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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 : AMERICAN EXPRESS COMPANY

American Express announced its Q1 results last week, with total revenues increasing by nearly 7% over the prior year quarter.

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FORECAST OF THE DAY : BLACKROCK'S EQUITY ISHARES ASSETS

BlackRock's Equity iShares Assets continue to see solid growth, driven by overall ETF market growth and the company's industry-leading position.

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RECENT ACTIVITY ON TREFIS

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Lifetouch Acquisition To Continue To Drive Top-Line Growth For Shutterfly In Q1
  • By , 4/22/19
  • tags: SFLY
  • Shutterfly (NASDAQ: SFLY) is expected to publish its Q1 2019 results on April 25. After delivering a strong performance in FY 2018, the market expects the online photo company to post a quarterly loss of $2.54 per share, while revenues are expected to be $323 million, up 61.8% from the year-ago quarter. We have summarized our full year expectations for SFLY based on the company’s guidance and our own estimates, in our interactive dashboard   How Is Shutterfly Likely To Have Fared In Q1?  You can modify any of our key drivers to gauge the impact changes would have on its valuation, and see more  Trefis Internet & Software Services Data here . Below we highlight some of the key historical trends and key revenue drivers that are likely to impact Shutterfly’s future performance: What drove changes to Shutterfly’s revenues in recent quarters and what can we expect in Q1? Shutterfly’s revenue has trended upwards over the recent quarters, increasing from $200 million in Q1 2018 to $950 billion in Q4 2018. The growth was driven by the better-than-expected performance from the Lifetouch acquisition and strong performance of its Business Solutions segment. The increasing trend in expected to continue in Q1, with revenues growing to $323 million, up 61.8% from the year-ago quarter. The Lifetouch acquisition will continue to drive top-line growth for Shutterfly in Q1. How have SFLY’s expenses changed over recent quarters and what can we expect in Q1? Total expenses for Shutterfly have trended upwards over recent quarters, growing from $108 million in Q1 2018 to $314 million in Q4 2018. This growth has been driven by higher integration costs related to the Lifetouch acquisition and higher personnel expenses. We expect the increasing trend to continue in Q1 2019 as the company continues to make technology investments to expand its product and category range. Moreover, integration costs coupled with costs related to Project Aspen will likely add to the operating expenses. Which are the key revenue drivers to watch out for in SFLY’s Q1 results? Lifetouch Shutterfly acquired Lifetouch, a national leader in school photography, in April 2018 for $825 million. Lifetouch added $799 million of non-GAAP revenue in 2018 driven by strong performance in schools and preschools. Lifetouch is expected to continue to drive top-line growth for Shutterfly in Q1, with management expecting Lifetouch Q1 revenue to range from $126 million to $230 million. Shutterfly Business Solutions (SBS) SBS provides personalized direct marketing and other end-consumer communications as well as just-in-time, inventory-free printing to Shutterfly’s customers. SBS grew revenues by 19% in 2018 to $231 million, driven by higher than expected volumes from existing customers. The company expects SBS net revenue to range from $45 million to $48 million in Q1 2019, a 2.5% decline from the year-ago quarter. 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.
    BCS Logo
    Tough Macroeconomic Environment Likely To Weigh On Barclays’ Revenue In Q1
  • By , 4/22/19
  • tags: BCS
  • Barclays (NYSE: BCS) is expected to publish its Q1 2019 results on April 25. We expect the bank’s revenue to decline by 1.1% year-over-year to £5.3 billion and EPS is expected to come around £0.05 as compared to -£0.04 reported in the prior-year quarter. The bank has beaten earnings forecasts in six of the last eight quarters, but missed estimates in five of the last eight quarters for revenue. Earnings declined sharply from Q3 into Q4, but we forecast its earnings to rebound in the coming quarter. We have summarized our full year expectations for BCS based on the company’s guidance and our own estimates, in our interactive dashboard  What Has Driven Barclays’ Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full-Year 2019?  You can modify any of our key drivers to gauge the impact changes would have on its valuation, and see more  Trefis Financial Services Data here . Below we highlight some of the key historical trends and factors that are likely to impact Barclays’ future performance: How Have Barclays’ Revenues Changed And What To Expect In Q1? Barclays’ revenue has fluctuated considerably over recent quarters. After surging to £5.6 billion in Q2 2018, revenues declined to £5.1 billion in Q4 2018. This decline can be primarily attributed to challenging market conditions towards the second half of FY 2018, which in turn adversely impacted its Corporate Division revenues. BCS is expected to report revenue of £5.3 billion in Q1 2019, a figure 1.1% lower than what it reported a year ago as low consumer confidence, poor investment sentiment, uncertainty over Brexit continue to impact the bank’s revenues across operating segments. How Have Barclays’ Expenses Changed And What’s The Q1 Outlook? Barclays’ total expenses have trended lower over recent quarters, with the exception of Q1 2018, when total expenses swelled to £5.3 billion driven by one-time RMBS litigation cost of £1.4 billion paid to the U.S. DoJ. Barclays has been able to improve its adjusted cost-to-income ratio from 70% in 2016 to 66% in 2018. We expect the declining trend to continue in Q1 2019 primarily due to the absence of one-time litigation costs. What Are The Key Factors To Watch In Barclays’ Q1 Results? Impact of Brexit Uncertainty surrounding Brexit is adversely impacting client activity in the U.K. This in turn is likely to impact Barclays’ U.K. revenues across segments, as continued uncertainty can weigh on investment activity. Moreover, an uncertain outlook for the direction of monetary policy, the U.S.-China trade conflict, slowing global growth and political concerns in the U.S. and Europe (including Brexit) are all likely to weigh on BCS’ profit in Q1. Focus on Corporate Division Barclays’ Corporate Division will be in focus in Q1 results as activist investor Edward Bramson, who owns more than 5% of Barclays, is pushing for restructuring of the securities trading operations. Trading division revenues declined by 4.5% (y-o-y) in Q4 2018 and we expect this declining trend to carry over in Q1. This is likely to add pressure to the bank’s under-performing IB division. Profitability Likely to Improve Despite the tough macroeconomic environment, we expect the bank’s net margin to increase to 15% in Q1 2019, which is a significant improvement from -1.5% reported in Q4 2018. Lower operating expenses, coupled with a lower effective tax rate – which is expected to be around 20% through 2019, compared to 39% in Q4 2018 – are all likely to boost the bank’s net income margin. 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.
    LVS Logo
    Las Vegas Sands Beat Street Estimates Driven By Macau Properties
  • By , 4/22/19
  • tags: LVS
  • Las Vegas Sands (NYSE:LVS) released its first quarter results last week, with consolidated net revenues of $3.65 billion and adjusted EPS of $0.91, beating street estimates. The company’s total revenues grew by 1.9% over the prior year quarter, driven by 2.4% growth in casino revenues and a strong performance by the company’s Cotai Strip hotels. The Trefis price estimate for Las Vegas Sands is $77 per shar e, which is above the market price. You can view our interactive dashboard on How Has Las Vegas Sands Fared In Recent Quarters? to observe the quarterly revenue trends and modify yearly earnings to gauge the impact on the stock price, and see more of our Consumer Discretionary Sector data here. Macau Properties LVS properties in Macau contribute around 64% of the consolidated net revenues and has been the major source of growth for the company over the last 2 years. The casino revenues in Macau have been consistently growing at 16% annually driven by increased visitation from different Chinese provinces. The net revenues increased by 8% to $2.33 billion, and adjusted EBITDA margin improved by 30 basis points to 36.8% this quarter. The Cotai Strip hotels remain a cornerstone to the business in Macau, with total Cotai revenues growing by 9.4% over the prior year quarter. Growth was driven by casino revenues, where the mass-market win percentage saw an improvement across properties. Singapore Property Marina Bay Sands contributes around 25% of the consolidated net revenues and has been observing declining revenues over the last couple of years, barring 2017. The net revenues decreased by 12% to $767 billion, driven by a sharp drop in casino revenues, over the prior year quarter. Casino revenues declined due to a significant drop in rolling chip volume, mass-market volume, and slot handle. The room occupancy improved by 1.3% to 98.1% this quarter, resulting in an increase in room revenues by 2% to $102 billion. Las Vegas Properties The share of Las Vegas properties in consolidated net revenues has been declining consistently over the last couple of years from 13% in 2015 to 10% in 2018, driven by a consistent drop in casino revenues in Las Vegas over the last decade. The net revenues declined by 1.3% to $471 billion, driven by lower casino revenues and a minor upside from room revenues, over the prior year quarter. The hotel occupancy rate declined by 0.9% and average daily rate increased by 2.3%, over the prior year quarter. The EBITDA margin remained almost flat compared to the prior year quarter at 29.3%. The management expects group business meetings, non-gaming offerings, international baccarat business, and room price increase as future growth opportunities in Las Vegas. 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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own
    FB Logo
    What To Expect From Facebook’s Q1 Results
  • By , 4/22/19
  • tags: FB TWTR SNAP GOOG AAPL MSFT AMZN SINA
