Monday, July 26, 2010
Thursday, July 22, 2010
The Travelers Companies Q2
Travelers reported quarter 2 profits of 670 million or $1.35 per share. The consensus for the quarter was $1.49 per share meaning travelers came up 14 cents short. The reason for the short coming was an unexpected rise in flooding and hail storms. On a positive note, Travelers had a 1% increase in net written premiums which beat analyst estimates. Year over year Travelers profits have fallen from 740 million to 670 million but EPS has risen from $1.27 to $1.35 due to Travelers repurchasing shares.
Travelers also decided to cut its full-year earnings forecast by 10 cents. The insurer said the rate of renewal from commercial customers is not meeting original expectations, which led to the drop in the forecast. Travelers now expects profit to range between $5.20 and $5.45 per share for the year. Analyst predict a profit of $5.71 per share for the year, but that estimate does not include investment gains and losses that are factored into net income.
Joe Doran
Travelers also decided to cut its full-year earnings forecast by 10 cents. The insurer said the rate of renewal from commercial customers is not meeting original expectations, which led to the drop in the forecast. Travelers now expects profit to range between $5.20 and $5.45 per share for the year. Analyst predict a profit of $5.71 per share for the year, but that estimate does not include investment gains and losses that are factored into net income.
Joe Doran
Saturday, July 17, 2010
Novartis AG Misses Earnings Expectations but Raises FY 2010 Guidance
Novartis AG barely missed meeting the street’s net income estimate of $2.43 billion, instead posting net income of $2.42 billion for the second quarter. However, Novartis has also raised its sales forecast for FY 2010 after second quarter net income increased by 19%. Management now expects sales to increase at mid-to-high single digit pace this year, compared with the more pessimistic mid-single digit range given earlier in the year. Fueling this sales increase has been the strong sales growth of newer products such as Lucentis and Exforge, which are needed to offset the loss in revenue that will be experienced in 2012 due to patent expiration of the drugs Divoan and Gleevec.
Sales of the hypertension drug Diovan gain a percent in generate $1.55 billion in revenue, beating street estimates of $1.5 billion. Gleevec, another flagship drug for Novartis AG, beat analyst estimates with revenue of $1.08 billion. Encouraging signs for the company has been the growth in its other underlying businesses aside from pharmaceuticals. New products accounted for nearly 21% of total sales for the quarter, with Exforge’s revenue growth of 35% and Lucentis’ revenue growth of 28%.
Novartis AG is still very much interested in diversifying its current medical inventory through the purchase of Alcon Inc., the world’s largest eye-care company. However, this process has not been without controversy as Alcon’s independent directors still believe the offer of 2.8 Novartis shares for every remaining public share of Alcon is still inadequate and are fighting to resist this offer. Novartis already has a 25% minority stake in the company and expects to complete the purchase of Nestle SA’s 52% stake in Alcon for $28.1 billion in the third or fourth quarter of this year.
Ultimately, I agree with Analyst’s predictions that Novartis is one of the more attractive pharmaceuticals out there currently. The company is already proving that their new products can offset the loss in revenue that will occur due to patent expiration and their attempt to diversify their business s leads me to believe that the company has set itself up for success.
Sales of the hypertension drug Diovan gain a percent in generate $1.55 billion in revenue, beating street estimates of $1.5 billion. Gleevec, another flagship drug for Novartis AG, beat analyst estimates with revenue of $1.08 billion. Encouraging signs for the company has been the growth in its other underlying businesses aside from pharmaceuticals. New products accounted for nearly 21% of total sales for the quarter, with Exforge’s revenue growth of 35% and Lucentis’ revenue growth of 28%.
Novartis AG is still very much interested in diversifying its current medical inventory through the purchase of Alcon Inc., the world’s largest eye-care company. However, this process has not been without controversy as Alcon’s independent directors still believe the offer of 2.8 Novartis shares for every remaining public share of Alcon is still inadequate and are fighting to resist this offer. Novartis already has a 25% minority stake in the company and expects to complete the purchase of Nestle SA’s 52% stake in Alcon for $28.1 billion in the third or fourth quarter of this year.
Ultimately, I agree with Analyst’s predictions that Novartis is one of the more attractive pharmaceuticals out there currently. The company is already proving that their new products can offset the loss in revenue that will occur due to patent expiration and their attempt to diversify their business s leads me to believe that the company has set itself up for success.
