Copyright © Daniel Cullinane CPA.
STRONG Q 4
Procter & Gamble Co. (NYSE: PG) released its fourth-quarter earnings report before the markets opened on Wednesday. The company said that it had $1.25 in earnings per share (EPS) and $17.44 billion in revenue, which compares with consensus estimates of $1.21 in EPS and revenue of $17.15 billion. In the same period of last year, the consumer products giant said it had EPS of $1.19 on $17.39 billion in revenue.
During the most recent quarter, Procter & Gamble returned $2.6 billion of cash to shareholders via nearly $1.9 billion of dividend payments and $0.8 billion of common stock repurchases.
In terms of its segments, the firm reported:
Beauty net sales increased 4% year over year to $3.36 billion.
Grooming net sales decreased 9% to $1.62 billion.
Health Care net sales came in at $2.22 billion.
Fabric & Home Care net sales increased 2% to $5.56 billion.
Baby, Feminine & Family Care net sales decreased 1% to $4.56 billion.
Corporate net sales increased 2% to $129 million.
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Looking ahead to the 2019 full year, the company expects to see organic sales growth in the range of 2% to 4% and core EPS growth of roughly 8%. Consensus estimates call for $4.74 in EPS and $68.89 billion in revenue for the year.
David Taylor, board chair, president and CEO, commented:
We delivered strong organic sales in the second quarter, building on our first quarter momentum, which enables us to increase our outlook for the year. Our focus on superiority, productivity and improving P&G’s organization and culture is delivering improved results despite a challenging competitive and macroeconomic environment.
Shares of Procter & Gamble closed Tuesday at $90.44, in a 52-week range of $70.73 to $96.90. The consensus analyst price target is $93.33. Following the announcement, the stock was up about 4% at $94.19 in early trading indications Wednesday.
Apple dismissed just over 200 employees this week from Project Titan, its stealthy autonomous vehicle group, people familiar with the matter told CNBC.
An Apple spokesperson acknowledged the lay-offs and said the company still sees opportunity in the space…
“Some groups are being moved to projects in other parts of the company, where they will support machine learning and other initiatives, across all of Apple,” the spokesperson said.
“We continue to believe there is a huge opportunity with autonomous systems, that Apple has unique capabilities to contribute, and that this is the most ambitious machine learning project ever,” they added.
My take: There’s something going on here. This is not the first time Apple has had to rethink its autonomous systems efforts. But that’s no excuse for Mashable’s hot take:
Dream of Apple Car may be dead as company dismisses 200 employees
SALES OF TOP TEN VEHICLES
EARNINGS SAVED BY TRUCK SALES
Ford Motor Co. (NYSE: F) reported fourth-quarter and full-year 2018 results after markets closed Wednesday. For the quarter, the automaker posted adjusted diluted earnings per share (EPS) of $0.30 on revenues of $41.8 billion. In the same period a year ago, the company reported EPS of $0.39 on revenues of $38.5 billion. Analysts were looking for EPS of $0.32 and revenues of $37.01 billion for the most recent period.
For the full year, Ford’s adjusted EPS totaled $1.30 on revenue of $160.3 billion, compared with 2017 EPS of $1.78 and revenue of $156.8 billion. Consensus estimates called for EPS of $1.33 and revenue of $146.65 billion. Auto sales totaled $148.29 billion for 2018, up by $2.64 billion (1.8%) year over year. GAAP EPS dropped from $1.93 to $0.92.
In the fourth quarter, revenue rose by 1%, but all other financial metrics were lower: net income dipped 2.6% compared with the fourth quarter of 2017 for a net loss of $100 million, net income margin fell 6.4%, diluted GAAP EPS fell by $0.66 and cash flows from operations dipped by $1.8 billion to $1.4 billion.
North American pretax income in the fourth quarter rose by $200 million to $2 billion, and revenue rose by $1.7 billion to $25.8 billion. The company attributed the increases to “healthy improvement in market factors due to favorable mix and higher net pricing.” Translation: We sold more than 900,000 F-Series pickups in North America. Globally, Ford sold more than 1 million F-Series trucks in 2018
Weaker quarterly performance was blamed on poor performance in China and Europe, but that should have been no surprise. The writing has been on the wall for months. Unit sales fell by 37% in China last year and by 3.2% in Europe. Even North American sales were lower, although pretax earnings of $1.96 billion carried the company to a quarterly total of $1.13 billion worldwide.
CEO Jim Hackett said:
We have consistently laid the foundation for the global redesign of our business, clearly investing to sharpen our competitiveness so we can better serve customers and invest for the future. Ford enters 2019 with a clear vision, a solid plan, and we are now in execution mode.
