Sunday, November 22, 2015

Spectrum Brands Holdings Q4 2015 Earnings

Spectrum Brands Holdings (SPB) reported its Q4 2015 earnings on Thursday, November 22, 2015. The company reported Q4 EPS of $1.13, $0.04 worse than the analyst estimate of $1.17. Revenue for the quarter came in at $1.31 billion versus the consensus estimate of $1.33 billion. Although the company missed on both top and bottom line, the stock reacted positively to strong updated company guidance for FY 2016. Before the company released earnings the stock was priced at $92.45 per share but then rose approximately 4% to $96.18 post earnings. Spectrum Brands expects fiscal 2016 net sales, as reported, to increase in the high-single digit range compared to fiscal 2015 reported net sales of $4.69 billion. Fiscal 2016 free cash flow is projected to be approximately $505-$515 million compared to $454 million in fiscal 2015. Capital expenditures, which were $89.1 million in fiscal 2015, are expected to be in the rage of $110 million to $120 million. I believe the company’s strong updated guidance including expected growth in sales and increase in capital expenditures will provide expansion, and support of technology innovation for the company which could definitely create an increase in value of the stock in the future. 

Saturday, November 14, 2015

ORCL 11/15

ORCL began trading the month of November at $39.05, and then reached a three month high on November 6th trading at $40.64. ORCL closed on November the 13th trading at $37.30 representing a 4.5% decrease for the month of November thus far. Additionally, this represents an 11.7% decline off of our purchase price of $42.25. This is close to where ORCL’s stock price has remained for much of the current quarter. ORCL’s cloud component continues to grow rapidly, however that growth does not appear to be well represented in the stock price. ORCL plans to hire more than 50 engineers in the next 6 months to build up its growing portfolio of Data-as-a-Service offerings. In early November ORCL launched a new cloud data product that can identify age and gender targeting with twice the precision of methods currently available on the market. On November 5th FBR & Co’s Daniel H. Ives downgraded the rating on the company from Outperform to Market Perform, while maintaining the price target at $44. The downgrade was due primarily to ORCL lack of ability to cope with foreign currency headwinds over recent quarters in addition to the lack of M&A expected to maintain ORCL’s new cloud business. However, late last month ORCL executive Larry Ellison alluded to the idea that they were saving cash for a large acquisition in the future. Additionally, ORCL was downgraded at Morgan Stanley which maintains a $45 price target.  

Jeff Sherman

Thursday, November 5, 2015

KORS Q2 Earnings Blog

Michael Kors reported second quarter revenue and earnings that both topped the Street’s expectations. Revenue came in at $1.13B, which beat estimates by $50M and represented a 7% increase year-over-year. Revenues were driven by strength in the company’s retail and wholesale segments across all geographies. Retail sales were up 8% due to 39 new store openings, strength in North American digital flagships and continued momentum internationally. Japan led the way, with sales increasing 61% on a constant currency basis. Comps were down 8.5% for the quarter, which was in line with expectations. The comparable store sales decline in North America was slightly offset by comp increases in Europe and Japan. If the U.S. digital flagship stores were included in the calculation, comps would have only been down low-single-digits in the quarter. Wholesale sales for the quarter grew 8% mainly attributed to continued strength in the accessories category. During the quarter 223 globally located wholesale stores were converted into shop-in-shops. The company continues to expand its wholesale business across all geographies. Licensing revenue was down 8% in the quarter primarily due to lower watch sales, somewhat offset by increased sales of jewelry, outerwear and eyewear. Gross margins were down 220 bps primarily due to the foreign currency impact on sales. SG&A was up 250 bps as a result global retail expansion, digital flagship initiatives, infrastructure investment for Korea in the men’s business, the building of a new European distribution center and continued investment in corporate systems. On the bottom line, earnings were reported at $1.01, which was $0.12 higher than expectations. This beat included a $0.06 negative impact from foreign currency exchange rates. Turning to the balance sheet, cash and equivalents decreased 57% from the same quarter last year due to the company’s ongoing share repurchase program. KORS purchased 9.4 million shares, totaling $400 million, during the quarter. To date the company has repurchased 23.2 million shares for approximately $1.2B. Inventory was up 15% YoY attributed to increased European inventory, acceleration of holiday merchandise and the consolidation of MK Panama. The remainder is due to normal growth as the company continues to expand its store base and e-commerce capabilities.

Wednesday, November 4, 2015

CIT Group 3rd Quarter Earnings Report

CIT Group reported Quarter three earnings pre market open on November 3rd. CIT Group posted EPS at $.80 and revenues of 520.9M. CIT Group beat estimates by $.09 and $.54M, yet the street reacted negatively to the beat, dropping CIT Group 2.5% on November 3rd. In the Transportation and North American banking business, CIT Grew to just over a billion dollars excluding the recent acquired assets. In transportation the commercial aircraft utilization rose slightly to 98%, and railcars declined to 97% which is because of the weaknesses in the commodity markets. CIT Group is continuing to participate in a share buyback program, and they provided investors a total of $170 million dollars.

Acquiring OneWest Bank increased CIT’s assets by almost 22 billion, which included 6 billion in cash, 8 billion in loans, and 6 billion in a run off mortgage portfolio. Net financing margin increased by 30 basis points to 3.7%, mostly because of a lower funding cost now. CIT’s transition to a commercial bank looks like it paying off, and with the possible increase in interest rates, CIT Group would only become more profitable, especially with the new acquisition.