Tag: Earnings

China hits US sorghum; Tesla’s pause; Goldman Sachs earnings

China hits US sorghum; Tesla’s pause; Goldman Sachs earnings

China steps up trade fight: China has slapped a huge charge on American imports of sorghum, accusing the United States of dumping the crop on its markets.
China is the largest buyer of American sorghum products.
It imported about $960 million worth last year, according to Chinese data.
Testing times for Tesla: Tesla announced Monday it had temporarily suspended production of its Model 3.
Blockbuster bank earnings: Goldman Sachs (GS) is set to report its earnings before the opening bell on Tuesday.
It’s been a strong earning season for the banks so far.
And the strong economy in the United States and abroad is adding to the momentum.
China powers ahead: China’s economy grew 6.8% in the first quarter of 2018, according to government data published Tuesday.
China’s government said last month that it’s aiming for economic growth of around 6.5% for the full year, lower than the 6.9% that it reported for 2017.
European markets were mostly higher, while markets in Asia ended the session mixed.

It May Be Impossible for Earnings to Satisfy the Bulls Right Now

It May Be Impossible for Earnings to Satisfy the Bulls Right Now

Banks lag for second day even as JPMorgan, BofA top estimates Stretched valuations, tighter labor market pose headwinds While nobody doubts earnings are soaring, the question is whether they’re soaring enough to restore order in the stock market.
Stocks were mostly falling after companies released results, almost regardless of how good they were.
Among 29 members of the S&P 500 that announced earnings through Friday, even those that beat analyst estimates saw shares trail in first-day reactions, data compiled by Wells Fargo & Co. showed.
It trailed the market again Monday as results from Bank of America failed to impress.
Among S&P 500 companies that have reported this season, their stocks fell an average 0.7 percent on the first day after earnings, data compiled by Bloomberg show.
He found that equity returns have shown an inverse relationship with the measure.
The pace of GDP growth just topped the unemployment rate for the first time during this bull market and Paulsen forecast that the spread may reach as high as 2 percent “before long”.
Such readings have seen S&P 500 advancing at an annualized rate of 2.6 percent since 1950, down from 15 percent when the indicator showed negative readings, his study showed.
There is no question that this earnings season will at least meet expectations, thanks to tax cuts and economic growth, but investors should look deeper at the trend of profit margins for clues whether double-digit growth can sustain beyond the first half of 2018, said Mike Wilson, Morgan Stanley’s chief U.S. equity strategist.
“Robust earnings should help move the market higher, but watch for early signs of margin pressure as a harbinger of earnings growth deceleration later this year.”

Big Banks Fail to Impress Despite Earnings Beat

Big Banks Fail to Impress Despite Earnings Beat

Shares of JPMorgan Chase & Co. (JPM ), Citigroup Inc. (C) and Wells Fargo Corp. (WFC) all saw a significant dip Friday despite posting earnings results that beat consensus estimates for both top and bottom line numbers.
In Q1, analysts expected the S&P 500 to show profit gains of 17% year-over-year (YOY), while banks were projected to jump 28%.
(See also: 10 Financial Stocks Poised to Outperform.)
The sell-off suggests that banks failed to meet lofty targets demonstrated by investors confidence in financials over the past five years, driving the sector up 90% over that time and accelerating gains in the past year.
Rising rates, which were expected to provide a strong boost to banks, worked to increase interest income 10% for JPM and C in Q1, yet interest expenses were up in the 50% range.
Despite historically low levels of unemployment and a strong economy, loan growth was lackluster, as JPM’s lending business slumped 0.2% from the previous three quarters, WFC loans slumped 1% and Citigroup’s lending gained just 1%, attributed to an initiative to expand its struggling credit card business.
Higher rates failed to translate into a a jump in lending profits, with net interest margins remaining in the 3% range.
The story suggests that while interest rates were at historic lows, individuals took advantage and refinanced, perhaps borrowing even more than they needed.
This lull in loan demand explains a weakness across the board for the banks’ mortgage businesses in Q1.
The bank posted EPS of $1.12 on revenue of $21.9 billion, reflecting a dip from the year-ago period of $22.3 billion in sales, yet better than analysts’ expectations.

Doubts over U.S. bank capital payouts may cloud strong earnings

Doubts over U.S. bank capital payouts may cloud strong earnings

Eight years of U.S. economic growth have been a tailwind for banks, but the Fed has since 2013 made its stress test scenarios more challenging each year.
After first writing down deferred tax assets to account for a lower corporate rate, banks now face being prevented from carrying back losses in stress testing to past profitable quarters to benefit from tax rebates.
First-quarter net income for JPMorgan, Wells Fargo and Citigroup likely rose 34 percent, 5 percent and 12 percent, respectively, according to analysts surveyed by Thomson Reuters I/B/E/S.
Banks will likely see bigger reductions in projected capital levels in this year’s exam, a banking industry economist said.
In a March 2 supervisory letter, the Fed cited elimination of carrybacks as one reason the tax law could have “material” negative effects on some banks in this year’s stress test.
Goldman Sachs said in January that a key measure of capital shrank by 0.7 percentage points to 10.7 percent at Dec. 31 because of one-time tax charges, which included marking down deferred tax assets, such as credits against future taxes known as loss carryforwards.
In stress tests before the tax law change, carrybacks from losses could support capital levels and improve the odds of bigger approved buybacks.
To be sure, executives could flag offsets to those effects.
Goldman, like other banks with profits kept overseas, picked up deferred tax liabilities for so-called repatriation taxes it booked in the fourth quarter but had not yet paid.
JPMorgan and Citigroup are two big card issuers but have not discussed their outlook for payouts in light of the letter.

