A unique interactive experience

Investors leverage our research to quickly see what really drives a company's value, test what-if scenarios, and make better investment decisions. At the core of each piece of content is a rigorous and deep analytical model, but what makes our research different is the Trefis Interactive Experience. The Trefis Interactive Experience transforms those analytical models into a format that lets you drill down into the data and create your own "what-if" scenarios. We cover hundreds of large-cap stocks and our content is trusted by millions of investors and executives globally on numerous leading online brokerage platforms, as-well-as on platforms such as Thomson Reuters and Forbes.


COMPANY OF THE DAY : PEPSICO

PepsiCo reported its Q4 results last week, with solid organic revenue growth and a boost in earnings due to its productivity plan and tax benefits.

See Complete Analysis for PepsiCo
Screenshot of forecast demo
To use this tool, please upgrade Adobe Flash Player here.

FORECAST OF THE DAY : SUNPOWER'S POWER PLANT SHIPMENTS

SunPower's Power Plant Shipments have been volatile in recent years, but we expect long-term growth driven by improving efficiencies and economic viability.

Read more...
Screenshot of forecast demo
To use this tool, please upgrade Adobe Flash Player here.

RECENT ACTIVITY ON TREFIS

KO Logo
After A Strong Performance In 2018, Outlook Turns Bleak For Coca-Cola In 2019
  • By , 2/19/19
  • tags: KO PEP
  • The Coca-Cola Company (NYSE: KO) released its Q4 2018 results on February 14, 2019, followed by a conference call with analysts. The company fell short of analysts’ expectations for revenue, primarily due to loss of revenue from the refranchising of company-owned bottling operations and the impact of currency. The company reported net revenue of $7.1 billion for the fourth quarter of 2018, which marks a decline of 6% on a year-on-year basis. However, the company met the consensus EPS estimates for the quarter with an adjusted earnings per share of $0.43 in Q4 2018, 10.3% higher than $0.39 in Q4 2017. Higher earnings were primarily driven by benefits from the ongoing productivity plan, refranchising of low-margin bottling business, and lower tax expense with the implementation of the TCJ Act. Full year revenue decreased by 10% to $31.9 billion. We have summarized the key takeaways from the announcement in our interactive dashboard – Coca-Cola Ends 2018 With Higher Profitability But A Discouraging Outlook . In addition, here is more Consumer Staples data .   Key Takeaways from the announcement Growth in sparkling products: As the young population is growing increasingly health conscious and moving away from soda consumption, Coca-Cola has attempted to innovate its iconic Diet Coke brand in North America to help consumers reduce added sugar, which translated into significant revenue growth in the North American segment. The company continued to strengthen its sparkling soft drink portfolio and build consumption rituals through world-class innovation, premiumization, and revenue growth initiatives. Though sparkling soft drinks declined 1% in Q4 2018 as solid volume growth across Central and Eastern Europe as well as India was offset by the impact of more challenging economic conditions in certain emerging markets, including Argentina and Central America, for the year 2018, sparkling soft drinks grew 2%, driven by strong growth in China and India as well as across Central and Eastern Europe. The continued success of Coca-Cola Zero Sugar, which witnessed double-digit growth during the year in addition to strong growth in the low and no-calorie offerings of Sprite and Fanta, led to an 8-percentage points acceleration in retail value growth for the no-calorie sparkling soft drinks portfolio for the year. Total portfolio growth: Water, enhanced water, and sports drinks category grew 1% in Q4, led by strong performance across emerging markets. However, the product category witnessed a 3% growth in 2018, primarily driven by strength in single-serve packaging in China and premium offerings in North America. Coca-Cola launched approximately 500 products across multiple markets through the lift, shift, and scale strategy while also accelerating the elimination of under-performing SKUs during the year. The company launched Georgia Craftsman in Japan and Authentic Tea House in China which helped the tea and coffee segment grow by 3% in Q4 and 1% for the full year. Ready-to-drink tea and coffee market size is expected to reach $116.13 billion by 2024 . Such immense growth potential would drive sales of Coca-Cola’s ready-to-drink tea over the next few years. Juice, dairy, and plant-based beverages were a drag on the company’s performance, with revenue for the category decreasing by 2% in Q4 and 1% for the year, largely driven by strategic decisions to deprioritize low-value juice brands in key African and Southeast Asian markets, as well as packaging downsizing actions in the juice portfolio within North America. Effects of Refranchising: Coca-Cola’s sales have seen a decline over the last couple of quarters due to structural changes undertaken by the company, as it is refranchising many of its bottling operations in a bid to move away from the capital intensive and low margin business of bottling, and focus more on the concentrate business as the consumption of carbonated drinks continues to slow down, especially in developed markets. Any impact on the sales of the bottler is going to have a magnified impact on overall sales for Coca-Cola and much less effect on the company’s profits, as the bottling business contributes 4-5 times more revenue per drink. Thus, in spite of revenue growing across every other segment, total revenue for the company declined by 10% in 2018 as revenue from the bottling segment witnessed a significant decrease of over 60%. However, refranchising of the low-margin bottling operations and focusing on core operations drove net margins sharply higher to 20.2% in 2018, compared to 3.5% in 2017. The company has completed the refranchising of its bottling operations in China, Japan, Canada, and Latin America through 2017 and 2018. Outlook Turns Cautious Revenue is expected to increase by 4.6% (y-o-y) in 2019, driven by growth across all major segments, offset by a lower revenue from bottling business. However, with most of the refranchising already completed, the revenue loss is not expected to be as significant in 2018. Revenue growth would also be driven by inorganic growth strategies of Coca-Cola. The company announced several key acquisitions in 2018, including Costa Limited, which provides a platform to build a global coffee business, and a strategic partnership with BODYARMOR, one of the fastest-growing beverage trademarks in the United States. Additionally, it also announced the acquisition of full ownership in Chi Ltd, which is a fast-growing leader in expanding beverage categories, including juices, value-added dairy, and iced tea in Nigeria. With multiple reductions in the global economic growth outlook for 2018 and 2019, the management has turned prudent and tapered down its bottom-line guidance for 2019. We expect net income margin to rise only marginally to about 21% in 2019, from 20.2% in 2018. Margin growth would be driven by the ongoing refranchising of low-margin bottling operations and Coca-Cola’s new productivity plan which has been extended to 2019 to achieve incremental savings of about $800 million. However, rising transportation costs and currency swings are expected to be potential drags on the company’s margins, thus limiting the upside on earnings. Therefore, in spite of strong organic growth, rising costs and economic headwinds would likely affect Coca-Cola’s bottom line in 2019. Additionally, rising count of common shares due to employee stock options is also expected to dilute earnings per share growth in 2019, which the company expects would remain around the same level as in 2018. We have a price estimate of $50 per share for the company, which is higher than its current market price. The stock was punished by investors on the day of results, with the share price falling by close to 6.9%. Though our current estimate of $50 is slightly lower than our earlier expectations, we believe that the stock price would gradually rise from its current low levels to its fundamental value, driven by an expanding footprint in the emerging markets, new product offerings, and strong organic sales growth.   What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    CVS Logo
    What To Expect From CVS's Q4
  • By , 2/19/19
  • tags: CVS
  • CVS Health  (NYSE:CVS) is scheduled to release its fourth quarter results on February 20 . The company had posted a 2.4% increase in sales to $47.3 billion with adjusted earnings reported at $1.73 per share in the previous earnings for Q3. This growth was primarily driven by higher prescription volumes within the retail pharmacy business.  The top line got a major boost by a strong Pharmacy Services segment, benefiting from the upside in the specialty services. The company’s retail business also showed  improvement, with revenue from the front store, which includes products like makeup and vitamins, increasing 2% from last year while same-store sales were up 0.8 %.  The company also has closed the $69 billion purchase of health insurer Aetna in November 2018. Looking ahead, the company expects its GAAP diluted EPS from continuing operations to grow in the range of $1.40 to $1.50 for the full year 2018. CVS is focused on long-term growth initiatives and to invest in process improvements and technology enhancements that will position them well to expand their reach in providing access to high-quality and more affordable care. The company is also upbeat about sustaining a solid year-over-year revenue trend in Q4, thereby realizing gains from the Pharmacy Services segment. Please refer to our dashboard analysis Outlook For CVS’s  Q4 2018 results . In addition, here is more Trefis Consumer Discretionary data . The factors below will likely play a key role in CVS’s Q4 results. Retail/LTC segment –  In its Retail/LTC segment, revenues increased by 6.4% to $20.9 billion in Q3 driven by an increase in same store prescription volume of 8.7%, on a 30-day equivalent basis, due to continued adoption of the Patient Care Programs, partnerships with PBM’s and health plans, and inclusion in a number of additional Medicare Part D networks this year, as well as brand inflation.  In the upcoming Q4, growth for this segment will follow an upward trend driven by solid same store script growth as a result of partnerships established with PBMs and health plans. Increased participation as a pharmacy in Medicare Part D networks will also boost results. Pharmacy Services segment –  In its Pharmacy Services segment, CVS grew by 2.6% to approximately $33.8 billion in Q3 driven by growth in pharmacy network and specialty claim volume as well as brand inflation, partially offset by continued price compression. This segment includes the pharmacy benefits manager business and specialty pharmacy services. The company expects drug price inflation, product launches, and higher utilization to fuel growth and this segment is expected to be a stable growth platform. The CVS Management stated that CVS Health’s specialty business is its top priority to help it expand its customer base. The company is more than poised to capitalize on this opportunity on the back of wide and differentiated offerings including Specialty Connect. All in all, we anticipate CVS to continue its healthy growth momentum in the coming earnings and beyond, with a rise in the top line.   What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    DUK Logo
    In Spite Of Higher Revenue, Increased Storm Restoration Charges And Lower Tax Shield Affect Duke Energy’s Margins In 2018
  • By , 2/19/19
  • tags: DUK
