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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 : AMERITRADE

We expect weak trading revenues to weigh on TD Ameritrade's fiscal Q3 results which are slated for release after market close today.

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FORECAST OF THE DAY : HALLIBURTON'S NORTH AMERICAN REVENUE

Halliburton reported better-than-expected Q2 results earlier today despite a sharp decline in North American revenues thanks to strong international performance.

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RECENT ACTIVITY ON TREFIS

V Logo
Visa’s Fiscal Q3 Revenues To Witness Strong Growth Despite Slow Network Volume Gains
  • By , 7/23/19
  • tags: V MA AXP DFS
  • Visa (NYSE: V) is expected to release its fiscal third quarter results after market close on Tuesday, July 23, and Trefis expects softness in retail sales figures for U.S. and Europe to impact the payment company’s top line.  Visa’s revenues ( shows key revenue components ) consist of transaction processing fees, domestic assessment fees, international transaction fees, and other value-added services. All these components depend on Visa’s network volume – which in turn is largely dependent on macroeconomic factors such as GDP growth, retail sales, and consumer confidence. As U.S. and Europe are together responsible for almost 60% of Visa’s total network  volume, the figure is particularly sensitive to retails sales in these regions. Trefis highlights the impact of changes in retail sales for key geographies on Visa’s Network Volumes  in an interactive dashboard. You can also find more of our Financial Services data here.   A brief look at the previous quarter results (fiscal Q2) In fiscal Q2, Visa reported total network volumes that were largely identical to the figure for the prior-year period. Network Volumes from the U.S. observed a strong annual growth of 7%, but Europe and Asia-Pacific regions observed declines of 5% and 1%, respectively. The geographical growth trends in Q2 were fairly in-line with Q1. However, comparing these trends with peer Mastercard, Visa’s Europe numbers observed a 5% decline as opposed to Mastercard’s 5% growth. Per Trefis estimates, the data processing and services fee increased by 10% and 3.5% in the second quarter, respectively. ( Note: Fees are calculated as a percentage of payments volume ) Despite slow growth in network volumes, Visa maintained its full-year revenue growth expectations of low double-digit level supported by increasing transaction fees. What to expect from the third quarter results? After observing a significant drop in January and February, the U.S. Retail Sales recovered in March. However, a further decline was reported for April in the Bureau’s June release. ( Note: Data considered is not adjusted for seasonality ). A similar trend was observed in the Eurostat Retail Trade Index, where the index gained just 0.46% in April after March’s increase of 11%. Retail sales growth slowed in China in April, whereas retail sales growth was stable in India. Per Trefis estimates, the U.S. retail sales, ex-auto and gas, and Visa’s U.S. network volumes have a high positive correlation of +0.65. Moreover, a strong positive correlation is also observed between Visa’s network volumes from the U.S. and Europe. Considering the macro-economic uncertainty associated with tariffs against China and Europe and the Fed’s June report indicating moderate growth in economic activity we expect Visa to post softer network volume growth for the third quarter. However, the revenue growth is expected to be in-line with the guidance as the company reported annual net revenue growth of 13% and 8% in Q1 and Q2, respectively. This growth was supported by a 4% and 0.5% annual rise in network volumes in Q1 and Q2, respectively. Trefis estimates Visa’s EPS for the current year to be $5.50. Taken together with a P/E of 28x, we arrive at Visa’s valuation  of $154 per share, which is roughly 15% below the current market price. What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own
    KO Logo
    What To Expect From Coca-Cola’s Q2 2019 Earnings Report?
  • By , 7/22/19
  • tags: KO PEP
  • Coca-Cola Company (NYSE: KO) is set to announce its Q2 2019 financial results on July 23, 2019, followed by a conference call with analysts. The company started the year 2019 on a positive note with a y-o-y revenue growth of 5.2% in Q1 2019 and Trefis expects this trend to continue through the year. Coca-Cola revenues are expected to be around $9.5 billion in Q2 2019, marking a y-o-y growth of over 6.6%. Higher revenue is likely to be driven by unit case volume growth, favorable price mix, concentrate sales growth, healthy growth in the company’s sparkling soft drinks, juice and plant-based beverages, sports drinks, and tea and coffee products. Earnings are expected to come in $0.62 per share in Q2 2019, marginally better than $0.61/share in the year-ago period, driven by recent refranchising of low-margin bottling business and cost savings from ongoing productivity initiatives, partially offset by foreign currency headwinds. We have summarized the key expectations from the announcement in our interactive dashboard – Coca-Cola Earnings: Performance and 2019 Forecast.  In addition, here is more  Consumer Staples data . A Quick Look At Coca-Cola’s Key Revenue Sources KO reported total revenue of $31.86 billion in FY 2018. Key revenue sources were as follows: EMEA (Europe, Middle East and Africa): $7.7 billion revenue in 2018 (24% of total revenue). This includes sale of carbonated and non-carbonated beverages, tea and coffee, and energy drinks in the EMEA region. Latin America: $4 billion revenue in 2018 (13% of total revenue). This includes sale of carbonated and non-carbonated beverages, tea and coffee, and energy drinks in Latin America. North America: $11.2 billion revenue in 2018 (35% of total revenue). This includes sale of carbonated and non-carbonated beverages, tea and coffee, and energy drinks in North America. Asia-Pacific: $5.1 billion revenue in 2018 (16% of total revenue). This includes sale of carbonated and non-carbonated beverages, tea and coffee, and energy drinks in Asia Pacific region. Bottling Investments and Corporate: $3.9 billion in revenue in 2018 (12% of total revenue). This consist primarily of its Company-owned or controlled bottling operations, sales and distribution operations of finished products. Global Ventures: This is a new addition to the company’s operating segments following the acquisition of Costa in January 2019, with plans to leverage its coffee platform. A] Revenue Trends EMEA Revenue in the EMEA region increased in Q1 2019 and the trend is expected to continue in Q2 as well. Higher revenue is primarily to be driven by volume growth, led by sparkling soft drinks and Fuze Tea, coupled with strong pricing in a majority of the key markets. Latin America Segment revenue growth is expected to remain sluggish in Q2 2019, led by a decline in volume in Argentina and Mexico. Additionally, the adverse impact of currency headwinds could also have an impact on top line growth. North America After declining in Q1 2019, volume sales are expected to rebound in the second quarter, led by the impact of new package initiatives executed in the market. Additionally, strong pricing and mix within the sparkling soft drink portfolio is likely to drive revenue growth in Q2. Asia Pacific (APAC) APAC revenue declined (y-o-y) in Q1 2019 due to unfavorable price mix. Higher growth in emerging markets vis-a-vis developed markets is expected to keep pricing under pressure in Q2 as well. However, significant volume growth is expected to offset the price effect and most likely lead to flat revenue in Q2 2019. Global Ventures Segment revenue is expected to be slightly higher in Q2 compared to Q1 2019, due to the full quarter effect of the division following the acquisition of Costa in January 2019. Bottling Investments and Corporate With most of the refranchising already done, segment revenue is expected to rise on a sequential basis in Q2 2019. However, compared to the previous year period, bottling revenue is likely to witness a drop during the quarter. B] Total Expense and Profitability Trend Total expenses have witnessed a lot of volatility over recent quarters due to rising cost of sales, impairment cost and SG&A cost, offset by lower expenses at the bottling business. Cost of Goods Sold (COGS): Cost of sales has largely increased over recent quarters, with Q1 2019 also marking an increase on a y-o-y basis. COGS is expected to remain elevated in Q2 2019 due to higher raw material and labor costs, impact of structural changes as well as the unfavorable impact of foreign currency. SG&A Expense:  Though SG&A cost has increased in the last three quarters, it is expected to remain flat in Q2 2019, driven by higher distribution and packaging cost, offset by a decrease in advertising expense and productivity gains. Other Operating Charges: Other operating cost has been decreasing over recent quarters and is expected to drop further in Q2 2019, due to the company’s productivity and reinvestment program and lower expenses at the bottling operations due to large scale refranchising. Net income margin is expected to be higher in Q2 2019 compared to the year-ago period, driven by lower advertising spend, productivity gains, decrease in other operating expenses, partially offset by currency headwinds and higher distribution cost. Full Year Outlook For the full year, revenue is expected to increase by 9.3% from $31.9 billion in 2018 to $34.8 billion in 2019, and further by 4.7% to $36.5 billion in 2020. Higher revenue is likely to be driven by growth across almost all major segments, offset by slightly lower revenue from the bottling business. 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 (completed in Q1 2019) and Chi Ltd, which is a fast-growing leader in expanding beverage categories, including juices, value-added dairy, and iced tea in Nigeria. Net income margin is expected to increase from 20.2% in 2018 to 21% and 22% in 2019 and 2020, respectively. 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. According to Coca-Cola’s valuation by Trefis, we have a price estimate of $52 per share for KO’s stock.   What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams All Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    CMG Logo
    Chipotle To Maintain Momentum In Q2 2019?
  • By , 7/22/19
  • tags: CMG QSR DNKN SBUX MCD
  • Chipotle Mexican Grill (NYSE: CMG), an American chain of fast casual Mexican restaurants, is set to announce its Q2 2019 results on July 23, 2019 followed by a conference call with analysts. The market expects the company to report revenue close to $1.4 billion in Q2 2019, which would be an increase of 11% on a year-on-year basis. The increase is mainly expected due to the rising digital sales and continuous addition of new restaurants. Market expectation is for the company to report earnings of $3.76 per share in Q2 2019, higher than the $2.87 per share in the year-ago period. Chipotle Revenues were reported at $4.9 billion in 2018. This was earned from company operated restaurants, primarily in the USA. We have summarized our key expectations from the earnings announcement in our interactive dashboard –  Chipotle’s Earnings: Performance and 2019 Forecast.  In addition, here is more  Consumer Discretionary data . Key Factors Affecting Earnings: Revenue to continue growth: After the E. coli outbreak in 2016, the company is back on a growth phase with revenues rising steadily in 2017 and 2018. In Q1 2019 the revenue grew further to $1.3 billion, up by 13.9% year on year. The restaurant growth is instrumental to the growth of revenue along with the average revenue per restaurant. Trefis estimates average number of restaurants to be more than 2,550 by the end of 2019. Trend in Expenses: Restaurant operating costs (Food, beverage & packaging, Labor and Occupancy) contributes around 70% of the cost. The Total Expenses thus changes mostly in line with the revenue. We expect the Indirect and other expenses to be lower in 2019 as the company is focusing on Operating efficiency which is also expected to improve EBITDA margins. Full Year Outlook: For the full year, we expect gross revenue to increase by 12.2% to $5.4 billion, driven primarily by rising comparable sales and continuous addition of new restaurants. EBITDA margin is expected to increase further to 17.2%.   Trefis calculates Chipotle’s Valuation at $684 per share for Chipotle’s stock. The value is based on the expectation that the company’s revenue and earnings will continue to see a growth over 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 More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own.
