that they were interested in entering the country and were exploring “modest” options for doing so. Expanding into China will be a good move for Netflix but it will not be easy sailing for the company.
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    Weekly Notes On Coffee Industry: Starbucks & Keurig Green Mountain
  • By , 5/26/15
  • tags: GMCR
  • Coffee prices drop to their 15-month lows, as Arabica Coffee July futures fell below $1.30 last week. This is due to speculations of increasing global supplies and improved weather conditions in Brazil, the world’s largest producer of coffee. Moreover, production forecasts for Colombian coffee were revised higher by USDA. However, it is estimated that the demand will still outpace the production. On the other hand, the National Weather Service forecasts a 90% certainty of El-Nino continuation through this summer. This might be devastating to all the crops in South American and Asian countries. In the past, El-Nino occurrences have led to drought situations in Central and South American nations, impacting coffee prices. Here’s a quick round-up of some news related to the coffee related companies covered by Trefis. Starbucks Starbucks Corporation (NASDAQ: SBUX), reported strong numbers in its second quarter for fiscal 2015, as the company’s consolidated net revenues increased 18% year-over-year (y-o-y) to $4.6 billion, with a significant contribution by China & the Asia-Pacific region.. The company’s China and Asia-Pacific (CAP) segment continues to outperform with 12% growth in the comparable store sales in the March ended quarter. Due to the recent drop in coffee prices, Starbucks locked 70% of its coffee supply for 2016. Meanwhile, Starbucks launched some new innovative menu items for the summer season, including Mini Frappucino, Frappucino Sugar Cookies, Raspberry Swirl Pound Cake, and Chicken Artichoke Panini. Starbucks’ stock increased from $50.50 to $51.50 during the last week.  Our price estimate for the company’s stock is $48, implying a market cap of $72 billion, which is 6% below the current market price. See our complete analysis of Starbucks Keurig Green Mountain Keurig Green Mountain (NASDAQ:GMCR) reported dull numbers in its Q2 earnings report for the fiscal 2015 reported on May 6. Lower brewer and accessory sales partially offset the growth in the sales of portion packs and pods, resulting in just a 2% year-over-year (y-o-y) increase in the company’s net sales, to $1.127 billion. Sales of pods (portion packs) grew 7% y-o-y to $956 million, driven by a 14% y-o-y increase in the volumes and a 1% increase in the pricing, whereas sales of brewers and accessories declined a massive 23% y-o-y to $106 million, driven by a 22% y-o-y decline in sales volume. In the Keurig Kold Investor Presentation, the company mentioned that it is going to release the cold brewer in the fall of 2015 on online platforms, and later on in retail stores by the end of holiday 2016. Such a delayed entry of cold brewers to retail shelves led to a drop in the stock price. Keurig Green Mountain’s stock dropped from $94 to $88, the 12-month low for GMCR, and later recovered to $90 during the last week.   Our price estimate for the company’s stock is $103, implying a market cap of $16.7 billion, which is more than 10% above the current market price. See our complete analysis of Keurig Green Mountain View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
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    Qualcomm And Daimler Announce Strategic Collaboration To Develop In-Car Tech
  • By , 5/26/15
  • tags: QCOM INTC AMD BRCM
  • Leading mobile chipmaker  Qualcomm’s (NASDAQ:QCOM) subsidiary, Qualcomm Technologies, recently announced a collaboration with Diamler AG to develop new technologies that will enable wireless charging of electric vehicles and in-car wireless charging of mobile devices. In the first phase of the collaboration, the companies will focus on transforming future vehicles with mobile technologies that enhance in-car experiences and vehicle performance such as 3G/4G connectivity, wireless charging technology for in-vehicle use and implementation of the Qualcomm Halo Wireless Electric Vehicle Charging (WEVC) technology. ( Read Press Release ) In a joint statement, Daimler and Qualcomm said they were assessing the application of wireless technology to charge their electric vehicles (EV) and plug-in hybrid EVs without ever having to plug them in. Chief among the technologies that the new partnership aims to explore is one that allows plug-in electric vehicles to charge even without being plugged in. This would be made possible by using Qualcomm’s Halo WEVC technology, which can be built into individual parking slots to allow vehicles to charge wirelessly. Along with Halo, Qualcomm will also provide its WiPower wireless charging technology to charge mobile devices, such as smartphones, tablets and smart watches inside Daimler’s vehicles. Unlike existing wireless charging standards, which require devices be placed on the charging pad, WiPower only needs to have the device placed within the charge area to work. Daimler also plans to include built-in 3G/4G connection into its cars, but the company did not specify how it plans to do that.  