In search of good news, markets turn to earnings season

In search of good news, markets turn to earnings season

Analysts expect companies in the S&P 500 to report a 17 percent jump in earnings per share for the first three months of the year, thanks in large part to lower tax rates and the strong global economy.
Prices have climbed faster than earnings in recent years, pushing up the ratio of stock prices to corporate profits, a standard method for determining if the market is expensive or fairly valued.
Back in January, S&P 500 traded at about 23.5 times its earnings per share over the prior 12 months.
Microsoft’s stock price is close to its highest level since the dot-com bubble, relative to its earnings over the prior 12 months, for example.
Both stocks appear less expensive when one looks at their prices relative to their expected earnings in the upcoming 12 months.
When interest rates are on the rise, companies have historically needed to produce even bigger profits just for their stock prices to hold steady.
Here’s a look at some of the trends that may shape the first-quarter reporting season, which really gets going on Friday, when JPMorgan Chase and other big banks offer their reports: — How much will inflation bite?
But analysts are forecasting another quarter of revenue growth for companies due to the healthier global economy.
Technology companies will be under scrutiny because that’s where expectations for revenue growth are close to the highest.
Over the last three months, analysts have raised their forecast for S&P 500 earnings per share in the first quarter by about 5 percent.

Lennar beats profit views as revenue jumps 28%

Lennar beats profit views as revenue jumps 28%

Lennar Corp. LEN, +0.46% shares are up 2.2% on low volume after the home builder reported its first-quarter earnings Wednesday.
Analysts polled by Thomson Reuters had expected adjusted earnings of 77 cents a share.
ORDERS: Lennar said first-quarter new home orders rose 30% to 8,456, including 1,069 homes from its February acquisition of CalAtlantic.
Lennar’s quarter-end backlog jumped 95% to 17,566 homes, 7,190 o f which came from CalAtlantic.
COMMENT: “We continue to remain positive on the outlook of the housing industry in general,” CEO Stuart Miller said in prepared remarks. “Although interest rates have ticked up, unemployment remains low, the labor participation rate has been increasing, and wages have been moving modestly higher, though we think, even higher than the data the government captures.
Feedback from our new home consultants indicates that our customer base feels confident in both job security and compensation levels in spite of the political noise that abounds.”
POSSIBLE SALE: Lennar said it has hired advisers to look into “strategic alternatives” for its investment and asset management subsidiary, Rialto Capital Management.
Lennar said it is focusing on its homebuilding business and returning to a pure play strategy.
Write to Cara Lombardo at cara.lombardo@wsj.com

UniFirst (UNF) Q2 2018 Earnings Conference Call Transcript

UniFirst (UNF) Q2 2018 Earnings Conference Call Transcript

As Steve discussed earlier, yesterday, UniFirst repurchased 1.105 million shares of Class B common stock and 73,000 shares of common stock for a combined $146 million in a private transaction with the Croatti family shareholders.
We probably will have more to say a quarter from now.
Shane O’Connor — Senior Vice President and Chief Financial Officer That operating margin at 9.5% is just for the second half of the year.
Shane O’Connor — Senior Vice President and Chief Financial Officer So are you talking — Tim Mulrooney — William Blair & Company — Analyst I think it was 4.1% last quarter.
Last quarter, in Q1 of ’18, it was 4.1%.
So do you have that for this quarter?
I think the one thing I will say a little bit is, we are starting to see a little bit of strength in that area in the West Texas market, where we’re starting to get a little bit of a pull from energy again.
But I don’t think there’s been a significant change, although I would say the environment from that side, because of maybe somewhat of the consolidation but also just the economy as customers feel better about their companies, usually that helps with pricing as well.
Operator [Operator instructions] And we have no further questions at this time.
Duration: 42 minutes Call Participants: Steven S. Sintros — President and Chief Executive Officer Shane O’Connor — Senior Vice President and Chief Financial Officer Andrew J. Wittmann — Robert W. Baird & Company — Analyst Judah Sokel — J.P.Morgan — Vice President Tim Mulrooney — William Blair & Company — Analyst Kevin Steinke — Barrington Research — Managing Director This article is a transcript of this conference call produced for The Motley Fool.