  • Duke Energy Corp . (NYSE: DUK) released its Q4 2018 results on February 14, 2019, followed by a conference call with analysts. Though the company exceeded analysts’ expectations for revenue, it fell short of the consensus on earnings per share. Duke reported net operating revenue of $6.1 billion in Q4 2018, 5.4% higher than $5.8 billion in Q4 2017. Higher revenue was mainly driven by an increase in customer base on the back of a rise in housing starts and privately-owned housing completions. The company reported earnings of $0.84 per share in Q4 2018, 10.6% lower than $0.94 in the year-ago period. Lower earnings for the quarter were driven by increased depreciation and amortization expense on a growing asset base and higher storm-related costs, partially offset by higher rider revenues. We have summarized the key takeaways from the announcement in our interactive dashboard – High Restoration Costs and Depreciation Affect Duke’s Profitability In 2018 . In addition, here is more Utilities data . Key Factors Affecting Earnings Higher consumption: Revenue from Electric Utilities and Infrastructure segment increased by 4.2% in 2018, mainly driven by higher energy consumption per customer, which increased by 3.4% during the year. Rising economic growth and higher per capita income has led to a pick-up in construction activity and an increase in housing starts and privately-owned housing completions for most of 2018. This has led to a higher customer base for the company, which, in turn, helped Duke enhance its pricing power, reflected in a slight increase in revenue per megawatt hour (MWh). Additionally, rising sales of electric vehicles is also contributing to higher consumption and revenue. As the economy moves further toward digitization, with retail moving online, increased use of wireless internet, higher demand for electric vehicles which, in turn, adds electric charging stations, it would help in Duke maintaining its segment revenue growth going forward. Growth in renewables: Revenue from the renewables segment increased by 3.5% in 2018 as the share of renewable energy in the U.S. continues to rise. Official records show that 18% of all the electricity in the US was produced by renewable sources in 2017, up from 15% in 2016. Though official numbers for 2018 are yet to be announced, early estimates point out that growth is better than what was recorded in 2017. Duke Energy has over 1000 MW of wind and solar projects in late stages of development. As additional consumers switch to renewable energy and with continuous decline in the cost of solar and wind energy generation, the segment is expected to be the fastest growing operating segment of the company. Lower margins: Duke Energy saw its net income margin decline to 10.9% in 2018 from 13% in 2017, primarily driven by high storm restoration costs, higher depreciation expense, one-time severance pay, and a lower tax shield on holding company interest. In October 2018, Florida was hit by the most powerful storm – Hurricane Michael – in its recorded history, which led to over a million power outages in the Carolinas and 70,000 outages in Florida. This led to the company incurring huge storm restoration costs which adversely affected EPS to the tune of $0.07 in 2018. Additionally, depreciation expense increased by 15.5% during the year on the back of a growing asset base, eating into the company’s bottom line. Though the implementation of Tax Cuts and Jobs Act led to a lower tax outgo, this benefit of a lower tax rate was completely offset by a lower tax shield on holding company interest. This factor had an adverse effect of about $0.13 on the EPS for 2018. The bottom line was also hit by a one-time severance payment of $144 million made in Q4 2018 as a buyout package to employees to cut costs. Outlook Remains Stable Duke Energy’s stock has not seen much volatility over the last one year. We believe that the biggest support to the company’s stock comes from the company’s pricing power, which is derived from it being a regulated entity. Also, as the demand for renewable energy is growing at a fast pace, Duke Energy has realized this opportunity by expanding and diversifying in this segment with the acquisition of REC Solar and Phoenix Energy Technologies. Duke is hedging its bets with renewable energy as the world moves toward having a cleaner environment. The commercial renewables segment is expected to drive the company’s overall revenue growth in 2019 and beyond. Additionally, the grid modernization and improvement initiatives of the company are expected to lead to a strong revenue growth in the Gas Utilities segment as well. Though net income margin is expected to be more or less flat at the current level as the company is likely to incur additional maintenance and capital cost and take some time to cope with major natural disasters of 2018 along with higher depreciation as the asset base grows, higher revenues would most likely drive better earnings per share in 2019. Concentrating on enhancing shareholder returns, the company increased the dividend by 4.2% in 2018. We believe that overall growth across all its operating segments without losing focus on enhancing shareholder returns would provide support to Duke’s stock price. We have a price estimate of $88 for Duke Energy’s stock.   What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    PEP Logo
    In Spite Of Lower Operating Margins, PepsiCo’s Bottom Line In 2018 Was Boosted By Significant Tax Benefits; Strong Organic Growth Expected In 2019
  • By , 2/19/19
  • tags: PEP KO
  • PepsiCo, Inc . (NYSE: PEP) announced its Q4 2018 results on February 15, 2019, followed by a conference call with analysts. The company met analysts’ expectations for revenue as well as EPS. PepsiCo reported revenue of $19.52 billion in Q4 2018, marginally lower compared to $19.53 billion in Q4 2017. Though organic revenue grew by 4.6% (y-o-y) during the quarter, unfavorable foreign exchange movements and acquisitions and divestitures had an adverse impact on reported revenue. Adjusted earnings were $1.49 per share in Q4 2018, 13.7% higher compared to $1.31 in Q4 2017. Higher earnings were mainly driven by gains from the productivity plan, tax benefits, and refranchising of a portion of its beverage business in Thailand, partially offset by lower operating profit due to higher transportation and commodity prices. We have summarized the key takeaways from the announcement in our interactive dashboard – Refranchising And Productivity Gains Along With Tax Benefits Drive PepsiCo’s Bottom Line In 2018 . In addition, here is more Consumer Staples data . Key Factors Affecting Earnings Growth in Frito-Lay: Frito-Lay North America (FLNA), which contributes a little over a quarter of the company’s total revenue, saw its revenue grow by about 3.5% in 2018, driven by effective net pricing and volume growth in variety packs and its trademark Doritos, partially offset by lower volume of Santitas. FLNA’s EBITDA margins saw a slight decline in 2018 due to certain operating cost increases and the impact of a bonus extended to certain U.S. employees in connection with the TCJ Act, partially offset by net revenue growth and productivity savings. We believe that the foray into new products and healthy snacks would drive segment revenue growth in 2019 and beyond. However, growth in margins is expected to be slightly subdued on the back of higher transportation costs and higher commodity costs, primarily potatoes and motor fuel. Quaker Foods and North America Beverages proved to be a drag: Net revenue of Quaker Foods declined by 1.5% in 2018, reflecting lower volume and unfavorable net pricing and mix. The lower volume was driven by decline in trademark Gamesa and ready-to-eat cereals, partially offset by growth in oatmeal. EBITDA margin declined due to lower revenue and the impact of higher commodity costs. In the near future, we expect revenue to be around the current level, with a slight downward bias, due to declining volume. Margins are expected to slightly improve, driven by productivity savings and lower advertising and marketing expenses. Revenue in North America Beverages segment grew by 0.6% on the back of favorable pricing mix. However, volume decreased in 2018 due to a decline in CSD (carbonated soft drinks) volume and a decrease in juice and the juice drinks portfolio. On the other hand, the water and sports drinks portfolio received a boost due to an increase in non-carbonated beverage volume and an increase in Gatorade sports drinks. EBITDA margins saw a sharp decline, driven by higher transportation and commodity costs. We expect revenue to increase in the near term, driven by higher sales of non-carbonated beverages. Margin growth is likely to remain subdued due to increasing advertising and marketing expenditure. Refranchising: In Q2 2018, PepsiCo refranchised its beverage business in Thailand by selling a controlling interest in its Thailand bottling operations. This has led to about a 2.1% decline in revenue from Asia, Middle East and North African segment. As the revenue per unit is 3-4 times greater in the bottling business, it has a magnified effect on revenues rather than on margins. Refranchising of the low-margin bottling business along with productivity savings has led to an increase in the segment’s profitability. We expect revenues to remain flat going forward due to the loss of revenue from the bottling business being refranchised, offset by organic growth across other categories. Margins are expected to continue their  upward trend. Outlook Remains Strong We believe PepsiCo’s recent focus on healthy snacks – with it shifting its portfolio to a wider range termed as “Everyday Nutrition Products” – would help it cater to the health-conscious young generation. The recent announcement of the $3.2 billion acquisition of SodaStream – the number one sparkling water brand – would likely help the company grow as there is a shift in consumers’ preference away from carbonated drinks and diet sodas, thus precipitating growth of the sparkling water category. Thus, we expect revenue to grow by 3% to $66.6 billion in 2019, compared to $64.7 billion in 2018, driven by strong organic growth, rising sales of non-carbonated beverages, growth in healthy snacks and sports drinks, partially offset by foreign currency headwinds. PepsiCo announced a new productivity plan in February 2019, which will leverage new technology and business models to further simplify, harmonize, and automate processes; re-engineer the go-to-market and information systems, including deploying the right automation for each market; simplify the organization and optimize manufacturing and supply chain footprint. This new plan is an improvement over the existing plan and is expected to boost the company’s margins over the next five years due to intended cost savings and operational efficiencies. Net income margin increased significantly in 2018, mainly due to $3.4 billion of tax benefit during the year following the implementation of Tax Cuts and Jobs Act. As this was a one-time benefit, margins in 2019 are expected to be much more subdued, though higher than in 2017. We expect net income margin of 8.5% in 2019, led by productivity savings and refranchising initiatives, slightly offset by rising commodity and transportation costs. On February 15, 2019, PepsiCo announced a 3% increase in its annualized dividend to $3.82 per share from $3.71 per share, effective with the dividend expected to be paid in June 2019. The company expects to return a total of approximately $8 billion to shareholders in 2019 through share repurchases of approximately $3 billion and dividends of approximately $5 billion. We believe that these initiatives to enhance shareholder returns, coupled with increasing organic growth and rising margins, would provide a boost to PepsiCo’s stock price over the next one year. We have a price estimate of $119 per share for the company, which is higher than its current market price.   What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    NVDA Logo
    What Factors Will Impact Nvidia's Fiscal 2020 Earnings?
