Earnings from Our Two Favorite Midstream MLPs: EPD and MMP
February 14, 2021
Image Source: Enterprise Products Partners L.P. – Fourth Quarter of 2020 IR Earnings Presentation In Alphabetical Order by Ticker: EPD, MMP By Callum Turcan The energy market is recovering and that speaks favorably towards the midstream side of the oil & gas industry. Midstream companies operate pipelines, storage facilities, processing plants, marine terminals, gathering systems and other energy infrastructure assets. As global health authorities work to bring an end to the coronavirus (‘COVID-19’) pandemic, aided by ongoing vaccine distribution efforts, that should enable North American raw energy resources production to post a sustained recovery. Raw energy resources include crude oil, natural gas, and natural gas liquids (such as propane, butane, and ethane). North American energy production took a big hit
Philip Morris International Issues Favorable Guidance
February 14, 2021
Image Shown: Philip Morris International Inc’s growth outlook rests heavily on its ability to grow its non-traditional cigarette sales volumes, and so far, the tobacco giant has put up tremendous performance on this front. Additionally, pricing power at its conventional cigarette business is also key, as that helps offset headwinds arising from secular declines in its annual cigarette shipment volumes. Image Source: Philip Morris International Inc – 2021 Investor Day Presentation By Callum Turcan During its 2021 Investor Day presentation held on February 10, tobacco giant Philip Morris International Inc (PM) reaffirmed its 2021 diluted EPS guidance and issued longer term guidance that was quite promising. The seller of Marlboro brand cigarettes in international markets (excluding the US and China)
Energy Earnings Roundup: CVX and XOM
February 10, 2021
Image Source: Exxon Mobil Corporation – 2020 IR Presentation In ticker by alphabetical order: CVX, XOM By Callum Turcan Several integrated oil and gas companies recently reported earnings for the final quarter of 2020, and as expected, these were brutal reports. The coronavirus (‘COVID-19’) pandemic weighed negatively on global demand for raw energy resources (crude oil, natural gas, natural gas liquids), refined petroleum products (gasoline, diesel, kerosene), and certain petrochemicals last year which created massive headwinds for the oil and gas industry across the board. Subdued raw energy resources pricing and lackluster refined petroleum product demand were the two big obstacles for the industry as those dynamics severely weakened the economics of upstream (involved in the extraction of raw energy
Free Cash Flow Machine Visa Remains One of Our Best Ideas
February 9, 2021
Image Shown: Visa’s ability to generate sizable free cash flows continues to impress. We are big fans of the payment processing giant. Image Source: Visa Inc – First Quarter of Fiscal 2021 IR Earnings Presentation By Callum Turcan We’re huge fans of Visa Inc’s (V) business model. The credit card network’s free cash flow generating abilities are impressive, aided by its low capital expenditure requirements. We view Visa’s long-term outlook quite favorably and include the company in the Best Ideas Newsletter portfolio as a top-weighted idea. The top end of our fair value estimate sits at $263 per share of Visa, materially above where V is trading at as of this writing. Overview Visa benefits from the network effect, which
General Electric Provides Upbeat Outlook for 2021
February 2, 2021
Image Shown: An overview of GE’s cash flow forecasts on a divisional basis for 2021. Image Source: General Electric – Fourth Quarter of 2020 IR Earnings Presentation By Callum Turcan The ongoing coronavirus (‘COVID-19’) has weighed negatively on the industrial sector for most of 2020, before the space started to recover during the latter part of the year. On January 26, industrial conglomerate General Electric Company (GE) reported fourth quarter earnings for 2020 that beat consensus top-line estimates but missed consensus bottom-line estimates. The company’s business operating segments are broken down into its various GE Industrial divisions (‘Power,’ ‘Renewable Energy,’ ‘Aviation’ and ‘Healthcare’) and GE Capital. What really impressed us was that GE Industrial’s free cash flow came in at
Mondelez Capturing Share, Generating Strong Free Cash Flow
February 2, 2021
Image Source: Mondelez International Inc – November 2020 IR Presentation By Callum Turcan On January 28, snacks giant (generates most of its annual revenues from biscuits, chocolates, gum and candy) Mondelez International Inc (MDLZ) reported fourth quarter earnings for 2020 that beat both consensus top- and bottom-line estimates. Management noted in the earnings press release that the firm “enter[ed] 2021 in a strong position financially and in the marketplace which gives us confidence that we can deliver on our long-term growth targets in 2021 and beyond.” Mondelez reported 3.7% net organic revenue growth in 2020, supported by favorable volume and pricing movements, and negatively impacted by product mix. The firm’s GAAP revenues were up just under 3% year-over-year in 2020,
Two Industrial Giants on the Rebound
February 1, 2021
Image Source: Honeywell International Inc – Fourth Quarter of 2020 IR Earnings Presentation By Callum Turcan Two industrial bellwethers reported fourth quarter earnings for 2020 recently, Caterpillar (CAT) and Honeywell (HON). Industrial companies were hit extremely hard by the coronavirus (‘COVID-19’) pandemic last year due to a myriad of factors from production lines getting shut down to deteriorating end-user demand, though things are starting to improve as global health authorities steadily work towards putting an end to the public health crisis now that vaccine distribution activities are underway. Both industrial firms covered in this note mentioned that they expect their financial and operational performance to improve going forward. Caterpillar (CAT) When Caterpillar Inc reported fourth quarter earnings for 2020 on
Repub from March 5, 2018: The Tragedy of Quantitative Finance
January 29, 2021
Please select the image below to download the document. Image shown, page 2. Tickerized for companies in the Dow Jones Industrial Average. This article was published March 5, 2018.
Starbucks Expects to Recover in Fiscal 2021
January 29, 2021
By Callum Turcan On January 26, Starbucks Corporation (SBUX) reported first quarter earnings for fiscal 2021 (period ended December 27, 2020) that saw the firm miss consensus top-line estimates but beat consensus bottom-line estimates. The ongoing coronavirus (‘COVID-19’) pandemic has weighed negatively on Starbucks’ performance of late, as its GAAP revenues fell by 5% and its GAAP operating income tanked by 25% on a year-over-year basis last fiscal quarter. Leaning on its digital presence and drive-through operations have helped to a degree, but the reduction in the number of workers commuting worldwide (especially in the US) is clearly taking a toll on its business, as is the decline in vacation and business travel. Shares of SBUX yield ~1.8% as of
Fourth Quarter Bank Earnings Roundup: MS, GS, BAC, C, WFC, JPM
January 28, 2021
Executive Summary: Though we’re generally cautious on banking business models due to the arbitrary nature of cash-flow generation within the banking system and the difficulty in valuing such entities on the basis of a free-cash-flow-to-the firm framework, we like Morgan Stanley–and its return on tangible equity of 17.7% during the fourth quarter of 2020 speaks to solid economic-value creation. Goldman’s annualized return on total equity (ROTE) was an impressive 22.5% during its fourth quarter, helping drive the full-year measure to 11.1% for 2020. Bank of America had been an idea in the Best Ideas Newsletter portfolio in the past, but we removed the company June 11, 2020. We continue to view the banking system more as utility-like serving as an extension