  • Facebook (NASDAQ:FB) is scheduled to report its Q1 results on Wednesday, April 24. In addition to updates on the company’s roadmap towards protecting user privacy in response to its numerous recent controversies, commentary around user growth and advertising ROI will be of interest to investors. This note details what to expect, and what Trefis will be watching when the company reports earnings. Trefis currently has a price estimate of $170 per share for Facebook, which is slightly lower than the current market price. Our interactive dashboard  What Is Facebook’s Q1 Outlook?  outlines our key forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes, and see all Trefis technology company data here . How Have Facebook’s Revenues And Metrics Trended, And What’s The Q1 Outlook? Facebook’s Total Revenues have continued to see strong growth, reaching nearly $56 billion in 2018 (year-on-year growth of 37%). For Q4, the year-on-year revenue growth stood at around 30%. This growth has been driven by growth in both monthly active users (MAUs) and average revenue per user (ARPU), which saw Q4 increases of 9% and 21%, respectively, on a year-on-year basis. Much of the company’s user base growth has come from the Asia-Pacific and Rest of World segments, which we expect to continue going forward. For Q1 2019, consensus revenue expectations stand at nearly $15 billion, which would represent year-on-year growth of about 25%, while EPS expectations stand at $1.63. What Are Facebook’s Key Revenue And Value Drivers To Watch In Q1?  Key Driver #1: Monthly Active Users This represents the number of users who access their Facebook accounts at least once per month globally. Facebook’s Monthly Active User base increased by 9% in Q4 2018 to reach 2.3 billion. This was driven largely by rapid growth in the Asia-Pacific and Rest of World segments. We expect Facebook’s Monthly Active Users to see similar growth to Q4 2018, and over the long run we forecast its user base to reach 2.5 billion by the end of 2020. Key Driver #2: Advertising ARPU This represents the average advertising revenue generated by Facebook per monthly active user. Ad revenues account for around 98% of Facebook’s total revenues. Facebook’s Advertising ARPU reached $7.37 in Q4 2018, up nearly 20% year-on-year driven by strong y-o-y growth across geographies. We forecast the company’s Advertising ARPU to continue increasing going forward, albeit at a more moderate pace due to privacy-related concerns and regulation. Key Driver #3: Operating Margin This represents Facebook’s operating income (revenues less operating expenses) as a percentage of its revenues. Operating expenses include cost of sales, research & development costs, marketing & sales and general & administrative expenses. Research & development expenses account for the largest portion of Facebook’s operating expenses, and stood at 17% of revenues in Q4 2018. Facebook’s operating margin stood at 46% in Q4 2018, down from 57% in Q4 2017, due to significant increases across cost of revenues, R&D, G&A and S&M expenses. Key Driver #4: Capital Expenditures This includes expenditures related to purchases of property, plant and equipment. For Facebook, this largely entails the purchase of servers, networking equipment, storage infrastructure and the construction of data centers. Facebook’s Capital Expenditures stood at $4.4 billion in Q4 2018, up from $2.3 billion in Q4 2017. Going forward, we expect Facebook’s Capital Expenditures to stand at around 20% of revenues. How Will Privacy Issues Impact Facebook’s Earnings And Valuation? Facebook has faced a litany of issues related to its treatment of user data, and is likely to see continued regulatory scrutiny related to its privacy practices. If Facebook’s ability to harvest and utilize user data for advertising purposes is hampered by regulation or further controversy, it could put some pressure on the company’s ARPU and ad revenues going forward.
    MSI Logo
    Motorola Solutions Q1 Preview: Software And Services In Focus
  • By , 4/22/19
  • tags: MSI ERIC NOK
  • Motorola Solutions  (NYSE:MSI) is expected to publish its Q1 2019 results on May 2, reporting on a quarter that likely saw the company’s earnings grow year-over-year, driven by the land mobile radio business and higher software sales, although earnings could be sequentially lower due to seasonality. Below we take a look at some of the trends that are likely to drive the results of the company’s fast-growing Software and Services segment. View our interactive dashboard analysis on What To Expect From Motorola Solutions In Q1 2019 . You can modify the key drivers to arrive at your own estimates for the company’s revenues and EPS, and see more  data for Information Technology Companies here . Higher Software Sales Could Drive Revenues And Margins Motorola Solutions’ Software and Services business – which accounts for about a third of the company’s revenues – has been expanding quickly, growing by about 20% year-over-year in 2018, compared to a growth rate of ~13% for the Products business. We expect the company’s software sales to be a key driver of sales in this quarter. Motorola previously projected  double-digit growth  in its software sales over the long run, outperforming the broader segment. The higher mix of software sales should also continue to bode well for the segment’s margins, which have been steadily expanding. Q4’18 operating margins for the segment stood at 28.1% of sales compared to 25.7% in the prior year. Updates On The Command Center Business Motorola has been doubling down on command center software – which is essentially an end-to-end solution that integrates intelligence and analytics with dispatch systems via a comprehensive software suite. The focus on this software could help the company cross-sell radio and video surveillance products as well, as it ties them together as a single platform, potentially also improving stickiness. In January, the company  acquired VaaS, a provider of AI-driven image capture and analysis technology for vehicle location, in order to expand its command center software portfolio. We will be looking for updates on how this business is progressing. 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.
    AXP Logo
    Key Takeaways From American Express’ Q1 Results
  • By , 4/22/19
  • tags: AXP V MA DFS
  • American Express (NYSE:AXP) released its first quarter results on April 18, with total revenues of $10.3 billion increasing by 6.65% over the prior year quarter. The company’s adjusted EPS came in at $2.01, beating street estimates slightly. Supported by revenue growth of 9% on an FX-adjusted basis, management has maintained its outlook of 8-10% revenue growth for the full year, despite a further cut in world GDP growth projections by the IMF earlier this month . The Trefis price estimate for American Express stands at $110 per share, which is in line with the market price. You can view our interactive dashboard on How Has American Express Fared In Recent Quarters? to observe the quarterly revenue trends and modify yearly earnings to gauge the impact on the stock price, and see more of our financial services company data here. Quarterly Growth Was Largely Broad-Based Global Consumer Services Group: The total revenues for this segment grew by 9% to $5.6 billion over the prior year quarter, driven by net interest income and card member loans. The non-interest income, which primarily comprises of discount fees, increased by 7% to $3.7 billion over the prior year quarter, driven by similar growth in proprietary billed business. The average discount rate remained steady at 2.37% over the last five quarters, consistent with the company’s goal of earning higher discount revenues by keeping the discount rate steady. Global Commercial Services: This segment contributes around 30% of total revenues and has grown at a CAGR of 14% for the past two years. The segment’s business has been strengthened by long-term partnerships with various retail and airline companies. The recent partnership extension with Delta Airlines until 2030 is a cornerstone for the commercial segment as it contributes about 8% of the company’s billings and 20% of lending. For the quarter, the segment’s revenues were up by 6% to $3.2 billion over the prior year quarter, driven by a similar increase in discount revenues. Global Merchant And Network Services: This segment contributes around 20% of total revenues and largely earns non-interest income by charging processing fees for operating the American Express Network. The segment’s revenues remained almost flat over the prior year quarter as well as sequentially. The total expenses ( including provision for loan losses) as a percentage of total revenues increased over the prior year quarter and sequentially, driven mainly by non-interest expenses. These expenses account for salaries, marketing and promotion and customer rewards, and were up by 10% to $7.6 billion over the prior year quarter with a slight improvement sequentially. Card member rewards and marketing expenses account for nearly 53% of the non-interest expenses. Marketing expenses were higher for the first quarter, growing by 17% to $1.5 billion over the prior year quarter, to enhance customer engagement. The company’s management guided for more even marketing expense distribution over the year, which resulted in higher costs this quarter. 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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own
    How Do Uber And Lyft Compare In Terms Of Key Revenue And Valuation Metrics?
  • By , 4/22/19
  • Ride sharing behemoth Uber recent filed its Form S-1 as it looks to go public, following rival Lyft which listed in March. In this analysis, we compare Uber and Lyft’s key operating and financial metrics (for 2018). We note that the metrics for Uber includes its Uber Eats delivery business (about 13% of net revenues in 2018), while Lyft’s metrics relate solely to its ride sharing operations. We have created an interactive dashboard analysis on  How Do Uber And Lyft Compare In Terms Of Key Metrics?  which outlines the metrics and comparison in detail. You can also see more  data for Technology Companies here . How Do Total Reported Revenues Of Uber and Lyft Compare? How Are Uber And Lyft Valued Based On 2018 Revenues? While Uber has not priced its IPO, there is speculation that the company could be targeting a $100 billion valuation, implying a revenue multiple of 9x based on 2018 revenues. Lyft’s current $17 billion valuation translates into an 8x revenue multiple. That said, it’s possible that Uber could go with more conservative pricing, considering that Lyft’s stock is down by close to 25% since its IPO. Uber’s revenue multiple stands at 9x, compared to about 8x for Lyft. In comparison, Google had a revenue multiple of 13x in 2016, when its revenues stood at about $11 billion – roughly in line with Uber’s 2018 revenue. Facebook had a revenue multiple of 16.5x in 2014 when it had revenues in the ballpark of $13 billion. However, both Facebook and Google were profitable at these revenue levels, compared to Uber which remains loss-making, justifying their comparatively higher multiples.
