Morning News: August 3, 2018
Posted by Eddy Elfenbein on August 3rd, 2018 at 7:05 am

China Dethroned by Japan as World’s Second-Biggest Stock Market

Is Something Important Happening To Oil Prices?

U.S. Is Expanding Power to Block Chinese Firms. HNA Was Already No Match.

A Trillion-Dollar Apple

Don’t Count Out The Growth Stocks Just Yet

Cisco to Acquire Security Unicorn Duo for $2.35 Billion

BMW Weighs Measures to Counter Tariff Impact

All The Reasons Tesla Stock Popped After The Q2 Conference Call

Heineken Strikes Multibillion-Dollar China Deal

Amazon Prime Video is Coming to Comcast’s Cable Boxes

Wayfair Losses Getting Worse

Three Theories on Why MoviePass Failed

Roger Nusbaum: Trillion Dollar Hats

Howard Lindzon: Fintech Week – The Language Of The Markets

Blue Harbinger: Stock Exchange: What Is Your Typical Timeframe?

Be sure to follow me on Twitter.

Cerner Earns 62 Cents per Share
Posted by Eddy Elfenbein on August 2nd, 2018 at 4:12 pm

Bookings in the second quarter of 2018 were $1.775 billion, an increase of 9 percent compared to $1.636 billion in the second quarter of 2017.

Second quarter revenue was $1.368 billion, an increase of 6 percent compared to $1.292 billion in the second quarter of 2017.

Adjusted Net Earnings for the second quarter of 2018 were $207.0 million compared to $205.5 million of Adjusted Net Earnings in the second quarter of 2017. Adjusted Diluted Earnings Per Share (EPS) were $0.62 in the second quarter of 2018 compared to $0.61 of Adjusted Diluted EPS in the year-ago quarter. Analysts’ consensus estimate for second quarter 2018 Adjusted Diluted EPS was $0.60.

“I am pleased with our second quarter results, which included all key metrics being at or above expected levels,” said Zane Burke, President. “Our results were solid across all of our major solution and services categories and included good contributions from U.S. and non-U.S. regions. Looking ahead, we believe our solutions and tech-enabled services are well aligned with the challenges providers and other health care stakeholders are facing, and we have a significant opportunity to grow as we help them with their transition to value-based care in coming years.”

Cerner currently expects:

-Third quarter 2018 revenue between $1.335 billion and $1.385 billion
-Full year 2018 revenue between $5.325 billion and $5.450 billion, consistent with previously provided full year guidance
-Third quarter 2018 Adjusted Diluted Earnings Per Share between $0.62 and $0.64
-Full year 2018 Adjusted Diluted Earnings Per Share between $2.45 and $2.55, consistent with previously provided guidance
-Third quarter 2018 new business bookings between $1.450 billion and $1.650 billion

Five Earnings Reports this Morning
Posted by Eddy Elfenbein on August 2nd, 2018 at 8:23 am

This is a busy morning for us. We had five of our Buy List stocks report earnings, plus two more will come later today. Here’s a summary.

Cognizant Technology Solutions (CTSH) earned $1.19 for Q2. Quarterly revenue rose 9.2% to $4.01 billion. For Q3, CTSH expects earnings of at least $1.13 per share. For all of this year they expect at least $4.50 per share.

Becton, Dickinson (BDX) had EPS of $2.91. That’s up 18.3% or 11.0% on a currency-neutral basis.

BDX raised its 2018 revenue guidance and now expects growth to exceed 31.5% on a reported basis compared to previous guidance of approximately 31.0% to 31.5%.

Becton bumped up the low end of their full-year forecast. They now see full-year EPS of $10.95 to $11.05 up from a previous range of $10.90 to $11.05.

Ingredion (INGR) had second quarter EPS of $1.66. 2018 adjusted EPS were expected to be in the range of $7.50 to $7.80. During the second quarter, the company repurchased 1.25 million shares.

