Market Update
Stocks Rebound in New York and Europe, Russia Halts Gas Flow to Poland and Bulgaria
Barry Adams
27 Apr, 2022
New York City
Market indexes opened higher and tech stocks led the rebound a day after the Nasdaq Composite hit the new low in 2022.
The S&P 500 index opened up 0.3% and the Nasdaq Composite advanced 0.4%.
Microsoft jumped more than 3% after reporting better-than-expected earnings and sales.
Alphabet Inc, the parent of Google, fell 4% after investors were disappointed with the advertising revenue growth on YouTube social media platform.
After the clos today, Meta Platforms is expected to report earnings and Apple and Amazon are scheduled to release earnings on Thursday.
Crude oil edged down $1.30 to $100.30 a barrel and Russia halted its natural gas deliveries to Poland and Bulgaria.
U.S. Treasury 10-year bond yield edged down to 2.74%.
In international trading, European markets traded higher despite the deepening divisions between Russia and European nations.
The DAX index in Frankfurt edged up 0.3%, in London the FTSE 100 index gained 0.7%, and in Paris Cac-40 index gained 0.5%.
Asian markets opened lower following a plunge in Nasdaq in overnight trading but trimmed losses in India and in China.
The Sensex index in Mumbai closed down 0.9%, the Nikkei index in Tokyo fell 1.2%, and the SSE index in Shanghai gained 2.5%.
Covid-19 cases are on the rise in Beijing but cases in Shanghai declined for the fourth day in a row.
Alphabet Revenue Growth Slows, Plans $70 Billion Buyback
Scott Peters
26 Apr, 2022
New York City
Alphabet Inc reported first-quarter 2022 revenues increased 23% to $68 billion, net income fell 8.3%, diluted earnings per share eased to $24.62 from $26.29.
The revenue growth in the first-quarter eased to 23% from 34% a year ago and in constant currency slowed to 26% from 32% respectively.
Total advertising revenues increased 20% to $61.4 billion from $51.2 billion, search revenues increased 25% to $39.6 billion from $31.9 billion, Google Network revenues rose to $8.2 billion from $6.8 billion, and YouTube revenues advanced 13% to $6.8 billion.
The company's board authorized a share repurchase plan of $70 billion.
Microsoft Quarterly Revenues Up 18%, Net Income Up 8%
Scott Peters
26 Apr, 2022
New York City
Microsoft Corp reported March quarter revenues rose 18% to $49.4 billion, net income rose 8% to $16.7 billion, and earnings per share 9% to $2.22.
Server products and cloud services revenue increased 29%, in Productivity and Business Processes rose 17% to $15.8 billion, and in Personal Computing segment rose 11% to $14.5 billion.
LinkedIn revenues rose 34%, Xbox content and services revenues rose 6%, Surface revenues increased 13%, and search and news advertising revenues excluding traffic acquisition costs increased 23%.
Microsoft returned $12.4 billion to shareholders through share repurchases and dividends in the quarter, an increase of 25% from a year ago period.
Nasdaq Plunges 4% Extending Year's Loss to 21%
Barry Adams
26 Apr, 2022
New York City
The S&P 500 and Nasdaq Composite accelerated market declines in the afternoon after nervous investors decided to sell tech stocks ahead of earnings and avoid Netflix-type blow ups.
The Nasdaq Composite fell 4% and fell further in bear zone with year-to-date losses of 22%.
The S&P 500 index declined 2.8% today and extended year-to-date losses to 13%.
Netflix dropped 4% and Microsoft, Alphabet, Meta Platforms, and Apple fell more than 3%.
Banks were down on the growing worries that the economic slowdown maybe in the cards for the rest of the year.
Wells Fargo, JPMorgan Chase, Citigroup, and Bank of America declined more than 2%.
Crude oil jumped $3.52 to close at $102.03 a barrel and 10-year U.S. Treasury yield eased to 2.746%.
Movers: Arch Resources, Carvana, Sherwin Williams, Tesla, Waste Management
Barry Adams
26 Apr, 2022
New York City
Arch Resources surged 20% after the coal miner reported quarterly earnings per share of $12.89 compared to loss of 40 cents a year ago.
The mining companies also declared a special dividend of $7.86 and standard dividend of 25 cents.
The company has coal commitments between 83 million tons and 87.8 million tons for 2022.
Carvana Co plunged 11.8% after the stock was downgraded by Deutsche Bank and the company last week reported first-quarter loss of $506 million compared to $82 million a year ago.
The company also said it is planning to sell $1 billion of stocks and raise additional $2.3 billion in unsecured debt to finance acquisition of its auction unit Adesa.
JetBlue Airways sank 11% after the airline said it is planning to shrink its capacity by 5% and layoff staff from its previous plan to increase by 15% compared to 2019. The company said it plans to shrink the spring and summer schedule by 5% to 8%.
