Showing posts from October, 2016

IB Net Payout Yields Model

Disney: The Problems At ESPN

Based on Nielsen's November estimates, ESPN owned by Disney (DIS) is collapsing faster than expected. The networks of ESPN, ESPN2, and ESPNU all lost over 600K subscribers for November alone.

Weatherford: Recovery Starts Now

Weatherford reported disappointing Q3 results. The company has left the stock for dead while the market is starting to rebound. The stock remains a speculative play in the sector for a catch-up trade. As other industry players trade near multi-year highs,  Weatherford International (NYSE: WFT )  is still trading at the lows. The recent  quarterly results  weren't the best, but the market appears stressed out for no reason. Read the full article on Seeking Alpha.  Disclosure: Long WFT. Please review the disclaimer page for more details. 

Alphabet: Path To $1,000

After another strong earnings report, Alphabet (GOOGL) is up $12 today to $829. The stock appears on a path to $1,000. RBC Capital Markets tech analyst Mark Mahaney places a $1,025 target on the stock. Alphabet trades at a meager 20 forward P/E multiple making one wonder if the inability to obtain a higher multiple is related to the market cap of nearly $560 billion or the potential problems in Europe. Either way, it appears the stock is on a path to $1,000. More research: Alphabet: Only Takes Minimal Financial Discipline Alphabet: EU Problems Disclosure: No position. Please review the disclaimer page for more details. 

Acacia Plunges To New Lows

Acacia Comm (ACIA) is down a substantial 12% to below $80 for the first time in months. This move comes ironically after the company rushed out a secondary offering at $100 to allow insiders to dump shares. Per Benzinga , the stock is down as top customers ZTE and ADVA Optical Networking issued soft guidance. ZTE reportedly accounts for 40% of revenues and the weak revenue numbers isn't a good sign for Acacia.

Twitter: Re-Accelerating User Growth Keys Q3 Results

Twitter reported that Q3 results beat estimates, but the market focused on a lack of revenue guidance for Q4. The social-media giant generated further growth in key user metrics that is far more important than revenues at this point. The stock remains one to own around the recent lows. After an initial positive reaction to  Q3 results , Twitter (NYSE: TWTR ) is trading mostly flat. The market appears more focused on the lack of revenue guidance for Q4 over the key re-accelerating user growth. Read the full article on Seeking Alpha.  Disclosure: Long TWTR. Please review the disclaimer page for more details. 

Freeport-McMoRan: Proving The Cash Flow Thesis

Freeport-McMoRan missed Q3 analyst estimates. The copper miner made huge strides in proving the cash flow thesis. The stock trades at an attractive valuation now that cash flows are set to pay for debt reduction. Freeport-McMoRan (NYSE: FCX )  spent the last year cutting capital expenses and reducing costs to improve cash flows. The biggest story in the next few quarters is to see whether the copper miner makes the necessary progress towards those solid cash flows and current copper prices. Read the full article on Seeking Alpha.  Disclosure: Long FCX. Please review the disclaimer page for more details. 

Weatherford: Bottoming Process

Weatherford International (WFT) reported some horrible Q3 numbers, but the stock rebounded solidly on the news. The daily low of $5.26 test the lows for the last few months to only see the stock rebound near the highs of the day. The interesting part of the story is that the industry sees the market bottoming out. Maybe even more important, a competitor like Halliburton (HAL) is shifting back towards focusing on profits over market share. This should help reduce some pressure on the bottom line at Weatherford. More research: Halliburton: Some Perspective Disclosure: No position. Please review the disclaimer page for more details. 

AT&T: Glimpse At The Realities Of Another Deal

AT&T reported Q3 numbers that fail to prove out the benefits of the DirecTV deal. The bundling of services has failed to add the most important subscribers. The large debt load makes the synergies in the Time Warner deal a must and the outcome of the DirecTV integration highly questions a positive outcome. In the midst of agreeing to buy Time Warner (NYSE: TWX ), AT&T (NYSE: T ) rushed out  Q3 earnings  a few days early. The biggest issue is that the synergy benefits from DirecTV aren't showing up in the results. Read the full article at Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

Analysts Optimistic On AT&T-Time Warner Deal

According to a survey conducted by Bernstein ( via Benzinga), most buy-side analysts expect the deal between AT&T (T) and Time Warner (TWX) to eventually obtain approval. An amazing 84% of the participants in the survey expect AT&T to close the deal, yet Time Warner trades far below the $107.50 offer price.

