/* Article Data (Server Side) article (o): [object Object] WSODIssue (s): |5950967|236719|41560|65138|8347540|209440|215622|9266107 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): Will these financial sector stocks also see estimate-beating earnings? Link (s): http://folionation.squarespace.com/news/2014/7/18/will-these-financial-sector-stocks-also-see-estimate-beating.html Thumbnail (s): DocumentDate_raw (n): 1405698480000 DocumentDate (s): July 18, 2014 DocumentDate_smart (s): Jul 18, 2014 DocumentKey (s): 1107-290734296785734927216-61LJKFKPD2JC32O70IH1UJF8SQ ContentType (s): Article TrackingPixel (s): Content (s):

Several financial sector stocks have reported earnings that have beaten analyst estimates. Will these stocks do the same?

Blackstone Group (BX) released its second-quarter results Thursday morning, and the company's earnings of $1.15 a share surpassed the average analyst earnings estimate of $0.71 a share. In fact, the New York-based private equity firm's earnings were 61.97% higher than the estimate.

Blackstone's solid second-quarter earnings comes on the heels of other estimate-beating performances fromBank of America (BAC)Citigroup (C)Goldman Sachs (GS)JP Morgan Chase (JPM), and Morgan Stanley (MS)

All six companies had different reasons for reporting better-than-expected net income. Blackstone's largest buyout fund passed a benchmark for investment performance that allowed the company to finally collect a profit.

Bank of America, Citigroup, and JP Morgan all reported weaker second-quarter earnings than a year earlier due to legal charges, but Bank of America's net income benefitted from higher revenue from stock trading while increases in lending and commercial banking helped Citigroup and JP Morgan's profits. Goldman Sachs saw higher revenue from its investment banking and investing and lending divisions, while Morgan Stanley's money management business played a crucial role in the company's earnings. 

These estimate-beating earnings inspired us to look for investment opportunities amongst financial sector stocks that have yet to report earnings. We began with a group of stocks that have a history of positive earnings surprises. This means that they've had four straight quarters of positive, estimate-beating earnings reports, with an average surprise of at least 5%

Sticking to our earnings theme, we screened for stocks that are undervalued with a price/earnings to growth (PEG) ratio below 1. This valuation ratio is calculated by dividing a stock's price-to-earnings (P/E) ratio by its expected annual earnings per share (EPS) growth. Therefore, the higher the stock's earnings growth, the lower its PEG ratio. When a stock's PEG is under 1, it is typically considered undervalued. 

For our final screen, we decided to incorporate analyst stock recommendations since they're the ones supplying estimates for company's earnings. We looked for stocks with an average analyst recommendation of "buy" or better

We were left with eight stocks on our list. Do you think these financial sector stocks will beat earnings estimates yet again? Use this list as a starting point for your own analysis, and let us know what you think in the comments.

Click on the interactive chart to view data over time. 

 

1. AmTrust Financial Services, Inc. (AFSI, Earnings, Analysts, Financials): Operates as a multinational specialty property and casualty insurance company in the United States and internationally. Market cap at $2.66B, most recent closing price at $35.69.

 


2. Argo Group International Holdings, Ltd. (AGII, Earnings, Analysts, Financials): Underwrites specialty insurance and reinsurance products in the property and casualty market worldwide. Market cap at $1.19B, most recent closing price at $44.79.

 


3. American International Group, Inc. (AIG, Earnings, Analysts, Financials): The company operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. Market cap at $72.63B, most recent closing price at $49.45.

 


4. Popular, Inc. (BPOP, Earnings, Analysts, Financials): Provides a range of retail and commercial banking products and services primarily to corporate clients, small and middle size businesses, and retail clients in Puerto Rico and Mainland United States. Market cap at $2.83B, most recent closing price at $27.57.

 


5. E-House (China) Holdings Limited (EJ, Earnings, Analysts, Financials): Operates as a real estate services company in China. Market cap at $1.68B, most recent closing price at $12.59.

 


6. Navigators Group Inc. (NAVG, Earnings, Analysts, Financials): Engages in the underwriting and management of property and casualty insurance in the United States, the United Kingdom, Belgium, and Sweden. Market cap at $862.43M, most recent closing price at $60.85.

 


7. Nelnet Inc. (NNI, Earnings, Analysts, Financials): Focuses on providing fee-based processing services, and education-related products and services in the areas of loan financing, loan servicing, payment processing, and enrollment services. Market cap at $1.66B, most recent closing price at $35.78.

 


8. Och-Ziff Capital Management Group LLC (OZM, Earnings, Analysts, Financials): Och-Ziff Capital Management Group LLC is a publicly owned investment manager. Market cap at $2.12B, most recent closing price at $13.50.

