Market Update
Indexes in Japan and China Plunge, Yen at Two-Decade Low
Arjun Pandit
25 Apr, 2022
New York City
Asian markets fell sharply after 3% losses in New York in Friday's trading.
In Tokyo, the benchmark Nikkei index declined 1.9% and the Japanese yen traded above 129 to a dollar. The yen has fallen to a 2-decade low and dropped 10% against the U.S. dollar, euro, and the British pound since the U.S. Fed began raising rates on March 16.
The weaker yen and weak domestic economy is forcing more Japanese companies to look for markets in Asia and worldwide. But weaker yen also lifts energy and fuel prices at home in resource-poor Japan.
In China, the Shanghai index plunged more than 5% and the Hong Kong index dropped nearly 4% led by tech and financial stocks.
China confirmed that Covid virus has spread to more locations in Beijing in the last week undetected and infection cases are rising rapidly in the city.
Most of Shanghai, the financial hub, remains in a prolonged lock down and at least 100 new deaths have been reported since Friday in the city.
The Sensex in Mumbai, India declined 1% and extended 2-day losses to 3% on the rising prospect of a rate hike and persistent worries of commodities and energy prices linked inflation.
Covid related cases are also on the rise in Uttar Pradesh, Maharashtra, Delhi and the National Capital Region.
France Re-elects President Macron to Lead 14-Year Stagnant Economy and Narrow Inequality
Barry Adams
24 Apr, 2022
New York City
French President Emmanuel Macron won a second term in office in a deeply divided country struggling with economic troubles, immigration divisions, and high youth unemployment.
President Macron won 58.6% or 18.8 million votes significantly ahead of his only rival Marine Le Pen garnering only 41.4% or 13.3 million votes, according to the data released by the interior ministry.
Approximately 28% of total voters stay away from casting ballots, highest rate of abstention since 1969.
Macaron is the first French president to be reelected since Jacque Chirac in 2002.
Macron acknowledged the difficulty of uniting the country in his victory speech on a stage erected in front of the Eiffel Tower and added "many voted for me not because they support my ideas but to keep out those of the far-right. I want to thank them and know I owe them a debt in the years to come."
France has struggled with economic growth for more than two decades and the annual growth has been less than 2% in most years and crossed 3% only in 2 years since 2000.
The France's $2.7 trillion GDP is still below the level in last reached in 2007.
The unemployment rate in France has hovered around 8% and youth unemployment has been near 9% in the first 5-year term on Macron.
The election was fought as choice between more globalization, pro-European policies, and stability in in government offered by Macron administration against the fight for inflation, subsidies to poor and young voters, and more government programs to support working class.
Two years of pandemic followed by Ukraine war has brought the economic issue to the forefront in the presidential election.
French voters are suffering from the rising food and energy prices, lack of jobs, and a surge in cost of living especially among the poor had forced many people to look for an alternative to the current administration.
Voters have also been upset with the high rate immigration from Africa and Muslim countries and many in working class feel that immigrants are getting the jobs that their children deserve.
The government's assistance program in helping immigrants and refugees settle in the country has also sparked a deep division in smaller cities and rural areas.
About 5.7 million or 8% of French population adhere to Muslim faith and their share is expected to grow to about 11% by 2030, according to French media estimates.
Macron's impressive victory by a large margin may be short-lived and voters are scheduled to elect members of National Assembly on June 12 and Jun 19.
Le Pen is seeking a national alliance of all opposition parties and offer a united front in the legislative election.
Macron's mandate may firm up or change after the National Assembly election depending on where the power balance hangs between parties in the legislative body.
However, leaders in Europe were quick to welcome the French election results and offered strong support to president Macron.
" We need a solid Europe and a France totally committed to a more sovereign and more strategic European Union," said European Council President Charles Michel.
"Wonderful news for all of Europe," said Italian Prime Minister Mario Draghi.
The leaders of European Commission, Sweden, Lithuania, Greece, and Spain were quick to acknowledge Macron's victory as victory for Europe.
President Macron was elected as the youngest French president at the age of 39 in 2017. defeating Marine Le Pen with 66% of votes in the second round.
Danaher Quarterly Revenues Advanced 12%, Net Income Up 1%
Scott Peters
23 Apr, 2022
New York City
Danaher Corp said first quarter 2022 net revenues increased 12% to $7.7 billion, net income increased 1% to $1.7 billion, and diluted earnings per share $2.31 compared to $2.29 a year ago.
COVID-19 related testing drove sales higher by 4%.
Operating margins declined 80 basis points to 28.3% from 29.1% in the quarter a year ago.
Life Sciences segment revenues rose 9.5% to $3.9 billion and operating profit margin declined 370 basis points to 28.8%.
