Daniel Cullinane CPA

25 Plaza 5 25th fl Jersey City NJ                                          phone 732-516-1648 fax 732-516-9778

MBA Taxation

Daniel Cullinane CPA

2500 Plaza 5 25th fl  Jersey City NJ 07311                                                          phone 732-516-1648  fax 732-516-9778

                 MBA TAXATION                                                                                                         

Copyright ©​ Daniel Cullinane CPA.


Earnings season for the fourth quarter is bringing some very mixed fanfare for investors at a time when economic numbers are slowing and earnings growth is expected to be easing. Just don’t bother telling that to the banks. After getting pummeled during the December stock sell-off, all of a sudden the value buyers are coming out in droves to bid up the big banks and many of the financial stocks again.

24/7 Wall St. has been tracking its earnings season scorecard on the major earnings announcements from companies worth billions of dollars and which also have billions of dollars in assets. One issue which routinely gets used to evaluate a bank and finance stock is the company’s share price versus its book value. The logic should be simple enough here — book value is that starting point any would-be acquirer would theoretically begin their valuation process.
































In the fourth quarter, despite the massive sell-off and volatility in December, many of the major banks never did trade under their stated and tangible book values. J.P. Morgan Chase & Co. (NYSE: JPM) remained mostly unscathed and has remained consistently above book value per share, but even the bad public image of Wells Fargo & Co. (NYSE: WFC) has not created a situation where its stock has come back to within striking distance of its book value per share. If you were insightful and aggressive enough there was a two-week period in December malaise that Bank of America Corporation could be purchased at and just under book value per share, but the book value of $25.13 at the end of 2018 is now versus a $29.30 share price.

24/7 Wall St. has tracked multiple large banks which still have share prices that are valued under or very close to their stated book values per share even after the gains that were seen in the stock market and in the financial services stocks in the last week. It is important to understand that there is a stated book value based on a simple balance sheet review, and then there is a tangible book value which removes non-physical items from the balance sheet such as goodwill and intangible assets such as patents, copyrights, trademarks, trade names, a perceived value of customer relationships, trade secrets and the like.

In an effort to streamline the banks and financials trading at or under book value, 24/7 Wall St. has shown the share price as of Friday’s close (1/18/2019) and compared it to the stated book value. Tangible book value has also been included if available. We have also shown the performance of the underlying shares in the last week and year-to-date, and shown consensus analyst target prices from Thomson Reuters and the respective 52-week trading ranges.

Here are the 4 larger banks and financial stocks which have already reported earnings for the fourth quarter of 2018 and which are still under or very close to the stated book values per share.

Citigroup

Citigroup Inc. (NYSE: C) had some mixed earnings numbers around revenues, but Wall Street rewarded it with big gains all week. Its shares closed up 1% at $63.12 on Friday, but it was down at about $57.30 on Monday morning when the reaction was less than stellar. Citigroup ended 2018 with a stated book value of $75.05 per share and a tangible book value of $63.79 per share. Citi’s consensus analyst target price is $76.15 and its 52-week range is $48.42 to $80.70. Its shares were last seen up 11% in the last week and up 21% just since the end of 2018.

Goldman Sachs

Goldman Sachs Group Inc. (NYSE: GS) had been under deep pressure in much of December and in January due to scandals overseas and due to a larger perceived drag on its trading operations as the markets were beaten down in December. Goldman Sachs shares went under $155 during the December lows and kept hitting 52-week lows, but its stock was trading at closer to $178 prior to its earnings release. The stock closed out this last week at $202.54 after rising almost $20 on the actual earnings report this week. It’s hard to fathom that its shares have rallied more than 30% from the December lows, but Goldman Sachs reported that its 2018 book value was up over 14% from a year earlier at $207.36 per share. Its tangible book value per common share rose by over 15% in the year to $196.64 per share. Goldman Sachs shares were up 14% over the prior week and its stock price was last seen up 21% year-to-date, and it has a 52-week range of $151.70 to $275.31. The current consensus analyst target price was last seen at $226.91. For a point of reference, the consensus price targets have come down handily during its more recent troubles as that target price was $253.30 at the start of 2019 and almost $275 just at the start of November.

