Risk/Reward archive
22Q3 sales rose 13.7% to $15.0 billion with double-digit gains in KEYTRUDA and GARDASIL/GARDASIL 9. GAAP diluted EPS fell 29.0% to $1.28; but non-GAAP diluted EPS rose 5.6% to $1.85. The company recorded an $887 million ($0.27 per…
Continue reading →AWK reported 22Q3 EPS of $1.63, up 6.5% from $1.53 in 21Q3 and above my estimate of $1.52. Operating revenues decreased 0.9% to $1.08 billion, as regulatory rate increases were more than offset by lost revenues from the…
Continue reading →Public Service Enterprise Group (PEG) reported 22Q3 operating revenues of $2.27 billion, up 19.4% from 21Q3. The increase in revenues was due mostly to higher gas supply sales to third parties at PEG Power and higher commodity revenues,…
Continue reading →22Q3 revenue declined 3.5% to $11.2 billion, mostly because of a drop in Revlimid sales due to patent expiry. GAAP EPS increased 8.5% to $0.75, but that was slightly below my estimate of $0.77, due mostly to a…
Continue reading →GE announced 22Q3 revenues of $19.5 billion, up 0.5% year-over-year, a GAAP loss per share of $0.14, compared with 21Q3’s $0.54 profit, and non-GAAP EPS of $0.35, below 21Q3’s $0.53. I had anticipated a GAAP EPS of $0.44…
Continue reading →BKR reported a 22Q3 GAAP net loss of $0.02 per share vs. 21Q3’s profit of $0.01. Non-GAAP adjusted EPS was $0.26 vs. $0.16. I had anticipated 22Q3 GAAP EPS of $0.18 and Non-GAAP EPS of $0.30. BKR’s 22Q3…
Continue reading →NJR reported 22Q3 GAAP net income of $0.14 per diluted share and a net financial loss (a non-GAAP measure) of $0.04. That compares with the 21Q3 GAAP loss of $1.16, owing to an impairment charge on its investment…
Continue reading →The average rate on the 30-year mortgage has risen above 6.00% in response to the latest hike in the Fed Funds target rate. Freddie Mac’s Primary Mortgage Market Survey pegged the average rate at 6.29% this week. The…
Continue reading →Five years after its merger with GE Oil & Gas, Baker Hughes Company (BKR) is adjusting to changes in its market environment, including the fallout from the war in Ukraine, supply chain disruptions, inflation and challenges and opportunities…
Continue reading →Fiscal 22Q4 net sales of $2.0 billion increased 6.1% YOY. GAAP diluted EPS was $0.32, below 21Q4’s $0.95. Non-GAAP adjusted EPS of $0.56 exceeded 21Q4’s $0.52. These results were generally in line with my expectations.
Continue reading →HPE’s 22Q3 GAAP diluted EPS was $0.31 vs. $0.29 in 21Q3 and better than my estimate of $0.26. Non-GAAP EPS was $0.48, compared with $0.47 last year and my estimate of $0.46. Net revenue of $6.95 billion exceeded…
Continue reading →Toll Brothers’ 22Q3 EPS was $2.35, up 25.7% from 21Q3’s $1.87 and above my estimate of $2.22. Revenues increased 10.6% to $2.49 billion, slightly below my projections. Deliveries of 2,414 units fell 7.1%, more than expected, but the…
Continue reading →Despite an accelerating slide in housing sales and production following this year’s rise in mortgage rates, my homebuilder stock price index has performed in line with its benchmarks since April. At current prices, homebuilding stocks trade at less…
Continue reading →Citius Pharmaceuticals reported a third quarter loss of $8.9 million or $0.06 per share, compared with last year’s loss of $7.3 million or $0.05 per share. As an early stage drug development company, Citius currently generates no revenues. …
Continue reading →22Q2 GAAP loss was $0.46 per share and normalized FFO -$0.04 per share, below my forecast of -$0.42 and +$0.01, respectively. The Office Portfolio disappointed again, raising concerns about declining occupancy. Senior Housing Operating Portfolio (SHOP) results met…