 


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relatedData (o:Array(16)): 0 (o): [object Object] Headline (s): U.S. Factory Orders declined 0.2 percent in January Teaser (s): Orders to American factories dropped again in January, but an important investment category showed a gain. Advertisement. Orders to factories edged down 0.2 percent in January, the Commerce Department said on Thursday. Source (s): SMN Weekly DocumentDate (s): 12 minutes ago DocumentDate_raw (n): 1425585825000 Link (s): http://www.smnweekly.com/u-s-factory-orders-declined-0-2-percent-in-january/19576/ DocumentKey (s): HTTPwww.smnweekly.com/u-s-factory-orders-declined-0-2-percent-in-january/19576/ DMSourceID (s): Google ContentType (s): Article 1 (o): [object Object] Headline (s): Stocks Higher In Light Trade; Embraer Sinks On Weak Earnings ERJ MNK Teaser (s): Stocks were modestly higher with an hour to go in Thursday's session as investors weighed mixed U.S. economic data and new European Central Bank stimulus. Source (s): Investor's Business Daily DocumentDate (s): 23 minutes ago DocumentDate_raw (n): 1425585150000 Link (s): http://news.investors.com/investing-stock-market-today/030515-742137-stocks-rise-in-lower-volume.htm DocumentKey (s): HTTPnews.investors.com/investing-stock-market-today/030515-742137-stocks-rise-in-lower-volume.htm DMSourceID (s): Google ContentType (s): Article 2 (o): [object Object] Headline (s): AbbVie's Expensive Growth Tonic Teaser (s): Form an orderly line. AbbVie will pay $21 billion, with 58% in cash and the remainder in stock, to buy Pharmacyclics , a biotech company worth $10 billion only a year ago. Source (s): Wall Street Journal DocumentDate (s): 34 minutes ago DocumentDate_raw (n): 1425584475000 Link (s): http://www.wsj.com/articles/abbvies-expensive-growth-tonic-heard-on-the-street-1425585049 DocumentKey (s): HTTPwww.wsj.com/articles/abbvies-expensive-growth-tonic-heard-on-the-street-1425585049 DMSourceID (s): Google ContentType (s): Article 3 (o): [object Object] Headline (s): Sasaki: casino site on New Bedford waterfront “generally incompatible” with ... Teaser (s): NEW BEDFORD - Incompatibility with maritime uses, risks of a failed development and other negative aspects of a resort casino on New Bedford's waterfront would far outweigh positive aspects such as environmental mitigation and boosts to local ... Source (s): SouthCoastToday.com DocumentDate (s): 2 hours ago DocumentDate_raw (n): 1425576375000 Link (s): http://www.southcoasttoday.com/article/20150305/NEWS/150309645/101199 DocumentKey (s): HTTPwww.southcoasttoday.com/article/20150305/NEWS/150309645/101199 DMSourceID (s): Google ContentType (s): Article 4 (o): [object Object] Headline (s): Interest Rate Forecast 2015 - 2016 Teaser (s): Interest rates are headed up, but at a fairly mild pace. The Federal Reserve will start pushing short-term rates up this summer, probably in June. Source (s): Forbes DocumentDate (s): 3 hours ago DocumentDate_raw (n): 1425573675000 Link (s): http://www.forbes.com/sites/billconerly/2015/03/05/interest-rate-forecast-2015-2016/ DocumentKey (s): HTTPwww.forbes.com/sites/billconerly/2015/03/05/interest-rate-forecast-2015-2016/ DMSourceID (s): Google ContentType (s): Article 5 (o): [object Object] WSODIssue (s): |7069859|1607179|149059|167459|205778|218647 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): What's wrong with HP? Link (s): http://folionation.squarespace.com/news/2015/3/5/whats-wrong-with-hp.html Thumbnail (s): DocumentDate_raw (n): 1425573540000 DocumentDate (s): March 5, 2015 DocumentDate_smart (s): 11:39 AM DocumentKey (s): 1107-290734296785735258101-5OGCDG128I1N7G3MQ93JFTTODP ContentType (s): Article TrackingPixel (s): Teaser (s):

 Can HP recover from a revenue miss in the first quarter, or is it more of the same ahead?

Hewlett-Packard (HPQ) fell over 9 percent last week after it shocked investors with a revenue miss in its quarterly report. HP reported revenue of $26.8 billion for the first quarter, vs an expected $27.2 billion. Its adjusted earnings per share (EPS) was $0.92, higher than the estimated $0.91, but the company’s guidance for the second quarter was a dismal $0.84-$0.88.

Especially in light of the company’s financial outlook, the bullish case for HP is now much less convincing.

The bad news

HP blamed high separation costs for its poor results. The company is in the midst of splitting its PC and printing businesses. In the process, it expects to spend $1.3 billion this fiscal year and another $500 million in fiscal 2016. Although these charges look daunting, they account for less than 2 percent of the company’s annual operating costs.

Enterprise service sales were weak, as revenue fell 11 percent over last year.