Diagnostics segment revenues increased 21.5% to $2.6 billion and operating margin improved 480 basis points to 33.5%.
Environmental & Applied Solutions segment revenues rose 2.5% to $1.16 billion and operating margin fell 480 basis points to 20.3%.
The Washington, D.C. based conglomerate manufactures industrial, medical and commercial products including leading brands Beckman Coulter, Leica, and Sciex.
Guidance and Outlook
The company guided non-GAAP base business core revenues growth which excluding acquisitions and currency translations in the second quarter in the mid-single digit percent range, which includes an approximately 200 to 300 basis point headwind from the COVID-19 related shutdowns in China.
For the full year 2022, the company continues to expect non-GAAP base business core revenue growth will be in the high-single digit percent range.
Pool Corp's Earnings Surge With Hikes in Prices, Inventories, Total Debt
Scott Peters
23 Apr, 2022
New York City
Pool Corp reported first quarter 2022 revenues increased 33% to $1.4 billion, net income soared 82% to $179.3 million, and diluted earnings per share rose 82% to $4.23 from $2.32 a year ago.
The revenue growth marked the 36th consecutive quarter of growth following a surge of 57% in the quarter a year ago.
Sales at existing businesses rose 26%supported by price increase between 10% and 12%, 5% pull forward both from the customers ordering ahead and extra selling days in the quarter compared to a year ago.
Gross margin improved to 49% and rose to 38% at existing businesses (excluding recent acquisitions) benefitting from inventory build up in prior year to meet rising demand.
Operating margin improved to 16.7% in the quarter from 12.1% in the prior year's quarter. Operating margin improved to 16.5% at the existing businesses.
To avoid supply chain delays, the wholesale distributor began ordering inventories in the second half of 2021 and raised inventory levels 68% to $1.6 billion. The inventory levels reflect the impact of inflation and recent acquisitions.
Total outstanding increased to $1.5 billion from $1.1 billion to fund recent acquisitions and support higher working capital.
Guidance and Outlook
The company lifted its annual earnings estimate outlook to between $18.34 to $19.39 from the previous estimate range between $17.19 and $17.94.
Higher Gold Prices Fail to Lift Newmont Earnings
Scott Peters
23 Apr, 2022
New York City
Newmont Corporation said first quarter 2022 revenues increased 4.5% to $3.02 billion, net income declined 20% to $448 million, and diluted earnings per share fell to 56 cents from 72 cents a year ago.
Gold costs applicable to sales per ounce increased 18% to $890 from $752 a year ago and including all-in sustaining costs rose 11% to $1,156 from $1,039.
Capital expenditures in the quarter increased about 8% from a year ago to $437 million and free cash flow fell to $252 million from $442 million a year ago.
Attributable gold production fell 8% from a year ago to 1.34 million ounces primarily due to lower mill throughput at CC&V, Tanami, Porcupine and Nevada Gold Mines, lower ore grades milled at Pe
Boston Beer's Seltzer Demand Deceleration Delivers Quarterly Loss
Scott Peters
23 Apr, 2022
New York City
The Boston Beer Company said first quarter 2022 net revenues dropped 21% to $430.1 million, net loss was $2 million compared to $65.6 million profit, and diluted loss per share was 16 cents compared to earnings of $5.26.
First quarter depletion, a measure of demand in the distribution system, decreased 7% and shipment fell 25.1% but the craft brewer estimated full-year depletion and shipment growth between 4% and 10%.
The company's depletions rate for its flagship brand Samuel Adams were similar in comparable quarters but depletion rates were smaller than expected in hard seltzer products Truly Hard Seltzer, Angry Orchard, and Dogfish Head brands.
Shipment volume for the quarter was approximately 1.7 million barrels, a 25.1% decrease from the prior year, reflecting decreases in the Company's Truly Hard Seltzer, Twisted Tea, Angry Orchard, and Dogfish Head brands, partially offset by increases in its Samuel Adams brand.
Guidance and Outlook
The company estimated full-year 2022 non-GAAP earnings between $11 and $16 a share on a fully diluted basis.
HCA Healthcare Lowers Annual Outlook, Higher Labor Costs Depress Quarterly Earnings
Bridgette Randall
23 Apr, 2022
New York City
HCA Healthcare said first quarter 2022 revenues increased 7% to $14.9 billion, net income declined 8.4% to $1.3 billion, and diluted earnings per share was $.412 compared to $4.14 a year ago.
In the quarter, the company operated 182 hospitals with 48,892 beds available for the service. Number of equivalent admissions increased 3.5% to 859,290 and revenue per admission increased 3.6% to $17,392.
Average length of stay was stable at 5.29 days and occupancy based on weighted average beds in service increased to 71.3% from 70.1%.