Continue reading →AlerisLife reported a 22Q2 net loss of $8.8 million or $0.28 per share, better than the 22Q1 loss of $9.7 million or $0.31 per share and the 21Q2 loss of $12.3 million or $0.39 per share. I had…
Continue reading →2022 second quarter net income attributable to shareholders was $17.8 million or $0.87 per diluted share, compared with 21Q2’s $19.5 million or $0.93 per share. The decline in EPS occurred despite a 21.8% increase in revenues to $235.6…
Continue reading →Mistras Group reported 22Q2 EPS of $0.15, below 21Q2’s $0.20 and my estimate of $0.18. Revenues of $179.0 million were 0.8% above the year earlier period and also below my expectations. While revenues were essentially flat, gross margin…
Continue reading →22Q2 revenues of $1.585 billion were flat year-over-year, but up 5% at constant currency. GAAP EPS of $0.92, was below 21Q2’s $1.68 and also below my $1.11 estimate. Non-GAAP EPS of $1.25 was below last year’s $1.72 and…
Continue reading →Public Service Enterprise Group (PEG) reported 22Q2 operating revenues of $2.08 billion, up 10.8% from 21Q2. GAAP EPS was $0.26 vs. a loss of $0.35 a year ago. Most of last year’s loss was related to a net…
Continue reading →22Q2 sales increased 28% to $14.6 billion, with LAGEVRIO sales of $1.2 billion, a 26% increase in KEYTRUDA sales to $5.3 billion and a 36% increase in GARDASIL/GARDASIL 9 sales to $1.7 billion. GAAP diluted EPS from continuing…
Continue reading →American Water Works Company (AWK) reported 22Q2 EPS of $1.20, up 5% from $1.14 in 21Q2. Operating revenues decreased 6.2% to $937 million, mostly due to the sale of the Homeowner Services (HOS) and New York American Water…
Continue reading →22Q2 revenues were higher, GAAP earnings lower and non-GAAP earnings higher than anticipated. Management reduced its 2022 revenue guidance by $1 million to $46 billion due to foreign currency headwinds. It also lowered its GAAP EPS guidance, but…
Continue reading →General Electric Company (GE) announced 22Q2 revenues of $18.6 billion, up 2.4% year-over-year, a GAAP loss per share of $0.59, two cents worse than 21Q2’s $0.57 loss, and non-GAAP EPS of $0.78, above 21Q2’s $0.22. I had anticipated…
Continue reading →Hewlett Packard Enterprise Company’s performance during the first half of fiscal 2022 was somewhat disappointing, due primarily to the residual disruptions from the pandemic and more recent developments, including the conflict between Russia and Ukraine. Although its order…
Continue reading →2022 first quarter net income from continuing operations attributable to shareholders was $16.0 million or $0.76 per diluted share, compared with 21Q1’s $3.1 million or $0.16 per share. Revenues improved to $195.1 million from $146.4 million.
Continue reading →Earlier today, Citius Pharmaceuticals issued a press release announcing its intention to spin-off its late stage oncology candidate, I/ONTAK, to a new, standalone publicly-traded company. In making the announcement, the company said that it believed that the market…
Continue reading →22Q1 In Line with Expectations. Maintaining Performance Rating and Price Target. 22Q1 GAAP earnings were $1.01 per share and normalized FFO –$0.09 per share, in line with my expectations of $1.04 and –$0.06. Excluding a $327.8 million gain…
Continue reading →22Q1 Loss of $0.30 in Line with Expectations; Katie Potter Steps Down as CEO; ALR Hires Alvarez & Marsal to Conduct a Comprehensive Operational Review AlerisLife reported a 22Q1 net loss of $9.7 million or $0.31 per diluted…
Continue reading →Since reporting disappoint 22Q1 results on April 26, GE’s stock has fallen sharply. Year-to-date, GE’s stock is down 22.6%, worse than the S&P 500 Industrial sector’s 11.7% decline.