    NOK Logo
    What To Expect As Nokia Publishes Q2 2019 Results?
  • By , 7/22/19
  • tags: NOK ERIC
  • Nokia  (NYSE:NOK) is expected to publish its Q2 2019 results on July 25, reporting on a quarter that likely saw the company’s networking business gain some traction driven by commercial 5G deployments in the United States. In this interactive analysis, we take a look at some of the trends that drove the company’s recent quarterly results and the outlook for Q2. View our interactive dashboard analysis  What To Expect From Nokia’s Q2 2019 Earnings? How Have Nokia’s Revenues Trended And What’s The Outlook For Q2 Revenues grew modestly from around EUR 4.9 billion in Q1’18 to about EUR 5 billion in Q1’19. We expect revenues to grow to about EUR 5.4 billion by Q2’19 What Are The Key Drivers Of Nokia’s Revenues? Key Driver 1: Networks This segment sells radio access network and related equipment and accounts for over 75% of Nokia’s total revenue. Revenue growth remained sluggish during Q1’19 as growth in IP routing was offset by weakness in the mobile and fixed access space. Things could improve slightly in Q2, driven by 5G deployments. Nokia had 36 commercial 5G wins as of April 2019 and it’s likely that this will be the biggest driver of the company’s results over 2019. Key Driver 2: Software Nokia’s software business accounted for about 11% of revenues in Q1. While software revenues remained almost flat YoY in Q1, it’s possible that sales could improve slightly over Q2. Key Driver 3: Nokia Technologies Nokia technologies primarily licenses the company’s intellectual property. The segment accounted for about 7% of total revenues in Q1. Revenues could improve slightly over Q2. Calculating Nokia’s EPS We expect Nokia to just about break-even over Q2 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.
    AMTD Logo
    Did Interest Income Gains Offset Lower Trading Commissions For TD Ameritrade In Fiscal Q3?
  • By , 7/22/19
  • tags: AMTD ETFC SCHW
  • TD Ameritrade (NASDAQ: AMTD) is slated to release its fiscal third quarter results after market close on Tuesday, July 22 and Trefis expects interest income from margin receivables to offset lower trading revenues. Per Trefis estimates, Ameritrade’s stock has a fair value of $58, which is roughly 15% ahead of the current market price. We have summarized our quarterly and full-year expectations for Ameritrade’s earnings   in our interactive dashboard. You can modify any of our key drivers to gauge the impact changes would have on Ameritrade’s valuation, and see all Trefis Financial Services Data here . A Quick Look at Ameritrade’s Revenues Ameritrade reported $5.4 billion in Total Revenues for its fiscal year 2018. This included five revenue streams: Commissions and transaction fees: $1.9 million in FY2018 ( 36% of Total Revenues ). A trading commission is charged for executing trades in stocks, bonds, options, futures, etc. Net Interest Revenue: $1.2 billion in FY2018 ( 23% of Total Revenues ). It is the interest earned on loans and margin receivables net of interest expense on funding sources. Bank Deposit Account Fees: $1.5 billion in FY2018 ( 28% of Total Revenues ). It is earned for providing cash management services such as deposit accounts and money market mutual funds. Investment Product Fees: $557 billion in FY2018 ( 10% of Total Revenues ). It is the fee earned on client assets invested in investor programs, mutual funds, and money market funds. Other Revenues: $113 million in FY2018 ( 2% of Total Revenues ). It includes proxy income, solicit and tender fees, and income from other ancillary services. A brief look at the previous quarter performance (fiscal Q2) In the second quarter, Ameritrade reported a sequential drop in net revenues, primarily due to a steep decline in trading activity compared to the first quarter. Ameritrade generates nearly 35% of its net revenues from trading commissions and reports significantly higher DARTs than its peers Schwab and E*Trade. Bank deposit fees remained flat sequentially, primarily due to stable account balance during the second quarter. Though interest-earnings assets followed an upward trend in Q2, interest revenues declined primarily due to lower margin receivables that generate the highest yield among the spread-based assets.   What to expect from the third quarter results? According to monthly metrics released by Ameritrade, DARTs for April and May came in at 817k and 863k, respectively. Average DARTs have been consistently falling since January. With VIX in the moderate range over the last three months, we expect Ameritrade to report a sequential decline in trading revenues driven by lower average DARTs for the third quarter. Consistent with the increase in interest-earning assets, margin receivables observed a slight improvement of 2% in April and were followed by a similar increase in May. Ameritrade’s average bank deposit account balance, which had been growing steadily in the last two quarters, observed a decline during the months of April and May. Considering the aforementioned trends in operational metrics, we expect Ameritrade to report mixed-results for the third quarter with a decline in trading commissions and a slight upside from net interest income. 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
    SNAP Logo
    Snap's Q2 Preview: Can Android Continue To Drive User Growth?
  • By , 7/22/19
  • tags: SNAP FB
  • Snap  (NYSE:SNAP) reports its Q2 results on Tuesday, July 23. The company’s Q1 had beat consensus expectations on revenue and EPS thanks to a better-than-expected user growth. In Q2, we will be looking out for: Continued traction in the Android user base Management commentary around ARPU expansion Competitive environment in light of increased scrutiny around Facebook’s business model Trefis estimates that Snap’s stock  has a fair value of $10, which is roughly 30% below the current market price. We capture trends in  Snap’s Earnings   over recent quarters along with our forecast for the year in an interactive dashboard. You can modify any of the key drivers to visualize the impact of changes on Snap’s valuation. Additionally, you will find more Trefis information technology data here . A Quick Look At Snap’s Sources Of Revenue Snap makes money by selling advertising space on its platform. The company’s revenue ($1.2 billion in 2018) was reported across the following two segments: North America ($781 million in 2018 revenue, contributed 66% to total revenue ): Segment revenue was derived from the sale of advertising solutions to customers in the North America region. International ($399 million in 2018 revenue, contributed 34% to total revenue ): Segment revenue was derived from the sale of advertising solutions to customers in the European region and the rest of the world. Operating Trends North America revenues more than doubled to $0.78 billion in 2018 from $0.36 billion in 2016. The change of $0.42 billion over this period implied an annualized growth rate of 47%. Q1 2019 revenue came in at $0.23 billion (33% y-o-y), and we expect revenues for full-year 2019 to reach $1 billion (28% y-o-y) for the first time. International revenues have grown more rapidly than North America revenues – increasing to $400 million in 2018 from just $41 million in 2016 at an annualized rate in excess of 200%. We expect 2019 revenue to reach cross $550 million (39% y-o-y). Taken together, this represents an increase in total revenues for the year to $1.56 billion from $1.2 billion in 2018 (an 32% jump) Snap’s loss widened from $515 million in 2016 to $1.2 billion in 2018 as the company expanded internationally. An improvement in profit margins leads us to believe that losses for the year will fall to roughly $950 million. We expect revenues to be $1.6 billion in 2019. Using a P/S multiple of 9x and share count of 1.3 billion, this works out to a fair value of $10 per share for SNAP’s stock, which is 35% below the current market price.    
    UBS Logo
    Macroeconomic Headwinds Would Have Hurt UBS's Q2 Results
  • By , 7/22/19
  • tags: UBS HSBC CS
  • UBS (NYSE: UBS) will kick-off the earnings season for European banks on Tuesday, July 23. After reporting a rather soft performance in Q1, the bank isn’t likely to do much better in Q2. Consensus estimates for UBS’s revenues for the quarter are close to $7.4 billion, which indicate an increase of roughly 2% on a sequential basis while EPS is expected to remain flat at $0.30. However, on a year-over-basis, revenue is expected to decline by 3.6% while EPS is projected to slide by more than 16%. Trefis estimates that  UBS’s stock has a fair value of $16.50, which is almost 35% ahead of the current market price. We have summarized our quarterly and full-year expectations for UBS’s earnings   in our interactive dashboard. You can modify any of our key drivers to gauge the impact changes would have on UBS’s valuation, and see all Trefis Financial Services Data here . A Quick Look At UBS’s Revenues UBS reported $30.3 billion in Total Revenues in Fiscal 2018. This included 4 revenue streams: Global Wealth Management : $16.9 billion in FY 2018 ( 55% of Total Revenues ). This segment generates revenues by providing tailored investment advice and solutions to private clients, particularly ultra-high net worth and high net worth individuals globally. Personal & Corporate Banking : $4.2 billion in FY 2018 ( 14% of Total Revenues ). This segment derives revenues by providing comprehensive financial products and services to private, corporate and institutional clients Asset Management : $1.8 billion in FY 2018 ( 6% of Total Revenues ). This segment generates revenues by providing clients a fully-integrated asset management offering Investment Bank : $8.1 billion in FY 2018 ( 25% of Total Revenues ). Revenues for this segment are derived by providing services to institutional, corporate and wealth management clients to help them raise capital, grow their businesses, invest and manage risks. A Quick Look At UBS’s performance with respects to its peers in recent quarters UBS under-performed its European banking peers Credit Suisse and HSBC in Q1 2019. HSBC witnessed a 5% increase in revenues while UBS’s revenues declined by nearly 12%. Moreover, UBS’s pre-tax profit plunged by 26% in Q1 while its European counterparts reported an increase in their pre-tax profits. Key Factors To Watch for In Q2 Global Wealth Management Is Key To UBS’s Growth Global Wealth Management (GWM) is UBS’s largest division, accounting for more than 50% of its revenues. GWM had a lukewarm Q1, with the segment’s revenues declining to $4 billion (-10% y-o-y) while operating income shrunk to $873 million (-21% y-o-y). This can be attributed to weakness across the industry, made worse by the negative impact of a stronger dollar. However, net new money remained strong at $22 billion and invested assets increased by $172 billion (+8% y-o-y) thanks to strong inflows across the Asia-Pacific region. Going forward, as global economic activity continues to improve, we expect higher invested assets to lead to an increase in recurring revenues for the Global Wealth Management business. Moreover, steady positive inflows should help the division’s revenues grow at a faster rate than expenses in the coming quarters. Investment Bank Struggles To Continue The IB division had a forgetful Q1, with total revenue falling to $1.8 billion (-10% y-o-y) while operating income shrunk to $207 million (-64% y-o-y) primarily because of the challenging trading environment in Europe and Asia. We expect the division’s struggles to continue in Q2. Escalating U.S.-China trade disputes as well as heightened global geopolitical and macroeconomic uncertainties are likely to have weighed on UBS’s trading revenues. Further, an escalating trade war is negatively impacting foreign exchange markets by shifting trade flows, and modifying expectations on growth and monetary policy. However, there has been an overall improvement in market activity and client sentiment in Q2. Taking all this into account, we expect the IB division to improve from its performance in Q1 although revenues will be lower than what it reported a year ago. Trefis Price Estimate We currently have a price estimate of $16.50 for UBS’s stock, which is roughly 35% ahead of the current market price. We believe than an improvement in market activity and client sentiment will have a positive impact UBS’s operating divisions. This in turn should help boost UBS’s profitability in the near term – helping its stock price recover. 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
    KMB Logo
    Kimberly-Clark's Revenue To Remain Flat In Q2 2019?
