Morning News: August 6, 2020
Posted by Eddy Elfenbein on August 6th, 2020 at 7:03 am

India’s Central Bank Keeps Key Lending Rate Unchanged

Bank of England Holds Rates Steady But Warns Of A Slower Economic Recovery

A Shattered Beirut Leaves Lebanese Asking If They Have a Future

Japan’s Locked Borders Shake the Trust of Its Foreign Workers

German Banks Push Back as American Investors Seek More Influence

Goldman Says Covid-19 Vaccine Approval Could Upend Markets

Liability Shield Is a Stumbling Block as Lawmakers Debate Relief

Interest Rates Are Low, but Loans Are Harder to Get. Here’s Why.

Airbus and Boeing Will Keep Making Jets That Airlines Can’t Buy

Life and Debt at a Private Equity Hospital

Uber Pulls Latin American U-Turn By Joining Taxi Ranks

Slippers to Work? Health Kick, Home Office Help Adidas

Pool Sales Skyrocket As Consumers Splash Out On Coronavirus Cocoons

Nick Maggiulli: The Most Important Number in Personal Finance

Howard Lindzon: The Apple, Nikola and Tik-Tok Show…

Joshua Brown: It’s Directional

Ben Carlson: Animal Spirits: S&P 5

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Earnings from Ansys and Fiserv
Posted by Eddy Elfenbein on August 5th, 2020 at 4:41 pm

We had two more Buy List earnings reports after the closing bell. First up is Ansys (ANSS). For Q2, the company reported revenue of $389.7 million and earnings of $1.55 per share. Wall Street had been expecting $1.16 per share. That’s down from $1.61 per share one year ago.

Ajei Gopal, the president and CEO said, “Q2 was a very strong quarter for Ansys, with revenue, operating margins and earnings exceeding the high end of our financial guidance. I’m excited that during the quarter we closed both the largest deal in our 50-year history as well as our largest sales agreement for new business. These results demonstrate the strength and resilience of our business and give us confidence for the future.”

Ansys now has a backlog of $846 million. That’s up 18% from a year ago.

For Q3, Ansys expects earnings of $1.10 to $1.34 per share on revenue between $347 million and $377 million. Wall Street had been expecting $1.41 per share on revenue of $376.4 million.

For the full year, Ansys sees earnings ranging between $5.75 and $6.35 per share on revenue of $1.570 billion to $1.645 billion. That’s an increase from the previous range of $5.61 to $6.23 per share. Wall Street had been expecting $5.93 per share on revenue of $1.59 billion.

Fiserv (FISV) reported Q2 earnings of 93 cents per share. That matched Wall Street’s view. It’s a drop of 4% compared with a year ago. Fiserv’s earnings report is a little complicated because of the recent merger with First Data. Adjusted revenue fell 12% to $3.22 billion.

“We demonstrated the strength and resilience of our business model during the quarter, producing significant free cash flow while delivering value for our clients. Our results also included excellent sales performance which provides strong market momentum entering the second half of the year,” said Frank Bisignano, President and Chief Executive Officer of Fiserv. “Most important, we are incredibly proud of our people who have displayed unwavering stamina, commitment and courage as we navigate the uncharted waters of a rapidly changing world.”

During the quarter, Fiserv bought back 5.7 million shares of stock for $550 million.

Fiserv said it expects EPS to grow by at least 10% this year. For context, Fiserv made $4.00 per share last year. This would be Fiserv’s 35th year in a row or double digit adjusted earnings growth.

Middleby Earns 55 Cents per Share
Posted by Eddy Elfenbein on August 5th, 2020 at 9:56 am

The big jobs report is due out on Friday, but we got a preview today with the ADP payroll report. According to ADP, private payrolls rose by 167,000 last month. That was well below economists’ expectation for one million. On the bright side, the number for June was revised higher from 2.4 million to 4.3 million.

Middleby (MIDD) said that its adjusted earnings were 55 cents per share last quarter. That was well above estimates for 41 cents per share. Net sales fell 38%.

CEO Tim Fitzgerald said, “Our solid financial performance was a result of successfully reducing our cost structure and maintaining strong levels of profitability across all three of our business segments, despite revenue decreases.”

The stock has been up as much as 10% this morning. Earnings from Fiserv and Ansys are due out after the close.