Sherwin-Williams jumped 9% after reporting quarterly sales of $5 billion, an increase of 7.4% but earnings per share declined to $1.41 from $1.51. Adjusted earnings of $1.61 a share were ahead of estimates between $1.51 and $1.53.
Tesla Inc plunged 11% after the company's CEO Elon Musk agreed to acquire Twitter Inc for $44 billion. About 33% or $60 billion of Musk's Tesla holdings are placed under collateral to finance the purchase.
Waste Management jumped 5% after reporting first-quarter revenues of $4.66 billion and adjusted earnings per share $1.29 a share. GAAP-based earnings per share increased to $1.23 from 99 cents a year ago.
The waste management company said revenues rose on growth in waste collection volume and improvement in yields in disposals.
UPS Revenues Jump on Price Increases, Shipment Volumes Fall
Scott Peters
26 Apr, 2022
New York City
UPS reported first-quarter 2022 revenues increased 6.4% to $24.4 billion, earnings fell 47% to $2.4 billion, and earnings per share declined to $3.03 from $5.47.
After adjusting the $2.86 per share or $3.6 billion of gains related to pension and other one-time costs comparable earnings per share in the quarter a year ago were $2.77 a share.
Total domestic package volumes declined to 19.7 million from 20.4 million a year ago. Total international package volume declined to 3.5 million from 3.8 million and consolidated package volume fell to 23.2 million from 24.1 million a year ago.
Average revenue per piece for domestic package rose to $11.97 from $10.93 and consolidated revenues per piece increased t0 $13.26 from $12.12 a year ago.
Revenues in the U.S. domestic segment increased 8% to $15.1 billion and operating profit rose to $1.6 billion from $1.4 billion. Revenue for piece increased 9.5%.
Revenues in the international segment rose 5.8% to $4.87 billion and operating profit increased 9% to $1.1 billion. Revenues per piece increased 10.5%.
Revenues in the Supply Chain Solutions segment rose 2% to $4.4 billion and operating profit rose to $473 million from $213 million.
The company announced its plans to double the amount of share repurchases for 2022, taking the target to $2 billion for the year.
Guidance & Outlook
For 2022, UPS reaffirms its full-year financial targets:
Consolidated revenue of about $102 billion
Consolidated adjusted operating margin of approximately 13.7% Adjusted return on invested capital above 30%
Capital expenditures of 5.4% of revenue, or approximately $5.5 billion
Dividend payments, subject to board approval, of about $5.2 billion
PepsiCo Net Benefits from Higher Prices and Volumes, Lifts Outlook
Scott Peters
26 Apr, 2022
New York City
PepsiCo, Inc reported first-quarter 2022 revenues increased 9.3% to $16 billion, net income rose 148% to $4.2 billion, and earnings per share increased by the same amount to $3.06 from $1.24 a year ago.
Excluding $3.3 billion benefits from the sale of certain juice brands in North America and Europe, earnings per share were $1.29.
organic revenues increased 13.7% and core earnings per share was $1.29 and increased 7% on constant currency basis.
Impact of exiting from Russia business was $193 million after taxes or 14 cents a share and including all impairment linked to Russia-Ukraine conflict add to $241 million or 17 cents per share.
Frito-Lay North America segment reported quarterly case volume increased 1% and revenues rose 14%.
Quaker Oats North America segment quarterly revenues rose 11% but case volume declined 1.5%.
Pepsico Beverage North America case volume increased 3% and revenues rose 5.5%.
Guidance and Outlook
For the full-year the company lifted its estimate of organic revenue growth to 8% from the previous estimate of 6%.
The food products and beverage maker reiterated its full-year core earnings per share outlook to 8%.
Lagging Indicator of Home Prices Jumps 20% in February
Brian Turner
26 Apr, 2022
New York City
S&P 500 Case-Shiller National Home Price index jumped 19.8% in February to 286.68 from a year ago.
The index tracks home prices across the nation and reached a new-high since the first value was calculated in January 1987.
The 10-city index showed an annual increase of 18.6% from 17.3% in January. The 20-city index increased 20.2% after gaining 18.9% in the previous month.
All 20 cities reported a price increase in February compared to 16 cities in January.
Sun-belt cities home prices jumped at a faster pace above the national averages as home builders struggled to add homes.
Prices in Phoenix soared 32.9%, in Tampa jumped 32.6%, and in Miami advanced 29.7%.
Home prices in Minneapolis and Washington, D.C. rose 11.9% and New York jumped 12.9%, the smallest gains in 20 cities tracked by the index but still advanced in double-digits.
Home price index is generally considered a lagging indicator of market environment and generally lags home sales and median price data trend.