  • By , 2/19/19
  • tags: NVDA AMD INTC
  • Nvidia  (NASDAQ:NVDA) recently posted its Q4 fiscal 2019 results. While the company’s top line was a beat, its adjusted earnings were below our estimates. Revenues declined in the mid-twenties percent, with both GPU, as well as Tegra Processors segments seeing a sharp decline in sales. Earnings plunged over 50% to $0.80 per share on an adjusted basis, amid lower margins. Looking ahead, the company has guided for a weak Q1, as it continues to struggle over crypto-related inventory. We have created an interactive dashboard analysis ~  A Quick Snapshot of Nvidia’s Q4 Performance And Trefis Estimates For The Fiscal 2020 . You can adjust various drivers to see the impact on the company’s overall earnings, and price estimate. Below we discuss our forecasts. In addition, here is more  Information Technology data . Expect Revenues To Decline In High Single-Digits In FY 2020 We forecast the company’s total revenues to decline in high single-digits in fiscal 2020. The GPU business will likely see sales of a little under $9.30 billion, while Tegra Processors’ revenue could decline to $1.45 billion. This can primarily be attributed to a slowdown in the Chinese economy, which has impacted the consumer demand for GPUs, according to the company’s management. Note that China and Taiwan combined account for over 50% of the company’s total sales. In addition, the company’s Turing graphics card sales so far has been lower than expected, given the high pricing. Also, the crypto hangover is expected to impact the Q1 results as well. Crypto currencies have seen a massive decline in the recent past, and the demand for graphics cards has faded, which were earlier sought for crypto mining. While the company did launch its new Turing architecture in 2018, the pricing of these cards was very high, and so far it appears to have not seen any significant demand. However, with its launch of GTX1660Ti later in this month, the company could see some uptick in sales. GeForce GTX 1660 Ti will be Nvidia’s first Turing 12nm gaming graphics card without the real-time ray tracing capability. The new card is rumored to outperform several other cards, and it could help Nvidia revive its GPU sales. Looking at the Tegra Processors, the trend in revenues have been volatile in the recent past, led by its automotive business, as well as SOC (system on a chip) modules for gaming consoles, primarily Nintendo Switch. The company posted a 50% dip in Tegra Processors’ revenue in Q4 fiscal 2019, due to lower shipments of SOC modules. Nintendo also revised its target of selling 20 million consoles to now 17 million consoles in the current fiscal, given the weak sales in the first half of the year. This trend will likely continue in the near term as well. Given these trends, especially in GPUs, the company could see further pressure on its operating margins. We forecast the company’s adjusted earnings to decline in low double-digits to $5.90 per share in fiscal 2020. Our price estimate of $176 for Nvidia is based on a 30x forward price to earnings multiple. What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    AVP Logo
    Key Takeaways from Avon's Q4 Earnings
  • By , 2/19/19
  • tags: AVP
  • Avon  (NYSE: AVP) reported dismal Q4 2018 earnings, where its total reportable Segment Revenue in reported currency decreased 10% and like-for-like total Segment Revenue decreased 1% in constant dollars. This was due to the impact of adopting the new revenue recognition standard required by generally accepted accounting principles in  the United States  (“GAAP”). Avon also had experienced a decline in Active Representatives and Ending Representatives. Each declined 6% and 8%, respectively, excluding the Brazil truckers’ strike. Avon’s bottom line remained dampened as it experienced continued variability with challenges in key markets, particularly Brazil, where it was facing bad debt, challenges with representative retention, as well as stiff competition from other players. On the brighter side, the company remains on track and completed the restructuring actions associated with the cost savings program initiated in 2016, exiting 2018 with run rate savings in excess of the targeted $350 million. Avon also realized approximately $40 million of savings against the Open Up Avon cost savings initiative outlined at Investor Day. The company is positive that injecting new talent and capabilities into the business will now steer Avon toward the path of growth. The company is focused to generate efficiencies, and will strive to improve in the remaining year by strategically redirecting investments to support underlying growth initiatives. Please refer to our dashboard analysis on Avon’s Q4 Earnings .  In addition, here is more Trefis Consumer Discretionary data . Segment-wise performance in Q4 –  Avon’s performance across different regions was low in the Q4. Avon’s  Europe, Middle East & Africa  segment generated revenues of $581.8 million, which fell 9% year over year. Results included an 8% decline in Active Representatives and a 9% fall in units sold. Also, Ending Representatives fell 10%.  South Latin America ’s revenues fell 15% to $488.3 million, while the same rose 6% on a constant-dollar basis. In the reported quarter, Active and Ending Representatives declined a respective 7% and 9%, while units sold fell 10%.  North Latin America ’ s revenues dipped 3% year over year at $199.4 million but improved 3% in constant dollars. While Active Representatives remained flat year over year, Ending Representatives declined 7%. Asia Pacific ’s revenues remained flat at $125.8 million, while it improved 4% in constant dollars, mainly owing to a 6% increase in average orders and a 4% rise in units sold. This was partly negated by a 2% fall in Active Representatives and a 3% decline in Ending Representatives. Avon’s focus areas: The factors below have been working in favor of Avon in Q4 and are likely to benefit the company’s performance in 2019 and beyond: Digital Initiatives – The company is aggressively focusing on digital and e-commerce initiatives. Avon’s social media presence has increased with it having the third largest fan following among beauty brands. Along with increasing investments on advertisement, the company is shifting many of its campaigns to the digital platform. In our view, this will positively impact its performance as an increasing number of customers are buying beauty products online. Rigorous performance management –  Following the stepping down of its CEO in early 2018, Avon hired a new CEO and executive members to steer the company toward the path of better future growth. Relentless focus on execution capabilities  –  Avon is channelizing its investments toward upgradation of its systems that will help the representatives in their roles of selling its products. Brazil witnessed an upgraded system and similar projects are being run in other countries including China, Russia, and Poland. Competitive representative experience – Avon is focusing on improving the end-to-end of its business model starting from forecasting customer demand, planning of operations, distributions, and shipment to representatives. The company is also gathering analytical data on each representative’s business in order to understand their functioning at a more detailed level. Further, Avon’s grouping of its representatives as top sellers, sellers, and new Representatives, will likely motivate better performance as representatives aim to gain the title of top sellers. Outlook for fiscal 2019 –  Avon is expecting that it would be able to grow its top line in 2019 by executing significant operational improvements, despite continued competitive pressures. Avon has been taking strategic measures to create a simpler and more agile company. The company also plans on continuing to realize cost savings to improve financial resilience and to be able to invest in its growth. Its long term financial goal remains mid-single-digit constant dollar revenue growth and low double-digit adjusted operating margin.
    WMT Logo
    Higher Comparable Sales and E-Commerce Growth To Drive Walmart's Fiscal 2020
  • By , 2/19/19
  • tags: WMT TGT AMZN
  • Walmart  (NYSE: WMT) reported its fourth quarter and full-year fiscal 2019 results on Tuesday, February 19. The company’s revenues were in line with expectations, while its adjusted EPS beat market expectations. On a reported basis, the company’s revenue increased 2% year over year (y-o-y) to $139 billion, driven by growth in the domestic market due to its marketplace offerings. Walmart’s adjusted EPS grew by 6% y-o-y to $1.41. Walmart U.S. delivered a strong top-line performance, with comparable sales of 4.2%, which topped the consensus estimate of 3.3%. This growth was driven by a 0.9% increase in customer traffic and a 3.3% growth in ticket size in Q4. Overall, e-commerce contributed approximately 180 basis points to the segment’s comparable sales growth in the fourth quarter. On a constant currency basis, the company’s U.S. e-commerce sales increased 43% in the quarter. In the company’s other segments, Walmart’s international sales declined 2% y-o-y to $32 billion, driven by the sale of a majority stake in Walmart Brazil and negative currency impacts. On the other hand, Sam’s Club revenues declined 4% y-o-y, negatively impacted by tobacco. However, Sam’s Club comparable sales grew 3.3% y-o-y (ex. fuel) in the quarter, led by a solid jump in traffic. Our $103 price estimate for Walmart’s stock is about in line with the current market price. We have created an interactive dashboard on  What To Expect From Walmart’s Fiscal 2020 Earnings, which outlines our forecasts for the company. You can modify our forecasts to see the impact any changes would have on the company’s earnings. In addition, you can see all of our Trefis Retail company data h ere . Going forward, we expect Walmart’s earnings to decline in Q1, due to investments in technology and a rise in employee wages. In addition, we expect online grocery to drive some growth for the company, though the accompanying expenses could result in margin pressure. Further, we also expect the company to continue to post an increase in its revenue growth rate, driven by growth across operating segments. Fiscal 2020 Outlook Walmart expects its consolidated net sales to grow at least 3% in constant currency in fiscal 2020, driven by the acquisition of Flipkart. It also expects a decline in EPS in low single-digits compared to fiscal 2019. In addition, the company expects comparable sales to range between 2.5% and 3.0%. The retailer’s management is aggressively rolling out grocery pickup and delivery in the U.S. and expanding omnichannel initiatives in Mexico and China. We expect Walmart to generate around $532 billion in revenues in fiscal 2020, and earnings of almost $14 billion. Of the total expected revenues in fiscal 2020, we estimate $343 billion in the Walmart U.S. business, almost $127 billion for the Walmart International business, and nearly $58 billion for the Sam’s Club business. For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own
    FB Logo
    How Much Of Facebook's Value Is Driven By Instagram?