Church & Dwight (CHD) earned 49 cents per share. That’s up 19.5% from a year ago. Net sales grew 14.5% to $1,027.9 million. The company raised the low end of its guidance. CHD now expects EPS of $2.26 to $2.28 (previously, it was $2.24 to $2.28). For Q3, they’re looking for 53 cents per share.

Intercontinental Exchange (ICE) had Q2 earnings of 90 cents per share. That’s an 18% increase over last year.

The company expects Q3 data revenue between $530 million and $532 million. For Q4, it’s expected to be in the range of $538 million to $542 million.

Q2 2018 Earnings Calendar
Posted by Eddy Elfenbein on August 2nd, 2018 at 7:12 am

In this current earnings season, 21 of our 25 Buy List stocks are reporting Q2 earnings. Here’s a list of reporting dates, Wall Street’s consensus estimates and actual reported results.

Morning News: August 2, 2018
Posted by Eddy Elfenbein on August 2nd, 2018 at 7:10 am

Bank of England Raises Interest Rates to Highest Level Since 2009

Fed Holds Interest Rates, Says Economy is Growing At A ‘Strong’ Pace

Solving The ‘Wage Puzzle’: Why Aren’t Paychecks Growing?

US Steel a Big Winner After Tariffs Boost Prices

Google in China: Internet Giant ‘Plans Censored Search Engine’

Starbucks Partners With Alibaba As It Tries to Keep Its Throne in China

Tesla CEO Elon Musk’s $5 Billion Apology Tour

Fiat Chrysler Has to Turn Jeep Around to Compete in China

T-Mobile Subscriber Growth Tops Peers on Path to Sprint Merger

Free Fidelity Funds Stoke Price War in Bid to Catch Index Giants

Apple’s Stock Buybacks Continue to Break Records

Wells Fargo To Pay $2.09 Billion Fine Over Decade-Old Mortgage Loans

Nick Maggiulli: 4 Lessons From the Richest Woman In Wall Street History

Jeff Carter: These Maxims Are Always True

Ben Carlson: Animal Spirits Episode 40: What Worked on Wall Street

Be sure to follow me on Twitter.

Today’s FOMC Statement
Posted by Eddy Elfenbein on August 1st, 2018 at 2:00 pm

No surprise. No rate change:

Information received since the Federal Open Market Committee met in June indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low. Household spending and business fixed investment have grown strongly. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-3/4 to 2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Voting for the FOMC monetary policy action were: Jerome H. Powell, Chairman; John C. Williams, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Esther L. George; Loretta J. Mester; and Randal K. Quarles.

Key Economic Reports
Posted by Eddy Elfenbein on August 1st, 2018 at 11:39 am

There are a few economic reports I want to highlight.

This morning, we learned that the ISM index fell to 58.1 last month. That’s still a very good reading.

Construction spending fell 1.1% last month.

Consumer confidence rose a bit in July.

This morning’s ADP report showed an increase of 219,000 private sector jobs. The official government report comes out on Friday.

Yesterday’s report on personal income and spending showed a 0.4% increase for both during June.

The Fed’s statement is due out at 2 pm today. The futures market currently pegs the odds of a rate hike today at 1.3%. For the next meeting in September, the odds are at 91.4%.

Morning News: August 1, 2018
Posted by Eddy Elfenbein on August 1st, 2018 at 6:50 am

Europe Says Greece Is a Comeback Story. The I.M.F. Isn’t Convinced.

Mexican Officials Optimistic About NAFTA News in Coming Days

China Slams U.S. ‘Blackmailing’ as Trump Weighs Higher Tariffs

Chinese Economy Starts to Feel Tariff Impact

Trump Administration Embraces Fintech Startups

Apple’s Tim Cook Calls Tariffs a ‘Tax on the Consumer’

Apple Shares Jump on iPhone Sales Projection

Stumbles? What Stumbles? Big Tech Is as Strong as Ever

Tesla Plans $5 Billion Investment in Chinese Factory

4 Reasons Monster Growth Remains In Amazon’s Future

Apple Won’t Talk About Its Autonomous Driving Plans, but They’re Happening

Brookfield Asset Management to Acquire Forest City

Chicago Chain Kept Other Hawaiian Restaurants From Using ‘Aloha Poke’ Name

Procter & Gamble, in a Strategy Shift, Moves to Raise Prices

Ferrari Confirms FY Guidance as News CEO Takes the Wheel

Lawrence Hamtil: Signals of Warning vs Signals of Opportunity

Joshua Brown: My MSNBC Hit on Trump’s New Idea For Tax Cuts

Cullen Roche: Why Are Banks Special?