Continue reading →Citius Pharmaceuticals (CXTR) is a specialty pharmaceutical company focused on the development of five potential products: (1) Mino-Lok, an antibiotic lock solution to treat and salvage infected central venous catheters (CVCs) in patients with catheter-related bloodstream infections (CRBSIs);…
Continue reading →21Q4 Results Below Expectations, Lowering 2022 Estimates, Reducing Rating and Price Target Mistras Group reported 21Q4 EPS of $0.00, slightly worse than 20Q4’s $0.01 and below my estimate of $0.06. Revenues of $171.2 million were 6.5% above the…
Continue reading →Homebuilding stocks have had a rough 2022. Year-to-date (through 4/12), my equal-weighted index of 11 publicly-traded U.S. homebuilders has fallen 34.8%. That compares with declines of 7.7% in the S&P 500 and 11.5% in the Russell 2000. Following…
Continue reading →Lowering Estimates and Safety Rating, Withdrawing Performance Rating and Price Target AlerisLife Inc. (ALR), formerly known as Five Star Senior Living, reported a fourth quarter net loss of $10.7 million or $0.34 per share, slightly worse than the…
Continue reading →Since my last report on December 9, 2021, Toll’s stock has fallen 26.3%, much more than the S&P Mid-Cap 400’s 2.6% decline. As I noted back then, shares of Toll and other homebuilders were ripe for a correction…
Continue reading →Establishing 2022 and 2023 Estimates, Maintaining Outperform Rating, Setting $85 Price Target Following the spin-off of Organon, Merck is focused on growing its pharmaceuticals business to offset the looming loss of exclusivity on its $5 billion Januvia/Janumet franchise…
Continue reading →Lowering Estimates for 2022 and Adding 2023, Lowering Price Target to $5.00 DHC reported 21Q4 normalized FFO of –$0.09 per share, compared with 21Q3’s ‑$0.05 and 20Q4’s +$0.09. Although the Office portfolio posted another solid quarter and the…
Continue reading →Raising 2022 Estimate and Adding 2023, Maintaining Outperform Rating and Price Target of $73 Bristol-Myers Squibb Company (BMS) achieved many operational milestones in 2021, advancing its development pipeline through clinical trials, new drug applications and regulatory approvals. At…
Continue reading →Sales Raise Over $1 Billion, Giving the Trust the Means to Retire the 9.75% Senior Notes due 2025 When They Become Callable in June 2022. DHC announced on January 31 that it has entered into a joint venture…
Continue reading →Since 2019, Campbell Soup Company has jettisoned several businesses to focus on its core Meals and Beverage (M&B) and Snacks segments. It has also acquired new growth platforms in Pacific Foods and Snyder’s-Lance. Its $1 billion enterprise cost…
Continue reading →Mistras Group is a leading provider of non-destructive testing (NDT) and related asset protection services that monitor the condition of critical infrastructure and equipment to ensure safe and efficient operations and maximize uptime. The company’s business has suffered…
Continue reading →Toll Brothers reported stronger-than anticipated fiscal 21Q4 results that once again exceeded my and the consensus estimates. Its diluted earnings per share were $3.02, up 95% from $1.55 in 20Q4. My estimate was $2.51 and the consensus estimate…
Continue reading →Organon reported 21Q3 GAAP EPS of $1.38 which exceeded my estimate of $1.31. Revenues were in line with my estimates and operating costs were lower, except for a $25 million increase associated with the acquisition of in-process research…
Continue reading →SJI reported a 21Q3 GAAP net loss of $25.8 million or $0.23 per share, wider than 20Q3’s net loss of $10.3 million or $0.10. On an economic earnings basis, which adjusts for fluctuations in the fair market value…
Continue reading →At its 2021 Securities Analyst Meeting (SAM), the management of Hewlett Packard Enterprise Company (HPE) said that the workplace changes advanced by the pandemic are proving the validity of its edge-to-cloud strategy. HPE has experienced stronger than anticipated…
Continue reading →Diversified Healthcare Trust (DHC) reported 21Q3 normalized FFO of –$0.04 per share, compared with 21Q2’s $0.05. The loss came despite a 40 bp improvement in SHOP occupancy. Operating costs remain high and senior living operators are discounting resident…
Continue reading →Again Lowering EPS Estimates; Reducing 6-12 Month PT and Maintaining Outperform Rating Five Star reported a third quarter net loss of $10.2 million or $0.32 per share, less than the second quarter’s loss of $12.3 million or $0.39…
Continue reading →Toll Brothers reported stronger-than anticipated fiscal 21Q3 results that once again exceeded my estimates. Its diluted earnings per share were $1.86, up 71% from $0.59 in 20Q2. My estimate was $1.48 and the consensus estimate was $1.53.
