Tuesday, May 2, 2017

Earnings - Altria, Cummins, Emerson Electic, HCP, & MasterCard

An absolute flurry of  earnings reports this morning already as we received results from 5 companies in our portfolio including Altria(MO), Cummins(CMI), Emerson Electric(EMR), HCP(HCP), and MasterCard(MA).

Altria(MO) reported Q1 results with EPS of $0.72 on net revenues of $6 billion.  The company reported a 2.6% decline in smokeable products volume, and a 5% decline in smokeless products. The company re-iterated full year guidance for EPS growth of 7.5%-9.5%. The stock initially dipped this morning below $70, but has fought all the way back up to $71+. Here is what management had to say.


"Altria is off to a solid start in 2017 despite some short-term headwinds," said Marty Barrington, Altria's Chairman, Chief Executive Officer and President. "We grew first-quarter adjusted diluted earnings per share by 1.4% against a difficult comparison in the year-ago quarter when we grew adjusted diluted EPS more than 14%. The smokeable products segment continued to generate strong results, which offset lower equity earnings from our beer investment and the effect of the voluntary product recall in the smokeless products segment.

"Our business fundamentals remain strong and we believe we are well-positioned for the rest of the year. Thus, we are reaffirming our 2017 full-year adjusted diluted EPS growth guidance of 7.5% to 9.5%. We continue to expect adjusted diluted EPS growth to be weighted to the second half."


Cummins(CMI) reported Q1 results with EPS of $2.36 on revenues of $4.5 billion. The company saw a 17% increase in international sales as overseas customers rebounded. The company also revised it's guidance for 2017 as it now expects sales to be up 4-7% instead of flat to -5%. The company also raised EBIT guidance from 11%-11.5% to 11.5%-11.75%.  The shares have been up big all day hitting a high of $163 before falling back a bit. Here is what management had to say.

“Cummins delivered solid financial results, successfully launched new products and returned $222 million in cash to shareholders in the form of dividends and share repurchases in the first quarter,” said Chairman and CEO Tom Linebarger. “We launched our fully updated range of engines for North American truck and bus markets offering improved performance and better fuel economy for our customers. As recently announced, we also advanced our strategy to be the leading global powertrain supplier through our agreement with Eaton to form the Eaton Cummins Automated Transmission Technologies joint venture. This new venture will design, develop and produce the next generation of Automated Transmissions which will be fully integrated with our engine development to deliver up to an additional 7 percent improvement in fuel economy. The joint venture will benefit from the continuing shift away from fully manual transmissions in commercial vehicles, launch new products that will gain market share, leverage Cummins’ strong presence in international markets for growth and generate aftermarket sales.”

Emerson Electric(EMR) reported Q2 2017 results with EPS of $0.45(down 21% yoy) on revenues of $3.57 billion. If you back out the $0.13 loss from discontinued operations EPS was $0.58. The company isn't seeing a lot of growth yet, but they did issue new guidance. The company now expects sales to be flat for 2017, and increased EPS to $2.55-$2.65. Previously the company guided sales down 1-3% and EPS between $2.47-$2.62. That hasn't stopped the shares from taking a 5% hit today as they flirt with $57. Here is what management had to say.

"Following our solid first quarter, the second quarter results again exceeded our expectations delivering continued profitability improvement over the prior year,” said Chairman and Chief Executive Officer David N. Farr. “During the quarter we saw improving demand across both of our platform businesses, positioning us for a stronger second half of the year. Considering our solid performance in the first half of the fiscal year and current order trends, we are raising our full year sales and EPS guidance. We now expect earnings per share from continuing operations to be $2.55 to $2.65, versus our prior guidance of $2.47 to $2.62. This EPS guidance assumes full year sales are approximately flat with underlying sales up approximately 1 percent excluding unfavorable currency translation."


HCP(HCP) reported Q1 results with EPS of $0.97, and FFO of $0.61. Revenues were $492 million. The company completed the sale of 64 Brookdale properties and repaid $1 billion in debt. The company continues to operate strongly. Shares have traded down about 1% most of the day.

MasterCard(MA) reported Q1 results with EPS of $1.00 on revenues of 2.7 billion. Net Income was $1.1 billion. The company saw an 8% increase in GDV. This was another solid quarter by the company as it continues to benefit from e-payment trends. The stock is up 2% on the day at fresh all time highs above $118.  Here is what management had to say.

We’re off to a very good start, with strong revenue and earnings growth driven by solid transaction and volume levels this quarter,” said Ajay Banga, Mastercard president and CEO. “We continue to execute well against our strategy, and by completing the VocaLink acquisition, we can now offer an even greater set of payment options to our customers. This deal redefines ouropportunities and positions us favorablyto capture newpayment flows.”

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