Profit margin – Stormbirds http://stormbirds.net/ Sat, 14 May 2022 04:00:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://stormbirds.net/wp-content/uploads/2021/07/icon-2021-07-05T151758.466-150x150.png Profit margin – Stormbirds http://stormbirds.net/ 32 32 Stocks are down. They are always expensive. https://stormbirds.net/stocks-are-down-they-are-always-expensive/ Sat, 14 May 2022 04:00:00 +0000 https://stormbirds.net/stocks-are-down-they-are-always-expensive/ US stocks are off to their worst start to a year in more than half a century. By some metrics, they still seem expensive. Wall Street often uses the ratio of a company’s stock price to its earnings as a yardstick to determine whether a stock looks cheap or expensive. According to this metric, the […]]]>

US stocks are off to their worst start to a year in more than half a century. By some metrics, they still seem expensive.

Wall Street often uses the ratio of a company’s stock price to its earnings as a yardstick to determine whether a stock looks cheap or expensive. According to this metric, the market as a whole had been abnormally expensive for much of the past two years, a period when particularly accommodative monetary policy spurred the popular view that low interest rates offered investors little alternatives to stocks.

Even though it fell 16% to start 2022, the S&P 500 traded over the weekend at 16.8 times its projected earnings over the next 12 months, according to FactSet..

This is still above the average multiple of 15.7 over the past 20 years, but down from the recent peak of 24.1 in September 2020.

Concerns about inflation and the path of Federal Reserve interest rate hikes have spurred recent market turmoil and sparked heated debate about appropriate equity valuations in the current environment. The S&P 500’s decline through Friday is its worst year-to-date performance since 1970, according to Dow Jones Market Data.

One source of uncertainty is the growing fear that the Fed’s monetary tightening could tip the economy into a recession, a scenario in which equity multiples generally decline. Higher interest rates reduce the value of future business cash flows in commonly used pricing models. Already, some investors worry that market expectations for corporate earnings are too high, given the economic headwinds ahead.

Michael Mullaney, director of global markets research at Boston Partners, which manages $91 billion, said he believes the S&P 500 is correctly valued based on current rates, but expects valuations continue to fall.

Stock valuations tend to fall during tightening cycles and earnings growth also tends to slow during these periods, even during periods that are not marked by high inflation. This means investors should anticipate a potentially even more austere market environment in the months ahead.

Additionally, it’s still early in the Fed’s cycle, and Mullaney said he expects the central bank to raise its benchmark rate higher than currently expected to rein in inflation. By the end of the Fed’s campaign, he expects the S&P 500 to be trading at around 15 times its projected earnings. Add in a recession and the market valuation would likely fall to 13 or 14 times earnings, he said.

“We are going to be in a volatile market until we get concrete evidence that significant inroads have been made to quell the inflation problem,” Mullaney said.

Bubble burst?

The market turmoil has drawn comparisons to the bursting of the dot-com bubble in 2000.

Analysts at Citigroup Inc.

wrote this week that the US stock market entered bubble territory in October 2020 and is now coming out of that bubble, although they said equities are not as stretched as they were in the dot-eras. com.

Futures multiples soared to 26.2 times earnings in March 2000. In the subsequent sell-off, they fell. In 2002, the S&P 500 traded at a low of 14.2 times its earnings the following year. In 2008, when the country was going through a severe recession, this figure reached 8.8.

While few stocks were spared this year’s slide, technology and other expensive growth stocks suffered the most. The Russell 1000 Growth Index has fallen 24% this year, while its value counterpart has fallen 8.1%.

Growth benchmark members include Apple Inc.,

whose shares are down 17% this year; Microsoft Corp.

, down 22%; Amazon.co.uk Inc.,

down 32%; and Tesla Inc.,

down 27%.

S&P 500 stocks, valuation versus performance

YEAR-TO-DATE PERFORMANCE

YEAR-TO-DATE PERFORMANCE

YEAR-TO-DATE PERFORMANCE

YEAR-TO-DATE PERFORMANCE

YEAR-TO-DATE PERFORMANCE

The value gauge, on the other hand, is dominated by stocks such as Berkshire Hathaway Inc.,

+ 3.8% in 2022; Johnson & Johnson,

up 3.4%; UnitedHealth Group Inc.,

down 3.3%; and Exxon Mobil Corp.

up 45%.

Shares of Tesla, for example, entered the year at 120 times the company’s expected earnings and at the end of this week were priced around 54 times, according to FactSet. Exxon Mobil, on the other hand, was trading at 10.5 times future earnings at the end of 2021, a multiple that fell to 9.4.

It is normal for stocks in some industries to trade at very different valuations than in other industries. Investors are generally willing to pay more for companies that they expect to grow quickly than for those with more limited growth prospects. Technology stocks often trade at elevated valuations, while oil and gas companies historically trade at more moderate valuations as the outlook for the industry is subject to energy price supply and demand and has tend to experience boom and bust cycles.

“It was definitely the more expensive names that took the brunt of the selloff,” said Mike Stritch, chief investment officer at BMO Wealth Management. “There has been a reset of what it’s reasonable to pay for valuations in a rising rate environment.”

US equities also look expensive relative to their overseas counterparts. Only benchmarks in Belgium, Portugal and Saudi Arabia, as well as the technology-heavy Nasdaq Composite, have higher valuations based on future earnings than the S&P 500, according to data available on FactSet. By comparison, Hong Kong’s Hang Seng is trading at 9.5 times projected earnings, Japan’s Nikkei 225 is trading at 14.3 times earnings and Germany’s DAX is trading at 11.4 times.