Back in 2010, Qualcomm acquired WiPower, a technology for wireless in-car device charging. This is not the first time that Daimler has teamed up with Qualcomm to develop smart vehicles using the chipmaker’s technologies. Both companies have worked together in the past, providing the Mercedes AMG Petronas Formula One team with sensor-based devices running on Qualcomm’s line of Snapdragon chipsets for the team’s race cars. ( Read Press Release ) Qualcomm recently provided guidance on how innovative the automotive sector has become. The cars are absorbing innovative smartphone technology at a very fast pace. Qualcomm strategically entered the automotive market in January 2014, and has supplied modems and its high-performance smartphone processor (Snapdragon) to over a dozen global automakers since then. Currently, there are around  20 million cars equipped with Qualcomm chips. Even though the company makes the most money selling the wireless chips and processors for a large chunk of the smartphone market, it expects about 10% of its chip division revenue to come from non-smartphone devices in 2015. Our price estimate of $71 for Qualcomm is almost in line with the current market price. For fiscal year 2015, we estimate the company to report revenue of $29 billion and net income of $8.1 billion. Also, our non-GAAP EPS estimate is $4.7 as compared to the market consensus of $4.82. View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
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    Aeropostale Crashes Yet Again On Weaker-Than-Expected Results And Guidance
  • By , 5/26/15
  • tags: ARO AEO ANF
  • There seems to be no end for  Aeropostale ‘s (NYSE:ARO) struggle. The company’s shares fell over  15% when it reported Q1 fiscal 2015 results well below  market expectations, which were already negative. It reported loss per share of $0.56, just below the consensus estimate of a loss of $0.55 a share. Net sales totaled at $318.6 million, trailing the market estimates of $326 million and reflecting a year over year decline of 20%. Comparable sales were down 11% on top of 13% decrease in the same quarter last year, and the remaining decline in net sales came from 19% decrease in weighed average square footage. Aeropostale continues to struggle with its weak brand image, low store traffic and poor customer response, while trying to rightsize its store fleet and merchandise portfolio. Its revival efforts haven’t worked out very well so far and there have been barely any signs of improvement, let alone a notable recovery. In fact, average unit retail, which improved moderately last year implying a slight recovery in average prices, fell flat in the first quarter. Our price estimate for Aeroposatle is at $6.18, implying a premium of close to 180% to the current market price. However, we are in the process of a significant revision in our price estimate. See our complete analysis for Aeropostale Though Aeropostale feels that it is making some progress on its merchandise, its guidance for the second quarter that includes the start of the back-to-school season indicates otherwise. The retailer projects loss per share of $0.52-$0.60 for the quarter, which is again below the consensus estimate. A part of Aeropostale’s under-performance can be attributed to what’s troubling the entire apparel industry —   a consistent decline in foot traffic and fierce competition from Zara and Forever 21. Partially responsible is the retailer’s strategy of reshaping  P.S. for Aeropostale, for which it has closed almost all the brand stores. However, the main problem remains Aeropostale’s basic logo merchandise portfolio, that has made it extremely difficult for the retailer to re-invent itself as a fashion retailer. Its fashion changes have been constantly undermined by its long-standing “cheap basic” brand image. Although the retailer’s performance was disastrous, it can take a little heart from the fact that its gross margins improved slightly with better merchandise margins and a small decline in promotional activities. Gross Margins expanded to 19.2% from 18.5% last year. However, the improvement wasn’t too promising and much of it can be attributed to a slight rebound from last year’s drastically low levels. Aeropostale’s gross margins are