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GM Logo
Earnings Review: Growth May Be Hard To Come By But GM's Sales Are At A Very High Level Right Now
  • By , 7/22/16
  • tags: GM F TM HMC
  • General Motors (NYSE:GM) reported earnings per share (EPS) of $ 1.82 for the second quarter of fiscal year 2016 on Thursday, July 21st on a 11% year-over-year growth in revenue and a 380 basis point expansion in operating margin. The company achieved such a high level of profitability despite a 5.7% reduction in new vehicles sold in North America and a 90 basis point reduction in market share in China, GM’s biggest market. This shows that the company’s volumes are at an extremely high level right now and, even though growth from this level should be slow, profitability should remain high. GM North America: No Cause For Worry We’ve written previously about how sales of all GM brands have declined in the U.S. in the first half of 2016 and about GM’s misguided marketing campaign for the new Chevrolet Silverado pick-up truck. However, despite these problems resulting in a 5.7% reduction in new units sold, the company reported a 14% year-over-year growth in revenue and a 160 basis point expansion in operating margin. This was largely the result of a close to 21% increase in average revenue earned per new unit sold. According to the company, Average Transaction Prices for full size pickups are $ 2,500 above last year’s second quarter’s levels and average transaction prices for all brands are up $ 1,500 per unit. This has given the company some leeway to increase incentives to make up for the loss in market share in the coming quarters. In the beginning of July, incentives on Chevrolet Silverado are up 76% from June levels and on GMC Sierra are up 147%. GM China: Mixed Signals China is the world’s biggest auto market and has been one of the fastest growing markets in recent years. However, last year’s stock market crash, impending fears of an economic slowdown, and the revaluation of the Yuan together stoked fears of a slowdown in this market. As a result, GM revised its growth forecasts for the region down to 3%-4% for the 2016-2020 period, with most of the growth expected to come from tier 3 and tier 4 cities. Despite those fears, new vehicle sales in China grew by close to 9% for the second quarter. GM’s units sold increased by close to 2%, with average equity income per unit sold decreasing by 8.1%. This represents both good and bad news for the company. The good news is that the market seems to be doing well, although some of this might be attributable to the relaxation of sales tax on certain vehicles by the Chinese Government.  That said, all GM brands except Chevrolet are growing their volumes. The bad news is that these new sales seem to be lower margin ones, which should put some pressure on the amount of value growth in China can contribute to GM’s market cap. GM Europe: Encouraging Europe has been a sore spot for many auto companies in recent years. GM itself has lost over $ 3 billion on its operations in the region in the last three years. However, the U.S. auto maker’s performance in Europe in this quarter was encouraging, with the company reporting an operating profit of $328 million compared to losses of $ 45 million in the same quarter last year. The company’s operating margin expanded by 350 basis points and its average transaction prices were up 5.1% or $ 800 per unit. Going forward, given the uncertain economic and political situation in many Eurozone countries, it is difficult to say whether the company can retain either these volumes or these transaction prices going forward. Have more questions about auto companies? Click on the links below: How Do Automotive Luxury Brands Compare In Their Performance In China? How Does GM’s performance vary across geographies? How Do Auto Luxury Brands Compare In The US? What Is Driving Changes In Ford’s Annual Unit Sales? How Much Money Does Ford Make Per Car Sold? How Much Has GM Been Investing In Growth Opportunities? How Ford’s Unit Pricing Differs Across Geographies? How Much Has Ford Been Investing In Growth Opportunities Ford’s Overwhelming Dependence On North America How Much Profit Does Ford Make Per Unit Sold In Each Geography? How Different China Growth Projections Impact Ford’s Bottomline How Ford’s Poor Russia Performance Is Obscuring Gains Made In Rest of Europe How Careful Targeting of F-Series Sales Helped Ford Boost Its Profits How Honda’s Automotive Business Is Faring In Japan The Most Significant Trends For Honda Motor Company Honda’s Brand Image Is Changing In The U.S. How Honda’s Automotive Performance Differs Across Geographies How Much Has Honda Been Investing In Growth Opportunities How Differing Japan Growth Projections Impact Honda Motor Company Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for General Motors See More at Trefis  |  View Interactive Institutional Research  (Powered by Trefis) Get Trefis Technology
    AMD Logo
    AMD Turns Profitable In Q2'16: Expected Growth In All Businesses To Help Deliver Non-GAAP Profitability In 2H'16
  • By , 7/22/16
  • tags: AMD INTC NVDA QCOM
  • AMD  (NYSE:AMD) reported its Q2 2016 earnings on July 21st. After reporting a net loss for seven consecutive quarters, the company finally managed to turn things around, reporting $69 million in net profit in Q2 2016. A 9% year-over-year and 23% quarter-over-quarter increase in revenue ($1.03 billion), and cash inflow from the ATMP joint venture transaction with Nantong Fujitsu Microelectronics, led to the improved profitability in Q2 2016. Strong semi-custom demand and better-than-seasonal graphics sales helped AMD beat its Q2 2016 revenue guidance. The ongoing semi-custom SoC ramps, the introduction of Polaris GPUs, and the launch of the 7th generation APUs can help AMD keep the positive momentum alive going forward. The company expects low single-digit revenue growth for the full year (2016) and is confident of delivering non-GAAP operating profitability in the second half of the year. For Q3 2016, the company estimates that: 1) revenue will  increase by 18% sequentially (+/-3%); 2) the non-GAAP gross margin should be 31%;  and, 3) non-GAAP operating expenses will be approximately $350 million, due to an increase in R&D investments. Note – Our current price estimate for AMD is significantly lower than the market. We are in the process of updating our model for the Q2 2016 earnings. See our complete analysis for AMD here Key Q2’16 Highlights First half 2016 GPU sales increased by a double digit percentage from a year ago. Stronger than seasonal GPU sales and higher client notebook processor sales were offset by a decline in desktop processor sales, led by channel softness in China. Mobile APU sales increased for the third straight quarter. Professional graphics revenue also grew  for the third straight quarter of sequential. AMD believes it gained share driven by increased adoption of Firepro graphics by OEMs, as well as several cloud data center GPU compute wins. Strong Polaris Demand Will Drive Growth In The Computing and Graphics Segment AMD’s strong second quarter graphics performance was capped by the launch of its new Polaris-based RX 480 GPUs at the end of June, which helped contribute to the highest desktop channel GPU shipments since Q4 2014. Judging by the initial channel sales and OEM design wins, AMD is confident that the strong demand will continue to drive revenue growth in Q3 2016 and beyond. The company will launch the rest of the Radeon RX family in the near future, which will hopefully add to the growth momentum. The 14 nm Polaris architecture based Radeon Graphic series extends AMD’s leadership in DirectX 12, gaming and Virtual Reality. Additionally, the high-performance x86 Zen processor core architecture (expected to be launched in the first half of 2017) can help AMD scale across multiple markets including high-performance desktops, servers, notebooks and embedded solutions. Ramping Semi-Custom Sales & New Deals To Drive Growth In The Semi-Custom Business AMD expects semi-custom shipments to peak for the year in the third quarter, as both Microsoft and Sony prepare for the holidays. Based on strong demand, the company believes that the semi-custom unit shipments and revenue will grow on an annual basis. Last quarter, Microsoft announced two new members of the Xbox One family powered by AMD. The Xbox One S is the slimmest Xbox console ever and the first to support HDR (High Dynamic Range) imaging. The system is expected to go on sale in the coming weeks. Microsoft also announced their next generation game console, codenamed Project Scorpio, for the 2017 holidays. Project Scorpio is one of the three semi-custom design wins AMD announced a few quarters back. Project Scorpio, along with 2 other undisclosed deals, is expected to generate nearly $1.5 billion for AMD over the next three to four years. View Interactive Institutional Research (Powered by Trefis): Global Large Cap   |  U.S. Mid & Small Cap   |  European Large & Mid Cap   More Trefis Research