This disparity is pushing some investors to take another look abroad.

“Even in our US-focused strategies, we have a healthy allocation to international stocks because they’re just cheaper,” said Eric Lynch, managing director of asset management firm Scharf Investments.

The earnings equation

Prices are only one component of stock market valuations. The other? Business profits. When earnings rise and prices remain stable, valuations contract. If earnings fall, it makes stocks even more expensive at the same price levels.

Earnings have been a rare bright spot so far in a market rocked by inflation data, the Fed’s policy shift and headlines about the war in Ukraine and rising Covid-19 cases. 19 in China.

With the end of the last reporting season, analysts expect S&P 500 company earnings to rise 9.1% in the first quarter from a year earlier, against their growth forecast of 5, 9% as of December 31, according to FactSet. For the year, earnings are expected to rise 10%, an improvement from the 7.4% growth forecast at the end of last year.

The good results are partly the result of exceptionally high profit margins, which suggests that many companies have managed to pass on higher costs to customers through price increases. Analysts estimate the S&P 500 net profit margin will be 12.3% for the first quarter, above the five-year average of 11.2%.

Markets have looked increasingly fragile lately: stocks, bonds, and crypto have all fallen as investors struggle to navigate the big swings rocking financial markets around the world. Caitlin McCabe of the WSJ examines some of the causes of the recent market frenzy. Photo: Spencer Platt/Getty Images

However, some investors doubt that margins can continue to rise.

“It just seems unlikely that the maximum margins will continue,” said Mr. Lynch, of Scharf Investments. “So even if there’s not a big recession, we would still say there’s certainly a very reasonable call to be made that margins will be squeezed and at the very least earnings estimates are too high.”

There are other reasons to worry. Companies this earnings season reported swings in “weak demand” at the fastest rate since 2020, according to BofA Global Research.

And the rise in 2022 earnings estimates for the S&P 500 is largely attributable to improving expectations for the energy sector, BofA found. Without the sector, which makes up less than 5% of the S&P 500, expectations for the index’s earnings this year would have fallen slightly from the end of last year, analysts at the bank said.

If earnings were to disappoint, it would make stock market valuations even more expensive than they already look, absent a further decline in share prices.

Write to Karen Langley at karen.langley@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Investors cheer as Coupang cuts 29% first-quarter net loss – TechCrunch https://stormbirds.net/investors-cheer-as-coupang-cuts-29-first-quarter-net-loss-techcrunch/ Thu, 12 May 2022 13:01:30 +0000 https://stormbirds.net/investors-cheer-as-coupang-cuts-29-first-quarter-net-loss-techcrunch/ South Korean e-commerce platform coupang mentioned its net loss in the first quarter was down 29% from a year earlier. The company posted a net loss of $209.2 million in the first quarter of this year, up from last year’s net losses of $295 million in the first quarter and $404.9 million in the fourth […]]]>

South Korean e-commerce platform coupang mentioned its net loss in the first quarter was down 29% from a year earlier. The company posted a net loss of $209.2 million in the first quarter of this year, up from last year’s net losses of $295 million in the first quarter and $404.9 million in the fourth quarterrespectively.

Investors cheered the result, pushing Coupang’s stock value up more than 13% in premarket trading.

The SoftBank Vision Fund-backed company said in its publication of results it “recorded the highest gross profit and gross profit margin in company history”, which helped its product business segment achieve profitability in the first quarter.

“In the first quarter, we recorded the highest gross profit and gross margin in company history,” Bom Kim, chairman of Coupang, said in his earnings call on Wednesday. “Generating over $1 billion in gross profit and exceeding 20% ​​gross margin. This represents a 42% improvement in gross profit year over year.”

Coupang’s revenue grew to $5.12 billion in the period ending March 2022 from $4.2 billion in the first quarter of 2021, a 22% growth. The company also revealed that its number of active customers increased by 13% year over year.

Claiming that its results were “largely due to process improvement, automation and supply chain optimization initiatives”, Coupang managed to register a $194 million improvement over the fourth quarter 2021 of its adjusted EBITDA, a heavily adjusted profit measure.

The company was, however, unprofitable by metric, revealing its adjusted EBITDA in Q1 2022 was -$91 million, though an improvement from Red Ink’s $132.9 million a year. earlier.

“While we saw a headwind from inflation and some supply chain disruption in the last quarter, our bottom line was net positive, due to improved processes and technology. , capacity utilization, supply chain optimization, and continued scaling of advertising, among other areas,” Kim mentioned.

One of Coupang’s fastest growing offerings is Rocket Fresh, a same-day fresh food delivery service in South Korea that delivers customers within hours of purchase, according to Kim. The service is available to subscribers to Coupang’s membership program, Rocket Wow Club. (These fast delivery services have become popular around the world, despite concerns about their profitability.)

The company recently increased its membership price for new and existing customers to improve profitability.

“There continue to be a lot of unpredictable short-term variables as we mentioned, but [the long term trajectory] we will continue to see significantly faster growth than the e-commerce segment,” Kim said on the call.

As the company grows in size, it expects to see more benefits from economies of scale, and its ability to invest in software and hardware automation and efficiency projects will help. to growth, the company said.

In March, SoftBank Vision Fund sold 50 million shares worth $1 billion for $20.87 each to Coupang after the Japanese fund sold Coupang shares worth $1.69 billion in September 2021, according to documents filed with the United States Securities and Exchange Commission.