Printing revenue declined 5 percent year-over year, or 4 percent in constant currency, which HP blamed on weak demand in Russia.

Software revenue was also down 5 percent, or 3 percent in constant currency, due to difficulties in shifting sales from software to SaaS (software as a service).

The good news

HP expects continued growth in the PC market, even though the business is contracting. Branding, channel, and scale will complement a strong product line-up.

HP’s printing unit boasted a 19.2 percent profit margin, but that was in part due to a weak yen. HP needs to keep innovating, which means more development costs and capital expenditure for printing. Investment now will benefit Multi Jet Fusion, its 3D printing initiative.

Other players

Strong hardware sales suggest Intel (INTC) and Nvidia (NVDA) could have a good year. Both are up this year, by 38.6 percent and 21.0 percent, respectively. Intel will benefit from customers upgrading their PCs’ CPUs. Nvidia’s graphics chip will also experience strong demand from the upgrade cycle. In the last quarter though, Intel’s stock is down around 8 percent. If HP’s optimism for PC sales is any indication, demand for Intel chips should be strong in 2015.

Microsoft (MSFT) is releasing Windows 10. On the server market, demand should be strong. Windows 2003 support is ending, which means enterprise customers will need to upgrade to Intel-based chips and HP servers.

Acquisition

HP announced it is buying Aruba Networks (ARUN) for $2.7 billion. According to the LA Times, the merger will help HP compete with rivals like Cisco Systems (CSCO) and gain new access to Asian markets.

The acquisition is probably less risky than its ill-fated purchase of Autonomy for $11 billion in 2011. Autonomy’s alleged accounting abuses forced HP to write down $8.8 billion from the merger.

Bottom line

HP expects earnings will be $2.03 to $2.23 per share in fiscal 2015, which means, at $34.84, the stock trades at a forward P/E of as high as 17.2. This is somewhat high for a firm that will face some turbulence as it restructures. The complexity of the separation may distract HP. Therefore, investors looking for exposure to the PC refresh cycle might be better off investing elsewhere, like in Intel or Nvidia. 

Written by Chris Lau

 

Click on the interactive chart to view data over time. 

 

1. Aruba Networks Inc. (ARUN, Earnings, Analysts, Financials): Provides distributed enterprise networks that securely connect local and remote users to corporate information technology resources worldwide. Market cap at $2.68B, most recent closing price at $24.40.

 

 

2. Cisco Systems Inc. (CSCO, Earnings, Analysts, Financials): Designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industry worldwide. Market cap at $149.72B, most recent closing price at $29.33.

 

 

3. Hewlett-Packard Company (HPQ, Earnings, Analysts, Financials): Hewlett-Packard Company offers various products, technologies, software, solutions, and services to individual consumers and small- and medium-sized businesses (SMBs), as well as to the government, health, and education sectors worldwide. Market cap at $62.48B, most recent closing price at $34.19.

 

 

4. Intel Corporation (INTC, Earnings, Analysts, Financials): Engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide. Market cap at $161.59B, most recent closing price at $34.12.

 

 

5. Microsoft Corporation (MSFT, Earnings, Analysts, Financials): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap at $353.21B, most recent closing price at $43.06.

 

 

6. NVIDIA Corporation (NVDA, Earnings, Analysts, Financials): Provides visual computing, high performance computing, and mobile computing solutions that generate interactive graphics on various devices ranging from tablets and smart phones to notebooks and workstations. Market cap at $12.19B, most recent closing price at $22.43.

 

 

(List compiled by Chris Lau. Monthly returns data sourced from Zacks Investment Research. All other data sourced from FINVIZ.)

 

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© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.

