IT - Gartner - Share Price 25.28 - Pre Earnings 17th August 2010.
Position : Short Prior to Earnings
Market Cap 2,460m. Revenue last year $1,139m. Net Income last year $83m. Net income prior year $103m. PE of between 24-30. IBM PE is 13. HPQ PE is 12. MSFT PE is 12.
So massive growth ? Well no. 2006 Revenues 1,060m. 2009 Revenues 1,139m. An increase of 7% . Hardly worth a PE of 30.
They have deferred revenue to manage the top and bottom lines. But you cant manage cash flows. Cash flow $162m for 2009 and $184m for 2008. Market cap is still 15x cash flow !!.
Short interest has increased in the last month, though is still low.
Balance sheet - looking not too good. Excluding the deferred revenues and goodwill there is a net deficit of around $67m. The point being there is not a large amount of cash or other assets on the balance sheet.
Operating cash flow for the last quarter was a negative $8m.
Analyst are expecting revenues of $306m for the year with an annual revenues of $1,270m for the current year and $1,410m for the following year. Quarter earnings are expected at 22c.
Estimates of EPS is 1.04c for the current year and 1.26c for the following year.
In reality during the boom times the company has only achieved 1.02c in 2008 and 0.88c in 2009. Last quarter the company acheived 20c.
Even if revenues are fudged, I still cant see how a company that earns $1 in a year is worth $25.3.
Apple is forecast to earn 17.47 for next year. Share price is 260.45. Giving a forward PE of 14.88.
This company is forecast to earn 1.26c giving it a forward PE of 20. Apple at least has a good chance of achieveing this earnings traget.
In terms of options activity there is not much going on to provide any insight.
I am going to short this one on the basis that even if it hits both earnings and revenue targets, unless it is going to compete with the Iphone, the PE ratio is unsustainable, compared to say Accenture, IBM and the like.
Monday 9 August 2010
Rising Food Prices
On my radar for the next 3-6 months is the increasing cost of food. As the middle classes grow in BRIC countries they will want their share of the food and much more than before. This will have an upward pressure on food prices. This could potentially cause US incomes to drop significantly as a larger proportion of US and European wages are spent on food costs, leaving less around for the discretionary purchases.
Bear in mind though the US wastes a lot of food, so the increasing costs may just cut out the wastage and make people a little slimmer, reducing the economic burden of fat people on the western economies. This will save the US around $117bn a year.
Bear in mind though the US wastes a lot of food, so the increasing costs may just cut out the wastage and make people a little slimmer, reducing the economic burden of fat people on the western economies. This will save the US around $117bn a year.
Monday 19 July 2010
Yahoo Earnings
19th July 2010. Recent upgrade from Thinkequity. Personally I dont believe in upgrades. Looking at the fundamentals.
Market Capitlisation $20.91bn
Sales $6,400 Dec 2009. $6,400 December 2006. So between 2006 and 2009 Yahoo has not increased sales.
Net underlying earnings $724m Dec 2009. $736m Dec 2006.
PE ratio based on underlying earnings 28.9
The only growth in earnings has been in March 2010 of a mere $0.2bn.
Google PE ratio is 19. Sales December 2009 = $23,650. Sales December 2006 $10,640.
Typically I would say that a short on Yahoo would be worth it.
Revenues are expected to be $1,160bn. Earnings per share around 14c.
Expected revenues have already been reduced to take account of Yahoo's loss of market share, so there could be an easy beat, prompting uneducated investors into the share.
However I cant see how the valuation stands up in comparison to its peer group given the lack of growth.
Market Capitlisation $20.91bn
Sales $6,400 Dec 2009. $6,400 December 2006. So between 2006 and 2009 Yahoo has not increased sales.
Net underlying earnings $724m Dec 2009. $736m Dec 2006.
PE ratio based on underlying earnings 28.9
The only growth in earnings has been in March 2010 of a mere $0.2bn.
Google PE ratio is 19. Sales December 2009 = $23,650. Sales December 2006 $10,640.
Typically I would say that a short on Yahoo would be worth it.
Revenues are expected to be $1,160bn. Earnings per share around 14c.
