Tag Archives: valuation

Loving Coca-Cola, But What About Valuation? [Seeking Alpha]

The Coca-Cola Company (KO), with a market cap of $189.26B, is the world’s largest non-alcoholic beverage company. The Coca-Cola Company has one of the widest moats in the consumer beverage industry with its diversified brands and extensive distribution network. KO had reached a new 52 week high of $42.70 in the last trading day after reporting a better than expected Q1, 2013 profit on April 16, 2013.

Q1, 2013 Earnings

KO reported net income of $1.75B, or 39 cents per share, down from $2.05B, or 45 cents per share, a year earlier. Excluding one-time items, earnings were 46 cents per share, beating analysts’ average estimate of 45 cents.

Volume Growth

Worldwide sales volume grew 4 percent, but revenue slipped 1 percent to $11.04B, which was negatively impacted by currency exchange rate and the sales lost through the refranchising of some other bottler assets. KO’s global sparkling portfolio grew 3%, led by brand Coca-Cola (3% growth), Fanta (6% growth), and Sprite (5% growth). Two-thirds of global volume growth was contributed by sparkling brands. As for the still beverage, the global volume increased by 6% for the quarter with growth across most still beverage categories.

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Boeing Is Flying Safely Into 2013 [Seeking Alpha]

The Boeing Company (BA) is an aerospace company, manufacturing commercial airplanes, providing defense equipment, and maintaining a small captive finance division. The sales are nearly split 50/50 between airplanes and defense segments. Following the acquisition of McDonnell Douglas in 1997, Boeing operates in duopoly with Airbus EAD. Boeing enjoys a narrow economic moat with its focus on innovation and its symbiotic relationship with key suppliers and customers.

Recent Highlights

On Dec. 19, 2012, BA announced the development of an advanced method to test wireless signals in airplane cabins, making it possible for passengers to enjoy more reliable connectivity when using networked personal electronic devices in the air. As reported, “once the new method was established, testing that previously took more than two weeks to conduct was reduced to 10 hours.”

On Dec. 17, 2012, BA announced a 10% increase in the company’s regular quarterly dividend to 48.5 cents per share and the resumption of its stock repurchase program with repurchases currently expected to total between $1.5 to $2.0 billion in 2013. As reported by Reuters, the number and timing of shares to be purchased will be based on the level of cash balances, general business conditions and other factors, including alternative investment opportunities.

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Intuitive Surgical Is Surging With Fundamental Supports

Intuitive Surgical, Inc. (ISRG) designs, manufactures and markets da Vinci Surgical systems and related instruments and accessories. The da Vinci system allows a surgeon to control up to three endoscopic instruments from a remote console while a dual camera provides a 3-D view of the operation. The Company has placed more than 2,000 da Vinci systems in hospitals internationally. Through its wide installed base and first-mover advantages, ISRG has developed a wide economic moat in the niche of robotics-assisted minimally invasive surgery market.

The da Vinci system offers patients truly significant benefits like quicker recovery times and fewer complications. The switching cost of adopting a new platform is high, giving ISRG a sticky customer base and a strong competitive edge. ISRG is able to earn continuous, recurring revenue by servicing machines and selling surgical instruments. ISRG is a growth stock, and its revenue had increased from 72 million in 2002 to 2,066 million, ttm. The operating margin had been increasing continuously since 2006, from 28.8%, to 39.5% in 2011. ISRG continued to generate increasing free cash flow from 30 million in 2004 to 678 million in 2011. Despite the slowing revenue growth, the company is still achieving 20% plus annual revenue growth with its $2B plus revenue.