6 (o): [object Object] Headline (s): Jobless claims jump unexpectedly to 10-month high (+video) Teaser (s): Jobless claims filed by US workers rose 7,000 to a seasonally adjusted 32,0000, the highest level since May. The unexpected jump in jobless claims could raise concerns about some weakness in the labor market. Source (s): Christian Science Monitor DocumentDate (s): 3 hours ago DocumentDate_raw (n): 1425572325000 Link (s): http://www.csmonitor.com/Business/2015/0305/Jobless-claims-jump-unexpectedly-to-10-month-high-video DocumentKey (s): HTTPwww.csmonitor.com/Business/2015/0305/Jobless-claims-jump-unexpectedly-to-10-month-high-video DMSourceID (s): Google ContentType (s): Article 7 (o): [object Object] Headline (s): ECB Raises Economic Forecasts for Eurozone Ahead of Stimulus Program Teaser (s): NICOSIA, Cyprus—The European Central Bank significantly raised its economic forecasts for this year and next in a sign of confidence that Europe—one of the global economy's trouble spots in recent years—is gaining strength even before the bank launches ... Source (s): Wall Street Journal DocumentDate (s): 7 hours ago DocumentDate_raw (n): 1425559635000 Link (s): http://www.wsj.com/articles/ecb-keeps-interest-rates-unchanged-1425559615 DocumentKey (s): HTTPwww.wsj.com/articles/ecb-keeps-interest-rates-unchanged-1425559615 DMSourceID (s): Google ContentType (s): Article 8 (o): [object Object] Headline (s): Mark Cuban: This tech bubble is 'far worse' than back in 2000 Teaser (s): What a week for Mark Cuban. Fresh off being tapped for the role of the president alongside Ann Coulter in the upcoming blockbuster “Sharknado 3,” the brash billionaire's bearish forecast has landed him a spot in MarketWatch's call of the day. Source (s): MarketWatch DocumentDate (s): 9 hours ago DocumentDate_raw (n): 1425553064000 Link (s): http://www.marketwatch.com/story/mark-cuban-this-tech-bubble-is-far-worse-than-back-in-2000-2015-03-05 DocumentKey (s): HTTPwww.marketwatch.com/story/mark-cuban-this-tech-bubble-is-far-worse-than-back-in-2000-2015-03-05 DMSourceID (s): Google ContentType (s): Article 9 (o): [object Object] Headline (s): Emerging Stocks Fall on China Growth Outlook as Currencies Drop Teaser (s): (Bloomberg) -- Emerging-market stocks fell to a three-week low and currencies weakened as China set its lowest economic-growth target in more than 15 years. Source (s): Bloomberg DocumentDate (s): 13 hours ago DocumentDate_raw (n): 1425536376000 Link (s): http://www.bloomberg.com/news/articles/2015-03-05/emerging-stocks-fall-on-china-growth-as-rupiah-drops-to-1998-low DocumentKey (s): HTTPwww.bloomberg.com/news/articles/2015-03-05/emerging-stocks-fall-on-china-growth-as-rupiah-drops-to-1998-low DMSourceID (s): Google ContentType (s): Article 10 (o): [object Object] WSODIssue (s): |36699565|25427545|264204 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): InvenSense is on the rebound, but can it keep up momentum? Link (s): http://folionation.squarespace.com/news/2015/3/4/invensense-is-on-the-rebound-but-can-it-keep-up-momentum.html Thumbnail (s): DocumentDate_raw (n): 1425490740000 DocumentDate (s): March 4, 2015 DocumentDate_smart (s): Mar 4, 2015 DocumentKey (s): 1107-290734296785735256765-39RBSJP0QPUBBMVL6CC71E6L31 ContentType (s): Article TrackingPixel (s): Teaser (s):

Motion sensor maker Invensense is on its way back from a fall in January. Is the rebound a blip or a sign of what's to come? 

Unless the company is Synaptics (SYNA) or NXP Semiconductor (NXPI), smaller device supplier firms aren’t performing well on the stock market. InvenSense (INVN), which makes motion sensors for smartphones and tablets, fell after its quarterly earnings, but it is rebounding. Thanks partly to strong first quarter from Apple (AAPL), investors are still bidding shares higher.

Wearables, IoT market is bright

Matt Ramsay, an analyst at Canaccord Genuity, expects profit margin to improve as InvenSense supplies to the Internet of Things (IoT) and wearables market. The company relies heavily on Samsung (SSNLF) and Apple as its customer. This would explain why its non-GAAP profit margin was just 45.7 percent in the last quarter.

Looking ahead, as smart watches and IoT-related solutions are released, InvenSense will have the opportunity to sell components at a higher price. The company’s single-chip solution is attractive for IoT: the chip saves space, costs less for OEMs to implement,and allows for full connectivity and memory powering. InvenSense showcased its microelectromechanical (MEM) sensor “Sensing everything” at CES this year.

The future, less so

In its January 29 conference call, InvenSense estimated total fourth-quarter 2015 revenue would fall between $95M and $98M. Non-GAAP gross margin will be between 46 and 47 percent, and non-GAAP earnings will be between $0.11 and $0.13 per share.

Looking beyond the current quarter, if InvenSense shifts its revenue to markets outside of mobile, the stock may rebound.

Risks

Limited profitability in the smartphone and tablet space will weigh on InvenSense. If the company's gross margins fail to improve, the stock will have limited upside.

Bottom line

Even though InvenSense is up 10 percent in the last week, the stock price is stabilizing. If profitability improves, the stock will rally back to the $20 range, up sharply from its recent $16.67 closing price.

Written by Chris Lau

Click on the interactive chart to view data over time. 

1. InvenSense Inc. (INVN, Earnings, Analysts, Financials): Designs, develops, markets, and sells micro-electro-mechanical system (MEMS) gyroscopes for motion tracking devices in consumer electronics. Market cap at $1.50B, most recent closing price at $16.87.

 

 

2. NXP Semiconductors NV (NXPI, Earnings, Analysts, Financials): Provides mixed signal solutions and semiconductor components primarily in Japan, Europe, South Korea, Rest of Asia Pacific, and the Americas. Market cap at $24.65B, most recent closing price at $98.73.