Emergency room visits increased 11.7% from a year ago to 2.06 million.
Outlook and Guidance
The hospital operator lowered its full year earnings and revenues range.
The annual revenues range was revised down to between $59.5 billion to $61.5 billion from the previous estimate of $60 billion to $62 billion.
Annual net income attributable to shareholders range was revised down to between $4.95 billion and $5.34 billion from the previous estimated range between $5.55 billion and $5.83 billion.
The diluted earnings per share range was revised lower between $16.40 and $17.60 from $18.40 to $19.20.
The company announced a quarterly dividend of 56 cents a share payable on June 20, 2022 to shareholders of record at the close of business on June 16, 2022.
Rate and Inflation Worries, Supply Disruptions Compound Investor Anxieties
Barry Adams
22 Apr, 2022
New York City
Stock sell-off in the final hour intensified and major averages closed down for the third consecutive week in a row.
Weak earnings in the healthcare sector compounded investor anxieties after hawkish comments from Fed Chairman Powell a day ago.
The S&P 500 and the Dow fell 2.8% and the Nasdaq Composite index closed down 2.6% in a broad market sell-off. Tech, healthcare, financials and consumer sector stocks participated in the decline for the second day in a row.
The Dow Jones Average extended losses for the fourth week in a row and the S&P 500 and the Nasdaq Composite indexes declined for the third week in a row.
For the week, the Dow fell 1.9%, the S&P 500 declined 2.8%, and the Nasdaq Composite dropped 3.8%.
In the year so far, the Nasdaq has fallen 17.9% and the S&P 500 is down 11%, and the Dow has declined 8%.
Mining and metal sector stocks were also on the defensive on the worries that a faster rise in rates may negatively impact the demand. Nucor and Freeport-McMoRan declined more than 6%.
Nucor in Thursday's trading reached a new record high after reporting strong earnings.
Apparel retailers fell sharply after Gap expanded its range of sales decline in the quarter just completed on the troubles in its Old Navy division.
American Eagle, TJX, Nordstrom, Dillard's, Macy's, Ross Stores, Abercrombie & Fitch, Ralph Lauren fell between 3% and 9%.
At least 700 companies are scheduled to release earnings next week including Apple, Amazon, Facebook parent Meta, Microsoft, and Google parent Alphabet.
Apparel Retailers Tank on Gap Troubles, Hospital Stocks Fall on HCA and Intuitive Surgical Earnings
Barry Adams
22 Apr, 2022
New York City
Intuitive Surgical fell 13% after reporting better than expected first-quarter revenues increased 15% t0 $1.49 billion and net income declined 14% to $366 million. The company also offered a cautious outlook on supply chain disruptions.
HCA Healthcare plunged 21% after the hospital operator reported flat earnings per share and lowered annual outlook to a range between $16.40 and $17.60 a share from the previous estimated range between $18.40 and $19.20 a share.
DexCom, DaVita, and Universal Health dropped between 6% and 12% after HCA lowered its earnings outlook and cited rising labor cots.
Dillard's dropped 12% and American Eagle Outfitters plunged 10% after Gap Inc revised higher sales loss range in the latest quarter ahead of earnings call next week. Gap also said Old Navy CEO and President Nancy Green will no longer lead the division.
Cap Inc stock plunged 20%.
American Express Net Falls 6%, T&E Spending Reaches Pre-Pandemic Level in March
Scott Peters
22 Apr, 2022
New York City
American Express reported first quarter 2022 total revenues net of interest expenses increased 29% to $11.8 billion, net income declined 6% to $2 billion, and diluted earnings per share fell to $2.73 from $2.74 a year ago.
The financial services company lifted its quarterly dividend 21% to 52 cents a share.
In the quarter, the company processed through its global network a total of $350 billion in transactions, an increase of 30% from a year ago.
Transactions in the U.S. rose 31% to $244 billion and in international segment gained 26% to $106 billion.
Average proprietary basic card member spending increased 26% from a year ago to $5,965 in the U.S. and jumped 31% to $4,165 in the international segment averaging an increase of 28% to $5,452.
Total card member loans increased 27% to $88.8 billion.
Proprietary card member base increased 5% in the U.S. to 39.8 million and rose 3% to 17.8 million and total increased 5% to 57 million.
Kimberly-Clark Advances Higher Costs to Consumers, Lifts Sales Outlook
Scott Peters
22 Apr, 2022
New York City
Kimberly-Clark reported first quarter 2022 sales increased 7% to $5.1 billion, net income declined 10% to $535 million, and diluted earnings per share fell by the same amount to $1..55 from $1.72 a year ago.
Organic sales in the quarter increased 10% and estimated full-year sales growth in the range of 4% to 6% from the previous estimated range between 3% and 4%.