  • By , 7/19/19
  • tags: KMB PG CL UL
  • Kimberly-Clark  (NYSE: KMB) is set to announce its Q2 2019 results on July 23, 2019, followed by a conference call with analysts. The market expects the company to report revenue close to $4.6 billion in Q2 2019, which would be a decrease of 0.6% y-o-y, in line with Trefis expectations. Market expectation is for the company to report earnings of $1.61 per share in Q2 2019, up from $1.59 per share in the year-ago period. Kimberly-Clark Revenues were reported at $18.5 billion in 2018. This included 3 main revenue streams: Personal Care: $9 billion in 2018 (48.9% of Total Revenues). This includes the revenue earned by the company from its personal care items like disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other related products. Consumer Tissues: $6 billion in 2018 (32.5 % of Total Revenues). This includes the revenue earned from products such as facial and bathroom tissue, paper towels, napkins, and related products. K-C Professional: $3.4 billion in 2018 (18.3% of Total Revenues). This includes the revenue earned from solutions and products like wipers, tissue, towels, apparel, soaps and sanitizers.   We have summarized our key expectations from the earnings announcement in our interactive dashboard –  Kimberly-Clark’s Earnings: Performance and 2019 Forecast.   In addition, here is more  Consumer Staples data.   Key Factors Affecting Earnings: Revenue expected to remain flat: Quarterly revenue for the company has been more or less stable over the last few quarters. In Q1 2019 the company recorded a revenue of $4.6 billion, down 2.1% y-o-y and Trefis estimates Q2 2019 revenue to be similar to Q1 2019. Kimberly-Clark’s personal care segment is responsible for half of the company’s sales. However, the segment is witnessing volume declines in North America, due to higher competitive activity and lower category demand. Kimberly-Clark has struggled to generate meaningful revenue growth of late, with stagnant revenues, primarily due to lower organic sales – reflecting a challenging growth environment. In 2019, Kimberly-Clark expects its total sales to decline 1% to 2%, including an expected 3% to 4% headwind from currencies. Trend in Expenses: The company has seen a fall from Q2 2018 in Total expenses compared to Q1 2018 due to the high Marketing, research, and general expenses in Q1 2018 compared to all other quarters. Net Income Margin dipped a bit in 2018 primarily due to higher Cost of Revenue to Total Revenue (64% in 2017 to 69% in 2018).  We expect it to remain in the new range for 2018. Further, for full year 2019 we expect the Net Margin to increase back to around 11.7%. Full Year Outlook: For the full year, we expect gross revenue to decrease by 0.7% to $18.4 billion, because of stagnant revenues, primarily due to a challenging growth environment . Net Income margin is expected to increase back to around 11.7%.   Trefis has a price estimate of $122 per share for Kimberly-Clark’s stock. The value is based on the expectation that the company’s revenue will remain nearly flat with margin increasing back to its previous levels after the fall in 2018.     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.  
    HOG Logo
    Harley-Davidson To See Fall In Revenue For 3rd Consecutive Quarter?
  • By , 7/19/19
  • tags: HOG F DDAIF GM HMC LEA TM TTM VWAGY
  • Harley-Davidson (NYSE: HOG) is set to announce its Q2 2019 results on July 23, 2019, followed by a conference call with analysts. The Market expects the company to report revenue close to $1.4 billion in Q2 2019, which would be an decrease of nearly 5.5% y-o-y. The decrease is mainly expected due to the global auto market slowdown and the shrinkage of the heavy motorcycle market in the US.  Market expectation is for the company to report earnings of $1.21 per share in Q2 2019, lower than $1.52 per share in the year-ago period. Harley-Davidson reported $5.7 billion in Total Revenues in 2018. This included 2 main revenue streams: Motorcycle Business: $4.9 billion in 2018 (86.9% of Total Revenues). This includes the revenue earned by the company from its motorcycle and related products sales. Financial Business: $0.7 billion in 2018 (13.1% of Total Revenues). This includes revenue from the financial services provided for purchasing or leasing vehicles of the company. We have summarized our key expectations from the earnings announcement in our interactive dashboard – Harley-Davidson’s Earnings: Performance and 2019 Forecast.  In addition, here is more  Consumer Discretionary data .   Key Factors Affecting Earnings: Revenue expected to contin ue to fa ll: Trend in Expenses: As Cost of Sales (both divisions) form nearly 70% of Total Expenses the fluctuation of the same is similar to Total Revenue. In Q1 2019 the Total Expenses were impacted by lower shipments, unfavorable mix, and incremental tariffs, partially offset by lower year-over-year SG&A, and lower restructuring charges. Full Year Outlook: For the full year, we expect gross revenue to decrease by 2.9 % to $5.5 billion, primarily due to a challenging global auto market and shrinkage of the US Heavyweight motorcycle market. Gross margin is expected to decrease further to around 36.8%.   Trefis has an estimate of $39 for Harley-Davidson’s stock. The slowdown in the global market and shrinking of its primary market has brought the company to a crossroads, as they now focus on new segments and geographies to take the growth forward.     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.
    DB Logo
    Will Deutsche Bank Successfully Follow Through On Its Biggest Restructuring Plan Till Date?
  • By , 7/19/19
  • tags: DB UBS CS
  • Deutsche Bank (NYSE: DB) has yet to successfully turn-around its operations after the impact of the 2008 recession. While stricter regulatory requirements weighed on Deutsche Bank’s revenues, the bank spent billions in legal and restructuring costs over the years – leading to a steady decline in its share price over the years. Notably,  Deutsche Bank’s stock has slumped in value from a high of $110 in 2007 to less than $7 now. With an aim to get things in shape, the bank recently announced its largest restructuring plan till date. Trefis captures the impact of Deutsche Bank’s Reorganization Plan  on various aspects of its business model in an interactive dashboard, parts of which are shown below. Further, we have revised Deutsche Bank’s valuation  downwards from $9 a share to $7. Summary of Key Changes Proposed: The new plan marks an overall shift towards more stable revenue sources As per the new plan, Deutsche Bank will exit its Equities Trading business while retaining a focused equity capital markets operation. Additionally, the bank plans to resize its Fixed Income Trading operations – in particular its rates trading business – and will accelerate the wind-down of its existing non-strategic portfolio . This is a notable step for the German banking giant, given that Equity and FICC trading generated roughly 30% of the bank’s revenues in 2018. This radical measure is expected to reduce revenue contribution of Deutsche Bank’s Corporate & Investment Banking (CIB) division to 42% in 2020 from 52% in 2018 At the same time, the Private & Commercial Bank (PCB) division’s contribution is expected to jump to 47% in 2020 from below 40% in 2018. The proposed changes mean that the bank will do away with a potentially high-return business in the near future, even as elevated funding costs and uncertainty around the scope of the bank’s Investment Banking operations weigh on profitability. KEY CHANGE #1 : The Bank Will Exit the Equities Sales & Trading business Deutsche Bank’s Equity Trading business will be completed phased out by 2021. We estimate the bank’s Equity Trading portfolio to shrink from over €55 billion in 2018 to just €11 billion by the end of 2019 Revenues from the equity trading desk are also expected to fall to merely €400 million from around €2 billion in 2018. However, the Investment bank will continue to focus on its traditional strengths in financing, advisory, fixed income and currencies. KEY CHANGE #2: Global Fixed Income Trading business to be scaled back DB plans to resize its Fixed Income operations – in particular its Rates business – with an aim to reduce risk-weighted assets currently allocated to these businesses by approximately 40%. As a result of these changes, the bank’s Fixed income trading securities are expected to go down by almost 30% to around  €11 billion in 2019 while revenues are expected to slide by almost €2 billion to €3.4 billion KEY CHANGE #3: Focus on core banking business including wealth management to increase As per the new plan, the bank intends to focus more on its retail banking and wealth management This should help the bank to achieve steady growth in revenues over coming years. DB expects its total revenues to steadily increase to around 25 billion euros in 2022. Moreover, reducing the higher-risk business should help the bank achieve a better profitability in the long run, as the bank was unable to generate constant acceptable returns from its capital-intensive and highly leveraged equity trading business. KEY CHANGE #4: Massive cost-cutting measures are expected to be undertaken The bank will lay-off approximately 18,000 full-time equivalent employees and also expects to reduce adjusted costs by approximately 6 billion euros to 17 billion euros in 2022. Moreover, the bank aims to reduce its cost-income ratio to 70% in 2022 and targets a post-tax Return on Tangible Equity of 8% at the Group level by 2022. To implement the transformation, the bank expects one-off charges including impairments, restructuring costs and severance payments of €7.4 billion by 2022. For 2019, the total impact is expected to be approximately €5.1 billion . Conclusion We believe that Deutsche Bank’s transformation plan, which includes reducing higher-risk businesses that were unable to deliver constant justifiable returns, will have an overall positive long-term impact on its profitability. The critical thing, though, is for Deutsche Bank to implement these changes successfully – something it hasn’t been unable to do as a part of the series of restructuring plans it has proposed over the last several 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
    UAL Logo
    Industry Tailwinds Will Help United Airlines' Profits Soar In 2019
  • By , 7/19/19
  • tags: UAL UAL. DAL. JBLU AAL