  • By , 2/19/19
  • tags: FB TWTR SNAP GOOG AAPL MSFT AMZN SINA
  • Despite the spate of privacy issues around Facebook ‘s (NASDAQ:FB) core business, the company has been able to grow its revenue at a fairly rapid clip. Although Facebook expects its growth and margins to moderate in response to the company’s investments in the health of the platform, Instagram continues to be a strong asset in the company’s portfolio. We estimate that Instagram generated as much as $5.5 billion in revenue – or 10% of Facebook’s total revenue – for 2018. Our interactive dashboard on Instagram’s Contribution To Facebook outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes, and see all of our Technology company data here . While Facebook does not break out Instagram’s revenues, we estimate that Instagram’s user base of over a 1 billion delivered an average revenue per user of around $5. In addition to having overtaken Snapchat as the world’s most popular photo sharing app, Instagram is increasingly becoming a go-to destination for marketers wanting to differentiate themselves beyond the traditional social media offerings. Coupled with Instagram’s (and Facebook’s) commerce ambitions, we believe that Instagram may reach as many as 1.6 billion users by 2020, which would lead to it accounting for an even larger portion of Facebook’s revenue. Notes: See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
    MSFT Logo
    Which Segments Will Drive Microsoft’s Revenue Growth Through 2020?
  • By , 2/19/19
  • tags: MSFT ADBE GOOG AMZN ORCL SAP ATVI CRM
  • Microsoft’s  (NASDAQ:MSFT) increasingly accommodating stance towards open source to drive growth in its cloud business has opened up several opportunities for the company. While we expect the Intelligent Cloud and More Personal Computing segments to register strong growth, the Productivity and Business Processes division is likely to be the company’s fastest-growing segment. We have a price estimate of $104 per share for Microsoft, which is about in line with the current market price. Our interactive dashboard on Microsoft’s Price Estimate outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation, and see all of our Technology company data here . Segment Overviews Microsoft’s Azure competes with AWS and Google Cloud in the cloud services space. While the company is a clear number two behind AWS, the movement of budgets towards edge computing and hybrid cloud environments could potentially cool down the scorching pace of cloud growth over the last few years. Microsoft’s own quarterly growth rates for Azure have declined from 98% a year back to 76% in the last quarter, though a larger base factor certainly contributes to that as well. In addition to global macro environment changes, the U.S.-China trade dispute has taken a toll on hardware OEMs, including chip and PC manufacturers. This had resulted in softening growth for the company’s More Personal Computing segment. Going forward, while Windows refresh cycles are likely to keep the growth healthy, the excess inventory situation at OEMs may take another few quarters to clear out before becoming a tailwind for the segment’s growth. The resilience in Productivity and Business Processes is predicated on the cloud architecture on which Office 365 is delivered across commercial and consumer categories. Dynamics 365 also continues to see strong growth driven by IoT projects on Azure. As highlighted above, the company’s single cloud backbone is helping drive application growth, with Office and Dynamics likely to continue witnessing strong growth due to their relative lack of dependence on hardware. LinkedIn – which is part of Productivity and Business Processes – has a strong position in the professional social networking space, where feed engagement is becoming a tool to supplement resumes in showcasing one’s skills. Overall, due to the aforementioned trends, we expect  Productivity and Business Processes  to be Microsoft’s biggest value driver over the coming two years. See More at Trefis | View Interactive Institutional Research (Powered by Trefis) All Trefis Data
    RIG Logo
    Key Takeaways From Transocean's Q4 Results
  • By , 2/19/19
  • tags: RIG HAL
  • Transocean  (NYSE:RIG), one of the largest offshore drilling companies, published its Q4 2018 results on Monday, posting a slightly wider than expected net loss. While the company’s contract drilling revenues grew by about 26% to $748 million, driven by its recent acquisitions, its adjusted net loss came in at $171 million . Below we discuss some key takeaways from the company’s results. We have created an interactive dashboard analysis on  t he expected outlook for Transocean, which you can use to arrive at your own revenue and EPS estimates for Transocean. We note that we have yet to update our model for 2018 results. You can also see all of our data for Energy Companies here . Utilization Trends Higher Transocean’s operating metrics have seen some improvement in recent months. Fleet utilization rates rose from 53% in Q4 2017 to roughly 62% in the last quarter, driven by the company’s fleet modernization initiatives and the closure of the Ocean Rig deal. Revenue efficiency – a measure of how much a rig actually earns while it is contracted against the maximum potential revenues – came in at 96%, up from about 92% in the year-ago quarter. However, average day rates for the fleet continued to trend lower to about $293k, down from around $297k in the year-ago quarter. Rates for ultra-deepwater rigs came in at $337k, down from $440k in the year-ago period, as the company likely worked through contracts that were signed more recently at lower rates. That said, Transocean has noted that day rates for ultra-deepwater drillships were likely to increase  through 2019 and 2020 . Backlog Rises On Improving Contracting Activity And Acquisitions The ultra-deepwater market is recovering, and the company has indicated that final investment decisions (FID) by oil and gas companies in 2019 could increase materially compared to the last year. Although crude oil prices have been volatile, Transocean says that recent cost improvements and reduced cycle times should make offshore projects less risky for consumers. Transocean has made good progress on the contracting front over the last year, securing a total of 37 new floater contracts, roughly double what it booked in 2017. Transocean has been focusing on upgrading its fleet over the last year, and via the acquisitions of Songa Offshore and Ocean Rig, the company added roughly $4.5 billion of high-margin backlog. The company’s total contract backlog stands at $12.2 billion, per its February 2019 Fleet Status report. What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    TRIP Logo
    Can TripAdvisor Witness A Turnaround In Its Hotel Segment In Fiscal 2019?
  • By , 2/18/19
  • tags: TRIP BKNG CTRP EXPE TZOO
  • TripAdvisor ‘s (NASDAQ: TRIP) Q4 results beat revenue estimates, but missed on EPS and Hotel performance metrics. The company’s Q4 performance was driven by solid demand for its Non-Hotel business, particularly the Restaurants and Experiences segment. This segment has continued to deliver operational and marketing efficiencies, which has led to solid improvement in its profitability, which we expect to continue in fiscal 2019 as well. In fiscal 2018, the company’s total revenues grew 4% year-over-year (y-o-y) to $1.6 billion. Its adjusted EBITDA grew more than 25% during the same period, largely driven by the Hotel segment’s EBITDA margin expansion. We have a price estimate for TripAdvisor of $64, which is around 10% ahead of the current market price. The company saw a more than 50% surge in its stock price over the course of 2018. We have created an interactive dashboard on What To Expect From TripAdvisor’s 2019, which details our key forecasts and estimates for the company for fiscal 2019. In addition, you can see all of our  Information Technology company data here . Segment Expectations TripAdvisor’s Hotel segment accounts for almost 80% of the company’s revenues. The company’s revenues declined moderately in its core hotel-booking segment, even as profitability spiked in the division in fiscal 2018. Management expects the segment to see slight declines in fiscal 2019, due to a continued negative impact from marketing pullbacks and some additional currency headwinds in the fiscal first half. However, the segment’s profitability will likely remain strong on the back of its lower cost base and more restrained spending. TripAdvisor’s Non-Hotel segment is broken down into Experiences, Restaurants, and Rentals. In fiscal 2018, the segment’s revenue jumped 27% to $460 million. The segment has been profitable, but is still largely in growth mode as management focuses on adding to its portfolio of bookable products in hopes of capturing a dominant position in this high-growth market. The company expects this segment to grow at a similar pace as last year in fiscal 2019, with rentals weighing marginally on it.   Revenue Forecasts We expect TripAdvisor’s Hotel segment to generate about $1.1 billion in revenue for full-year 2019 from Click-Based and Transaction revenues, Display-Based Advertising and Subscription revenue, and Other Hotel revenues. The company has witnessed increased visitors (or hotel shoppers) on its primary website over recent years, where direct suppliers and Online Travel Agencies (OTA) place their advertisements. The company also generates commissions from its travel partners for its instant booking feature. Increased visitors on the TripAdvisor website have driven more clicks and partnerships with advertisers (hotels and OTAs). However, declining revenue per hotel shopper – amid increased competition – has weighed on revenues. We expect this metric to decline going forward, putting further pressure on the company’s Hotel revenue growth. What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    MGM Logo
    Macau Should Continue To Drive Growth For MGM Resorts
  • By , 2/18/19
  • tags: MGM WYNN LVS
  • Despite missing consensus earnings estimates,  MGM Resorts (NASDAQ: MGM) delivered a decent Q4, ending the year on a positive note. Revenues for the quarter came in about 17% higher than the year ago period, driven by marked improvement at both gaming and non-gaming facilities across both its domestic and Macau properties. As expected, much of this revenue growth was largely driven by contributions from two new casinos – MGM Springfield and MGM Cotai – as well as growth in both mass market and VIP games in Macau, owing to the opening of MGM Cotai and the addition of VIP junket rooms. As a result, Macau revenue was up nearly 33% year-on-year to just over $687 million, forming about 22% of the company’s net revenues. In addition, MGM’s domestic revenues grew by nearly 10% to slightly under $2.2 billion, largely due to improved visitations, better than expected occupancy rate (up 4% y-o-y) and RevPAR (up 8% y-o-y) – as a result of the opening of MGM Springfield. Further, we expect its newly opened casinos to be the driving force in the near term. Additionally, the remodeled Park MGM casino and NoMad floors, coupled with the recently opened Eataly, should provide for decent near-term opportunities. In addition, the company announced its “MGM 2020” plan, with the focus of improving margins, reducing costs, and driving revenue growth through varied digital ventures, which should help improve the guest experience through data, pricing, digital and loyalty capabilities. Moreover, its acquisition of Empire City in New York should not only help the company tap into the underserved New York market, but also help complement its MGM Springfield casino – driven by cross marketing opportunities. This, coupled with the soon to be acquired Northfield Park in Ohio, should expand its domestic portfolio and provide for decent medium term opportunities. Below we take a look at what to expect from the company in 2019. We have a $35 price estimate for MGM’s stock, which is slightly higher than the current market price. We are in the process of updating our model based on Q4 results. Our interactive dashboard on  what to expect from MGM Resorts in 2019  details our expectations for the company’s 2019 earnings. You can modify the charts in the dashboard to gauge the impact that changes in key drivers for MGM would have on the company’s earnings and valuation, and see all of our  Consumer company data here . What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    DE Logo