Personal Care segment quarterly sales increased 11% to $2.7 billion on 8% price increase and volume improved 3%.
Consumer Tissue segment quarterly sales increased 4% to $1.6 billion and net selling price increased 5% and volume improved 2 points.
Professional segment revenues increased 4% to $0.8 billion on 4% increase in net selling price.
In the quarter, the company completed purchase of majority and controlling stake in Think Inc for $181 million. The company made an initial minority investment in the maker of reusable period and incontinence underwear in 2019.
Outlook
The company lifted its annual sales outlook to between 2% to 4% from the prior range between 1% to 2% and reaffirmed previous unadjusted earning per share outlook.
Adjusted earnings per share estimate was revised higher to a range between $5.60 and $6.00.
Schlumberger Positioned to Benefit from Multi-Year Investment Cycle
Scott Peters
22 Apr, 2022
New York City
Schlumberger said first quarter 2022 revenues increased 14% to $6 billion, net income soared 70% to $510 million, and diluted earnings per share increased 71% to 36 cents from 21 cents a year ago.
International revenues increased 10% to $4.6 billion and North America revenues rose 32% to $1.3 billion.
Latin America led the revenue growth across all geographies as drilling activities ramped up in Mexico, Ecuador, Argentina, and Brazil.
Europe/CIS/Africa grew primarily from higher Production Systems sales in Turkey and increased exploration drilling in offshore Africa
Movers: American Express, Gap, Kimberly-Clark, Snap, Schlumberger, Verizon
Barry Adams
22 Apr, 2022
New York City
American Express was in focus after reporting better than expected $2.74 earnings per share after total revenues net of interest expense rose 29% from a year ago. Global spending volume in March reached a record high.
Kimberly-Clark soared 10% after the consumer products maker said quarterly organic sales growth was 10% and revised its annual organic sales estimate range to between 4% to 6% from 3% to 4%. The company also reaffirmed its annual earnings per share outlook between $5.60 and $6.00.
Snap Inc gained 4% after the social media platform reported quarterly revenues 38% to $1 billion and daily active users increased 18% to 332 million.
Schlumberger added 5% after the oil services provider said quarterly revenues increased 14% and net income soared 70% to $510 million and the company lifted its dividend by 40% to 17.5 cents.
Gap Inc plunged 11% after the fashion retailer revised its first quarter sales outlook to a decline in low to mid-teens from a year ago from the previous estimate of mid to high-single digit decline. The retailer also said Old Navy President and CEO Nancy Green will depart this week from the business.
Verizon Communications Inc declined 5% after the mobile telephony and broadband services provider said total revenues increased 2.1% to $33.5 billion and net income fell 12.1% to $4.7 billion.
Total wireless retail connections increased 22% from a year ago to 115.2 million and Fios internet connections increased 4.7% to 6.6 million.
U.S. and Global Markets Adjust As Fed Plays Catch Up
Barry Adams
22 Apr, 2022
New York City
The S&P 500 and Nasdaq Composite index futures point to lower opening as the Fed prepares to raise at a faster pace.
Bond markets around the world took note of the hawkish tone of the latest comments from Fed Chairman Jerome Powell as the central bank prepares to increase rates at a faster pace.
The U.S. Fed had brushed off rising energy and food prices and a surge in home prices as transitory for more than two years and is now playing catch up.
Stock markets are expected to remain volatile as investors adjust to higher rates and faster increases in rates in the next two years. Consumer price and wholesale price indexes indicate inflation between 6% and 7%, significantly above the preferred range of between 2% and 3% set by the Fed.
In Asia, Nikkei index closed down 1.6% and March inflation rose 0.8%, 26-month high, and surged 2.2% excluding the cheap mobile plans introduced last April.
Moreover, the Japanese yen traded at a 20-year low of 129 to a U.S. dollar.
10-year bond yields in India gained 0.6% to 7,17% and the Sensex index dropped 1.3% after foreign investors lightened holdings in index stocks.
European markets traded lower led by 1.5% decline in CAC 40 and DAX indexes. Bond yields of Germany, France, Italy and the U.K. rose between 25 and 60 basis points after Powell's comments.
Snap Daily Active Users Grows 18%, Revenues Surpass $1 Billion
Scott Peters
21 Apr, 2022
New York City
Snap Inc said first quarter 2022 revenues increased 38% to $1.06 billion, net loss expanded 25% to $359 million, diluted loss per share increased 16% to 22 cents to 19 cents.
Daily active users increased 18% to 332 million and average revenues per user increased 17% to $3.20. Daily active user increased 5% to 98 million in North America.
Total daily time spent by Snapchatters aged 25 and older engaging with shows and publisher content increased by more than 25% from a year ago.
Q2 2022 Outlook