  • United Airline Holdings (NYSE:UAL)  is an airline major based out of Chicago, Illinois. It operates 4,900 flights to 355 destinations across five continents. In 2018 it carried over 158 million passengers and flew over 1.7 million flights. The company  reported Q2 results earlier this week. During the quarter, United overcame issues stemming from its inoperative 737-MAX fleet to post better-than-expected numbers. We currently have a price estimate of $102 per share for United’s stock, which is roughly 10% ahead of the market price. Our interactive dashboard summarizes  United Airlines’ Earnings  and also highlights our outlook for full-year 2019.  Additionally, you can see more Trefis data for Industrials & Transportation companies here. Second Quarter Highlights: United’s revenue came in as expected, improving 6% year-on-year, to $11.4 billion. Strong passenger demand during the quarter helped pushed revenue higher. It reported a net income of $1.1 billion, representing a 54% increase YoY. The airline was able to take advantage of strong consumer demand, with Mainline and Regional operations both witnessing higher demand than what was witnessed a year ago. With strong demand boosting efficiency, United was able to see its margins improve to 12% for the quarter – 4 basis points higher than the figure a year ago. Earnings per share came in at $4.21 for the quarter, beating market consensus, and well ahead of the figure of $2.48 for Q2 2018. Revenue per available seat mile (RASM) rose 2.5% year-on-year, while, cost per available seat mile (CASM) decreased 0.4% year-on-year. The fall in costs reflects United’s continued efforts to improve its on-ground logistics and reduce the costs of its operations. The increase in RASM was, by and large, a result of two factors: Firstly, an increase in ticket pricing Secondly, a larger percentage of passengers flying premium class. With lower oil prices, total fuel costs fell 2% YoY despite an increase in fuel volume. Improved margins and a consolidation in operations helped United’s cash and cash equivalents jump 89% YoY to $3.2 billion. Our takeaway for the quarter and our outlook for the year: United served over 43 million passengers during the quarter, which is a record for any second-quarter in the airline’s history. It also added 34 new routes to its operations, and among major airlines United had the second-best completion factor and second-fewest cancellations. The management has continued to focus on the strategy that it had laid out over the past couple of quarters, i.e., focusing on premium passengers, and its mainline operations. Both strategies seem to be paying dividend. United continued to add capacity during the quarter by adding multiple aircrafts to its fleet, and with load factor improving for the quarter, the company is well placed to achieve its revenue and earnings target for the year. The airlines saw domestic U.S. demand to be stronger than the demand on its international operations, with both Europe and Asia witnessing a slowdown in their economies. Latin America, on the other hand, experienced a 14% growth, breaking with the trend witnessed in Asia and Europe. We expect that Asia and Europe will trail the U.S. in terms of revenue growth for the year due to macro-economic headwinds in these regions. For the full year, we estimate that United’s revenue will grow 8% to $44.5 billion. While management’s guidance pegs earnings per share to come in at $11.50 per share, we at Trefis expect earnings per share to come in at $13.50 for the year. United continues to be a strong performer in the airline industry. We expect the airline to continue to witness similarly positive results right through the 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
    AA Logo
    Alcoa's Q2 2019: Macroeconomic Headwinds And Restructuring Charges Weigh Heavily On Revenue And Bottom Line
  • By , 7/18/19
  • tags: AA MT VALE RIO
  • Alcoa (NYSE: AA) released its Q2 2019 financial results on July 17, 2019, followed by a conference call with analysts. Key Takeaways Alcoa’s trend of a shrinking revenue base over the last four quarters continued in Q2 2019 as well, with the company missing consensus estimates on revenue and earnings. Alcoa’s revenues of $2.7 billion in Q2 2019, marked a decline of 24.3% over the previous year period. Lower revenue was driven by a decrease in alumina and aluminum shipments, along with a drop in global price levels of both these commodities on the back of excess supply. The company reported an adjusted loss of $0.01 per share in Q2 2019, compared to adjusted earnings of $1.17/share in Q2 2018. Lower earnings were primarily driven by lower production, decreased price realization, and restructuring charges related to aluminum plants in Spain. You can view our interactive dashboard – Alcoa Earnings: Performance and 2019 Forecast – and alter the assumptions to arrive at your own estimate for the company’s revenues, earnings, and stock price. In addition, here is more  Materials data . A Quick Look At Alcoa’s Key Revenue Sources Alcoa reported $13.4 billion in revenue in FY 2018. The company’s primary revenue segments are as follows: Alumina:  $5.17 billion revenue in FY 2018 (39% of total revenue). This segment consists of the Company’s worldwide refining system, which processes bauxite into alumina, which is sold to its aluminum segment and third-party customers who process it into industrial chemical products. Aluminum:  $7.24 billion revenue in FY 2018 (54% of total revenue). This segment consists of Alcoa’s worldwide smelter system. Results from the sale of aluminum powder, scrap, and excess power are also included in this segment, as well as the results of aluminum derivative contracts. Bauxite:  $0.99 billion revenue in FY 2018 (7% of total revenue). This segment consists of the Company’s global bauxite mining operations located in Australia, Brazil, Guinea, and the company also has an equity stake in a mine in Saudi Arabia. A] Revenue Trend Alumina Revenue Revenue from third-party alumina sales decreased by over 19% (y-o-y) to $864 million in Q2 2019, driven by a drop in shipments and lower price realization. Shipments are expected to remain sluggish in the near term due to lower demand for alumina with many global aluminum companies cutting down on capacity. Additionally, the global price level is also expected to remain subdued with the commodity being in excess supply since December 2018. Aluminum Revenue Aluminum revenue has continuously decreased since Q2 2018, led by lower volume. Segment revenues declined by over 26% (y-o-y) in Q2 2019, however, on a sequential basis, revenue witnessed a slight uptick. Shipments are expected to remain under pressure with the company cutting back on its forecast for global aluminum demand, driven by lower demand in both China and the world ex-China due to trade tensions and macroeconomic headwinds. 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 is expected to remain low, which could, in turn,  lead to lower segment revenue in the near term. Bauxite Revenue Over recent quarters, bauxite revenue has seen a lot of volatility due to production variation and fluctuation in demand for alumina production and other industrial applications. Segment revenue is expected to remain under pressure through 2019, driven by lower price realization and volume sales. B] Expense and Profitability Trend Total expenses decreased on a y-o-y basis in Q2 2019, due to the drop in production volume across all its segments. Cost of Goods Sold (COGS): Cost of sales as a % of revenue has been continuously increasing over the last four quarters, from 76.9% in Q2 2018 to 80.5% in Q2 2019, due to lower sales of aluminum products along with higher costs for carbon materials, energy, and maintenance related expenses. With aluminum sales expected to remain low, COGS is likely to remain elevated through 2019. Restructuring Expense: Alcoa incurred a significant restructuring charge of $370 million in Q2 2019, related to 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 a Collective Dismissal Process with the workers. Effective Tax Rate: On a sequential basis, the effective tax rate was much lower in Q2 2019, as the tax rate shot up in Q1 2019 due to an unfavorable tax impact related to the treatment of operational losses in certain jurisdictions for which no tax benefit was recognized. However, on a y-o-y basis, the tax rate was still higher, which adversely affected the bottom line. In spite of the drop in total expenses, net income margin dropped from 0.3% in Q2 2018 to -14.8% in Q2 2019, led by a sharp drop in revenues, lower volume, increase in restructuring expense, and cost of sales. Full Year Outlook For the full year, the company is expected to report revenue of $10.9 billion in 2019, marking a decrease of 18.4% over 2018, driven by lower alumina and aluminum volume sales and price realization. This is expected to be followed by a 1.6% increase in revenue to $11.1 billion in 2020, driven by a moderate turnaround in global commodity price levels and an increase in production volume. Lower shipments are expected to adversely affect the company’s profitability as the total cost would be attributed to lower volume. Also, restructuring charges related to Spanish operations are also likely to affect margins, which are expected to drop to 0.3% in 2019, from 1.7% in 2018. However, with an increase in revenue and major restructuring cost already incurred, margins are expected to improve to 3% in 2020. According to Alcoa’s Valuation done by Trefis, we have a price estimate of $30 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.
    AMZN Logo
    Why Is Shopify Stock Up 10x Since Its IPO?
  • By , 7/18/19
  • tags: AMZN SHOP
  • Shopify (NYSE:SHOP) – an e-commerce platform that allows businesses to create and run online stores – has seen its stock soar by close to 10x since its 2015 IPO. The company has two revenue streams – namely Subscriptions (which gives users access to its e-commerce platform and tools) and Merchant Services (which include payments, shipping, etc). In this analysis, we take a look at some of the trends that drove the expansion in the company’s stock price. View our interactive dashboard analysis Why Is Shopify Stock Up 10x Since Its IPO?    Additionally, you can see more Trefis  technology company data here . Shopify Is Up 10x Since Its 2015 IPO, Outperforming Amazon Which Is Up ~5x In the Same Period Stock up from ~$28 in May 2015 to ~$300 currently, implying CAGR of 82%. Revenues Up By Over 5x Over Last 4 Years Shopify’s revenues have increased from around $0.2 billion in FY’15 to about $1.1 billion in FY’18 Growing Merchant Base And Spend Per Merchant The number of merchants using Shopify has grown from 243k in 2015 to 820k in 2018. The average revenue per merchant has increased from $70 per month to about $110 per month. Growth In GMVs Transacted On Shopify Platform Outpacing Other E-Commerce Giants Gross merchandise value – the value of merchandise sold by Shopify’s customers – grew from under $8 billion in 2015 to $41 billion in 2018. This translates into a 3Y- CAGR of 75% and compares to a CAGR of 28% for Amazon (ex. AWS) and 5% for eBay. Increasing Mix Of High-Value Customers While Shopify primarily caters to small and medium businesses with its “Basic” and “Shopify” plans which cost $29 and $79, respectively, per month, the company is increasingly targeting larger enterprises with its “Plus” plans. The company had over 5300 users on Plus plans as of June 2019, compared to over 2500 users in 2017. Increasing Uptake For Merchant Solutions, Such As Payments Shopify provides additional services to merchants – ranging from payments to shipping. This revenue has grown at a CAGR of 60% in 4 years, versus about 40% for subscriptions. For instance, gross payments processed by Shopify is up almost 3x since 2016. Shopify is also investing ~$1 billion in building its own fulfillment network. Shopify’s Total Addressable Market Is Sizable Global e-commerce sales are projected to grow to about $3.5 trillion in 2019. As Shopify’s GMV stands at less than 1.5% of this number, it could allow the company significant room for growth.  
    CLF Logo
    What To Expect From Cleveland-Cliffs’ Q2 2019 Earnings Report?