Be sure to follow me on Twitter.

Carriage Services Earns 22 Cents per Share
Posted by Eddy Elfenbein on July 31st, 2018 at 4:41 pm

Very poor earnings from Carriage Services (CSV). The funeral home company made just 22 cents per share in Q2.

The reasons were twofold, i.e. broadly lower volumes and average revenue due to a spike in cremation rates in both our Same Store and Acquisition Funeral Portfolios, and higher interest costs and an increase in outstanding common shares after our recent balance sheet recapitalization.

We view the disappointing second quarter as a temporary performance aberration related to challenging revenue and margin vagaries in our funeral portfolio which is not historically symptomatic of long term operating trends. Over the last eighteen months we have made substantial organizational changes within our operations leadership (Regional Partners and Directors of Support) designed to position the company for higher and sustainable operating and financial performance from both our funeral and cemetery portfolios over the next five years.

We have complete confidence that our operating leadership is effectively dealing with the revenue and margin challenges in our funeral portfolio and that we will experience broadly higher performance during the latter part of the second half of the year compared to our second quarter. In other words, we fully expect to head into next year with our operating trends again being our friend. We have also made great strides in our Cemetery Portfolio by employing and upgrading strong sales leadership in most of our larger parks which has led to improved operating and financial performance through the first half of the year, which is reflected in an increase of 5.7% in Cemetery Revenue and a 13% increase in Cemetery Field EBITDA. We expect the cemetery performance improvements to continue if not accelerate into next year.

Carriage said they expect $1.35 to $1.40 for the coming four quarters.

Fiserv Earns 75 Cents per Share
Posted by Eddy Elfenbein on July 31st, 2018 at 4:26 pm

Fiserv (FISV) just reported Q2 earnings of 75 cents per share. That was one penny per share better than estimates. The financial services firm also reiterated its full-year guidance of $3.02 to $3.15 per share, on internal revenue growth of at least 4.5%.

Fiserv’s CEO, Jeffery Yabuki, said, “Our first-half performance has set us up for strong full-year results and additional momentum as we look into 2019.”

“Our second quarter results were excellent and have us well-positioned to achieve our full-year objectives,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “We continue to focus on service quality, innovation and integration which is reflected in both our current results and sales pipeline entering the second half of the year.”

Here are some highlights of Q2:

Adjusted revenue increased 2 percent to $1.35 billion in the second quarter and 3 percent to $2.72 billion in the first six months of 2018 compared to the prior year periods.

Internal revenue growth for the company was 6 percent in the second quarter, with 5 percent growth in the Payments segment and 7 percent growth in the Financial segment.

Internal revenue growth for the company was 5 percent in the first six months of 2018, with 5 percent growth in the Payments segment and 4 percent growth in the Financial segment.

Adjusted earnings per share increased 32 percent to $0.75 in the second quarter and 27 percent to $1.51 in the first six months of 2018 compared to the prior year periods.

Adjusted operating margin increased 40 basis points to 32.4 percent in the second quarter and increased 20 basis points to 32.5 percent in the first six months of 2018 compared to the prior year periods.

Free cash flow was $491 million in the first six months of 2018 compared to $555 million in the prior year period.

Sales results were up 6 percent in the quarter and 9 percent in the first six months of 2018 compared to the prior year periods.

The company repurchased 5.4 million and 11.0 million shares of common stock for $390 million and $789 million in the second quarter and first half of 2018, respectively. The company had 10.4 million remaining shares authorized for repurchase as of June 30, 2018.

This means the company expects $1.51 to $1.64 per share for the second half of this year.