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NAPCO sets another net sales record in the third quarter https://stormbirds.net/napco-sets-another-net-sales-record-in-the-third-quarter/ Tue, 10 May 2022 14:04:58 +0000 https://stormbirds.net/napco-sets-another-net-sales-record-in-the-third-quarter/ Despite strong sales growth in the third quarter, NAPCO says its ability to fully meet product demand continues to be limited by ongoing supply chain challenges, electronic component shortages and logistical delays. AMITYVILLE, NY—NAPCO Security Technologies (Nasdaq: NSSC) not only achieved record sales in the third quarter of its fiscal year 2022, but the company […]]]>

Despite strong sales growth in the third quarter, NAPCO says its ability to fully meet product demand continues to be limited by ongoing supply chain challenges, electronic component shortages and logistical delays.

AMITYVILLE, NY—NAPCO Security Technologies (Nasdaq: NSSC) not only achieved record sales in the third quarter of its fiscal year 2022, but the company also saw its hardware gross margin rebound from the tighter margins experienced in 2021.

The company saw its net sales for the quarter ending March 31 increase 27% to a quarterly record of $35.9 million, from $28.2 million for the same period last year. Its recurring services revenue (RSR) for the quarter increased 35% to $12 million from $8.9 million for the same period last year.

Services recurring revenue now has a forward-looking annual operating rate of $49.9 million based on April 2022 recurring revenue. Meanwhile, adjusted EBITDA for the quarter was $5.2 million, compared to $5.5 million for the same period a year ago, a decrease of 5%, due to the increased costs of the supply chain situation.

Richard Soloway, Chairman and President of NAPCO, comments, “Our third quarter of fiscal 2022 delivered strong revenue growth, with the highest sales of any quarter in company history of 35.9 million, an increase of 27% over last year.

Equipment revenue (+23%) and recurring service revenue (+35%) contributed to this sales growth. This is the sixth consecutive quarter of year-over-year sales growth. Our recurring services revenue now has a forward-looking annual operating rate of approximately $50 million based on April 2022 recurring services revenue.”

NAPCO’s gross margin for recurring services revenue was 87% for the quarter, down from 86% for the same period last year, but it was the hardware margin that got Soloway excited.

“I was very pleased to see our hardware gross margins increase to 17%, more than double last quarter’s hardware gross margin of 8%. Clearly, hardware margins continue to be impacted by the continued impact of supply chain constraints. However, our strategy of temporarily sacrificing hardware gross margin by purchasing components at higher prices so that we can continue to manufacture radios, which generates continued high-margin recurring revenue for every radio installed and in operation, works.

“Radio sales and activations continue to be strong. This, combined with some strategic price increases and continued strong revenue, allowed us to increase our overall gross margin from last quarter and beat street consensus estimates for the third quarter on revenue. business, EPS, net income and adjusted EBITDA. Additionally, our overall gross profit increased 27% to $14.6 million from last quarter ($11.4 million) and 13% from the third quarter of last year (12. $9 million).

Soloway says electronic component suppliers are ramping up capacity. He believes that once that happens, parts prices will normalize and NAPCO will see an increase in gross margin.

“Our radio and fire alarm business, and the RSR associated with each, continues to grow significantly as commercial buildings must be secure. Additionally, the commercial fire alarm company is a mandatory, non-discretionary business, which means that in order to receive a certificate of occupancy for a building, a fire alarm system is mandatory and must always operate in accordance with codes. fire prevention.

“Due to the critical nature and high profitability of this sector, the commercial fire alarm sector continues to be one of the key areas where we focus our resources,” he adds.

Despite strong sales growth in the third quarter, Soloway says NAPCO’s ability to fully meet strong product demand continues to be limited by ongoing supply chain challenges, electronic component shortages and product delays. logistics.

“NAPCO’s delivery performance has been excellent during these very difficult times. However, these aforementioned constraints have slowed the pace of revenue realization and led to historically high backlog levels that may continue through calendar year 2022, particularly for electronics.

“The strong sales performance during the third quarter was achieved, in part, because NAPCO continues to focus on aggressively managing these logistical challenges to ensure we remain well positioned to meet the needs of our customers. We continue to manage these issues by redesigning products, developing alternative and lower-cost sources of supply and delivery methods, and continuing to work closely with our customers and suppliers to get through these extraordinary times.” he declared.

NAPCO has $47.4 million in cash and no debt.


This article first appeared on SSI’s sister site CEPro.com.

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Wendy’s Menu borrows a hit idea from Taco Bell https://stormbirds.net/wendys-menu-borrows-a-hit-idea-from-taco-bell/ Sun, 01 May 2022 17:00:12 +0000 https://stormbirds.net/wendys-menu-borrows-a-hit-idea-from-taco-bell/ For decades, fast food has been largely about food. Chains like McDonald’s (MCD) – Get the McDonald’s Corporation report and Restaurant Brands International (RSQ) – Get the Restaurant Brands International Inc report Burger King has changed up the mainstays of its menu, trying all sorts of new versions of the iconic Big Mac and Whopper. […]]]>

For decades, fast food has been largely about food. Chains like McDonald’s (MCD) – Get the McDonald’s Corporation report and Restaurant Brands International (RSQ) – Get the Restaurant Brands International Inc report Burger King has changed up the mainstays of its menu, trying all sorts of new versions of the iconic Big Mac and Whopper.

They’ve done this while expanding their chicken offering and even getting a foothold in the world of plant-based foods (although that didn’t go over very well). Both chains have never stopped innovating, but they have largely kept this innovation on the food side of the menu.

