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1
Charles Schwab (SCHW) along with TDAmeritrade (AMTD) released earnings following Interactive Brokers (IBKR) last night. The brokers give us an idea of the health and depth of financial markets. Trading volumes have soared since the Trump election in November, we know this from the money center banks that have reported already.

Earnings: EPS of 36 cents on revenue of $1.97 billion. Estimates were Q4 EPS +50% to 36 cents on revenue +17% to $1.98 billion.
Client Assets New retail brokerage accounts jumped 21% to 182,000. Financial planning help conversations rose 10% to 32,000 clients. Total client assets at year-end were up 11% at $2.78 trillion.
 

Reaction: Charles Schwab NYSE: SCHW Jan 18, 12:37 PM EST 40.34 +0.01 +0.02%


https://alphastreet.com/app#/company/SCHW

Schwab's Q3 report showed core net new assets grew by $30 billion, sustaining what the firm called a "solid" 5% annualized organic growth rate. At the end of Q3 SCHW had 10 million brokerage accounts up 4% and 1.1 million bank accounts up 6%.

More Earnings News

UnitedHealth $UNH Strong Optum Health Earnings, Less ObamaCare Exchange
Morgan Stanley $MS Earnings Beat on Revenue and Profit
What to Expect From Goldman Sachs $GS Earnings This Week
What to Expect From Citibank $C Earnings This Week 
What to Expect From Netflix $NFLX Earnings This Week 
JPMorgan Chase $JPM Earnings Beats on Trading Income Rise
Bank of America $BAC Earnings Beats EPS, Misses Revenue
Wells Fargo $WFC Earnings Lower, Loan Growth Affected by Reverse Mortgages
Delta Airlines Upbeat on Outlook But Cautions on Rising Fuel Costs
Homebuilder KB Home $KBH Reports Strong Revenue and Orders
MSC Industrial Direct $MSM Shares up 6% After Earnings Guidance
Money in Spuds, ConAgra Potato Spinoff Lamb Weston $LW Earnings Beat
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 
Live From The Pit

2
TDAmeritrade (AMTD) released earnings following Interactive Brokers (IBKR) last night. The brokers give us an idea of the health and depth of financial markets. Trading volumes have soared since the Trump election in November, we know this from the money center banks that have reported already. TD Ameritrade is working to wrap up its deal to buy rival brokerage Scottrade Financial Services Inc.

Earnings: EPS of 41 cents on revenue of $859 million. Analysts expected fiscal Q1 EPS up 5% to 41 cents as revenue increases 5.6% to $857.3 million boosted by increased commissions and fees.
Client Assets New client assets grew at annualized rate of 10% to $19 billion. Total client assets up 15% to $797 billion. Average client trades per day rose 11% to 487,000.
 

Reaction: TD Ameritrade Holding NYSE: AMTD Jan 18, 12:07 PM EST 46.20 +0.33 +0.72% after having risen 27% since the election.

Quote
"Strong organic growth from net new client assets, rate-sensitive assets and new accounts, coupled with emerging tailwinds from the improving interest rate environment, provides a solid base for future earnings growth," said CFO Steve Boyle in a statement.

More Earnings News

UnitedHealth $UNH Strong Optum Health Earnings, Less ObamaCare Exchange
Morgan Stanley $MS Earnings Beat on Revenue and Profit
What to Expect From Goldman Sachs $GS Earnings This Week
What to Expect From Citibank $C Earnings This Week 
What to Expect From Netflix $NFLX Earnings This Week 
JPMorgan Chase $JPM Earnings Beats on Trading Income Rise
Bank of America $BAC Earnings Beats EPS, Misses Revenue
Wells Fargo $WFC Earnings Lower, Loan Growth Affected by Reverse Mortgages
Delta Airlines Upbeat on Outlook But Cautions on Rising Fuel Costs
Homebuilder KB Home $KBH Reports Strong Revenue and Orders
MSC Industrial Direct $MSM Shares up 6% After Earnings Guidance
Money in Spuds, ConAgra Potato Spinoff Lamb Weston $LW Earnings Beat
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 

Live From The Pit

3
Interactive Brokers (IBKR) along with TDAmeritrade (AMTD) earnings give us an idea of the health and depth of financial markets. Trading volumes have soared since the Trump election in November, we know this from the money center banks that have reported already. IBKR is one of the largest automated global electronic brokers giving us an inight into the retail end o the marketplace.

Earnings: IBKR reported a drop in 4Q16 earnings due to lower trade volumes and a drop in revenue. Net income fell to $4MM or $0.07 per share from $17MM or $0.25 per share last year. Revenue dropped to $193MM from $271MM.

Reaction: Interactive Brokers Group NASDAQ: IBKR After-hours $37.05 -.97 -2.55%

 

IBKR's results for 2016 were positively impacted by strong growth in net interest income, which grew 24% from 2015.





It was also noticed the non-recurrence of unsecured customer losses caused by the sudden move in the value of the Swiss franc in January 2015 following the SNB's 10% devaluation of the Franc. This caused massive losses and led to IBKR leaving the forex market for accounts under $10 million.
 
IBKR BoD declared a quarterly cash dividend of $0.10 per share. This dividend is payable on March 14, 2017 to shareholders of record as of March 1, 2017.

More Earnings News

UnitedHealth $UNH Strong Optum Health Earnings, Less ObamaCare Exchange
Morgan Stanley $MS Earnings Beat on Revenue and Profit
What to Expect From Goldman Sachs $GS Earnings This Week
What to Expect From Citibank $C Earnings This Week 
What to Expect From Netflix $NFLX Earnings This Week 
JPMorgan Chase $JPM Earnings Beats on Trading Income Rise
Bank of America $BAC Earnings Beats EPS, Misses Revenue
Wells Fargo $WFC Earnings Lower, Loan Growth Affected by Reverse Mortgages
Delta Airlines Upbeat on Outlook But Cautions on Rising Fuel Costs
Homebuilder KB Home $KBH Reports Strong Revenue and Orders
MSC Industrial Direct $MSM Shares up 6% After Earnings Guidance
Money in Spuds, ConAgra Potato Spinoff Lamb Weston $LW Earnings Beat
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 
Live From The Pit

4
Days away from the Trump Presidency a timely earnings report from the big health insurer UnitedHealth Group (UNH). UNH beat fourth-quarter earnings forecasts Tuesday aided by reduced cost pressure from its ObamaCare exchange business. UnitedHealth has managed to avoid volatility from ObamaCare and antitrust nerves which have plagued other insurers.