 

 

3. Synaptics Inc. (SYNA, Earnings, Analysts, Financials): Develops and supplies custom-designed human interface solutions that enable people to interact with various mobile computing, communications, entertainment, and other electronic devices. Market cap at $2.99B, most recent closing price at $80.71.

 

 

(Monthly return data sourced from Zacks Investment Research. All other data soruced from FINVIZ.)

Analyze These Ideas: Getting Started

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ABOUT US

© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.

11 (o): [object Object] Headline (s): What time are the bank stress tests coming out? Teaser (s): Daniel Tarullo, governor of the U.S. Federal Reserve, is the official most closely identified with the central bank's stress-test policies. Source (s): MarketWatch DocumentDate (s): Mar 4, 2015 DocumentDate_raw (n): 1425483397000 Link (s): http://www.marketwatch.com/story/what-time-are-the-bank-stress-tests-coming-out-2015-03-04 DocumentKey (s): HTTPwww.marketwatch.com/story/what-time-are-the-bank-stress-tests-coming-out-2015-03-04 DMSourceID (s): Google ContentType (s): Article 12 (o): [object Object] WSODIssue (s): |90864|66115342|284935 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): 3 stocks to watch when the Misery Index drops Link (s): http://folionation.squarespace.com/news/2015/3/3/3-stocks-to-watch-when-the-misery-index-drops.html Thumbnail (s): DocumentDate_raw (n): 1425416160000 DocumentDate (s): March 3, 2015 DocumentDate_smart (s): Mar 3, 2015 DocumentKey (s): 1107-290734296785735255459-5P0TI51SQT6CT5B1PC70S8AEI2 ContentType (s): Article TrackingPixel (s): Teaser (s):

Whether you knew it or not, you're less miserable than you've been at any time since 1959. Thanks, Misery Index.

Well, it's official. Americans are the least miserable they've been since the 1950s, according to Arthur Okun's misery index. The Wall Street Journal reported on Monday that the Misery Index, the sum of US inflation and the unemployment rate, hit its lowest level since 1959. Does that mean that we're back to the days of consumer paradise, when cars were 15 feet long and our only fear was nuclear obliteration?

Perhaps, perhaps not. But we can make some educated guesses about politics and the economy based on the Misery Index's historical data.

First, there's an inverse correlation between the index and incumbent presidents' odds of winning second terms, but that's irrelevant at the moment.

Second, there's a strong inverse correlation between the index and the forward P/E ratio—a valuation metric that incorporates expected growth—of the the S&P 500. So if misery goes up, forward P/E goes down. And when misery goes down, forward P/E goes up.

This probably isn't much of a revelation, but it inspired us to look for stocks that might derive particular benefit from a return to mid-century boom times. Since conventional wisdom has it that consumers devote more of their money to retail spending during good periods in the cycle, we began with the holdings of the SPDR S&P Retail ETF (XRT). To identify companies that could take the most advantage of increased consumer spending, we screened for stocks with higher gross, pretax and operating margins in the trailing twelve months (TTM) than the industry average. That ought to make anyone happy.

Click on the interactive chart to view data over time. 

1. Dollar Tree Inc. (DLTR, Earnings, Analysts, Financials): Operates discount variety stores in the United States and Canada. Market cap at $16.44B, most recent closing price at $79.92.

TTM gross margin at 37.66% vs. industry average at 34.38%. TTM operating margin at 12.42% vs. industry average at 7.84%. TTM pretax margin at 11.09% vs. industry average at 6.64%.

 

2. Sprouts Farmers Market Inc. (SFM, Earnings, Analysts, Financials): Operates as a specialty retailer of fresh, natural, and organic food in the United States. Market cap at $5.44B, most recent closing price at $35.85.

TTM gross margin at 31.89% vs. industry average at 24.06%. TTM operating margin at 6.85% vs. industry average at 5.04%. TTM pretax margin at 5.87% vs. industry average at 4.47%.

 

3. Whole Foods Market Inc. (WFM, Earnings, Analysts, Financials): Engages in the ownership and operation of natural and organic food supermarkets. Market cap at $20.26B, most recent closing price at $56.22.

TTM gross margin at 38.12% vs. industry average at 24.06%. TTM operating margin at 6.5% vs. industry average at 5.04%. TTM pretax margin at 6.57% vs. industry average at 4.48%.

 

(List compiled by David Floyd. Monthly returns data sourced from Zacks Investment Research. Profitability data sourced from Fidelity. All other data sourced from FINVIZ.)

 

Analyze These Ideas: Getting Started

Dig Deeper: Access Company Snapshots, Charts, Filings

ABOUT US

© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.

