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Allstate 08-17 15:20 GMT
(Comment)
Allstate reported its catastrophe losses for the month of July yesterday. There were 15 events...
8-K Filing by Kathleen Shanley, CFA
Allstate reported its catastrophe losses for the month of July yesterday. There were 15 events qualifying as catastrophes, and some unfavorable reserve re-estimates of losses previously reported. The total damage was $262 million pretax ($207 million aftertax). About three-quarters of the total was attributable to two severe hailstorms, affecting Colorado and several other states, and to the Carr fire in Northern California. While the loss in July wasn't small, it is not out of line with the recent trend. In last year's third quarter, total catastrophe losses were $861 million. Our credit score is stable. Please see our recent full report on Allstate dated August 13, 2018 for additional discussion.
Unum Group 08-17 02:31 GMT  
(Report with Analyst's Data Sheet) 
Unum Group (UNM) no longer sells long-term care policies, and it has already taken several charges in recent years to bolster its reserve coverage. But the...
Costly Care by Kathleen Shanley, CFA
Minerva S.A. 08-17 02:21 GMT  
(Report with Analyst's Data Sheet) 
The latest quarterly results published by Minerva S.A. (BEEFBZ) did not please equity analysts, as sales came below market consensus. The bonds have also...
IPO Talks by Cedric Rimaud, CFA
ArcelorMittal 08-17 02:11 GMT  
(Report with Analyst's Data Sheet) 
ArcelorMittal (MT) posted solid second quarter results with EBITDA exceeding the consensus forecast on a significant year over year increase in the average...
Heading Toward $6 Billion  by Evan Mann, CFA
Constellation Brands 08-17 00:36 GMT
(Comment)
STZ announced today that it would increase its investment in cannabis producer Canopy...
Acquisition by Kim Noland
STZ announced today that it would increase its investment in cannabis producer Canopy Growth, its entry into the marijuana market. The company paid a rich price ($4bn) to increase its stake to near 40% and the equity sold off on the risk and uncertainty. The deal will be largely funded with debt and our initial estimate is an increase in leverage by more than half a turn to the mid 4x range. Management indicated it would cease stock repurchases and use free cash flow to pay down debt until it returned to near the target level of 3.5x. The deal isn't surprising given the company's long track record of debt-financed acquisitions (see our recent report of 7.11.18) ---although we think the risks on this deal may outweigh the rewards certainly near term, the stock at still over $200 per share representing $40 billion of equity value is the security likely to be most affected. The bonds haven't moved much--the 2027 issue we rated outperform are still trading at a y.t.w. of 4.2% after the news.
Walmart 08-16 16:48 GMT
(Comment)
There was nothing to complain about in Walmart's fiscal second quarter results and much to cheer,...
Earnings by Carol Levenson, CFA
There was nothing to complain about in Walmart's fiscal second quarter results and much to cheer, including more seasonable weather which, along with healthy consumer spending, served to boost comparable-store sales. For Walmart US comparable-store sales rose 4.5%, the best performance in ten years, led by grocery, apparel, and seasonal merchandise and bolstered nearly equally by traffic and ticket. E-commerce sales growth accelerated to 40% and contributed 100 basis points to "comps." The adjusted operating margin was flat at 4.6% as lower gross margin from investments in price and higher transportation costs was offset by expense leverage on the sales increase, despite continuing technology and fulfillment investments. The company took a big hit on the sale of its 80% interest in Walmart Brazil, mainly due to cumulative foreign exchange losses, but the $4.5 billion charge was a noncash one. Excluding this charge, adjusted earnings increased by 17%, aided by tax reform. EBITDA was up a more realistic 4%. The acquisition of Flipkart has not yet closed but the debt is already on the balance sheet. Even so, we estimate that the increase in rent-adjusted leverage was nearly imperceptible to 1.4x. It helped that share buybacks were dramatically lower in anticipation of the Flipkart announcement. The company raised its full year guidance (excluding Flipkart and its debt costs) slightly for sales and earnings and now expects its operating margin to come in at the high end its previous guidance at 4.4% excluding currency. Management addressed the topic that is on everybody's minds with regard to retailing, tariffs. But it admitted it doesn't know what will happen either. It did note that Walmart does most of its buying within the countries in which it operates and the company is working on mitigation strategies for potential tariffs. Unfortunately, with no call, nobody can ask any questions about Humana reports, which management probably wouldn't answer anyway.
