Archive for 2013

• Fiserv Earns $1.56 Per Share
  Eddy Elfenbein, October 29th, 2013 at 4:31 pm

  Fiserv ($FISV) just reported third-quarter earnings of $1.56 per share which was five cents more than Wall Street’s consensus.

  From the CEO:

  “Results for the quarter were solid across the board and in-line with our performance expectations for the full year,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “Strength in our payments businesses along with continued strong sales is compelling evidence of the market-leading differentiation and value embedded in our solutions.”

  More highlights from the quarter:

  Adjusted earnings per share increased 24 percent in the quarter to $1.56 and increased 18 percent in the first nine months of 2013 to $4.39, as compared with the prior year periods.

  Free cash flow grew 21 percent in the first nine months of 2013 to $598 million compared with $496 million in the prior year period.

  Adjusted operating margin was 30.5 percent in the quarter, an increase of 60 basis points compared with the third quarter of 2012, and increased 50 basis points to 29.8 percent in the first nine months of 2013, compared with the prior year period.

  Now the important stuff — forward guidance:

  Fiserv expects its full year 2013 adjusted earnings per share from continuing operations to be in a range of $5.94 to $6.02, or growth of 17 to 19 percent over 2012. The company expects full year adjusted revenue growth of approximately 10 percent, and adjusted internal revenue growth of approximately 3 percent.

  “We remain on track to achieve our 2013 financial objectives and have meaningful momentum as we head into 2014,” said Yabuki.

  That’s an increase of ten cents per share to the low-end of their range. Fiserv has already made $4.39 per share for the first three quarters, so that implies a range of $1.55 to $1.63 per share for Q4. The shares are up a bit after hours.

• Earnings Call Harris Corp.
  Eddy Elfenbein, October 29th, 2013 at 1:08 pm

  Here are some highlights from today’s earnings call from Harris ($HRS):

  Operating income was $64 million and operating margin was strong at 15.5%, as a result of very good program performance.

  Turning to Slide 8. Free cash flow was strong at $139 million versus $77 million last year, and capital expenditures were $33 million compared to $44 million in the prior year.

  During the quarter, we repurchased about 1.7 million shares of our common stock for a total cash outlay of $100 million, and our effective tax rate for the quarter was 32.2%.

  Moving to Slide 9. Fiscal 2014 guidance remains unchanged at a range of $4.65 to $4.85 per diluted share for our income from continuing operations, and a revenue decline of 1% to 3% compared to the prior year. We’ve also made no changes to segment information, which is detailed on this slide.

  It sounds a little dull, but I like to hear companies say that guidance is unchanged. That just means they’re executing as expected. That’s good news.

• What Happened to Exxon Mobil?
  Eddy Elfenbein, October 29th, 2013 at 10:16 am

  What happened to Exxon Mobil ($XOM)? The oil giant used to dominate the market, but the stock has been a major laggard during this bull market. It’s not just the sector; XOM has lagged the XLE as well (see below).

  

  Exxon is still a big kid. They have a market cap of $390 billion which is second only to Apple ($AAPL) in the S&P 500. But it’s not that far ahead of Google ($GOOG) which comes in at $340 billion. If XOM had merely kept pace with the S&P 500, their market cap would be over $700 billion today.

  Is XOM a good buy here? That’s hard to say. The stock is probably lower than where it ought to be, but it’s not clear how much long-term potential there is. XOM is going for 11 times next year’s earnings, but those earnings are projected to be less than last year’s profit.

  You can often find good buys by looking at what strong stocks have lagged the market for a few years. XOM certainly fits that. But I’m not convinced the stock is a bargain just yet.

• Harris Earns $1.18 per Share
  Eddy Elfenbein, October 29th, 2013 at 9:51 am

  Nice earnings beat for Harris ($HRS) this morning. For its fiscal Q1, the company earned $1.18 per share which was five cents more than expectations. Quarterly revenues dropped 5.5% to $1.19 billion which was $30 million below consensus.

  Harris also reaffirmed their guidance for this year (their fiscal year ends in June). They see full-year earnings ranging between $4.65 and $4.85 per share. Wall Street expects $4.74 per share.

  The company generated free cash flow (net cash provided by operating activities less capital expenditures) of $139 million in the first quarter compared with $77 million in the prior year. Free cash flow was 109 percent of income from continuing operations.

  “First quarter operating performance provided a positive start to our fiscal year,” said William M. Brown, president and chief executive officer. “Previous restructuring actions together with our continuing progress on operational excellence allowed us to post solid results in the quarter, despite the tough government spending environment.”

  HRS has been as high as $61.94 this morning which is up 4.3% from yesterday’s close. The stock is currently off its high.

  AFLAC ($AFL) and Fiserv ($FISV) are due to report after the closing bell.