-Dave Siegel
Friday, July 16, 2010
Alcoa Beats Earnings Estimates
Alcoa kicked off earnings season on Monday, beating analyst estimates. Income from continuing operations came in at $137mm, or $0.13 per share, compared to a year-over-year loss of $312mm or $0.32 per share and a $194mm loss or $0.19 per share sequentially. Analysts were expecting Alcoa to earn 12 cents for Q2. Revenues increased 6% quarter over quarter, mainly driven by higher volumes in key end markets. EBITDA margin was 14%. This increase in margins can me attributed to Alcoa's continuing cash sustainability initiatives, mainly in the area of decreased head-count. They also managed to generate positive free cash flow.
Although LME Aluminum prices have decreased dramatically during the quarter, stronger volumes coupled with lower energy costs and favorable exchange rates more than offset this decrease in prices. FCF came in at $87mm, and Alcoa has $1.34b in cash on hand. This increase in FCF is being driven by Procurement reductions, overhead reductions, and days in working capital reductions, all part of Alcoas continuing CSI.
Management projects that aluminum demand will increase 10%-12% in 2010, and are maintaing their long term outlook of 6% CAGR growth through 2020. Demand will increase in lightweight, versatile materials for building, as well as other key markets as a result of increasing global population, and the need for recyclable and lightweight materials in the automotive industry.
Looking forward I believe that global economic recovery will help drive Alcoa's earnings. Management has done a great job steering the company through rough operating environments, and these initiates will increase Alcoas ability to generate cash going forward. As worldwide demand increases for aluminum, Alcoa will benefit from higher realized LME pricing, increasing margins and Income. Some risks going forward include tightening in China, as China is the largest producer and consumer of Aluminum in the world, and pricing is directly correlated to their usage. I recommend a HOLD rating on Alcoa, but will have to update my model for a new target price.
-Thomas Boeje
Although LME Aluminum prices have decreased dramatically during the quarter, stronger volumes coupled with lower energy costs and favorable exchange rates more than offset this decrease in prices. FCF came in at $87mm, and Alcoa has $1.34b in cash on hand. This increase in FCF is being driven by Procurement reductions, overhead reductions, and days in working capital reductions, all part of Alcoas continuing CSI.
Management projects that aluminum demand will increase 10%-12% in 2010, and are maintaing their long term outlook of 6% CAGR growth through 2020. Demand will increase in lightweight, versatile materials for building, as well as other key markets as a result of increasing global population, and the need for recyclable and lightweight materials in the automotive industry.
Looking forward I believe that global economic recovery will help drive Alcoa's earnings. Management has done a great job steering the company through rough operating environments, and these initiates will increase Alcoas ability to generate cash going forward. As worldwide demand increases for aluminum, Alcoa will benefit from higher realized LME pricing, increasing margins and Income. Some risks going forward include tightening in China, as China is the largest producer and consumer of Aluminum in the world, and pricing is directly correlated to their usage. I recommend a HOLD rating on Alcoa, but will have to update my model for a new target price.
-Thomas Boeje
Monday, May 17, 2010
Visa and Bank of Americs
Visa dropped over 10% on Friday due to an amendment added on to the financial reform bill about capping fees that Visa can charge. This can have adverse effects on Visa's business and will need to be looked into further.
As for Bank of America, them like the rest of the financial sector has fallen on hard times due to financial regulation and the European Debt Crisis.
-Richie
As for Bank of America, them like the rest of the financial sector has fallen on hard times due to financial regulation and the European Debt Crisis.
-Richie
Friday, May 7, 2010
Eldorado Q1 2010 Earnings -- Nick Iuliucci
Eldorado reported Q1 2010 earnings Thursday, May 6th. Eldorado reported net income of $52.8 million or $0.10 per share for the period, compared with $13.1 million or $0.04 per share in the first quarter of 2009, and they generated $80.8 million in cash from operating activities before changes in non-cash working capital. The increase in profit for the period resulted from significantly higher sales volumes from the Kisaladag mine in Turkey, as well as the new contributions of the mines in China previously operated by Sino Gold (the White Mountain and Jinfeng mines). Just like 4th quarter 2009, 1st quarter 2010 was a record quarter.
"We had record quarterly production of 164,928 ounces of gold at a cash operating cost of $371 per ounce with strong performances from all mines, whilst setting consecutive quarterly production records at Kisladag. Our revenues increased by 248% over the comparable period in 2009. Net quarterly income increased by 304% to $52.8 million. Cash generated from operating activities increased by 290% to $80.8 million. With the strong performance of the quarter we are increasing our 2010 production guidance to 575,000 to 625,000 ounces of gold and slightly reducing cost guidance to cash operating costs of $375 - $395 per ounce." said Paul Wright, President and CEO of Eldorado Gold. "We are also extremely pleased that the development of our Company with its strong performance in 2009 and the positive outlook for 2010 and beyond has enabled at this time the adoption of a dividend policy."