    Key Takeaways From Deere Q1
  • By , 2/18/19
  • tags: DE CAT
  • Deere ‘s (NYSE: DE) posted lower-than-expected Q1 fiscal 2019 earnings on February 15th, citing higher costs for raw materials and logistics, coupled with concerns over trade policies and tariffs. The company reported revenue of $7.9 billion (+15% y-o-y) and its adjusted diluted earnings were up over 14% year-on-year to $1.54. Although Deere reported solid revenue growth – largely driven by the robust outlook of its Construction and Forestry segment – China and Europe dampened the Agricultural segment. However, a robust outlook for the Construction segment, coupled with the full year contribution of the Wirtgen acquisition and easing cost pressures, should drive 2019 results. As a result, we expect Deere’s overall revenue to grow by 6-7% in 2019. We have an updated price estimate of  $174 for Deere’s stock, which is slightly higher than the current market price. We are in the process of updating our model based on Deere’s performance in Q1. Our interactive dashboard on  what to expect from Deere in 2019  details our expectations for the company’s 2019 earnings. You can modify the charts in the dashboard to gauge the impact that changes in key drivers for Deere would have on the company’s earnings and valuation, and see all of our  Industrials company data here . Construction Segment To Drive Growth Deere’s Construction and Forestry segment continued its solid performance in Q1, as sales increased by nearly 31% y-o-y to $2.3 billion. The better than expected growth was mainly due to full period contribution from the Wirtgen acquisition (vs. one month in Q1 fiscal 2018) and higher shipment volumes, partially offset by higher production costs. We expect robust construction spending to continue into 2019 as a result of strengthening U.S. economic conditions, which should drive growth in U.S. housing demand. Further, we expect the segment to benefit from improved transportation investment, economic growth worldwide, and increased demand for its forestry equipment in the U.S. Moreover, the full year contribution from Wirtgen should further boost Deere’s Construction business in 2019. Consequently, we expect the solid outlook of the industry to continue to support demand for new and used equipment. As a result, we expect the segment to grow by around 10-11% in 2019. Soft Demand To Dampen Agricultural Segment Outlook The Agriculture and Turf segment, which accounts for nearly two-thirds of Deere’s overall revenue, grew by around 10% y-o-y in Q1 fiscal 2019. This growth was largely due to higher shipment volumes and pricing, partially offset by higher warranty-related expenses and unfavorable effects of currency translation. As a result, margins dipped by nearly 170 basis points to 7.4% mainly due to higher production, less favorable product mix and increased research and development costs. Further, Deere’s host of new acquisitions should not only expand its market position but also enable the company to provide cost-effective equipment, technology, and services to farmers. This, coupled with geopolitical uncertainty and ongoing trade disputes, has resulted in depressed bean prices and may result in softer demand for the company’s equipment. As a result, we expect the segment to grow by around 2-3% in 2019. What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    CS Logo
    Key Takeaways From Credit Suisse's Q4 Earnings
  • By , 2/18/19
  • tags: CS UBS
  • Credit Suisse (NYSE:CS) recently reported its fourth quarter and full year results.  The bank delivered its first net profit – of CHF 2.1 billion – since 2014 after completing its restructuring program in 2017. There was only a marginal increase in the bank’s annual revenue, while its Q4 revenue declined by 2% from Q3 2018. Credit Suisse’s profitability can be primarily attributed to a decline in its operating expenses, which fell by approximately 9% in 2018, and an increase in its wealth management revenue of approximately 4.7%, contributing 41% of its total revenues. Credit Suisse reported a second consecutive quarterly loss in its struggling global markets trading operation, which was offset by increased profits and revenues in its wealth management and Swiss universal banking divisions. We currently have a price estimate of $15 per share for Credit Suisse, which is ahead of the current market price. We have summarized Credit Suisse’s Q4 2018 earnings in   our interactive dashboard for the bank, the key parts of which are captured in the charts below. You can modify any of our key drivers to gauge the impact changes would have on its valuation, and see all Trefis Financial Services company data . Segment Performance  After reporting a solid performance in the first half of 2018, Credit Suisse did not quite maintain that performance in the second half. Key takeaways of the bank’s performance are below: While wealth management revenues increased annually, the revenues fell in the second half by approximately 8% from the first half of 2018. Credit Suisse’s assets under management fell sequentially to CHF 1.3 trillion for the fourth quarter. The bank’s investment banking revenues fell by approximately 27.5% in the second half of the year. We expect the bank to scale down its IB operations, though it will likely return to profitability for 2019. Credit Suisse’s operating expenses declined in each quarter of 2018, mainly relating to lower salaries and variable compensation expenses and a decrease in general and administrative expenses – driven by lower professional services fees and lower non-income taxes – leading to the bank’s first post-tax profit in four years. Outlook For Fiscal 2019  As evidenced by the decline in trading assets, Credit Suisse plans to scale back its investment banking business and intends to focus more on its growing wealth management business. The bank may have to reassess its income tax expense for 2018 once the U.S. finalizes its base erosion and anti-abuse tax (BEAT) regulations. For 2019 and 2020, CS plans to achieve a return on tangible equity of 11% and also plans to distribute at least 50% of net income to shareholders, primarily through share buybacks and the distribution of a sustainable ordinary dividend. What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own
    MDT Logo
    What Factors Will Drive Medtronic's Earnings Growth In Q3 FY19?
  • By , 2/18/19
  • tags: MDT ABT ISRG
  • Medtronic  (NYSE:MDT) is set to report its Q3 fiscal 2019 earnings on February 19, and we expect the company to post mid-single-digit top line and bottom line growth. The company will likely see steady growth across its segments. Coronary & Structural Heart, along with Diabetes, should lead this growth, given the higher demand for its drug eluting stents, and MiniMed systems. We have created an interactive dashboard ~ What To Expect From Medtronic’s Q3 Fiscal 2019? You can adjust various drivers to see the impact on the company’s overall earnings. Below we discuss our forecast in detail. In addition, here is more  Healthcare data . Expect Revenues To Grow In Mid-Single Digits In Q3 FY19 Cardiac & Vascular Group revenues will likely grow in mid-single-digits to around $2.90 billion in Q3. Within Cardiac & Vascular Group, Cardiac Rhythm & Heart Failure should continue to see slow growth, while Coronary & Structural heart could see mid-to-high single-digit growth. While the cardiac rhythm management devices market is expected to grow at a CAGR of 7% over the next few years, there is a strong competition in the market, with companies such as Abbott, Boston Scientific, and Biotronik, along with Medtronic, looking to gain share. Medtronic’s Coronary & Structural Heart division has seen strong demand for its Evolut PRO Valve, along with strong adoption of the Resolute Onyx drug-eluting stent in the recent past. We expect this trend to continue in the near term. Minimally Invasive Therapies Group could see mid-single-digit revenue gains, primarily led by its Surgical Innovations division, which has seen steady growth for LigaSure vessel sealing instruments, along with advanced stapling products in the recent past. Respiratory, Gastrointestinal, & Renal also saw strong growth in patient monitoring products, and this trend will likely continue in Q3 as well. Looking at Restorative Therapies Group, the company saw double-digit growth in Brain and Pain therapies in the first half of fiscal 2019. This can be attributed to strong sales of its Intellis spinal cord stimulation platform, and StealthStation S8 surgical navigation systems, among other products. Note that Medtronic completed the acquisition of Mazor Robotics in Q3 fiscal 2019. The company in its previous quarter earnings conference call stated that it plans to integrate Mazor X Robot with its StealthStation system, in order to have a competitive advantage in the spine market. Mazor Robotics overall sales were a little under $65 million in 2017, and it will be unlikely to have any meaningful contribution to Medtronic’s top line in the near term. Medtronic’s Diabetes group has seen growth in high twenties percent in the recent quarters, led by its new MiniMed 670G system, which is the world’s first hybrid closed loop system that optimizes glycemic control for patients with type 1 diabetes. Also, the new Guardian Connect CGM system will aid the overall segment revenue growth. Guardian Connect is a continuous glucose monitoring system designed for people on insulin injections. It can be connected with apps on mobile phones and predict and alert about highs and lows of glucose levels. We forecast the segment revenues to grow in high single-digits to around $635 million in Q3, in line with the company’s guidance for the segment. Overall, the company should see steady growth across its segment in Q3 fiscal 2019. The company has guided for slight improvement in its operating margins, which along with higher revenues should result in adjusted earnings of $1.24 per share, reflecting a 5.50% growth over the prior year quarter. We currently have a $110 price estimate for Medtronic, which we will update post the Q3 results announcement. What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    GOLD Logo
    After Lower Prices And Volume Proved To Be A Drag On Profitability In 2018, Will Barrick Gold Spring A Surprise In 2019?