Ford did not publish a forecast for 2019 but did reiterate longer-term targets for a pretax margin of 8% or better, a return on invested capital in the high teens, and an adjusted debt to EBITDA ratio of less than 2.5%. In a preview of 2018 results released a week ago, Ford also declined to provide a forecast for 2019.
Analysts have forecast adjusted EPS for the first quarter at $0.28 on revenue of $37.66 billion. For the full year, the consensus estimates call for EPS of $1.30 on revenue of $145.45 billion.
In premarket trading Thursday, shares were up two cents at $8.36, in a 52-week range of $7.41 to $12.15. The consensus 12-month price target on the stock was $9.892 before the earnings report was released. The dividend yield on the stock is 7.19%.
When Comcast Corp. (NASDAQ: CMCSA) reported its fourth-quarter financial results before the markets opened on Wednesday, the company said that it had $0.64 in earnings per share (EPS) and $27.85 billion in revenue. Consensus estimates had called for $0.62 in EPS and $27.55 billion in revenue. In the same period of last year, Comcast said it had EPS of $0.49 and revenue of $21.91 billion.
During the most recent quarter, advertising revenue increased 27.7%, primarily reflecting an increase in political advertising revenue. Excluding political advertising revenue, advertising revenue increased 3.1%.
Business services revenue increased 9.5%, primarily driven by increases in the number of customers receiving services. Other revenue increased 19.1%, primarily driven by the timing of X1 licensing revenue. Video revenue decreased 1.6%, primarily reflecting a decrease in the number of residential video customers. Voice revenue decreased 3.0%, primarily due to a decrease in the number of residential voice customers.
Total customer relationships increased by 258,000 to 30.3 million in the fourth quarter of 2018. Residential customer relationships increased by 229,000 and business customer relationships increased by 29,000.
Comcast did not offer any guidance in the report. However, the consensus estimates are $0.64 in EPS and $26.93 billion in revenue for the first quarter of 2019.
Brian L. Roberts, board chair and chief executive of Comcast, commented:
Highlighting a few of our accomplishments during the past year, Comcast Cable’s customer relationship growth accelerated, driven by our 13th consecutive year of over 1 million broadband net additions. 2018 Cable EBITDA growth was the highest in seven years, underscoring the financially attractive transition of our business to connectivity. NBCUniversal had a great year, fueled by double-digit growth in our TV businesses, reflecting our terrific broadcasts of big events like the NFL’s Super Bowl LII, the 2018 Olympics, and the FIFA World CupTM, and overall robust demand for our leading sports, news and entertainment content.
Shares of Comcast were last seen up more than 5% at $36.98, in a 52-week range of $30.43 to $44.00. The consensus analyst price target is $44.07.
Starbucks Corp. (NASDAQ: SBUX) is scheduled to release its fiscal first-quarter financial results after the markets close on Thursday. The consensus estimates call for $0.65 in earnings per share (EPS) and $6.49 billion in revenue. In the same period of last year, the coffee chain said it had $0.65 in EPS and $6.07 billion in revenue.
In the most recent quarter, the coffee giant announced that it has plans to expand coffee delivery across the United States with UberEats as part of a broader strategy to try to reach more customers. Starbucks began testing delivery in Miami with UberEats in September and will begin offering it in nearly a quarter of its more than 8,000 U.S. company-operated stores in 2019.
Also during the quarter, Starbucks announced that it had plans to lay off approximately 5% of its global corporate workforce (not including employees who work in its cafes) as it seeks to become a more nimble company. As for a specific number, the firm said it will lay off 350 employees. The areas affected include marketing, creative, product, technology and store development.
Overall, Starbucks has performed more or less in line with the broad markets, with its stock up about 3% year to date. In the past 52 weeks, the stock is actually up closer to 8%.
A few analysts weighed in on Starbucks ahead of the report:
BMO Capital Markets has a Market Perform rating and a $60 price target.
Goldman Sachs has a Neutral rating with a $68 price target.
Mizuho has a Buy rating with a $75 target price.
RBC has an Outperform rating and a $74 target price.
KeyCorp has a Buy rating with a $70 price target.
Wells Fargo has an Outperform rating with a $73 target.
Shares of Starbucks were last seen at $66.56, with a 52-week range of $47.37 to $68.98. The stock has a consensus analyst price target of $68.44.
JANUARY NEWSLETTER 4
Stocks had traded lower on Tuesday, but Wednesday’s early indications were to recover about half of those prior losses. After so much volatility, investors should be rethinking and considering how they want their investments and assets positioned for 2019.
