Thursday, July 20, 2017

Earnings - IBM, Phillip Morris, & Visa

Here is my earnings recap for IBM(IBM), Phillip Morris(PM), and Visa(V)

IBM reported 2017 Q2 EPS of $2.48 on revenues of $19.3 billion.  Revenues continue to decline overall at Big Blue, but the company is still seeing growth in it's strategic imperatives, although that growth rate is really coming down. The company is expecting GAAP EPS for 2017 to come in at $11.95. I also don't like how the company has been benefiting from a tax benefit recently.  That would have knocked $0.18/share off EPS this quarter.  I'm also starting to become uncomfortable with the company's rising debt levels considering revenues are still falling. We aren't near danger levels, but with total debt clocking in around $45 billion it's quite a large amount overall. Shares have not fared the best since earnings as they trade lower from $153 to around $147 today

The thing about IBM is it has great operating margins, good brand recognition, a big dividend, and a lot talented employees. That always make it an intriguing play among other things.  I think a lot of people are becoming way more concerned about the company at this point.  Can't say I blame them.  Here is what the CEO had to say.

"In the second quarter, we strengthened our position as the enterprise cloud leader and added more of the world's leading companies to the IBM Cloud," said Ginni Rometty, IBM chairman, president and chief executive officer. "We continue to innovate, adding regtech capabilities to our portfolio of Watson offerings; developing solutions based on emerging technologies such as Blockchain; and reinventing the IBM mainframe by enabling clients to encrypt all data, all the time.”

Phillip Morris(PM) reported 2017 Q2 earnings with EPS of $1.14 on revenues net of excise taxes at $6.9 billion.  The company reported a 7.1% decline in tobacco volume. The company also lowered it's full year currency adjusted EPS outlook from $4.84-$4.99 to $4.78-$4.93.  This quarter definitely brings some questions into play about the overall tobacco market.  Volumes are tailing off quicker recently, and even though the company had blockbuster growth in it's alternative segment its still not enough to offset traditional cigarette sales. The stock was down a little over 1% in trading today.

Visa(V) reported 2017 Q3 results with EPS of $0.86 on revenues of $4.6 billion.  The company saw large increases in volumes, and transactions as a result of the Visa Europe integration.  TPV saw a 34% increase YoY.  The headwinds for electronic transactions are strong, and I think the Visa Europe purchase came at a good time.  I'll be looking forward to next year after when we can compare YoY results post integration much better.  Here is the CEO's statement.

“I’m pleased to report Visa’s fiscal third quarter results which reflect strong growth in payments volume, cross-border volume, and processed transactions, which were powered by economic tailwinds in the U.S. and globally,” said Alfred F. Kelly, Jr., Chief Executive Officer of Visa Inc. “Our results and growth are a reflection of our strategy to pursue the conversion of cash and checks to electronic payments in partnership with our clients around the world.”

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