Much of this is from UNH's Optum health services unit, UnitedHealth is up 13% postelection.

Earnings: Earnings of $2.11 per share were up 50.7% from a year ago and 4 cents ahead of consensus.  Revenue rose 9.0% to $47.52 billion, topping views of $47.13 billion.

Reaction: UnitedHealth Group NYSE: UNH Jan 17 11:10 AM EST 159.26 -2.54 -1.57%

 



UnitedHealth said its medical costs as a share of premium revenue fell 1.9 percentage points to 80.8% in Q4, helped by "reduced individual market pressure."

Optum

Optum unit revenue growth temporarily slowed in Q4 due a 4.8% decline in revenues at the OptumRx pharmacy benefit management services unit. That decline reflected a loss of business that had been anticipated when UnitedHealth bought Catamaran.

UNH stated that the Catamaran acquisition had an 18% operating earnings growth in 4Q16 for Optum overall, led by 27% growth at OptumRx. Looking into 2017, OptumInsight's year-end backlog grew 21% to $12.6Bil, said the company. The company added that it is optimistic about its outlook for 2017 with revenue exceeding $90Bil.

UnitedHealth remains in a handful of ObamaCare exchange markets in 2017, and CEO Stephen Hemsley may offer clues about the company's plans for 2018 as Republicans move to repeal the law's key provisions.



Guidance:

UNH Maintained its financial outlook for 2017:

Revenue of $197 billion-$199 billion and adjusted EPS of $9.30-$9.60. Wall Street analysts see revenue of $198.3 billion and EPS of $9.51.

More Earnings News

Morgan Stanley $MS Earnings Beat on Revenue and Profit
What to Expect From Goldman Sachs $GS Earnings This Week
What to Expect From Citibank $C Earnings This Week 
What to Expect From Netflix $NFLX Earnings This Week 
JPMorgan Chase $JPM Earnings Beats on Trading Income Rise
Bank of America $BAC Earnings Beats EPS, Misses Revenue
Wells Fargo $WFC Earnings Lower, Loan Growth Affected by Reverse Mortgages
Delta Airlines Upbeat on Outlook But Cautions on Rising Fuel Costs
Homebuilder KB Home $KBH Reports Strong Revenue and Orders
MSC Industrial Direct $MSM Shares up 6% After Earnings Guidance
Money in Spuds, ConAgra Potato Spinoff Lamb Weston $LW Earnings Beat
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 
Live From The Pit

5
Breaking News / What to Expect From Citigroup $C Earnings This Week
« on: January 15, 2017, 12:28:51 PM »
Citigroup (C) reports fourth-quarter results on Jan. 18 before the market opens. Citi follows Bank of America (BAC) , Wells Fargo (WFC) and JPMorgan (JPM) along with the other money center major banks  Morgan Stanley (MS) and Goldman Sachs (GS) with another big bankers earnings week. Since Donald Trump won on Election Day there has been a huge run higher on Citi and the other bank stocks. Trading income was the biggest surge for most banks in Q4 and $C along with $MS looks to have the biggest jump in total trading revenue at 23% versus a year earlier estimates Deutsche Bank analyst Matt O'Connor.

Citibank Consensus Forecast
 

Citigroup earnings per share (EPS) expected to be $1.12 in 4Q16. In the previous quarter, $C reported EPS of $1.24 according to consensus data from Thomson Reuters. Net revenues for Citigroup are expected to be $17.3 billion in 4Q16, 7% lower year-over-year. Net income is expected to be $3.2 billion for the quarter, 19% higher compared to the same period last year.

Of note $C is the only major money center bank trading at less than book value. It is trading at 11.4 times forward earnings and 0.8 times book value.

The bank rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The Federal Reserve decision to raise rates has also helped banks.  The new surge in home prices has also buoyed optimism for the banking business and banks profits thereto.



Citbank's trading business stands to also benefit should the economy rebound along with rising interest rates, which could help its lending spreads. Corporate tax savings would also aid profitability. Citigroup CFO John Gerspach said in October that his firm might have benefited from a retreat by Deutsche Bank (DB) in the government-bond and currency-trading businesses.



What Analysts Think

UBS analyst Saul Martinez downgraded Citigroup to sell from buy and lowered target price to $58 from $64.

Martinez saysCiti’s global footprint means it will see less benefit from lower corporate tax rates and higher interest rates in the U.S. He adds its international positioning means it is more exposed to potential fallout from more protectionist policies under a Trump administration.

SocGen analyst Andrew Lim on buy backs

SocGen believes in the “Trump Effect” to  increase net interest income, lower corporate taxes and allow for the return of excess capital. Trump’s proposed fiscal stimulus has steepened the U.S. yield curve.

“The increase in earnings will likely be significant for some banks, in our view, more than justifying the recent rally in share prices for US-centric banks,” Lim wrote in a note. he added “We see Trump’s policies as supportive of FX trading
going forward, amplified by ongoing macro-political volatility in Europe and emerging markets.”

Lim also highlighted Morgan Stanley, Citigroup Inc and BofA as having the most excess capital and using it to buy back shares could boost EPS by 26 percent, 21 percent and 10 percent respectively.

Barclays analyst Jason Goldberg reiterated his overweight rating on Citigroup in an investor note last week.

Morgan Stanley analyst Betsy Graseck upgraded Citigroup from “equal weight” to “overweight” and upgraded the target price from $50 to $70.