    PG Logo
    What To Watch For In Procter & Gamble's Fiscal Q3 Results
  • By , 4/19/19
  • tags: PG UL KMB CL
  • Procter & Gamble (NYSE: PG) is scheduled to announce its fiscal third quarter results on Tuesday, April 23. In the first half of fiscal 2019, the company’s net sales came in flat at $34.1 billion. Moreover, P&G’s organic sales were up 4% year-over-year (y-o-y) on 3% volume growth, with flat pricing and 1% growth in mix across segments, excluding the impacts of foreign exchange, acquisitions, and divestitures. In terms of the bottom line, P&G’s core EPS (adjusted) also grew 4% y-o-y to $2.36, primarily driven by a reduction in shares outstanding. We have a  $93 price estimate for P&G’s stock,  which is almost 10% below the current market price. We have created an interactive dashboard on What To Expect From P&G’s Q3?   which outlines our forecasts for the company’s Q3 results. You can modify our forecasts to see the impact any changes would have on the company’s earnings and valuation and see  more Trefis Consumer Staple data here. Q3 Expectations In Q3, we expect Procter & Gamble to report flat revenues on the back of declines across segments – Grooming and Baby, Feminine, and Family Care. This is because we continue to expect the rising competition from local players to negatively impact the revenue in the Baby, Feminine, and Family Care segments in Q3. We also expect the Grooming segment to continue its declining revenue trend, due to secular pressure from the likes of Dollar Shave Club. However, the rising popularity of its direct-to-customer model  Gillette-On-Demand could offset some of this pressure. In Q3, we expect the company’s SG&A costs to be around $4.6 billion, slightly up year-over-year (y-o-y). This is based on our assumption of growth in productivity savings from the combination of reduced overhead, agency fees, and ad production costs. We also expect the company’s adjusted gross profit margin to decline slightly in Q3, on the back of rising delivery costs. Based on these adjustments, we expect P&G’s adjusted operating income to decline almost 5% y-o-y to about $3.3 billion for Q3 2019. Overall, these adjustments resulted in a 6% y-o-y increase in our adjusted net income forecast for the company, translating into adjusted EPS of $1.08. Fiscal 2019 Outlook  P&G has issued strong guidance for the full year fiscal 2019. The company has updated its full-year fiscal organic sales growth outlook to 2% to 4%, compared to a previous 2% to 3% range, driven by the strong momentum of the fiscal first half. It also expects total revenues to be in the range of down 1% to up 1%, compared to previous guidance of down 2% to in-line with fiscal 2018 results in the same period. In terms of the bottom line, the company reaffirms its expectation of core earnings per share growth to be in the 3% to 8% range. For the full fiscal year, commodity costs are expected to be a $400 million headwind and trucking costs will likely be up 25% or more versus last year’s levels. In addition, pricing could remain positive in the back half, but this could increase volume uncertainty and volatility. Further, macro uncertainty stemming from issues like Brexit and a crisis of consumer confidence in France could also impact both the top and bottom line for the full year. 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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    CRM Logo
    Which Segment Will Push Salesforce.com's Revenue Growth in 2019?
  • By , 4/19/19
  • tags: CRM SAP DATA
  • Trefis estimates the Cloud-Based CRM Software segment will push  Salesforce.com ‘s (NYSE: CRM) total revenue to nearly $15.9 billion in 2019. The company posted revenue of $13.3 billion and earnings of $2.75 in 2018. We have created an interactive dashboard wherein you can edit the drivers to arrive at your own conclusions,  How has Salesforce.com’s revenue performed over the past few years and what is its outlook for 2019?, In addition, here is more Information Technology Data .   Total Revenue: The company has seen a constant growth in Total Revenue over the past years. The revenue has increased from $6.7 billion in 2017 to $13.3 billion in 2018. Trefis estimates the strong growth will continue and the company will post Total revenue of around $15.9 billion in 2019.   Cloud-Based CRM Software Revenue: Cloud-Based CRM Software   Revenue has been the highest contributor to Total Revenue over the years. The revenue has increased from $5.2 billion in 2016 to $9.6 billion in 2018. Trefis estimates the segment to have continued its growth as the company continues to be a synonym for CRM Software across the globe, as well as the market leader, and post revenue of approximately $11.2 billion in 2019.   Cloud Software Revenue: Cloud Software Revenue has registered the highest growth in terms of percentage over the past few years.. The revenue has increased from $1 billion in 2015 to $2.9 billion in 2018. Trefis estimates the segment to have strong growth as the cloud software market continues its rapid growth globally and post revenue of approximately $3.7 billion in 2019.   Consulting & Services Revenue: Consulting & Services Revenue has seen high growth over the years. The revenue has increased from $0.5 billion in 2015 to $0.9 billion in 2018. Trefis estimates the segment to maintain its strong growth in the near term and post revenue of approximately $1.1 billion 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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    HD Logo
    How Has Home Depot's Revenue Performed And What Is Its Outlook For 2021?
  • By , 4/19/19
  • tags: HD LOW
  • Trefis estimates that a continuous increase in the revenue per square foot covered metric will take  Home Depot ‘s (NYSE: HD) revenue to more than $122.1 billion by 2021. The company posted revenue of $108.2 billion and earnings of $9.78 for 2018. We have created an interactive dashboard wherein you can edit the drivers to arrive at your own conclusions,  How has Home Depot’s revenue performed over the past few years and what is its outlook for 2021? .  In addition, here is more  Consumer Discretionary data . Total Revenue: Home Depot has had a good growth in revenue over the years where it has increased from $94.6 billion in 2016 to $108.2 billion in 2018. We expect the growth to continue and revenue to be more than $122.1 billion on the back of the revenue per square foot metric in 2021.   Revenue per Square Foot: This the fastest growing metric for the company and the one which is propelling the revenue forward. In the recent  past it has increased from $399 in 2016 to $456.6 in 2018. Trefis expects the growth to remain steady and the metric to be more than $513 in 2018 due to better market conditions, greater Pro sales, and growth in digital sales. The focus on appliances as well as innovation are other factors driving this growth.   Square Footage per Store and Number of Stores: These metrics have remained flat in recent years as the company consolidates its operations and focuses on the supply chain infrastructure of the existing stores and revenue growth from them. Trefis estimates the metrics will continue to be flat in the near term.     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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    TXT Logo
    Textron's Revenue Declines in Q1, But Witnesses Improved Bottom Line Due To Aviation
  • By , 4/18/19
  • tags: TXT UTX LMT
  •  Textron (NYSE:TXT) Textron reported earnings on the 17 th of April. Textron beat earnings mainly on the back of the aviation segment, which grew to $1.1 billion, with higher volumes seen from both the jet and turboprop segments.  The aviation unit delivered 44 jets, this up from 36 jets during the same period last year. The Bell helicopter unit saw a decline with 30 deliveries, this down from 44 units last year. Textron’s industrial and systems segment continued to see weakness during the quarter on the back of weak demand. The industrial segment in general has been struggling due to a lack of demand. We currently have a price estimate of $60 per share  for the company, which is higher than the market price. View our interactive dashboard for Textron Q4 2018   and modify the key drivers to visualize the impact on Textron’s price. Key Takeaways for Textron’s Q1 Earnings: -Earnings per share came in at $0.76, primarily as a result of a stronger aviation segment. – Revenue declined though, 2% yoy, this was driven by lower revenue in the Systems, Bell, and Industrial units for Textron. This decline was offset by a 12% jump in the core aviation segment. -Operating margin came in 9.5%, while operating cash flow for the quarter came in at $196 mil. -Long term debt remained flat at $2.8 billion. -We expect that EPS  will come in around $3.60-3.70 for the year. Going forward, we expect the Aviation segment to continue to see stronger demand, while the rest of the sectors will continue to struggle. With EPS coming in higher than the previous year, we expect that it will lead to improved performance for the stock; which then will bring the price closer to our estimate.   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 More Trefis Research Like our charts? Explore  example interactive dashboards  and create your own.    
    KO Logo
    What To Expect From Coca-Cola’s Q1 2019 Results?