]]> STMicroelectronics Reports First Quarter 2022 Financial Results https://stormbirds.net/stmicroelectronics-reports-first-quarter-2022-financial-results/ Fri, 29 Apr 2022 09:00:43 +0000 https://stormbirds.net/stmicroelectronics-reports-first-quarter-2022-financial-results/ STMicroelectronics released its U.S. GAAP financial results for the first quarter ended April 2, 2022. ST reported first-quarter net revenue of $3.55 billion, gross margin of 46.7% , an operating margin of 24.7% and net income of $747 million or diluted earnings per share of $0.79. “ST’s second-quarter midterm outlook calls for net revenue of […]]]>
STMicroelectronics released its U.S. GAAP financial results for the first quarter ended April 2, 2022. ST reported first-quarter net revenue of $3.55 billion, gross margin of 46.7% , an operating margin of 24.7% and net income of $747 million or diluted earnings per share of $0.79.

“ST’s second-quarter midterm outlook calls for net revenue of $3.75 billion, up 25.3% year-on-year and 5.8% sequentially; the gross margin should be approximately 46.0%,” said Jean-Marc Chery, president and CEO of STMicroelectronics. “First quarter net revenue of $3.55 billion and gross margin of 46.7% are above the midpoint of our business outlook range. This revenue performance, driven by strong demand for microcontrollers, was partially offset by the temporary reduction in operations at our manufacturing facility in Shenzhen, China due to the pandemic.

“On a yearly basis, first quarter net revenue increased 17.6%, operating margin increased from 14.6% to 24.7% and net income more than doubled to $747 million. dollars,” Chery added.

Net revenues totaled $3.55 billion, a 17.6% year-over-year increase. Year-over-year, the company recorded higher net sales in all product groups except the Imaging sub-group, as expected. Year-over-year net sales to OEMs and distribution increased 14.4% and 24%, respectively.

Gross profit totaled $1.65 billion, a 40.8% year-over-year increase. Gross margin of 46.7% increased 770 basis points year-over-year, primarily due to better product mix and favorable pricing, and was 170 basis points above midpoint of the company’s forecast.

Free cash flow (non-US GAAP) was $82 million in the first quarter, compared to $261 million in the year-ago quarter.

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Some say corporate greed is the root of inflation https://stormbirds.net/some-say-corporate-greed-is-the-root-of-inflation/ Wed, 27 Apr 2022 09:07:32 +0000 https://stormbirds.net/some-say-corporate-greed-is-the-root-of-inflation/ Price gouging: Some say corporate greed is the root of inflation News Sports Entertainment Life Money Technology Travel Opinion Critics say companies are raising prices more than necessary to offset rising costs, boosting profits while using supply problems as a hedge. Left-leaning think tanks and lawmakers say rising prices are making inflation worse. They cite […]]]>
Price gouging: Some say corporate greed is the root of inflation

Critics say companies are raising prices more than necessary to offset rising costs, boosting profits while using supply problems as a hedge.

  • Left-leaning think tanks and lawmakers say rising prices are making inflation worse.
  • They cite record corporate profits despite rising costs expected to dampen profits.
  • Conservative economists argue that these arguments ignore the fundamental laws of supply and demand that now plague the market.

Soaring inflation was pinned on supply chain bottlenecksworker wage increases and growing consumer demand – all symptoms of an economy still emerging from the pandemic-induced slowdown.

But think tanks and lawmakers on the left are increasingly pointing to what they say is an even bigger culprit: corporate greed.

Companies, they say, are raising prices more than necessary to offset their rising wholesale costs, boosting profits while using supply problems as a hedge.

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Is Caterpillar stock a buy, sell or hold ahead of upcoming earnings? (NYSE: CAT) https://stormbirds.net/is-caterpillar-stock-a-buy-sell-or-hold-ahead-of-upcoming-earnings-nyse-cat/ Mon, 25 Apr 2022 17:23:00 +0000 https://stormbirds.net/is-caterpillar-stock-a-buy-sell-or-hold-ahead-of-upcoming-earnings-nyse-cat/ shironosov/iStock via Getty Images Summary in seconds I downgrade my rating for Caterpillar Inc. (NYSE: CAT) shares from buy to hold. In my article for CAT written earlier on February 8, 2022, I reviewed Caterpillar’s financial performance in the last quarter of 2021. This The latest update highlights CAT’s upcoming Q1 2022 results. I expect […]]]>

shironosov/iStock via Getty Images

Summary in seconds

I downgrade my rating for Caterpillar Inc. (NYSE: CAT) shares from buy to hold. In my article for CAT written earlier on February 8, 2022, I reviewed Caterpillar’s financial performance in the last quarter of 2021.

This The latest update highlights CAT’s upcoming Q1 2022 results. I expect Caterpillar’s Q1 net income to be below market expectations. Although Caterpillar is still trading below my price target, the implied capital appreciation potential is not high enough to translate into a Buy rating. As such, I view Caterpillar stock as a hangover ahead of upcoming earnings.

Key indicators of CAT actions

There are two main categories of metrics investors should consider before evaluating Caterpillar’s future financial and market prospects.

The first category of indicators relates to the recent performance of CAT’s stock price on an absolute and relative basis.

Caterpillar stock price performance since the start of 2022

caterpillar

Looking for Alpha

Year-to-date, Caterpillar’s stock price is up +4.6%, outperforming the S&P 500 which fell -10.0%.