Macquarie analyst David Konrad downgraded Citigroup to “neutral” from “outperform”.

Macquarie also believes Citi’s global payments business could be hurt by global events such as Brexit and Trump’s presidential victory.

Citibank NYSE: C closed Friday Jan 13 at 59.63 +0.40 +0.68%. The 52-week range is 34.52 - 61.63 on Average Volume of 21,307,209.

More Earnings News
What to Expect From Goldman Sachs $GS Earnings This Week
What to Expect From Morgan Stanley $MS Earnings This Week 
What to Expect From Netflix $NFLX Earnings This Week 
JPMorgan Chase $JPM Earnings Beats on Trading Income Rise
Bank of America $BAC Earnings Beats EPS, Misses Revenue
Wells Fargo $WFC Earnings Lower, Loan Growth Affected by Reverse Mortgages
Delta Airlines Upbeat on Outlook But Cautions on Rising Fuel Costs
Homebuilder KB Home $KBH Reports Strong Revenue and Orders
MSC Industrial Direct $MSM Shares up 6% After Earnings Guidance
Money in Spuds, ConAgra Potato Spinoff Lamb Weston $LW Earnings Beat
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 

Live From The Pit

6
Breaking News / What to Expect From Morgan Stanley $MS Earnings This Week
« on: January 15, 2017, 11:53:02 AM »
Morgan Stanley (MS) reports fourth-quarter results on Jan. 17 before the market opens. MS follows Bank of America (BAC) , Wells Fargo (WFC) and JPMorgan (JPM) along with the other money center major banks  Citibank (C) and Goldman Sachs (GS) with another big bankers earnings week. Since Donald Trump won on Election Day there has been a huge run higher on MS and the other bank stocks. Trading income was the biggest surge for most banks in Q4 and $MS looks to have the biggest jump in total trading revenue at 23% versus a year earlier estimates Deutsche Bank analyst Matt O'Connor.

Morgan Stanley Consensus Forecast
 

Morgan Stanley earnings per share (EPS) expected to rise 51% to $0.65 from $0.43 a year ago according to consensus data from Thomson Reuters. Analysts expect revenue of $8.35 billion for the quarter. On average analysts expect MS $2.76 EPS for the current fiscal year and $3.30 EPS for next fiscal year.

The bank rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The Federal Reserve decision to raise rates has also helped banks.  The new surge in home prices has also buoyed optimism for the banking business and banks profits thereto.

Morgan Stanley's trading business stands to also benefit should the economy rebound along with rising interest rates, which could help its lending spreads. Corporate tax savings would also aid profitability. Morgan Stanley has also been aggressively cutting expenses back in in January the bank laid off a number of senior investment bankers and cut bonuses 15% after the Jan. 1 start date of new pay packages reconfigured with new incentives.



Analysts will be watching for comments on China according to the Wall Street Journal.  The paper reported MS reportedly is planning to up its stake later this year to 49% with its joint-venture partners in China in "a sign of good faith to the Chinese government," .. "will open up over time and offer opportunities,"



Source: MarketBeat

What Analysts Think

SocGen analyst Andrew Lim raised Morgan Stanley’s price target to $60.0 from $22.5.

SocGen upgraded Morgan Stanley along with Bank of America Corp  and UBS Group AG (USA) to Buy as it believes in the “Trump Effect” to  increase net interest income, lower corporate taxes and allow for the return of excess capital. Trump’s proposed fiscal stimulus has steepened the U.S. yield curve.

“The increase in earnings will likely be significant for some banks, in our view, more than justifying the recent rally in share prices for US-centric banks,” Lim wrote in a note. he added “We see Trump’s policies as supportive of FX trading
going forward, amplified by ongoing macro-political volatility in Europe and emerging markets.”

Lim also highlighted  Morgan Stanley, Citigroup Inc and BofA as having the most excess capital and using it to buy back shares could boost EPS by 26 percent, 21 percent and 10 percent respectively.

Morgan Stanley NYSE: MS closed Friday Jan 13 at 43.81+0.18 +0.41%. The 52-week range is 21.16 - 44.60 on Average Volume of 12,138,877. Over the three months ended Dec 31, 2016 Morgan Stanley stock was up almost 37%.

More Earnings News
What to Expect From Goldman Sachs $GS Earnings This Week
What to Expect From Citibank $C Earnings This Week 
What to Expect From Netflix $NFLX Earnings This Week 
JPMorgan Chase $JPM Earnings Beats on Trading Income Rise
Bank of America $BAC Earnings Beats EPS, Misses Revenue
Wells Fargo $WFC Earnings Lower, Loan Growth Affected by Reverse Mortgages
Delta Airlines Upbeat on Outlook But Cautions on Rising Fuel Costs
Homebuilder KB Home $KBH Reports Strong Revenue and Orders
MSC Industrial Direct $MSM Shares up 6% After Earnings Guidance
Money in Spuds, ConAgra Potato Spinoff Lamb Weston $LW Earnings Beat
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 

Live From The Pit

7
Breaking News / What to Expect From Goldman Sachs $GS Earnings This Week
« on: January 15, 2017, 09:53:22 AM »
Goldman Sachs (GS) reports fourth-quarter results on Jan. 18 before the market opens. GS follows Bank of America (BAC) , Wells Fargo (WFC) and JPMorgan (JPM) along with the other money center major banks  Citibank (C) and Morgan Stanley(MS) with another big bankers earnings week. Since Donald Trump won on Election Day there has been a huge run higher on GS and the other bank stocks. Goldman shares were $182 on Election Day and recently traded at $244.30.GS also has around five former employees involved in the new Trump Administration which continues the bank's political domination.

Goldman Sachs Consensus Forecast
 

Goldman Sachs earnings per share (EPS) expected at $4.84 in 4Q16 versus last year adjusted EPS of $4.68. Net income expected at $2 billion for the quarter, 26% higher than 4Q15. Net revenue expected at $7.7 billion, 6% higher YoY according to consensus data from Thomson Reuters.