  • By , 2/15/19
  • tags: GOLD NEM VALE FCX
  • Barrick Gold Corp. (NYSE: GOLD) released its Q4 2018 results on February 13, 2019 followed by a conference call with analysts. The company fell marginally short of analysts’ expectations for revenue, primarily due to lower shipments and a decline in average realized prices of gold and copper. Barrick Gold reported revenue of $1,904 million in the fourth quarter of 2018, which marks a decline of 14.5% on a year-on-year basis. However, the company met the consensus EPS estimates with an adjusted earnings per share of $0.06 in Q4 2018, 72.7% lower than $0.22 in Q4 2017. The lower earnings was a reflection of decreasing volume, lower grades and recovery rates, higher cost of sales, and increasing direct mining costs, driven by higher energy prices and consumption. We have summarized the key takeaways from the announcement in our interactive dashboard – Will The Poor Performance Of 2018 Affect Barrick Gold’s Stock Valuation For 2019?  In addition, here is more Materials data .   Key Factors Affecting Earnings Lower volume: Gold shipments declined by 5.8% to 1.26 million ounces in Q4 2018 from 1.34 million ounces in Q4 2017. Gold volume has witnessed a steady decline over the last couple of years, with shipments decreasing by 14.3% (y-o-y) in 2018, mainly driven by a 15% reduction in production volume during the year. Lower production reflected the impact of the 50% divestment of the Veladero mine in June 2017, along with lower grades and recoveries across most operations, lower throughput at Acacia as a result of reduced operations at Bulyanhulu, and lower tonnage processed at Lagunas Norte. A similar trend was observed in copper, with shipments declining by 5.7% in 2018 on the back of a 7.3% reduction in copper production for the year. The drop in copper production was driven by lower production at Lumwana – primarily due to mill shutdowns, crusher availability issues, and lower head grade and recoveries, coupled with lower throughput at Zalvidar. Lower price realization: 2018 was marked with a lot of price volatility. After strengthening at the beginning of the year, gold prices saw a sharp decline after Q2 2018, mainly driven by rising interest rates in the US and the stronger dollar. However, gold prices staged a minor recovery in the fourth quarter of 2018, mainly driven by rising economic uncertainty which forced central banks around the world to buy more gold as a hedge against an economic slowdown. Thus Q4 2018 saw a sequential rise of 0.6% in gold prices. However, on a year-on-year basis, realized gold price declined by 4.5%, dominated by the decline in the initial part of the year. The US-China trade war had a significant impact on copper prices, which declined by 17.4% (y-o-y) in Q4 2018; whereas the realized price for the full year saw a drop of 10.7% to $1.34 for  2018. The price volatility adversely affected revenue growth for the both the segments in Q4 as well as the full year. However, prices of both the commodities have rebounded since January 2019 and we expect prices to remain elevated through the year. Rising cost of production: The all-in sustaining cost (AISC) per ounce of gold increased by 7.5% to $806 in 2018 compared to $750 in 2017, due to higher cost of sales, primarily driven by inventory impairment of $166 million at Lagunas Norte, exacerbated by the impact of lower grades and recoveries across most operations, coupled with higher direct mining cost due to a rise in energy prices and consumption. AISC per pound of copper saw a significant rise of 20.5% to $2.82 in 2018, compared to $2.34 in 2017, mainly attributed to a higher maintenance costs due to mill shutdowns and crusher availability issues, higher energy consumption to truck ore to the crusher, and tire costs due to road conditions at Lumwana. Additionally, depreciation expense was higher, mainly as a result of the impairment reversal recorded in Q4 2017 relating to Lumwana, resulting in higher non-current asset values to depreciate compared to the prior year. Lower shipments and price realization of gold and copper led to total revenues decreasing by 13.5% to 7.2 billion in 2018, as against $8.4 billion in 2017. Rising cost of production during the year affected profitability. Additionally, the company reported a large impairment charge of $900 million in 2018, related to Lagunas Norte and Veladero operations, in contrast to $212 million of impairment reversal in 2017. These cost increases, along with lower revenues, dragged net margin into the red, which in turn translated into negative returns for shareholders. Will 2019 be an inflection point? We believe that after a dismal 2018, this year will prove to be much better for Barrick Gold. The driving force behind this optimism is the recent $6.5 billion merger with Randgold Resources (which took effect on January 1, 2019), with the combined entity having an annual revenue generating capacity of $10 billion. We expect revenue to rise by close to 16% to $8.39 billion in 2019, on the back of increased shipments and strengthening of gold and copper prices. Additionally, Randgold’s high grade ores, lower cost of production, efficient logistics framework and better supply chain, and inventory management is expected to help Barrick Gold improve its profitability, thus reflecting in a sharp increase in net margin to 10% in 2019. EPS would likely rise to $0.72 in 2019 from -$1.32 in 2018. Expectations of higher margins and the recent announcement of a sharp rise in dividend pay-out would support growth in the company’s stock. However, the road in 2019 is not that smooth for Barrick Gold. The largest bump in its way is the planned merger of Newmont Mining and Goldcorp Inc (expected to conclude in Q2 2019) which would create the largest gold company, displacing Barrick Gold to the second spot. It would be interesting to see what additional steps the management at Barrick Gold takes to effectively counter the increasing scale of Newmont Mining and break the $14 share price ceiling in the near term. We have a price estimate of $14 per share for Barrick Gold.   What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    ATVI Logo
    What To Expect From Activision Blizzard In 2019?
  • By , 2/15/19
  • tags: ATVI EA ZNGA
  • Activision Blizzard  (NASDAQ:ATVI) recently posted its Q4 results, which were in line with our estimates. The top line grew in mid-teens while its bottom line saw strong double-digit growth, primarily led by a higher contribution from Blizzard. However, the segment saw continued softness in net bookings. In fact, the company has guided for a significant decline in the Blizzard segment in 2019. We forecast a low double-digit decline in the company’s top line, and a low thirties percent decline in the adjusted earnings, primarily due to the expected trends in the Blizzard segment, which we discuss below. We have created an interactive dashboard ~  A Quick Snapshot of Activision Blizzard’s Q4 Performance And Trefis Estimates For The Full Year 2019 . You can adjust various drivers to see the impact on the company’s earnings, and price estimate.  In addition, here is more Information Technology data . Expect Revenues To Decline In Low Single-Digits Activision revenues were up in mid-single-digits in 2018, primarily led by Call of Duty: Black Ops 4, The game has seen strong sales in the recent months. In fact, it was No. 2 in NPD’s top 10 grossers list for 2018. The game will likely see continued demand in Q1 as well, and the company plans to release the next line up in the franchise in Q4 2019. However, the company’s management in its recent earnings conference call stated  that the segment revenues won’t see any significant growth (y-o-y) in 2019, given that Destiny’s publishing rights were sold to Bungie. The Blizzard segment saw high single-digit revenue growth in 2018, led by World of Warcraft: Battle of Azeroth. However, the company saw softness in net bookings (in-game). There is no release planned for World of Warcraft in 2019, and this will have a significant impact on the company’s performance. We forecast the decline to be as steep as 50% on the segment’s revenues. Looking at King Digital, the segment revenue grew 7%, led by its new game ~ Candy Crush Friends. However, its monthly active user base of around 271 million was down in low double-digits (y-o-y). We forecast the segment revenues to grow in low double-digits in 2019, led by an expected pick up in its active user base, with the launches in the Candy Crush franchise, and an uptick in advertising revenues. Overall, we forecast the company’s revenues to decline in low double digits to $6.67 billion in 2019, primarily due to the plunge in the Blizzard segment. Note that our forecast is above the company’s guidance of $6.30 billion. We expect the earnings to be $1.90 per share for the full year 2019, on an adjusted basis. Our price estimate of $52 for Activision Blizzard is based of a 28x forward price to earnings multiple. What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    What's Next For Namaste Technologies After Ousting CEO?
  • By , 2/15/19
  • tags: MO CONSTELLATION-BRANDS PM WEED BUD
  • Namaste Technologies’ (CVE:N) stock has tanked of late, after the company announced that CEO Sean Dollinger had been terminated for cause after an internal investigation found “evidence of self-dealing” and “breaches of fiduciary duty.” The company also announced that it will be undergoing a review of strategic options, which could potentially include the outright sale of the company. The stock is now trading below $1, down from nearly $3 in late September when a short-seller leveled allegations of fraud that prompted the company’s internal investigation. Investors will be eagerly awaiting the results of the review of strategic options, though given the turmoil and depressed valuation, it may not be an opportune time to seek a buyout. Namaste is an emerging company in the cannabis-related market, selling vaporizers and other accessories through its 30 e-commerce websites across 20 countries. While the company focused primarily on the medical side until recently, it has taken steps to capitalize on the growth potential of Canada’s recreational cannabis market. Given the turmoil surrounding the company, and its relatively murky outlook, we have cut our price estimate for Namaste Technologies to CAD 2 per share (around $1.50). Our interactive dashboard analysis on Namaste Technologies’ Valuation  outlines our near-term expectations for the company. You can modify any of our key estimates or forecasts to gauge the impact changes have on the company’s valuation, and see all Trefis Consumer company data . What’s Next For The Company?  Namaste’s board elevated Meni Morim, the company’s Chief Product Officer and Director of AI, to the position of CEO. The company sent a letter to shareholders stating that the company’s operations will continue uninterrupted during the strategic review, and discussing its ongoing innovation initiatives including “Artificial Intelligence capabilities that are being deeply integrated into [the] customer experience.” However, at this point it is very possible that the company ultimately pursues a buyout, despite the depressed valuation. Given its potential in the fast-growing market, solid technological capabilities and sales pipeline, there could be a few suitors for its business (such as Canadian cannabis competitors or even a larger tobacco company potentially). With the stock trading well below the levels it saw for much of 2018, a suitor could potentially acquire the company at a relatively attractive price tag.