Continue reading →Public Service Enterprise Group held its 2021 Investor Day on Sept. 27, 2021. At the meeting, management offered the following guidance:
Continue reading →SJI’s utility businesses – South Jersey Gas Company (SJG) and Elizabethtown Gas Company (ETG) – are its core growth engines. Representing 70%-80% of consolidated profits, they have grown by pursuing regulatory-approved infrastructure investment programs and gaining customers from…
Continue reading →21Q2 Performance in Line with Expectations; Raising Performance Rating and Lowering Price Target 21Q2 GAAP EPS of $1.68 was lower than 20Q2’s $2.14. Although sales increased 4.5% to $1.6 billion, costs were higher as a result of new…
Continue reading →Progress on Strategic Repositioning; Performance in Line with Expectations; Upgrading Performance Rating; Maintaining Price Target of ~$7.50. DHC reported 21Q2 normalized funds from operations (FFO) of $12.2 million or $0.05 per share, lower than 20Q2’s $0.25, due mostly…
Continue reading →Five Star reported a second quarter net loss of $12.3 million, reversing last year’s $3.0 million net profit. On a per share basis, the loss was $0.39, compared to net income of $0.10 and below my estimate of…
Continue reading →2021 Second Quarter Results in Line with Expectations. Maintaining Neutral Rating. AWK reported 21Q2 EPS of $1.14, up 17.5% from 20Q2. Operating revenues increased 7.3% to $999 million. Operating income rose 5.4% to $330 million. Operating margin eased…
Continue reading →Initiating Coverage with an Outperform Rating. Prospects Beyond 2022 are Favorable. With the acquisitions of Celgene in 2019 and MyoKardia in 2020, BMS has substantially transformed its business and repositioned for growth. Drugs added to the portfolio from…
Continue reading →It has been a year since PSEG announced a strategic review to explore divesting its fossil fuel generating assets. Since then, management has said that it is pleased with the interest shown by potential buyers in its 6,750+…
Continue reading →On May 5, 2021, Bluegreen Vacations Holding Corporation (BVH), formerly known as BBX Capital Corporation, completed the acquisition of the 7% publicly-traded ownership stake of Bluegreen Vacations Corporation (BXG) that it did not already own through a statutory…
Continue reading →The Company Reported Stronger Than Expected 21Q2 Results, But Its Upwardly Revised Guidance Was Somewhat Disappointing. HPE reported fiscal 2021 second quarter GAAP earnings of $0.19 per share, well above its most recent guidance of $0.02-$0.08 per share…
Continue reading →HPE has posted two consecutive quarters of stronger-than-expected results. Although the quarterly figures still lag behind the prior year, the recent strength suggests that its business is rebounding strongly off the bottom. As noted by management, HPE’s business…
Continue reading →In early April, Five Star announced a change in its strategy whereby it will transition out of the management of 108 smaller senior living communities (SLCs) with 7,500 living units (with an average of 69.4 units per community),…
Continue reading →Merck is progressing toward the spin-off of its subsidiary, Organon & Co., which is expected to be completed by the end of the June. Organon will include Merck’s women’s health products, biosimilars and certain established brands, most of…
Continue reading →On April 9, Five Star and DHC announced a restructuring of their management agreement whereby DHC will transition the management of 108 smaller senior living communities (SLCs) with a total of 7,500 units to other operators by the…
Continue reading →In recent weeks, Merck has been following through on its plan to spin-off its subsidiary, Organon & Co., to shareholders. On March 17, it filed its Form 10 registration statement related to the transaction. On March 24, it…
Continue reading →Diversified Healthcare Trust reported 2020 fourth quarter normalized funds from operations (FFO) (my definition) of $15.1 million or $0.06 per share, slightly better than 20Q3, but well below 19Q4. The results were modestly better than I anticipated with…
Continue reading →Citius Pharmaceuticals (CXTR) is a specialty pharmaceutical company focused on the development of four potential products: (1) Mino-Lok, an antibiotic lock solution to treat and salvage infected central venous catheters (“CVCs”) in patients with catheter-related bloodstream infections (“CRBSIs”);…