Expected revenues have already been reduced to take account of Yahoo's loss of market share, so there could be an easy beat, prompting uneducated investors into the share.
However I cant see how the valuation stands up in comparison to its peer group given the lack of growth.
Todays Trading 19 July 2010
19 July 2010. Im looking at the following stocks today. IBM, TXN with earnings to be released AMC today. JPM I am looking to see if there is some sort of bounce after an apparent upgrade and a bashing on Friday. GS gave away gains made on Friday pre market after the agreement with the SEC.
MAT was also bashed on Friday - should be looking for a bounce, it only missed by 1c and Toy Story 3 is a big hit for DIS. Sales of merchandise should help MAT.
EDU - if this misses estimates this will fall big time.
MAT was also bashed on Friday - should be looking for a bounce, it only missed by 1c and Toy Story 3 is a big hit for DIS. Sales of merchandise should help MAT.
EDU - if this misses estimates this will fall big time.
Bank Stress Tests
19th July 2010.
The bank stress test results are being published at 16.00GMT on Friday 23rd July 2010. They will be after markets close st 16:00 GMT.
The banks I am watching this week in the UK are ;
Barclays (BAR)
HSBC
Im staying well away from other European banks (except Spanish). The German banks have some serious real estate debt and other banks I'm sure they have been lending to some of the former eastern European companies with significant property valuation issues.
The bank stress test results are being published at 16.00GMT on Friday 23rd July 2010. They will be after markets close st 16:00 GMT.
The banks I am watching this week in the UK are ;
Barclays (BAR)
HSBC
Im staying well away from other European banks (except Spanish). The German banks have some serious real estate debt and other banks I'm sure they have been lending to some of the former eastern European companies with significant property valuation issues.
Sunday 18 July 2010
Good news for the Euro
July 15 2010. Spain's sale of 15-year government bonds successful. Italian government wins backing for austerity package. Greece pushes through wage deal, widens pension reform.
Saturday 17 July 2010
Earnings for 19th July 2010
The following are notable earnings for next week.
Monday: DAL, HAL, HAS, MMR, EDU, PETS, ATHR, BRO, CCK, ELS, IBM, ICUI, IEX, LNCR, NE, PKG, RLRN, RLI, STLD, TXN, TUP, and ZION.
Tuesday: BIIB, FRX, GS, HOG, ITW, JNJ, PEP, PII, STT, AMTD, UAL, UNH, WHR, BSX, GILD, JNPR, TPX, CMW, AND YHOO.
Wednesday: ABT, MO, BLK, KO, CMA, GENZ, MS, LCC, USB, WFC, BIDU, EBAY, FFIV, ISRG, NFLX, NTGR, QCOM, SBUX, and WDC.
Thursday: APD, T, BBT, BMY, CSH, CAT, DO, LLY, EXC, FITB, FLIR, KEY, NOK, NUE, RS, TZOO, TEL, UNP, ZMH, AMZN, AXP, BUCY, CPHD, COF, CMG, ETFC, MSFT, MOS, and SNDK.
Friday: IR, JCI, KMB, ERIC, MHP, SLB, SPAR, VZ, and WIT.
Monday: DAL, HAL, HAS, MMR, EDU, PETS, ATHR, BRO, CCK, ELS, IBM, ICUI, IEX, LNCR, NE, PKG, RLRN, RLI, STLD, TXN, TUP, and ZION.
Tuesday: BIIB, FRX, GS, HOG, ITW, JNJ, PEP, PII, STT, AMTD, UAL, UNH, WHR, BSX, GILD, JNPR, TPX, CMW, AND YHOO.
Wednesday: ABT, MO, BLK, KO, CMA, GENZ, MS, LCC, USB, WFC, BIDU, EBAY, FFIV, ISRG, NFLX, NTGR, QCOM, SBUX, and WDC.
Thursday: APD, T, BBT, BMY, CSH, CAT, DO, LLY, EXC, FITB, FLIR, KEY, NOK, NUE, RS, TZOO, TEL, UNP, ZMH, AMZN, AXP, BUCY, CPHD, COF, CMG, ETFC, MSFT, MOS, and SNDK.
Friday: IR, JCI, KMB, ERIC, MHP, SLB, SPAR, VZ, and WIT.
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