The bank rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The Federal Reserve decision to raise rates has also helped banks.  The new surge in home prices has also buoyed optimism for the banking business and banks profits thereto.

Goldman trading business stands to also benefit should the economy rebound along with rising interest rates, which could help its lending spreads. Corporate tax savings would also aid profitability.

What Analysts Think

Citigroup’s Keith Horowitz downgraded the stock to sell last week citing the valuation and says Goldman needs $4 billion in revenue beyond the 2017 consensus estimate of $32.4 billion to justify its valuation.

UBS’s Brennan Hawken wrote in a Jan. 6 note saying Goldman is in a position to grab more than its share of an estimated $15 billion rise in fixed-income, currency, and commodity trading revenue among big banks over the next two years. Hawken predicts above-consensus earnings of $20.80 a share this year and $24.40 in 2018.

Goldman Sachs Group Inc NYSE: GS closed Friday Jan 13 at 244.30 +0.56 +0.23%. The 52-week range is 138.20 - 247.77 on Average Volume of   4,007,166

More Earnings News
What to Expect From Netflix $NFLX Earnings This Week 
JPMorgan Chase $JPM Earnings Beats on Trading Income Rise
Bank of America $BAC Earnings Beats EPS, Misses Revenue
Wells Fargo $WFC Earnings Lower, Loan Growth Affected by Reverse Mortgages
Delta Airlines Upbeat on Outlook But Cautions on Rising Fuel Costs
Homebuilder KB Home $KBH Reports Strong Revenue and Orders
MSC Industrial Direct $MSM Shares up 6% After Earnings Guidance
Money in Spuds, ConAgra Potato Spinoff Lamb Weston $LW Earnings Beat
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 

Live From The Pit

8
Breaking News / What to Expect From Netflix $NFLX Earnings This Week
« on: January 14, 2017, 12:12:30 PM »
Netflix (NFLX) catapulted up 3.5% on Friday to close at an all-time high of $133.70. The boost came from an upgrade from Deutsche Bank’s Bryan Kraft, who raised the stock to from “Sell” to “Hold” in a note ahead of $NFLX Q416 earnings report  Wednesday, January 18th after the market’s close.

Netflix Consensus Forecast

Expected to report earnings of .13c EPS according to analysts surveyed by FactSet, a gain of 30% compared with Q415 and a 8% increase from Q316. Revenue of  $2.47 billion is expected, up more than 35% compared with Q41.

Key will be Netflix's domestic and international subscribers,

 

Consensus per FactSet is for 1.44 million domestic streaming subscriber additions, and 3.73 million international net adds. The company’s forecast is for 1.2 million domestic additions and 3.4 million internationally. Deutsche Bank's Kraft thinks Netflix will present strong international growth, adding 4.35 million international subs to the company’s guidance buoyed by strength in Western Europe.

Revenue Breakdown Estimate:

Estimates of analysts tracked by FactSet.

$1.39 billion in revenue from domestic streaming subscriptions,
$942 million in international streaming revenue
126 million from Netflix’s DVD shipping business.

Netflix $NFLX  performance history,

80% drawdown and -40% after ipo at some point but still 120+ baggers to date via @curiousbuild 



Deutsche Bank's Bryan Kraft note on Netflix from “Sell” to “Hold”

Kraft said the company will beat consensus next week with its net subscriber additions in a note distributed on Thursday.

Quote
Kraft said the increased international demand was "catalyzed by original content (e.g. Luke Cage – Sept. 30 release, The Crown, Gilmore Girls, and Fuller House)."

$NFLX P/S ratio is now at the higher end of its historical range via ‏@stockrow1



Pacific Crest’s Andy Hargreaves reiterates an Overweight rating with a $135 price target

Quote
We expect the strong and rapidly growing content lineup to drive Q4 domestic and international net adds at least in line with the company’s guidance for 1.45 million and 3.75 million. Continued international momentum should allow the company to Q1 guide global net adds at least in line with the consensus estimate of 4.3 million, with the potential for upside.

Hargreaves added:

Quote
“An acquisition or broader strategic vision may be necessary to drive the next leg of material stock appreciation, neither of which have high certainty,” given that subscriber gains may not lead to much stock upside:

We continue to recommend owning NFLX. The company operates what we view as the ideal model for premium video distribution in the Internet era, which offers a tremendous opportunity for further revenue and profit growth. However, at current levels and with the company’s strategy well outlined, the opportunity for subscriber or pricing growth beyond our expectations is more balanced with the risk of slowing growth due to competition or other factors. Consequently, absent an acquisition, we believe the company may have to expand its strategic vision to support more than moderate annual stock appreciate.

We believe the company has the asset base and ambition to do this, either by expanding into ad-supported video, broadening subscription options to leverage elasticity, or pursuing tangential opportunities. However, timing and impact of such a move is highly uncertain. Separately, we continue to believe Netflix is a viable acquisition target for both technology companies looking to expand their video services business, or traditional media companies looking to transition toward direct- to-consumer distribution. Although its $55 billion market cap has become more of a challenge for many businesses to consider, Netflix remains entirely unique in its positioning and a superior alternative to building out a global video distribution business from scratch, in our view.

MKM Partners’s Rob Sanderson reiterates a Buy rating and a $165 price target.

Sanderson is modeling the company to meet its own forecast for Q4. For Q1he models 1.9 million domestic additions and 2.8 million international additions above consensus.

Quote
Consensus does not reflect normal Q1 seasonality for net paid additions. Last quarter, management proactively highlighted a high bar for international net adds in Q1. We think the Street may have lowered too much. Last year was unusual on the ROW launch, but in the trailing three years, int’l net paid adds increased by 6% to 24% sequentially in Q1. Consensus is 30% lower in Q1 than in Q4. In the previous four years, domestic net adds have been up 46% to 74% sequentially in Q1. Consensus is up 18% this year. This is based on FactSet, which is historically not as accurate as other sources for subscribers. We expect to see StreetAccount consensus on Tuesday. We expect this data will still imply conservative Q1 expectations, though somewhat less conservative than FactSet.

