• Cognizant Earns $1.13 per Share
    Posted by on February 6th, 2019 at 8:56 am

    We had one Buy List earnings report this morning. Cognizant Technology Solutions (CTSH) reported Q4 earnings of $1.13 per share. That’s a pretty good number. It’s up from $1.03 per share for Q4 2017, and it beat the company’s own forecast. Three months ago, the IT-outsourcer told us to expect earnings of at least $1.05 per share. Wall Street had been expecting $1.06 per share. In constant currency, quarterly revenue rose 8.8%.

    “Cognizant executed well in 2018, diversifying our revenue base and client roster, and investing to build distinctive leadership in six advanced digital capabilities,” said Francisco D’Souza, Vice Chairman and Chief Executive Officer. “Forming the core of our digital strategy, these capabilities are instrumental in helping clients digitize and transform their entire enterprises, which we call being digital at scale. Digital continues to permeate and power every industry, creating a substantial market opportunity for us across the industries, geographies, and buyer groups we serve. With a disciplined plan for executing our digital strategy, we’ve set Cognizant up for the next stage of sustainable strong growth and value creation.”

    For the year, Cognizant made $4.57 per share. Just a reminder that CTSH originally said they expected to make at least $4.53 this year. Then in May, they lowered that to $4.47, and Wall Street freaked out. We ignored it. Three months ago, they raised their full-year forecast to $4.50 per share, and it turns out, they beat that by seven cents per share. For the year, the company’s operating margin was 20.7%. I like that. They’ve previously said that their long-term target is for 21%.

    Now let’s look at guidance. For 2019, Cognizant sees earnings of at least $4.40 per share. Wall Street had been expecting $4.45 per share.

    The other big news from Cognizant is that Brian Humphries will be taking over as CEO on April 1 from Francisco D’Souza who has been CEO since 2007. D’Souza has done a great job, and he’ll remain a member of the board.

  • Morning News: February 6, 2019
    Posted by on February 6th, 2019 at 7:13 am

    Some Central Banks Have Gold Fever and It Might Be Sensible

    With Savings to Burn, Russia Turns (Again) to a State-Led Spending Plan

    Wall Street Veteran Says U.S.-China Deal Will Be Sell Trigger

    Qatar and Exxon Mobil Plan $10 Billion Gas Investment in Texas

    What the State of the Union Means for Business

    How Trump’s Latest Plan to Cut Drug Prices Will Affect You

    EU rejects Siemens and Alstom, Aurubis and Wieland Mergers

    Spotify Rises on Podcast Acquisitions, Robust Subscriber Growth

    Bet Everything on Electric: Inside Volkswagen’s Radical Strategy Shift

    Inside Wisconsin’s Disastrous $4.5 Billion Deal With Foxconn

    Presto! One Little Line Transforms Disney’s Results

    SoftBank’s Son Unveils $5.5 Billion Buyback, Laments Share Price

    Nick Maggiulli: Even God Couldn’t Beat Dollar-Cost Averaging

    Cullen Roche: How The Patient Investor Sees the World More Clearly

    Jeff Carter: Take Care of Your Investors

    Be sure to follow me on Twitter.

  • Torchmark Earns $1.56 per Share
    Posted by on February 5th, 2019 at 4:15 pm

    This afternoon, Torchmark (TMK) reported Q4 earnings of $1.56 per share. That met expectations. For the year, Torchmark made $6.13 per share. That’s up from $4.82 per share for 2017.

    Here are some highlights:

    Net income as an ROE was 12.3%. Net operating income as an ROE excluding net unrealized gains on fixed maturities was 14.6%.

    Life underwriting margin at Globe Life Direct Response increased over the year-ago quarter by 6% and health underwriting margin at Family Heritage Agency increased over the year-ago quarter by 15%.

    Life premiums increased over the year-ago quarter by 7% at American Income Agency and health premiums increased over the year-ago quarter by 8% at Family Heritage Agency.

    Net life sales and net health sales at Liberty National Agency increased over the year-ago quarter by 6% and 9%, respectively.

    Average producing agent count increased over the year-ago quarter by 10% at Family Heritage Agency.

    1.5 million shares of common stock were repurchased during the quarter and 4.4 million shares were repurchased during the year.

    For this year, Torchmark sees earnings of $6.50 to $6.70 per share. Wall Street had been expecting $6.61 per share. That means the stock is going for about 12.5 times this year’s earnings.