  • By , 4/18/19
  • tags: KO PEP
  • Coca-Cola Company (NYSE: KO) is set to announce its financial results for Q1 2019 on April 23, 2019, followed by a conference call with analysts. Total revenues for Coca-Cola have largely trended lower over recent quarters, falling from $8.9 billion in Q2 2018 to $7.1 billion in Q4 2018. Lower revenue was primarily driven by the loss of revenue from the refranchising of company-owned bottling operations and the impact of currency headwinds. However, the trend is expected to reverse, as revenues are projected to increase by 3%-4% (y-o-y) in Q1 2019 with most of the refranchising already completed, coupled with benefits from a number of acquisitions throughout 2018. Market expectation is for the company to report adjusted earnings of $0.46 per share in Q1 2019, marginally lower than $0.47 per share in Q1 2018. Lower earnings are likely to be a reflection of rising transportation costs and currency swings. We have summarized our key expectations from the announcement in our interactive dashboard – How is Coca-Cola expected to fare in Q1 2019 and what is the outlook for the full year? In addition, here is more  Consumer Staples data . A} Revenue Trend EMEA Revenue from the EMEA region has been under pressure due to a decline in price/mix primarily due to negative geographic mix from the timing of shipments across the Middle East and North Africa. Additionally, continued double-digit growth in Coca-Cola Zero Sugar and strong performance in Fuze Tea was offset by the impact of a challenging macroeconomic environment in certain key African and Middle Eastern markets. Latin America In spite of volume declining by double-digits in Argentina, segment revenues have been more or less stable over the last couple of quarters largely driven by strong performance in Mexico through revenue growth management initiatives, as well as positive price/mix across all business units. The segment is expected to see a pick-up in 2019 with KO’s increasing market share in non-alcoholic ready-to-drink (NARTD) beverages. North America Revenue from North America has declined in the last quarter due to lower volume of sparkling soft drinks, juice, dairy, and plant-based beverages. Tea volume declined low single-digits, impacted by deprioritizing low-margin tea products. Additionally, refranchising of certain operations in the region has led to lower revenues. However, revenue is expected to increase going forward as most of the refranchising is already completed, coupled with high growth in Coca-Cola Zero Sugar and strong performance in Sprite. Asia-Pacific Revenue in APAC faced pressure in Q4 2018 with lower volumes in the Philippines and Australia and  the impact of the deprioritization of low-margin commodity water. However, the segment is once again expected to register growth, led by strong sales across India and Southeast Asia, benefiting from strong marketing and innovation within Trademark Coca-Cola and Sprite, coupled with rising market share in NARTD beverages, sparkling soft drinks, and tea and coffee. Bottling Investments Revenue from the bottling business has been decreasing due to refranchising of the company’s bottling operations. However, with most of this program already behind us, the impact of refranchising is expected to be negligible in 2019. B} Expenses Trend Coca-Cola’s total expenses have been declining over the quarters due to benefits from refranchising of the high-cost bottling business. Additionally, lower tax expense with the implementation of the TCJ Act has led to significant reduction in total expenses on a y-o-y basis. We expect the extension of the company’s productivity plan to drive margin growth going forward. What is the outlook for the full year? Revenue is expected to increase by 4.6% to $33.3 billion in 2019, driven by growth across all major segments, offset by a lower revenue from the bottling business. However, with most of the refranchising already completed, the revenue loss from the segment is not expected to be as significant as in 2018. Revenue growth would also be driven by inorganic growth strategies of Coca-Cola, with the company announcing several key acquisitions in 2018, including Costa Limited and a strategic partnership with BODYARMOR. 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. 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. Trefis has a price estimate of $50 per share for Coca-Cola’s stock. We believe that an expanding footprint in the emerging markets, new product offerings, and strong organic sales growth would support growth in KO’s stock 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.
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    Alcoa Misses Consensus In Q1 2019; Reaffirms Full Year Outlook
  • By , 4/18/19
  • tags: AA CLF VALE
  • Alcoa (NYSE: AA) released its Q1 2019 financial results on April 17, 2019, followed by a conference call with analysts. The company missed consensus estimates for revenue as well as earnings. Alcoa reported revenue of $2.72 billion in Q1 2019, which marked a decline of close to 12% on a y-o-y basis. Lower revenue was mainly a reflection of a decrease in aluminum and alumina shipments, along with a drop in global aluminum prices. Revenues declined by 18.7% sequentially, primarily due to a sharp drop in alumina prices due to higher global supply in Q1, along with lower aluminum volume sold due to operational disruptions. The company reported adjusted net loss of $0.23 per share in Q1 2019, compared to adjusted net profit of $1.01 per share in Q1 2018 and $0.70 in Q4 2018. Net loss for the quarter was mainly driven by high restructuring and other related costs of $120 million, associated with two aluminum plants in Spain with combined operating capacity of 124,000 metric tons per year, that have been maintained in restart condition. We have summarized the key announcements in our interactive dashboard – How did Alcoa fare in Q1 2019 and what is the outlook for the full year? In addition, here is more  Materials data . Key Takeaways Alumina Revenue Revenue from third-party alumina sales decreased by 2% (y-o-y) to $897 million, driven by a drop in shipments. However, on a sequential basis, third-party alumina sales declined by 20.8% due to a much lower price realization compared to the previous quarter. Alumina shipments decreased from 2.38 million tons in Q1 2018 to 2.33 million tons in Q1 2019. Lower volume was driven by lower demand for alumina with many aluminum companies cutting down on capacity, mainly in China (alumina is a raw material for aluminum companies). After a year of being in deficit, which led to alumina prices increasing significantly post Q1 2018, alumina has been in surplus (excess supply) from December 2018, which has, in turn, led to a sharp drop in global price levels. This led to a significant reduction in price realized to $385/ton in Q1 2019 from $479/ton in Q4 2018. Aluminum Revenue Revenue from third-party primary aluminum sales decreased by 20.2% (y-o-y) to $1.57 billion in Q1 2019, compared to $1.97 billion in the year-ago period. Lower revenue was driven by a decrease in volume sold and price realization. Volume decreased by 10.7% in Q1 2019, due to outages at Wagerup and Pinjarra. The decrease in price realization is in line with a sharp drop in global aluminum prices since December 2018. With aluminum exports from China being at record highs (exports exceeded 500kmt in seven of the last eight months) due to very low domestic demand, the price realized per ton has witnessed a sharp drop in Q1 2019. Profitability In spite of a lower effective tax rate, net income margin in Q1 2019 was -7.3%, significantly lower than 6.3% in Q1 2018. This was mainly due to restructuring charges of $113 million, as against a reversal of 19 million in Q1 2018. Higher restructuring charges were associated with two aluminum plants in Spain with combined operating capacity of 124,000 metric tons per year, that have been maintained in restart condition, as a part of Collective Dismissal Process with the workers. Outlook for FY 2019 For the full year, we expect total revenue to decline by close to 14% to $11.5 billion in 2019, mainly due to lower revenue from the alumina and aluminum segments, driven by a decrease in shipments and global price levels for both the metals. Revenue from Bauxite is also expected to decline with the commodity being is excess supply, which would, in turn, lead to a further drop in prices. Decrease in shipments is expected to adversely affect the company’s profitability as the total cost would be attributed to lower volume. Also, an additional restructuring charge related to Spanish operations, which is expected to be incurred in Q2 2019, is also likely to affect margins for the year. We expect net income margin to decline to 1% in 2019 from 1.7% in 2018. Trefis has a price estimate of $33 per share for Alcoa’s stock, which is higher than its current market price. We believe that the company’s focus on improving its asset base and reducing cost, along with the recently announced $200 million share repurchase program, would continue to support the growth in its stock 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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
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    What To Expect From Credit Suisse In Q1?
  • By , 4/18/19
  • tags: CS UBS DB
  • Credit Suisse  (NYSE:CS) is expected to publish its Q1 2019 results on April 24. This note details Trefis’ forecasts for Credit Suisse, as well as some of the key trends we will be watching when the company reports earnings. How have Credit Suisse’s revenues changed recently, and what’s the forecast for Q1? Total Revenues for Credit Suisse have largely trended lower over recent quarters. Revenues fell from CHF 5.6 billion in Q1 2018 to CHF 4.8 billion in Q4 2018. The decline can primarily be attributed to sub-par performance of Investment Banking division towards the second half of FY 2018. We estimate Credit Suisse’s revenues to grow at 8.3% sequentially (q-o-q) to reach CHF 5.2 billion in Q1 2019. However, this figure is 7.7% lower than what it reported a year ago. How have Credit Suisse’s total expenses changed, and what’s the forecast for Q1? One of Credit Suisse’s primary objectives over the recent years has been to reduce its non-interest expense. CS has been successful in accomplishing this objective, with non-interest expense falling from CHF 26 billion in 2015 to CHF 17 billion in 2018 (CAGR: -12.6%). This has reduced the cost/income ratio from 98.2% in 2015 to 76.9% in 2018. Non-interest expense fell from CHF 5.1 billion in Q4 2017 to CHF 4.1 billion in Q4 2018, representing a decline of 18% (y-o-y). We expect total expenses to remain flat at current levels in Q1 2019. Which are the key revenue and expense drivers to watch out for in Credit Suisse’s Q1 results? Key Driver #1: Net Interest Income: This represents interest earned through loans and other assets net of interest paid to deposits. Net Interest income has remained relatively stable over the past few quarters. However, net interest income surged by 54%(y-o-y) to CHF 2.4 billion in Q4 2018 primarily due to higher deposit margins on slightly lower average deposit volumes and stable loan margins on stable average loan volumes. We expect net interest income to be CHF 1.8 billion in Q1 2019, 13% higher than what it reported a year ago. Key Driver #2: Net Fee & Commission Income: This income includes fees for general banking products, services and revenues from wealth structuring solutions and other asset management-related fees. Net Fee & Commission income has been the largest contributor to Credit Suisse’s revenues over recent quarters, contributing approximately 55% of total revenues over 2018. We forecast the net fees to decline by 5% (y-o-y) to approximately CHF 3 billion in Q1’19. Key Driver #3 Compensation and Benefits: This includes salaries and benefits paid out to employees. Compensation Expense is the bank’s single biggest cost driver, and was roughly 46% of total revenues over 2018. We expect CS to report CHF 2.2 billion of compensation expense in Q1 2019, 3% higher than what it reported in Q4 2018. What is the impact of the uncertain macroeconomic environment on Credit Suisse’s revenues? UK’s anticipated withdrawal from the EU and escalating U.S.-China trade tensions have an adverse impact on investor confidence and client activity levels. These heightened global geopolitical and macroeconomic uncertainties are likely to weigh on CS’s revenues, primarily its Investment Division revenues. Additionally, the low interest rate environment in many European countries is also adversely impacting Credit Suisse’s net interest income. What will be the impact of the above on Credit Suisse’s EPS? We expect the earnings to be CHF 0.29 per share on an adjusted basis in Q1. This reflects 10% growth to the prior year quarter. The growth in earnings will likely be led by improving margins and lower tax rate. We currently have a price estimate of $15 per share for CS, which is slightly ahead of the current market price. We have summarized our quarterly and full year expectations for Credit Suisse based on the company’s guidance and our own estimates, on our interactive dashboard  How Is Credit Suisse Likely To Have Fared In Q1? You can modify any of our key drivers to gauge the impact changes would have on its valuation, and see all Trefis Financial Services 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.