below 20%, while several comparable apparel retailers have their EBITDA margins above this level. This fact is enough to gauge the weakness in the retailer’s business, which appears a long way from being profitable. Aeropostale’s shares have reached an all time low, it is burning cash at a rapid pace and raising capital in public markets is a little far fetched now. It would make sense for the retailer to look for possibilities of a public-private transition, in order to work towards the revival of its business away from investors’ eyes. However, Aeropostale’s high operating lease and low cash generation capabilities make it a less attractive acquisition option despite the fact that its current market cap stands at just $174 million. Generating returns on such small investments might not be difficult for a private equity firm, should one acquire it, but no one has shown any such interest so far, which darkens the company’s future. There are some aspects of its business such as  P.S. from Aeropostale and international expansion, where Aeropostale can push to improve its overall performance. However, they will require significant capital and time, and the retailer appears to have little of either. Investors are losing confidence in the company rapidly, which is indicative of the fact that Aeropostale may not sustain for long in the market if its revival efforts continue to fail. View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap |  More Trefis Research  
    EA Logo
    Weekly Notes On Gaming Industry: Electronic Arts & Activision Blizzard
  • By , 5/26/15
  • tags: ATVI
  • The first trimester of 2015 has brought some respite for the game developers, as the gaming industry is showing some signs of improvement in terms of software sales. According to the research group NPD, gamers spent $595 million on new physical software, hardware, and other accessories, up 3% year-over-year (y-o-y) in April 2015. However, the hardware sales were down 4% y-o-y to $184 million, due to a strong comparison with last year’s April sales, as well as a 55% decline in demand for previous generation consoles. In terms of unit sales, the demand for new generation consoles drove the growth by 12%. Microsoft’s Xbox outpaced Sony’s PlayStation consoles in April. On the other hand, software sales witnessed 13% y-o-y growth to $256 million. For the first trimester, hardware sales were down 10% y-o-y, whereas the software sales strengthened by roughly 5%. Here’s a quick round-up of some news related to the gaming industry covered by Trefis. Electronic Arts Electronic Arts (NASDAQ:EA) finished its fiscal 2015 with strong revenue figures in its Q4 earnings report released on May 5. The company’s GAAP net revenues jumped more than 5% year-over-year (y-o-y) to $1.185 billion in the fourth quarter, with a 25% y-o-y increase in the digital revenues, which now account for nearly 52% of the total revenues. The company’s core sports titles and the new releases: Dragon Age: Inquisition and Battlefield: Hardline, drove the revenue growth. On March 31, the company announced the release of the first expansion pack for  The Sims 4 (The Sims 4 Get To Work), on PC and Mac in North America. On May 21, EA released the teaser trailer for one of the most awaited racing titles this year: Need For Speed, which will be launched in the fall of 2015 for PC, PS4, and Xbox One. EA’s stock traded between $62 and $63.50 during the last week.  Our price estimate for the company’s stock is $54, implying a market cap of $17 billion, which is more than 10% below the current market price. See our complete analysis of Electronic Arts stock here Activision Blizzard Activision Blizzard (NASDAQ: ATVI) reported better than expected results in its first quarter earnings report, with 15% y-o-y growth in GAAP net revenues. GAAP digital revenues reached a record $581 million for the quarter, and were a record 45% of the total GAAP net revenues. The company was recently included in the Fortune’s list of top 100 best companies to work for. Moreover, Blizzard Entertainment announced the first-ever global tournament for new online game: Heroes of the Storm, to be held at BlizzCon on November 6 th and 7 th .  Activision’s stock traded between $25.40 and $25.80 during the last week.  Our price estimate for Activision is $25.88, which is roughly the same as the current market price. See our complete analysis of Activision’s stock here View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
    BBY Logo
    Best Buy's Net Profit Falls On Restructuring, As Underlying Business Remains Strong
  • By , 5/26/15
  • tags: BBY RSH AMZN EBAY WMT
  • View Interactive Institutional Research (Powered by Tref is):
    ANN Logo
    Ann Outlines Growth Areas Following Lackluster Q1 Results.