 

13 (o): [object Object] WSODIssue (s): |36276|109353|40431866|204192|268527 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): Apple Watch could crush watchmakers Link (s): http://folionation.squarespace.com/news/2015/3/3/apple-watch-could-crush-watchmakers.html Thumbnail (s): DocumentDate_raw (n): 1425413580000 DocumentDate (s): March 3, 2015 DocumentDate_smart (s): Mar 3, 2015 DocumentKey (s): 1107-290734296785735255392-69UQJFRME4DU05KTS2RCB1BMJ7 ContentType (s): Article TrackingPixel (s): Teaser (s):

The Apple Watch release is looming over traditional watchmakers. Will they be able to adapt?

Apple (AAPL) has slated its Watch event for March 9, and the unveiling could initiate strong demand for wearable technology. Apple sold a staggering number of iPhones in the previous quarter—74.5 million, to be exact. The stock, not surprisingly, has soared. 

Yet if we believe IDC, a significant slowdown in market growth for smartphones could be ahead: year-on year increases in sales could drop to 6.2 percent by 2018, compared to a roaring 39 percent in 2013. If this proves to be the case, the Apple Watch could be a crucial step to transition into new markets.

Watchmakers in trouble

Demand for Apple Watch could grow rapidly if the firm manages to create a light, thin device with decent battery life. CEO Tim Cook appears confident that the battery could last an entire day, which might spell trouble for traditional watchmakers.

Firms such as Movado Group (MOV), Fossil (FOSL), Tiffany & Co (TIF) and Michael Kors (KORS) could all be on the ropes in the years ahead.

These stocks are already down by as much as 33 percent in the last year, in the case of Movado. The decline might be due to investors’ fears of competition from wearable technology. Swatch (UHRNz), for one, has embraced the trend and is updating its Swatch Touch. The new Swatch Touch Zero One is specifically marketed to volleyball players and can track hits, high hits, power hits and high fives.

Swiss watchmakers, who have been pressed by the Swiss franc’s rising value, are already raising prices for luxury watches. Their bet, write Pierre Taillefer and Nina Larson for AFP, is that consumers will be willing to pay more for “true luxury and perfection.”

Bottom line

If met with solid demand, the Apple Watch release could be a defining moment for Apple, already the world's largest company by market capitalization, and bad news for watchmakers.

Written by Chris Lau.

Click on the interactive chart to view data over time. 

1. Apple Inc. (AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $751.92B, most recent closing price at $129.09.

 

2. Fossil Group Inc. (FOSL, Earnings, Analysts, Financials): Designs, develops, markets, and distributes fashion accessories worldwide. Market cap at $4.36B, most recent closing price at $86.62.

 

 

3. Michael Kors Holdings Limited (KORS, Earnings, Analysts, Financials): Engages in the design, marketing, distribution, and retailing of branded women's apparel and accessories, and men's apparel. Market cap at $13.64B, most recent closing price at $67.95.

 

 

4. Movado Group Inc. (MOV, Earnings, Analysts, Financials): Designs, sources, markets, and distributes fine watches and jewelry. Market cap at $649.90M, most recent closing price at $25.81.

 

 

 

5. Tiffany & Co. (TIF, Earnings, Analysts, Financials): Engages in the design, manufacture, and retail of fine jewelry worldwide. Market cap at $11.72B, most recent closing price at $90.60.

 

 

(List compiled by Chris Lau. Monthly returns data sourced from Zacks Investment Research. All other data sourced from FINVIZ.)

 

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© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

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14 (o): [object Object] WSODIssue (s): |89999|94102|261077|274387 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): Dreamworks Animation flops Link (s): http://folionation.squarespace.com/news/2015/3/2/dreamworks-animation-flops.html Thumbnail (s): DocumentDate_raw (n): 1425332820000 DocumentDate (s): March 2, 2015 DocumentDate_smart (s): Mar 2, 2015 DocumentKey (s): 1107-290734296785735253994-13J8QDLDODTHGG1SGH2HCJOQ0L ContentType (s): Article TrackingPixel (s): Teaser (s):

With dud movies, disappointing earnings and massive layoffs, is Dreamworks a bargain or just a bad investment?

Seeing that Disney (DIS) is trading 1.8 percent from its yearly high, while for Time Warner (TWX) the figure is 6 percent, one might assume that a fellow entertainment company like Dreamworks Animation (DWA) would follow the trend. 

It turns out that's not the case. In 2014, shares traded as high as $31.35, stabilizing between $22 and $24 as investors speculated the firm would be taken over. That did not happen, and now, in the wake of disappointing fourth quarter earnings, the company must prove it can survive.

In the fourth quarter, Dreamworks lost $0.75 per share on revenue of $234.24 million. The firm was hit by restructuring charges of $210.1 million. Movies like The Penguins of Madagascar and Mr. Peabody did poorly. Its restructuring plan resulted in a staff reduction of 500. The firm also sold its campus for $185 million to SunTrust Equity Funding (STI).

The issue

The core issue is that Dreamworks is spending too much on titles that are not guaranteed to be hits. By allowing the project budget to get out of control, Dreamworks let losses grow in 2014.

