Author Archive
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Sherwin-Williams Earns $4.08 per Share for Q1
Eddy Elfenbein, April 29th, 2020 at 9:51 amThis morning, Sherwin-Williams (SHW) reported Q1 earnings of $4.08 per share. That beat estimates of $3.94 per share. Sales rose 2.6% to $4.15 billion.
The company lowered its full-year range to $16.46 – $18.46 per share with acquisition-related costs of $2.54 per share. The previous guidance was $19.91 to $20.71 per share with acquisition costs of $2.79 per share.
“We anticipate that the rapid deterioration of the U.S. and global economies experienced late in the first quarter due to the COVID-19 pandemic will most likely continue through the second quarter. We see no immediate, meaningful improvement ahead in most end markets we serve, and we are unable to predict when any noticeable improvement will occur. Given the trends and indicators we see at this time, we anticipate second quarter 2020 consolidated net sales will decrease by a low-to-mid-teens percentage versus the second quarter of 2019.
“For the full year 2020, we are revising our sales guidance to reflect uncertainties in the timing and pace of improvement in the U.S. and global operating environment. If economic conditions begin returning to normal in the third quarter 2020 and continue improving through the fourth quarter 2020, we anticipate full year consolidated net sales to be flat to down a low single digit percentage. If economic conditions do not materially improve until the first quarter 2021, we anticipate full year 2020 consolidated net sales to decrease by a mid-to-high single digit percentage. This is compared to our previous full year 2020 sales guidance of an increase of 2% to 4%. Considering our revised range of potential sales, we are revising our diluted net income per share guidance for 2020 to be in the range of $16.46 to $18.46 per share compared to our previous guidance of $19.91 to $20.71 per share and compared to $16.49 per share earned in 2019. Full year 2020 earnings per share includes acquisition-related amortization expense of approximately $2.54 per share, respectively. Full year 2019 earnings per share includes acquisition-related costs of $3.21 per share and other adjustments of $1.42 per share.”
The stock is up about 6% this morning. Earnings from AFLAC (AFL) are due out after today’s close.
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Q1 GDP = -4.8%
Eddy Elfenbein, April 29th, 2020 at 9:38 amThis morning, we got our first look at Q1 GDP. Bear in mind that the first quarter was almost perfectly divided between the coronavirus and pre-coronavirus.
The government said that the economy shrank by 4.8% for the first three months of the year.
Economist surveyed by Dow Jones had expected the first estimate of GDP to show a 3.5% contraction.
This marked the first negative GDP reading since the 1.1% decline in the first quarter of 2014 and the lowest level since the 8.4% plunge in Q4 of 2008 during the worst of the financial crisis.
The biggest drags on the economy were consumer spending, nonresidential fixed investment, exports and inventories. Residential fixed investment, which jumped 21%, along with spending from both the federal and state governments helped offset some of the damage.
Consumer expenditures, which comprise 67% of total GDP, plunged 7.6% in the quarter as all nonessential stores were closed and the cornerstone of the U.S. economy was taken almost completely out of commission. Durable goods spending tumbled 16.1% while expenditures on services were down 10.2%.
Exports dropped 8.7% while imports fell 15.3%, including a 30% drop in services.
The S&P 500 is up over 2,900 this morning.
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Morning News: April 29, 2020
Eddy Elfenbein, April 29th, 2020 at 7:10 amStock Markets Edge Higher as U.S. Data Looms
Coronavirus Likely Hammered U.S. Economy in First Quarter
Businesses Seek Sweeping Shield From Pandemic Liability Before They Reopen
World’s Richest Are Waiting for New Dip in Stocks Before Buying
The Pandemic Will Reduce Inequality—or Make It Worse
Tyson Foods Helped Create the Meat Crisis It Now Warns Against
Amazon Turns to Chinese Firm on U.S. Blacklist to Meet Thermal Camera Needs
Obstacles and Opportunities for the Aviation Industry
Legal Jargon on Cruise Tickets May Foil Virus Class-Action Suits
Ben Carlson: Occam’s Razor on Interest Rates and the Stock Market
Michael Batnick: Small Mean Reversion
Howard Lindzon: I Need a Joint – A Panic With Friends With Paul Rosen – Marijuana Entrepreneur
Joshua Brown: You Can’t Invest in GDP
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Cerner Earns 71 Cents per Share
Eddy Elfenbein, April 28th, 2020 at 4:16 pmAfter the closing bell, Cerner (CERN) reported Q1 earnings of 71 cents per share. Wall Street had been expecting 70 cents per share.
