Yum! Buys $200 Million in Grubhub Shares in Drive to Push KFC, Taco Bell Sales

11:22 AM, Feb 8, 2018 — Yum! Brands (YUM) announced plans to buy stock worth $200 million in online food-ordering company Grubhub (GRUB), giving a liquidity injection as the firms also outlined a partnership to drive sales at Yum’s KFC and Taco Bell restaurants.

Chicago-based Grubhub will expand its board of directors by one to 10, adding Artie Starrs, the president of Pizza Hut US which is another Yum property, the companies said in a statement on Thursday.

“We are committed to making our iconic brands easier to access through online ordering for pickup and delivery, and aggressively pursuing delivery as a strategic global growth opportunity,” Yum’s chief executive officer, Greg Creed, said in the statement. Nearly half of the company’s 45,000 restaurants are already offering the online service, he said.

KFC, Taco Bell and Grubhub will work with owners of the fast-food franchises to test online ordering for pickup and delivery. The initial phase will be rolled out over the coming months, the companies said.

Grubhub will use the liquidity from the Yum stock purchase to grow its US delivery network, drive more orders to Yum restaurants and improve ordering and delivery services.

Grubhub has about 80,000 restaurant partners in more than 1,600 US cities and London, the company said. It separately reported Thursday fourth quarter earnings and sales that came in better than analysts expected, with an outlook on sales in the first quarter and all of 2018 that was in line with Wall Street’s expectations.

Louisville, Kentucky-based Yum’s fourth quarter adjusted earnings rose year-on-year, while revenue in the three months was just shy of what analysts were predicting.

Price: 78.90 Price Change: -1.23 Percent Change: -1.54

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Equities Back in Selling Mode as Dow, S&P 500 Swing Widely Between Gains and Losses

10:29 AM, Feb 6, 2018 — Markets in the US swung widely between gains and losses on Tuesday, heading briefly into the green after Monday’s sharp selloff as materials and information technology led the recovery attempt before the gains were eroded.

The Dow Jones Industrial Average was up more than 200 points at one point in the session before selling pressure reignited following the nearly 1,200-point plunge that started the week as investors were spooked by the prospects of higher interest rates prompted by signs of strength in the world’s biggest economy.

Asian and European markets early on took their cue from US indices, and futures pointed to a weaker day. But the markets turned ahead in early trading as tech gained 1.1% on the Standard & Poor’s 500, keeping the Nasdaq Composite in the green, while financials rose 0.8%.

Energy shares were firmer as oil prices pared some of their losses and Chevron (CVX) rose 1.6% to join Apple (AAPL) as the Dow’s best gainers.

“Markets are oversold on a short-term basis and are currently testing initial levels of support,” Janney Montgomery Scott’s Dan Wantrobski said in an e-mailed note Tuesday. “We would expect a counter-trend move/rally to commence soon — however, our belief is that we have not yet seen ultimate exhaustion of selling pressures.”

In company news, Lumentum Holdings (LITE) surged 14% after reporting better-than-expected fiscal second quarter results. Micron Technology (MU) gained 4% after raising its second quarter outlook above analysts’ expectations.

In morning trading, the Dow was down 0.5%, the S&P 500 fell 0.4% and the Nasdaq lost 0.2%.

Globally, the FTSE 100 fell 1.5%, the Nikkei 225 lost 4.7%, the Hang Seng dropped 5.1% and the Shanghai Composite shed 3.4%.

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Alphabet Fourth Quarter Earnings Miss Street’s Forecast While Better-Than-Expected Sales Gain Traction

8:15 AM, Feb 2, 2018 — Google parent Alphabet (GOOGL) posted fourth-quarter earnings that missed analysts’ expectations late on Thursday even after excluding an additional tax expense of $9.9 billion from the result but sales advanced.

Total revenue climbed to $32.32 billion during the three months that ended December 31 from $26.06 billion a year ago, according to a statement published by the company, beating the $31.88 billion analyst estimate compiled by Capital IQ.

But while the company’s sales increased, its total traffic acquisition costs rose, increasing to 24% of Google’s advertising revenues from 22% a year earlier. And even though the aggregate cost-per-click slumped 14% from a year ago, the company’s total costs and expenses including research and development charges surged to $24.66 billion from $19.43 billion, eating up a vast chunk of the growth in its quarterly revenue.