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    Will New Domain Name Registrations Drive Verisign’s Growth in Q1?
  • By , 4/18/19
  • tags: VRSN
  • Verisign (NASDAQ: VRSN) is scheduled to announce its first quarter results on Thursday, April 25. The company continues to see strong growth, and now has approximately 153.0 million .com and .net registrations in the domain name base driven by continued growth in online advertising, e-commerce, and the number of internet users. This note details Trefis’ forecasts for Verisign, as well as some of the key trends we will be watching when the company reports earnings. How have Verisign’s revenues changed over recent quarters, and what’s the forecast for Q1 2019? Total Revenues for Verisign have largely trended higher over recent quarters. Revenues grew from $299 million in Q1 2018 to $308 million in Q4 2018. The growth can primarily be attributed to surge in domain name registrations and improved renewal rates. We forecast the revenues to grow to $303 million in Q1 2019 (+1.2% y-o-y) as a result of the increased volume of domain registrations and continued growth in the domain name base. How have Verisign’s total expenses changed over recent quarters, and what’s the forecast for Q1 2019? Total operating expenses for have remained fairly stable around $112 million over the last 8 quarters, with the exception of Q4 2017, when the operating expenses were relatively high ($119 million) due to a surge to in sales and marketing expense. We forecast the operating expenses to decline by 5.6% (y-o-y) primarily due to decrease in advertising and marketing expenses. Which are the key factors to watch out for in Verisign’s Q1 results? Increasing Domain Name Registrations During 2018, Verisign processed 38.2 million new domain name registrations for . com  and . net, which represents an increase of 4% increase compared to 2017. We expect this increasing trend to continue in Q1 2019. Domain name growth will likely be driven by continued internet growth and marketing activities carried out by Verisign and its registrars. Moreover, improving renewal rates for .com domain names will further aid top-line growth for Verisign. Improving Profitability EBT surged by 31% (q-o-q) to $234 million in Q4 2018 primarily due to one-time pre-tax gain of $55 million recognized on the sale of Verisign Security Services customer contracts. Verisign’s pre-tax profit has largely trended upwards over the recent quarters and we expect this increasing trend to continue. We forecast EBT to increase by 23.7% (y-o-y) to $189 million driven by increase in revenues and lower sales and marketing expenses. What will be the impact of the above on VRSN’s EPS? We expect the earnings to be $1.26 per share on an adjusted basis in Q1. This reflects a 15.6% growth to prior year quarter. The growth in earnings will likely be due to higher revenues and improved margins. We currently have a price estimate of $171 per share for VRSN, which is approximately 10% behind the current market price. We have summarized our quarterly and full year expectations for VRSN based on the company’s guidance and our own estimates, on our interactive dashboard   What Has Driven Verisign’s Revenues & Expenses Over Recent Quarters, And What’s the forecast for Q1?  You can modify any of our key drivers to gauge the impact changes would have on its valuation, and see all Internet & Software Services Data here .
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    Will Subdued Client Activity Adversely Impact UBS In Q1?
  • By , 4/18/19
  • tags: UBS
  • UBS  (NYSE: UBS) is expected to publish its Q1 2019 results on April 25. This note details Trefis’ forecasts for UBS, as well as some of the key trends we will be watching when the company reports earnings. How have UBS’ revenues changed over recent quarters, and what’s the forecast for Q1 2019? Total Revenues for UBS have largely trended lower over recent quarters. Revenues fell from CHF 8.2 billion in Q1 2018 to CHF 7.0 billion in Q4 2018. The decline can primarily be attributed to sub-par performance of Trading division towards the second half of FY 2018. We forecast UBS’ revenues to decline by 14.2% year-over-year to CHF 7.0 billion in Q1 2019, as negative market sentiment and subdued client activity continue to adversely impact UBS’ Investment Division revenues (constituting 27% of total revenues in 2018) How have UBS’ total expenses changed over recent quarters, and what’s the forecast for Q1 2019? Total Expenses for UBS have remained fairly stable around CHF 5.9 billion over the last 12 quarters. We expect the trend to continue in Q1 2019. We estimate UBS’ total expenses to be CHF 5.8 billion for the quarter; a figure 4.6% lower than what it reported a year ago Which are the key revenue and expense drivers to watch out for in UBS’ Q1 results? Key Driver #1: Net Interest Income: This represents interest earned through loans and other assets net of interest paid to deposits. Net Interest income has remained relatively stable over the past few quarters. However, this figure fell sharply in Q2 2018 due to higher funding costs for long-term debt and lower banking book interest income, partly offset by higher deposit revenues. We expect net interest income to be CHF 1.5 billion in Q1 2019, a figure 17.7% lower than what it reported a year ago. Key Driver #2: Net Fee & Commission Income: This income includes fees for general banking products, services and revenues from wealth structuring solutions and other asset management-related fees. Net Fee & Commission Income has been the largest contributor to UBS’ revenues over recent quarters, contributing approximately 59% of total revenues over 2018. We forecast the net fees to decline by 7.3% (y-o-y) to approximately CHF 4.4 billion in Q1’19. Key Driver #3: Personnel Expense: This includes salaries and benefits paid out to employees. Personnel Expense is the single biggest cost driver, and was roughly 53% of total revenues over 2018. We expect UBS to report CHF 4.0 billion of personnel expense in Q1 2019, 4.2% higher than what it reported in Q4 2018. What is the impact of the uncertain macroeconomic environment on UBS? Brexit uncertainty and the escalating U.S.-China trade disputes have an adverse impact on investor confidence and client activity levels. These heightened global geopolitical and macroeconomic uncertainties are likely to weigh on UBS’ revenues, particularly its Trading Division revenues. Additionally, the low interest rate environment in many European countries is also adversely impacting UBS’ revenues, primarily from net interest income. What will be the impact of the above on UBS’ EPS? We expect the earnings to be CHF 0.25 per share on an adjusted basis in Q1, which reflects a 39% decline from the prior year quarter. The fall in earnings will likely be due to lower revenues and lower net income margin. We currently have a price estimate of $17 per share for UBS, which is almost 25% ahead of the current market price. We have summarized our quarterly and full year expectations for UBS based on the company’s guidance and our own estimates, on our interactive dashboard  How Is UBS Likely To Have Fared In Q1?. You can modify any of our key drivers to gauge the impact changes would have on its valuation, and see all Trefis Financial Services Data here
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    PepsiCo Beats Consensus In Q1 2019; Maintains FY 2019 Outlook
  • By , 4/18/19
  • tags: PEP KO
  • PepsiCo Inc. (NYSE: PEP) released its Q1 2019 results on April 17, 2019, followed by a conference call with analysts. The company beat market expectations for revenue as well as earnings. PEP reported revenue of $12.88 billion in Q1 2019, marking a year-on-year growth of 2.6%. Higher revenue was mainly driven by strong growth of 5.5% in the Frito-Lay segment, effective net pricing and higher volumes for healthy snacks, juice and water products, and non-carbonated drinks (NCDs). The company’s core EPS came in at $0.97 per share in Q1 2019, slightly higher than $0.96 in the year-ago period and much higher than the consensus of $0.92 per share. Higher earnings were primarily a reflection of stronger revenue growth, productivity savings, and lower interest burden, partially offset by an increase in the effective tax rate. We have summarized the key announcements in our interactive dashboard – How did PepsiCo fare in Q1 2019 and what is the outlook for the full year? In addition, here is more  Consumer Staples data . Key Factors Affecting Earnings Frito-Lay North America Revenue from Frito-Lay North America (FLNA), which contributes a little over a quarter of the company’s total revenue, increased by 5.5% (y-o-y) in Q1 2019. Higher revenue was primarily driven by effective net pricing and volume growth of 2%. Higher volume was driven by strong sales of its trademark Doritos and Ruffles, partially offset by a double-digit decline in Santitas. Operating margins increased marginally in Q1 2019 due to net revenue growth and productivity savings, partially offset by certain operating cost increases. Quaker Foods North America Net revenue declined by 1.2% (y-o-y) in Q1 2019, mainly driven by volume decline of 1% and unfavorable mix, partially offset by favorable net pricing. Volume decline was driven by a double-digit decline in ready-to-eat cereals, partially offset by modest growth in Aunt Jemima syrup and mix. Operating margin continued its declining trend reflecting certain operating cost increases, impact of higher commodity costs, and the net revenue performance North America Beverages Net revenue increased 2.2% in Q1 2019, driven by effective net pricing, partially offset by a 2% decline in volume. Lower volume was driven by a 4% decline in carbonated soft drink volume, partially offset by 1% volume increase in non-carbonated beverage. Operating margin was marginally lower in Q1 2019 compared to Q1 2018 due to higher commodity costs and increased advertising and marketing expenditure. Latin America Net revenue increased by 1.4% reflecting effective net pricing, partially offset by impact of unfavorable foreign exchange. Operating margin increased sharply in Q1 2019 reflecting the net revenue growth, productivity savings, and impact of an insurance settlement recovery related to the 2017 earthquake in Mexico. Europe Sub-Saharan Africa Net revenue increased 1.5%, reflecting a 7-percentage-point impact of the SodaStream acquisition, as well as effective net pricing, partially offset by the impact of unfavorable foreign exchange. The y-o-y increase in operating margin in Q1 2019 is due to the net revenue growth, productivity savings, and impact of an insurance settlement recovery in Russia. Asia, Middle East and North Africa In spite of volume growth and effective net pricing, segment revenue declined by 0.6% in Q1 2019 reflecting unfavorable foreign exchange and refranchising of a portion of the beverage business in Thailand. Operating margins increased, primarily reflecting the volume growth, productivity savings, and the effective net pricing, partially offset by certain operating cost increases, higher advertising and marketing expenses, and the impact of higher commodity costs. Profitability On a sequential basis, net income margin saw a sharp drop from 35.1% in Q4 2018 to 11% in Q1 2019. This was primarily due to a significant rise in the effective tax rate from -254.9% to 23.9%. PEP received significant tax benefits in Q4 2018 following the implementation of the TCJ Act, which translated into a negative effective tax rate. However, in Q1 2019, with a tax expense of $446 million, margins saw a sharp drop. On a y-o-y basis, in spite of a higher effective tax rate, margin was slightly higher due to productivity savings and lower interest burden in Q1 2019. Full Year Outlook For the full year, we expect the company’s revenues to grow by 3.1% to $66.7 billion in 2019, driven by growth in the company’s healthy snacks, sports drinks, and non-carbonated beverage portfolio. An effective tax rate of 21% in 2019 (compared to tax benefits received in 2018), incremental investments by the company to strengthen its business, and absence of gains from sale of assets (unlike in 2018), is expected to lead to a sharp drop in net income margin to 8.5% in 2019 from 19.4% in 2018. However, gains from the company’s recently announced new productivity plan are expected to support margin growth going forward. Trefis has a price estimate of $120 per share for PepsiCo’s stock. Though the stock rallied after the announcement of Q1 results, we believe that the stock price could come down, closer to our estimate, as the company has reaffirmed its 2019 guidance that it shared earlier this year, which might be indicative of the possibility of performance in the coming quarters being subdued.   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.