Morgan Stanley

Morgan Stanley (NYSE: MS) closed up 2.7% at $43.69 on Friday for a slight premium to its $42.20 book value per share. The market gain and continued re-interest in the financial sector was the driver here, because its stock was trading at $42.00 just a day earlier. This book value per share is compared to $40.67 at the end of September 2018 and to $38.52 at the end of 2017. Morgan Stanley’s tangible book value per share was at $36.99 on the last day of 2018, versus $35.50 at the end of September and versus $33.46 at the end of 2017. Morgan Stanley has a 52-week range of $36.74 to $59.38 and a consensus analyst target price of $52.50. Its shares have risen by almost 5% in the last week and 10% so far in 2019.

PacWest

PacWest Bancorp (NASDAQ: PACW) is more of a regional bank, but its market cap is still almost $5 billion. Its year-end book value was at $39.17 per share, and Friday’s gain of 2.5% to $39.55 took the share price just over that number after bating earnings expectations late in the week. Analysts had a consensus analyst target price of $44.25 on last look and its 52-week range is $31.16 to $55.86. One important issue to consider here is that the tangible book value, the bare bones valuation model, was down at $18.02. Its stated book value was $38.46 per share and the tangible number was $17.28 per share one quarter earlier. Those figures were $38.65 and $18.28 per share, respectively, a year earlier. PacWest’s shares were last seen up 9% over the prior week and up almost 19% since the end of 2018

Earnings season for the fourth quarter is bringing some very mixed fanfare for investors at a time when economic numbers are slowing and earnings growth is expected to be easing. Just don’t bother telling that to the banks. After getting pummeled during the December stock sell-off, all of a sudden the value buyers are coming out in droves to bid up the big banks and many of the financial stocks again.

24/7 Wall St. has been tracking its earnings season scorecard on the major earnings announcements from companies worth billions of dollars and which also have billions of dollars in assets. One issue which routinely gets used to evaluate a bank and finance stock is the company’s share price versus its book value. The logic should be simple enough here — book value is that starting point any would-be acquirer would theoretically begin their valuation process.In the fourth quarter, despite the massive sell-off and volatility in December, many of the major banks never did trade under their stated and tangible book values. J.P. Morgan Chase & Co. (NYSE: JPM) remained mostly unscathed and has remained consistently above book value per share, but even the bad public image of Wells Fargo & Co. (NYSE: WFC) has not created a situation where its stock has come back to within striking distance of its book value per share. If you were insightful and aggressive enough there was a two-week period in December malaise that Bank of America Corporation could be purchased at and just under book value per share, but the book value of $25.13 at the end of 2018 is now versus a $29.30 share price.

24/7 Wall St. has tracked multiple large banks which still have share prices that are valued under or very close to their stated book values per share even after the gains that were seen in the stock market and in the financial services stocks in the last week. It is important to understand that there is a stated book value based on a simple balance sheet review, and then there is a tangible book value which removes non-physical items from the balance sheet such as goodwill and intangible assets such as patents, copyrights, trademarks, trade names, a perceived value of customer relationships, trade secrets and the like.

In an effort to streamline the banks and financials trading at or under book value, 24/7 Wall St. has shown the share price as of Friday’s close (1/18/2019) and compared it to the stated book value. Tangible book value has also been included if available. We have also shown the performance of the underlying shares in the last week and year-to-date, and shown consensus analyst target prices from Thomson Reuters and the respective 52-week trading ranges.

Here are the 4 larger banks and financial stocks which have already reported earnings for the fourth quarter of 2018 and which are still under or very close to the stated book values per share.

Citigroup

Citigroup Inc. (NYSE: C) had some mixed earnings numbers around revenues, but Wall Street rewarded it with big gains all week. Its shares closed up 1% at $63.12 on Friday, but it was down at about $57.30 on Monday morning when the reaction was less than stellar. Citigroup ended 2018 with a stated book value of $75.05 per share and a tangible book value of $63.79 per share. Citi’s consensus analyst target price is $76.15 and its 52-week range is $48.42 to $80.70. Its shares were last seen up 11% in the last week and up 21% just since the end of 2018.