CAT stocks have actually been on a rollercoaster ride in 2022 year to date. During the first half of January 2022, Caterpillar fared much better than the S&P 500 as the market viewed CAT as a key beneficiary of Biden’s new offer. infrastructure bill. December 30, 2021 Looking for new Alphas the article pointed out that “UBS (UBS) prefers construction equipment on the back of the infrastructure bill,” and that reflects Wall Street analysts’ positive sentiment toward Caterpillar earlier this year.

But shares of CAT retreated after mid-January and tracked the performance of the S&P 500 closely through late February. In my previous update for CAT, I noted that “a year-over-year decline in Caterpillar’s operating profit margin was a disappointment” and that it hurt CAT’s share price performance. after publishing its results for the fourth quarter of 2021 at the end of January.

Caterpillar has started to outperform the S&P 500 again in early March, and this came after Russia invaded Ukraine at the end of February, which was one of the main drivers of the rise in commodity prices. Looking for new Alphas published an article on March 8, 2022 that cited Jefferies (JEF) research referring to CAT as one of the “commodity-related machine names” that are “a strong hedge against commodity inflation and general”. In other words, investors see high commodity prices driving up demand for machinery, which will be positive for Caterpillar.

The second category of metrics involves sell-side consensus financial forecasts.

Revisions to Caterpillar’s First Quarter 2022 Financial Estimates Over the Last Three Months

Caterpillar Revisions

Looking for Alpha

Revisions to CAT’s financial forecast for fiscal year 2022 over the past three months

CAT Revisions

Looking for Alpha

According to the charts shown above, the majority of Wall Street analysts have raised their Q1 2022 and fiscal year 2022 revenue forecasts for Caterpillar over the past three months, while most have cut their profit estimates for CAT over the same period. This is consistent with what I discussed above. High raw material prices will drive higher sales for Caterpillar, but CAT also faces cost pressures, as underlined by its operating profit margin contraction in the fourth quarter of 2021.

Is CAT stock overvalued now?

Before previewing Caterpillar’s Q1 2022 earnings in the following sections, it’s worth assessing CAT’s valuations in light of the stock price’s year-to-date outperformance versus the S&P. 500.

My price target for CAT is $245, based on a forward P/E multiple of 17.5 times applied to forward earnings per share of $14.00. The forward P/E multiple of 17.5 times is pegged to the stock’s 10-year consensus average P/E for the next twelve months, according to S&P Capital IQ The data. My forward EPS estimate is the company’s average consensus normalized earnings per share for fiscal year 2022-25. Given the cyclical nature of Caterpillar’s business, I have used averages of Caterpillar’s historical P/E multiple and future EPS estimates to value CAT.

The $245 target price for Caterpillar translates to +13% upside from its last stock price of $216.30 on April 22, 2022. Using +15% as the minimum hurdle rate for a investment, I view CAT stock as fairly valued, rather than overvalued or undervalued, now.

When does Caterpillar release its earnings?

Caterpillar issued a press release nearly two weeks ago on April 14, revealing that the company’s first quarter 2022 results will be released on Thursday, April 28, 2022, before market open.

What to expect from the gains?

Expectations for Caterpillar’s first quarter earnings are reflected in the key indicators I discussed in an earlier section of this article.

CAT’s year-to-date share price performance is an indication of both market optimism about strong revenue growth supported by high commodity prices, and concerns investors regarding margin compression. Similarly, the upward revision of Caterpillar’s consensus estimates and the downward revision of CAT’s consensus forecasts in recent months tell the same story.

I agree that Caterpillar’s costs in the first quarter of 2022, not revenues, will determine whether CAT’s upcoming financial results will meet market expectations. I noted in my early February 2022 post that there is “near-term pressure on Caterpillar’s operating profit margin resulting from cost inflation and supply chain issues.”

Things did not have better end of February based on company management feedback to Citigroup (C) World Conference on Industrial Technology and Mobility on February 24, 2022, which occurred approximately one month after CAT’s fourth quarter results.

Caterpillar mentioned at the Citigroup conference that it “would expect a lot of that (inventory accumulation) to go down as the supply chain improves,” but it pointed out that she was “not sure when that will be” and “we’re not seeing anything immediate right now.” In other words, it is evident that supply chain headwinds continued to be an issue for CAT through the end of February. In terms of distribution costs, CAT also acknowledged “we’ve seen a little more airfreight than we’d like”.

In conclusion, I expect a shortfall in Q1 2022 for Caterpillar.

What is Caterpillar’s forecast?

Caterpillar’s first-quarter consensus revenue forecast of $13.5 billion seems reasonable, as it implies a realistic revenue expansion of +13.5% year-over-year. This represents an improvement from CAT’s +11.8% YoY sales growth in Q1 2021, but already suggests a significant decline from Caterpillar’s Q4 2021 revenue increase of +22 .8%.

But CAT’s Q1 2022 EPS on Wall Street consensus of $2.60 still looks too bullish. Given supply chain issues and inflation, a -3.3% QoQ contraction and -9.4% year-on-year decline for Caterpillar’s first-quarter fiscal year net income prices do not fully reflect the cost pressures for the business.

My own estimate of Caterpillar’s first quarter EPS is well below $2.41, indicating a shortfall for CAT.

Is the CAT stock a buy, sell or hold?

CAT action is pending. Caterpillar shares have already outperformed the S&P 500 by a substantial margin so far this year, and my price target for CAT does not imply enough upside to warrant a Buy rating. With my expectations of a shortfall for the stock in Q1 2022, I lower my investment rating for Caterpillar to Hold.