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    What To Expect From Kimberly-Clark In Fiscal 2019
  • By , 4/18/19
  • tags: KMB PG CL UL
  • Kimberly-Clark  (NYSE: KMB) is scheduled to announce its fiscal first quarter results on Monday, April 22. In 2018, the company’s net sales grew marginally year-over-year to $18.5 billion, negatively impacted by a difficult environment – particularly significant commodity inflation and negative foreign currency effects. In addition, the company’s organic sales grew more than 1% y-o-y, driven by changes in product mix, net selling prices, and sales volumes. In terms of operating segments, the company saw gains in the K-C Professional segment and Customer Tissues, which was offset by flat results in the Personal Care segment. In terms of the bottom line, Kimberly-Clark’s adjusted earnings per share grew 6% y-o-y, driven by cost savings and reduced overhead spending. Our $113 price estimate for Kimberly-Clark’s stock is slightly below the current market price. We have created an interactive dashboard on What Is The Outlook for Kimberly-Clark For 2019?, which outlines our forecasts for the company’s full-year fiscal 2019 results. You can modify our forecasts to see the impact any changes would have on the company’s earnings and valuation, and see  more Trefis Consumer Staple data here.  In Q1,  we expect Kimberly-Clark’s revenues to decline slightly on the back of continued declines in the Personal Care segment in Q1. In addition, commodity costs, foreign exchange challenges, and transportation costs may persist in Q1, which could impact the company’s growth rates. Fiscal 2019   Expectations Net Sales Forecast: For full-year 2019, Kimberly-Clark expects its total sales to decline 1% to 2%, including an expected 3% to 4% headwind from currencies. In addition, the company also plans to grow its organic sales by 2% and achieve a higher net selling price of at least 3% in the same period. Operating Profit Forecast:  Further, the company also plans to grow adjusted operating profit by 1% to 4% in fiscal 2019, of which commodities and currencies in total could be a headwind to operating profit of about 20%. EPS Forecast:  Kimberly-Clark is targeting full-year adjusted earnings per share of $6.50 to $6.70 and diluted earnings per share of $4.85 to $5.35. Overall, we expect the environment to remain challenging for the company in 2019, although better than in 2018. Margin Pressure To Continue:  Kimberly-Clark’s full-year gross margin was 33.2%, down 270 basis points y-o-y. The primary reason for this decline was higher pulp and raw material cost and inflation – commodities were a drag of $795 million for the year.  We expect the continued cost pressure from inflation in raw materials and input costs to hurt the company’s margins going forward, as the company has guided for its full-year commodity inflation to fall in the range of $300 million to $400 million in 2019. In addition, some big-box retailers’ aggressive pushes towards launching their own private-label products could impact Kimberly-Clark’s shelf space, which could also put pressure on margins. Growth In Cost Savings Program: In 2018, Kimberly-Clark achieved $510 million of cost savings, which include its FORCE and Restructuring program savings. The company had  announced  its restructuring program as part of a multi-year cost savings target, whereby it set a four-year cost savings target of more than $1.5 billion. These savings are to be achieved by improving productivity at manufacturing facilities, optimizing raw material and product design costs, generating benefits from procurement activities and improving distribution efficiencies. Kimberly-Clark expects the program to generate annual pre-tax cost savings of $500 million to $550 million by the end of 2021, through workforce reductions in the range of 5000 to 5500, or about 12% to 13% of its total workforce. This program is expected to broadly impact all of the company’s business segments and organizations in each major geography. For 2019, the company is targeting to deliver $400 million to $450 million of total cost savings. This includes FORCE savings of $300 million to $325 million and restructuring savings of $100 million to $125 million. In addition, supply chain related restructuring activities and savings are also expected to ramp up in 2019. Growth In Emerging Markets  Markets outside North America remain an area of strength for the company, as almost 48% of total sales are observed here. In 2018, Kimberly-Clark’s organic sales grew 2% y-o-y in emerging markets, compared to 1% y-o-y growth in developed markets. The company is looking at developing and emerging markets to drive growth, as it grapples with weak pricing and market saturation in the North American market. The company has strong growth prospects in markets such as China and Brazil, primarily due to low penetration of its category products in these regions, and the likely increase in the consumption of these products with economic development. 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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
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    What Key Factors Drove E-Trade’s Q1 Results?
  • By , 4/18/19
  • tags: ETFC SCHW AMTD
  • E-Trade (NASDAQ:ETFC) released its first quarter results on April 17, with net revenues and EPS of $755 million and $1.09 increasing by 6.7% and 24.5%, respectively, over the prior year quarter. Growth was driven by net interest income, fees and service charges, slightly offset by trading commissions. The Trefis price estimate for E-Trade stands at $57 per share, which is above the market price. You can view our interactive dashboard on How Has E-Trade Fared In Recent Quarters? to observe the quarterly revenue trends and modify yearly earnings to gauge the impact on the stock price, and see more of our financial services company data here. What Drove E-Trade’s Revenue Growth?   Net Interest Income: E-Trade’s net interest income is earned largely through investment securities and margin receivables, which together contribute around 92% of interest-earning assets. For the quarter, net interest income came in at $492 million, growing by 10.5% over the prior year quarter and supported by an increase in average balances of investment securities and average yield. For margin trading accounts, the average yield has increased from 4.15% in 2017 to 4.71% in 2018, and 5.24% this quarter, supported by a series of rate hikes by the Fed last year. Fee and Service Charges: The company charges for order flow, sweep deposits in money market accounts, advisor management, mutual funds, and foreign exchange services. The revenues for this segment increased by 12% over the prior year quarter to $118 million. In the past three years, growth has been driven by order flow revenue, advisor management fees, and mutual fund services. Trading Commissions: Trading commissions have been consistently declining for the past three years, with average commission per trade dropping by 33% to $7.07 per trade in 2018. The trading revenues for the quarter came in at $122 million, decreasing by 11% over the prior year quarter and remaining the same sequentially. Commission revenues were driven by a moderate improvement in average commission per trade and almost flat DARTs. Improving Operating Margin E-Trade’s total expenses as a percentage of total revenues declined from 53% in the first quarter of 2018 to 48% this quarter ( provision for loan losses included in the metric ), improving the operating margin 5% over the prior year quarter. The company’s advertising expenses declined by $6 million over the prior year quarter, and management guided for $200 million in advertising and marketing expenses for the full year. Marketing and advertising expenses have been increasing at a 20% growth rate for the past two years, and retaining the prior year figure of $200 million would bring a significant upside to operating profits. 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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own
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    Is Verisign Fairly Valued?