Jobs report ‘unbelievably strong’ but earnings disappoint, economists say

Jobs report ‘unbelievably strong’ but earnings disappoint, economists say

Here are some early comments on the February employment report, which showed a better-than-expected 313,000 jobs created in the month and the unemployment rate at 4.1%.
The 12-month increase in worker pay slipped to 2.6% from 2.8%.
• “Payrolls came in substantially stronger than expected, though average hourly earnings is a disappointment.
That said, it’s possible that the rebound in the workweek put some downward pressure on AHE because salaried workers would have earned less per hour than they would have during the shorter workweek in January.
This is a very encouraging report.” — Thomas Simons, senior vice president, fixed income economics, Jefferies LLC.
Unbelievably strong Feb jobs report but where are the big wage gains to go with it: February payroll jobs +313k Dec-Jan revisions +54k Unemployment rate 4.1% (unchngd) LabFrcPartRate +0.3 ppt EmpPopRatio +0.3 ppt U6 8.2% (unchngd) wages +2.6% y/y — Chad Stone (@ChadCBPP) March 9, 2018 • Economist Joseph LaVorgna said the report was “perfect for risk assets.” #employment report is perfect for risk assets especially #StockMarket.
313k increase in #NFP with upward revisions.
— Joseph A. LaVorgna (@Lavorgnanomics) March 9, 2018 • Stu Hoffman, senior economic advisor at PNC Financial, said the report set the stage for a Fed interest-rate hike “for sure” in two weeks, “but only 2 more this year.” Hourly wages up 0.2% in Feb and gain from year ago edges down to 2.6%.Takes pressure off fear of fast rise in wages leading to more aggressive FOMC rate hikes.
FOMC hike in two weeks for sure but only 2 more this year#FOMC — stuart hoffman (@StuHoffmanPNC) March 9, 2018 • “While the unemployment rate failed to tick back down as expected, remaining at 4.1%, that was due to a healthy rise in labor force participation.” — Andrew Grantham, CIBC World Markets.
• “The massive 313,000 increase in nonfarm payrolls in February, the biggest in 18 months, together with the 54,000 upward revision to gains in the preceding two months, illustrates that the economy is doing much better than the recent incoming activity data have suggested.” — Paul Ashworth, Capital Economics.

Ask Larry: ​​Will Reduced Earnings Lower My Benefit?
Social Security Disability

Ask Larry: ​​Will Reduced Earnings Lower My Benefit?

Today’s column looks at the effects of current low earnings on benefit amount calculation, how SSA credits military service, worker’s comp and disability benefits, the calculation of spousal benefits and the recomputation of benefits due to continued covered earnings.
I would like to know if I should file for Social Security benefits soon because it looks like I will earn substantially less than I did in the last 15 years.
You may want to use a Social Security benefits calculator such as Maximize My Social Security or another expert program that allows you to enter your projected future earnings, which will answer your question about the effect that your reduced earnings will have on your benefit rate.
Best, Larry How Does Social Security Credit Military Service?
These extra wages are then added to the rest of the veteran’s Social Security covered earnings when calculating their retirement benefit rate.
Starting in 1968, Social Security began crediting these deemed military wages automatically.
For example, if your high year of earnings was $12,000, your ACE would be $1,000, and your combined Workers’ Compensation and Social Security disability amount would be limited to $800 per month.
Hi Larry, I’m still working at 66 and don’t yet draw Social Security benefits, and my wife is also 66 but began her benefits at age 62.
So, if you started taking your benefits at age 67 & 1/2, you would receive 12% of delayed retirement credits (i.e. 18 months x 2/3rds of 1%).
However, when a person starts drawing benefits between FRA and age 70, DRCs are initially credited only through December of the year prior their year of filing.

Why It Pays To Keep A Careful Eye On Your Earnings Record
Social Security Disability

Why It Pays To Keep A Careful Eye On Your Earnings Record

Why It Pays To Keep A Careful Eye On Your Earnings Record.
Whether you’re ready to retire, just joining the workforce, or somewhere in between, regularly reviewing your Social Security earnings record could make a big difference when it’s time to collect your retirement benefits.
Just think, in some situations, if an employer did not properly report just one year of your work earnings to us, your future benefit payments from Social Security could be close to $100 per month less than they should be.
On average, we process about 236 million W-2 wage reports from employers, representing more than $5 trillion in earnings.
But it’s ultimately the responsibility of your employers — past and present — to provide accurate earnings information to Social Security so you get credit for the contributions you’ve made through payroll taxes.
We rely on you to inform us of any errors or omissions.
You’re the only person who can look at your lifetime earnings record and verify that it’s complete and correct.
So, what’s the easiest and most efficient way to validate your earnings record?
Visit socialsecurity.gov/myaccount to set up or sign in to your own my Social Security account; Under the “My Home” tab, click on “Earnings Record” to view your online Social Security Statement and taxed Social Security earnings; Carefully review each year of listed earnings and use your own records, such as W-2s and tax returns, to confirm them; and Keep in mind that earnings from this year and last year may not be listed yet.
You can learn more about how your benefit amount is calculated at www.socialsecurity.gov/pubs/10070.pdf.