Showing posts from October, 2017

Earnings Analysis: Honeywell (HON)

On Friday, Honeywell announced third quarter results for fiscal 2017.  After preannouncing results last week there's not a lot of new information here, so my analysis will likely be fairly brief.  Headlines will say that the company met expectations, but that's only after the new expectations were set with the preannounced results.  The company delivered earnings of $1.75, which were at the high end of their guidance in July.  Sales came in at $10.1B with organic growth of 5%, led in part by aerospace.  It was back at the beginning of the year that everyone was panicking as to whether the company would be able to get any organic growth.  Free cash flow growth was excellent at 18%, providing plenty of funding for the spinoffs that were just announced.  

Fourth quarter projections continue this growth as the company expects to have 4% - 6% organic revenue growth resulting in earnings in the range of $1.79 - $1.84.  To put things simply, the spinoffs are going to allow Honeywell t…

Earnings Analysis: Citigroup (C)

Thursday morning, Citigroup announced third quarter earnings results.  They topped analyst expectations by delivering earnings of $1.42 and revenues of $18.1B.  Expectations were at $1.32 and $17.89, raised slightly more from where it was at when I previewed the results in my last weekly summary.  The company returned $6.4B in capital over the course of the quarter, a majority of that represented through the repurchase of about 81 million shares of stock.  The TBV also rose 6% from a year ago, landing at $68.55 which is in line with my estimates for where that key measurement is going.  Despite the solid beat, the stock's price has fallen about 5% since the announcement.

In Global Consumer Banking (GCB) we saw revenue increases across all regions, with Latin America leading the way.  in North America, the Costco card acquisition provides much of the experienced strength, but it also brings much of the increase in Net Credit Loss (NCL) growth.  Expenses and gross margins also improv…

Stock Analysis: Honeywell (HON)

Before the opening bell yesterday morning, Honeywell announced the results of its portfolio analysis, an analysis that was spurred by activist investor pressure.  Third Point's Dan Loeb challenged Honeywell, shortly after new CEO Darius Adamczyk took the helm, that the company isn't doing enough to capture shareholder value and that they should spin off the Aerospace division. 

After the company has done deep analysis of their portfolio of products, they agreed to do not 1, but 2 spinoffs from the company.  Neither spinoff, however, is the one that Third Point asked for.  Instead, the company is going to spin off their homes business - essentially the HVAC and fire protection products which they have (thermostats, filters, other equipment for home and businesses) as one business.  This business will be worth approximately $4.5B.  The second spinoff will be their transportation business, which is primarily rooted in their low-margin, but highly successful turbo chargers, which …

Weekly Portfolio Summary

As we enter the final quarter of the calendar year, we prepare for third quarter earnings reports season.  Pepsico announced their results earlier this week and you can see my thoughts on that here.  The portfolio continues to perform well, but you'll notice a few things have changed since last time as well  First, I sold the remaining investment I've put into ON semiconductor.  As such, I've inserted a new icon into my blog to identify stocks where I'm playing with the house's money, which you'll see noted just before we talk about my rankings.  You'll continue to see me do some research an post on the stock, but my homework will not necessarily be as deep as it has been in the past.  .

Since I was no longer invested in a tech stock, I wanted to find the right opportunity to get reinvested there and happened to come across the stock of Apple at just the right time, seeing it drop significantly from new highs after people started worrying about iPhone 8 and …

Earnings Analysis: Pepsico (PEP)

Today Pepsico kicked off the next wave of earnings reports in my portfolio for 2017.  Third quarter results turned out to be a bit mixed, as the company reported earnings of $1.48 and revenues of $16.24B.  This beat market consensus on the earnings side by four cents, however missed consensus on revenues by $70M.  Operating margins were up, contributing to the earnings beat, however, organic growth was a paltry 1.7%, a level that was commented to have "lagged the industry."

The management team, whom I've come to respect and trust as a shareholder, held back no punches when describing their quarter.  Seconds within opening her remarks, CEO Indra Nooyi clearly stated why they missed top line marks, stating that North American Beverages (NAB), in particular, was the sore spot and that this is a temporary issue that has already been responded to and is already showing improvement.  More on this shortly.

The call had some good news and some bad news.  First, on the good news si…

Trade: Apple (AAPL)

On Friday, I put in a purchase for about half of my maximum potential position in the stock of Apple at $152.25.  At the time of this writing it is 5.7% of my portfolio.  While I haven't had time to discuss my shopping list of new potential buys, the sale of my position of On Semiconductors left an opening for me to pick up a new tech name.  On my list I had Alphabet (Google) and Logitech as other potential picks.  It just so happens that AAPL's stock price came down into the area where I would start accumulating a position first.  Alphabet is just too expensive for me to work with - even in options, and while Logitech was close, I don't see the growth potential nearly as strong as it is with Apple today.

The stock pulled back over $10 since the showcasing of their new phones the iPhone 8 and iPhone X.  Reception has been somewhat lukewarm and there has been a lot of rumors about bugs and delays in delivery.  The problem is that this is an ongoing story every year with ever…