Morning News: August 5, 2020
Posted by Eddy Elfenbein on August 5th, 2020 at 7:04 am

Older Investors Go for Gold, Younger Ones Bitcoin, JPMorgan Says

U.S. Job Losses Set to Mount With Small Businesses Running on Fumes

Trump’s Bid to Force TikTok Sale Follows Well-Trod Legal Path

More Bailout Cash Won’t Stop Wave of Credit Card Defaults

Business Interrupted by the Pandemic? Your Insurance Is No Good

Disney, Staggered by Pandemic, Sees a Streaming Boom

BMW Losses Almost $800 Million As Sales Slide During Lockdowns

Virgin Atlantic Files for Bankruptcy in the US to Secure Its Rescue Deal

McClatchy, Family-Run News Chain, Goes to Hedge Fund in Bankruptcy Sale

Forget Spas and Bars. Hotels Tout Housekeeping to Lure Back Travelers.

Kodak’s $765M Federal Loan Disclosure For Drug Venture Under SEC Investigation

U.S. Pursues Nearly $13 Billion of Claims in Purdue Pharma Opioid Probes

Star Technologist Who Crossed Google Sentenced to 18 Months in Prison

Michael Batnick: Where’d All The Stocks Go?

Ben Carlson: Concentrated Performance in the Stock Market

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Disney Makes Surprise Profit
Posted by Eddy Elfenbein on August 4th, 2020 at 4:16 pm

After the closing bell, Disney (DIS) reported a surprise Q2 profit of eight cents per share. I say surprise because Wall Street had been expecting a loss of 64 cents per share. That’s a huge beat.

The weak spot was revenue. For the quarter, Disney has $11.78 billion in revenue. That was below estimates for $12.37 billion. The only parts of Disney’s business that saw an increase in revenue were the direct-to-consumer and international businesses.

The big success story is Disney’s streaming service. I guess it helps that everyone is stuck at home! If you add up all the subscription services, Disney now has over 100 million paid subscribers. Disney+ is up to 57.4 million.

Revenue for their Parks, Experiences and Products business was down a staggering 85%. Disney’s Media Networks was only down 2%. As a result of the lockdown, Disney took a $3.5 billion hit to its operating income.

The shares are up 4.74% in after-hours trading.

Morning News: August 4, 2020
Posted by Eddy Elfenbein on August 4th, 2020 at 7:07 am

London Traders Hit $500 Million Jackpot When Oil Went Negative

U.S. Oil Production Dropped Massively In May, And Recovery Not In Sight

Gold ETF Holdings Are Booming and Only the U.S. Government Holds More

Lobbying For Russian Pipeline Spikes In Washington

TikTok, Trump and an Impulse to Act as C.E.O. to Corporate America, ByteDance Founder Defends TikTok’s U.S. Strategy In Staff Letter & Microsoft’s Rescue Attempt Of TikTok Endears Old Company To New Generation

Google Cloud Prepares For Black Friday ‘Peak On Top Of Peak’

The Caribbean Dilemma

Summer Recreation? It’s Backordered

Killer Mike Wants to Save America’s Disappearing Black Banks

Number Fever: The Pepsi Contest That Became A Deadly Fiasco

Ben Carlson: Why Housing Could Be One of the Best-Performing Asset Classes of the 2020s

Michael Batnick: The Most Lopsided Days

Howard Lindzon: Disruption Is Good! …Nasdaq 20,000…The Seeds Are Being Planted At An Accelerating Pace.

Joshua Brown: The 50 Fastest Growing RIAs, Valuation Since The Late 1990’s – Win Any Argument With Your Friends! & Monthly Candles Are Out! S&P 500, Treasury Yields, US Dollar, Bitcoin, Market Breadth & More

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Great Earnings from Trex
Posted by Eddy Elfenbein on August 3rd, 2020 at 4:19 pm

Great quarter for Trex (TREX). The deck stock earned 81 cents per share for Q2. That beat by 16 cents per share. Sales rose 7% to $221 million. Nice increases in gross and EBITDA margins.

“Strong second quarter results demonstrated continued broad-based demand for Trex decking and railing products reinforcing our leadership position in outdoor living. Trex Enhance® Basics and Naturals decking has significantly expanded the size of our addressable market and has accelerated our ability to take share from wood, while Trex Transcend® and Trex Select® decking continued to gain market share.