Goldman Sachs

Goldman Sachs Group Inc. (NYSE: GS) had been under deep pressure in much of December and in January due to scandals overseas and due to a larger perceived drag on its trading operations as the markets were beaten down in December. Goldman Sachs shares went under $155 during the December lows and kept hitting 52-week lows, but its stock was trading at closer to $178 prior to its earnings release. The stock closed out this last week at $202.54 after rising almost $20 on the actual earnings report this week. It’s hard to fathom that its shares have rallied more than 30% from the December lows, but Goldman Sachs reported that its 2018 book value was up over 14% from a year earlier at $207.36 per share. Its tangible book value per common share rose by over 15% in the year to $196.64 per share. Goldman Sachs shares were up 14% over the prior week and its stock price was last seen up 21% year-to-date, and it has a 52-week range of $151.70 to $275.31. The current consensus analyst target price was last seen at $226.91. For a point of reference, the consensus price targets have come down handily during its more recent troubles as that target price was $253.30 at the start of 2019 and almost $275 just at the start of November.

Morgan Stanley

Morgan Stanley (NYSE: MS) closed up 2.7% at $43.69 on Friday for a slight premium to its $42.20 book value per share. The market gain and continued re-interest in the financial sector was the driver here, because its stock was trading at $42.00 just a day earlier. This book value per share is compared to $40.67 at the end of September 2018 and to $38.52 at the end of 2017. Morgan Stanley’s tangible book value per share was at $36.99 on the last day of 2018, versus $35.50 at the end of September and versus $33.46 at the end of 2017. Morgan Stanley has a 52-week range of $36.74 to $59.38 and a consensus analyst target price of $52.50. Its shares have risen by almost 5% in the last week and 10% so far in 2019.

PacWest

PacWest Bancorp (NASDAQ: PACW) is more of a regional bank, but its market cap is still almost $5 billion. Its year-end book value was at $39.17 per share, and Friday’s gain of 2.5% to $39.55 took the share price just over that number after bating earnings expectations late in the week. Analysts had a consensus analyst target price of $44.25 on last look and its 52-week range is $31.16 to $55.86. One important issue to consider here is that the tangible book value, the bare bones valuation model, was down at $18.02. Its stated book value was $38.46 per share and the tangible number was $17.28 per share one quarter earlier. Those figures were $38.65 and $18.28 per share, respectively, a year earlier. PacWest’s shares were last seen up 9% over the prior week and up almost 19% since the end of 2018

Earnings season for the fourth quarter is bringing some very mixed fanfare for investors at a time when economic numbers are slowing and earnings growth is expected to be easing. Just don’t bother telling that to the banks. After getting pummeled during the December stock sell-off, all of a sudden the value buyers are coming out in droves to bid up the big banks and many of the financial stocks again.

24/7 Wall St. has been tracking its earnings season scorecard on the major earnings announcements from companies worth billions of dollars and which also have billions of dollars in assets. One issue which routinely gets used to evaluate a bank and finance stock is the company’s share price versus its book value. The logic should be simple enough here — book value is that starting point any would-be acquirer would theoretically begin their valuation process.In the fourth quarter, despite the massive sell-off and volatility in December, many of the major banks never did trade under their stated and tangible book values. J.P. Morgan Chase & Co. (NYSE: JPM) remained mostly unscathed and has remained consistently above book value per share, but even the bad public image of Wells Fargo & Co. (NYSE: WFC) has not created a situation where its stock has come back to within striking distance of its book value per share. If you were insightful and aggressive enough there was a two-week period in December malaise that Bank of America Corporation could be purchased at and just under book value per share, but the book value of $25.13 at the end of 2018 is now versus a $29.30 share price.

24/7 Wall St. has tracked multiple large banks which still have share prices that are valued under or very close to their stated book values per share even after the gains that were seen in the stock market and in the financial services stocks in the last week. It is important to understand that there is a stated book value based on a simple balance sheet review, and then there is a tangible book value which removes non-physical items from the balance sheet such as goodwill and intangible assets such as patents, copyrights, trademarks, trade names, a perceived value of customer relationships, trade secrets and the like.