Continue reading →Vaccination of 90% of Residents Raises Visibility on a Rebound in Occupancy Five Star reported slightly stronger 20Q4 results than anticipated, due primarily to gains on investments held by its captive insurer. Average occupancy across its owned and…
Continue reading →Diversified Healthcare Trust reported 2020 third quarter normalized funds from operations (FFO) (according to my definition) of $11.0 million or $0.05 per share, well below results for 19Q3 and 20Q2 and also below my projection of $27.8 million…
Continue reading →General Electric reported a 2020 third quarter GAAP loss of $1.16 billion or $0.13 per share on revenues on revenues of $19.4 billion, down 17%. In the 2019 third quarter, the company reported a comparable net loss of…
Continue reading →Shares of GE have underperformed both the broader market and GE’s industrial peer group since the onset of the COVID-19 pandemic. The weak performance reflects primarily the company’s exposure to the aviation business, which prior to the pandemic…
Continue reading →Diversified Healthcare Trust (DHC) reported 2020 second quarter normalized funds from operations (FFO) (according to my definition) of $52.8 million or $0.22 per share, down 33% from $81.1 million or $0.33 per share in the prior year quarter. …
Continue reading →Five Star Senior Living continues to cope with the effects of the COVID-19 pandemic on its operations. During the 2020 second quarter, it experienced a 3.8% decline in occupancy from 82.5% to 78.7% across its owned and managed…
Continue reading →DHC’s share price closed on Thursday (4/9) at $3.51, down 58.4% year-to-date, worse than the peer group average of down 24.7%, but the stock is up from its bottom of $2.00. Most of the losses for DHC occurred…
Continue reading →As noted in a previous post, it is most appropriate to value GE as a single, stand-alone enterprise. Several unifying investment themes support this view:
Continue reading →In April 2015, partially in response to the regulatory restrictions that accompanied GE Capital’s designation as a systemically important financial institution by the Financial Stability Oversight Council, GE adopted the GE Capital Exit Plan, under which it planned…
Continue reading →In my view, the most appropriate way to look at GE’s stock valuation is to consider the company as a single enterprise. In this analysis, I compare its current valuation to peers. My calculations for GE’S enterprise value-to-EBITDA…
Continue reading →Based upon management’s guidance given at General Electric’s 2020 Outlook meeting on March 4th, I project 2020 Industrial Leverage EBITDA of $11.6 billion, up roughly 3% from 2019. Industrial Leverage EBITDA was given in the appendix to the…
Continue reading →Given the complexity of its business mix and financial structure, valuing GE is not an easy exercise even under benign economic conditions. The task is made even more difficult when there is considerable uncertainty about prospects for the…
Continue reading →GE’s stock has been battered during this sell-off, falling much more than the broader market as a whole. Since reaching an intra-day peak of $13.26 on February 12 (roughly one month ago), the stock has fallen 40.8% to…
Continue reading →On Thursday (2/21), Brightcove (BCOV) reported somewhat disappointing 2019 fourth quarter performance and guidance which caused its stock to plummet 12.8% on the open and end the day down 7.2% (from the previous close). Yet, buyers emerged quickly…
Continue reading →Under new CEO Steve Westhoven, the business portfolio of New Jersey Resources (NJR) has evolved as it typically does in response to changes in its operating environment. Its regulated utility operations, New Jersey Natural Gas (NJNG) and its…
Continue reading →A key change at Brightcove since my last post has been the turnover at the top. In August 2017, after three consecutive quarters of earnings misses, Dave Mendels, who had served as CEO for more than four years,…
Continue reading →At its 2019 Securities Analyst meeting (SAM) held in New York City on October 23, the senior management of Hewlett Packard Enterprise (HPE) said that the company was poised to enter the third phase of its evolution: pivoting…
Continue reading →SNH has set a goal of $900 million in announced or closed asset sales in 2019. With more than nine months of the year gone, it has completed only $119.1 million in asset sales and has an estimated…