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The market for taxi services is in crisis as profit margin shrinks https://stormbirds.net/the-market-for-taxi-services-is-in-crisis-as-profit-margin-shrinks/ Sat, 23 Apr 2022 23:41:34 +0000 https://stormbirds.net/the-market-for-taxi-services-is-in-crisis-as-profit-margin-shrinks/ As transportation market leaders reduce incentives and commissions, the industry is witnessing reversals. New Delhi: Vikram Shukla, 36, who booked an Uber taxi, saw after waiting 10 minutes that his ride had been canceled by the driver. Shukla was unable to find another taxi instantly and had to drive for an equivalent price to Uber. […]]]>

As transportation market leaders reduce incentives and commissions, the industry is witnessing reversals.

New Delhi: Vikram Shukla, 36, who booked an Uber taxi, saw after waiting 10 minutes that his ride had been canceled by the driver. Shukla was unable to find another taxi instantly and had to drive for an equivalent price to Uber. In the process, he lost 15 minutes. Vikram Shukla’s story is not an isolated one as many other riders are increasingly going through the same post-lockdown experience as services have diminished and the response from many riders is unprofessional. These incidents point to a worsening crisis in the transport market, which has seen massive growth over the past decade. The Sunday Guardian has charted the current crisis in the amusement rides market, how the industry and workforce are responding to it. “The Covid pandemic has greatly disrupted the market. In fact, the market has slowed since 2018, with the company reducing our incentives and commissions. But, still before Covid, we were generating a good amount of profit because we were getting a high number of rides. After March 2020 things changed and the company further reduced our profit margin. People expected things to improve after Covid but even now the market has not improved. Today, many drivers are leaving the industry. I personally know drivers who, after booking, offer the customer a lower amount for the service and ask him to cancel the ride. The main reason drivers circumvent Uber’s guidelines is the massive cut in commissions and incentives,” said Gurgaon resident Alok Pradhan, who has been driving Uber for five years. It’s not that only Uber had suffered, even other transportation market leaders have also seen reversals in their businesses over the past three years.
years.
The Sunday Guardian has sought an answer from Uber on growing customer complaint of late about the company’s drivers, services and how the Covid pandemic and rising fuel prices have had a negative impact on its workforce and business model, but despite multiple attempts, no response from Uber has been received. It is a known fact that between 2014 and 2018, when the market exploded, the price of fuel was low. Now prices have gone up and drivers have to bear the pain of rising prices. Moreover, in 2015, Uber was making inroads into the Indian market. They offered good incentives for drivers to expand their market. Now things have changed dramatically.
The crisis is not just about a big company like Uber, but all other taxi service providers are facing the same issues. Recently, in the Delhi-NCR area, taxi and taxi strikes have been called by the unions, which has led passengers to go through a rough patch. The unions had the same issues – they were demanding higher tariffs and lower CNG prices to offset the impact of rising fuel prices. The strike has resulted in a shortage of taxis and automobiles in Delhi-NCR.
It’s not just that Uber is cutting commissions and driver incentives, but it’s also taking other cost-cutting measures. A report by Fintracker points out that Uber had reduced its advertising costs by around 50% after the pandemic. Recently, the company raised fares for rides in Delhi-NCR by 12% and a few other metros by 15%, but drivers who spoke to the newspaper argued that profits from the rise in fares would go to business.
Many believe that a comprehensive plan for application-based cabin aggregators (ABCAs) needs to be implemented, in order for the industry to be successful in the long term. Recommendations for app-based taxi aggregators have been made in the past by think tanks, but the government had yet to make a decision on this. The prestigious Gurgaon-based Management Development Institute (MDI) recently published an article in which it suggested draft policy recommendations for app-based taxi aggregators (ABCAs). He pointed out that for long-term success in India, regulators should balance regulations in such a way that regulations do not discourage innovations in business models and encourage competition in the market. The Sunday Guardian also contacted the Ministry of Roads, Transport and Highways for a response on the guidelines for taxi aggregators, but no response was received.

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3 Reasons Tesla’s Monster Earnings Will Help It Continue to Crush the Nasdaq in 2022 https://stormbirds.net/3-reasons-teslas-monster-earnings-will-help-it-continue-to-crush-the-nasdaq-in-2022/ Thu, 21 Apr 2022 16:17:51 +0000 https://stormbirds.net/3-reasons-teslas-monster-earnings-will-help-it-continue-to-crush-the-nasdaq-in-2022/ You’re here (TSLA 6.28% ) CEO Elon Musk is as polarizing a figure as it gets. On the one hand, it has propelled the electric vehicle (EV) industry from a dubious concept to becoming a trend that mainstream automakers are trying to follow. But he also receives criticism for actions such as his online behavior […]]]>

You’re here (TSLA 6.28% ) CEO Elon Musk is as polarizing a figure as it gets. On the one hand, it has propelled the electric vehicle (EV) industry from a dubious concept to becoming a trend that mainstream automakers are trying to follow. But he also receives criticism for actions such as his online behavior and his multi-billion dollar purchase proposal. Twitter ( TWTR 0.23% ).

However, it is clear that Tesla is a remarkable company. Tesla stock is up on the year while the Nasdaq Composite is down 13% and virtually every major automaker to EV newcomer – from Toyota for Rivian Automotive, is down 5% to 66%. Here’s why Tesla continues to defy Nasdaq gravity in 2022, and whether the stock is a good buy now.

Image source: Tesla.