Cisco Systems 08-16 13:53 GMT
(Comment)
Cisco Systems reported a 6% increase in revenue for its fiscal fourth quarter, which ended July...
Earnings by Dave Novosel, CFA
Cisco Systems reported a 6% increase in revenue for its fiscal fourth quarter, which ended July 28th. It was the best performance in several years. The Security (+12%) and Applications (+10%) segments led the way. Infrastructure Platforms revenue rose nearly 7% despite the fact that router sales were off. The company enjoyed success in every geographic region, with the Americas up 5%, EMEA up 8%, and APJC up 6%. Recurring revenue was 32% of total revenue, up one point from a year ago, as the company continues to emphasize software and services. Not only was Q4 impressive, but management provided guidance for 5% to 7% revenue growth for the first quarter. EBITDA margins improved 30 basis points in Q4, as higher pricing offset the increase in component costs. DRAM costs are still higher, but the increases are moderating. Cisco generated almost $7 billion of free cash flow in fiscal 2018. It used the cash and the sale of short term investments to repurchase more than $18 billion of its shares, while spending roughly $3 billion on acquisitions, and reducing debt by $8 billion. Leverage at year-end was only 1.8x. After the quarter ended, CSCO announced the acquisition of Duo Security for $2.35 billion in cash and assumed equity awards, broadening its security offerings.
MTN Group Ltd. 08-16 03:55 GMT  
(Report with Analyst's Data Sheet) 
MTN Group Ltd. (MTNSJ) released some good operating results in 1H 2018, led by strong underlying results in Nigeria. The operating outlook for the back...
On Track by Alexandre Dray
Rite Aid 08-16 03:45 GMT  
(Report with Analyst's Data Sheet) 
Rite Aid (RAD) recently called off its merger with Albertsons before shareholders could vote. The deal was likely to be voted down because of strong shareholder...
The Hits Keep On Coming by Kim Noland
Macy's Inc. 08-16 03:26 GMT  
(Report with Analyst's Data Sheet) 
The annoying quirks of the retailing calendar favored first quarter sales growth at Macy's by shifting a big sale event from the second quarter to the first...
It All Evens Out by Carol Levenson, CFA
Deutsche Telekom AG 08-16 03:12 GMT  
(Report with Analyst's Data Sheet) 
Up until it reported second quarter results last week, we had been encouraged by Deutsche Telekom's better performance in Germany. Although the...
Slowed By Sprint by Dave Novosel, CFA
Denbury 08-15 
Novelis 08-09 
Southern Co. 08-09 
Alpek SAB de CV 07-30 
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Jun 16, 2018 | Barron's
GC on AT&T - Q- "On that score, Gimme Credit, the very independent corporate credit research outfit, last week reiterated its negative stance on AT&T's notes maturing in 2027, given the increase in leverage following the Time Warner acquisition."
Feb 8, 2018 | Financial Times
KS on Wells Fargo - Q- "It is certainly a black eye for Wells Fargo that they have not been able to put the sales incentive scandal behind them, but the growth restrictions are a greater concern for equity investors than for bondholders."
Nov 6, 2017 | Bloomberg
CL on TEVA -Q-"We find it troubling that management, which presumably met with Fitch before the downgrade, was not able to convince the rating agency that it would take more dramatic deleveraging actions in order to preserve investment grade ratings,"
Nov 6, 2017 | Bloomberg
DN on Sprint- Q- "They don't produce enough free cash flow to cut into the debt," "The only possible way to do that is to continue cutting costs."
Oct 14, 2017 | Associated Press
PA on Pacific Gas and Electric Co.- Q- Investors "are spooked,"
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