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Reducing Cost Improves The Bottom Line For Republic Services [Seeking Alpha]

This is a stock where Goldman Sachs’ conviction buy rating was backed up by Bill Gates’ continuous acquisitions. Republic Services, Inc. (RSG), a Delaware corporation, is the second largest provider of non-hazardous solid waste collection, transfer, recycling and disposal services in the United States, as measured by revenue. RSG manages operations through four geographic regions – Eastern, Midwestern, Southern and Western. The Company operates 343 collection companies, 194 transfer stations, and 191 active solid waste landfills as well as recycling facilities and several landfill gas-to-energy projects. While declining volume continued to be a concern, RSG maintains a narrow economic moat through vertical integration. Its operation efficiency and scale advantages are hard to duplicate for local competitors.

Recent Highlights and Development

On Nov. 1, 2012, RSG announced that for fiscal 2012, it expected adjusted diluted EPS in the range of $1.85-$1.87, which was lower than analysts’ estimate of $1.90. RSG also announced that its Board of Directors declared a regular quarterly dividend of $0.235 per share for stockholders of record on January 2, 2013, and the dividend will be paid on January 16, 2013.

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Railroad Story: CSX Is Delivering On The Right Track With Improving Margins [Seeking Alpha]

CSX Corp (CSX), a Class I railroad in the United States, provides rail-based transportation services, including traditional rail service and the transport of intermodal containers and trailers. CSX operates 21,000 miles of track and hauls shipments of coal products (32% of consolidated revenue), chemicals (14%), intermodal traffic (12%) and other merchandise. Since 2003, the Company had been improving its net margin from 3.16% to the current 15.84%, ttm. The return on equity had also been improved dramatically from 3.88% in 2003 to the current 21.69%, ttm. Despite the 16% decline of coal volume in the first three quarters of 2012, CSX managed to improve its operating margin continuously, as compared to the 15.82% margin in 2011. With its stable outlook, strong balance sheet and continued operation improvement, CSX is expected to generate consistent cash flow for its investors.

Revenue, Earnings Estimate,and Analysts Calls

For the current quarter, analysts are expecting $2.87B revenue, as compared to the $2.95B for the same quarter last year. Analysts are also expecting $11.75B revenue for the 2012 fiscal year and $12.07B for the 2013 fiscal year.

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Teva Deserves A Better Valuation

Teva Pharmaceutical Industries Ltd. (TEVA), the world’s largest generic pharmaceutical manufacturer with operations in 60 countries, issued FY 2013 guidance below analysts’ estimates on Nov. 30, 2012. TEVA expects net revenue to be in the range of $19.5-$20.5 billion and Non-GAAP diluted EPS between $4.85 and $5.15. The numbers were below analysts’ expectations with revenue of $20.8 billion and the EPS of $5.71. The share price reacted to this soft guidance with an opening low of $39.09, followed by a quick reversal and rebounded to an intra-day high of $40.98, before closing with a small gain at $40.35.

Copaxone Update

Investors are concerned that multiple sclerosis medicine Copaxone may lose market share to new treatments such as Norvatis AG (NVS)’s Gilenya and Biogen Idec Inc. (BIIB)’s not-yet-approved pill BG-12. Sales of Copaxone, which accounts for 20 percent of TEVA’s revenue, will be $3.7 billion to $3.9 billion, which is in-line with the analysts’ estimate of $3.74 billion, based on the average of six estimates.

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Microsoft Has Yet To Find Its Valuation Support

Microsoft Corporation (MSFT) had declined 15.42% after hitting the recent high of $31.46 on Sep. 20, 2012. According to the report from Reuters, since the launch of Windows 8 on Oct. 26, 2012, Windows laptop sales are down 24 percent, while desktop sales are down 9 percent compared with the same period last year, said NPD Group, which tracks computer sales weekly. Usually a new Microsoft release boosts PC sales as many consumers hold off from purchases for several months prior so they can get hold of the latest software immediately. While it is still too early to conclude the result of Windows 8 with only 5 weeks of sales, it seems that the new Windows series is making less impact on the PC market with its new launch. If Windows 8 sales do not meet the target after the shopping season, MSFT investors will be very disappointed.

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