  • By , 7/18/19
  • tags: CLEVELAND-CLIFFS CLF VALE RIO
  • Cleveland-Cliffs (NYSE: CLF) is expected to report its Q2 2019 financial results on July 19, 2019, followed by a conference call with analysts. Cleveland Cliffs’ revenues saw a y-o-y decline in Q1 2019, driven by a 10.7% decrease in the average realized product revenue rate. The market expects CLF to report a revenue drop of 12%-13% in Q2 2019. Lower revenue is likely to be a result of the loss of revenue from the sale of the APAC (Asia-Pacific) business in mid-2018. On a sequential basis, revenue is expected to see a sharp rise in Q2 2019 over Q1 2019, primarily due to a pick up in global iron ore prices and base effect (as Q1 is the weakest quarter for the company during a year). Earnings are expected to come in at $0.56 per share in Q2 2019, marginally higher than $0.55/share in the year-ago period, mainly due to the sale of the loss-making APAC operations, partially offset by higher maintenance, transportation, and stripping cost. We have summarized our key expectations from the announcements in our interactive dashboard – Cleveland-Cliffs’ Earnings: Performance and 2019 Forecast.   In addition, here is more  Materials data . A Quick Look At CLF’s Revenue Sources CLF reported total revenue of $2.33 billion in FY 2018. The company has only one operating segment as follows: Mining and Pelletizing: This segment contributes 100% of the company’s revenues. The Mining and Pelletizing segment is a major supplier of iron ore pellets to the North American steel industry from its mines and pellet plants located in Michigan and Minnesota. A] Revenue Trend Revenue from iron ore sales remained strong in 2018 due to higher volume and premium pricing. However, iron ore sales were down by 14% (y-o-y) in Q1 2019, mainly due to a decrease in volume and lower price realization. CLF is expected to witness a y-o-y decline in pellet volume sold in Q2 2019 due to the loss of volume from APAC, partially offset by the addition of two new contracts in 2018. Though iron ore prices remained elevated for most of 2018 following China’s new environmental policy announcement, prices declined in Q1 2019 as steel mills in China started offloading inventories and shedding capacity due to low margins, and unfavorable customer mix by CLF driven by a higher proportion of rail shipments. However, iron ore price realization is expected to improve in Q2 2019 over the previous quarter and remain around previous-year levels, driven by the recent jump in iron ore prices due to reduced supply as Vale cut its production target following the accident at one of its dams. Thus, on a year-on-year basis, stable price levels and a decrease in volume is expected to lead to a drop in iron ore revenue for CLF in Q2 2019. B] Expenses and Profitability Trend Total expense in Q2 2019 is likely to see a marginal drop over the previous year period due to decrease in interest expense and stable SG&A expense levels, offset by higher maintenance, transportation, and stripping cost. Cost of Goods Sold (COGS): Cost of sales has been continuously increasing over the last four quarters and we expect this trend to continue in Q2 2019. Higher COGS is likely to be driven by higher maintenance cost, reduced energy rebates, along with increased transportation and stripping cost. SG&A Expense: Though SG&A expense decreased sequentially in Q1 2019, it was higher on a y-o-y basis due to increased employment costs, including severance, and incentive-based compensation. SG&A expense is expected to remain flat in Q2 2019. Interest Expense: Interest expense has steadily declined over recent quarters and we expect this trend to continue in Q2 2019, driven by benefits of debt restructuring activities of 2018 and capitalized interest related to the HBI production plant and upgrades at the Northshore plant. Net income margin is expected to see a marginal uptick in Q2 2019 compared to Q2 2018, driven by lower interest outgo, flat SG&A expense, partially offset by rising cost of sales. Full Year Outlook For the full year, we expect revenue to decrease marginally from $2.33 billion in 2018 to $2.32 billion in 2019, driven by loss of volume from the sale of APAC operations, partially offset by stronger premium pricing through 2019. However, the trend is likely to reverse with revenue expected to increase to $2.34 billion in 2020, driven by growth in production and volume sold, along with the premium pricing environment projected to continue. Additionally, the new hot-briquetted iron (HBI) plant is expected to add to the company’s volume from mid-2020. Though CLF is expected to receive $117 million in tax refunds in Q3 2019, it is still much lower than the benefit of close to $490 million received in 2018, which would, in turn, translate into net income margin of 22% in 2019, much lower than 48.4% in 2018. In spite of interest savings, margins are expected to further drop to about 18% in 2020 as the company would be spending much more on the operations and logistics of the new HBI plant during the year. According to Cleveland-Cliffs’ valuation done by Trefis, we have a price estimate of $13 per share for CLF’s stock, which is higher than its current market price. We believe that premium pricing for the company’s high-grade ore, expansion of production capacity from 1.6 million metric tons to 1.9 million metric tons at the new HBI (hot-briquetted iron) plant in Great Lakes, and upgradation of its Northshore plant to replace up to 3.5 million long tons of blast furnace pellet production with DR-grade pellet production, is also expected to support growth in the stock price going forward.   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.
    DAL Logo
    Strong Passenger Flow Will Boost Delta Airlines' Profits For The Year
  • By , 7/18/19
  • tags: DAL AAL JBLU LUV
  • Delta Airlines (NYSE: DAL) is a major US airline company that serves both domestic and international routes and operates 5,400 flights to 325 destinations in 54 countries. Delta reported better-than-expected results for the second quarter late last week thanks to higher passenger flow for the quarter. With Delta witnessing fewer delays for the quarter, the airline also reported a notable improvement in operational efficiency. Per Trefis, Delta’s shares have a fair value of $62, which is in line with the current market price. Our interactive dashboard about  Delta Airlines’ Earnings  highlights changes to key metrics for the company and summarizes our outlook for the year. Summarizing Delta’s Q2 2019 Results Revenue rose to $12.5 billion and came in 20% higher than the figure for Q2 2018. Revenues largely rose on the back of three key factors: Firstly, ticket prices rose across the industry as cancellations stemming from the 737-MAX grounding took hold. Delta, which does not fly any 737-MAX, was able to take advantage of the grounding by increasing its capacity and flight frequency. Secondly, fewer flights meant higher passenger-flow for Delta. The result was a much higher revenue print than analysts had expected. It should be noted that we expect this trend to continue for a couple of quarters, or at least until the 737-MAX issue is resolved, or alternatively, regional competitors can find alternative aircraft’s to service routes that the 737-MAX had previously services. Lastly, Delta’s mainline division enjoyed a higher unit revenue as it saw more passengers choosing its premium segment. The airline has been working to improve this segment, as it looks to improve revenues and margins. The strategy clearly seems to be working, and we expect that the premium segment will continue to play a key part in Delta’s overall strategy to increase profitability in the long run. Both net income and earnings per share rose during the quarter. Key metrics RASM (Revenue per Average Seat Mile), increased by 3.8% for the quarter as ticket prices increased Load Factor improved to record levels. Delta also witnessed a reduction of 1.4% in unit costs thanks to improved operational efficiency and lower fuel costs. Delta’s fuel costs were $2.08 per gallon for the quarter – slightly lower than the figure a year ago. What’s our outlook for the rest of the year? We expect revenues for full-year 2019 to be $47.8 billion. Tailwinds for Delta include higher ticket prices (stemming from flight cancellations); higher unit revenues, as more people opt for the premium segment; and higher capacity. Furthermore, Delta has plans to add capacity both to its mainline routes and its regional service. This combined with our expectation of increased unit revenue as a result of higher premium passenger footfall, should help drive earnings per share. Our full-year outlook for earnings per share comes in at $6.30 a share.
    AXP Logo
    Will Soft Retail Sales Growth Weigh On American Express’ Q2 Results?
  • By , 7/18/19
  • tags: AXP V MA DFS
  • American Express (NYSE: AXP) is scheduled to release its second quarter results on July 19 and Trefis expects soft retail sales growth of April and May to weigh on its Q2 earnings. The company has broadly two revenue streams: Net-Interest Income, where Amex charges interest on credit card loans, and Non-Interest Income, where Amex charges transaction processing fees on billed volumes. Net-Interest Income and Non-Interest Income had a contribution of 20% and 80% of the total revenues in 2018, respectively. Billed Business and Credit Card loans are the key operational metrics that drive Amex’s top line. In the Trefis interactive dashboard, How Do American Express’ Billing Volumes Compare With Retail Sales?, you can observe quarterly trends in Amex’s billed business and compare it with trends in U.S. Retail Sales. Additionally, you can find more of our Financial Services data here. A brief look at the previous quarter results Billed volumes grew by just 4% during the first quarter as compared to strong 12% growth in the first quarter last year ( y-o-y basis ), primarily due to a decline in consumer spending during the early part of the year. The FOMC maintained the target rate for the federal funds rate at 2.25-2.5% in its January and March meetings. However, a slowdown of economic activity was reported for the first quarter in the Fed’s  March release . Amex’s Q1’19 revenues came in at $10.3 billion, increasing by 6.65% over the prior year period. Amex’s three business segments, Global Consumer Services, Global Commercial Services, and Global Network Services reported revenue increases of 9%, 6%, and 2% in Q1’19, respectively. What to expect from the second quarter results? After observing a significant drop in January and February, the U.S. Retail Sales recovered in March. However, a further decline was reported for April in the Bureau’s June release. ( Note: Data considered is not adjusted for seasonality ). Per the Bureau’s advance estimates for June, the seasonally unadjusted retail sales figures are expected to shrink by 5% sequentially. Per Trefis estimates, the U.S. retail sales, ex-auto and gas, and American Express’ U.S. billing volumes have a high positive correlation of +0.7. Considering the macro-economic uncertainty associated with tariffs against China and Europe, the Fed’s June report indicating moderate growth in economic activity, we expect retail sales growth to be softer during the second quarter. Consequently, we expect American Express to face revenue headwinds from lower U.S billing volumes (which constitutes nearly 66% of its billed business). 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
    BLK Logo
    BlackRock Should Have Done Much Better In Q2 Compared To The Unusually Slow Q1
  • By , 7/18/19
  • tags: BLK STT BK JPM C