Continue reading →The five publicly-traded REITs that are managed by the RMR Group, Inc. (RMR), a Newton, Mass.-based property manager, have often traded at significant discounts to their peers. The discount has been attributed to the nature of the relationship…
Continue reading →The cover story in this week’s Sunday New York Times Magazine is “What Really Caused the Deadly Crashes of the Boeing 737 Max?“. While acknowledging that malfunctions caused the crashes, it also documents in detail the errors made…
Continue reading →On August 15, 2019, Harry Markopolos, who gained fame as the person who exposed the fraud perpetrated by Bernie Madoff, released a 175-page report entitled “General Electric, A Bigger Fraud Than Enron.” GE’s stock fell 11.3% on the…
Continue reading →In response to the financial difficulties of its primary tenant, Five Star Senior Living (FVE), Senior Housing Properties Trust (SNH) has been forced to negotiate a change in the structure of their business relationship. Specifically, SNH has agreed…
Continue reading →Five Star Senior Living (FVE) and its landlord Senior Housing Properties Trust (SNH) have previously announced a restructuring of their commercial arrangements whereby SNH will cancel the five master leases that cover 181 senior living and skilled nursing…
Continue reading →On June 20, Merck held an investor day, its first in five years, to highlight its goals and objectives and provide a broad perspective on its five-year performance outlook. Although its blockbuster cancer treatment, KEYTRUDA (pembrolizumab), has been…
Continue reading →Shares of Bluegreen Vacations Corporation (BXG) received a double whammy in May from the parent company BBX Capital’s (BBX) decision to back out of its offer to buyback BXG’s public float – equal to 10% of outstanding shares…
Continue reading →The net income and EPS figures for the 2019 first quarter for Baker Hughes, a GE company, are confusing as presented. The company reported net income (before income or loss allocated to the non-controlling interest, which is GE)…
Continue reading →AT&T reported diluted EPS of $0.56 per share, down from $0.75 a year ago. Non-GAAP adjusted EPS of $0.86 per share was up slightly from $0.85 last year and in line with consensus estimates. The difference between GAAP…
Continue reading →Arch reported 18Q1 diluted EPS of $3.91, up from $2.75 in 17Q1 and well ahead of the consensus estimate of $2.71. The gain in earnings came despite a 3.5% decline in revenues to $555.2 million, primarily because of…
Continue reading →The company reported diluted EPS of $0.24 per share, up from $0.21 a year ago. Sales declined 1% to $31.4 million due mostly to a non-repeat of a large order from a distributor who was launching a first…
Continue reading →Earnings of $1.80 per share included a $0.21 charge related to merchant fees litigation. Excluding that charge, AXP’s 2019 first quarter EPS would have been $2.01, up from $1.86 a year ago and in line with market expectations. …
Continue reading →After reporting a 2018 fourth quarter loss of $23 million, negative EBITDA for the quarter of $12.5 million and a $51 million drawdown on its bank credit facility, it is clear that Five Star, SNH’s largest tenant, must…
Continue reading →General Electric (GE) posted 2018 fourth quarter results that were viewed positively by the financial community primarily because there were no new major negative surprises. Although management gave an update on the company’s recent progress and certain aspects…
Continue reading →American Water Works Company (AWK) has delivered superior operating, financial and stock price performance over the past eight years. Its 2018 performance did not match the eight year average in either absolute or relative terms. However, management is…
Continue reading →2018 was a rough year for investors in Acme United Corporation’s (ACU) stock, including CEO Walter Johnsen who owns 15% of the outstanding shares. ACU’s 2018 total return was -38%, worse than the Zack’s Micro Cap Index’s 17%…
Continue reading →Despite progress recorded in both its restructuring and its financial performance, HPE's shares underperformed the market. Several factors contributed to the underperformance; but the shares should have upside if the company can deliver on its guidance.
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