• Morning News: October 29, 2013
  Eddy Elfenbein, October 29th, 2013 at 6:29 am

  Rajan Raises Key Rate to Fight Inflation as Cash Curbs Eased

  EU Delays Bank Capital Rule Following Nordic Protest

  Hopes of Market Reforms in China Tempered by Political Realities

  The White House May End US Spying On Friendly Foreign Leaders

  Medicare Chief Is About to Get Grilled on Obamacare

  UBS Profitability Goal Delayed by Capital Demands

  Ron Paul: Son Will Hold Up Yellen to Get Fed Bill Vote

  Deutsche Bank Profit Slumps 94% on 1.2 Billion-Euro Charge

  Lloyds Looks to Reinstate Dividend

  Infosys Said to Reach Settlement With U.S. on Visa Probe

  Apple’s Profit Falls Despite Higher Sales of iPhones

  BP Ups Asset Sales, Dividend as Big Oil Q3 Kicks Off

  Goldman Pushes Junior Investment Bankers to Take Weekends Off

  Roger Nusbaum: Are We A Country of Moochers?

  Cullen Roche: The Debt Bad Guys

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• Updates on CR and CMI
  Eddy Elfenbein, October 28th, 2013 at 1:09 pm

  Earlier this month, I noted that Global Payments ($GPN) rose sharply. I had highlighted GPN thirteen months ago, and the stock has done very well since then.

  In that same post from September 2012, I wrote: “Cummins ($CMI) seems to be a very attractive stock. I’m surprised the stock is so low. The same could be said for Crane ($CR).”

  Not exactly sophisticated analysis, but I was right again. Here’s how those stocks have performed compared with the S&P 500:

  

  As of today, both stocks are about fairly priced. I no longer see a big bargain here.

• Stocks Are Flat Ahead of Apple’s Earnings
  Eddy Elfenbein, October 28th, 2013 at 11:19 am

  The stock market is about flat today. I think the Industrial Production report helped some but most traders are still focused on earnings. Apple’s earnings are due after the bell, and that will get a ton of attention. We’re almost exactly halfway through earnings season; 248 of the S&P 500 companies have reported so far, and 76% have beaten earnings estimates. That’s not bad.

  The S&P 500 has been as high as 1,762.77 today which is another all-time intra-day high. The market closed Friday at 1,759.77 which was an all-time high close. Our Buy List briefly passed the 30% YTD gain market, but has since fallen back.

  Steven Russolillo notes the strong breadth of today’s market. A total of 451 stocks in the S&P 500 are higher this year. That’s the second-most breadth since 1980. In 2003, 458 stocks were up for the year. This isn’t always the case. In 1998 and 1999, most of the heavy lifting of that bull rally was done by a small number of stocks.

  Stocks like AFLAC, Stryker, Medtronic and Ross Stores are at new highs. There are no Buy List earnings reports today, but tomorrow AFLAC, Fiserv and Harris are due to report.

  Of course, the Fed meets again tomorrow and Wednesday but I don’t expect to hear any tapering news. To taper now would be like getting picked off with two outs in the bottom of the ninth in the World Series. That’s unheard of.

• September Industrial Production Rises 0.6%
  Eddy Elfenbein, October 28th, 2013 at 10:59 am

  The Federal Reserve reported this morning that Industrial Production rose 0.6% last month. The details showed that manufacturing was rather tepid but the utility was very strong.

  Unlike the stock market, the Industrial Production data series is one that hasn’t been able to surpass its pre-recession peak. The September report was the first to crack 100 since March 2008. The series is based on 100 being the average for 2007. IP still has to grow another 0.8% to top the peak from December 2007.

  IP is an interesting data series to follow since it correlates strongly with expansions and recessions. We can’t say what the future will hold, but the economy has been slowly rising this year.

  

• Morning News: October 28, 2013
  Eddy Elfenbein, October 28th, 2013 at 6:18 am

  China May Revamp Rural-Land Rights as Part of Reforms

  Euro Jobless Fault Line Festers as Italy Scars Recovery

  The Dubai Economy Is Going Nuts, And There’s A Surprising New Factor Fueling The Boom

  Japan Regulator, Tepco Chief Meet Over Fukushima

  Panel Says No Cover-up in Japan’s Mizuho Mob Loans Scandal

  Yellen Poised to Rival Obama With Financial Power

  F.D.A. Shift on Painkillers Was Years in the Making

  Fee Wars: Why Do iShares Sector ETFs Cost So Much?

  Bank of America Verdict Spotlights U.S. Focus on Civil Cases

  Apple’s iPhone Sales, Holiday Quarter Up for Scrutiny

  Twitter Go-It-Alone App Strategy Boosts Costs Before IPO

  Toyota Outsells GM in Quarter as Abe Gives Edge to Japan

  Amazon Sales Growing Ahead of Holiday Shopping Season

  Jeff Miller: What Happened to the Part-Time Employment Story?

  Credit Writedowns: US Stock Market Capitalization Higher Than Any Time Except NASDAQ Bubble

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• Between the Folds
  Eddy Elfenbein, October 26th, 2013 at 4:41 pm

  I can’t embed this video, but here’s a link to Between the Folds — an amazing documentary on origami.