    TTM Logo
    Brexit Could Be Good Or Bad News For Jaguar Land Rover
  • By , 7/22/16
  • tags: TTM-BY-COMPANY VLKAY GM TM TTM F BMW DAI DDAIF TSLA
  • The impending exit of Britain from the European Union could have dire effects on  Tata Motors ‘ (NYSE:TTM) British marquee brand Jaguar Land Rover, which forms more than 90% of the group’s valuation, as per our estimates. JLR is back in full swing in 2016, posting record-breaking half-year sales results, selling 291,556 vehicles between January and June, up 22% year-over-year. The primary growth driver was the 64% increase in Jaguar sales through the first half of the year. High demand for compact luxury vehicles has been the main reason for Jaguar’s rapid sales rise in the last year or so. JLR has also posted a solid 21% year-over-year growth in the U.K. so far this year, beating the growth seen by any of the German trio of Mercedes-Benz, Audi, and BMW in the region. The U.K. once again became JLR’s single largest market, overtaking China last year, due to the combined impact of strong vehicle sales in the U.K. and lower sales in China. The U.K. represented 21.4% of Jaguar Land Rover’s net vehicle sales in the first half of the year. JLR, headquartered in the UK itself, has 25,000 of its 26,000-plus employees working there. Growing uncertainty after the U.K. voted to exit the European Union weighed on the consumer and business confidence in June, negatively impacting vehicle sales in the month. It might be too early to relate the fall in vehicle sales in the U.K. to the June 23 vote, as car deliveries typically occur several weeks after purchase decisions, and most of the month’s sales happened prior to the vote. However, manufacturers push to boost figures as much as possible at the end of the month, meaning the June 23 vote could have had an impact on the June results. Considering that the U.K. is JLR’s largest market, a possible slowdown in demand in the region will impact JLR’s revenue as well. In addition, tariff barriers imposed following Britain’s exit from the European Union will effect JLR’s operations in terms of sourcing of components and movement of workforce in the region. Europe (excluding the U.K.) formed over 18% of JLR’s vehicle deliveries through the first half of the year. More than 80% of the vehicles produced in the U.K. are sold abroad. A massive 94% of the ~£11 billion imported automotive parts came from the European Union last year, with 27% from high-tech suppliers in Germany, according to Roland Berger. The added costs might prompt increases in model prices, which could make JLR less competitive in the European markets, as compared to its chief competitors such as BMW, Audi, and Mercedes-Benz. On the other hand, the fluctuations in the pound sterling against the euro and the U.S. dollar could play out in JLR’s favor. The automaker manufactures its vehicles primarily in the U.K., with three vehicle manufacturing plants– two in the West Midlands at Castle Bromwich and Solihull, and one near Liverpool in Halewood. In addition, JLR has a manufacturing plant in China, in partnership with Chery Automobile, and has recently opened its first wholly-owned manufacturing plant outside the U.K. in recession-struck Brazil. Considering that JLR exports most of the vehicles produced in the U.K., depreciation of the pound against the euro and the dollar could be favorable for the automaker. The pound sterling is down ~10% against the euro and ~12% against the dollar since right before the announcement of the Brexit vote on June 23. Concerns over the U.K.’s current account, interest rate cuts by the Bank of England, and the U.S.’s prospective monetary tightening could lead to a further depreciation of the pound. The German carmakers (including non-premium brands such as Volkswagen) exported more than one million cars to the U.K. last year, and the declining pound is expected to dent earnings from the country, when converted back to the euro. This, however, could benefit JLR in the region. The automaker might be able to nab market share from its competitors by improving its price competitiveness within the U.K. and the rest of Europe. Have more questions on Tata Motors? See the links below. New Compact Models Boost Jaguar Land Rover’s First Half Volumes Tata Motors Rides On Strong Q4 Performance By Jaguar Land Rover To Boost Fiscal 2016 Results Jaguar Land Rover Steps Up Unit Sales In Crucial Markets How Will Tata Motors’ Valuation Be Impacted If Jaguar Land Rover Sells Fewer Cars Than Estimated? What Will Be The Jump In Tata Motors’ Valuation If Jaguar Land Rover Sells More Cars Than Expected? Where Does Jaguar Land Rover Stand Relative To The German Top 3 In Crucial Markets? What’s Tata Motors’s Fundamental Value Based On Expected Fiscal 2016 Results? How Has Tata Motors’s Revenue And EBITDA Composition Changed Over FY12-FY16? By What Percentage Have Tata Motors’s Revenues And EBITDA Grown Over The Last Five Years? What Is Tata Motors’s Revenue And EBITDA Breakdown? Where Will Tata Motors’s Revenue And EBITDA Growth Come From Over The Next Three Years? Why Jaguar Land Rover Forms More Than 90% Of Tata Motors’ Valuation Notes: Get Trefis Technology
    VALE Logo
    Vale's Q2 2016 Production Review: Decline In Iron Ore Output As Production Cuts Take Effect
  • By , 7/22/16
  • tags: VALE MT RIO CLF
  • Vale reported its production figures for Q2 2016 yesterday, with a decline in iron ore production the most striking takeaway from the report. After several successive quarters of reporting year-over-year increases in iron ore production as the company ramped up its iron ore output, production cuts from some of Vale’s higher cost iron ore mining operations instituted in the second half of last year have taken effect with the company reporting a 3% year-over-year decline in its Q2 iron ore production. Vale had decided to cut around 25 million tons per year worth of lower margin iron ore production last year in response to plummeting iron ore prices, amid a global supply glut. Whereas iron ore prices still remain subdued, production cuts from lower margin producers have eased the oversupply situation, arresting the decline in iron ore prices. Apart from the decline in iron ore production, Vale’s coal production stood 25% lower year-over-year as a result of geological instability issues at the Carborough Downs mine. Nickel production stood 17% higher year-over-year as production recovered from temporary outages last year, whereas copper production stood 2% higher year-over-year. Here is a summary of Vale’s Q2 production. Have more questions about Vale? See the links below. Vale’s Full Year 2015 Pre-Earnings Report Vale’s Q4 2015 Earnings Report: Decline In Iron Ore Prices Negatively Impacts Results How Important Is China To Vale’s Iron Ore Sales? What Is China’s Share Of Vale’s Overall Revenue? What Is Vale’s Revenue & EBITDA Breakdown? What Is Vale’s Fundamental Value Based On 2015 Results? By What Percentage Has Vale’s Revenue & EBITDA Declined Over The Last 5 Years? By What Percentage Can Vale’s Revenue & EBITDA Increase Over The Next 3 Years? How Has Vale’s Revenue Composition Changed Over The Last 5 Years? Notes:
    BA Logo
    Boeing Recognizes A $2.78 Billion Charge Ahead Of Q2 Earnings
  • By , 7/22/16
  • tags: BA