  • BlackRock (NYSE: BLK) will report its second quarter 2019 earnings on Friday, July 19. Consensus figures point to negligible change in revenues for the world’s largest asset manager compared to the year-ago period, while EPS is expected to drop 2% y-o-y to $6.51. Per Trefis, BlackRock’s stock has a fair value of $490, which is roughly 5% higher than the current market price. We have captured trends in  BlackRock’s Earnings   over recent quarters in an interactive dashboard along with our expectations for full-year 2019. You can modify Trefis forecasts to see the impact of changes on BlackRock’s valuation. Additionally, you can see more Trefis data for financial companies here . A Quick Look At BlackRock’s Revenue Sources BlackRock reported $14.2 billion in Total Revenues in FY 2018. This included 7 revenue streams. Equity Investments: $6 billion in FY 2018 ( 42% of Total Revenues ) – Represents fees generated by BlackRock through its equity fund offerings to retail and institutional investors Fixed Income Investments: $3.1 billion in FY 2018 ( 22% of Total Revenues ) – Represents fees generated by BlackRock through its debt fund offerings to retail and institutional investors Multi-Asset Class Investments: $1.2 billion in FY 2018 ( 8% of Total Revenues ) – Fees from funds that employ a combination of equity, fixed income and alternative investments. Alternate Investments: $1.1 billion in FY 2018 ( 8% of Total Revenues ) – Represents fees generated by BlackRock through its alternative investment fund offerings (including currencies, commodities and real estate) to retail and institutional investors Cash Management: $0.6 billion in FY 2018 ( 4% of Total Revenues ) – Represents fees generated by BlackRock through its money market fund offerings to retail and institutional investors Advisory Services: $0.8 billion in FY 2018 ( 6% of Total Revenues ) – Fees from risk management, investment analytics, investment system and advisory services Distribution Fee and Other Revenue: $1.4 billion in FY 2018 ( 10% of Total Revenues ) – Fees from mutual funds for bringing in investments, sales commission, fund accounting services and transition management fees How Have BlackRock’s Revenues & Expenses Changed Over Recent Quarters? In Q1 2019, BlackRock reported Total Revenues of $3.35 billion, down by 7% y-o-y. This decline was mainly caused by 5% drop in base fees despite AUM inflows of $65 billion across indexed, actively-managed and cash management funds. Notably, Technology Services revenue grew by 11% in Q1 due to surging interest in BlackRock’s proprietary Aladdin platform. Total expenses were down by 4% y-o-y to $2.1 billion driven by lower compensation cost compared to the year-ago period. BlackRock’s Key Revenue Drivers Assets under Management (AuM): In Q1 2019, BlackRock’s AuM increased by 3% y-o-y to $6.5 trillion. Further, the company’s popular iShares ETF offering maintained its leadership position in the industry and attracted $65 billion in net inflows in the first quarter. iShares will continue to drive growth in BlackRock’s asset base going forward. Total Investment Advisory Fees: It is a key revenue driver and has contributed more than 80% of total revenues in the last five quarters. In Q1 2019, base fee was down by 5% y-o-y to $2.8 billion mainly due to lower equity valuations in 2018 and continued dollar appreciation. We expect it to improve in subsequent quarters and report a positive growth figure for full-year 2019. BlackRock’s Outlook For Full Year 2019 BlackRock is expected to report $14.6 billion in Total Revenues for 2019, which is 3% more than previous year, thanks to steady growth across its fund offerings. Further, advisory fee is expected to increase by 5% y-o-y for full-year 2019. Notably, fierce competition in the asset management industry, and the secular trend of investors shifting their cash to low-cost investment options have resulted in a steady reduction in fund expense ratios over recent years. This trend is expected to continue over the foreseeable future, and will weigh on revenues. At the same time, Total Expenses are expected to increase by 4% y-o-y due to moderate increase in Compensation Fees and General & Administrative Expenses – resulting in a marginal reduction in Net Income for the year. BlackRock has regularly invested in share repurchases to boost shareholder returns. This trend is likely to continue in subsequent quarters and help its EPS figure reach $26.92 for FY 2019. EPS of $26.92 coupled with our forward P/E multiple of 18.2x represents a price estimate of $490 – a figure roughly 5% ahead of the current market price. Do not agree with our forecast? Create your own forecast for  BlackRock’s valuation by changing the base inputs (blue dots) on our interactive dashboard. 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
    STT Logo
    Industry Headwinds Would Have Hurt State Street's Q2 Results
  • By , 7/18/19
  • tags: STT COF BK BLK C
  • State Street (NYSE: STT) will report its second quarter 2019 earnings on Friday, July 19. Consensus figures points to a 6% decline in revenues year-on-year to $2.87 billion, and a 26% drop in EPS figure to $1.39. Per Trefis, State Street’s stock has a fair value of $75, which is 35% higher than the current market price. We have captured trends in  State Street’s Earnings   over recent quarters in an interactive dashboard along with our expectations for full-year 2019. You can modify Trefis forecasts to see the impact of changes on State Street’s valuation. Additionally, you can see more Trefis data for financial companies here . A Quick Look At State Street’s Revenue Sources State Street reported $12.0 billion in Total Revenues in FY 2018. This included 2 revenue streams. Investment Management: $1.9 billion in FY 2018 ( 16% of Total Revenues ) – This division provides retail and institutional investors with a broad range of equity, fixed income, cash and alternative investment products Investment Servicing: $10.1 billion in FY 2018 ( 84% of Total Revenues ) – It could be sub-divided in 3 segments: Asset Servicing– Includes the fee earned by the bank for serving as the custodian of financial assets on behalf of institutional investors Foreign Exchange & Other Trading– It refers to the revenue from Trading Services and Securities Financing Securities Finance & Other– It consists of fees revenue from structured products business, software licensing and maintenance, among others. How Have State Street’s Revenues & Expenses Changed Over Recent Quarters? In Q1 2019, State Street reported Total Revenues of $2.9 billion, down 4% from the year-ago period. This was due to a 7% fall in Investment Management revenues and a 6% decline in Investment Servicing revenues y-o-y. Notably, Net Interest Income (NII) increased by 5% y-o-y to $673 million due to higher U.S. interest rates and disciplined pricing. Servicing fees dropped 12% compared to the previous year due to stiff industry-wide competition and lower client activity levels. Although compensation expense recorded a slight decrease in Q1, Total Expenses were marginally up due to higher information systems and communication cost. State Street’s Key Revenue Drivers Assets under Custody/Administration (AuC/A): State Street’s AuC/A figure fell from a record high of $34 trillion in Q3 2018 to just $31.6 trillion by the end of the year due to the slump in equity valuation. The figure recovered partially to $32.6 trillion in Q1 2018, and should continue to grow to return to $34 trillion by the end of this year. Assets under Management (AuM): It is the key driver of Investment Management revenues and has reported an increase of 3% y-o-y in Q1 2019.  However, Investment Management revenues were down by 7% y-o-y, as positive growth in AuM was more than offset by a decrease in management fees. Further, total Assets under Management (AUM) are expected to grow by 5.4% y-o-y in 2019. State Street’s Outlook For Full Year 2019 State Street is expected to report $11.9 billion in Total Revenues for 2019, which is at the same level as previous year. This could be attributed to a slight decrease in Investment services revenues, offset by 3% y-o-y increase in investment management. Although Asset under custody & Administration (AUC/A) is expected to grow by 3.5% y-o-y, decline in servicing fees as a % of AUC/A would reduce Asset Servicing revenues by 1% as compared to 2018. As a result, Investment Servicing revenues for 2019 are expected to be around $10 billion, which is slightly lower than 2018 figure. Total Expenses are expected to see a slight reduction in 2019 as compared to the previous year. However, Net Income would remain unchanged as a higher tax rate is likely to offset the impact of lower expenses. State Street is expected to have repurchased shares worth $300 million in the second quarter. This trend is likely to continue in subsequent quarters and help its EPS figure reach $6.45 for FY 2019. EPS of $6.45 coupled with our forward P/E multiple of 11.6x represents a price estimate of $75 for State Street’s stock – representing a potential upside of 35% for the bank’s stock. Do not agree with our forecast? Create your own forecast for State Street’s valuation by changing the base inputs (blue dots) on our interactive dashboard. 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
    COF Logo
    Increased Card Lending, Lower Charge-Off Rates Should Have Boosted Capital One's Q2 Results
  • By , 7/18/19
  • tags: COF USB BK C GS
  • Capital One (NYSE: COF) will report its Q2 2019 earnings on Wednesday, July 18. Consensus figures points to a 3% decline in revenues year-on-year to $7 billion, and a 23% drop in EPS figure to $2.86. Per Trefis, Capital One’s stock has a fair value of $100, which is roughly 10% higher than the current market price. We have analyzed trends in  Capital One’s Earnings  over recent quarters in an interactive dashboard along with our expectations for full-year 2019. You can modify Trefis forecasts to see the impact of changes on Capital One’s valuation. Additionally, you can see more Trefis data for financial services companies here . A Quick Look At Capital One’s Sources of Revenue Capital One reported $28.1 billion in Total Revenues in FY 2018. This included 3 revenue streams: Commercial Loans: $2.9 billion in FY 2018 ( 10% of Total Revenues ) – It includes products like commercial loans, middle market loans, small ticket commercial loans and specialty lending Consumer Loans: $7.2 billion in FY 2018 ( 26% of Total Revenues ) – This segment provides services like branch-based lending, deposit gathering, mortgage lending, automobile lending etc. to retail consumers Credit Cards: $17.7 billion in FY 2018 ( 63% of Total Revenues ) – It includes Capital One’s domestic consumer and small business card lending, domestic national small business lending, national closed end installment lending and international card lending businesses in Canada and the United Kingdom Other: $281 million in FY 2018 ( 1% of Total Revenues ): It includes unallocated amounts related to bank’s centralized Corporate Treasury group activities, such as management of corporate investment portfolio, asset/liability management and certain capital management activities. How Have Capital One’s Revenues & Expenses Changed Over Recent Quarters? In Q1 2019, Capital One reported Total Revenues of $7.1 billion, which is 2.5% more than the previous year. The increase was primarily driven by an 8% growth in Non-Interest Revenues y-o-y, coupled with a 2% increase in Interest-Earning Assets, although a 7 bps drop in Net Interest Margin (NIM) nullified the effect of a bulk of these gains Operating Expenses increased 3% y-o-y due to jump in Marketing Costs and Professional Services Costs. Notably, credit loss provisions saw a marginal increase of 1% as compared to year-ago period. However, the notable reduction in card charge-off rates over April and May should help loss provisions trend lower in Q2. Capital One’s Key Revenue & Expense Drivers Net Interest Margin (NIM): In Q1 2019, Capital One’s net interest margin decreased by 10 bps sequentially. The NIM figure has trended lower for three consecutive quarters, and this has hurt profitability as 82% of the company’s revenues are derived from Net Interest Income. Interest Earning Assets: Capital One is very sensitive to movement in this driver. In recent quarters, interest-earning assets have seen an upward trend due to an increase in outstanding loans. This trend is expected to continue in subsequent quarters and help the net interest income figure reach $23.6 billion in 2019. Card Charge-Off Rate: Card Charge-off Rate decreased by 13 bps y-o-y in Q1 due to improvement in economic conditions and low unemployment rates. We expect the same to continue in subsequent quarters. Capital One’s Outlook For Full Year 2019 We expect Capital One to report $28.9 billion in Total Revenues for 2019, which is 3% higher than the figure for last year. Although credit card revenues are expected to grow by 6% y-o-y followed by an uptick in commercial lending, a 2% drop in consumer lending revenues would partially offset gains. Notably, the launch of Walmart Card is expected to boost credit card revenues. Total Expenses would increase by 5% y-o-y to $21.8 billion driven by higher marketing cost and compensation expenses. This would result in a net income figure of $5.7 billion which is 6% less than the figure for the previous year. Capital One has regularly invested in share repurchase and is expected to follow the same trend in 2019. This would help its EPS figure reach $11.43 for FY 2019. The EPS of $11.43 coupled with our P/E multiple of 8.7x works out to a price estimate of $100 – representing a potential upside of 10% for the bank’s stock. Do not agree with our forecast? Create your own forecast for Capital One Valuation by changing the base inputs (blue dots) on our interactive dashboard. 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
    PM Logo
    What To Expect From Philip Morris' Q2 2019 Earnings Report?