24/7 Wall St. reviews dozens of analyst research reports each day of the week. The goal is to find new ideas for investors and traders alike. Some of these analyst reports cover stocks to buy, while others cover stocks to sell or to avoid.
Additional commentary and trading data have been added on some of the daily analyst reports. The consensus analyst price targets and other valuation metrics are from the Thomson Reuters sell-side research service.
These are the top analyst upgrades, downgrades and initiations seen on Wednesday, January 23, 2019.
Alphabet Inc. (NASDAQ: GOOGL) was maintained as Buy at Deutsche Bank, but the firm lowered its target price down to $1,300 from $1,300 in its call. Alphabet most recently closed at $1070.52, in a 52-week range of $970.11 to $1,273.89. The stock has a consensus price target of $1,328.00.
Amazon.com Inc. (NASDAQ: AMZN) was maintained as Buy at Deutsche Bank, but the firm lowered its target price to $2,250 from $2,300 in the call. Amazon closed down 3.7% at $1,632.13 but was indicated up 1.3% at $1,653.50 on Thursday morning.
Bluebird Bio Inc. (NASDAQ: BLUE) was maintained as Buy but the target price was lowered to $161 from $250 (versus a $125.09 prior close) at Canaccord Genuity.
Callon Petroleum Co. (NYSE: CPE) was raised to Buy from Neutral with an $11 price target (versus an $8.06 close) at Citigroup.
Dell Technologies Inc. (NYSE: DELL) was started with a Buy rating and assigned a $55 target price (versus a $44.06 close) at Citigroup.
Delphi Technologies PLC (NYSE: DLPH) was downgraded to Sector Perform from Outperform at RBC Capital Markets. Shares last closed at $16.26, with a consensus price target of $19.91. The 52-week trading range is $13.18 to $58.67.
D.R. Horton Inc. (NYSE: DHI) was raised to Buy from Neutral with a $45 price target at Mizuho. Shares closed at $36.42, in a 52-week range of $32.39 to $52.74. The consensus price target is $44.53.
Huntington Ingalls Industries Inc. (NYSE: HII) was downgraded to Underweight from Overweight with a $215 target price at Barclays. It closed at $196.50, in a 52-week range of $173.80 to $276.69. The consensus price target is $246.77.
International Business Machines Corp. (NYSE: IBM) shares closed down 1% at $122.52 ahead of earnings, and Big Blue shares were indicated up about 7% at $131.00 on Wednesday morning. Wedbush Securities maintained IBM as Neutral with a $165 price target, noting that structural issues remain. Wells Fargo reiterated its Hold rating.
IBM has a 52-week range of $105.94 to $168.72, and its consensus target price ahead of earnings was $143.84.
International Paper Co. (NYSE: IP) was raised to Overweight from Equal Weight with a $60 target price (versus a $45.74 close) at Stephens.
Kellogg Co. (NYSE: K) was started as Neutral at Guggenheim. The stock closed at $58.70, with a consensus price target of $65.83. The 52-week trading range is $55.11 to $74.98.
Kraft Heinz Co. (NASDAQ: KHC) was started as Neutral at Guggenheim. Shares closed at $47.28, in a 52-week range of $41.60 to $80.59. The consensus price target is $56.33.
Merck & Co. Inc. (NYSE: MRK) was downgraded to Market Perform from Outperform at BMO Capital Markets. Shares closed at $75.83, with a consensus analyst target of $81.54. The stock has a 52-week trading range of $52.83 to $80.19.
Mylan N.V. (NASDAQ: MYL) was downgraded to Neutral from Buy and the price target was slashed to $32 from $54 (versus a $28.89 close) at UBS. The stock was indicated down 0.5% at $28.75 on Wednesday, and its consensus target price was $42.25.
Oasis Petroleum Inc. (NYSE: OAS) was downgraded to Neutral from Buy and the price target was lowered to $7 from $10 (versus a $6.14 close, after a 9.4% drop) at Citigroup.
Pfizer Inc. (NYSE: PFE) was downgraded to Neutral from Buy at UBS. Shares closed at $42.27, in a 52-week range of $33.20 to $46.47. The consensus price target is $45.35.
Scorpio Tankers Inc. (NYSE: STNG) was downgraded to Neutral from Overweight at JPMorgan. Shares closed at $20.03. The consensus price target is $31.92, and the 52-week trading range is $14.80 to $32.50.
Tesla Inc. (NASDAQ: TSLA) was downgraded to Underperform from Sector Perform and the price target was lowered to $245 from $290 at RBC Capital Markets. The stock last closed at $298.92, in a 52-week range of $244.59 to $387.46. The consensus price target is $334.53.
Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) was raised to Neutral from Underweight with a $16 price target at Piper Jaffray. UBS started it with a Buy rating, noting that the beaten-down shares are now overpricing concerns about the balance sheet. Shares were indicated up 3% at $19.33 on Wednesday, and the consensus analyst target was $22.35.
Texas Roadhouse Inc. (NASDAQ: TXRH) was downgraded to Hold from Buy at Stifel. The most recent close at $66.00 compares with a consensus price target of $64.40. The 52-week trading range is $53.05 to $75.24.
Toll Brothers Inc. (NYSE: TOL) was downgraded to Neutral from Buy with a $39 target price at Mizuho. Shares closed at $34.49. The 52-week range is $28.68 to $52.37, and the consensus price target is $38.53.
Walmart Inc. (NYSE: WMT) was raised to Overweight from Equal Weight with a $110 target price at Morgan Stanley. The stock closed most recently at $97.49, with a consensus price target of $106.81. The 52-week trading range is $81.78 to $109.98.
Tuesday’s top analyst calls included Altria, Electronic Arts, Embraer, Gap, Kinder Morgan, Netflix, Take-Two Interactive Software, Under Armour and many more.I'm interested in the Newslet
Ford Motor Co. (NYSE: F) continues to struggle with a turnaround that has extended almost two years. Sales of its top 10 vehicles in the United States are essential to its financial future. Those sales results are mixed, looked at model by model.
Ford announced earnings that showed the turnaround has not worked so far. Fourth-quarter revenue rose only 1% to $41.8 billion. The U.S. car manufacturer said it lost $0.1 billion. And Ford management said that North American sales were strong. Those in Europe and China were troubled though. China has been Ford’s Achilles’ heel for some time.
In the United States, by far the largest part of Ford’s North American operations, 10 vehicles make up most of its sales, which dropped 3.5% in total to 2,497,318 in 2018. Among these are Ford’s F-Series pickups, which have been the best-selling vehicle in the United States for 42 years. F-Series sales last year were higher by 1.4% to 909,330. The F-Series makes up 36% of Ford’s sales in the United States. It competes against the Chevy Silverado and FCA’s Ram, which are also among the top-selling vehicles in the United States.
Ford’s next best-selling vehicle in the United States is its small Escape crossover, which competes in one of the most crowded car segments in America. And it had a tough year in 2018. Sales dropped 11.7% to 272,228. Sales of the third best-selling car, the Explorer sport utility vehicle, also fell, down 4.3% to 227,732. Next on the list in terms of sales, Fusion with 173,600, down 17.2%. The midsized car is one that Ford has killed in the United States. Ford’s fifth best-selling vehicle is the Transit, a cargo van used mostly by businesses. Its sales rose 8.2% to 137,794, but it is a niche product.
Ford’s sixth best-selling vehicle in the United States is also in trouble. The midsized Edge crossover had sales of 134,122, down 5.9%. Ford’s seventh best-selling vehicle, the Focus had sales of 113,345, a plunge of 28.4%. It is one of Ford’s least expensive cars. In eighth place, sales of the enormous Expedition SUV were 54,661, up 5.4%. In ninth place, sales of the EcoSport were 54,348. The crossover was not available last year. And landing at the number 10 spot, the Ford Fiesta, another of its economy cars. Sales jumped 11.9% to 51,730 last year, but that is less than 6% of the F-Series sales total.
Looked at model by model, the vehicles that are essential for Ford’s U.S. sales are not doing very well, which is terrible news for its turnaround effort.
ALSO READ: 4 Top Deutsche Bank US Transportation Stock Picks With Big 2019 Upside Potential
Model 2018 2017 % Change
1. F-Series 909,330 896,764 1.4
2. Escape 272,228 308,296 -11.7
3. Explorer 227,732 238,056 -4.3
4. Fusion 173,600 209,623 -17.2
5. Transit 137,794 127,360 8.2
6. Edge 134,122 142,603 -5.9
7. Focus 113,345 158,385 -28.4
8. Expedition 54,661 51,883 5.4
9. EcoSport 54,348 0 N/A
10. Fiesta 51,730 46,249 11.9
Total vehicles 2,497,318 2,586,715 -3.5I'm interested in the Newsletter
Daniel Cullinane CPA
25 Plaza 5 25th fl Jersey City NJ phone 732-516-1648 fax 732-516-9778
2500 Plaza 5 25th fl Jersey City NJ 07311 phone 732-516-1648 fax 732-516-9778