Pending home sale contracts have been falling for the last four months in a row and March data is scheduled to be released on Wednesday. National home price index increased 10.4% in 2021 and 3.7% in 2020.
Nasdaq Down 2% On Tech Earnings Jitters
Barry Adams
26 Apr, 2022
New York City
Benchmark indexes opened down and quickly lost more than 1.5% following a day when market indexes staged a sharp reversal in the afternoon trading on Monday.
After 45 minutes of trading, the S&P 500 index declined 1.4% and the Nasdaq Composite index dropped 2%.
The S&P 500 and Nasdaq indexes rebounded 2% from the bottom reached at midday to close up on Monday.
The S&P 500 closed up 0.6% and the Nasdaq Composite gained 1.3%.
For April, the Nasdaq is still down 8% and the S&P 500 is down 5%. In the year so far, the Nasdaq has lost 19.5% and the S&P 500 has declined 10.4%
Investors showed a burst of enthusiasm ahead of earnings from tech leaders Microsoft, Google parent Alphabet, and Meta Platforms Inc.
About 700 companies are scheduled to release earnings including about 130 companies in the S&P 500 index.
Pepsico reported better-than-expected earnings of $4.26 billion from $1.71 billion a year ago. Earnings per share jumped to $3.06 from $1.24 a share.
S&P CoreLogic Case-Shiller national home price Index showed prices rose 19.9% in February from a year ago. The index showed a gain of 19.1% in January.
European markets are up between 0.4% and 0.6% in Frankfurt, Paris, and London.
Asian markets closed higher but the Shanghai index lost 1.4% extending three-day losses.
Mega Cap Techs Drive Market Reversal, Twitter Says Yes to Musk
Barry Adams
25 Apr, 2022
New York City
The S&P 500 and Nasdaq Composite indexes made a reversal in the afternoon trading after crude oil prices and bond yields eased and investors hunted for bargains ahead of earnings from large tech companies.
The Nasdaq Composite fell to 12,727 and reversed to close up 1.3% to 13,004.85, a reversal of more than 2.5%.
The S&P 500 index also reversed earlier losses at mid-day and gained 2% to close up 0.6%.
Microsoft, Google parent Alphabet, Apple and other leading tech companies are scheduled to release earnings after the close tomorrow.
Coca-Cola closed nearly unchanged after reporting better-than-expected quarterly earnings and reaffirmed its outlook for $10.5 billion free cash flow in the year.
Oil complex stocks dropped as much as 6% and recovered to close down only 2% to 3% after crude closed down 3.5% near $100 a barrel price.
Bond yield eased and the 10-year U.S. Treasury closed at 2.822%.
Twitter Accepts Musk's $44 Billion Deal
Barry Adams
25 Apr, 2022
New York City
Twitter Inc agreed to be acquired by a company wholly owned by Elon Musk, billionaire investor and CEO of Tesla Inc.
The $54.20 a share in cash deal values the social media platform at $4 billion. The deal price is 38% premium to Twitter's closing price on April 1, 2022, before Musk made his 9% stake public.
After the deal is completed in 2022, Twitter will operate as a private company.
Musk has secured $25.5 billion of fully committed debt and margin loan financing and is providing an approximately $21.0 billion equity commitment.
There are no financing conditions to the closing of the transaction.
Twitter plans to release its first quarter fiscal year 2022 results before the market opens on April 28, 2022 and will not hold an earnings conference call.
PS Business Park Agrees to $7.6 B Blackstone Deal, Higher Rents May Follow
Scott Peters
25 Apr, 2022
New York City
PS Business Parks, Inc agreed to be acquired by affiliates of Blackstone Real Estate for $187.50 a share or $7.6 billion including transaction cost.
The deal hinges on the assumption that the commercial rents will recover after taking a beating during the two-year global Covid-19 pandemic.
The purchase price represents a premium of approximately 15% to the volume weighted average share price over e the last 60 days.
The real estate development and management company primarily owns and manages industrial, business parks and trading multi-office properties suitable for small and medium size businesses.
The deal will cover a 27 million square feet portfolio of properties located primarily in California, Texas, Northern Virginia and Miami, Florida.
One of the prime properties in the portfolio is Miami International Commerce Center with 3.5 million square feet of space and home to 350 businesses in the City of Doral, Florida.
The deal is expected to be completed in third-quarter of 2022 subject to shareholder approval.
PSB has a 30-day go-shop period to look for a superior offer and has a right to terminate the definite merger subject to a termination fee.
Public Storage, traded on the New York Stock Exchange, which holds approximately 25.9% of the outstanding shares of PSB common stock, has agreed to vote its shares in favor of the transaction.
PSB stock jumped 12% to $188.17 and Public Storage stock fell 1.3% to $397.26.