    CBS Logo
    Advertising, Subscriptions To Drive CBS's Fiscal 2019
  • By , 2/15/19
  • tags: CBS VIA DIS
  • CBS Corporation ‘s (NYSE:CBS) revenues and earnings per share missed market expectations when it reported its fiscal fourth quarter results on February 14. In Q4, the company’s overall revenue increased 3% year-over-year (y-o-y) to $4 billion, primarily due to significant growth in political midterm advertising and affiliate and subscription fees, partially offset by a double-digit drop in content licensing revenues. This was due to the timing of international sales and tough comps against big domestic sales compared to the prior year. In addition, CBS reported adjusted operating income of $837 million (up 10% y-o-y), reflecting a higher investment in programming and technology for its new direct-to-consumer platform. Also, the company posted adjusted earnings of $1.50, up 25% y-o-y. CBS’s stock price declined close to 25% over the course of 2018 despite strong financial results, largely due to the legal issues involving Leslie Moonves and National Amusements. Our $61 price estimate for CBS’ stock is almost 20% ahead of the current market price. We have created an interactive dashboard   on What To Expect From CBS’s 2019 Results,  which outlines our forecasts for the company. You can modify our forecasts to see the impact any changes would have on the company’s earnings. In addition, you can see all Trefis  Media Company data here. Going forward, we expect the company to post an increase in earnings and revenue growth rate in Q1, driven by growth in advertising, direct-to-consumer offerings, retransmission and reverse comps and international content licensing. In Q1 2019, demand for national advertising is expected to grow, and scatter pricing could pace up to about 25%. At the Local Media segment, the company expects revenues to pace up to high single-digits. Detailed 2019 Expectations CBS expects to see strong gains in advertising, with big sports events programming from the Super Bowl and the NCAA men’s basketball tournament. The company also expects continued growth in content licensing, as it is planning to expand content development and distribution to a host of third-party distributors such as Apple, Netflix, and TBS.   In the direct-to-customer channel, CBS reported 8 million subscribers combined at CBS All Access and Showtime OTT in the domestic market in 2018. Further, the company expects to produce 30% more hours of original programming in 2019 than it did in 2018. CBS’s management also made news on the over-the-top front, projecting 25 million subscriptions for All Access and Showtime OTT by the end of 2022. The company also stated its financial goals to reach a high-single-digit revenue CAGR and double-digit adjusted earnings CAGR through 2021, largely driven by investments in programming, marketing, and technology. Looking ahead in 2019, we expect CBS to generate around $15.5 billion in revenues and adjusted earnings of around $2.1 billion. Our revenue forecast represents year-on-year growth of nearly 7%. Of the total expected revenues in 2019, we forecast $10 billion to come from the Entertainment business, nearly $2.7 billion from the Cable Networks business, over $800 million in the Publishing business, and nearly $1.9 billion for the Local Media division. For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own
    EL Logo
    What Are Estee Lauder's Key Sources Of Revenue?
  • By , 2/14/19
  • tags: EL
  • Estee Lauder  (NYSE: EL) has continued with its growth momentum the past few years, primarily driven by strong performance in its Skin Care and Makeup segments. Its Skin Care and Makeup Divisions account for 80% of the company’s revenue. Recently, during the Q2 earnings for FY19, the company reported better-than-expected growth in sales growing by 11% y-o-y. Estee Lauder’s Skin Care segment, which constitutes over one-third of Estee Lauder’s sales, posted 16% growth in Q2 sales. The company posted this exceptional performance driven by strong innovations, increasing demand from younger consumers, and gains from its hero products: Estée Lauder, La Mer, Origins, and Clinique brands. Driven by continued success of the recent launches — Advanced Night Repair Eye Concentrate Matrix — the Estee Lauder brand saw strong growth from China and the travel retail segment. La Mer saw growth coming from new products in the Genaissance collection and launch of The Moisturizing Matte Lotion. In addition, Origins generated sales growth from every geographic region, led by Asia. The division is continuing to perform well in e-commerce and is outpacing growth in the mass Skin Care segment. EL’s makeup segment continued to see increased sales from the acquisitions of Too Faced and BECCA in the last fiscal year. The 3% increase in this segment was driven by strong growth from its brands viz. Estée Lauder and Tom Ford, Too Faced, BECCA, and La Mer.  Other sources of revenue for EL is the Hair Care segment, which increased by 5% primarily driven by higher sales of the Aveda brand and continued growth from the Invati Advanced line of products. Driven by this earning performance, which has been fueled by growth in most of their segments and brands, Estee Lauder is projecting growth in its Q3 2019 sales to increase between the band of 8% – 9% (Excluding a 5% impact from currency translation and a 2% impact from the adoption of ASC 606), net earnings per share between $1.17 and $1.20. EL’s growth drivers and aggressive growth strategies will help it in maintaining its dominance in the beauty market. Also, the company is on track with the implementation of the Leading Beauty Forward initiative, directed toward better-management of costs and operations, which will help it grow stronger in the coming years. We have created an interactive dashboard on  Estee Lauder’s Key Sources of Revenues  that shows Estee Lauder’s key revenue sources and the expected performance in 2019. You can adjust the revenues to see the impact on earnings. In addition, all Trefis Consumer Discretionary Data is here .     What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.  
    DNKN Logo
    Will Expansion Of Stores Be Key For Dunkin' Brands In 2019?
  • By , 2/14/19
  • tags: DNKN SBUX MCD CMG QSR
  • Dunkin’ Brands  (NASDAQ:DNKN) announced its 4th quarter and full year results recently. For Quarter 4 the company beat consensus estimates for earnings but missed consensus revenue expectations for the quarter by $10.23 million. Overall, for the Fiscal Year 2018 the company posted $1.32 billion in revenue and $239 million as Net Income. The company added a net new 392 stores (278 in US). The comparable sales growth for Dunkin’ US was 0.6%, Baskin-Robbins US was down by 0.6%, while the International segments for Dunkin’ and Baskin-Robbins was up by 2.2% and 3.8%, respectively.   We have a $76 price estimate for Dunkin’ Brands. The charts have been made using our new, interactive platform. You can click here for our interactive dashboard Our Outlook for Dunkin’ Brands in FY 2019 and Estimate Its Fair Price by modifying different drivers, and see their impact on the net income and price estimate for the company. In addition, all Trefis Consumer Discretionary Data is here . Key Factors That May Impact Results Going Forward: Simplified Menu: In the first quarter, DNKN completed the national rollout of its menu simplification, which resulted in a 10% reduction of required menu items. This step is expected to help in the long run by reducing the complexity, which should help deliver a better guest experience, improve order accuracy, drive franchisee profitability, and ultimately, increase restaurant level margins.   Expanding Its Footprint: Dunkin’ Brands is looking to expand the footprint of Dunkin’ U.S. at a 3% annual rate, adding around 1,000 new restaurants by 2020. The company is also on track to convert its existing restaurants into NextGen stores to offer better customer service.  At the end of the fiscal year 2018, 392 net new locations were added in the country, and the company now has 132 new and remodeled NextGen restaurants. The company remains on track to deliver 90% of net restaurant growth outside of its core markets by the end of 2020. New restaurants add to revenue growth, and should positively impact the company’s valuation.   Branded CPG Products:  DNKN’s total portfolio of CPG products across both brands in retail sales delivered 5% of retail stores growth for the fiscal year 2018. New and innovative product launches, such as the new ready-to-drink flavor, Cookies & Cream, should help to ensure continued growth from this avenue.   Convenience To Customers: Dunkin’ Brands is looking to increase the conveniences it offers to its guests with several initiatives such as a focus on its loyalty program, testing a digital catering platform, and tying up with third-party delivery options with a goal of creating a strong delivery and catering platform by the end of next year. The company has grown its partnership with DoorDash, who now covers over 70% of Baskin-Robbins stores across the U.S. which is a 40% increase in coverage year on year.  The consumer response to this remains positive, with delivery orders on average carrying a ticket that is 50% higher than that of the restaurant. The company is also working on building a dedicated mobile order drive-thru lane to ensure speed of service to its digital customers.   Investment Into Dunkin’ U.S.: Earlier this year, the company announced its intention to invest approximately $100 million into the Dunkin’ U.S. business, with about 65% of this investment allocated toward equipment that would accelerate its beverage-led strategy. In this regard, the company noted solid growth across its beverage portfolio, led by Espresso, Cold Brew, and Frozen categories. The management also stated that a significant portion of these funds will go toward new espresso equipment and consequently, revitalizing a critical, high-growth category for its business.   Launch Of Value Platforms : In April 2018 DNKN launched its national value platform, Go2s, and the company noted that more than 75% of these breakfast sandwich transactions contained a beverage, and the average check size was roughly $8-$9. The company took a break to test different national value iterations, but beginning in January they are back with a  similar Go2s platform and an afternoon beverage break offer.   In conclusion, Dunkin’ Brands had a strong 2018 and is on the path to continue the growth momentum in 2019. We believe expanding presence, value platforms, and digitization will lead the way for a strong fiscal year 2019.     What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    QSR Logo
    Will The New Management Push Restaurant Brands' Growth Further?
