Tesoro’s second-quarter earnings fell to $238 million from $363 million the year before. Excluding one-time benefits and charges, earnings were $216 million. Operating income slid to $364 million from $644 million a year ago. Refining operating income registered the bulk of the decline, falling to $395 million from $610 million a year ago, despite the addition of operations from the acquired Carson facility for one month. Turnaround activity and narrowing of midcontinent and Canadian crude discounts were the primary culprits. Given its highly integrated system, Tesoro for the most part avoided the higher cost of RINS during the quarter. Though…
Author: Lisa Bowe
Polaris remains one of the most-liked companies on the NYSE, and its evolution keeps investors guessing. Under the direction of a visionary management team, the company has invested in or paired with a wide range of adjacent businesses, including electric vehicles, work (Bobcat) and military products, and motorcycles. In our opinion, this semiorganic growth strengthens Polaris’ narrow moat as it leverages its brand equity across new products. Polaris continued to execute through the difficult weather at the beginning of the quarter, as indicated by total sales rising 15%, with off-road vehicle sales increasing 7% and on-road vehicles sales rising 29%,…
Hormel HRL shares were down in early trading after the company lowered (and tightened) its earnings guidance range to $1.88-$1.96 per share from $1.93-$2.03, representing a 3% decline at the midpoint. Management cited lower-than-expected results in its pork operations, higher input costs, and softer retail sales of refrigerated food products. Supporting commentary was limited; management said it will present more details regarding its 2013 outlook during the June 26 investor day, which we will attend. Analysts don’t expect a material change to the $35 fair value estimate, as the time value of money offsets the lower guidance; even if Hormel…
Convergys opened 2013 on a soft note as first quarter revenue came in modestly lower compared to last year– $494 million versus $498 million in the first quarter of 2012. Headwinds from legacy Interactive Voice Response platform migrations and declines in call volumes from a large telecom client negatively affected growth during the quarter. As we noted in our earlier commentary, volume decline is largely due to a shift in portfolio mix and not from competitive share loss. Based on the strength of the company’s recent live agent signings ($250 million over the last 12 months), we expect call volumes…
Operationally, Lagardere offered few surprises in its fullyear update, since management had already disclosed expected sales figures in the sales call last month. Overall, sales and profitability trends remained sluggish in most of Lagardere’s media operations, due to weak macro conditions in Europe and structural headwinds in its oldmedia businesses. On a like-for-like basis, full-year net sales and recurring EBIT from media activities were roughly flat with the prior year, coming in at EUR 7.66 billion and EUR 358 million, respectively. Management expects 2013 recurring EBIT will increase 0%-5%, which assumes a consolidated 5% advertising sales decline. It looks as…
In a similar vein to Rio Tinto, BHP retains fiscal year 2013 production guidance, despite sharply lower third-quarter sales volumes. Compared to 2012’s fourth quarter, petroleum volume fell 7%, iron ore 8%, copper 16%, coking coal 10% and thermal coal was down 6%. Rare bright spots were aluminium, steady, and nickel up 23%, though these are both low-margin commodities. Cyclone-related downtime hit iron ore, and heavy rains impacted Queensland coal. Despite the declines, most segments performed better than expected, considering the poor weather. Petroleum production guidance stands at 240 million barrels of oil equivalent (mmboe) with a 15% jump in…
Citigroup reported net income of $3.8 billion, or $1.23 per share, for the first quarter of 2013. Overall, the results were in line with our expectations, and we do not intend to significantly alter our fair value estimate. We note that Citicorp’s return on assets (which excludes the legacy assets attributed to the Citi Holdings segment) exceeded 1% during the quarter. In our opinion, this level of performance will eventually lead to modest excess return on equity, supporting our narrow moat rating. Citigroup’s internally estimated Basel III Tier 1 common ratio stood at 9.3% at the end of the first…
Dollar General reported decent fourth-quarter results and guided for 10%-12% top-line growth, 4%-6% samestore sales growth, and 8%-13% earnings per share growth in 2013. The guidance for top-line growth was ahead of expectations, but management’s profit growth expectations were in line with analysts’ forecast. The key to the Dollar General equity story is retaining the consumers gained during the 2008 recession and mitigating the eventual impact from Wal-Mart’s small-store rollout. Analysts still forecast Dollar General to increase market share and generate returns above its cost of capital, but we caution that the significant capacity being added to the sector by…
National Bank of Greece reported a EUR 554 million ($720 million) loss in the third quarter. This brings 2012’s year-to-date losses to EUR 2,458 million, compared with a EUR 1,325 million loss in the first nine months of 2011. Heavy provisions for bad loans and deeper trading provisions were largely behind the worsening of Greece’s largest bank’s bottom line. As anticipated, the bank’s credit quality and capital position deteriorated further. Greece’s recession keeps pounding NBG very hard, pushing the bad-loan balance to new highs. As at Sept. 30, the group’s overall non-performing loan ratio (loans past due 90 or more…
On Thursday, Dynegy announced it will pay $622 million through assumption of cash and debt to acquire Ameren’s 4.1-gigawatt merchant coal plant fleet in Illinois. Dynegy also acquired Ameren Energy Marketing and Homefield Energy, immediately establishing the company’s previously announced plan to develop a retail offering in Illinois. Excluding the marketing business, the deal price implies a $150-per-kilowatt value for the coal plants. This compares to recent large deals involving Exelon and Dominion that implied about $300 per kilowatt for high quality Eastern U.S. coal plants and virtually nothing for marginal Midwest coal plants. The transaction provides significant downside protection…
Power Financial posted operating earnings of CAD 406 million (or $0.57 per share) for the fourth quarter, compared with CAD 422 million (or $0.60 per share) in the corresponding period in 2011. For the full year of 2012, operating earnings were CAD 1,686 million (or $2.38 per share), compared with CAD 1,729 million (or $2.44 per share) in 2011. The earnings shortfall was due to lower contributions from the operating subsidiaries. Great-West Lifeco’s earnings were essentially flat for the full year. The company reported operating earnings of CAD 1,955 million, compared with CAD 1,898 million a year ago. Sales growth…
On Tuesday, Mosaic announced a joint venture agreement with Ma’aden and Saudi Basic Industries Corporation to develop an integrated phosphate mine and production facility in Saudi Arabia. Mosaic will own 25% of the venture and, subject to final financing terms, its cash investment would be as much as $1 billion, spread over four years and beginning in 2013. The new facility is expected to have production capacity of roughly 3.5 million metric tons of finished product per year, with production starting in late 2016. Essentially, Mosaic is paying $1 billion for an 875,000 metric ton phosphate operation. Mosaic has continually…