  • By , 5/26/15
  • tags: ANN GES ANF
  • Ann (NYSE:ANN), the parent company of Ann Taylor and LOFT, reported its Q1 fiscal 2015 results last week, in the wake its prospective acquisition by the Ascena Group.  The company reported earnings per share of $0.29 for the quarter, up from $0.11 in the same quarter last year. Excluding the impact of pre-tax restructuring charges, Ann’s Q1 fiscal 2015′s EPS settled at $0.37, compared to $0.33 in the year ago period. On the topline front, the retailer reported 1% increase in revenues to $597.7 million, with comparable sales declining 1.5%. By brands, Ann Taylor’s comparable sales fell 3% with 2.6% increase at its mainline stores & Internet and a sizable 16% decline at Ann Taylor factory. While the brand witnessed good customer response to its fashion newness in full priced stores, buyers continued to avoid past season products at its factory outlets. At LOFT, performance was consistent across the formats as overall comparable sales declined 0.6% with 0.7% decline at mainline format and flat growth at LOFT outlet. While most of the brand’s categories performed well during the quarter, weakness in sweaters and denim had a significant offsetting impact. From a long term perspective, apart from working proactively on merchandise design, Ann is looking to increase the efficiency of its supply chain, optimize SG&A expenses, progress on omni-channel integration, and grow its  Lou & Grey brand. We believe that if the retailer is able to progress on these fronts swiftly, it can become a valuable business proposition for Ascena Group. Our price estimate for ANN stands at $40, which is about 15% below the current market price. However, we are in the process of updating our model in light of the recent earnings release.
    SCHW Logo
    Trade Volumes Decline, Asset Bases Rises For Charles Schwab In April
  • By , 5/26/15
  • tags: SCHW ETFC AMTD
  • Brokerage firm Charles Schwab (NYSE:SCHW) witnessed a strong start to the year, with total daily trades standing at nearly 580,000 through the March quarter. Trade volumes were about 5% higher than the comparable prior year period and 5% higher than the previous quarter. However, volumes fell to about 515,000 trades per day in April, a 4% year-on-year decline. Schwab is one of the largest brokerage firms in the U.S. with over 9.55 million active brokerage accounts on its platform, and total client assets of almost $2.55 trillion. The brokerage added over $200 billion worth of client assets last year and has kept up the momentum in 2015 thus far. Below we take a look at some of Schwab’s key trading and operating metrics for April and our forecasts for them.
    BAC Logo
    Q1 2015 U.S. Banking Review: Mortgage Originations
  • By , 5/26/15
  • tags: BAC C JPM USB WFC
  • The U.S. mortgage industry witnessed a small improvement for the first quarter of the year, with data compiled by the Mortgage Bankers Association showing that $313 billion in mortgages were originated over the period. This compares to origination figures of $278 billion for the previous quarter and $247 billion for the year-ago period. It should be noted that 2014 was a particularly bad period for mortgage originations, as lenders did not hand out more than $300 billion in home loans for any quarter in the year. The exceptionally poor run over recent quarters can be best understood by the fact that mortgage originations have fallen below $300 billion in only two other quarters besides the Q1 -Q4 2014 period in the last fifteen years – in Q3 2008 and Q1 2011. The lower level of mortgage activity has negatively impacted revenues for the country’s biggest banking group – especially for  Wells Fargo (NYSE:WFC) and  U.S. Bancorp (NYSE:USB), who bulked up their mortgage banking businesses considerably after the economic downturn. In comparison, things remained largely unchanged for  Bank of America (NYSE:BAC) and  Citigroup (NYSE:C) as both banking giants were forced to slash their mortgage operations in the wake of the recession. In this article, we highlight the changes in mortgage origination volumes for each of the country’s five largest commercial banks over the last two years, and also what to expect from each of them over the coming years.
    PAYX Logo
    Paychex Should Benefit From Continued Improvement In The U.S. Job Market
  • By , 5/26/15
  • tags: PAYX ADP
  • The U.S. Bureau of Labor Statistics recently released its monthly unemployment summary, reporting a drop in the unemployment rate to 5.4%, the lowest in seven years. The strengthening U.S. economy is continuing to add jobs in the market, leading to a drop in the unemployment rate. This bodes well for Paychex (NASDAQ:PAYX), which is likely to see an increase in the number of employees per client it serves.
