The Wolfe Energy team hosts a webcast on Fridays at 10:00AM ET to discuss energy news and themes for the week. Presenting analysts include Josh Silverstein (E&P), Sam Margolin (Global Integrateds & Refiners), Blake Gendron (Oilfield Services), and Keith Stanley (Midstream).
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There was a lot of material covered on Peacock at CMCSA’s investor day (January 16th in New York), and we wanted to share our biggest takeaways – which are: 1) Peacock is truly unique – there is no OTT product that combines this type of premium content with an advertising model out there, 2) CMCSA’s guidance and forecasts seem quite conservative in our view, and 3) we think the platform is scalable globally. Bottom line: we walked away from the investor day impressed.
Equity markets continue to defy blatant signs of froth and complacency, but until prices begin to reflect these concerns momentum still favors the bulls.
STT reported EPS of $1.73, and $1.98 excluding notable items, well ahead of cons. of $1.70 and our $1.73. Adjusting for the lower tax rate, core EPS still came in at $1.90. Versus our estimate, the core beat was driven by stronger topline including higher NII (+$0.01), better fees (+$0.04), and the remainder from lower core expense / preferred interest. Bottom Line: The quarter in of itself was great showcasing improving fee momentum (+5% QoQ, ex gain on sale), greater NII resiliency (-1% QoQ), and good cost control (core expenses flat QoQ). While the 2020 outlook guide is somewhat mixed (fee guide worse, expense / tax guide better), the midpoint still implies LSD % upside to the street, and the revenue guidance on both NII and fees appears conservative. Shares are up >3% pre-market which is encouraging, and given upside to numbers as implied by 2020 Outlook guide, we think the stock holds these early gains. Maintain OP rating.
The Consumer Electronics Show kicks off every year with previews of futuristic products. If you didn’t attend, we’ve got you covered. Ben Bajarin, a consumer electronics analyst at Creative Strategies, and Dan Galves, Wolfe’s Auto Tech analyst, were on the scene and provide their impressions.
KSU reported adjusted 4Q EPS of $1.82, slightly below Cons. and our estimate of $1.85. Revenue growth of 5% was 60bp better than our model but KSU’s OR of 62.4% was 90bp worse than our model. Below the line items were mixed with a $0.06 headwind from other income losses but a $0.06 tailwind from a low tax rate. Adjusted EPS excludes a $0.29 restructuring charge related to PSR initiatives.
This morning (1/17/20), JBHT reported 4Q EPS of $1.35, well below Cons. of $1.50 and our estimate of $1.43. Intermodal missed our estimate by $0.06 and ICS (brokerage) missed by $0.03, while Dedicated beat us by $0.03 and TL just slightly missed our expectations.
Better-than-expected margins (ex-CAM) and notable receivables capture drove solid FCF execution, despite the many moving operational pieces of the fit-for-basin rollout (particularly in NAM). NAM topline fell by 14% QoQ, the decline led by USL -19% (OneStim -33%), while int’l grew 2% sequentially and ended FY19 on-target with the prior high single-digit growth bogey. The market should appreciate the FCF execution, as SLB leads the OFS charge toward higher margins, earnings power, and shareholder returns (in a maturing upstream growth environment). However, the expectation that SLB would ‘quantify’ its shrinking of the US pumping business was perhaps muddled by press release commentary of “stacking”, “right-sizing”, and “scale-to-fit” directives (hopefully more color on the call). SLB recognized nearly $400M of NAM/other restructuring & workforce charges, and alluded to additional ‘exiting of UP NAM business units’ in FY20.
FAST reported a weaker than expected 4Q on the key metrics of sales and gross income, precipitated by a sharp slow-down in December daily sales growth to 0.9% ex-FX (vs. 4-5% bogey), and gross margin of 46.9% (down 80bps Y/Y) vs. >47% guidance. EPS of 31c was in line on better SG&A control and a slightly lower tax rate of 24.4%. Note that free cash flow continues to be weighed down by higher capex, which amounted to $246m in 2019, vs. $195-225m guide and $176m prior year.
DAL is in an enviable position, with financial stability enabling forward thinking and tactical commercial risk-taking. We expect DAL will continue to evolve its product to drive a growing brand premium, specifically around Basic Economy (evolving it or even eliminating it in time), change fees (reducing or eliminating some of them), and other things. We believe some things will be relatively easy to change, and some will require buy-in from pilots as DAL begins what may be a protracted and complicated negotiating process. Either way, DAL’s results allow us to think bigger picture.