We think the stock set-up heading into 2017 is much better than a year ago. Comps should get easier through the year, originals are becoming a larger subscriber draw, the content slate is significantly larger for 2017 and a large portion of the footprint is entering what has been the break-out year for other regions.

Dougherty & Co.’s Steven Frankel reiterates a Neutral rating more cautious about the rest 2017.

Frankel offers a more bearish outlook for NFLX. He sees Netflix’s overseas operations turning in less profit for 2017 than he’d previously expected.

Quote
From a high level, we are assuming that in 2017, the company adds 4.05M domestic (vs. an estimated 4.21M in ’16) and 14M international (vs. 12.97M in ’16) subs. We are assuming domestic streaming contribution margin increases from 35.8% in ’16 to 37.0% in ’17 (previously we had 35.6%). International streaming, which we have losing $317M in ’16 should reach profitability in the back half and post a full year contribution profit of $5M (vs. our prior assumption of $250M or 5.3% of revenue). As a result, our De17 EPS falls from $1.06 to $0.85 on revenue of $11.07B. The current consensus is $11.02B/$0.93.

An important note particularly when a stock is trading at all time highs is valuation and catalysts. To quote Frankel on this point:

Quote
“The company must continue to execute to perfection, especially in terms of sub adds.”

“While we like the company’s strategy and competitive position,” writes Frankel, “fear of quarter-to-quarter volatility and uncertainty as to when the company can see meaningful margin expansion — driving operating margins at least into the mid-teens — keeps us on the sidelines.”

FBR & Co.’s Barton Crockett has a Market Perform rating.

Crockett tracking Google searches for Netflix finds the trend suggests rising overseas interest:

Quote
Google search volumes slightly better in 4Q16 versus 3Q16. As a rough gauge of global interest in Netflix, we track Google searches using Netflix as a search term across key territories (see detail in the note). The key takeaway is that in most territories the trend in searching for Netflix in 4Q16 was in line with or better than 3Q16. To us, this suggests a backdrop of steady to improving global consumer interest, a good backdrop for Netflix’s ability to execute versus guidance for 4Q16.

In the U.S., Netflix churn rose in 2Q16 on fallout from the press coverage of an effective price hike from ungrandfathering. But, by our math, the impact of a 20-bp improvement in churn year over year would be totally offset by the increased churn from having a sub base that is 4 million larger. Netflix also reasonably called out 1Q16 as a difficult comp because of the rest of world launch in January 2016. International net adds grew 73% in 1Q16 to 4.5 million. We are modeling 3.7 million net international adds in 1Q17, a decline of 17%—a tough nut to overcome for the balance of the year when international growth should normalize.

Crockett also warns on bullish euphoria:

Quote
But the equity, up 30% in the last three months (versus the S&P 500 up 6%), already anticipates much of this, and we believe bulls are too blithely eager to argue for accelerating sub growth in 2017, versus tough comps, and a little too quick to dismiss risks tied to potential change in the regulatory landscape under President- elect Trump.

RBC's Mark Mahaney note distributed on Thursday.

Quote
"We are estimating 1.46 million net new U.S. streaming subs and 3.75 million net new international streaming subs, roughly in line with guidance,"

J.P. Morgan's analysts led by Doug Anmuth.

“However, we believe Netflix sets up as a cleaner story into 2017 with pricing changes behind, revenue accretion from higher [average selling prices], stronger content and increased global profitability. Importantly, we think Netflix can add more U.S. and international subscribers in 2017 than 2016.”

Netflix plans to increase its hours of original programming to 1,000 in 2017, from 600 in 2016.

Netflix was the best performer in the S&P in 2015. However 2016 was extremely volatile with subscriber growth and price hike blips. Friday, as mentioned the stock closed at an all time high. Heady days from its 2002 IPO. Comparisons will be made with Amazon.com Inc.’s AMZN and their global content push. There will also be a question of what the future of net neutrality might be under the new Trump administration.

Returns since Netflix announced streaming video 10 yrs ago...
via @charliebilello


Quote
Netflix: +4021%
Blockbuster: -99.9%
Innovate or die



Netflix produced the most popular show of 2016

Over major networks like CBS, NBC, Fox and ABC

1. Netflix's Fourth season of Orange Is the New Black.
2. CBS's The Big Bang Theory,
3. Netflix's Stranger Things
4. Netflix's Fuller House
5. ABC's Designated Survivor

The data was collected by ratings startup SymphonyAM, which defined popularity by viewership in the first 35 days. SymphonyAM gathered its data from an app that listens to subscribers' TVs and estimates viewership. Netflix itself has always refused to reveal any viewership numbers.

NFLX shares closed at 133.70 +4.52 +3.50% and after hours rose to 133.98 +0.28 +0.21%. The 52 Week Range is $79.95 - 133.93.

Sources: Fortune, Barrons, Marketwatch

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Money in Spuds, ConAgra Potato Spinoff Lamb Weston $LW Earnings Beat
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 
JPMorgan Chase (JPM) Earnings Review
Bank of America (BAC) Earnings Review
Wells Fargo (WFC) Earnings Preview


Live From The Pit

9
Calls on Jan 20, 2017 Before Open
AMERIS BANCORP  ABCB    Before Open   N/A   0.56   N/A
CITIZENS FIN GP  CFG    Before Open   N/A   0.52   N/A
GENL ELECTRIC  GE    Before Open   N/A   0.46   N/A
KANSAS CITY SOU  KSU    Before Open   N/A   1.19   N/A
REGIONS FINL CP  RF    Before Open   N/A   0.22   N/A
ROCKWELL COLLIN  COL    Before Open   N/A   1.15   N/A
SCHLUMBERGER LT  SLB    Before Open   N/A   0.27   N/A
SUNTRUST BKS  STI    Before Open   N/A   0.88   N/A
SYNCHRONY FIN  SYF    Before Open   N/A   0.67   N/A
 