Quarterly revenues rose 2% to $1.41 billion. That was slightly below the company’s expectations. Cerner cited travel restrictions implemented by the company in response to the pandemic.
For Q1, Cerner had operating cash flow of $284 million and free cash flow of $160 million. Cerner has a total backlog of $13.47 billion.
“I am pleased with our solid first quarter results despite the initial impact of the COVID-19 pandemic,” said Brent Shafer, Chairman and CEO. “More importantly, I am proud of the efforts of Cerner associates as they quickly adapted to the challenges presented by the pandemic while maintaining an unwavering focus on supporting our clients on the frontlines. While we expect the pandemic to continue affecting our results, we currently believe that the largest impact will occur in second quarter 2020 and expect resiliency in our future financial performance.”
Now for guidance.
For Q2, Cerner sees revenue between $1.34 billion and $1.39 billion. For all of 2020, Cerner expects revenue between $5.55 billion and $5.70 billion. That’s down from the prior range of $5.725 billion to $5.975 billion.
Cerner expects EPS of 60 to 64 cents per share for Q2 and $2.78 to $2.90 for the full year. The latter forecast is down from $3.09 to $3.19.
The shares are down about 1% after hours.
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April Could Be the Market’s Best Month In Several Years
Eddy Elfenbein, April 28th, 2020 at 12:37 pm
The S&P 500 got off to a nice start this morning but is now about flat for the day. At one point, the index got as high as 2,921.15.
This month looks to go down as one of the best months for stocks in decades. The price of oil continues to sink. One barrel is now going for less than $12. Also, the Fed’s meeting starts today.
The Buy List is still holding up well following yesterday’s very strong gain. Cerner (CERN) is due to report after today’s close. In six days, Eagle Bank (EGBN) has climbed 22%.
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Morning News: April 28, 2020
Eddy Elfenbein, April 28th, 2020 at 7:04 amOil Plunges Again After Sudden Index Shift Prompts Firesale
With Virus War Still Raging, Fed Peers Out of the Foxhole
Job or Health? Restarting the Economy Threatens to Worsen Economic Inequality
Bankers Rebuke S.B.A. as Loan System Crashes in Flood of Applications
Start-Ups Pursue ‘Free Money’ With Relief Funds, Prompting Backlash
Mortgage Chaos Threatens to Worsen Once It’s Time for Repayments
New York AG Raises Concerns About Amazon’s Pandemic Safety Practices
BP Hikes Debt, Keeps Dividend as Coronavirus Hammers Profits
For a Glimpse at What Reopening Looks Like, Head to Waffle House
Howard Lindzon: Momentum Monday – Clouds over Crude and Life over Death
Roger Nusbaum: Creating Resiliency
Jeff Carter: Emails During Corona
Michael Batnick: Unintended Consequences
Ben Carlson: More Thoughts on the Worst Case Scenarios for Diversified Portfolios
Joshua Brown: Nothing Matters Till the Playoffs, No Surprise & What’s Happening with Amazon and the Big Box Retailers Now
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Great Day for the Buy List
Eddy Elfenbein, April 27th, 2020 at 8:32 pmToday was a very good day for the Buy List. I shouldn’t brag about this since we’re focused on the long term around here, but it’s nice to have a big day.
The Buy List gained 2.97% while the S&P 500 gained 1.47%. That’s an unusually large gap in our favor.
Eighteen of our 25 stocks beat the market today. Both Danaher (DHR) and Silgan (SLGN) made new 52-week highs today.
Here’s a rundown of how we did:
Eddy Elfenbein is a Washington, DC-based speaker, portfolio manager and editor of the blog Crossing Wall Street. His