As a result, Google swung to a loss of $4.35 per share, which includes the negative impact of the change in US tax laws, from a profit of $7.56 per share in the prior-year period. Excluding the impact, which was primarily due to the one-time transition tax on accumulated foreign subsidiary earnings and deferred tax impacts, earnings stood at $9.70 per share, which was still below the Street’s forecast for a profit of $10.07 per share, excluding items.

Companies: Alphabet Inc.
Price: 1143.20 Price Change: -38.39 Percent Change: -3.25

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Boeing Sees New Highs in 2018 Plane Deliveries After Record Year as Results Beat Expectations

11:05 AM, Jan 31, 2018 — Boeing (BA) reported a surge in revenue for 2017 and a record number of commercial airplane deliveries while offering guidance for this year that would see both figures increase further.

The Chicago-based manufacturer said fourth quarter core earnings per share rose to $4.80 from $2.47 a year earlier, well ahead of the consensus among analysts polled by Capital IQ who were expecting $2.88. Boeing said the bump came from “strong deliveries, performance and tax reform.” Revenue climbed 9% in the three months to $25.4 billion compared with expectations for $24.8 billion.

“Although the headline numbers for both Q4 and 2018 look great, there is of course a big impact from the recent US tax reform which we think investors have tried to anticipate,” Vertical Research Partners aerospace and defense analyst Rob Stallard said in an e-mailed note.

Boeing, with the best performing stock on the Dow Jones Industrial Average in 2017 that hit an intraday record high on Wednesday, reported commercial plane deliveries last year of a record 763. For 2018, Boeing sees 810 to 815 deliveries.

The company is guiding revenue of $96 billion to $98 billion for 2018, ahead of 2017’s results of $94 billion, which were restated according to accounting principles that are being adopted this year. And Boeing is looking for core EPS of $13.80 to $14, up from last year’s $12.33.

Chief Executive Officer Dennis Muilenburg said 2017 saw Boeing’s first deliveries of its 737 MAX airplanes and it flew the first KC-46 tanker that will be delivered to the US Air Force. The firm was also “awarded an initial contract for the Ground Based Strategic Deterrent program, and a contract to provide 36 F-15 fighters to Qatar,” he said.

While Vertical’s Stallard said the anticipated cash benefit from lower corporate taxes isn’t as large as thought, “there were no execution issues in the quarter, and Boeing continues to successfully improve margins and generate operating cashflow.”

Companies: Boeing Company (The)
Price: 357.40 Price Change: +19.69 Percent Change: +5.83

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Pfizer Fourth Quarter Earnings Beat Expectations Amid Rising Sales of Pneumonia Vaccine

9:45 AM, Jan 30, 2018 — Biopharmaceutical major Pfizer (PFE) posted top and bottom lines which beat analysts’ expectations in its fourth quarter, helped by strong sales growth of the pneumonia vaccine Prevenar 13 and the blood thinner treatment Eliquiz.

The New York-headquartered company generated revenue of $13.70 billion in the fourth quarter, up 1% from $13.63 billion in the prior-year period, according to a statement published on Tuesday. This was ahead of the consensus estimate of analysts polled by Capital IQ for $13.67 billion.

Sales were bolstered by revenue in the company’s Innovative Health division, which rose by 6% from the prior-year quarter and was up by 5% on an operational basis. This helped to offset a 7% decline in revenue – or an 8% decline on an operational basis – in the Essential Health division.

The quarterly revenue gain in Innovative Health was bolstered by a 46% increase in revenue from Eliquis to $710 million, a 47% jump in revenue from arthritis treatment Xeljanz to $410 million and a 7% rise in revenue from the pneumonia vaccine Prevenar 13 to $1.53 billion. Global Ibrance revenues rose by 11% to $716 million. The division’s growth was, however, negatively impacted by lower revenues for Viagra in the US which the company said was primarily due to generic competition that began in December 2017.

Adjusted diluted earnings per share rose 32% to $0.62 in the quarter from the prior-year period, beating the Street’s estimate of $0.56 per share on an adjusted, diluted basis.

For the 2018 year, the company is forecasting for revenue of $53.5 billion-to-$55.5 billion, compared to analysts’ estimates of $53.82 billion and Pfizer is guiding for adjusted diluted earnings per share of $2.90-to-$3 compared to analysts’ forecasts for $2.78 per share on an adjusted basis.

The company added that as a result of the enactment of the US tax reform, its fourth-quarter and full-year 2017 provision for taxes on reported income was favorably impacted by approximately $10.7 billion.