1. Tesla outperforms the competition

Tesla tends to release its quarterly production and delivery numbers about two to three weeks before its earnings report. On April 2, Tesla reported quarterly production of 305,407 units and shipments of 310,048 units, which is a big jump from first quarter 2021 results of 180,338 units produced and 184,800 units shipped. However, the quarter-over-quarter growth marked a major slowdown from what investors were used to, as Tesla produced 305,840 units in the fourth quarter of 2021 and shipped 308,600 units. Tesla attributed the slowdown to supply chain challenges and factory closures.

However, Tesla’s growth prospects are favorable. The company began production and delivery from its Berlin factory in March and just started production from its Texas factory in April. The opening of the two new factories will ease pressure on Tesla’s Shanghai factory and could enable it to continue to manage supply chain challenges and the global shortage of chips, materials and batteries better than its peers. .

In its recent investor presentation, Tesla said it had started deliveries of its crossover SUV, the Model Y, from its Texas plant and its German plant – while working to shift battery cell production to China. internally and to diversify its supply chain and purchases. process.

In summary, Tesla is showing resilience during an industry-wide shortage while paving the way for another record year of production and delivery in 2022.

2. Tesla is growing faster than ever

Even with weaker production and delivery numbers in the first quarter of 2022, it’s worth mentioning that Tesla’s revenue, earnings and free cash flow growth continues to impress investors.

The company reported automotive revenue of $16.86 billion in the first quarter of 2022, an 87% year-over-year increase. In the first quarter of 2022 alone, Tesla produced 36% of the automotive revenue it made for all of 2021. Tesla cited its increased selling price as one of the reasons for the higher revenue growth.

Despite the rise in revenue, Tesla’s operating expenses were about the same at $1.86 billion, up from $1.62 billion in 2021, just 15% higher as total revenue was 81% higher. Similarly, net cash provided by operating activities in the first quarter of 2022 was 143% higher than in the first quarter of 2021, but capital expenditures were only 31% higher, while driving a flow of free cash of $2.23 billion, the second highest quarterly performance on record. Tesla ended the quarter with $17.51 ​​billion in cash and cash equivalents on its balance sheet.

3. Tesla is more profitable than ever

One of Tesla’s most impressive statistics is its operating margin. Unlike gross margin, which takes into account the cost of goods sold, operating margin also takes into account operating expenses such as utilities, salaries, selling, general and administrative expenses, sales and marketing, research and development and other operating costs. deals. Tesla posted a record operating margin of 19.2% in the first quarter of 2022, which means that for every dollar of revenue generated, it earned an operating profit of 19.2 cents. For comparison, here are the 2021 operating margins of major automakers, including Tesla.

Chart of TSLA operating margin (annual)

TSLA operating margin (annual) given by Y-Charts

Tesla cited increased vehicle deliveries, higher average selling prices, lower cost of goods sold, lower stock-based compensation, and increased sales of regulatory credits as drivers of profitability that offset higher raw material, commodity, logistics and shipping costs and increased operating costs. expenses.

In an industry constrained by rising raw material costs, rising parts and component costs, rising shipping and freight costs, and rising labor costs, it is impressive to see Tesla will increase its operating margin as other major automakers will likely announce lower operating margins in quarters. to come.

Tesla is a phenomenal company but an expensive stock

The investment thesis for Tesla remains intact. And in many ways, it’s getting harder and harder to argue that Tesla isn’t the world’s best automaker. It has the biggest growth prospects, the best technology and is ahead of the curve as the competition tries to catch up, it continues to deliver on its promise. Tesla is more profitable than ever and has its own charging network as well as investments in solar power and energy storage. It also has a lean business model that does not depend on the dealer network. But as Warren Buffett so aptly put it, “you pay a very high price in the stock market for a happy consensus.” In other words, big companies are often expansive stocks. And this logic applies perfectly to Tesla.

Tesla’s market capitalization is $1.08 trillion. It earned adjusted non-GAAP diluted earnings per share (EPS) of $3.22 in the first quarter of 2022. So even if Tesla continues to grow earnings and earn, say, $15 in adjusted EPS in 2022 , it would still have a forward price-to-earnings ratio of around 70. Tesla stock is by no means cheap. And it shouldn’t be — it really is a really good deal. For risk-tolerant investors who are optimistic about the growth of the electric vehicle industry, adding Tesla to a diversified basket of electric vehicle stocks isn’t the worst idea as long as it’s understood that the stock Tesla is subject to strong ups and downs. In the past year alone, Tesla stock has reached $1,243.49 per share and as low as $546.98 per share.

As with any business, it’s important to understand what you’re buying and why you want to own it. With Tesla, the investment thesis is simple. It’s a bet on long-term growth in EV adoption by buying the industry leader at a premium. For some people, this is a thesis that makes sense. But for others, electric car stock may just be an awesome undertaking that’s just too expensive to consider now.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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Electric Lunch Box Market Industry Size, Share, Future Demands, Gross Margin, Growth Factors, Emerging Technologies and Latest Innovations https://stormbirds.net/electric-lunch-box-market-industry-size-share-future-demands-gross-margin-growth-factors-emerging-technologies-and-latest-innovations/ Tue, 19 Apr 2022 02:45:52 +0000 https://stormbirds.net/electric-lunch-box-market-industry-size-share-future-demands-gross-margin-growth-factors-emerging-technologies-and-latest-innovations/ As a reliable source of market research information, the compelling Electric Lunch Boxes Market report extends the scope of business success. The report represents a professional and comprehensive industry study of the Electric Lunch Box Market that focuses on primary and secondary drivers, market share, competitor analysis, major segments, and geographical analysis. This market report […]]]>

As a reliable source of market research information, the compelling Electric Lunch Boxes Market report extends the scope of business success. The report represents a professional and comprehensive industry study of the Electric Lunch Box Market that focuses on primary and secondary drivers, market share, competitor analysis, major segments, and geographical analysis. This market report explains a range of aspects of market analysis that today’s businesses need. It has become a requisite of this rapidly changing market to take such Electric Lunch Boxes Market report that accounts for the surrounding market conditions.