Live From The Pit

10
Calls on Jan 19, 2017 Before Open
BANK OF NY MELL  BK    Before Open   N/A   0.78   N/A
BB&T CORP  BBT    Before Open   N/A   0.73   N/A
CHECK PT SOFTW  CHKP    Before Open   N/A   1.15   N/A

EXACTEARTH LTD  XCT    Before Open   N/A   -0.07   N/A
GATX CORP  GATX    Before Open   N/A   1.05   N/A
HOME BANCSHARES  HOMB    Before Open   N/A   0.33   N/A
INSTEEL INDS  IIIN    Before Open   N/A   N/A   N/A
KCG HOLDINGS  KCG    Before Open   N/A   0.08   N/A
KEYCORP NEW  KEY    Before Open   N/A   0.29   N/A
 

M&T BANK CORP  MTB    Before Open   N/A   2.02   N/A
MGIC INVSTMT CP  MTG    Before Open   N/A   0.22   N/A
PPG INDS INC  PPG    Before Open   N/A   1.19   N/A
TAL EDUCATN-ADR  TAL    Before Open   N/A   N/A   N/A
UNION PAC CORP  UNP    Before Open   N/A   1.33   N/A
WEBSTER FINL CP  WBS    Before Open   N/A   0.55   N/A
WNS HLDGS-ADR  WNS    Before Open   N/A   0.34   N/A
SANDY SPRING  SASR    N/A   N/A   0.54   N/A

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11
Calls on Jan 18, 2017 Before Open
ASML HOLDING NV  ASML    Before Open   N/A   1.06   N/A
CITIGROUP INC  C    Before Open   N/A   1.12   N/A
COMMERCE BANCSH  CBSH    Before Open   N/A   0.68   N/A
FASTENAL  FAST    Before Open   N/A   0.38   N/A
GOLDMAN SACHS  GS    Before Open   N/A   4.76   N/A

NORTHERN TRUST  NTRS    Before Open   N/A   1.13   N/A
TD AMERITRADE  AMTD    Before Open   N/A   0.41   N/A
US BANCORP  USB    Before Open   N/A   0.81   N/A
NOVOZYMES A/S  NVZMY    N/A   N/A   N/A   N/A
 


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12
Breaking News / US Earnings To Watch Jan 17 2017 $CMA $INFO $MS $SNV $UNH
« on: January 14, 2017, 10:48:00 AM »
Calls on Jan 17, 2017 Before Open
AQUA AMER INC  WTR    Before Open   N/A   0.29   N/A
BANK OZARKS  OZRK    Before Open   N/A   0.69   N/A
COMERICA INC  CMA    Before Open   N/A   0.96   N/A
IHS MARKIT LTD  INFO    Before Open   N/A   0.36   N/A
MERCANTILE BANK  MBWM    Before Open   N/A   0.46   N/A
MORGAN STANLEY  MS    Before Open   N/A   0.66   N/A
NEW ORIENTAL ED  EDU    Before Open   N/A   0.09   N/A
SYNOVUS FINL CP  SNV    Before Open   N/A   0.53   N/A
UNITEDHEALTH GP  UNH    Before Open   N/A   2.07   N/A


 


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13
Delta Air Lines (DAL) fourth-quarter earnings were in line with expectations Thursday.

Earnings: Net income fell to $622MM compared to $980MM an EPS of 82 cents, $1.25 per share during 4Q15,  as expected but a 31% drop from last year. Revenue was $9.46 billion above $9.41 expected. Unit revenue fell 2.7% vs. a year earlier, better than guidance of -3% to 5%.

Reaction: Delta Air Lines, Inc. NYSE: DAL  Jan 12, 11:14 AM EST 49.74 -1.70 -3.30%

 


https://alphastreet.com/app#/home

Delta said its passenger unit revenue during 4Q16 fell 2.7% on a 0.9% increase in capacity. Cargo revenue for the quarter fell 19% YoY.



During 4Q16 DAL returned $499MM to its shareholders that comprises of $149MM of dividends and $300MM of share repurchases.

Delta Air Lines Earnings $DAL AlphaGraph: Q4 2016 Highlights



Guidance:

DAL expects its 1Q17 operating margin to be in the range of 11-13%. The company expects its passenger unit revenue to be up by approx. 0-2%. $DAL anticipates its systems capacity to drop by approx. 0-1%.

More Earnings News

Homebuilder KB Home $KBH Reports Strong Revenue and Orders
MSC Industrial Direct $MSM Shares up 6% After Earnings Guidance
Money in Spuds, ConAgra Potato Spinoff Lamb Weston $LW Earnings Beat
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 
JPMorgan Chase (JPM) Earnings Preview
Bank of America (BAC) Preview
Wells Fargo (WFC) Earnings Preview

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14
Calls on Jan 13, 2017 Before Open

BANK OF AMER CP  BAC    Before Open   N/A   0.38   N/A
BLACKROCK INC  BLK    Before Open   N/A   5.01   N/A
FIRST HRZN NATL  FHN    Before Open   N/A   0.25   N/A
FIRST REP BK SF  FRC    Before Open   N/A   1.02   N/A
JPMORGAN CHASE  JPM    Before Open   N/A   1.42   N/A
PNC FINL SVC CP  PNC    Before Open   N/A   1.86   N/A
WELLS FARGO-NEW  WFC    Before Open   N/A   1.00   N/A

 


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15
Calls on Jan 12, 2017 Before Open

ADV DRAINAG SYS  WMS    Before Open   N/A   0.15   N/A
DELTA AIR LINES  DAL    Before Open   N/A   0.81   N/A
FUELCELL ENERGY  FCEL    Before Open   N/A   -0.37   N/A
NORTHERN TECH  NTIC    Before Open   N/A   N/A   N/A
ROCKY MT CHOC  RMCF    Before Open   N/A   N/A   N/A
SANDVINE CORP  SVC    Before Open   N/A   0.04   N/A
SHAW COMMS-CL B  SJR    Before Open   N/A   0.23   N/A
SHAW COMM-TS  SJR    Before Open   N/A   0.31   N/A
 