“Our gross margin performance reflected improvements in both Trex Residential and Trex Commercial. The 80-basis point expansion in Trex Residential gross margin was primarily due to improved throughput and reduced material costs in our Enhance product line, partially offset by startup costs for the new capacity in Nevada. Trex Commercial gross margin reflected quarter-specific project mix, as well as improvements in overall execution and manufacturing cost savings.

“Production efficiencies, stable raw material costs and disciplined SG&A spending drove strong operating leverage in the quarter, resulting in a 580 basis-point expansion in EBITDA margin and 33% growth in earnings per share in the second quarter,” noted Bryan Fairbanks, President and Chief Executive Officer.”

Now let’s look at guidance. For Q3, the company expects sales between $215 million and $225 million. The midpoint is a 13% increase over last year’s Q3. Wall Street had been expecting quarterly sales of $193.94 million.

Trex also announced a 2-for-1 stock split. This means that investors will get twice as many shares and the share price will fall in half. The split will happen on September 14. (The split will take effect the following day.)

The shares are up 3.7% in after-hours trading.

Stocks Reach 5-1/2 Month High
Posted by Eddy Elfenbein on August 3rd, 2020 at 10:47 am

The stock market had a very good July. The S&P 500 gained 5.51% for the month making it the fourth monthly gain in a row.

This morning, the index got as high as 3,299. That’s the highest intra-day level since February 20. We have new highs from Trex, Danaher, Ansys and Broadridge. Several others are very close.

On Friday, the 10-year Treasury closed at a record low of 0.55%.

This is an important week for economic news. This morning, the ISM Manufacturing Index came in at 54.2. That’s pretty good. It was the best ISM number since March of last year.

There’s more economic news due later this week. On Wednesday, ADP will release its payroll report for July. On Thursday, we’ll get another report on jobless claims. This has increased over the last two weeks. Then on Friday, we’ll get the July jobs report.

Morning News: August 3, 2020
Posted by Eddy Elfenbein on August 3rd, 2020 at 7:08 am

China Factory Activity Expands At Fastest Rate in 9 Years

Fed Is Headed for a Clash With Hedge Funds, Other Shadow Banks

Buy, Sell, Repeat! No Room For ‘Hold’ In Whipsawing Markets

Gold Can Do What Bonds Can’t in a Superlow-Rate World

Microsoft Talks To Buy TikTok’s U.S. Operations Spark Ire In China

Marathon Petroleum Sells Speedway to 7-Eleven Owner For $21 Billion

Men’s Wearhouse Owner Files for Bankruptcy & Lord & Taylor Files for Bankruptcy as Retail Collapses Pile Up

Swiss Industry Recovers From Covid-19 Slump and Redirects Orders

Apple Reportedly Eyes Turning iPhones Into Payment Terminals

In Showdown Between China and the West, HSBC Gets Caught in the Middle

Roger Nusbaum: It Boils Down To Having The Correct Asset Allocation

Jeff Miller: Weighing the Week Ahead: Is the Payroll Employment Report Accurate?

Howard Lindzon: SPAC SPAC SPAC SPAC SPAC

Ben Carlson: Why Would Anyone Own Bonds Right Now? & The Battle of the Bubbles

Michael Batnick: Animal Spirits: Fixed Income in a Low Rate Environment, It’s Either Sadness or Euphoria & Do Technology Stocks Dominate?

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Church & Dwight Beats Earnings and Raises Guidance
Posted by Eddy Elfenbein on July 31st, 2020 at 9:50 am

Church & Dwight (CHD) reported very good earnings this morning. The household products company made 77 cents per share for its fiscal Q2. That beat the Street by 14 cents per share. Quarterly sales grew by 10.6% to $1,194.3 million.

C&D now expect full-year sales growth of 9% to 10%. The initial outlook had been for 6.5% growth. The company also expects EPS to grow by 13%. That’s up from the initial range of 7% to 9%.

The CEO said this was an “extraordinarily strong quarter” and I have to agree. Shares of CHD have been up as much as 5% this morning and they reached a new all-time high. The stock is up more than 33% for us this year.