• 0% After 15 Years
    Posted by on April 20th, 2011 at 8:56 am

    Do you remember what you were doing 15 years ago? If you’re the S&P Bank Index (^BIX), then you’re exactly where you were.

  • Abbott Labs Earns 91 Cents Per Share
    Posted by on April 20th, 2011 at 7:59 am

    Abbott Laboratories ($ABT) reported Q1 earnings this morning of 91 cents per share which beat estimates by one penny.

    For the period ended March 31, the North Chicago, Ill., company earned $864 million, or 55 cents per share. Excluding one-time items it earned 91 cents per share. Revenue grew 17 percent to $9.04 billion

    Analysts polled by FactSet expect earnings per share of 90 cents on revenue of $8.82 billion.

    Revenue was led by higher sales of the company’s best-selling product Humira, which increased 18 percent to $1.65 billion. Humira is used to treat inflammatory diseases like rheumatoid arthritis and has historically accounted for nearly one-fifth of the company’s sales.

    Charges included the expense of integrating Solvay Pharmaceuticals and changes to Abbott’s fiscal calendar.

    This is an excellent stock. In January, Abbott said it was expecting full-year earnings of $4.54 to $4.64 per share so they seem to be on target so far. That means the stock is going for about 11 times this year’s earnings.

    On top of that, the shares currently yield 3.76%. In February, the company increased its dividend for the 39th year in a row.

  • Morning News: April 20, 2011
    Posted by on April 20th, 2011 at 7:24 am

    Markets Are Booming All Around The World

    Draghi’s ECB Campaign Gains Momentum as German Backing Grows

    Gold Exceeds $1,500 as Dollar Drops on Concern About U.S., European Debts

    Crude Oil Rises for Second Day on Improving Outlook for Global Fuel Demand

    Treasuries Fall, Snap Three-Day Gain, as Asian Stocks Extend U.S. Advance

    Banks Lag S&P as Slower Loan Growth Outweighs Higher Dividends

    Goldman’s Sluggish Growth Raises Concern on Wall Street

    Intel, IBM Results Show Return of Corporate Computing Demand

    Income Slips For Yahoo, But Ads Show Some Promise

    China Mobile First-Quarter Profit Rises 5.4% on Data Sales

    Smartphones and Japan in Focus in Nokia Q1 Report

    Fiat First-Quarter Profit Gains Powered By Ferrari, Brazil Sales

    AES Corp. to Buy Ohio Utility DPL for $3.5 Billion

    Paul Kedrosky: The Crisis of the Flight to Safety Crisis

    Joshua Brown: GOOD: Here’s How Your Taxes Are Spent

  • Stryker’s Earnings Call
    Posted by on April 19th, 2011 at 11:11 pm

    From Seeking Alpha:

    Looking at the first quarter, total company sales increased 12% on a reported basis and 10.2% on a constant currency basis. Strong, core MedSurg product growth, coupled with the acquisitions principally reflected in our new Neurotechnology segment, paced our growth. On a GAAP basis, diluted net earnings per share were $0.78, a decrease of 2.5% versus Q1 of 2010. We have noted the Neurovascular inventory step-up, other acquisition and integration-related charges totaling $46 million net of tax as a non-GAAP adjusting item in our earnings release. Excluding the charge, increases are reported U.S. GAAP diluted earnings per share of $0.78 to $0.90 per share. The U.S. GAAP diluted net earnings per share declined up 3% then becomes growth of 13% when excluding the identified non-GAAP items.

    On cash flow, we continued to perform well, with cash flow from operations of $205 million and free cash flow of $150 million. Finally, in the first quarter, we repurchased 4 million shares for a total spend of $250 million. We currently have open authorizations totaling approximately $575 million.

    (…)

    Turning to our outlook, our guidance as Steve noted, remains unchanged. Currency remains positive and if rates hold near current levels, we would expect second quarter sales to be favorably impacted by approximately 3% to 4% when compared to 2010. Using current rates, the full year currency impact on top line sales would be an increase in the range of 1.5% to 2.5% when compared to 2010, up from the original expectation of 0.5% to 1.5%. We are maintaining our outlook calling for net sales of 11% and net sales increase of 11% to 13% in constant currency. Excluding the impact of foreign currency as well as acquisitions, sales growth is projected to be 5% to 7% for the full year. Adjusted diluted net earnings per share are anticipated to be in the $3.65 to $3.73 range, representing an increase of 10% to 12% over 2010 adjusted diluted earnings per share.

    We also now anticipate acquisition and integration-related charges associated with the recently completed Neurovascular business to reduce reported diluted net earnings per share by approximately $0.28 to $0.30 versus the previously noted $0.21 to $0.25, driven by higher costs associated with the inventory step-up, while other integration costs remain on or ahead of plan.

  • Stryker Earns 90 Cents Per Share
    Posted by on April 19th, 2011 at 5:09 pm

    Stryker ($SYK) just reported earnings of 90 cents per share which beat Wall Street’s consensus by a penny.

    Stryker reiterated its 2011 EPS forecast of $3.65 to $3.73. Wall Street has been expecting $3.72 per share so that may been seen as a disappointment, but it really isn’t one. This is exactly what they told us in January.

  • Bed Bath & Beyond Breaks $56
    Posted by on April 19th, 2011 at 2:41 pm

    I’ve noticed that stocks that beat earnings often seem to have a delayed reaction. Bed, Bath & Beyond ($BBBY) had a great earnings report and despite a soggy market, the shares continue to drift higher.

  • Return on Equity Capital Futures
    Posted by on April 19th, 2011 at 2:20 pm

    Pardon this thinking-out-loud post, but I’m curious if there could be a futures product that’s somehow tied to expected return on equity capital.

    I have no idea how it would work, but it would be a boon to financial academics everywhere.

  • Alpha Indices
    Posted by on April 19th, 2011 at 2:12 pm

  • Is J&J’s 48-Year Dividend Streak in Jeopardy?
    Posted by on April 19th, 2011 at 12:21 pm

    One more item on Johnson & Johnson ($JNJ): The company has raised its dividend for 48 years in a row. Number 49 should come any day now.

    The issue is that the company’s earnings haven’t grown very much, so the board probably won’t raise the dividend a lot. Earnings-per-share rose from $4.63 in 2009 to $4.76 in 2010. That’s an increase of 2.8%.

    If the board kept the payout ratio constant, that would mean the quarterly dividend would rise from 54 cents per share to roughly 55.5 cents per share.

    On one hand, the board certainly feels they need to keep the dividend streak going. On the other hand, they can’t raise the dividend too much. Nearly all the free cash will be going to a possible Synthes deal. On the third hand, a dividend increase of a penny per share will look pretty lame.

    I think we’ll see an increase of two or three cents per share. Still, the stock currently yields more than a 10-year Treasury bond.

    Of course, they could shock us by foregoing a dividend increase.

  • J&J Beats Earnings and Guides Higher
    Posted by on April 19th, 2011 at 12:00 pm

    Finally some good news from Johnson & Johnson ($JNJ). This company has made just about every mistake possible over the last year but at least they’re still making a good profit.

    For the first quarter, JNJ earned $1.35 per share (after charges) which beat Wall Street’s estimate by nine cents per share.

    But more importantly, JNJ raised its full-year EPS guidance. The earlier guidance was $4.80 to $4.90. Now it’s $4.90 to $5.00. That’s excellent news. In January, the company gave the initial guidance numbers which disappointed Wall Street. Today’s news should help restore some faith in JNJ.

    The stock is currently up about 3% today. Also, here’s more on the impact a Synthes deal could have on the medical device industry.