  • The market woke up to some troubling news yesterday as  Boeing ‘s (NYSE:BA) management announced that the company will report approximately $2.78 billion in pre-tax charges related to three of its most troubled programs — the 787, the 747 and the KC-46A. This is going to directly hurt its earnings figures this quarter, thouhg most analysts will exclude and tax-adjust these charges. The aerospace giant has affirmed that these charges are going to have little to no effect on cash flows. The company reaffirmed full year guidance with the announcement. In the last 12 quarters, Boeing has beaten earnings estimates in all but one instance. Last quarter, the company incurred a one time charge on its KC-46A program, which led to a 22% decrease in its earnings. Boeing has had problems with the programs in question for some time now, however, no one expected the hit to be of this proportion. See our complete analysis of Boeing 787 Program The biggest of the charges is related to a write-off of 2 Boeing 787 Dreamliner aircraft which were expected to be delivered to customers this year. The two planes in question belong to a program that consisted of 6 test aircraft, of which three have been donated, and one refurbished and sold to the government of Mexico. The remaining two were also meant to be refurbished, however, management decided the costs associated with it were too high an investment; deciding to write them off instead. In a nutshell, an after-tax charge of $847 million, or $1.33 per share, is to be reclassified from program inventory to R&D expenses. An important thing to note here is that deferred costs will go down due to the reclassification and cash flows will not be affected. Additionally, this move also sheds light on the fact that today, it is getting extremely expensive to design, test and launch an entirely new aircraft. As evidenced by this incident, it could take years, if not decades, for a new program to break even. This could explain why Airbus and Boeing have focused extensively — in the recent past — to launch re-engined versions of existing aircraft instead of starting new programs at all. Furthermore, this could explain why both industrial mammoths have relied heavily on aftermarket revenues to recover costs associated with aircraft manufacturing. 747 Program Depressed demand for large cargo aircraft has been catalogued for quite some time now and this has hurt the 747 program. In light of this, Boeing had previously announced slowing the production of its 747-8 model. Therefore, charges related to this program come as no big surprise for investors. Basically, Boeing expects to sell a smaller quantity of aircraft at a discounted price. This reflects lower aircraft in the accounting quantity and lower revenues. The company expects to keep the production rate fixed at 6 per year through 2019, and not increase production to 12 per year as earlier anticipated. Unlike the 787 write-off, this charge is likely to affect cash flows as the costs are higher and the company expected to generate less revenue at the lower unit sales rate. Boeing has realized an after-tax non-cash charge of $814 million, or $1.28 per share, in the program. Recently, Volga-Dnepr group finalized a deal to purchase 20 Boeing 747-8Fs (4 of which have already been delivered). Despite this, it seems like nothing can save the Boeing 747 program in the near future. Accumulating charges and a lack of demand are going to plague the program for some time to come. KC-46A Program Last month, the management revealed that the delivery date for the KC-46A has slipped from August 2017 to January 2018. The company will recognize an after-tax charge of $393 million, or $0.62 per share, this quarter. This is primarily due to a delay in manufacturing (taken up in order to keep the delivery on schedule) and technical challenges which includes a fix on the hardware related to the refuelling boom. Additional charges were incurred to flight test these technical challenges. View Interactive Institutional Research (Powered by Trefis): Global Large Cap  |  U.S. Mid & Small Cap  |  European Large & Mid Cap More Trefis Research
    ABT Logo
    Recent Product Launches Drive Growth For Abbott Laboratories In Q2'16
  • By , 7/22/16
  • tags: ABT
  • Leading healthcare major, Abbott Laboratories  (NYSE:ABT) reported its Q2 2016 earnings on July 20, 2016. The company’s sales for the quarter grew by 6.4% excluding the unfavorable impact of 3.2% due to foreign currency headwinds. The foreign currency effects were higher than the company’s prior expectations, as the U.S. dollar strengthened relative to other currencies in the quarter due to Brexit. Nevertheless, Abbott’s operational growth was better as compared to its growth in the last few quarters. The company’s vascular business saw encouraging growth driven by the strong adoption of Mitraclip for the treatment of mitral regurgitation. Also, Abbott got FDA approval of its fully dissolving heart stent (Absorb) in Q2, which is likely to drive its vascular market share higher in the coming quarters. The company’s Freestyle Libre device to monitor glucose was also seeing strong adoption internationally. Going ahead, Abbott stands a chance to increase its market share broadly across all the segments, driven by new product approvals. Furthermore, Abbott remains confident that it will complete the St. Jude acquisition by the year end, which is likely to further strengthen its vascular portfolio. Below we analyse the key metrics as reported by Abbott in Q2 2016:    
    DAI Logo
    Daimler Earnings Review: Mercedes Posts Record Results Through June, But Margin Down On Added Expenses
  • By , 7/22/16
  • tags: DAI DDAIF BMW VLKAY TTM TM GM F
  •                       Have more questions on Daimler? See the links below. Daimler Earnings Review: Profit Declines As Currency, Negative Mix Impact Results Where Will Daimler’s Revenue And Gross Profit Growth Come From Over The Next Three Years? What Is Daimler’s Revenue And Gross Profit Breakdown? By What Percentage Have Daimler’s Revenues And Gross Profit Grown Over The Last Five Years? What Is Daimler’s Fundamental Value Based On Expected 2016 Results? How Has Daimler’s Revenue And Gross Profit Composition Changed Over 2012-2016E? Notes: Get Trefis Technology
    LUV Logo
    Southwest Drops Post 2Q'16 Results As The Airline Restricts Its Capacity Growth For 2017-2018
  • By , 7/22/16
  • tags: LUV ALK JBLU DAL UAL AAL
  • Like most of its peers, Southwest Airlines (NYSE:LUV), reported strong June quarter financial results this week driven by focused capacity growth and fuel cost savings. However, the Dallas-based airline missed the market estimate for both revenue and earnings due to weak unit revenues and higher-than-expected fuel costs during the quarter. Further, during the 2Q’16 earnings call, the airline’s management commented that its capacity growth in 2017 and 2018 is expected to be lower than that of 2016 due to softness in the pricing environment. Hence, the investors reacted negatively to this news and the airline’s stock fell more than 11% in a single trading day to $37.32 per share. For the second quarter, Southwest grew its capacity by 4.8% compared to last year, in line with the airline’s full year capacity growth target of 5%-6%. With this focused capacity addition, the airline was able to attract 5% more passengers for the airline and managed to improve its load factor by 100 basis points for the quarter. Consequently, despite a notable decline in its unit revenue, Southwest’s 2Q’16 revenue grew by more than 5% to $5.38 billion. On the profitability front, the airline’s fuel price averaged at $1.81 per gallon, in line with its guidance for the quarter, resulting in fuel cost savings of over $100 million. However, the airline’s unit costs (excluding fuel costs and special items) grew sharply due to the accelerated depreciation on the Classic fleet, advertising and technology investments, and air-frame maintenance during the quarter. Yet, the airline posted an improvement of roughly 18% in its operating income, or 250 basis points growth in its operating margin, compared to last year. Despite the pricing pressures, Southwest continued to deliver value to its shareholders in the form of dividends and share buyback program in the second quarter. The airline repurchased its common stock for $700 million during the quarter, by completing its previous $1.5 billion buyback authorization. Its Board launched a new $2 billion buyback program in May of this year, of which stock worth $500 million has already been repurchased. Further, the airline intends to launch an accelerated share repurchase of $250 million from this authorization soon. Southwest’s aggressive share buyback program magnified the impact of its improved operating income on its earnings per share. Going Forward Based on the current market conditions, Southwest expects its unit revenue to decline by 3%-4% and its fuel price to rise to $2.05 per gallon in the third quarter. This is likely to weigh on the airline’s operating margins in the coming quarters. As mentioned earlier, Southwest will moderate its capacity growth over the next couple of years based on the pricing pressure in the industry. While the airline has not altered its capacity guidance for the remaining half of the year, it anticipates the capacity growth in 2017-2018 to be lower than that of the current year. However, the airline is optimistic about 2017 for a number of other reasons. These include the launch of new technology and a new class of aircraft – 737-8, the opening of an international terminal at Fort Lauderdale, and approval for operating flights to three cities in Cuba. Have more questions about  Southwest Airlines (NYSE:LUV)? See the links below: Southwest Q2’16 Earnings Preview: Capacity Growth To Partially Offset The Impact Of Declining PRAS M How Will Different Capacity And Fuel Cost Forecasts Impact Southwest’s 2016 EBITDA? Rapid Capacity Additions And Lower Fuel Expense Drive Southwest’s 1Q’16 Earnings What Will Be The Impact On Southwest’s EBITDA, If Crude Oil Prices Rebound To $100 Per Barrel by 2018? Will Southwest’s International Operations Contribute A Significant Portion Of Its Revenue By 2020? What Will Be Southwest’s Value In 2020? What Factors Caused A Sharp Jump In Southwest’s 2015 Operating Margin? How Has Southwest’s Revenue And EBITDA Composition Changed Over The Last Five Years? Southwest Airlines: The Year 2015 In Review What Is Southwest’s Outlook For 2016? What Is Southwest’s Fundamental Value Based On 2016 Estimated Numbers? What Is Southwest’s Revenue And EBITDA Composition? How Has Southwest’s Revenue And EBITDA Grown Over The Last Five Years? Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for Southwest Airlines View Interactive Institutional Research (Powered by Trefis): Global Large Cap  |  U.S. Mid & Small Cap  |  European Large & Mid Cap More Trefis Research
    UNP Logo
    Union Pacific's Q2 2016 Earnings Review: Top Line Headwinds Take Their Toll On Results
  • By , 7/22/16
  • tags: UNP CSX NSC
  • Union Pacific’s Q2 2016 earnings per share declined 15% year-over-year as a result of a decline in revenue due to lower shipments and fuel surcharge revenue. The decline in coal shipments was particularly severe due to a fall in demand for the commodity from utilities, with soft natural gas prices favoring increasing usage of natural gas for electricity generation. Lower fuel surcharge revenue as a result of a decline in oil prices also contributed to the decline in the company’s top line. Though lower volume related operating expenses as well as Union Pacific’s cost reduction initiatives partially offset the impact of top line headwinds on the operating ratio (operating expenses as a percent of revenue), the net impact was a 110 basis points deterioration in this metric of operational performance. Have more questions about Union Pacific? See the links below. What Is Union Pacific’s Revenue And EBITDA Breakdown? What Is Union Pacific’s Fundamental Value Based On 2015 Results? By What Percentage Did Union Pacific’s Revenue & EBITDA Grow In The Last 5 Years? By What Percentage Can Union Pacific’s Revenue & EBITDA Grow In The Next 3 Years? How Has Union Pacific’s Revenue Composition Changed Over The Last 5 Years? How Will Union Pacific’s Revenue Composition Change By 2020? What Would Be The Impact Of A 100 Basis Points Decline In Union Pacific’s Share Of U.S. Rail Intermodal Shipments? Union Pacific Corporation: A Look Back At The Year 2015 Notes: See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology  
    P Logo
    Why Pandora's Stock Wavers As Earnings Overshadowed With Deal Talk
  • By , 7/22/16
  • tags: P
  • Pandora ‘s recently reported Q2 fiscal 2016 earnings turned out marginally better than expectations, with non-GAAP diluted loss per share 4 cents better than the consensus estimate. However, revenue at $343 million, fell $7 million short of the consensus and total listener count dropped to 78.1 million from 79.4 million in Q1. Nevertheless, a marginal increase in active listener count was reassuring and the company deemed it a strong quarter. However, the results were mixed enough to ellicit some investor concern. The stock was down in after-hours trading, though it opened up a scant 2% on news that Pandora had rejected a buyout offer from Sirius XM in recent months. A few months back, activist investor Corvex had started pushing Pandora’s management to consider a sale, arguing that it was the best way to provide strong returns to shareholders. The Internet radio company’s stock fell from $20 to $12 in October last year when it announced an adverse settlement on unpaid royalties.  And it has not recovered since, despite consecutive quarters of earnings outperformance. Pandora’s progress has indeed been painfully slow.  It still seems far from generating profits and the recent mandated hike in royalty rates has only made things worse. Also, the company’s development of an on-demand music platform is certainly overdue as Rdio’s intellectual property, acquired last year for $75 million, still seems unused. Pandora’s current Market Cap is around $2.9 billion and we’ve estimated its value at $2.8 billion. The CEO of Liberty Media Corp, the owner of Pandora’s biggest rival Sirius XM, floated a buyout offer that valued Pandora at $ 3.4 billion . The Internet radio company refused the offer, believing to low relative to the company’s promise. (It commanded a market valuation of $4.6 billion last fall.) We believe that, given investors  agitatation with its slow progress, the company will have to somehow showcase a turnaround performance to revive their confidence. However, there is a silver lining to this scenario. The rejection to the buyout offer is indicative of the fact that the management believes the company can manage current turmoil to offer shareholders stronger returns over time. Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap | More Trefis Research
    KMB Logo
    Kimberly Clark Q2'16 Preview: Currency Impact To Offset Higher Volumes
  • By , 7/22/16
  • tags: KMB UL CL PG
  • The manufacturer of popular brands like Huggies and Kotex,  Kimberly-Clark  (NYSE:KMB) is expected to report its Q2’16 earnings on July 25th. The company saw a 5% year-over-year decline in its Q1 2016 revenue ($4.5 billion), as the 2% increase in volumes was offset by a 7% negative impact from currency headwinds. There was a 5% volume decrease in Brazil and a 7% fall in sales from developed markets including Western Europe. We believe that volumes from these regions could increase in the second quarter because of better economic conditions in Brazil and Europe. However, the currency headwinds will continue to impact the revenues due to a stronger U.S. dollar, even as the com[any’s ongoing FORCE (Focused on Reducing Costs Everywhere) initiative will help improve the bottom line. See our complete analysis for Kimberly-Clark here Currency Headwinds Will Continue To Impact Q2’16 Top Line US dollar has strengthened in Q2 against most of the major currency pairs around the world, especially Euro and Sterling. This is likely to offset the net sales to be reported in Q2 as the company does not hedge its translation exposures in forex market. FORCE Initiative To Cushion The Bottom Line  Kimberly clark started the FORCE program in 2013 as a cost saving measure. It focuses on reducing costs by improving productivity, optimizing product cost design and reducing the raw material prices through negotiations. Kimberly-Clark aims to achieve $350 million of cost savings from the FORCE program and it got a good head start in Q1 by saving $95 million. Regional volumes overview: North America and emerging markets likely to lead again. The good Q1 volumes from North America may reflect in Q2 earnings too as US Consumer Sentiment touched the high of 94.7 in May as compared to the quarterly low of 89 in April. (University of Michigan, tradingeconomics.com) China saw a below expectation rise in sales of Huggies in Q1 due to pricing competition.  However, as per the company guidance, this is expected to improve as competitive promotional activity eases in the remainder of the year. This might be a favorable factor for the volumes and revenues. Latin America may continue to disappoint as the company’s Venezuelan operations have been shut down in July due to problems in procuring raw material amidst worsening economic situation of the country. Contrary to Venezuela, volumes from Brazil might improve slightly despite the grim economic conditions, as the Consumer Confidence Index of Brazil rose 7.9% in May month over month.  (Reported by National Confederation of Industry, Brazil) . The European Consumer Confidence Index remains in negative but it too has seen an improvement of 2.3 points to -7.3 from its lows of 9.7 in April.  (European Commission Consumer Confidence Index, Bloomberg) . So the company might not perform worse than Q1 in Europe, if not better. See our complete analysis for Kimberly-Clark here Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap More Trefis Research
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    Why Fighting Counterfeits Is Critical For Alibaba?