  • By , 7/17/19
  • tags: PM MO
  • Philip Morris International (NYSE: PM) is set to release its Q2 2019 financial results on July 18, 2019, followed by a conference call with analysts. The company is expected to report revenue of $7.42 billion in Q2 2019, marking a decline of about 4% compared to Q2 2018. Lower revenue is likely to be driven by lower volume of cigarette shipments as millennials are shifting from combustible products to e-vapor, falling market share of Marlboro, and currency headwinds, partially offset by increasing sales of the company’s heated tobacco products. Earnings are expected to come in at $1.33 per share in Q2 2019, lower than $1.41 per share in the year-ago period. Lower earnings could primarily be a reflection of a decrease in revenues, Canadian tobacco litigation-related expenses, and the impact of deconsolidation of the Canadian subsidiary Rothmans, Benson & Hedges Inc. (RBH) under U.S. GAAP. You can view our interactive dashboard – Philip Morris’ Q2 2019 Earnings Expectations – and alter the assumptions to arrive at your own estimates for the company’s revenue, earnings, and stock price. In addition, here is more  Consumer Staples data . A Quick Look At PM’s Key Revenue Sources PM reported total revenue of $29.6 billion in FY 2018. The primary operating segments are as follows: Combustible Products: $25.5 billion revenue in 2018 (86% of total revenue). Under this segment, the company predominantly sells American blend cigarette brands, such as Marlboro, L&M, Parliament, Philip Morris, and Chesterfield. Reduced-Risk Products: $4.1 billion revenue in 2018 (14% of total revenue). Under this segment PM sells its flagship IQOS devices and heated tobacco units A] Revenue Trend Combustible Products Cigarette shipments have been continuously declining over the last four quarters, due to changing consumer preferences as more people are moving toward non-combustible offerings, and unfavorable foreign currency effect. We expect this trend to continue in Q2 as well. However, on a y-o-y basis, the decline in revenue in Q2 2019 is not expected to be as sharp as the volume decline, as the company would most likely resort to price increase to mitigate the effect of lower shipments. Reduced-Risk Products Shipments of heated products increased sharply by 20.2% from 9.6 billion units in Q1 2018 to 11.5 billion units in Q1 2019, due to increasing demand for non-combustible options. The discounts and promotional offers by the company are expected to drive volume growth in Q2 2019 as well. Additionally, Philip Morris’ rising market share for its heated product segment in the EU region, Japan, and Russia could drive its segment revenue growth in the medium-term. B] Expenses and Profitability Trend Total expenses are expected to increase on a y-o-y basis in Q2 2019, led by higher raw material and labor costs, litigation-related expenses, partially offset by lower interest expense. Cost of Goods Sold (COGS): Cost of sales as a % of revenue declined in Q1 2019 compared to the previous year period. We expect the metric to increase slightly (on y-o-y basis) in Q2 2019, driven by an increase in labor and shipping costs, along with higher cost of tobacco leaves. Marketing, Administration and Research Cost: This expense has increased over the last three quarters and we expect it to remain at elevated levels in Q2 2019, driven by Canadian tobacco litigation-related expense and loss on deconsolidation of RBH. Interest Expense: Interest expense is expected to see a decline on a y-o-y basis in Q2 2019 as 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. Net income margin has steadily declined over the last three quarters. We expect margins to shrink further in Q2 2019 due to projection of lower revenue and a rise in total expenses. Full Year Outlook For the full year, we expect net revenue to increase by 1.3% to $30 billion in 2019 from $29.6 billion in 2018, and further by 3.3% to $31 billion in 2020, as sales under the company’s heated tobacco segment are expected to pick up further. Additionally, the FDA nod for the IQOS product is likely to boost the company’s top line further in the medium term. However, net income margin is expected to remain flat at 26.7% in 2019, due to litigation expenses and deconsolidation losses, partially offset by lower interest and tax outgo, coupled with a gradual phasing out of the discounts on IQOS. Margins are expected to rise to 28% in 2020, led by higher revenue and increasing market share of heated tobacco products. Trefis has a price estimate of $89 per share for the company’s stock. We believe that the recent FDA nod for IQOS would help the company increase its top line and market share in the US.  Also, strong company fundamentals, rising market share of its products in major markets, and a higher dividend pay-out would support growth in the 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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    How Is Union Pacific Likely To Have Fared In Q2?
  • By , 7/17/19
  • tags: UNP CSX NSC
  • Union Pacific Corporation (NYSE: UNP) is set to release its Q2 financial performance on July 18. We expect the company to post a modest decline in revenues, primarily led by its Energy and Agriculture divisions, amid export headwinds, while Industrial and Premium could continue to see steady growth. However, earnings could grow in high single-digits, led by slight improvement in margins, and lower share count. You can look at our interactive dashboard analysis ~ What To Expect From Union Pacific’s Q2? ~ for more details. In addition, you can see more of our  data for industrial companies here. 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. Union Pacific’s Revenues Have Largely Been Trending Higher In The Recent Quarters Total Revenues for Union Pacific have largely trended higher over the recent quarters, growing from $5.5 billion in Q4 2017 to $5.8 billion in Q4 2018, before declining slightly to $5.4 billion in Q1 2019. The growth in 2018 was largely led by capacity constraints in the trucking industry, which benefited railroad companies at large. Union Pacific’s Revenue Growth In The Recent Quarters Has More Or Less Been Similar To That of Other Railroad Companies Union Pacific’s revenue grew at an average rate of 1.0% over the last 5 quarters. CSX Corporation’s revenue grew at an average rate of 1.1% during the same period. Norfolk Southern’s revenue grew at an average rate of 1.3% over the last 5 quarters. Revenue Could See Modest Decline In Q2, Led By Energy Freight Segment Agricultural freight could decline in low single-digits in Q2, given the trade tensions between the U.S., and China in particular, as it has impacted the grain exports. In fact, the segment saw 7% volume decline in Q1, and this trend could continue in Q2 as well. Energy freight could decline in low double-digits in Q2, primarily led by coal, given the company lost one of its  contracts to a competitor. In fact, the segment revenues were down 16% in Q1 for the same reason, and this trend is expected for the full 2019. Premium segment, which includes intermodal and automotive freight, saw strong growth in 2018 due to capacity constraints in the trucking industry.  2019 could also turn out well for Union Pacific, as the driver shortage continues to be a headwind for the trucking industry. Looking at Automotive, the U.S. light vehicle sales are expected to decline 2% to 16.8 million units in 2019, and this could offset some of the growth from the intermodal side. Industrial freight could grow in mid-single digits, led by chemicals, plastics, and construction related shipments. In fact, the company saw a 12% uptick in construction carloads in the previous quarter, and this trend could continue in Q2 as well, given the growth in overall construction spending. Earnings Will Likely Grow In High Single-Digits In Q2, Aided By Slight Improvement In Margins, And A Lower Share Count We expect the earnings to be $2.13 per share in Q2. This reflects 8% growth to the prior year quarter. The growth in earnings will likely be led by a slight improvement in margins, along with a lower share count. 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. Our earnings estimate is slightly below the consensus estimate of $2.16 per share.     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.
    UNH Logo
    UnitedHealth Group Looks Poised To Report Strong Q2 Results
  • By , 7/17/19
  • tags: UNH AIG HIG CVS WBA
  • UnitedHealth Group (NYSE: UNH) will report its Q2 2019 earnings on July 18. Consensus figures points to an 8% growth in revenues year-on-year to $60.59 billion, and a 16% increase in EPS figure to $3.45. Per Trefis, UnitedHealth Group’s stock has a fair value of $284, which is 5% higher than the current market price. We have analyzed trends in  UnitedHealth’s Earnings   over recent quarters in an interactive dashboard along with our expectations for full-year 2019. You can modify Trefis forecasts to see the impact of changes on UnitedHealth Group’s valuation. Additionally, you can see more Trefis data for Heath Care companies here . A Quick Look At UnitedHealth Group’s Revenue Sources UnitedHealth Group reported $286.2 billion in Total Revenues in FY 2018. This included 7 revenue streams. UnitedHealthcare Employer & Individual / Private Health Insurance: $54.8 billion in FY 2018 ( 19% of Total Revenues ) – offers individual insurance and employer sponsored health insurance plans for employees UnitedHealthcare Medicare & Retirement / Medicare: $75.5 billion in FY 2018 ( 26% of Total Revenues ) – provides healthcare services, primarily to individuals aged 65 or older UnitedHealthcare Community & State / Medicaid Managed Care: $43.4 billion in FY 2018 ( 15% of Total Revenues ) – This division provides managed care solutions and insurance coverage to beneficiaries under Medicaid program of U.S. government UnitedHealthcare Global: $9.8 billion in FY 2018 ( 3% of Total Revenues ) – It includes business from Amil S.A (Brazil) which provides health insurance and dental care plans for individuals and employees. OptumHealth: $24.1 billion in FY 2018 ( 8% of Total Revenues ) – offers health and wellness services to individual, business and government customers OptumInsight: $9.0 billion in FY 2018 ( 3% of Total Revenues ) – deals in software products along with information, advisory and outsourcing services OptumRx: $69.5 billion in FY 2018 ( 24% of Total Revenues ) – responsible for processing and paying prescription drug claims of its clients How Have UnitedHealth Group’s Revenues & Expenses Changed Over Recent Quarters? In Q1 2019, UnitedHealth Group reported Total Revenues of $60.3 billion, up by 9% y-o-y. This increase was mainly due to a 11.5% jump in UnitedHealthcare Medicare & Retirement followed by a 10.6% growth in OptumRx revenues. Further, OptumHealth revenues increased $1 billion y-o-y driven by care delivery, behavioral health and health financial services. Although Total Operating expenses was up 8% y-o-y in Q1 due to a jump in Medical cost by a figure of $2 billion, net income margin increased by 60bps on the back of strong revenues. Operating Cost as % of total revenues improved by 130 bps to 14.1% y-o-y driven by operational efficiency and deferred health insurance tax. UnitedHealth Group’s Key Revenue & Expense Drivers UnitedHealthcare Medicare & Retirement Revenues: In Q1 2019, these revenues were $21.1 billion – $2.2 billion higher than the figure a year ago. This increase could be attributed to an increase in Medicare advantage customer base by 405,000.  We expect the trend to continue in subsequent quarters and help the segment’s customer base cross 14.5 million by the end of 2019. OptumRx: It has contributed around 70% of Optum’s revenues in the last four years. In Q1 2019, the segment reported $17.8 billion in revenues, 10.6% higher y-o-y. This growth was due to a 2.1% y-o-y increase in prescription volumes and a higher mix of specialty drugs. We expect the retail prescription volume to grow steadily to cross 1.4 million by the end of 2019. UnitedHealth Group’s Outlook For Full Year 2019 UnitedHealth Group is expected to report $309.7 billion in Total Revenues for 2019, which is 8% more than 2018. This could be attributed to a 11% growth in UnitedHealthcare Medicare & Retirement revenues followed by 4% growth in UnitedHealthcare Global revenues compared to the previous year. Further, Optum revenues are expected to increase by 10% in 2019 – primarily driven by a 15% jump in OptumHealth revenues and an 8% growth in OptumRx. Net Income is likely to increase by 17% y-o-y in 2019, as higher EBITDA and lower interest expense would boost the figure to $14.5 billion. UnitedHealth Group has regularly invested in share repurchases to boost shareholder returns. This trend is likely to continue in subsequent quarters and help its EPS figure reach $14.87 for FY 2019. EPS of $14.87 coupled with our forward P/E multiple of 19.1x represents a price estimate of $284 – representing a potential upside of 5% for the bank’s stock. Do not agree with our forecast? Create your own forecast for UnitedHealth Group’s valuation by changing the base inputs (blue dots) on our interactive dashboard. 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