  • By , 2/14/19
  • tags: QSR SBUX DNKN CMG MCD
  • Restaurant Brands International (NYSE: QSR) reported its 4th quarter and full year results on February 11, 2019 before the market opened. As per the numbers in the early release, comparable sales are up 0.6% in Tim Hortons, 2% in Burger King, and 1.6% in Popeyes Louisiana Kitchen for the Fiscal Year 2018. For Quarter 4 the company beat the Non-GAAP EPS consensus, while total revenue was in line with consensus. The company posted a total revenue of $5.3 billion (as per new standard) while earnings were at $2.63.   We have a $69 price estimate for Restaurant Brands International. The charts have been made using our new, interactive platform. View our interactive dashboard – Our Outlook For Restaurant Brands International In Fiscal Year 2019 and modify the key assumptions to reach a price estimate of your own. In addition, all Trefis Consumer Discretionary Data is here .   Factors That May Impact Future Performance:   New Management: The company in a release in the second half of January announced leadership changes to help move the company in the right direction. Daniel Schwartz is promoted to Executive chairman after serving as a CFO and CEO for the last 8 years. Jose Cil is promoted to the CEO of the company after being with Burger King for 18 years. While Josh Kobza is promoted to COO of RBI to oversee the global development, technology, and operational teams responsible for supporting the growth of RBI’s brands.   Expansion of Burger King: RBI is focused on expanding its Burger King chain and is entering into several franchisee agreements to fulfill this goal. The company has announced a financial agreement with private equity giant Bridgepoint to expand in the U.K. This agreement was followed by a master franchise agreement with Nexus Point in Taiwan and another master franchise agreement to expand its presence in the Netherlands. In fiscal year 2018, the company grew its restaurant count by roughly 6.1% year-on-year, which reflects continued growth from its partners all around the world. Faster growth of the Burger King chain can become a key driver of revenues for RBI.   Implementing Delivery: RBI began testing delivery for BK in the U.S. in the first quarter across several hundred restaurants and numerous markets. This strategy follows from the successful model seen in many of its international markets, including China and Spain. The company has now expanded its delivery facility in BK to nearly 3,000 restaurants in North America and over 7,000 restaurants around the world. Moreover, a mobile order and pay app was launched in the U.S. this quarter, which may help to improve the customer experience. The company also made great progress rolling out delivery to over 1,100 Popeyes restaurants in the U.S., representing nearly 50% of the U.S. restaurants within just one year.   Prospects of Popeyes Louisiana Kitchen: Revenue growth from this segment can be expected to come from a higher number of its restaurants. In fiscal year 2018, the company had a net restaurant growth of 7.3%. The company has also signed a master franchise agreement for expansion in Brazil, which calls for opening 300 restaurants in the country over the next ten years. In the third quarter, the company also announced a master franchise development agreement in the Philippines, marking its first major development agreement for the Popeyes brand in Asia.   Tim Hortons’ Poor Results In The U.S.: While comps returned to the plus side for TH in Q3 and Q4, there is still plenty of work to be done. The global comparable sales improved just 0.6% for the Fiscal Year 2018. TH launched ‘Breakfast Anytime,’ in contrast with previously, when breakfast items were only sold till noon. This was done based on research conducted by the company, the results of which showed that this program appealed to roughly 75% of respondents and 60% of TH’s guests indicated they would likely buy a breakfast sandwich after 12 noon. Moreover, one-third of the guests indicated their frequency of visits would increase post the implementation of the program. This initiative can be considered to be the key driving factor behind the improvement in comps for Canada, and should continue to benefit the company in the forthcoming quarters.   In conclusion, we believe Restaurant Brands’ next year will depend on how the new management takes on the challenges the company currently has. That said, Burger King and delivery seems to be the most likely factors to drive momentum in the first couple of quarters in fiscal year 2019.     What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    YELP Logo
    Can Growth In Demand Help Yelp Tide Over Supply-Side Issues?
  • By , 2/14/19
  • tags: YELP SINA GRPN EBAY GOOG AMZN BIDU BABA
  • Yelp (NYSE:YELP) reported its fourth quarter and full year earnings on Wednesday, February 13. The company’s revenue and EPS beat market expectations. While end-user demand continues to be strong, the company’s management continues to be cautious on its sales transition in its local advertising business. Our interactive dashboard on Yelp’s Price Estimate  outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation, and see all of our Technology company data here . Q4 earnings takeaways are below: Paying advertiser accounts grew to 191,000 (+17% y-o-y). App unique devices increased to 33 million (+14% y-o-y), with cumulative reviews also registering strong growth to reach 177 million (+20% y-o-y). Advertising revenue increased to $235 million (+12% y-o-y) driven by a 17% y-o-y increase in paying advertiser accounts. Management noted that Yelp had “significantly decreased friction” in the advertiser acquisition process. Other revenues declined to $9 million (-12% y-o-y) on account of the divestment of Eat24 to GrubHub and business restructuring. The company expects its 5-year revenue CAGR to be in the mid-teens, while the guidance for 2019 revenue growth has been pegged at 8-10%. Furthermore, the revenue growth guided for Q1 is even lower at 4-6%. Evidently, management expects the transition in local advertising to selling non-term contracts to take at least 12 months to stabilize. The first sequential decline in paying advertisers over the last three years lends credibility to management concerns. On the brighter note, Yelp expects its partnership with GrubHub to help drive volumes going forward while helping to control costs. Given that Yelp continues to grow the demand side of its marketplace, volume growth with GrubHub is likely to translate into better margins. Overall, after the surprise in Q3, Yelp’s management appears to be treading cautiously. While we expect the company’s operating leverage to surprise on the cash flows, we will be looking out for more consistent execution from the company. Do not agree with our forecast? Create your own price forecast for the Yelp by changing the base inputs (blue dots) on our interactive dashboard .
    DWDP Logo
    Lower Margins In Material Science Business Will Likely Weigh On DowDuPont's 2019 Earnings
  • By , 2/14/19
  • tags: DOWDUPONT DWDP
  • DowDuPont  (NYSE:DWDP) saw high single-digit revenue growth, while its adjusted earnings were up in the low twenties percent for the full year 2018. This growth was primarily led by its Material Science business, which saw an uptick in pricing and volume. However, the company guided for a weak Q1, amid tepid economic growth. In fact, the company will likely see only a modest growth  in revenues for the full year 2019, while its earnings could see modest decline, amid margin contraction. Note that the company plans to split into three different entities later in this year. We have created an interactive dashboard ~ What To Expect From DowDuPont In 2019? You can adjust various drivers to see the impact on the company’s earnings, and price estimate. Below we discuss our forecasts.  In addition, all Trefis Chemicals data is here . Expect Revenues To See Modest Growth In 2019 We forecast the Agriculture revenues to see a modest decline in 2019, due to continued currency headwinds, primarily from the Brazilian Real. The company last year saw a modest decline in sales, as gains from higher pricing were offset by lower volume, among other factors. It expects to gain from new product launches and higher pricing in 2019. Performance Materials & Coatings sales were up in high single-digits in 2018, led by double-digit pricing gains. Looking forward, the company will likely see higher sales in 2019, led by volume gains, especially for performance silicones. The overall silicones market is expected to grow at a CAGR of around 6% to $19 billion in 2022, according to a research report . This should bode well for DowDuPont, given it is one of the larger players in the silicone market. Looking at the Industrial Intermediates & Infrastructure segment, it has seen 20% revenue growth in 2018, led by double-digit volume gains. This can be attributed to the enhanced capacity at the Sadara unit, and higher demand in industrial specialties. We forecast revenue growth in low single-digits for the full year 2019, as expected volume gains will mostly be offset by pricing and currency headwinds. Packaging & Specialty Plastics will also likely see a low single-digit growth, led by continued demand for industrial and consumer packaging. The division is benefiting from added capacity at the U.S. Gulf Coast, along with higher production at the Sadara facility. Note that Performance Materials & Coatings, Industrial Intermediates & Infrastructure, and Packaging & Specialty Plastics are part of the company’s Material Sciences division, which accounted for 57% of the company’s total revenues in 2018. While the business will likely see modest revenue gains in 2019, margins will likely decline, amid headwinds in isocyanates, due to softening prices. The Specialty Chemicals business will likely continue to see steady growth, primarily due to higher demand for the Nutrition & Biosciences product line, which saw revenue growth in low teens last year. Note that the last year double-digit growth can partly be attributed to the acquisition of FMC’s Health & Nutrition business. The company stated that volume gains last year were led by probiotics, and specialty proteins, among others. This trend will likely continue in the near term, and beyond, given the growth in the overall market. The global personalized retail nutrition and wellness market is expected to grow in high single-digits over the next few years. DowDuPont caters to the food industry at large, and it is one of the larger players for ingredients, including preservatives. Overall, we expect the company’s top line to see only a modest growth to $87 billion, and adjusted earnings to see a low single-digit decline to $4.07 per share. Our price estimate of $63 for DowDuPont is based on a 15x forward price to earnings multiple.   What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.