  • By , 7/22/16
  • tags: BABA AMZN EBAY
  • Recently,  Alibaba  (NYSE:BABA)  unveiled a new online platform that is aimed at streamlining the process required to track and remove fake goods on its e-commerce platforms. Termed as the Intellectual Property-Joint Force System, this tool will give participating brands an online portal and account manager to better facilitate the removal of counterfeits from Alibaba’s sites. The system will also allow Alibaba to alert brands on suspicious listings which it is unable to verify independently. Brands can then notify Alibaba if these products violate intellectual property rights so they can be taken down from the website. This move comes after several warnings from U.S. trade officials about large quantities of counterfeit goods being sold on its platform. It is estimated that fake products account for more than 60% of products sold on Alibaba’s platforms (as per China’s State Administration for Industry And Commerce) and complete elimination of these products can impact its volumes to a large extent. However, as the company looks to expand globally, it is critical for Alibaba to build a strong reputation and foster consumer trust across the world.  Fighting counterfeits will be key to achieve this goal. See our complete analysis for Alibaba Growing Volumes With Genuine Products The quantity of counterfeits sold on Alibaba’s platform is very large.  NetNames, which tracks counterfeits online for brands such as Inditex and Billabong, estimates that 20% to 80% of branded goods on Alibaba’s Taobao platform are fakes. Brands do not believe that Alibaba’s efforts to resolve this issue are genuine.  The International Anticounterfeiting Coalition recently suspended a category under which Alibaba was admitted as a member, following questions from brands about Alibaba’s sincerity in fighting fakes.  This is a clear indication of Alibaba’s loss of reputation. While the company does appear to be taking several steps, including the recent online process to track and remove fakes, it can build its reputation back only when fakes on its platform reduce significantly. However, given the huge quantities of fakes sold on its platform, elimination of these products can impact Alibaba’s volumes significantly. The company is walking the thin line of maintaining both sustained growth and its reputation as a seller of genuine products. Alibaba’s CEO justified fake products on its platform by stating that they have always existed in China and the internet has made it easier for these Chinese producers to connect with customers and sell their products. Rapid expansion of its e commerce platform has led to a huge number of these Chinese producers becoming part of Alibaba’s Taobao platform.  The company is definitely dependent on these players for transaction volumes. However, as it looks to expand globally, a trustworthy reputation is critical. As the Chinese economy slows, Alibaba is looking at regions such as India, Australia and Europe for growth.  Unless it solves the counterfeit problem, this growth might be difficult to achieve. While it does appear that the company is taking serious initiatives to remove fakes from its platform, greater demonstrated success will be critical for long term growth of the company. 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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    Alaska Air Reports Another Strong Quarter Backed By Rapid Capacity Growth And Lower Fuel Costs
  • By , 7/22/16
  • tags: ALK LUV JBLU DAL AAL UAL
  • Continuing the growth streak from the past quarters, Alaska Air Group (NYSE:ALK) reported impressive June quarter 2016 results on the back of strong capacity growth and lower fuel costs. While the airline’s top line growth was hampered by the sharp decline in its passenger unit revenue (PRASM), its aggressive capacity expansion led to a notable rise in its passenger traffic, which more than offset the impact of weak unit revenue. As a result, the airline’s 2Q’16 revenue grew about 4% to $1.49 billion, meeting the consensus expectations. On the cost side, the sudden recovery in crude oil prices in the last three months caused Alaska Air’s fuel price for the quarter to average at $1.53 per gallon, well above its guidance of $1.44 per gallon. However, due to its efforts to control its operating costs, the airline’s unit cost (excluding fuel costs and special items) declined 3.7% on a year-on-year basis. This enabled the Seattle-based airline to post a 210 basis points expansion in its operating margins compared to the same quarter last year. As an update on its merger with Virgin America, Alaska Air highlighted that it had reached an agreement with the Department of Justice (DoJ) concerning the timing of the review of the deal. Post the closure of the deal, which is expected to be in the fourth quarter of 2016, Virgin America will operate as a subsidiary of Alaska Air, until it obtains a single-operating certificate. The airline expects to receive the certificate by the first quarter of 2018. The carrier also reiterated that  Peter Hunt, who is currently the Senior Vice President and Chief Financial Officer with Virgin America, will be designated as the subsidiary’s President. Benito Minicucci will become the Chief Executive Officer of Virgin America, in addition to his current role of Chief Operating Officer of Alaska Air. Alaska Air-Virgin America Deal Milestones Going forward, Alaska Air aims to moderate its capacity growth in the second half of the year. The airline plans to grow its capacity by 8% in the third quarter and by 3% in the fourth quarter, translating into an overall capacity growth of about 8.5% in 2016 compared to 2015. This growth will include Alaska Air’s newly approved flights to Newark, and Cuba. However, the airline anticipates its fuel price to rise to $1.62 per gallon in the September quarter because of the recovery in crude oil prices. Further, its unit costs (excluding fuel costs and special items) are also expected to increase 3% and 0.5% in the third and the fourth quarter, bringing the full year 2016 unit costs up by only 0.5%. Besides this, the airline aims to slow down its share buyback program over the next couple of years to fund its merger with Virgin America. However, the airline will maintain a strong capital budget to improve its fleet of aircraft. Alaska Air expects to receive delivery of 14 new 737-900s in the next year, for which the airline expects to spend over $1 billion in 2017. Source: Alaska Air-Virgin America Merger Presentation, April 2016 See Our Complete Analysis For Alaska Air Here Have more questions about  Alaska Air  (NYSE:ALK)? See the following links: Alaska Air Q2’16 Earnings Preview: Capacity Growth, Fiscal Discipline To Support Earnings How Will The Virgin America Deal Impact Alaska Air’s Share Repurchase Program? Will Alaska Air-Virgin America Face Antitrust Issues? How Will The Virgin America Merger Impact Alaska Air’s Cost Of Capital? How Will Alaska Air’s Market Share Change Post The Virgin America Deal? Why Is Alaska Air Acquiring Virgin America? How Will Alaska Air Benefit From The Virgin America Deal Operationally? How Will The Expected Return On The Alaska Air-Virgin America Merger Compare With The Previous Deals In The Sector? How Will The Virgin America Deal Alter Alaska Air’s Capital Structure? Has Alaska Air Paid A Fair Price For Acquiring Virgin America? Alaska Air’s Earnings Rise On The Back Of Rapid Capacity Growth And Lower Fuel Costs Notes: 1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com 2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to  our complete analysis for Alaska Air Group 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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    Newmont Mining Q2 2016 Earnings Review: Strong Performance Of Gold Mining Operations Drives Results
