New Earnings Reports
May 10, 2008
Well, unless you live in a cave, you are well aware that the big news last week was the Fed announced a 25 basis point cut. The Federal funds rate is now down to 2%, the lowest level it’s been in four years.
To quote the Fed, “economic activity still remains weak”,
however they made it clear that they are hopeful that the cuts will help inflation to moderate over time spurring economic growth.
This is highly likely to be the last fed cut that we can expect.
Another prudent quote is “The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.”
I think the fed has truly realized that they have cut interests rates substantially. As you should be able to deduce, this is great news for investors. We can expect no further future rate cuts, and now is the time to jump back in. The future of the economy is in the hands of consumers now (or in the pockets of consumers).
Earnings Report Commentary: How do I get this info? Well it’s not the most in depth research, nor do I view this information as suitable to make investing decisions off of. Buts it’s definitely a introduction in what to look for when analyzing company earnings reports. These are strong blue chip companies. All I did was pull up balance sheet/income statement/cash flows from the 10Q and MD&A. I always start with the MD&A because it discusses topics of financial performance and conditions of a company from the perspective of its management. Management also discusses trends in sales and expenses, capital resources and liquidity and trends in cash flows. Much of the financial performance comes from the Income Statement.
A break down of statements:
Income statement: reports on the financial performance of the firm over a period of time. Elements include Revenues, Expenses, and Gains and losses (this is just increases/decreases in equity or net assets from peripheral transactions ie selling something at a loss or gain that is outside to the scope of the general operating activities of a company)
Balance Sheet – reports the firms financial position at a POINT IN TIME. Consists of Assets, liabilities, and owners equity
Cash flow statement reports cash receipts and payments. The CF statement is broken down into operating, investing and financing cash flows. Ideally we would like to see the majority of income coming from the operating activities as opposed to the other groups, b/c this shows the company’s normal business is profitable.
Some more earnings news….a little late but better then never J
FMC Technologies (FTI) – reported first quarter earnings growth of 33% on strength from crude oil prices. Net income was $81.5 million (62 cents per share), compared with the $61.3 million (45 cents/share) the previous year. FTI has increased its forecast for full year 2008 earnings to 2.80-2.90 per share.
Mastercard (MA) – announced profits more than doubled and pointed to international credit card growth as the main driver to the business. Earnings came in at $2.59 per share (some 60 cents higher than analysts predicted)
Express Scripts (ESRX) – reported 33% increase in its first quarter profits. Net profit increased to $177.2 million (69 cents/share) from $133.7 million (49 cents/share) from a year ago. ESRX reported mediocre expectation for full-year ’08.
Constellation Energy Group (CEG) – reported first quarter earnings fell 26% ouch. Overall though the company earned $145.7 million (81 cents/share). The company’s revenue fell 6% to $4.83 billion in the first quarter. CEG was hurt by commodity hedges, coal supplier defaults and lower retail power margins.
Colgate- Palmovile (CL) – suffered a bit in the first quarter. Income fell 4% due to restructuring charges and higher provision for income taxes. First quarter earnings fell to $466.5 billion (86 cents/share) Sales grew 16% though to $3.71 billion
First Solar (FSLR) – did very well!!!! Earning 57 cents per share during their first quarter. Consider this they have more than a 700% increase from last years period. The company reported sales nearly tripling to $196.9 million. Check updated forecast. Aided by rising oil prices and a global crave for alternative energy source FSLR is a great stock to watch.
Hess corp. (HES) – doubled their net income reporting first quarter of $759 million (ie $2.34/share). This increase was due to their ability to increase production in tandem with increasing oil prices. Revenue and non-operating income rose to $10.7 billion from $7.4 billion in the year-ago period.
National Oilwell Varco Inc. (NOV) – first quarter earnings rose 44% to $397.6 million ($1.11 per share).
Cameron International corporation (CAM) – reported that first quarter profit rose 25% due to a strong demand for drilling systems, (very similar to National Oilwell). Overall the company reported quarterly net income of $126.3 million (55 cents/share). The company’s revenue jumped 34% to $997 million. Cameron also raised their full year expectations, looking to make $2.50 to $2.60 per share. (this is from their previous forecast guidance of $2.45 to $2.55per share)
NRG Energy (NRG) – didn’t do too well the first quarter. Net income fell 26% to $38 million (16 cents per share). The company got owned by lowering the value of certain financial instruments to reflect current market conditions.