One bright spot was its revenue from Television Series and Specials, which grew 7.7 percent to $50.7 million. To boost liquidity for the short term, Dreamworks increased its revolving credit facility, from $400 million to $450 million.

Risks elevated

Restructuring is never a pretty thing for companies. For Dreamworks, the company will be running with fewer staff this year. While costs will fall, it still means the company needs to release movie titles that attract an audience.

Bottom line

Dreamworks looks like a bargain stock right now, but it is filled with risks. Rumors the firm will be bought out might buoy the stock. There are no other positive catalysts at this time, but if the firm releases a hit this year, profits, and its stock price, might improve. In the meantime, it’s probably better to avoid this company.

Written by Chris Lau.

Click on the interactive chart to view data over time. 

1. The Walt Disney Company (DIS, Earnings, Analysts, Financials): Operates as an entertainment company worldwide. Market cap at $176.89B, most recent closing price at $104.08.

 

 

2. DreamWorks Animation SKG Inc. (DWA, Earnings, Analysts, Financials): Engages in the development, production, and exploitation of animated feature films and characters worldwide. Market cap at $1.82B, most recent closing price at $21.41.

 

 

3. SunTrust Banks Inc. (STI, Earnings, Analysts, Financials): Operates as the holding company for SunTrust Bank, which provides various financial services to consumer and corporate customers in the United States. Market cap at $21.51B, most recent closing price at $41.0.

 

 

4. Time Warner Inc. (TWX, Earnings, Analysts, Financials): Operates as a media and entertainment company in the United States and internationally. Market cap at $68.11B, most recent closing price at $81.86.

 

(List compiled by Chris Lau. Monthly returns data sourced from Zacks Investment Research. All other data sourced from FINVIZ.)

 

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ABOUT US

© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.

 

 

 

15 (o): [object Object] WSODIssue (s): |39635|53729|64811|80411|93645|69598|9419497|136780|184972|26632167|109578|217004|223627|272133|285119 DMSourceID (s): KAPITALL Source (s): Kapitall Headline (s): Eiffel Tower addition puts wind energy in the spotlight Link (s): http://folionation.squarespace.com/news/2015/3/2/eiffel-tower-addition-puts-wind-energy-in-the-spotlight.html Thumbnail (s): DocumentDate_raw (n): 1425331200000 DocumentDate (s): March 2, 2015 DocumentDate_smart (s): Mar 2, 2015 DocumentKey (s): 1107-290734296785735253916-4MHPMFEKSV51D0N5AAOVGLULN2 ContentType (s): Article TrackingPixel (s): Teaser (s):

From Paris to the Altamont Pass, wind energy is finally getting the attention it deserves.

Visitors to the Eiffel Tower may have noticed something different about the Paris icon in the past week, depending on where they were standing. Two 17-foot wind turbines were installed in the structure last week, and while they're visible from across the Seine, they can't be distinguished from the rest of the structure if you're standing at the bottom of the tower. 

Is Paris running on wind energy now? Not exactly, but 0.15 percent of the Eiffel Tower's energy consumption is now wind-generated, slightly offsetting the 6.7 GWh the structure consumes every year. No word yet on how long the turbines will take to counterbalance the energy used to haul them 400 feet into the air. 

So the installation is largely "symbolic," in the words of Jan Gromadzki, who oversaw the project for Urban Green Technology. But still, it brings our attention to an often-neglected source of renewable energy. Less disaster-prone than nuclear, less photogenic than solar, wind deserves its time in the limelight.

As it turns out, it might just be getting it. Google (GOOG) announced last month that it would enter into a 20-year power purchase agreement with NextEra Energy (NEE). As part of the agreement, nearly 800 old turbines in California's Altamont Pass, some of them from the 1980s, will be replaced with nearly 50 sleek, new, less bird-kill-y installations that will contribute to Google's 35 percent renewable energy mix.

A recent invention is also adding to the buzz around wind power. Altaeros Energies, a clean energy startup that came out of MIT in 2010, has developed a flying blimp-turbine called the BAT (Buoyant Airborne Technology). Since wind is stronger and more steady at higher altitudes, the reasoning goes, why not harvest its energy up there? A 2,000-foot-tall turbine is a daunting undertaking, but a power-producing balloon at the end of a 2,000-foot cable is much more manageable. The company has received $7 million in funding from SoftBank to pursue the project, which could provide energy for a limited number of households in rural areas or in the event of a natural disaster.

But should individual investors be as cavalier as Google and SoftBank when it comes to wind energy? The First Trust ISE Global Wind Energy Index Fund (FAN) has certainly had a rough 12 months, but that's largely due to sector-wide energy woes caused by low crude oil prices. Note the correlation with Exxon (XOM):

Wind energy investments are so tied into the wider energy sector partly because there are very few pure wind energy investments out there. BP (BP) and Shell (RDS.A) alone make up close to 4 percent of FAN's investments, for example. But even if pure wind plays are scarce, investors can still get in on the action. Below are 15 stocks from FAN's holdings

 

Click on the interactive chart to view data over time. 