  • By , 7/22/16
  • tags: NEM ABX FCX SLW
  • Newmont Mining reported strong Q2 earnings results with the stellar performance of the company’s gold mining operations offsetting the negative impact of the performance of the copper mining operations. Higher gold prices, higher gold shipments, and improved cost performance boosted the company’s overall results, offsetting the impact of lower copper prices and production on results. Additional production from the recently acquired Cripple Creek & Victor (CC&V) gold mine boosted production volumes whereas higher volumes and efficiency improvements resulted in improved cost performance for the gold mining operations, as illustrated by the all-in sustaining metric (a comprehensive measure of all costs required to sustain ongoing mining operations). Have more questions about Newmont Mining? See the links below. What Is Newmont Mining’s Revenue And EBITDA Breakdown? What Is Newmont Mining’s Fundamental Value Based On Expected 2015 Results? How Has Newmont Mining’s Revenue Composition Changed Over The Last 5 Years? By What Percentage Did Newmont Mining’s Revenue & EBITDA Decline In The Last 5 Years? By What Percentage Can Newmont Mining’s Revenue & EBITDA Grow In The Next 3 Years? How Will Newmont Mining’s Revenue Composition Change by 2020? Newmont Mining: A Look Back At The Year 2015 Why The Commencement Of Production At The Merian Mine Will Boost The Fortunes Of Newmont’s South American Gold Mining Operations Notes: See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    K-Cups, Expansion In China Drive Growth For Starbucks In The June Quarter
  • By , 7/22/16
  • tags: SBUX DNKN QSR MCD CMG
  • Starbucks Corporation  (NASDAQ:SBUX) reported its June quarter results on July 21, 2016, meeting the consensus estimate for EPS, but missing it slightly for revenues. That said, Starbucks saw a significant 7% y-o-y growth in its top-line, undeterred by the industry-wide traffic deceleration and macroeconomic changes that other players in the industry have been suffering from. At 9.7% y-o-y, the channel development segment was one of the biggest contributors to the revenue growth, supported by the growing dollar share of Starbucks Roast and Ground, and Starbucks K-Cup platforms. Highlights Of The Quarter: 1. Slowdown In The Comps Growth In The Americas Historically, Starbucks’ levels of comparable store sales growth have been at or above 5%. In a shocking move for the investors, the June quarter saw this metric coming down to 4%, impressive when compared to other players in the quick service restaurant marketplace, but very far from Starbucks’ recent 8%-9% levels. The fall in the metric was primarily seen in the Americas, and is attributable to the shift of Starbucks’ loyalty program from a frequency-based to a spend-based model. However, the company remains confident about this shift, expecting it to be a pivotal point for its business. This stems from the fact that it will likely eliminate in-store operating issues and order splitting, and result in increased speed of service and reduced line attrition. 2. Success Of Cold Brew Coffee  Despite the slowdown in comps in the Americas, revenue grew to  7% y-o-y.  This is likely a result of the success of cold brew coffee that Starbucks introduced earlier in the quarter, and the launch of Teavana handcrafted beverages. 3. China To Be A Key Growth Market China is one of the brightest stars in the Starbucks growth story. The company has almost 2,300 stores in over 100 cities in China, and continues to open more than one store a day. China outshone the other regions in the quarter, by posting 7% comps growth due to increased traffic. Further, China accounts for over 10 million of the 19 million Starbucks Reward members in China and Asia Pacific (CAP). To reinforce China’s growth potential, Starbucks has decided to open up a roastery in Shanghai in 2017. 4. Europe, Middle East, and Africa (EMEA) Remains A Drag Coming to EMEA, the region with the smallest presence revenue-wise, this was a low point for the company. Some of the factors that contributed to consumer uncertainty and thus, revenue losses in the region, are the slowing European economy, Brexit, a weakened British pound, and ongoing security concerns throughout the region. Have more questions on Starbucks? See the links below. Starbucks Q3 FY 2016 Earnings Preview: Continued Focus On China, Expansion Of The Single-Serve Segment To Drive Results Starbucks’ Expansion Plans in China & Digital Channels Drive Growth In Q2 FY 2016 How Has Starbucks’ Revenue And EBITDA Composition Changed Over 2011-2015? By What Percentage Have Starbucks’ Revenues And EBITDA Grown Over The Last Five Years? What Is Starbucks’ Revenue & EBITDA Breakdown? What’s Starbucks’ Fundamental Value Based On Expected 2016 Results? (Updated After Q2 FY’16) Starbucks Q2 FY 2016 Earnings Preview: New Developments In China/Asia Pacific Region To Steal The Limelight Where Will Starbucks’ Revenue And EBITDA Growth Come From Over The Next Three Years? (Updated After Q2 FY’16) Notes: See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    Breakfast Sandwiches, Coffee Sales Lead Dunkin' To Profitability In Q2'16, Even As The International Segments Suffer
  • By , 7/22/16
  • tags: DNKN CMG SBUX QSR MCD
  • Dunkin’ Brands  (NASDAQ: DNKN) released its June quarter earnings on 21st July ’16, reporting a slight increase in revenues, partially offset by traffic deceleration in the quick service restaurants (QSR) and restaurant marketplace in the U.S. In terms of bottom-line, Dunkin’ saw a 23% y-o-y growth in its EPS, supported by the company’s share buyback program and favorable comparisons, facilitated by the closure of its Canadian ice-cream plant and the  final settlement of its Canadian pension plan in Q2’15. The growth in the top-line was primarily fueled by the growth in comparable store sales (0.5% y-o-y) at Dunkin’ U.S. and Baskin Robbins U.S.  While Dunkin’ U.S. comp store sales growth came from strong beverage sales, and newly introduced breakfast sandwiches, like GranDDe Burrito and the Bacon Supreme Omelet, Baskin’s U.S. comps were driven by the new Warm Cookie Ice Cream Sandwich. However, the company’s international segments continued to be weighed down due to foreign currency headwinds and sales declines in South Korea and Europe. The focus in the quarter had been on growing its coffee segment (with the launch of cold brews), opening new restaurants (mainly in the U.S. and China), and driving comps higher through digital innovation and better restaurant experience. Moreover, the company continues to work on selling all of its company-operated restaurants or converting them into franchisees by the end of 2016. This, as a result, may soften the company’s year-end revenue growth. Keeping this in mind, Dunkin’ has revised its annual revenue growth guidance from 4% – 6% to  3% – 5%. Going forward, the company will remain focused on its five-part plan of driving its coffee leadership, fastest market product innovation, targeted value offerings and everyday smart pricing, increased use of digital technologies, and an improved restaurant experience. In line with this strategy, Dunkin’ targets spreading the reach of its newly launched cold brew coffee across the nation by the end of the summer, evolving its menu to improve the quality and taste by introducing higher quality better tasting eggs, reformulated bagels, and revamping its bacon.   