Posts Tagged ‘ earnings ’

American Tower (AMT) – Strong Results and REIT coming

November 1, 2011
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American Tower Corp (AMT) owns and operates wireless communication broadcast towers here in the United States. The towers service a number of industries including cellular, paging, and network services. American Tower has been a controversial stock with a high valuation – but enormous potential.  The company is rather leveraged at 4.5x debt-to-ebitda so small swings in results can lead to very big swings in the stock price.

The company had very strong site leasing revenues and relatively balanced growth. AMT  had strong revenues across carriers and conversion towards a REIT looks on trade for early 2012. There will be a shareholder vote on November 11th to approve the REIT status which will come with a large dividend in December 2011. The company has also been buying back shares aggressively. Given all the uncertainty around technology and carrier wars the tower operators provide exposure to the growth in cellular and smart phones while also providing financial leverage to growth in the industry. American Tower’s technicals are also quite good hitting a new high in a tough market.

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Interpublic Group (IPG) – Advertising Spend Growing

October 28, 2011
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Interpublic Group (IPG) is an integrated advertising agency that serves clients of many different type around the world. The company delivers customized advertising and marketing solutions for a variety of different types of advertising campaigns. The company released a very strong quarter and apparently many aspects of traditional media are not dead yet.

Inerpublic’s organic revenues were up 8.7% which was well above Wall Street estimates. One of the big drivers of sales growth was growth in the Asia-Pacific region which was up 15.3%. Margins were higher and the operating margin expanded to 10%. Interpublic was confident on their conference call which is a positive signal as the advertising markets are certainly geared to GDP growth around the world. This is an all-around positive signal for the economy. IPG’s stock price is up 10% today but is till 25% below recent highs earlier in the year.

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Apple (AAPL) – Quarterly Earnings Preview

October 18, 2011
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I expect a monster quarter out of Apple. I believe that Steve Job’s unfortunate death has led to a surge in support for Apple products. The beat is largely expected so the key will be do they beat by “enough” relative to Wall-Street consensus. Here are the past 8 quarters earnings beats relative to the Street:

  • Q3 11 (last quarter):   33%
  • Q2 11:   18%
  • Q1 11:   19%
  • Q4 10:   13%
  • Q3 10:   13%
  • Q2 10:   35%
  • Q1 10:   77%
  • Q4 09:   28%

Probably they need to beat by over 30% for the stock to march higher unabated.

Price targets generally range from $450-$550 for the stock

  • Sales consensus is $29.6B
  • EPS consensus is $7.31
  • EPS estimate range is:  $6.50 to highs of $7.80 or so

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Parker Hannifin (PH) – Super Solid Q3

October 18, 2011
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Parker Hannifin is one of the world’s leading diversified industrial companies. Parker Hannifin (PH) has large businesses in motion control, aerospace, fluid power systems, electromechanical controls, air conditioning, industrial refrigeration and thermal products. Parker reported record third quarter earnings which grew about 20% vs. a year ago. Organic sales growth was +10% which contained 3% from FX and 1% from acquisitions. Parker Hannifin not only had strong sales but grew operating margins to new records of 16.1% with particular strength in the American industrial segment and aerospace.

Parker Hannifin raised earnings guidance from a range of $6.70-$7.50 last quarter up to a new range of $7.25-$7.85 after today’s release. This is above the Wall Street consensus which was still sub $7 going into today. Guidance was raised by 6.3% and is significantly above wall street estimates ($6.96) so this has led to a 3% rally in the shares despite some strength heading into the quarter and a tough tape.

The conference call has just started. I will listen and post some quick thoughts a little later today.

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Pepsi (PEP) – A Constructive Quarter with Snacks and Emerging Markets Drving Growth

October 12, 2011
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pepsiPepsi (PEP) is one of the first companies to report Q3 earnings. While the carbonated beverage business in North American is essentially a flat business (volumes grew 1% ex-acquisitions) the rest of Pepsi’s business showed some resiliency.  The non-US business, particularly in emerging markets is doing exceptionally well and the snack business (Frito-Lay) is also leading growth from both higher volumes and pricing power. Some growth rates which were discussed on the conference call for the international snack business:

EM Snack business volume growth:

  • China: +31%
  • India: +26%
  • Saudi Arabia: +24%
  • Egypt: +15%
  • Turkey: +22%
  • Russia: over 35%

EM beverage business is growing volumes between high single digit and double digits, and Gatorade volumes grew 9% around the world.

While Alcoa was disappointing, the materials sector is one of the worst positioned for the near term dynamics of strong dollar, lower commodity pricing, and slowing growth.

Pepsi had a very constructive call and the near-term technicals for the stock now look good. There are many stocks similarly positioned as we head into Q3 earnings.

 

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