The premier Electric Lunch Box Market report offers industry specific study of the Electric Lunch Box market defining market definition, classifications, applications, commitments and global trends of industry. The report outlines significant product developments and tracks recent acquisitions, mergers, and research in the Electric Lunch Box Market industry by major market players. This global market report includes all the company profiles of the major players and brands in the market. Market drivers and restraints have also been studied here using SWOT analysis. An all-inclusive Electric Lunch Box Market business report not only gives an edge to expand the business but also helps to outshine the competition.

electric lunch box market is expected to grow at a growth rate of 8.1% during the forecast period 2020 to 2027. The introduction of electronic lunch boxes which consume less electricity and people’s growing willingness to spend are the factors that have an impact on the electric lunch box market in the forecast. period from 2020 to 2027.

Download Full Sample PDF Copy of Report with Global Industry Analysis: (Including Full TOC, List of Tables and Figures, Chart) at:

https://www.databridgemarketresearch.com/request-a-sample/?dbmr=global-electric-lunch-box-market

Competitive Analysis: Global electric lunch box market

Key players covered in the Electric Lunch Boxes market report are Zojirushi America Corporation., Cello World., among other domestic and global players. Market share data is available for Global, North America, Europe, Asia-Pacific, Middle East & Africa and South America separately. DBMR analysts understand competitive strengths and provide competitive analysis for each competitor separately.

Answers to key questions in the report:

  • What will be the pace of market development of Electric Lunch Box market?
  • What are the key factors driving the global Electric Lunch Box market?
  • Who are the main manufacturers on the market?
  • What are the market openings, market risks and market outline?
  • What are sales volume, revenue, and price analysis of top manufacturers of Electric Lunch Box market?
  • Who are the distributors, traders and dealers of Electric Lunch Box Market?
  • What are the Electric Lunch Box market opportunities and threats faced by the vendors in the global Electric Lunch Box Industries?
  • What are the deals, revenue, and value review by market types and uses?
  • What are the transactions, revenue and value review by business areas?

Main points covered in the table of contents:

Electric Lunch Box Market Overview: It includes six sections, research scope, key manufacturers covered, market fragments by type, Electric Lunch Box market shares by application, study objectives, and years considered.

Electric Lunch Box Market Landscape: Here, the global Electric Lunch Boxes market opposition is dissected, by value, revenue, transactions, and slice of the pie by organization, market rate, fierce circumstances Latest landscape and patterns, consolidation, development, obtaining, and parts from across the industry from top organizations.

Electric Lunch Box Manufacturer Profiles: Here, the major players of the global Electric Lunch Boxes market are considered dependent on region of transactions, key elements, net benefit, revenue, cost, and creation.

Electric Lunch Box Market Status and Outlook by Region: In this segment, the report examines net benefit, transactions, revenue, creation, global industry share, CAGR, and market size by region. Here, the global Electric Lunch Box Market is thoroughly examined based on regions and countries like North America, Europe, China, India, Japan, and MEA.

Electric Lunch Box Application or End User: This segment of the exploration study shows how extraordinarily end-customer/application sections are added in the global Electric Lunch Box market.

Electric Lunch Box Market Forecast: On the production side: in this part of the report, the creators have focused on the conjecture of creation and creation esteem, the gauge of the main manufacturers and the estimation of creation and creation esteem by kind.

Electric Lunch Box Research Results and Conclusion: This is one of the last segments of the report where the findings of the investigators and the end of the exploratory study are given.

Full details of the report with facts and figures along with respective images and graphs @

https://www.databridgemarketresearch.com/toc/?dbmr=global-electric-lunch-box-market

The report can answer the following questions:

  • North America, Europe, Asia-Pacific, Middle East & Africa, Latin America market size (sales, revenue, and growth rate) of Electric Lunch Box.
  • Global major manufacturers’ operating situation (sales, revenue, growth rate and gross margin) of Electric Lunch Box.
  • Major Global Countries (USA, Canada, Germany, France, UK, Italy, Russia, Spain, China, Japan, Korea, India, Australia, New Zealand, Southeast Asia, Middle East, Africa, Mexico, Brazil, C. America, Chile, Peru, Colombia) market size (sales, revenue, and growth rate) of Electric Lunch Box.
  • Different types and applications of Electric Lunch Box, market share of each type and application by revenue.
  • Forecast the global Electric Lunch Box market size (sales, revenue) by regions and countries from 2022 to 2028 of Electric Lunch Box.
  • Upstream raw materials and manufacturing equipment, industry chain analysis of Electric Lunch Box.
  • Electric lunch box SWOT analysis.
  • New Electric Lunch Box Project Investment Feasibility Analysis.

Our reports will help customers resolve the following issues:

Uncertainty about the future: Our research and insights help our clients predict revenue buckets and growth ranges in the future. This will help our clients to invest or sell their assets.

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For a strategy, it is essential to have an objective understanding of market opinions. Our research provides a clear picture of the market mood. We maintain this oversight by engaging with key opinion leaders across each industry’s value chain.

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Our analysis assesses the investment centers of the market based on projected demand, returns and profit margins. By using our market research, our clients can focus on the most important investment centers.

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Our research and insights help our clients identify business partners.

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