Visa: FQ4 Quick Thoughts

After the close, Visa (V) reported the following numbers according to :

United Airlines: No Need For A Pause

United Airlines continues to post massive profits in relation to the market cap. Even at a slower pace, the airline is still repurchasing a large amount of outstanding shares. The recent rally only brings the stock up to more normal levels from which to launch another rally. Amazingly, the recent rally in  United Airlines (NYSE: UAL )  only brings the stock back up to levels from late 2015. In general, the airlines is seen in a better light now after strong results and new CEO Oscar Munoz gains momentum. Read a full article on Seeking Alpha.  Disclosure: Long UAL. Please review the disclaimer page for more details. 

Twitter: Softbank Nothing But Trader Chatter

Twitter (TWTR) surged 7% on what appears (via Barron's) was trader chatter about a rumor in a likely move to run the stock up. While it wouldn't surprise me that SoftBank would have interest in buying Twitter, the firm recently closed on a sizable $32 billion deal for ARM Holdings.

AT&T/Time Warner Merger Thoughts

As reported on Friday, AT&T (T) agreed to purchase Time Warner (TWX) for $107.50 per share. The deal brings together a distribution leader in the form of the wireless network operated by AT&T and the content owned by Time Warner. The deal could be a big victory for the Net Payout Yields model on Covestor where Time Warner has been a long-term holding. The company has long repurchased a large portion of the outstanding stock while paying a decent dividend that recently yielded nearly 2%. The big question is where the stock will trade on Monday with 50% of the value based on whether AT&T breaks the downside collar. As well, the market will likely fear whether the regulators will approve this merger of mega-media giants. Ultimately, a decent price on Monday provides an opportune time to exit a long-term position at the top. Here is hoping to a big pop at the start of trading. Below are links to more detailed reports on my opinions on the merger. WhoTrades Time Warn

CSX: Traditional Earnings Beat Doesn't Add Value

CSX beat Q3 EPS estimates while missing revenues yet again. The company remains on pace for negative trends despite help from lower share counts. The recent rally in the stock already prices in any potential upside from higher earnings in 2017. After the close,  CSX (NYSE: CSX )   reported  the traditional earnings beat and revenue miss. The railroad operator has a history of strong operations even despite the multi-year headwinds in the macroeconomic and specifically the energy sector. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

Yum Brands: About That Capital Return Plan

Yum Brands recently announced a huge increase to the capital return plan. The details of the stock repurchase plan are highly misleading considering the purchases of stock prior to the split of the Yum China business. Once the split takes place, yield investors can better evaluate the deal offered to investors. In the midst of plans to split the China business into a separate company,  Yum Brands (NYSE: YUM )  plans massive capital returns to shareholders. Unlike other typical large-scale capital return plans, the stock actually trades near all-time highs. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details.

Bank Of The Ozarks: Defying Skeptics

Bank of the Ozarks reported strong Q3 results. The bank completed two more acquisitions during the quarter but the market is focused on the cycle lows in asset quality metrics. The stock is both cheap and expensive depending on the valuation metric making the trading action around $40 crucial for the path forward. Before the open,  Bank of the Ozarks (NASDAQ: OZRK )  reported strong quarterly results. Lots of critics question the strategy of the regional bank, but one can't argue with the results. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

Twilio: Why Haven't You Sold Already?

Twilio proposed a secondary offering of $400 million led primarily by selling shareholders. The valuation of the company is now $6 billion based on the fully diluted share count while revenue expectations are only $255 million. Investors should not buy from insiders dumping shares at inflated valuations. After the close on a Friday, Twilio (NYSE: TWLO ) snuck out a  proposed secondary  despite only completing an IPO about four months ago. The communications software provider has seen the stock rocket since going public. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

Twitter: No Deal, No Problem

Twitter is down 20% as bidders disappear from making premium bids for the social media service. The company has plenty of catalysts with live-streaming deals and the emergence of generous video ad revenue sharing with content creators. The dip below $20 provide opportunity as either the video catalyst will launch Twitter back into growth mode or the company will accept likely bids in the mid-$20 range. Twitter (NYSE: TWTR ) is in freefall today as the market comes to the realization that a deal isn't imminent. Despite constant media rumors, the company never really signaled that the social media site was for sale and definitely not at prices anybody would pay. Read the full article on Seeking Alpha.  Disclosure: Long TWTR. Please see the disclaimer page for more details.