Investment "Logic"

On Thursday, Raytheon reported their fourth quarter 2018 earnings results.  While I am spending some time looking into this overall, this recap will not be as exhaustive as most of my efforts because I'm in progress of liquidating my holding.  This stock is currently less than 3% of my overall portfolio and is generally a non-factor - especially since I am looking to it for additional funds.  The results were somewhat mixed, as revenues missed expectations of $7.45B by $9M, coming in at $7.36B.  Earnings, on the other hand, were able to beat expectations of $2.89 by coming in at $2.93.  These results and the general explanations that go with them probably would've been given a pass, considering how hard the stock was sold off into the end of the year and what the stock was priced at a quarter ago.  However, the guidance provided really put a damper on the stock as they failed to significantly miss already subdued expectations. Worries coming into the ...

Apple announced revenues of $84.3B, which was below the adjusted consensus of $83.97B and earnings just beat expectations of $4.17 by coming in at $4.18.  It's important to note that these estimates were adjusted down based upon the earnings miss notification that was provided at the beginning of the month.  However, it's equally important to note that it's not as bad as analysts were expecting.  When you get a preannouncement, the key certainly won't be the past numbers, as they've already set expectations there.  The key information is going to be more about the deeper details as well as the forward guidance and readthrough on the current quarter performance to date.  We'll get to all of that in this recap, but let's start with the deeper numbers on the Quarter. To start with, the cause of the poor performance in the quarter was related to iPhone sales - particularly in China.  As such, it's no surprise to hear that iPhone revenues were down 15% ...

Citigroup announced fourth quarter and fiscal year 2018 annual results back on January 14.  Results for the quarter were a little mixed, as earnings of $1.61 beat estimates of $1.55, but revenues of $17.1B missed expectations of $17.59B.  While the results weren't what the street was looking for and the initial numbers provided a hit to the stock's price, management's subsequent commentary provided a significant change in sentiment and we've watch the stock price raise closer to its tangible book value in the two weeks since.  Looking a little deeper into the numbers themselves, revenues were mostly hit due to an under performing fixed income market in addition to assets that were sold off as the company continues to shed its remaining legacy businesses that doesn't fit overall goals.  The fixed income issue is something that has been seen across all money center banks and Citigroup is one of the largest players in this space, so it is not a result that is fully ...

On November 1, Apple announced it's fourth quarter results for fiscal year 2018.  Revenue rose twenty percent to $62.9B and earnings rose forty-one percent to $2.91.  Most important in the transforming Apple story is the continued growth of the services sector, which grew twenty-seven percent YoY.  This is important, because it's this services story which I believe will change how the stock is looked at and valued more as a consumer products company than a tech provider.  Services provides an ongoing revenue stream even if phone sales are choppy or peaking out.  That said, phone sales are still looking good on the revenue front as the company reported a 29% increase YoY and per-unit prices were higher than expected at $793, meaning the higher end phones were wildly sought after.  All of these numbers beat analyst expectations, but the headline numbers aren't what has driven the stock's action since the announcement. Forward guidance was pretty much in...

Back on Tuesday, Cedar Fair announced the results of their third quarter operations.  Results were pleasantly pleasing as revenues came in at $664M, which is about 1% better YoY.  Earnings came in at $3.76 which was well in excess of analyst expectations of $3.25.  Results were bolstered by an increase of both attendance and spend coupled with cost management within the organization.  July was seen as a volatile month for the company, weather-wise, resulting in lower than expected visitation during a key portion of the year.  However, in the following two months of the quarter, attendance and spending rebounded and exceeded expectations as season pass holders returned to the facilities with better overall weather patterns.  This trend continues into October with the various Fall festivals which they hold and 2019 season pass purchases are off to a strong start - to show ongoing strength for the next year.  As a result of these patterns and how it f...

Back on October 25, Raytheon announced strong operational results for their third quarter of 2018.  Sales were up 8.3% YoY and earnings were up 14.2%.  These results were stronger than wall street expected with revenues of $6.81B beating estimates of $6.69B and earnings of $2.25 killing expectations of $1.97 per share.  Backlogs also grew to new record levels of $41.6B, increasing by almost $5B YoY.  This resulted in a guidance update for 2018 bookings to increase by $1B.  Additionally, the company provided a preview to 2019 guidance.  Within this guidance, the book to bill ratio is expected to be over 1 (more orders than output), which is bullish.  They also guided sales growth of 6%-8%, operating margins to be in line with 2018 results, a tax rate of 17%-19%, and operating cash flow of $3.8B-$4.0B. Looking for negatives to note, operating margin results were down some and guided down some on the year mainly due to Missiles, which is seeing a nu...

On October 19, Honeywell announced their third quarter earnings results and they were fantastic.  Earnings came in at $2.03, beating out the $1.99 estimates while revenues came in at $10.76B which just edged expectations of $10.75B.  Organic sales came in at 7% which was the very high end of the anticipated range while margin expansion exceeded their range by 20 basis points on a 50 basis point high end.  On top of that, the company exceeded the guided amount of capital returned to shareholders via buybacks by $1.5B on a $3B guidance.  Hopefully, the company was buying back shares towards the end of the quarter when the stock was getting hit its hardest, but if it was, we certainly haven't seen it in the stock prices since - outside of the fact that they may not be in a window in which they can buy back shares now, resulting in less of a floor of protection for the stock.   All segments performed well for the company with SPS and Aero leading the way ...