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Colgate-Palmolive Fourth Quarter Sales Miss Expectations Despite Year-on-Year Gain

9:24 AM, Jan 26, 2018 — Colgate-Palmolive (CL) posted revenue which fell short of analysts’ expectations for its fourth quarter on Friday despite the metric rising year-on-year buttressed by growth in Latin America and North America, its two biggest markets.

The consumer goods company, whose products include toothpastes, shampoos and pet nutrition, generated net sales of $3.89 billion in the quarter, up 4.5% from $3.72 billion in the prior-year period, according to the statement. This was just shy of the consensus estimate of analysts polled by Capital IQ for $3.92 billion.

Adjusted diluted earnings per share were flat year-on-year a $0.75 and in line with analysts’ estimates. On an unadjusted basis, diluted earnings per common share fell to $0.37 from $0.68. This included $0.07 per diluted share of aftertax charges resulting from the company’s global growth and efficiency program and a provisional charge of $0.31 per diluted share related to US tax reform.

The largest portion of revenue in the company’s oral, personal and home care segment came from Colgate-Palmolive’s operations in Latin America, where sales rose to $976 million from $940 million a year earlier. In North America, sales rose to $798 million from $790 million. Revenue also rose in all of the company’s other geographical regions, including Asia Pacific, Europe and the area the company refers to as ‘Africa/Eurasia’.

Sales from the pet nutrition segment rose to $593 million from $579 million in the prior-year period.

“Based on current spot rates, we expect a mid-single-digit net sales increase and low to mid-single-digit organic sales growth in 2018, with improvement in organic sales growth versus the second half of 2017,” Ian Cook, chief executive of Colgate-Palmolive, said.

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Newell Brands

Newell Brands Explores Options for Several Assets as 2017 Sales Growth View Shaved

12:47 PM, Jan 25, 2018 — Newell Brands (NWL), the maker of Rubbermaid containers and Sharpie markers, plans to narrow its focus to nine core consumer segments and is looking to offload industrial, commercial and smaller consumer product assets.

That would bring a 50% reduction in the company’s global factories and warehouses and a halving of its customer base, Hoboken, New Jersey-based Newell said on Thursday. The firm will begin the evaluation process immediately and expects any deals to be completed by the end of next year.

“If fully actioned, Newell Brands would expect to be an approximately $11 billion focused portfolio of leading consumer-facing brands with attractive margins and growth potential in global categories,” the company said in a statement.

The announcement said the company’s shares spiralling to a five-year low and bringing their loss over the past year to 49%. Newell also said it sees preliminary 2017 core sales growth of about 0.8% compared with prior guidance for 1.5% to 2% along with normalized earnings per share in a range of $2.72 to $2.76 from an outlook of $2.80 to $2.85.

“We believe that exiting non-strategic assets, reducing complexity and focusing on our key consumer-focused brands will make us more effective at unlocking value and responding to the fast-changing retail environment,” Chief Executive Officer Michael Polk said in the statement.

Assets that could be shed include Waddington, Process Solutions, Rubbermaid Commercial Products and Mapa along with Rawlings, Goody, Rubbermaid Outdoor, Closet, Refuse and Garage, and US Playing Cards.

For 2018, Newell sees normalized EPS of between approximately $2.65 to $2.85, the company said.

Companies: Newell Brands
Price: 24.10 Price Change: -7.13 Percent Change: -22.83

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Netflix Poised to Start Internet Stock Earnings Season as Canaccord Says Watch Subscriber Data

12:59 PM, Jan 22, 2018 — Netflix (NFLX) will start the earnings season for key Internet stocks after the close on Monday, with the video streaming company projected to more than double earnings and add almost a billion in revenue.

The consensus on Capital IQ is for earnings per share of $0.41 and revenue of $3.28 billion, which would compare with the year ago result of $0.15 in EPS and $2.35 billion in revenue.

Netflix stock, trading at about $226 on Monday, is “admittedly premium” and needs consistent subscriber beats, pricing increases or better-than expected margin expansion to keep moving higher, said Canaccord Genuity e-commerce analyst Michael Graham.

The main metric to watch is subscribers, and the outlook is for about 54 million US users and 61.6 million internationally, Canaccord said. For Netflix’s peers in the so-called FANG group, Canaccord is “most constructive” on Facebook (FB) and Amazon.com (AMZN), while they are “nervous” about gross margin contraction for Alphabet (GOOG, GOOGL).

Facebook’s recent changes to its news feed “may push down on time spent” for 2018 although Graham sees 41% growth in revenue and 58% jump in EPS in the quarter that ended last month.