    HON Logo
    Industry Headwinds Would Have Weighed On Honeywell's Q2 Results
  • By , 7/17/19
  • tags: HON TXT LMT UTX
  • Honeywell (NYSE: HON) is a multinational conglomerate that produces commercial and consumer products, engineering services, and aerospace systems. The company is slated to report earnings on Thursday, July 18. Per Trefis, Honeywell’s shares have a fair value of $160, which is roughly 10% below the current market level. We capture trends in Honeywell’s Earnings over recent quarters in our interactive dashboard along with our forecast for full-year 2019. You can modify Trefis forecasts to see the impact of changes on the company’s valuation. Additionally, you can see more Trefis data for Industrials here . Business Division Overview: Aerospace Division : Honeywell Aerospace provides integrated aerospace solutions like avionics, engines, and service solutions to aircraft manufacturers, airlines, military and space companies, and airports.  The division accounts for 36% of the company’s revenue and is expected to produce high single-digit growth for the quarter. Home Building Technologies : This division is responsible for providing a range of home-building solutions, which includes energy efficiency solutions, safety solutions and maintenance solutions for home-builders and energy-related companies. The division accounts for 22% of the company’s revenue . With new home starts and sales trending lower in Q2 2019, we expect revenues for this division to trend lower for the quarter. Safety and Productivity Solutions: Honeywell’s safety products provide a range of solutions for home and industrial safety. It accounts for 10% of revenue . The division is expected to see a sizable increase in revenues for the quarter. Performance Material and Technologies: This business division offers a range of products and solutions including film and additive products, specialty chemicals, electronics materials, and renewable transport fuels. It accounts for 32% of the company’s revenue . We expect significant growth for the quarter from this division. What to expect from Honeywell’s second-quarter results: Over the past year, Honeywell has spun-off key businesses and consolidated its operations to streamline its business model. Retrenchment of businesses and consolidation of its products drove Honeywell’s margins above 20% in the first quarter, and we expect margins to remain around this level for the latest quarter. Revenue is expected to decline 14% year-over-year to $9.4 billion partly as a result of the impact of spin-offs, and partly due to broader economic effects that have resulted in slower revenue growth. The quarter saw key industries like housing (which Honeywell’s home building division depends on for revenue) slow down. Fewer housing starts for the period are expected to hurt Honeywell’s top line. In addition to the housing issue, the company’s aerospace revenue would be under pressure as a result of 737-MAX issues. Honeywell supplies mechanical systems and avionics to Boeing for the production of 737-MAX aircrafts. On a positive note, the company’s Safety division should see a sizable improvement in revenues for the quarter. Operating profit is expected to come in at $1.2 billion, increasing by 2.5% year-on-year. Earnings per share are expected to come in at $2.10 per share, which would be a decline of 1.9% year on year. The company is expected to mitigate the fall in revenue through higher margins, thereby offsetting some of the declines in revenue. Our Expectation’s Going Forward For Honeywell: Home Building Technologies: In a recent presentation at the Goldman Sachs conference, Honeywell outlined its strategy of focusing on its Home Building Technologies segment as the primary means by which it will improve revenue. The company believes the market for this segment is as large as $100 billion, and will grow at 4% annually for the foreseeable future. Honeywell has market leadership in key sub-categories, which it believe’s will help it in two key ways: firstly, it believes it can increase its market-share, and secondly, with its leadership in the sub-categories like fire, software, etc., it can acquire some small players – consolidating its position as the market leader in the segment. In general, the division is expected to play a key role in driving revenue in the coming quarters. But risks remain with slower construction, and new home starts showing a slowdown. Aerospace: While Boeing is a key customer for Honeywell, the company does not play a large role in Honeywell’s overall profitability. The aerospace division continues to see strong demand for its products, both from commercial airlines and government contracts Lower revenue from Boeing should have minimal impact on the company’s top line in the long run, as new contracts should help mitigate most of the loss of revenue from Boeing’s contracts. 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.
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    Did Elliott Management And The Oracle-Microsoft Deal Impact SAP’s Q2 Results?
  • By , 7/17/19
  • tags: SAP MSFT ORCL CRM
  • SAP  (NYSE: SAP) is slated to report its Q2 results on Thursday, July 18. The company beat consensus expectations on revenue and earnings in the previous quarter. SAP become a recent addition to activist investor Elliott Management’s portfolio, and that is likely to have a material impact on the company’s performance in the near as well as long term. SAP expects to grow by attracting customers moving away from Oracle, and the company had shared expectations of expanding its operating margin by 5% in the next three years. As a part of the earnings announcement, we will be looking for management commentary about the potential impact of the Oracle – Microsoft deal for interoperability of their clouds. Notably, SAP also has an alliance with Microsoft to develop a common data model. Per Trefis estimates, SAP’s shares have a fair value of $121, which is 10% below the current market price. Our interactive dashboard on   SAP’s Earnings   highlights the changes in key metrics over recent quarters and captures our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation. Additionally, you can see more Trefis  technology company data here . A Quick Look At SAP’s Revenue Sources SAP makes money selling enterprise software and related support services. The company reports its revenues in three segments ($28.3 billion in 2018): Cloud subscriptions and support ($5.7 billion in 2018, 20% of total revenue ): Revenue is derived from subscription SAP’s software, cloud platform, hosting management services and support for subscription customers. Software licence ($5.3 billion in 2018, 19% of total revenue ): Revenue is derived from the sale of on-premise software. Software support ($12.6 billion in 2018, 44% of total revenue ): Revenue is derived from the sale of support services provided for on-premise software. Services ($4.7 billion in 2018, 17% of total revenue ): Revenue is derived from the sale of consulting, training and other support services. Summarizing Fiscal Q1 Performance, And Highlighting Our Expectations For Q2: Total revenue : Over the last two years (2016-18), revenue reached $28.3 billion in 2018 from $24.4 billion in 2016. In Q1 2019, the revenue was $6.9 billion (14.9% y-o-y). We expect 2019 revenue to reach $31.5 billion (11.5% y-o-y) Cloud Subscriptions and Support : Over the last two years (2016-18), revenue reached $5.7 billion in 2018 from $3.3 billion in 2016. In Q1 2019, the revenue was $1.8 billion (44.2% y-o-y). We expect Q2 2019 revenue to reach $1.9 billion (36.2 % y-o-y) and 2019 revenue to reach $7.7 billion (35% y-o-y) Software Licenses : Over the last two years (2016-18), revenue reached $5.3 billion in 2018 from $5.4 billion in 2016. In Q1 2019, the revenue was $0.7 billion (3.2% y-o-y). We expect 2019 revenue to reach $5.6 billion (5.5% y-o-y) Software Support : Over the last two years (2016-18), revenue reached $12.6 billion in 2018 from $11.7 billion in 2016. In Q1 2019, the revenue was $3.2 billion (6% y-o-y). We expect 2019 revenue to reach $13.3 billion (5.5% y-o-y) Services : Over the last two years (2016-18), revenue reached $4.7 billion in 2018 from $4 billion in 2016. In Q1 2019, the revenue was $1.2 billion (14.3% y-o-y). We expect 2019 revenue to reach $4.9 billion (5.5% y-o-y) We forecast SAP’s EPS figure for full-year 2019 to be $5.16. Taken together with our P/E multiple of 21x for the company, this works out to a $121 price estimate for SAP’s stock, which is roughly 10% below the current market price. Do not agree with our forecast? Create your own forecast for SAP’s valuation by changing the base inputs (blue dots) on our interactive dashboard.
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    Interest Income Gains To Drive E-Trade’s Q2 Results
  • By , 7/17/19
  • tags: ETFC AMTD SCHW
  • E-Trade (NASDAQ: ETFC) is expected to release its second quarter results on July 18 and Trefis expects interest income to lift E-Trade’s top line despite an overall decline in market volatility over the last three months. In the Trefis interactive dashboard, What To Expect From E-Trade’s Q2 Results? you can observe recent trends in E-Trade’s operational metrics and compare it with the quarterly trends in revenues and expenses. Additionally, you can find more of our Financial Services data here. A Quick Look at E-Trade’s Revenue Sources E-Trade reported $2.8 billion in Total Revenues for full-year 2018. This included four revenue streams: Net Interest Revenue: $1.8 billion in FY2018 ( 64% of Total Revenues ). It is largely earned on investment securities and margin receivables Fees and Service Charges: $431 billion in FY2018 ( 15% of Total Revenues ). The company charges for order flow, sweep deposits in money market accounts, advisor management, mutual funds, and foreign exchange services. Trading Commissions: $498 million in FY2018 ( 17% of Total Revenues ). A trading commission is charged for executing trades in stocks, bonds, options, futures, etc. Other Revenues: $98 million in FY2018 ( 3% of Total Revenues ). It includes income from stock plan administration software and services to corporate clients. A brief look at the previous quarter performance In Q1, E-Trade reported $755 million of net revenues, growing by 3% sequentially. Revenue increases were primarily driven by net interest income, which witnessed a 2% sequential increase. An 11% drop in margin receivables was offset by a 4% growth in investment securities during the first quarter.  What to expect from the second quarter results? Per the operational data released by E-Trade for April and May, margin receivables and average DARTs have been fairly stable. This is opposed to other brokerages where average DARTs for May fell by nearly 10% as compared to January. Considering net interest income as a driver, we expect E-Trade to report net revenues that are largely identical to the figure for the previous quarter. We expect E-Trade to report an EPS figure of $4.16 for FY 2019. This EPS figure coupled with our P/E multiple of 12x works out to a price estimate of $49 for E-Trade’s stock – a figure 10% ahead of the current market price. What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs For  CFOs and Finance Teams  |  Product, R&D, and Marketing Teams More Trefis Data Like our charts? Explore  example interactive dashboards  and create your own