Sodexo’s first-half results reflected ongoing pressure in European markets, which contributed to a slowdown in revenue and weaker-than-expected profitability. Revenue growth of 4.3%, to approximately EUR 9.46 billion, seemed fairly strong at first glance, particularly given tough economic conditions in one of Sodexo’s largest regions. However, this masked a sequentially weaker second quarter, with even the stronger North American segment posting a tepid increase of only 1%, due mainly to the effects of a large healthcare contract loss in 2012. The European segment managed to keep quarterly revenue flat, as new facility management contract wins offset customer price sensitivity in…
Author: Sean Campbell
Gannett’s GCI first-quarter results were roughly in line with expectations. However, many analysts remain pessimistic regarding Gannett’s long-term prospects, since the firm remains highly dependent on the publishing business, which represents roughly 70% of total revenue and around half of operating income. Because of the growth of free online news content, barriers to entry in the news market have precipitously declined, and we believe this will prevent the publishing segment from returning to positive growth. First quarter revenue increased 1.6% to $1.24 billion over the prior-year period, as growth in the broadcasting (up 8.5%) and digital (up 3.9%) segments offset…
In the third quarter, Huntington Bancshares earned $160 million, or $0.19 per diluted share. Compared with the prior quarter, net income jumped by 10%, largely thanks to a nonrecurring tax benefit of $20 million ($0.02 per share). The Ohio lender’s results were in line with our most recent revisions and we are leaving our $7.50 per share fair value estimate unchanged. As we have seen across the board, despite some loan growth, Huntington’s net interest income did not surprise to the upside. Prices for loans are still very low due to competitive pressure and the low rate environment. Furthermore, liabilities’…
Between October and December, Banco Santander earned CLP 113 billion ($237 million, or $0.50 per ADR), more than double the trailing quarter’s net income. This brought full-year earnings to CLP 388 billion ($810 million, or $1.70 per ADR), yielding a healthy 18.8% return on equity. Compared with the trailing quarter, provisions for loan losses declined despite an increase in nonperforming loans. In the third quarter, Santander Chile booked an extra CLP 25 billion in provisions for loan losses after implementing a more conservative underwriting scheme. Thus, fourth quarter provisions fell to an annualized 1.9% of loans, from 2.6% in September.…
Nike’s ongoing focus on innovative products and super brand image creation continues to drive outperformance in North America and is allowing the European business to hold up despite a tough macro environment. The popularity of the brand and Nike’s global athletic brand icon creation are as strong as ever and support the wide economic moat rating, denoting that the firm’s superior returns on capital are sustainable. The company is still working aggressively to fix its business in China, cleaning up inventory and cutting back on retail partners lacking strong sales trends. At minimum, the impact in China appears to be…
There were few surprises in Tourmaline Oil’s year-end results, but plenty of positive factors for investors to embrace. The company hit record production levels in 2012, as expected (this figure was disclosed last month in its reserve estimate release), and commented briefly on its increased production guidance for 2013. Management now believes it will average 80 thousand barrels of oil equivalent per day of production in 2013 (up from 75 mboe/d) as higher gas prices allow the firm to increase its rig count from 8 to 11. Digging into the latest corporate presentation, we see that the firm has also…
Oxy announced that first-quarter international production would be 18 mboe/d lower than fourth-quarter levels, and sales volumes would be 40 mboe/d lower. The lower production volumes are a result of a facility turnaround in Qatar, the impact of full cost recovery on some production sharing contracts, and pipeline disruptions in Colombia. The timing of liftings in the Middle East/North Africa region also affected sales volumes. Oxy’s previous forecast was for lower international volumes in the first quarter from the turnaround in Qatar, with volumes flat with the fourth quarter the remainder of the year. Its guidance for the remainder of…
Vera Bradley’s fourth-quarter results came in ahead of management’s preannouncement issued in mid-January, driven by increased distribution and e-commerce gains. However, the first-quarter outlook was below consensus expectations and the commentary related to the firm’s fullyear guidance wasn’t terribly inspiring. Net revenue came in at $162.5 million, up 20% year-overyear, and ahead of management’s guidance, but segment growth wasn’t consistent. Same-store sales were down 0.4% on weak traffic, as management cited a more pricecompetitive environment and weak consumer. The ecommerce and indirect channels picked up the slack though, as web-based sales rose 23% and the indirect channel (up 11%) benefited…
While the recent result for fixed products mixed it was largely in line with analyst’s expectations. New businesses in mobiles, network applications and services (NAS), and digital media will support long-term growth. Despite the decline, fixed products will remain a meaningful contributor to group revenue over the next five years. Fixed products make up 28% of group revenue, but analysts forecast a decline to 17% by 2017. This is largely attributable to structural headwinds as consumers disconnect fixed-voice lines. Telstra is also compensated with disconnection payments from NBN Co as the copper network is switched off. Management is adamant renegotiation…
Imagination Technologies provided investors with interim comments about its third-quarter results that were relatively in line with analyst’s expectations. Imagination continues to announce meaningful design wins with firms like Samsung and Intel and should see solid revenue growth in the years ahead, as the company’s graphics intellectual property is incorporated into more and more smartphones and tablets. The firm’s targets of 500 million chip units sold with the firm’s IP in 2013 and 1 billion in 2016 remain on track. The firm also gave preliminary insight into revenue and costs associated with the MIPS acquisition that was also in line…
Centrica reported 2012 adjusted EPS of GBP 0.27, in line with consunsus estimates and an increase over 2011 adjusted EPS of GBP 0.26. Although the company did not provide 2013 earnings guidance, management did update investors on its five-year outlook. Investors were pleased to see British Gas grow operating profit 8% in 2012 versus 2011 despite pressure from higher energy costs that have reduced margins. The U.K. does not benefit from shale gas like the U.S., creating significantly higher energy costs for consumers. As the U.K.’s largest energy supplier, the company has taken the brunt of the public criticism of…
Shares of Imperial Tobacco were down nearly 2.5% on Wednesday following a story in the Guardian suggesting that the Queen will announce in May an initiative to curb tobacco use that will include plain packaging, and a ban on smoking in cars carrying anyone under the age of 16. We note that any sudden decrease in cigarette use in the U.K. will disproportionately impact Imperial Tobacco, which holds 45% market share of the country’s cigarette market, and 47% share in the fine cut market, and derives roughly 21% of its operating profit from the country. Additionally, should any restrictions be…