Last week, Blackstone agreed to acquire student housing real estate firm American Campus Communities for $13 billion.
Following real estate mergers, generally the acquiring company hikes rents after about 18 months of completion of the transaction.
Movers: Coca-Cola, Fiverr, GitLab, Phillips, Schlumberger, Snowflake, Twitter, Verizon
Barry Adams
25 Apr, 2022
New York City
The Coca-Cola Company gave up early gains after reporting quarterly sales rose 16% and earnings surged 24% on price hikes and improved business mix.
Fiverr soared 6% on speculation that the stock may be cheap on historic metrics and ahead of its earnings release in two weeks.
GitLab surged 11% after KeyCorp raised its price target to $63 from $50 and assigned an "overweight" rating on the stock.
Koninklijke Philips NV plunged 12% after reporting lower than expected results and cited several threats to its annual outlook and expanded its recall of recently launched ventilators.
Snowflake Inc jumped 9% after Wolfe Research highlighted a strong product cycle and assigned a rating of "outperform" after initiating coverage of the cloud computing software developer.
Verizon Communications Inc declined 4% after Goldman Sachs downgraded the stock to "neutral" from "buy" rating citing recent large subscriber losses and high valuation.
Twitter Inc gained more than 4% after media reports suggested that the company may finalize its takeover deal with Elon Musk-led consortium of investors as early as today and ahead of its earnings release on Thursday.
Oil complex stocks trade down after crude oil fell more than 4% in New York and in international markets on the global slowdown worries.
Exxon Mobil declined 5%, Schlumberger dropped 10%, Chevron Corp, BP Plc, and Shell Plc dropped 4%,
Coca-Cola Sales Rise 16%, Net Jumps 24%
Scott Peters
25 Apr, 2022
New York City
The Coca-Cola Company reported first-quarter 2022 revenues increased 16% to $10.5 billion, net income rose 24% to $2.8 billion, and diluted earnings per share rose 23% to 64 cents from 52 cents a year ago.
The revenue growth was driven by 7% increase in price and business mix and 11% increase in concentrate sale partly driven by shipment calendar and partially offset by one day less in the quarter.
Revenues in North America increased 22% on 5% growth in case volume, in Latin America rose 34% and 9%, and in Europe, Middle East & Africa gained 22% and 11% respectively.
Operating margin improved to 32.5% from 30.2% a year ago and cash flow from operations declined to $620 million from $1.6 billion and free cash flow fell to $420 million from $1.4 billion.
Guidance and Outlook
The company reaffirmed its organic sales growth range between 7% and 8%.
The company expects commodities price increase in the mid-single digit percentage increase on a comparable basis.
For the full-year, on a constant currency basis, the company expects comparable EPS growth between 8% and 10% and adjusted earnings per share increase between 5% and 6% from $2.31 in 2021.
In the second quarter, comparable net revenues (non-GAAP) are expected to include an approximate 4% currency headwind based on the current rates and including the impact of hedged positions, in addition to a 3% tailwind from acquisitions.
Comparable EPS (non-GAAP) percentage growth is expected to include an approximate 4% currency headwind based on the current rates and including the impact of hedged positions.
The suspension of Russian business is expected to decrease full-year revenues between 1% and 2%, unit case volume by 1%, and non-GAAP earnings per share to fall by 4 cents.
Russia-related impacts on financial results are included in the full-year estimates.
Stocks Extend April Sell-off as Stagflation Prospects Rise
Barry Adams
25 Apr, 2022
New York City
Benchmark indexes in New York trading extended April losses as investors confront a new reality of prolonged supply chain disruptions on the rising coronavirus cases in China.
Over the weekend, China reported a surge in new coronavirus cases in the capital city of Beijing and announced new testing and lockdown measures in business districts.
Shanghai, the financial capital, remains in a prolonged lockdown and reported at least 100 new deaths linked to Covid-virus and food supplies in the city worsened.
In Monday's trading, Shanghai index dropped 5% and declined to a 2-year low and the Hong Kong index plunged 4% and extended loses to a 5-year low.
After 30 minutes of trading, the S&P 500 index declined 1.2% and the Nasdaq Composite fell 0.7%.
For the month, the Nasdaq Composite is down 10% and the S&P 500 6%.
About 700 companies are scheduled to release earnings this week including 160 companies in the S&P 500.
Coca-Cola advanced 2% and reported better-than-expected quarterly earnings before the markets opened in New York.
Crude oil declined 5% on the growing prospect of global slowdown and traded at $97.22 a barrel and Brent crude dropped 4.9% to $101.60 in international trading.
The U.S. 10-year Treasury yield eased to 2.78% as investors are increasingly factoring the slowing economy coupled with the rising inflation leading to a stagflation.