TAIWAN SEMI-ADR  TSM    Before Open   N/A   0.58   N/A
WILLIS TWRS WAT  WLTW    Before Open   N/A   1.61   N/A

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16
KB Home KBH / Homebuilder KB Home $KBH Reports Strong Revenue and Orders
« on: January 11, 2017, 06:02:41 PM »
Homebuilder KB Home $KBH reported lower 4Q16 earnings despite revenue rising 20.81% to $1.19 billion, topping estimates for $1.15 billion. Earnings was down 7% from a year earlier to $0.40 per diluted share from $44.02MM or $0.43 per diluted share a year ago but beat expectations by a penny. Profits were hurt by increased costs. 

Orders rose 20% on the year, net order value grew 27% to $855.9 Mil. Its backlog grew 19% for the quarter to $1.52 billion, the best year-end level since 2006. The average selling price rose 2% vs. a year earlier to $387,400. 

Reaction: KB Home NYSE: KBH After-hours: $17.05 +0.45 +2.71% after shares closed up 2.1% to 16.60 today.

 

Quote
"With healthy net order activity in the fourth quarter contributing to our highest backlog value level in 10 years, we are entering 2017 with strong momentum," said Jeffrey Mezger, KB Home's chairman and CEO.

KBH's Homebuilding operating income for 4Q16 decreased 20% from 4Q15 to $56MM.

In 2016 KBH repurchased about 8.4MM shares of its common stock at a total cost of $85.9MM, while improving its ratio of debt to capital to 60.5% and ratio of net debt to total capital to 54.3%.

Inventories were $3.4Bil, with investments in land acquisition and development totaling $1.36Bil for the year ended Nov. 30, 2016.


https://alphastreet.com/app#/home

In 4Q16 KBH generated a 21% increase in housing revenues driven by increases in deliveries across all four of its regions, with the most pronounced growth coming from the West Coast region.

During 4Q16, the company achieved 3.3 net orders per community per month reflecting an increase of 30% YoverY with improvement in each of its four regions.

KBH stated that land spend for 2016 totaled $1.4Bil. In terms of specs, the company was a little bit over one finished spec for a community. $KBH was at 378 at the end of 4Q16 in terms of finished specs.

Guidance:

For 1Q17 KBH expects to generate housing revenues of $760-820MM. For full-year 2017, the company anticipates housing revenues in the range of $3.8-4.2Bil. For 1Q17, $KBH is projecting overall average selling price to be $360,000-365,000. Overall ASP for 2017 is expected to be $370,000-385,000, representing an increase of 2-6% versus 2016.

For full-year 2017, the company expects Homebuilding operating income margin, excluding the impact of inventory-related charges, to be 5.7-6.3%. Full-year 2017 GM is expected to be 16-16.5%. Effective tax rate for 2017 is expected to be 39%.

KBH said there is a balance of margin and absorption that will get the highest returns on investments. The company is approaching its targeted absorption and can now work on improving margins. $KBH’s community count was up in California but it was down in Southeast. $KBH is taking advantage of the demand that has emerged with first-time buyers.

More Earnings News

MSC Industrial Direct $MSM Shares up 6% After Earnings Guidance
Money in Spuds, ConAgra Potato Spinoff Lamb Weston $LW Earnings Beat
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 
Wells Fargo (WFC) Earnings Preview JPMorgan Chase (JPM) Earnings Preview
Bank of America (BAC) Preview

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17
MSC Industrial Direct through MSC Industrial Supply Co. is one of the largest industrial equipment distributors in the world. MSM earnings reports give us an insight into the industrial economy strength.

Earnings: 1Q17 net income fell to $54.11MM from $55.03MM last year, while EPS rose to $0.95 from $0.89 on lower weighted average shares. Net sales dropped to $686.27MM from $706.82MM. Slight decline due to higher interest expenses and difficult demand environment softness in pricing.

Reaction: MSC Industrial Direct NYSE: MSM 98.14 +5.97 +6.48%

 


https://alphastreet.com/app#/company/MSM

In terms of cash conversion, $MSM turned 139% of its net income into cash flow from operations during 1Q17. The company expects FY17 cash conversion to be about 100%.

Guidance:
 
MSM expects 2Q17 net sales of $688-701MM and EPS of $0.86-0.90. At the midpoint, average daily sales are expected to increase roughly 1.5% as compared to the previous year quarter.

Has seen some supplier price increase activity that are selective and not broad based. The company anticipates to take a very modest price increase in the next two months, if the price increase activity continues in the market.

More Earnings News
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 
Wells Fargo (WFC) Earnings Preview JPMorgan Chase (JPM) Earnings Preview
Bank of America (BAC) Preview

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18
Calls on Jan 11, 2017 Before Open

CORUS ENTMT-B  CJREF    Before Open   N/A   N/A   N/A
CORUS ENTMT-TS  CJR    Before Open   N/A   0.42   N/A
EXTERRAN CORP  EXTN    Before Open   N/A   N/A   N/A
MSC INDL DIRECT  MSM    Before Open   N/A   0.93   N/A
STAFFING 360 SL  STAF    Before Open   N/A   -0.17   N/A
SUPERVALU INC  SVU    Before Open   N/A   0.13   N/A

 


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19
Lamb Weston Holdings (LW) reported its first quarterly report since becoming an independent company after food giant ConAgra Brands Inc (CAG) span it off in November. Lamb Weston was $CAG's frozen-potato line with major cusomers like McDonalds MCD and YUM.

Earnings:  Q2 profit of $87.2 million, or 59 cents a share. On an adjusted basis 63 cents a share incl $9 million in costs related to spinoff from ConAgra. Revenue jumped 7% to $790.7 million. Profit grew 19% beating expectations on tightened supply chain. Analysts polled by Thomson Reuters had forecast earnings of 55 cents on $773.6 million in revenue.