On October 12, Citigroup announced third quarter 2018 earnings results and they were rather strong.  Earnings came in at $1.73, above estimates of $1.69.  Revenues came in at $18.38B, which was slightly below consensus for $18.45.  75 million common shares were repurchased as a part of the $6.4B in returned capital to shareholders over the quarter.  The Tangible Book Value also increased to $61.91.   Loan growth was up 3% from the same quarter a year ago and deposits were up 4%.  Revenues from investing were also up nicely as the company took advantage of the volatile markets we've been experiencing since February.  The fact that about half of the company's business comes from overseas also seemed to be a benefit, as there was less impact to their operations compared its peers who are mostly US based.  Despite the fact that revenues missed expectations, it's not as bad as it may seem, given there was a sale of a Mexican Asset Management...

On October 2, Pepsico announced their third quarter earnings results while saying goodbye to their CEO.  This was the last day and last earnings call to be led by Indra Nooyi, a venerable champion in the business with her strong leadership pointed towards a strong future for the company by making sure they stayed in front of and fully involved in snack and beverage trends.  I'll get more into the company's future as I close this up, though.  As for the earnings results themselves, the company generated non-GAAP earnings of $1.59 which beat consensus by two cents and delivered organic revenue growth of 4.9%.  Core constant currency growth was 9%.  This included a 2% impact from currency conversion, given the recent strength of the US Dollar.  They also guided up on their expectation for organic growth from less than 3% to at least 3%, a sign of confidence that their final quarter looks bright.   While profit was down for the North American Be...

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 see...

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...

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 t...

Back on February 27, Ionis announced their fourth quarter and fiscal year 2017 results.  Instead of diving into results, the company started out with talking about its pipeline.  As I have been anticipating, we have some updated information on the PDUFA (and thus the retail approval) for Inotersen, which will be July 6.  At the same time, their EU review has also been accelerated and things continue to go smoothly.  With approval, Ionis will be ready for immediate launch of the drug.  They also appear to be getting close to deciding on a partner to take on the drug, which is a bit of a mix on emotion.  Giving it up means that Ionis will give up revenues, in exchange for all of the sales and marketing efforts, but given where they are in the process, the company should be able to maintain relatively high royalty rates.  Similarly, we also received an update on Volanesorsen, with the FCS therapy going in front of the FDA on May 10.  Again, the p...

Pepsico announced their fourth quarter and fiscal 2017 year end results back on February 13.  Headline results showed a slight beat of expectations with earnings coming inline with expectations at $1.31 and sales beating expectations of $19.38B with results of $19.53B.  The company was able to return organic growth back to anticipated levels of 2.3%, most North American segments grew and took share, and the international segments saw growth of mid single digits or higher.  The down side continues to be in the North American Beverages division.  It's true that they were able to see growth quarter over quarter, which was nice to see - especially after the product placement issues last quarter.  However, the growth is still not where expected or desired with an economy in its current state.  Pepsi is now about to introduce a new fizzy water called Bubly, which they hope will help bring some life back.  Personally speaking, they brought this on much to...

A quarter late, I'm finally writing my first review of Apple quarterly earnings.  The company reported their fiscal first quarter of 2018 on Thursday beating on top and bottom lines.  The company reported revenues of $88.3B and earnings of $3.89.  This results in a solid beat of expectations on the top line of $86.48B and a slight beat on earnings expectations of $3.86.  These results culminate in the best quarter ever for earnings and revenue for the company.  All this said, not everything was seen as great or perfect in the quarter.  IPhone sold 1% less units than that compared a year ago and mac units were down 5%.  IPad sales were up 1%.  Services grew 18% year over year.  It's worth noting that all of these numbers are built off of the fact that there was one less week this fiscal year than last. This is the crux of where all of the chaos around this stock is based.  Essentially, it seems analysts were expecting some sort of "...

Last week, Citigroup announced fourth quarter earnings and FY 17 results.  Overall, the quarter was solid with earnings of $1.28 and revenues of $17.25B.  This compares to estimated earnings of $1.19 and revenues of $17.22B respectively.  Something else to note is that these numbers are before  what was $22B in charges related to new tax law changes.  That $22B number was two billion more than originally expected, but it seems the market was able to absorb that without too much concern.   Looking a little deeper into the results, it was encouraging to see revenues increase across all regions, where we saw loan and deposit growth in Latin America and increases from wealth management and credit cards in Asia.  Institutional revenues were down slightly due to the continued lack of volatility in the fixed income markets.  Efficiency also improved over the quarter and despite the write down related to the Tax Act, the company is still on tar...

Back on November 2, Cedar Fair announced the results of their third quarter fiscal 2017 earnings results.  Results were a little mixed as they missed on the top line slightly, but provided a nice beat against earnings expectations.  EBITDA guidance confirmed what was already expected last quarter, with the company decidedly unable to meet its $500M target a year early.  Despite this, the board decided to increase its annual distribution (remember, this is an MLP, not a regular stock with a dividend) by 4%.  That sets the payout at $3.56, or approximately 5.27% as of today's price.   Revenues came in at $652.69M compared to estimates of $652.97M, which were revised down during the quarter.  Despite this, earnings beat expectations of $3.24 by eighteen cents, showing strong cost and expense discipline.  Despite management's desire to avoid using it as an excuse, weather clearly was a factor prior, considering how Hurricane Harvey rolled throug...