Q1 2010 Highlights:
Produced 164,928 ounces of gold at an average cash operating cost of $371 per ounce (total cash cost $398 per ounce)
Sold 163,446 ounces of gold at a realized average price of $1,110 per ounce
Reported earnings of $0.10 per share
Generated $80.8 million ($0.15 per share) from operating activities before changes in non-cash working capital
Announced the adoption of a dividend policy
They sold 163,446 ounces of gold at an average price of $1,110 per ounce, a 184% increase over the first quarter of 2009, when they sold 57,459 ounces at an average price of $909 per ounce. Production from Jinfeng and White Mountain added 57,265 ounces as compared to the prior year, and increased production at both Kisladag and Tanjianshan added to our record production levels.
Going forward, as I’ve said previously in a quarterly update on Eldorado Gold, things are lining up nicely for the company. Things are going so well they adopted their first ever dividend policy just last week. They hit $16 Friday, May 7th. I’ve updated the model with the new numbers and upped my price target from $16 to $16.50 due to higher realized gold prices and higher production levels. Regardless of valuation, I feel that UASBIG will continue to benefit from having EGO in the portfolio. With the volatility of the market and the economic concern regarding Greece, Eldorado provides a good hedge against our other holdings.
"We had record quarterly production of 164,928 ounces of gold at a cash operating cost of $371 per ounce with strong performances from all mines, whilst setting consecutive quarterly production records at Kisladag. Our revenues increased by 248% over the comparable period in 2009. Net quarterly income increased by 304% to $52.8 million. Cash generated from operating activities increased by 290% to $80.8 million. With the strong performance of the quarter we are increasing our 2010 production guidance to 575,000 to 625,000 ounces of gold and slightly reducing cost guidance to cash operating costs of $375 - $395 per ounce." said Paul Wright, President and CEO of Eldorado Gold. "We are also extremely pleased that the development of our Company with its strong performance in 2009 and the positive outlook for 2010 and beyond has enabled at this time the adoption of a dividend policy."
Q1 2010 Highlights:
Produced 164,928 ounces of gold at an average cash operating cost of $371 per ounce (total cash cost $398 per ounce)
Sold 163,446 ounces of gold at a realized average price of $1,110 per ounce
Reported earnings of $0.10 per share
Generated $80.8 million ($0.15 per share) from operating activities before changes in non-cash working capital
Announced the adoption of a dividend policy
They sold 163,446 ounces of gold at an average price of $1,110 per ounce, a 184% increase over the first quarter of 2009, when they sold 57,459 ounces at an average price of $909 per ounce. Production from Jinfeng and White Mountain added 57,265 ounces as compared to the prior year, and increased production at both Kisladag and Tanjianshan added to our record production levels.
Going forward, as I’ve said previously in a quarterly update on Eldorado Gold, things are lining up nicely for the company. Things are going so well they adopted their first ever dividend policy just last week. They hit $16 Friday, May 7th. I’ve updated the model with the new numbers and upped my price target from $16 to $16.50 due to higher realized gold prices and higher production levels. Regardless of valuation, I feel that UASBIG will continue to benefit from having EGO in the portfolio. With the volatility of the market and the economic concern regarding Greece, Eldorado provides a good hedge against our other holdings.
Thursday, May 6, 2010
CHK Q1 2010 Earnings - Dan Goldfarb
Chesapeake Energy Corporation reported net income of $590 million or $.92 per share on revenue of $2.798 billion and production of 223 billion cubic feet of natural gas equivalent.
The major drivers of their positive earnings were a 9% year over year increase in average daily production, a 19% year over year increase in production adjusted to asset sales, and a 35% year over year increase in oil and natural gas liquids production. The company’s earnings increase also reflects an increase in the price of natural gas and realized hedging gains.
Chesapeake anticipates full-year production growth of 8-10% for 2010 and 16-18% in 2011. The company is also working on expanding its oil and gas liquids production to 15-20% of total production through organic growth by 2012.
Overall, we maintain a hold rating on the company, expecting revenue growth to be driven by increasing commodity prices, their increased exposure to the US shale play, and their organic growth.
The major drivers of their positive earnings were a 9% year over year increase in average daily production, a 19% year over year increase in production adjusted to asset sales, and a 35% year over year increase in oil and natural gas liquids production. The company’s earnings increase also reflects an increase in the price of natural gas and realized hedging gains.
Chesapeake anticipates full-year production growth of 8-10% for 2010 and 16-18% in 2011. The company is also working on expanding its oil and gas liquids production to 15-20% of total production through organic growth by 2012.
Overall, we maintain a hold rating on the company, expecting revenue growth to be driven by increasing commodity prices, their increased exposure to the US shale play, and their organic growth.
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