Have more questions on Dunkin’ Brands (DNKN)? See the links below. Dunkin’ Brands’ Q2 FY’16 Earnings Preview: Product And Digital Innovation To Support Earnings Dunkin’ Brands To Enjoy Robust Revenue Growth In 2016, Despite International Segments Struggling in First Quarter What Is Dunkin’ Brands’ Revenue & EBITDA Breakdown? By What Percentage Have Dunkin’ Brands’ Revenues And EBITDA Grown Over The Last Five Years? How Has Dunkin’ Brands’ Revenue And EBITDA Composition Changed Over 2011-2015? Where Will Dunkin’ Brands’ Revenue And EBITDA Growth Come From Over The Next Three Years? Dunkin’ Brands’ FY 2015 Earnings Review: Dunkin’ Donuts US & K-Cups Drive Revenue Growth, Baskin-Robbins International Struggles Dunkin’ Brands’ Q1 FY’16 Earnings Preview: All Eyes On Comp Sales Growth Of International Segments What’s Dunkin’ Brands’ Fundamental Value Based On Expected 2016 Results? (Updated After Q1 2016 ) Notes: See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    What To Expect From Twitter's Q2 Results
  • By , 7/22/16
  • tags: TWTR FB LNKD
  • Twitter  (NYSE:TWTR) is scheduled to report its Q2 2016 earnings on Tuesday, July 26. Twitter’s struggle to grow its active user base was the primary investor concern through 2015 and Q1 2016, and that is unlikely to change this time around. In the first quarter this year, Twitter’s average Monthly Active Users (excluding SMS Fast Followers) improved by 5 million quarter-over-quarter to 310 million. We believe that the user base is likely to have marginally improved since then. In Q2, Twitter expects revenues to grow by around 20% over the prior year quarter and adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to grow by 20-29% over Q2 2015.  In Q1 2016, Twitter’s revenues rose by 36% y-o-y to $595 million. Advertising revenue increased by 37% y-o-y to about $531 million. This was primarily driven by a 208% y-o-y increase in the number of ad engagements due to growth in auto-play video ads. Going forward, we believe growth in overall ad engagement will continue to drive the company’s advertising business, as there is still significant potential to increase ad load levels on the micro-blogging platform, especially through videos. Have more questions about Twitter? Please refer to  our complete analysis for Twitter See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    Apple's Q3 Earnings Will Trend Lower On Sluggish iPhone And Mac Sales
  • By , 7/22/16
  • tags: AAPL aapl
  • Apple  (NASDAQ:AAPL) is scheduled to publish its fiscal Q3 results on Tuesday, July 26, reporting on another challenging quarter that is likely to see revenues and margins contract on a year-over-year basis amid sluggish iPhone and Mac sales. Apple has guided for revenues of between $41 billion and $43 billion for the quarter, with gross margins in the range of 37.5% to 38%. Below we provide some of the key trends to watch when Apple publishes earnings.
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    Down, But Not Out: Chipotle Returns To Profitability In Q2'16, Despite Weakness In Top Line
  • By , 7/22/16
  • tags: CMG DNKN MCD SBUX QSR
  • Chipotle Mexican Grill  (NYSE: CMG) released its June quarter earnings on 21st July, 2016. Although the top-line continued to suffer, Chipotle reported a return to profitability for the first time since the E.coli controversy. Chipotle’s revenues were down 17% on an annual basis, despite its efforts at re-branding itself and improving its reputation with initiatives like Food With Integrity. The company maintained a strict control over its operating expenses, improving them 2% y-o-y in absolute terms, helped by lower commodity prices. However, as a percentage of revenue, operating expenses continued to be higher, likely due to heavy spending on advertising and marketing campaigns that Chipotle has undertaken to restore its brand image. Earlier in the year, Chipotle had disclosed plans to grow its top-line through new store openings, and increasing store sales using promotional offers and reward programs. The comparable store sales data has been in the red for the company since a series of contamination events hit its outlets last year. However, Chipotle’s marketing efforts and decision to introduce a new menu item,”chorizo,” somewhat paid-off, as it saw a 5 percentage point improvement in comparable store sales growth in Q2’16. Furthermore, the company said it will be continue to concentrate on spending on promotional offers as it tries to win back its customers. The launch of Chiptopia reward program is a step in this direction. With more than 3.6 million participants and approximately 30% of all transactions occurring through Chiptopia, it is to be a big part of the company’s strategy, going forward.   Have more questions about Chipotle Mexican Grill (NYSE: CMG)? See the links below: Chipotle Mexican Grill Q2 FY’16 Earnings Preview: Recovery In Top-line Likely To Be Weak Chipotle Mexican Grill Struggles in Q1 FY’16 As Last Year’s E.coli Controversy Impacts Comparable Sales Chipotle Mexican Grill FY 2015 Earnings Review: E.Coli Scandal Hinders Top-line Growth What’s Chipotle Mexican Grill’s Fundamental Value Based On Expected 2016 Results? What Is Chipotle Mexican Grill’s Revenue and EBITDA Bridge? How Has Chipotle Mexican Grill’s Operating Metrics Changed Over 2011-2015? Where Will Chipotle Mexican Grill’s Revenue and EBITDA Growth Come From Over The Next Three Years? Chipotle Mexican Grill Q1 FY’16 Earnings Preview: E.coli Scandal Might Still Impact Top-line Growth Notes: See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    SunPower's Earnings Could Trend Lower As It Builds Out Projects For H2
  • By , 7/22/16
  • tags: SPWRA SPWR FSLR
  • SunPower (NASDAQ:SPWR), the second largest U.S. solar equipment manufacturer, is expected to publish its Q2 earnings in the coming weeks. We expect the firm’s revenues to trend lower on a year-over-year basis, amid weaker revenue recognition in its power plant business as it builds out assets for sale during the second half of this year under its Holdco strategy. On a Non-GAAP basis, the company has guided for revenue of $310 million to $360 million for the quarter with a gross margin of 12% to 14% and EBITDA of zero to $25 million. Below we take a look at some of the key factors to watch when SunPower reports earnings.
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    Sprint Earnings Preview: Cost Management, Prepaid Business In Focus
  • By , 7/22/16
  • tags: S T TMUS VZ
  • Sprint  (NYSE:S) is slated to publish its fiscal Q1 results on July 25. We expect the company’s results to be driven by operating cost reductions and its recent postpaid phone subscriber gains, although this could be partially offset by its recent prepaid and tablet connection losses. Below, we take a look at some of the key factors to watch when Sprint publishes earnings Monday. We have a $4.50 price estimate for Sprint, which is slightly ahead of the current market price.
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    How Will 3M Perform In Q2 2016?