In an effort to streamline the banks and financials trading at or under book value, 24/7 Wall St. has shown the share price as of Friday’s close (1/18/2019) and compared it to the stated book value. Tangible book value has also been included if available. We have also shown the performance of the underlying shares in the last week and year-to-date, and shown consensus analyst target prices from Thomson Reuters and the respective 52-week trading ranges.

Here are the 4 larger banks and financial stocks which have already reported earnings for the fourth quarter of 2018 and which are still under or very close to the stated book values per share.

Citigroup

Citigroup Inc. (NYSE: C) had some mixed earnings numbers around revenues, but Wall Street rewarded it with big gains all week. Its shares closed up 1% at $63.12 on Friday, but it was down at about $57.30 on Monday morning when the reaction was less than stellar. Citigroup ended 2018 with a stated book value of $75.05 per share and a tangible book value of $63.79 per share. Citi’s consensus analyst target price is $76.15 and its 52-week range is $48.42 to $80.70. Its shares were last seen up 11% in the last week and up 21% just since the end of 2018.

Goldman Sachs

Goldman Sachs Group Inc. (NYSE: GS) had been under deep pressure in much of December and in January due to scandals overseas and due to a larger perceived drag on its trading operations as the markets were beaten down in December. Goldman Sachs shares went under $155 during the December lows and kept hitting 52-week lows, but its stock was trading at closer to $178 prior to its earnings release. The stock closed out this last week at $202.54 after rising almost $20 on the actual earnings report this week. It’s hard to fathom that its shares have rallied more than 30% from the December lows, but Goldman Sachs reported that its 2018 book value was up over 14% from a year earlier at $207.36 per share. Its tangible book value per common share rose by over 15% in the year to $196.64 per share. Goldman Sachs shares were up 14% over the prior week and its stock price was last seen up 21% year-to-date, and it has a 52-week range of $151.70 to $275.31. The current consensus analyst target price was last seen at $226.91. For a point of reference, the consensus price targets have come down handily during its more recent troubles as that target price was $253.30 at the start of 2019 and almost $275 just at the start of November.

Morgan Stanley

Morgan Stanley (NYSE: MS) closed up 2.7% at $43.69 on Friday for a slight premium to its $42.20 book value per share. The market gain and continued re-interest in the financial sector was the driver here, because its stock was trading at $42.00 just a day earlier. This book value per share is compared to $40.67 at the end of September 2018 and to $38.52 at the end of 2017. Morgan Stanley’s tangible book value per share was at $36.99 on the last day of 2018, versus $35.50 at the end of September and versus $33.46 at the end of 2017. Morgan Stanley has a 52-week range of $36.74 to $59.38 and a consensus analyst target price of $52.50. Its shares have risen by almost 5% in the last week and 10% so far in 2019.

PacWest

PacWest Bancorp (NASDAQ: PACW) is more of a regional bank, but its market cap is still almost $5 billion. Its year-end book value was at $39.17 per share, and Friday’s gain of 2.5% to $39.55 took the share price just over that number after bating earnings expectations late in the week. Analysts had a consensus analyst target price of $44.25 on last look and its 52-week range is $31.16 to $55.86. One important issue to consider here is that the tangible book value, the bare bones valuation model, was down at $18.02. Its stated book value was $38.46 per share and the tangible number was $17.28 per share one quarter earlier. Those figures were $38.65 and $18.28 per share, respectively, a year earlier. PacWest’s shares were last seen up 9% over the prior week and up almost 19% since the end of 2018

​MESSENGER

​CALLS FOR FTC 

​JANUARY NEWSLETTER 2

​The North American International Auto Show in Detroit is one of the world’s largest venues for manufacturers to launch new cars and for industry CEOs to explain their visions for the year ahead. The period over which the show has been open has been a rough one for Ford Motor Co. (NYSE F).

An announced but loose joint venture with Volkswagen and the planned introduction of an electric version of its F-Series were not enough to offset poor earnings results that offered no hard 2019 projections. Ford CEO James Hackett, who will be on the job two years in May, may not make the anniversary.

Ford’s performance during the show did not help shareholder sentiment. The stock is still down for the past year, off 29%. The Ford family, which owns a massive block of the company’s shares, can’t be happy. Ford is led by family scion William Clay Ford Jr., who has the title of executive chairman. At 61, he could take over Ford and attempt to turn it in a better direction. He was CEO from 2001 to 2006.