  • Disney Beats Earnings
    Posted by on February 5th, 2019 at 4:10 pm

    After the closing bell, Disney (DIS) reported very good earnings for their fiscal Q1. The company earned $1.84 per share which beat estimates by 29 cents per share. Revenue fell to $15.30 billion but that beat expectations of $15.14 billion.

    Disney, whose assets include cable networks such as ESPN and film studios like Marvel, is making a push into streaming services as more consumers drop their pay-TV package in favor of cheaper options that can be watched through an internet connection. The company launched ESPN+ last year and plans to launch Disney+, a streaming service of its movies and original programming, later this year.

    The company said that its direct-to-consumer and international segment posted revenue of $918 million and an operating loss of $136 million in its first quarter ended Dec. 29. due to increased costs related to ESPN+ and the upcoming launch of Disney+.

    On the earnings call, Disney said that it expects investment in those ventures to negatively impact the segment’s year-over-year operating income by $200 million in the second quarter.

    Revenue in Disney’s media networks business, which includes ESPN, rose 7 percent to $5.92 billion in the first quarter, compared to the year-earlier period, while its parks business was up 5 percent to $6.82 billion. Studio entertainment revenues fell 27 percent to $1.8 billion thanks to the strong performance of Star Wars: The Last Jedi and Thor: Ragnarok in the prior-year quarter compared to Mary Poppins Returns and The Nutcracker and the Four Realms this year.

    The company expects its pending $71.3 billion acquisition of a majority of assets from Twenty-First Century Fox to aid its strategy in streaming. The deal is expected to provide Disney with additional media assets for its new streaming service and would also give Disney a larger stake in the streaming service Hulu.

    But Disney’s direct-to-consumer push comes with risks: It’s hard to turn a profit on streaming services, which usually entail high content and technology costs but offer lower prices than traditional cable to attract consumers.

    The stock rose a little bit in the after-hours session.

  • Cerner Earns 63 Cents per Share
    Posted by on February 5th, 2019 at 4:08 pm

    Cerner (CERN) reported Q4 earnings of 63 cents per share, up from 58 cents per share in Q4 of 2017. Cerner’s result matched Wall Street’s forecast. Q4 revenue rose 4% to $1.366 billion. For the year, Cerner made $2.45 per share and revenue rose 4% to $5.366 billion.

    The healthcare IT firm also they’ll initiate a quarterly dividend of 15 cents per share starting in the third quarter.

    “We finished the year on a solid note and in line with full-year expectations,” said Brent Shafer, Chairman and CEO. “After one year at Cerner, I have confirmed my initial view that we have significant opportunity to grow and create value in health care, and we are refining our operating model so we can innovate at scale, deliver value to clients faster, and grow profitably. Our confidence in Cerner’s growth outlook, combined with strong cash flow and balance sheet, put us in a position to return capital to shareholders by initiating a quarterly dividend. This move along with the existing share repurchase program underscores our commitment to delivering shareholder value.”

    Cerner expects:

    Q1 2019 revenue between $1.365 billion and $1.415 billion, and 2019 revenue between $5.650 billion and $5.850 billion.

    Q1 EPS between $0.60 and $0.62, and 2019 EPS between $2.57 and $2.67.

    First quarter 2019 new business bookings between $1.100 billion and $1.300 billion.

  • Church & Dwight Earns 57 Cents per Share
    Posted by on February 5th, 2019 at 9:01 am

    Church & Dwight (CHD) reported Q4 earnings of 57 cents per share which was a penny below estimates. For the year, CHD earned $2.27 per share. For the year, organic sales rose 4.3% which beat the company’s forecast of 4.0%.

    Matthew Farrell, Chief Executive Officer, commented, “Q4 organic sales growth of 4.3% was exceptionally strong and exceeded our 3% outlook. Q4 was the third consecutive quarter of greater than 4% organic growth and the second consecutive quarter of positive price and product mix (+1.6%). The Consumer Domestic business posted strong volume growth in Q4 and positive pricing as the promotional environment continued to improve. Our categories continue to grow and our market shares are healthy. Eleven of our 14 domestic categories grew during the quarter and more than half have grown for at least 5 consecutive quarters. In the domestic business, 7 out of 11 power brands met or exceeded category growth in 2018. In the International business, we exceeded our 6% organic growth target for the fourth consecutive year in 2018.

    “Compelling new product launches and investments will drive 2019 organic sales growth of approximately 3.5%. Price increases announced on approximately 30% of the portfolio contribute to gross margin expansion in 2019. These pricing actions did not hit retailer shelves until late Q4 and had minimal impact on Q4 results. Additional pricing actions are currently being discussed with retailers. The investments in our International business continue to pay off, particularly export and our Asia Pacific partnerships. We are entering 2019 with momentum.”