    AMTD Logo
    Mild Growth In Asset Base, Trade Volumes For TD Ameritrade In April
  • By , 5/26/15
  • tags: AMTD ETFC SCHW
  • TD Ameritrade (NYSE:AMTD) reported modest growth in trade volumes in April after witnessing high volumes in the quarter ended March 31. The company initially reported a rise in trading activity in the December quarter after sluggish volumes in mid-2014. In its most recent earnings (Q2 FY 2015), Ameritrade reported a 1% year-over-year  growth in net revenues to $803 million. The company witnessed a 6% y-o-y decline in commission and transaction fees revenues mainly due to a tough year-on-year comparison over the comparable prior year period. On the other hand, net-interest revenues rose by 2% y-o-y to $149 million while investment product fee revenues were by by 13% y-o-y to $85 million. According to our estimates, Ameritrade’s adjusted EBITDA margin in fiscal Q2 compressed by almost 3 percentage points over the prior year quarter to 42.5%. Limited revenue growth complemented by a rise in operating expenses led margins to fall through the quarter. Although most cash operating expenses remained flat over the comparable prior year period, the brokerage incurred about 8% higher employee compensation and clearing costs. Below we take a look at some of Ameritrade’s key metrics and our forecasts for these metrics.
    CSX Logo
    Railroads Weekly Review: Norfolk Southern, CSX, Union Pacific
  • By , 5/26/15
  • tags: CSX NSC UNP
  • Railroad stocks saw some stability last week, after having declined significantly in the week before due to lowered revenue guidance from Kansas City Southern. Investors have been concerned about energy sector volumes, which include commodities such as coal, coke, and crude oil. In this review, we take a look at carloads of  Norfolk Southern (NYSE: NSC),  CSX (NYSE: CSX), and  Union Pacific (NYSE: UNP), for the quarter to date ended May 16, with a particular focus on their energy related commodities. Norfolk Southern According to Norfolk Southern’s carload report, its coal carloads maintained their decline of 19% year-on-year from the previous week in to the quarter to date ended May 16. Coke carloads were up 6.5% in the quarter to date May 16, compared to 5% in the quarter to date May 9. Norfolk Southern’s petroleum products carloads, which includes crude oil, were up 33% in the quarter to date May 16, compared to 36% in the quarter to date May 9. In the week ended May 16, intermodal volumes grew 4%, compared to 3% in the week ended May 9. We currently have a price estimate of $100 for Norfolk Southern. For 2015, we estimate revenues of $11.4 billion, compared to a consensus estimate of $11.1 billion, and EPS of $6.30, compared to a consensus estimate of $5.90. Click here to see our complete analysis of Norfolk Southern. Union Pacific Union Pacific’s petroleum products carloads declined 4% year-on-year in the quarter to date May 16, compared to 6% year-on-year in the quarter to date May 21. Its coal carloads declined 25% in the quarter to date May 16, while coke carloads were up 23%. Now that the labor contract negotiations between the ILWU and PMA have ended and a formal contract has been signed, Union Pacific’s intermodal carloads have recovered, with a 5% increase during the quarter to date May 16. Union Pacific’s stock gained 1.1% over the week through Thursday. We currently have a price estimate of $104 for Union Pacific. For the year 2015, we estimate revenues of $24.4 billion, compared to consensus estimate of $24.0 billion, and EPS of $6.30, compared to a consensus estimate of $6.25. Click here to see our complete analysis of Union Pacific. CSX CSX’s coal carloads declined 10% year-on-year in the quarter to date May 16, compared to 11% year-on-year in the quarter to date May 9. Coke carloads were down 17% in the quarter to date May 16, compared to 18% in the quarter to date May 9. CSX’s petroleum products carloads were up 9% in the quarter to date May 16, consistent with the quarter to date May 9. Intermodal volumes grew 3% during the week ended May 16. We currently have a price estimate of $30 for CSX. For the year 2015, we estimate revenues of $12.8 billion, compared to a consensus estimate of $12.5 billion, and EPS of $2.10, compared to a consensus estimate of $2.06. Click here to see our complete analysis of CSX. View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
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