Fortive reported a good 4Q17 with sales growth of 11% (+3% organic) and adjusted EPS growth of 20.6%, mostly in line with expectations. Management provided its initial 2018 guidance of 3-4% organic sales growth and 16-19% EPS growth. We should expect some M&A activity during the year, with $5B available for deals. We are pleased with the results and maintain our position size and price target. Continue reading “Fortive 4Q17 earnings results were good – 2018 guidance is supportive of our thesis”
Category: Equity Earnings
CVS 4Q17 earnings were good, but 2018 profit guidance lowered as the company reinvests in the business
CVS reported 4Q17 revenue growth of 5.3%, and adjusted EPS of $1.92 (+12% y/y) at the high end of its guidance. CVS provided its 2018 guidance which was good, although expected profit was lowered by 250bps to account for the $275M reinvestments that will be made in the business (wages/benefits, data analytics and new store format). We are not surprised by this disclosure as it was our assumptions that extra cash from the tax reform would be put into the business. We remain bullish on the company’s strategy and are maintaining our position size and price target. Continue reading “CVS 4Q17 earnings were good, but 2018 profit guidance lowered as the company reinvests in the business”
Sanofi reported disappointing sales and EPS growth in 4Q17, recent deals integration will be key
Sanofi reported 4Q17 sales growth of -1.6%, impacted by the Dengue vaccine issue in the Philippine and continued pressure in its Diabetes franchise in the US. As a consequence, Business EPS declined ~9%. Sanofi has been more successful recently in its M&A strategy, which should bring back some growth to the business in the coming years. Price target and position size unchanged. Continue reading “Sanofi reported disappointing sales and EPS growth in 4Q17, recent deals integration will be key”
Exxon 4Q17 earnings results disappoint but no change in long term thesis
Exxon released 4Q17 earnings and cash flow below consensus expectations, driving the stock lower today. In addition, investors were expecting a share buyback announcement that did not materialize. The next catalyst for the stock is its March’s analyst day where a more detailed capital allocation plan will be released. We are maintaining our position size and price target. Continue reading “Exxon 4Q17 earnings results disappoint but no change in long term thesis”
Sensata 4Q17 earnings results: thesis is playing out, we still see some upside going forward
Sensata (ST) reported 4Q17 organic sales +5.2% and adjusted EPS +14.5%. For 2017, organic sales growth was 4%, and adjusted EBIT margin expanded by 100bps. 2017 was a strong year of new design wins for Sensata, leading the way to another year of growth. The company is performing in line with our expectations regarding margin improvement and deleveraging, paving the way for more M&A in the future. We are maintaining our price target and position size. Continue reading “Sensata 4Q17 earnings results: thesis is playing out, we still see some upside going forward”
Stryker 4Q2017 earnings results were good, guidance for 2018 disappoints the market but in line with our expectations
Stryker reported strong 4Q 2017 organic sales of +8.1% and EPS +10%, and full year 2017 organic sales of +7.1% (above its latest guidance) and EPS growth of +12%. The stock is consolidating after market on lower 2018 guidance vs consensus, but as a reminder the stock was up ~9% year-to-date, and the management team tends to guide conservatively. We think 2018 guidance to be very decent at +6-6.5% which is better than medtech peers. Overall Stryker continues to perform well and we raise our price target to $188. Continue reading “Stryker 4Q2017 earnings results were good, guidance for 2018 disappoints the market but in line with our expectations”
LMT 4Q17 earnings results are in line, 2018 initial guidance shows positive impact from tax reform
Lockheed Martin reported 4Q 2017 earnings today that were in line with expectations. The initial 2018 outlook lifted the stock as LMT is using a lower tax rate to fund growth initiatives as well as to contribute $5B to its pension plan (always a big cost item for defense primes), which is improving earnings longer-term. Our price target is increasing to $374 as the F-35 deliveries gets closer to its target of 160/year. Continue reading “LMT 4Q17 earnings results are in line, 2018 initial guidance shows positive impact from tax reform”
Colgate 4Q17 earnings results disappointing
Colgate-Palmolive (CL) Q4 2017 results were better sequentially with organic sales growth of 2.0%, but it was below expectations due to negative pricing of 1%, its worst price performance since 2004. Margin erosion from pricing deleveraging and higher advertising expenses did not help earnings growth. Management provided its initial 2018 outlook that is only slightly better than consensus, and with the new tax rate providing close to half of the growth. Colgate could be reassessing its growth strategy as it recently acquired 2 small skin care companies. We maintain our price target and position size. Continue reading “Colgate 4Q17 earnings results disappointing”
UNP 4Q17 earnings results impacted by implementation of new technology and lower pricing
UNP reported revenue growth of 5% and EPS growth of 10% y/y (mostly thanks to share repurchase and a lower tax rate). However, UNP consolidated today on network fluidity issues, lower pricing than expected and poor Intermodal growth. Just a reminder that prior to today, the stock had climbed 34% in the past 6 months. We are seeing no degradation to our long-term thesis of a management team focused on productivity and returns. We are increasing our price target to $145 after rolling over our model to 2018. Continue reading “UNP 4Q17 earnings results impacted by implementation of new technology and lower pricing”
McCormick 4Q17 earnings: MKC showed us it remains a core holding in consumer staples (and in our kitchen)
McCormick (MKC) delivered Q4 adjusted EPS of $1.54, a 21% increase y/y. Organic sales growth was driven by a good balance of volume and price increase, reflective in our eyes of the strength of McCormick’s portfolio. This led to a 220bps margin expansion, which is respectable in the food sector. We see 2018 guidance as achievable and thus maintain our view of MKC as a core holding in the consumer staples sector. Price target revised up to $117. Continue reading “McCormick 4Q17 earnings: MKC showed us it remains a core holding in consumer staples (and in our kitchen)”