Danaher reported first-quarter earnings of $0.98 per share, after adjusting for one-time gains related to the sale of the Apex tool joint venture, earnings of $0.75 per share, a modest 2% increase over the prior year. Earnings growth of 2% was held back by sluggish core revenue growth and foreign currency translation, with no one individual segment standing out as either over- or under-performing expectations. While the Street responded favorably to last quarter’s surprising strength, this quarter was more in line with our near-term view for Danaher that weak global markets, and tepid spending for capital projects and research and…
Author: Thomas Larson
Global Payments reported a 1% increase in profits for the company’s third fiscal quarter. Profit attributable to the company reached $58.5 million, or $0.75 per share, up from $57.9 million, or $0.73 per share, in the year-earlier quarter. Excluding items such as acquisition intangible amortization expenses and costs related to the company’s security breach, quarterly earnings per share rose four cents to $0.87. We are not making changes to our fair value estimate of $51 per share or our narrow economic moat assessment at this time. We liked the fact that the costs of the company’s security breach seem set…
Google’s first-quarter results provided continued evidence of the firm’s wide economic moat at work. Quarterly advertising revenues excluding payments to publisher partners (ex-TAC) grew to $8.9 billion, 16% more than last year, greater than estimates for growth in digital advertising. However, Google operating income (excluding Motorola Mobility) grew less than 11% versus 2012. Notably, analysts believe the economics of Google’s Internet desktop search business are not sustainable as users continue to shift to mobile computing. While the traditional desktop Internet business is generally mature and open, the mobile Internet business involves a greater number of players that have some control…
Royal Bank of Scotland’s terrible fourth quarter, which resulted in a GBP 2.6 billion loss, looks like a kitchen-sink quarter, with management taking big charges in an effort to start 2013 with a cleaner slate. Fourth-quarter results included GBP 1,150 million of additional redress costs related to misselling scandals, GBP 620 million of restructuring costs, and GBP 518 million of goodwill writedowns. Similarly, the full-year loss of GBP 6.0 billion included GBP 8.8 billion of special and one-time items. On a management-provided underlying basis, the no-moat bank reported an operating profit for both the fourth quarter and the full year,…
Weatherford’s multi-year tax nightmare is coming to a close in 2013, after three restatements, several late 10-K filings, material weaknesses, and much angst from Weatherford investors. The CFO has been replaced, and the tax department greatly expanded, but the damage has been done. The move to Switzerland in 2009 in an effort to improve the firm’s overall tax structure has been a miserable failure, with 2013’s tax rate expected to be around 34%-35%, but we expect it to trend down to 30% over time, a level that is still higher than Schlumberger’s rate. Furthermore, the restatements around the Iraq contracts…
Energias de Portugal reported 2012 EPS of EUR 0.28 versus EUR 0.31 in 2011. The results were in line with the consensus estimate, but EUR 0.01 per share less than Morningstar’s full-year estimate. Poor results from operations in Brazil, where 2012 EBITDA was EUR 535 million–22% lower than in 2011–continued to have an impact on the 2012 fourth quarter. Rate reductions in distribution and the delay in the commissioning of the Pecem coal-fired plant were the key drivers for the poor results from Brazil. Management reiterated flattish 2013 EBITDA guidance versus 2012 and our 2013 EPS estimate of EUR 0.28…
Portugal Telecom reported year-end results that were a bit weaker than expected. Revenue increased 7.4% year over year, thanks to a full 12 months of consolidating the firm’s stake in Oi, versus our projection of an increase of 7.8%. Despite the recession in Portugal, PT succeeded in expanding most of its subscriber bases in the country. While its traditional fixed-line customer base declined 1.6% to 2.6 million, the firm increased its broadband base 10.8% and its television base 17.4%, taking both to 1.2 million. PT also increased its wireless base 2.1% to 7.6 million. However, while the firm managed to…
Carlsberg has offered to purchase another 30.3% stake in Chongqing Brewery Company (CBC) 600132 for DKK 2.65 billion (USD 461 million/CNY 2.9 billion), or CNY 20 per share (representing a 25% premium to the stock’s recent trading range). This transaction occurs well after Carlsberg’s 2010 purchase of a 12.2% stake in CBC for CNY 40 per share. Upon completion, Carlsberg will own 60% of CBC, the sixth-largest brewer in China. Management expects the deal to close in early 2014 and anticipates that it will be earnings per share accretive in the first year. The purchase price values the firm at…
Siemens reported first-quarter earnings of EUR 1.40 per share, a 9% decline from the same quarter in the prior year. While revenue grew just over 1% in the quarter, the change was solely due to foreign exchange translation. Additionally, the company drove 40 basis points of margin expansion in the quarter, driven by strength in the energy segment (up 120 basis points to 9.1%) and health care (up 390 basis points to 15.5%), offset by softness in the industry segment and infrastructure and cities segment. The improvement in operating margins helps to validate management’s recent attention to cost structure, and…
Saipem surprised us and the Street on Tuesday with a massive revision to its 2013 earnings guidance. Earnings before interest and taxes in 2013 are now expected to be around EUR 750 million, a 50% drop from 2012 levels of EUR 1.5 billion. For a very well-run company with a nearly unblemished operational track record over the past decade and steadily increasing earnings, the magnitude of the revision is stunning. Broadly, Saipem’s revisions can be tied to several common factors. First, the oil and gas engineering and construction space has struggled with highly competitive market conditions since 2009 and 2010,…
BASF ended the third quarter of 2012 with EUR 1.8 billion of cash and a $12.5 billion commercial paper program backed with an additional $6 billion revolver, versus EUR 8.4 billion of long-term debt, EUR 4.3 billion of short-term debt, and some underfunded pension (the company started the year with EUR 3 billion in pension liabilities). The firm generated EUR 13 billion EBITDA for the trailing 12 months, putting interest coverage at almost 20 times and gross adjusted debt leverage at about 1.2 times, slightly below the level reached last year due to weak European and Asian economic growth. BASF…
Qiagen reported fourth-quarter results above our expectations on Tuesday on account of better than expected revenue, tight cost controls, and a lower tax rate. We plan to raise our fair value estimate modestly to reflect the outperformance and higher-than-anticipated earnings potential in 2013, but consider the risk/reward balanced at current valuation levels. Anemic spending in global academic research, intense competitive pressure within the U.S. HPV market, and continued macroeconomic difficulties are unresolved issues, rendering Qiagen shares fairly valued, in our opinion. Overall, Qiagen ended 2012 on a strong note. Fourth-quarter net sales rose 4% year over year to $346.5 million,…