Reaction: Lamb Weston NYSE: LW PreMarket:  $39.23 +6.3% (15% over spinoff at $34).

 

Guidance:

LW raised guidance for fiscal 2017 forecasting earnings of $2.20 to $2.28 and revenue growth in the mid-single digits. Analysts are expecting earnings of $2.07 per share on $3.1 billion in revenue.

Quote
Chief Executive Tom Werner said demand for frozen potato products is currently outpacing capacity, but the company plans to expand in the back half of the year.


More Earnings News
Iconic WD-40 $WDFC Earnings Miss Expectations, Shares Slip 6 percent 
Wells Fargo (WFC) Earnings Preview JPMorgan Chase (JPM) Earnings Preview
Bank of America (BAC) Preview

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20
Iconic maintenance and cleaning product company WD-40 (WDFC) reported fiscal first-quarter profit of $11.8 million on $89.2 million in revenue at 82 cents per share (EPS). The results missed analysts expectations by 5 cents. The average estimate analysts surveyed by Zacks Investment Research was for 87 EPS.

Guidance:WD-40 expects full-year earnings to be $3.64 to $3.71 per share with revenue in the range of $395 million to $404 million.

Reaction: WD-40 NASDAQ: WDFC After-hours: 110.40 -$6.90 -5.88%

WD-40 closed at $117.65 before the report, a gain of 24 percent in the last 12 months. WD-40 on its website claims 2000 uses for its product.
 


via: https://alphastreet.com/app#/home

Foreign Exchange Affect

WDFC 1Q17 net sales of maintenance products declined 4% compared to a year ago, driven by unfavorable foreign exchange rate and timing of orders.

Similarly, net sales of homecare and cleaning products fell 2% compared to the year ago quarter.

Guidance

For FY17 WDFC expects net sales growth in the range of 4-6% with net sales expected to be between $395-404MM. Net income is expected to be between $51.3-52.3MM and diluted EPS is expected to be between $3.64-3.71, based on an estimated 14.1MM weighted average shares outstanding. The company also expects gross margin percentage to be near 56% for FY16.

More Earnings News

Wells Fargo (WFC) Earnings Preview JPMorgan Chase (JPM) Earnings Preview
Bank of America (BAC) Preview

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21
Calls on Jan 10, 2017
LAMB WESTON HLD  LW    Before Open   N/A   0.55   N/A

SYNNEX CORP  SNX    After Market Close   N/A   2.09   N/A
LIMONEIRA CO  LMNR    After Market Close   N/A   -0.05   N/A
EXFO INC-TS  EXF    After Market Close   N/A   0.07   N/A
EXFO INC  EXFO    After Market Close   N/A   0.05   N/A

 


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22
Wells Fargo WFC / What to Expect From Wells Fargo $WFC Earnings This Week
« on: January 09, 2017, 12:38:22 PM »
Wells Fargo (WFC) along with the other money center major banks ]JPMorgan Chase (JPM) and Bank of America (BAC) kick off 2017 earnings season on Friday. Since Donald Trump won on Election Day there has been a huge run higher on WFC and the other bank stocks. .

Wells Fargo (WFC) Consensus Forecast

Thomson Reuters consensus estimates are calling for Wells Fargo of $1.00 in EPS with revenue of $22.47 billion. The fourth quarter of last year reported EPS of $1.03 and $21.59 billion revenue.  Wells Fargo is still recovering from a sham-account scandal but has managed to avert much of that negativity and news cycle with the Trump focus.
 

The bank rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The Federal Reserve decision to raise rates has also helped banks.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.

WFC shares closed at $55.04 on Friday and the 52-week range is $43.55 to $58.02.

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23
Bank of America (BAC) along with the other money center major banks ]JPMorgan Chase (JPM) and Wells Fargo (WFC) kick off 2017 earnings season on Friday. Since Donald Trump won on Election Day there has been a huge run higher on BAC and the other bank stocks. .

Bank of America (BAC) Consensus Forecast

Thomson Reuters consensus estimates are calling for earnings per share (EPS) of $0.38 and $20.96 billion revenue. The same period of last year was $0.27 in EPS on revenue of $19.56 billion. BAC is valued at 0.95 times book value and 14 times forward earnings expectations.
 

The bank rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The Federal Reserve decision to raise rates has also helped banks.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.

BAC shares closed at $22.68 on Friday and the 52-week range is $10.99 to $23.39.

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24
JPMorgan Chase (JPM) along with the other money center major banks Bank of America (BAC) and Wells Fargo (WFC) kick off 2017 earnings season on Friday. Since Donald Trump won on Election Day there has been a huge run higher on JPM and the other bank stocks. JPM also has CEO Jamie Dimon the new chairman position of the Business Roundtable for new new Trump administration.

JPMorgan Chase Consensus Forecast

EPS $1.43 and $23.95 billion in revenue. In the same period of last year EPS was $1.32 and $23.75 billion in revenue. Currently JPM is valued at 1.38 times book value with a forward price-to-earnings (P/E) ratio of  13.4.

 

The bank rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The Federal Reserve decision to raise rates has also helped banks.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.
JPM shares closed at $86.12 on Friday and the 52-week range is $52.50 to $87.76.


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25
The 2017 earnings season starts off with a bang this week, we have JPMorgan Chase (JPM), Bank of America (BAC) and Wells Fargo (WFC) all reporting on Friday. Since Donald Trump won on Election Day there has been a huge run higher on bank stocks. This in turn has helped fuel the run in the S&P 500 and Dow Jones Index to Record highs.

JPMorgan Chase (JPM) Earnings Preview
Bank of America (BAC) Earnings Preview
Wells Fargo (WFC) Earnings Preview

The rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The Federal Reserve decision to raise rates has also helped banks.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.
 


$XLF weekly tight into earnings via @astruzynski





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