  • By , 4/17/19
  • tags: VRSN
  • Verisign (NASDAQ: VRSN) reported solid financial results in FY 2018, driven by growth in domain name registrations and improved renewal rates compared to the previous year, a trend which we expect to continue into 2019. In Q4, the company comfortably beat earnings estimates ($1.21), with non-GAAP earnings of $1.58 which surged 64.6% from the year-ago quarter. Revenues increased 4.1% year over year to $307.5 million but failed to meet the top-line mean consensus estimates of $309 million. We currently have a price estimate of $171 per share for VRSN, which is approximately 10% behind the current market price. We have summarized our full year expectations for VRSN based on the company’s guidance and our own estimates, on our interactive dashboard  Verisign’s Fiscal 2019 Outlook . You can modify any of our key drivers to gauge the impact changes would have on its valuation, and see all Trefis Internet and software company data here. Key Performance Metrics From Fiscal 2018 Verisign recorded revenues of $1.2 billion in 2018, which represents an increase of 4% compared to 2017 while operating income surged by 8% to $767.4 million. The company added 38.2 million new domain name registrations for .com and .net, ending 2018 with 153 million .com and .net registrations in the domain name base, an increase of 4% from 2017. Non-GAAP EPS increased by 29% year-over-year to $4.75 in 2018 thanks to the impact of lower taxes, surge in non-operating income and share repurchases. Net income grew by 27.5% primarily due to one-time pre-tax gain of $55 million recognized on the sale of Verisign Security Services customer contracts. Other Key Factors and Earnings Guidance For FY 2019 Verisign entered into Amendment 35 to the Cooperative Agreement, allowing VeriSign to engage with ICANN to amend the COM Agreement and to raise .com registration and renewal prices 7% in the back four years of each six-year period. Thus, providing Verisign with more pricing power. VeriSign also renewed its contract with ICANN to remain the sole .net operator until 2023, which should further aid growth in domain name registrations – as more companies rely on growing their businesses digitally. The company completed the sale of its Security Services Business, primarily comprising of Distributed Denial of Service Protection and Managed DNS services, to Neustar with the objective of focusing more on its core domain name registry services business. For FY 2019, Verisign expects revenue to be in the range of $1.215 billion to $1.235 billion, partially offset by the loss of revenue associated with the sale of Security Service customer contracts. Non-GAAP operating margin is expected to be between 67.5% to 68.5%, while EPS is expected to grow by 10% to $5.20 in 2019. Moreover, the company expects its domain name base growth rate to be between 2.25% and 4.25% for full year 2019. We estimate the fair value for Verisign’s stock to be $171 based on our Non-GAAP diluted EPS estimate of $5.2 for full-year 2019, and using a forward P/E multiple of 33x. 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.
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    Key Takeaways from L’Oreal’s Q1 Results
  • By , 4/17/19
  • tags: LRLCY EL AVP REV
  • L’Oreal reported its first quarter results on April 16, with total sales increasing by 11.4% to €7.55 billion over the prior year quarter. Ignoring the impact of consolidation and currency fluctuations, the growth in total sales was 7.7%, which is higher than the first quarter of 2018 where the comparable sales growth was 6.8%. Among the four product lines, L’Oreal Luxe and Active Cosmetics remain the strongest growing segments and together contribute around 40% of total sales. Geographically, New Markets continue with the strong growth trajectory by reporting a 20% increase in sales over prior year quarter. This supports the company’s mission to acquire a billion new customers, double the existing figures, where a major portion is expected from the Asia-Pacific region. The company’s e-commerce business posted a jump in sales of 43.7% over the prior year quarter and contributes around 11% of total sales. The Trefis price estimate for L’Oreal stands at $54 per share, which is in line with the current market price. You can view our interactive dashboard on How Has L’Oreal Fared In Recent Quarters? to observe the quarterly revenue trends and modify yearly earnings to gauge the impact on the stock price, and see more of our Consumer Discretionary Sector data here. Product Line Performance The group operates a portfolio of 36 brands that are split into divisions as per consumption universe and distribution channels. Professional Products: This division targets professional hair salons and contributes around 12% of total sales. The division’s sales have grown by 4.8% to €835 million over the prior year quarter, but has been witnessing a decline in recent years. This is in line with the overall industry trend, as the growth in professional care has been limited. Consumer Products: This division targets the mass market with makeup, skincare, and hair care products. It contributes around 44% of total sales and reported €3.28 billion of sales, growing by 7% over the prior year quarter. On an annual basis, this division has been reporting subdued performance in the past few years. L’Oreal Luxe: This is the fastest-growing division, with quarterly sales of €2.68 billion, 19% over the prior year quarter. The division leverages selective distribution and has the biggest brand portfolio of generalist brands, aspirational brands, and specialized brands. This division has been observing strong growth in the past two years, growing consistently at ~10% levels. Active Cosmetics: This division includes brands that sell derma-cosmetic products exclusively through specialty drugstores, pharmacies, and dermatologists. The segment reported quarterly sales of €751 million, 14% over the prior year quarter. Together with L’Oreal Luxe, this division has been consistently reporting 10% annual growth for the past two years. 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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own
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    What To Expect From Philip Morris' Q1 2019 Results?
  • By , 4/17/19
  • tags: PM MO
  • Philip Morris International (NYSE: PM), manufacturer of cigarettes and other nicotine containing products including reduced-risk products, is set to announce its Q1 2019 results on April 18, 2019, followed by a conference call with analysts. We expect the company to report revenue of close to $6.75 billion in Q1 2019, which would mark a decline of 2.1% on a year-on-year basis. Sequentially, net revenue is expected to decrease by about 10%. Lower revenue is likely to be a reflection of decreasing sales of cigarettes and a slower than expected sales growth in the heated products segment due to regulatory uncertainty. Market expectation is for the company to report earnings of $1.01 per share in Q1 2019, marginally better than $1.00 per share in the year-ago period. Marginal improvement in earnings would most likely be driven by lower interest expense following repayment of high-cost debt in 2018. We have summarized our key expectations from the earnings announcement in our interactive dashboard – How is Philip Morris expected to fare in Q1 2019 and what is the outlook for the full year?   In addition, here is more  Consumer Staples data . Key Factors Affecting Earnings Declining cigarette sales Revenue from the company’s combustible products segment is expected to drop by 1.2% in the first quarter of 2019 compared to the previous-year period, and by 10.6% compared to Q4 2018. The decrease would primarily be driven by lower cigarette volume sold. As millennials are moving away from combustible products to e-vapor/heated tobacco products due to health concerns, the cigarette shipment is expected to continue its downward trend. Though cigarette units are expected to be somewhat flat on a y-o-y basis, they are expected to drop by over 13% on a sequential basis. Marlboro, the company’s flagship brand, which has witnessed a decrease in its market share over the last couple of quarters, is expected to continue the trend in 2019 as well, adversely affecting segment revenues. Slow pick up in IQOS Revenue for the company’s Reduced Risk Products (RRP) segment is expected to decline by 6.8% on a year-on-year basis due to lower volume and price realization. The company’s primary vapor product, IQOS, has not been able to see its sales pick up the way the market had expected, mainly due to regulatory uncertainty surrounding heated tobacco products. Recently, with the FDA cracking down on vapor companies, sales are expected to head south in early 2019. Though IQOS is a brand that is expected to drive PM’s growth over the long term, the segment is projected to face dwindling sales in the short-term due to lower price realization on the back of heavy discounts offered to promote the product in the market. Margin improvement Net income margin is expected to increase from 22.6% in Q1 2018 to 26% in Q1 2019, driven by lower interest expense. As a step towards optimizing its capital structure, the company used its high cash balance to pay off $2.5 billion of its 10-year U.S. bonds in 2018, which with a coupon of 5.65%, was the most expensive debt instrument on the company’s books. Though an increase in marketing costs weighed on the margin in Q4 2018, interest saving is expected to provide an uptick to profitability in 2019. Full Year Outlook For the full year, we expect net revenue to increase by 3.9% to $30.8 billion in 2019, from $29.6 billion in 2018, as sales under the company’s heated tobacco segment are expected to pick up in the second half of the year with expectations of regulatory clarity with respect to the product. Lower interest and tax outgo, coupled with a gradual phasing out of the discounts on IQOS is expected to drive profitability with net income margin expected to be ~27% in 2019, up from 26.7% in 2018. Trefis has a price estimate of $87 per share for Philip Morris’ stock. Expectations of high growth in e-vapor in the long term, along with measures to improve profitability, is expected to provide support to the company’s stock price over the next one year.   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.
