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Earnings Analysis: Pepsico (PEP)

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Back on April 30 (yeah, I'm way behind), Pepsico announced their first quarter financial earnings for 2018.  Earnings came in at $0.96, beating consensus by three cents and sales were $12.56B also ahead of analyst expectations of $12.35B.  Finally, organic growth came in line with company guidance at 2.3%.  In all, the quarter was solid.  Maybe not perfect, but definitely solid.

As has been the case for a couple quarters already, North American Beverages (NAB) under performed the overall company.  There were operating and raw material inflation costs as well as some one-time bonus impacts.  That said, NAB did improve performance quarter over quarter for the third quarter in a row.  Guidance has been that this is the path they're on and that it will continue, so I see that as a positive at this point.  There are worries among the analyst community about competition and pricing wars, particularly in the sports drink section, but management seems to have the facts to back up their…

Trade: Pepsico (PEP)

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Today I increased my position in Pepsico by 25% at a price of $97.25.  While I haven't had a chance to complete my homework and post my review on the company's first quarter results, I do know the company beat expectations and provided a solid set of results for the quarter.  The one thing that I noted to like, in particular, was the fact that North American Beverages (NAB) didn't do as bad as analysts expected.  While there is some concern on all of the China and Tariff talks impacting the stock and the fact that the company is seeing more competition against the 10-year treasury, we've now seen the stock drop roughly 21% from its 52 week highs.  This selloff is getting to be over done and any good news could sent the stock higher.  If the stock drops to $92.75 we'll see the stock yielding 4% and that's far from typical for this consistent player.  I do have more room in my position and cash levels to take advantage of more down side - and I do see potential f…

Earnings Analysis: Honeywell (HON)

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Back on April 20, Honeywell announced the results of their first quarter operations.  Results were strong, with earnings coming in a $1.95 and sales coming in at $10.4B - both of which were beats against expectations of $1.90 and $10.02B respectively.  Organic sales also beat guidance of 2% - 4%, by resulting in 5% along with 40 basis points of margin expansion and $1B of cash flow.  Additionally, the company spent $1.4B in share repurchases ($950M) and dividends since there weren't ideal investment opportunities to go after.  Growth was led by the aerospace division with 8% organic growth along with 6% organic growth from the Safety and Productivity solutions division.  Home and Business Technologies and Performance Materials and Technologies grew 2% and 3% organically, respectively.  

Results were strong enough that the company raised EPS guidance to a range of $7.85 - $8.05, raising both the lower and upper ends.  They anticipate organic growth of 3%-5% and the sales of the busi…

Weekly Portfolio Summary

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Oh how the times change so easily.  It's become apparent that the stock market of 2017 is gone and what has taken its place is one filled with uncertainty and volatility.  Repeatedly over the last number of weeks we face wild swings as our President tweets, aids calm fears, and new complications arise.  It's important to note that for the last month and a half, we've truly been in the grips of a macro environment where everything from Presidential Tweets, Fed statements, Jobs reports, and other extraneous political and macroeconomic news controls the markets.  The one thing that could potentially put some calm to the market - earnings season - only started on Friday and despite what was a strong showing out of our biggest banks, what started as strong gains were wiped out and met with losses as people got prepared for a weekend which included fears of us dropping missiles on Syria (it happened Friday night and then called a "complete success"), as well as fears t…

Earnings Analysis: Citigroup (C)

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On Friday, April 13, Citigroup announced their results for the first quarter of fiscal year 2018.  Earnings came in at $1.68, beating estimates of $1.61.  Revenues were in line with expectations of $16.86B, delivering results of $18.87B.  The earnings number was a 24% increase from a year ago whereas the revenues were a 3% increase.  It's also worth noting that operating margins were up 4% from a year ago while the efficiency ratio continues to improve for the sixth consecutive quarter, up 50 basis points to 58.4% from a year ago.

Looking deeper, Global Consumer Banking (GCB) revenues increased 6% from a year ago with solid growth in both North America and International businesses.  There is a one-time boost from the sale of the Hilton brand cards which has about a 2% impact.  Credit costs rose 3% representing both volume growth and seasoning of their cards business in both North America and International.  NCLs grew overall in GCB, but much of this is seasonality, as there is typi…

Weekly Portfolio Summary

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Once again, it's been awhile since I've provided an update or completed missing quarterly reviews.  Time to put in some extra work and get caught up.  To start out with, my portfolio has been under performing the S&P 500 this year.  As of today, I'm just over 2% behind the S&P 500.  I'm finding this to be quite frustrating and am trying to figure out what/how/why that is the case after last year's over performance.  I have yet to figure out the solution, as many of these companies are still just as great as they always have been, but they've been out of favor in the market for the last couple months.  This is potentially a temporary thing and a test to my conviction in the holdings.

That said, there are other factors to consider as well.  The US Dollar has leveled off and shown a little strength with the rise of interest rates and lack of similar actions in other reasons, for example.  And to top that off, Trump just elected Larry Kudlow as the new Econo…

Trade: iShares MCI Eurozone ETF

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Yesterday I sold my entire stake of the iShares MCI Eurozone ETF at a price of $43.825.  While I haven't been able to post my weekly summary due to technical problems, followed by a busy life, I had written that the picture for that holding has started to change pretty significantly.  First, there is a lot of Tariff talk going on.  The EU is starting to look to Tariff the US after we set tariffs on steel and aluminum.  This is taking a hit to the market, overall, and makes it difficult to see as much growth and momentum for European companies if they can't make as much off of selling product to the US.  The second big event was the appointment of Larry Kudlow as the President's Chief Economic Advisor.  Larry is well known for his stance on "King Dollar" or a strong dollar, which goes against this fund in particular, as it is unhedged and was chosen to take advantage of a strengthening Euro to Dollar.  Since all of these events haven't taken place, I felt it w…