    For Q4, organic sales rose by 4.3% which beat their outlook of 3%.

    Gross margin in the fourth quarter was lower than expected due to the household business growing faster than expected and U.S. tariffs, the impact of which has been addressed with the announcement of 2019 price increases. The incremental marketing spend, higher incentive compensation, and U.S. tariffs were offset by a lower tax rate.

    The company also boosted its quarterly dividend from 21.75 cents per share to 22.75 cents per share. That’s a 4.6% increase. That’s the 23rd annual dividend increase in a row.

    Update: The shares fell 7.51% in today’s session.

  • Becton, Dickinson Earns $2.70 per Share
    Posted by on February 5th, 2019 at 8:37 am

    Three weeks ago, Becton, Dickinson (BDX) told us they made $2.70 per share for fiscal Q1. This morning, the official earnings report came out and confirmed that. On a currency-neutral basis, that’s an increase of 14.9%.

    “We are very pleased with our strong start to fiscal year 2019. As noted in our pre-announcement, results were better than expected across all three segments,” said Vincent A. Forlenza, Chairman and CEO. “It is evident that the combination of BD and C. R. Bard is delivering value to customers, patients and shareholders around the world.”

    For 2019, BDX expects revenues to grow by 5% to 6%, and they see EPS ranging between $12.05 and $12.15. Shares of BDX lost about 2% today.

  • Morning News: February 5, 2019
    Posted by on February 5th, 2019 at 6:56 am

    Trade Hawks Quietly Bristle as Trump’s China Deadline Approaches

    How U.S. Criminal Laws Became Weapons in the China Trade War

    Stop Worrying About the Fed’s Balance Sheet

    Don’t Hold Your Breath for Big Stock Returns, Says Goldman Sachs

    This Market’s Almost as Boring as the Super Bowl

    Cloud-Computing Giants Keep Growing Despite Slowdown Fears

    Tech Is Splitting the U.S. Work Force in Two

    Loose Money Era Leaves Trail of U.S. Corporate Debt Junkies

    Once the ‘Bond King,’ Bill Gross Is Retiring, His Star Dimmed

    Alphabet’s Higher Spending Worries Investors, Shares Dip

    Slack Files for Public Offering, Joining Silicon Valley’s Stock Market Rush

    Crypto Exchange Customers Can’t Access $190 Million After CEO Dies With Sole Password

    Ben Carlson: Simple vs. Complex, 2018 Edition

    Michael Batnick: Was This a Dead Cat Bounce?

    Joshua Brown: The Confidence Shock & re: the Bill Gross Retirement, Stock Buyback Laws and More

    Be sure to follow me on Twitter.

  • Raytheon Breaks Above $173 per Share
    Posted by on February 4th, 2019 at 1:27 pm

    Raytheon (RTN) is the latest in a trend we’ve seen a lot of.

    Step 1. Stock drops on “disappointing earnings.”

    Step 2. **Wait Two Days**

    Step 3. Stock breaks out once people realize that the earnings weren’t that bad.

    Wall Street’s first instinct is to panic. The real money is made by waiting. To quote Jesse Livermore, “It was never my thinking that made the big money. It was always my sitting.”

  • Boeing’s Amazing Long-Term Growth
    Posted by on February 4th, 2019 at 1:07 pm

    I think many investors would be surprised at the long-term growth of shares of Boeing (BA). Last week, the company reported blow-out earnings.

    Dow component Boeing’s stock surged Wednesday after the company reported year-end results that smashed Wall Street’s expectations, with record revenue and airplane deliveries driving the blowout.

    Boeing reported a massive fourth-quarter earnings result of an adjusted $5.48 per share, beating expectations in a Refinitiv survey of analysts by 91 cents. Revenue was also strong, at $28.3 billion — more than $1 billion than analysts expected.

    The aerospace giant reported $101.1 billion in annual revenue, breaking the $100 billion mark for the first time. Boeing also provided a strong 2019 forecast. Boeing expects next year’s earnings of $19.90 to $20.10 per share. Wall Street was expecting $18.31 a share for full-year 2019 earnings.

    Boeing is a Dow component. In fact, it has the highest share price in the Dow which gives it the highest weighting. By market cap, it’s the 14th largest company in the index. Boeing was added to the Dow in 1987.

    Since the bear market low nearly ten years ago, Boeing has crushed the Dow 1,571% to 277%. Here’s the 45-year view:

    Since 1974, Boeing gained 176,000% and the Dow’s +2,842%.