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    What To Expect From Union Pacific's Q1
  • By , 4/17/19
  • tags: UNP CSX NSC
  • Union Pacific Corporation (NYSE: UNP) is set to release its Q1 financial performance on April 18. This note details Trefis’ forecasts for Union Pacific, as well as some of the key trends we will be watching when the company reports earnings. You can view our interactive dashboard analysis ~   How Is Union Pacific Likely To Have Fared In Q1?  ~  for more details on the expected performance of the company. In addition, you can see more of our  data for industrial companies here. How have Union Pacific’s revenues changed over recent quarters, and what’s the forecast for Q1 2019? Total Revenues for Union Pacific have largely trended higher over recent quarters. Revenues grew from $5.5 billion in Q4 2017 to $5.8 billion in Q4 2018. The growth can primarily be attributed to the capacity constraints in the trucking industry, which benefited railroad companies at large. We estimate total revenues to be $5.7 billion for Q1; a figure 4% higher than what it reported a year ago. What are Union Pacific’s key sources of revenues? Union Pacific generates its revenues primarily from various commodities freight, including energy, industrial, premium, and agriculture. Premium segment includes intermodal freight, which refers to the shipment of containers that can be moved from one form of transport to another. The segment also includes automotive freight. Energy segment refers to shipments related to coal, crude oil, sand, and petroleum products. Industrial freight revenues are derived from the shipment of industrial commodities. Agriculture refers to grains, fertilizers, ethanol, and biofuel related shipments. What to expect from the Agriculture segment? Agriculture revenues grew from $1.01 billion in Q4 2017 to $1.12 billion in Q4 2018. We forecast the revenues to decline in low single-digits to $1.1 billion in Q1 2019. This can be attributed to uncertainties related to Agriculture exports. The U.S. government has imposed several foreign tariffs, which will likely impact the grain exports at large, and in turn impact the railroad shipments. What to expect from the Energy segment? Energy freight revenues declined from $1.21 billion in Q4 2017 to $1.10 billion in Q4 2019. This can be attributed to weaker coal and sand shipments. We forecast the segment revenues to grow in mid-single-digits in the near term. While we don’t expect any significant growth in coal, petroleum products shipments will likely trend higher. The decline in domestic coal demand can largely be attributed to the trends in natural gas prices. The benchmark Henry Hub natural gas price is currently trading under $3 levels, falling from the highs of $4.50 in late 2018. With gas prices being more attractive, the dependency on coal as an energy source continues to come down. EIA estimates  603 million short tons  (mst) coal consumption in 2019, which will be the lowest coal consumption over the past few decades. Coal exports have been trending higher in the recent quarters, but it may see a slight decline in 2019, thereby impacting the overall volume. How much can industrial freight grow? Union Pacific’s industrial freight grew from $1.28 billion in Q4 2017 to $1.40 billion in Q4 2018. This can partly be attributed to higher fuel surcharge in the recent quarters, given the movement in crude oil prices. We forecast the revenues to grow in mid-single-digits in Q1. This growth will likely be led by chemicals, metals, and forest products, as an expected growth in construction will likely bode well for the railroad shipments. The U.S. construction sector is forecast to  grow  in mid-single-digits over the next three years. How much can Premium segment revenues grow? Premium segment revenues have grown from $1.52 billion in Q4 2017 to $1.75 billion in Q4 2018. This can primarily be attributed to capacity constraints in the trucking industry amid driver shortage after the full implementation of the ELD Mandate. This trend will likely continue in the near term. We forecast the segment revenues to grow in mid-to-high single-digits in Q1 2019. What will be the impact of the above on Union Pacific’s EPS? We expect the earnings to be $1.91 per share in Q1. This reflects 14% growth to the prior year quarter. The growth in earnings will likely be led by higher revenues, and higher margins. The company last year launched Unified Plan 2020  aimed at better efficiency. This plan should help improve margins and create more reliability for customers, and aid the company’s overall earnings growth in the coming years.   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.
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    What To Expect From Intuitive Surgical's Q1?
  • By , 4/17/19
  • tags: ISRG BSX ABT MDT
  • Intuitive Surgical  (NASDAQ:ISRG) is expected to publish its Q1 2019 results on April 18. This note details Trefis’ forecasts for Intuitive Surgical, as well as some of the key trends we will be watching when the company reports earnings. You can view our interactive dashboard analysis ~ How Is Intuitive Surgical Likely To Have Fared In Q1? In addition, you can see more of our  data for Healthcare companies here. How have Intuitive Surgical’s revenues changed over recent quarters, and what’s the forecast for Q1 2019? Total Revenues for Intuitive Surgical have largely trended higher over recent quarters. Revenues grew from $892 million in Q4 2017 to $1.05 billion in Q4 2018. This can primarily be attributed to growth in the installed base. We estimate Intuitive Surgical’s revenues to be $951 million for Q1; a figure 12% higher than what it reported a year ago. What are Intuitive Surgical’s key revenue sources? Intuitive Surgical generates its revenues primarily from three sources: system sales, instruments & accessories sales, and services. System sales refers to da Vinci surgical systems, which are computer assisted systems that help surgeons perform minimally invasive surgeries by controlling the device from a console. Instruments & accessories sales includes EndoWrist devices, which have tools such as forceps and scissors attached to them, in order to provide better control to surgeons. Accessories include sterile drapes, camera heads, vision products, light guides, and other devices. Services includes full-time support to its customers, from installing the surgical systems to repairing and maintaining them. What to expect from the instruments & accessories business? The segment revenues have grown from $457 million in Q4 2017 to $539 million in Q4 2018. We forecast the revenues to be $516 million in Q1 2019, reflecting low double-digit growth (y-o-y). Instruments & accessories segment has seen steady growth in the recent past, led by higher installed base. This trend will likely continue in Q1 as well. The company’s installed base grew 13% in 2018, and it will likely grow in low double-digits in 2019. This can be attributed to the advantages of minimally invasive surgeries through da Vinci Surgical Systems. They entail fewer and smaller incisions, less blood loss, shorter hospital stays, faster recoveries, and fewer scars than traditional open surgery. How much can systems sales grow? da Vinci systems sales grew from $285 million in Q4 2017 to $341 million in Q4 2018. We expect the sales to be $277 million in Q1, reflecting high teens growth over the prior year period. Sequentially the revenues will likely be down in high teens. Q1 is a seasonally weak quarter for Intuitive Surgical with patient deductibles being reset. Services segment should see mid-single-digit growth  Services segment revenues can also be linked to the company’s installed base. However, we forecast slower growth for services, as compared to other segments. This can be attributed to the trends in average service revenue per installed unit. The figure has declined at an average annual rate of 1% over the last five years. What will be the impact of the above on Intuitive Surgical’s EPS? We expect the earnings to be $2.65 per share on an adjusted basis in Q1. This reflects 9% growth to the prior year quarter. The growth in earnings will likely be led by higher revenues. However, we expect a slight decline in margins, in line with the company’s guidance.  The margins are expected to be lower due to costs associated with the expansion in the emerging markets, primarily China, India, and Taiwan.     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.
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    What To Expect From Netflix Post-Q1 Results
  • By , 4/17/19
  • tags: NFLX
  • Netflix ‘s (NASDAQ: NFLX) Q1 earnings per share and revenues both beat consensus estimates in its Q1 results. The company reported net streaming additions of 9.6 million in the quarter. In Q1, the company’s revenues grew a robust 22% year-over-year (y-o-y) to $4.5 billion, driven by growth in subscribers across both the U.S. and international streaming markets. The international subscriber base continued to increase at a rapid pace (33% y-o-y) once again, while the domestic subscriber base growth stabilized in the low double digits. Netflix saw its stock gain nearly 35% over the course of 2019. We have a  $378 price estimate for Netflix’s stock, which is slightly ahead of the current market price. We have created an interactive dashboard on What Has Driven Netflix’s Recent Results, which outlines our forecasts for the upcoming quarter and full-year 2019. You can modify our forecasts to see the impact any changes would have on the company’s earnings and valuation, and see  more Trefis Media data here .  Q2 Expectations  Netflix expects 5 million global paid net additions (around 300k net adds in the U.S. and 4.7 million internationally), compared to a 5.4 million consensus estimate. The company has guided for its total revenues to reach $4.9 billion in Q2 2019. The company also expects an operating margin of 12.5% in Q1. Netflix also raised its prices in the U.S. and some Latin American markets. Netflix’s new pricing in the U.S. will be phased in for existing members over Q1 and Q2, and its U.S. prices for new members are increasing across the board – the Standard plan (two HD streams) is increasing from $10.99 to $12.99 per month ; the Premium plan (up to four Ultra HD streams) is increasing from $13.99 to $15.99 per month; and the Basic plan (with a single non-HD stream) is increasing for the first time, from $7.99 to $8.99 per month. This will help boost the company’s average revenue per customer over the coming quarters. We forecast Netflix to reach 64 million subscribers (including free trials) in the U.S., with an average monthly fee per subscriber of over $11.50, translating into $2.2 billion in domestic streaming revenues for Q2. In addition, we also estimate nearly 100 million subscribers in international markets with an average monthly fee per subscriber of $8.70, translating into about $2.6 billion in international streaming revenues in the same period. Netflix has been growing its subscribers by leveraging its original content slate, and we expect this to continue in the near term as well. On the other hand, Netflix’s DVD business is expected to continue to lose steam, and its revenues will likely decline to just over $77 million. Fiscal 2019 Expectations We expect the company to report close to $20.5 billion in revenues in 2019, with $9.3 billion revenues in the domestic streaming segment and $11 billion in the international streaming segment. The U.S. market for streaming content is getting more saturated due to strong competitive pressure, which is expected to intensify once Disney launches its own direct-to-consumer offering Disney+. This service is also priced significantly cheaper than Netflix (at $7 per month versus $13) Netflix reported negative cash flow of $3 billion for 2018 and now expects 2019 free cash flow deficit to be modestly higher at approximately -$3.5 billion, due to higher cash taxes related to the change in its corporate structure and additional investments in real estate and other infrastructure. The company expects free cash flow to improve in 2020 and each year thereafter, driven by its growing subscriber base, revenues, and operating margins. 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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.