Amazon’s revenue growth this year should stay high although “there may be signs of increased cloud competition for AWS from Azure,” the Microsoft (MSFT) cloud computing service. For the fourth quarter, the analyst said “secular and seasonal strength on the revenue front should carry the day.”

In the fourth quarter, Alphabet’s “top line performance should be solid” while in the year ahead, core revenue growth should stay above 20% and gross margins should continue to contract, Canaccord said.

Companies: Netflix, Inc.
Price: 225.97 Price Change: +5.51 Percent Change: +2.50

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Amazon Hikes Prime Monthly Membership Prices by 18%

12:18 PM, Jan 19, 2018 — Amazon.com (AMZN) raised prices on its Prime monthly membership, increasing the cost for its delivery and exclusive content service for both new and existing subscribers.

The monthly Prime membership for new members was lifted by $2, or 18%, to $12.99 as of Friday. The Prime Student discounted plan for new subscriptions is $1 higher at $6.49 now, the Seattle-based e-commerce giant said on its website. No reason was given for the hike.

“Prime provides an unparalleled combination of shipping, shopping and entertainment benefits, and we continue to invest in making Prime even more valuable for our members,” Amazon said in a statement as reported by CNBC and Recode.

Existing monthly Prime and Prime Student members will pay the new price for renewals happening after Feb. 18, Amazon said. Annual memberships will still be $99 and student subscriptions will continue to be $49.

Amazon said in its statement that it’s increased the number of items eligible for its unlimited free two-day shipping to more than 100 million, and same-day and one-day delivery service under Prime has expanded to more than 8,000 locations.

The company also touted its original programs that are included with Prime Video and said Prime members will continue to benefit from its music and reading services and other “exclusive products.”

In the third quarter, Amazon said subscription services jumped 59% to $2.44 billion, although that number includes Prime as well as audiobook, e-book, digital video, digital music, and other non-Amazon Web Services subscriptions.

Companies: Amazon.com, Inc.
Price: 1296.71 Price Change: +3.39 Percent Change: +0.26

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Pearson Full-Year Sales Fall as Sales from US Higher Education Courseware Slips

11:01 AM, Jan 17, 2018 — Education publishing company Pearson (PSO, PSON.L) expects to report a fall in full-year sales following the continuation of a declining trend in its flagship US higher education courseware business and an adjusted operating profit below an earlier guidance range based on the average effective exchange rate from 2017.

Total underlying sales fell 2% during the 12 months that ended December 31, Pearson said in a trading update ahead of the release of its full year results on February 23. Revenue from US higher education courseware slid 3% due to the continuation of trends seen in the first nine months coupled with cautious buying behavior of channel partners in the fourth quarter.

Based on an average effective exchange rate from 2017, the company said it expects an adjusted operating profit of about 570-575 million pounds ($785.6-$792.5 million) and earnings per share of 53.5-54.5 pence. That compares with an October 2017 guidance range of 576-606 million pounds and 49-52 pence, respectively. Pearson said the beat on earnings reflects, among other things, an improved tax rate. At guidance exchange rates from December 2016, the adjusted operating profit is likely to come near the top end of the forecast.

As part of a program to increase simplification and efficiency, the company has been making asset disposals, including the sale in late December of 44.75% equity stake in its Mexican online university partnership, Utel. Good cash generation and proceeds from disposals also helped Pearson to reduce its net debt, which is anticipated to come in at $500 million in 2017, down from $1.1 billion a year ago.

The company also said its efficiency program is on track to deliver 300 million pounds of annualized cost savings by 2020. Restructuring costs in 2017 stood at about 80 million pounds, above the 70 million pounds guidance and reflecting faster progress. Total restructuring costs are set to be in line with guidance of 300 million pounds over 2017-2019, with 90 million pounds earmarked in 2018.

Pearson said it sees an adjusted operating profit of between 520-560 million pounds less the full-year impacts of disposals made in 2017 of 45 million pounds, and less favorable exchange rates as at December 31 of 25 million pounds. It added that the group effective tax rate will remain unchanged for the US tax reform over the medium term.

“Our restructuring program is on track and our 2017 performance has set us up well to make further progress against our strategic priorities and grow profit in 2018,” Chief Executive Officer John Fallon said in the update. The company has “made good progress in 2017 on the simplification of our portfolio” and the “strengthening of our balance sheet,” he added.

Companies: Pearson, Plc
Price: 9.38 Price Change: -0.44 Percent Change: -4.48

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