First among the events that bothered outsiders was the Volkswagen announcement. Ford described it as a critical step forward as it tries to get its house outside the United States in order. Ford framed the deal as the “first formal agreement in a broad alliance.” Based on comments by both Hackett and VW’s chief, Dr. Herbert Diess, there may not be a second.


24/7 Wall St.
Deutsche Bank Extremely Cautious on Semiconductors: 5 Top 2019 Picks

The two companies said, “The alliance will drive significant scale and efficiencies and enable both companies to share investments in vehicle architectures that deliver distinct capabilities and technologies.” This is far from specific. The broad future plans were even less so:

In addition, Volkswagen and Ford have signed a memorandum of understanding to investigate collaboration on autonomous vehicles, mobility services and electric vehicles and have started to explore opportunities. Both companies also said they were open to considering additional vehicle programs in the future. The teams will continue working through details in the coming months.

Ford warned that it missed its fourth-quarter numbers. Earnings of $0.30 per share were two cents short of the most recent consensus expectations. The Wall Street Journal reported that Ford Chief Financial Officer Bob Shanks said in an interview, “We’re very confident about the things we know we can control … but at this point we want to be a little prudent with how specific we are.” He was referring to 2019 expectations.

Finally, Ford will launch an electric version of its F-150, the best-selling vehicle in America. Company management couldn’t say when the vehicle will be available.

​One of the biggest challenges in protecting privacy is that many of the violations are invisible. For example, you might have bought a product from an online retailer—something most of us have done. But what the retailer doesn’t tell you is that it then turned around and sold or transferred information about your purchase to a “data broker”—a company that exists purely to collect your information, package it and sell it to yet another buyer.

The trail disappears before you even know there is a trail. Right now, all of these secondary markets for your information exist in a shadow economy that’s largely unchecked—out of sight of consumers, regulators and lawmakers…

Meaningful, comprehensive federal privacy legislation should not only aim to put consumers in control of their data, it should also shine a light on actors trafficking in your data behind the scenes. Some state laws are looking to accomplish just that, but right now there is no federal standard protecting Americans from these practices. That’s why we believe the Federal Trade Commission should establish a data-broker clearinghouse, requiring all data brokers to register, enabling consumers to track the transactions that have bundled and sold their data from place to place, and giving users the power to delete their data on demand, freely, easily and online, once and for all.

​Publicly, Apple and Facebook have brawled over privacy issues, with Apple CEO Tim Cook and Facebook chief Mark Zuckerberg trading high-profile barbs over the past year. But behind the scenes the two companies are fighting what may be a more consequential battle for leadership in messaging, vying for customers’ attention and loyalty through Facebook’s Messenger and WhatsApp, and Apple iMessage…

iMessage has an estimated 1.3 billion active users, based on Apple’s most recent disclosure of total active devices that have the service preinstalled. Facebook Messenger alone, meanwhile, has already grown to more than 1.3 billion monthly active users as of September 2017. WhatsApp, the messaging leader in many parts of the world, has 1.5 billion users, and Instagram, which also includes messaging, has 1 billion users. Some of those are likely to have downloaded more than one of the Facebook apps.

Many of those Facebook-owned apps were downloaded on Apple’s iOS devices. Data from analytics company Sensor Tower shows that in the U.S. around 40% of new downloads of Messenger since 2014 and 46% of new downloads in the last year were on iOS devices.

“Our biggest competitor by far is iMessage, and in important countries like the U.S. where the iPhone is strong, Apple bundles iMessage as a default texting app and it is still ahead,” Mr. Zuckerberg said in a rare comment about the competition on Facebook’s most recent quarterly earnings call.

My take: In The Information’s comment stream, Stewart Alsop says what I was going to say, only better:

From the user’s point of view, both products suck. iMessage does not sync well on Apple’s own devices, which is supposed to be a key benefit. And Facebook Messenger purposely does not integrate with other communications apps and is hard to use for sharing or forwarding. Both ignore email as an adjacent app. (And I didn’t even mention LinkedIn Messaging!) Does the battle between two titans actually involve making a better product for consumers?

​PROBLEMS