  • By , 7/22/16
  • tags: MMM JCI HON
  • 3M  (NYSE:MMM) is expected to release its second quarter earnings on July 26, 2016, before markets open. Highlights Of Q1: 1) Negative Impact Of Foreign Currency Fluctuations Foreign currency played a dampener, reducing sales by 3%. The biggest impact was seen in Latin America and Canada, where sales declined 15.7% due to FX. 2) Growth Driven By Safety & Graphics and Healthcare The segments witnessed growth rates of 2.9% and 4%, respectively. In Safety & Graphics, sales increased 4% in Asia Pacific, 2% in both the US and EEMA, and 1% in Latin America and Canada, with improving margins as a result of higher selling prices and lower material costs. In Healthcare, sales growth was seen across the portfolio, led by food safety, and health information systems. Growth in Healthcare was led by 11% growth in Asia Pacific, 9% in Latin America and Canada, 6% in EEMA, and 4% in the US. 3) Decline In The Electronics & Energy Segment Sales declined 18% on an organic local-currency basis, due to a soft end market demand and high channel inventory. Sales were flat in EEMA, Latin America and Canada, and the US, and declined 18% in Asia Pacific, where the company’s electronics business is concentrated. Lower organic volume and foreign currency effects negatively impacted the margins. 3M plans to reduce ~250 positions in this business worldwide, incurring a Q2 expense of $20M. Have more questions on 3M? Have a look at these links below: Why Has 3M’s Stock Risen Over 20% Since The Beginning Of The Year? What Is The Growth Expected Of Markets Served By 3M’s Safety and Graphics Segment Over The Next 5 Years? What Is The Growth Expected Of Markets Served By 3M’s Health Care Segment Over The Next 5 Years? How Will 3M Perform In 2016? What Is The Growth Expected Of Markets Served By 3M’s Industrials Segment Over The Next 5 Years? What Is The Growth Expected Of Markets Served By 3M’s Electronics & Energy Segment Over The Next 5 Years? How Will 3M’s Strategy Of Acquisitions To Drive Growth Pan Out In The Future? Why Will The Health Care Segment Be A Key Growth Driver For 3M? What Was The Biggest Factor Which Resulted In A Change In Sales In Q1 2016 In Each Region For 3M? 3M Beats EPS, Revenue Estimates Will Organic Growth Drive 3M’s Q1 Earnings? What Does 3M’s Five-Year Growth Plan Entail? What Is 3M’s Plan With Regards To China? What Is The Geographic Breakdown of 3M’s Sales? How Does 3M Compare With Its Peers In Terms Of R&D Spending? What Is 3M’s Fundamental Value Based On Expected 2016 Results? How Will 3M’s Revenue And EBITDA Composition Change In The Next 3 Years? 3M: Year 2015 In Review What Is 3M’s Revenue And EBITDA Breakdown? Notes:
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    How Did Johnson Controls Fare In Q3 2016?
  • By , 7/22/16
  • tags: JCI LEA
  • Johnson Controls  (NYSE:JCI) announced its Q3 2016 results on July 21, 2016. While the company managed to beat the EPS estimates, it missed on the revenue. Highlights Of the Quarter: 1) Growth In Building Efficiency Driven By North America And Asia 3% growth seen in North America, and 9% in Asia. Orders secured up by 5%. Hitachi JV continues to exceed expectations, with strong performance in China, Japan, and Taiwan, and greater opportunities witnessed in North America. Pricing discipline and cost reductions are being implemented to drive profitability within the Hitachi JV. 2) Power Solutions Sees Higher Volumes In All Regions Global shipments of start-stop up 22%, driven by China and the Americas, where growth rates of 79% and 78% were seen. Lead price of $1,700 in Q3 vs $1,950 last year, impacting the company’s top-line. Strong price discipline and a favorable product mix help to improve margins. During the quarter, the company announced partnership with Bohai Piston Group of China to build a fourth battery plant, giving access to five million vehicles by 2020, and increasing capacity of AGM production in North America to 11 million units by 2020. 3) Sales Down In Automotive Experience, But Impressive New Business Wins Strong global production in Asia and Europe, offset by expiring programs in North America. China non-consolidated JVs increased 49% in the quarter, but up only 11% if adjusted for the Interiors JV and FX. Quoted new businesses worth $4.3 billion year-to-date, exceeding FY 2015 figure of $3.6 billion, well on the way to a record year of new businesses secured. 4) Tyco And Adient Update Company is speeding up its merger with Tyco, now expected to close on September 2, against a previously planned date of September 30. Adient’s first operational day was July 1, as planned. Adient is a market leader in North America, Europe, and China, with a 200 basis points margin improvement expected over the medium term. CEO Alex Molinaroli also stated that the Brexit has resulted in a little slowdown in results in the UK, but has not affected the European business. However, since UK only contributes about 3% to the company’s revenues, it may not have much of an impact. Have more questions on Johnson Controls? See the links below: How Will Johnson Controls Perform In Q3 2016? Why Is Johnson Controls Banking On China For Its Absorbent Glass Mat Batteries? Why Is Johnson Controls Increasing The Production Of Its Absorbent Glass Mat (AGM) Batteries? What Are The Prospects For Johnson Controls’ Power Solutions Business? What Will Be The Effect On The Segment Operating Margin As A Result Of The Johnson Controls-Tyco Merger? What Are The Benefits Johnson Controls Will Attain From The Tyco Merger? What Will Be Johnson Controls’ Revenue Composition Post The Tyco Merger? Why Did The SG&A Expenses For Johnson Controls Increase In The First Half Of FY 2016? How Did Johnson Controls’ Segments Perform in Q2 2016? Will The U.S. Treasury Department Rules, That Killed The Pfizer-Allergan Deal, Affect Johnson Controls-Tyco Merger? Johnson Controls’ Earnings Beats Expectations Will Johnson Controls Miss Estimates Again? How Has Johnson Controls’ Net Sales Changed By Geographic Areas? How Does The Adient Spin-Off And Tyco Merger Create Value For Johnson Controls’ and Tyco’s Shareholders? What Costs Did Johnson Controls’ 2015 Restructuring Plan Entail? Johnson Controls: Year 2015 In Review How Will Johnson Controls’ Revenue And EBITDA Composition Change In The Next 3 Years? What’s Johnson Controls’ Fundamental Value Based On Expected 2016 Results? What’s Johnson Controls’ Revenue And EBITDA Breakdown? Notes:
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    First Solar's Q2 Earnings Could Trend Lower On Less Favorable Revenue Mix
  • By , 7/22/16
  • tags: FSLR SPWR TSL
  • First Solar  (NASDAQ:FSLR), the largest U.S. solar equipment manufacturer, is expected to publish its Q2 2016 results over the next few weeks. We expect the company’s adjusted earnings to trend lower on a year-over-year basis, amid a lower mix of project sales and potentially higher module sales, which have lower margins. Below, we take a look at some of the key factors to watch when the company reports earnings.
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    Reviewing AT&T's Mixed Q2 Results
  • By , 7/22/16
  • tags: T TMUS VZ S
  • AT&T  (NYSE:T) published a relatively mixed set of Q2 2016 results on Thursday, with earnings coming in line with expectations, although revenues fell short of estimates amid lower wireless service and equipment revenues. Below we provide some of the key takeaways from AT&T’s results.