 

1. The AES Corporation (AES, Earnings, Analysts, Financials): 1. The AES Corporation (AES): Operates as a power company in Latin America, Africa, North America, Europe, the Middle East, and Asia. Market cap at $9.25B, most recent closing price at $12.97.

 

 

2. Allegheny Technologies Inc. (ATI, Earnings, Analysts, Financials): 2. Allegheny Technologies Inc. (ATI): Produces and sells specialty metals worldwide. Market cap at $3.66B, most recent closing price at $33.66.

 

 

3. BP p.l.c. (BP, Earnings, Analysts, Financials): 3. BP p.l.c. (BP): Provides fuel for transportation, energy for heat and light, retail services, and petrochemicals products. Market cap at $126.03B, most recent closing price at $41.44.

 

 

4. Capstone Turbine Corp. (CPST, Earnings, Analysts, Financials): 4. Capstone Turbine Corp. (CPST): Develops, manufactures, markets, and services turbine generator sets and related parts for use in stationary distributed power generation applications. Market cap at $233.68M, most recent closing price at $0.71.

 

 

5. Duke Energy Corporation (DUK, Earnings, Analysts, Financials): 5. Duke Energy Corporation (DUK): Operates as an energy company in the Americas. Market cap at $55.53B, most recent closing price at $78.55.

 

 

6. Centrais Eletricas Brasileiras S.A. (EBR, Earnings, Analysts, Financials): 6. Centrais Eletricas Brasileiras S.A. - Eletrobras (EBR): Engages in the generation, distribution, transmission, and commercialization of electric power; and construction and operation of nuclear power plants in Brazil. Market cap at $2.58B, most recent closing price at $1.91.

 

 

7. Federal-Mogul Holdings Corporation (FDML, Earnings, Analysts, Financials): 7. Federal-Mogul Holdings Corporation (FDML): Federal-Mogul Corporation supplies powertrain and safety technologies worldwide. Market cap at $1.96B, most recent closing price at $13.07.

 

 

8. General Electric Company (GE, Earnings, Analysts, Financials): 8. General Electric Company (GE): Operates as a technology, service, and finance company worldwide. Market cap at $261.00B, most recent closing price at $25.99.

 

 

9. Alliant Energy Corporation (LNT, Earnings, Analysts, Financials): 9. Alliant Energy Corporation (LNT): Operates in electric and gas utility businesses in the United States. Market cap at $7.06B, most recent closing price at $63.60.

 

 

 

 

10. China Ming Yang Wind Power Group Limited (MY, Earnings, Analysts, Financials): 10. China Ming Yang Wind Power Group Limited (MY): Designs, manufactures, sells, and services megawatt-class wind turbines in China. Market cap at $263.44M, most recent closing price at $2.15.

 

 

11. NextEra Energy Inc. (NEE, Earnings, Analysts, Financials): 11. NextEra Energy Inc. (NEE): Engages in the generation, transmission, distribution, and sale of electric energy in the United States and Canada. Market cap at $45.97B, most recent closing price at $103.46.

 

 

12. NRG Energy Inc. (NRG, Earnings, Analysts, Financials): 12. NRG Energy Inc. (NRG): Operates as a wholesale power generation company. Market cap at $8.11B, most recent closing price at $23.98.

 

 

13. Otter Tail Corporation (OTTR, Earnings, Analysts, Financials): 13. Otter Tail Corporation (OTTR): Engages in electric and nonelectric operations in the United States and internationally. Market cap at $1.20B, most recent closing price at $32.72.

 

 

14. Trinity Industries Inc. (TRN, Earnings, Analysts, Financials): 14. Trinity Industries Inc. (TRN): Provides products and services to the industrial, energy, transportation, and construction sectors primarily in the United States, Canada, Mexico, the United Kingdom, Singapore, and Sweden. Market cap at $5.23B, most recent closing price at $33.62.

 

 

15. Woodward Inc. (WWD, Earnings, Analysts, Financials): 15. Woodward Inc. (WWD): Engages in the design, manufacture, and servicing of energy control and optimization solutions for commercial and military aircraft and ground vehicles, turbines, reciprocating engines, and electrical power system equipment worldwide. Market cap at $3.16B, most recent closing price at $48.55.

 

(List compiled by David Floyd. Monthly returns data sourced from Zacks Investment Research. All other data sourced from FINVIZ.)

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ABOUT US

© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member. 

*/ Will these financial sector stocks also see estimate-beating earnings?

Will these financial sector stocks also see estimate-beating earnings?

Several financial sector stocks have reported earnings that have beaten analyst estimates. Will these stocks do the same?

Blackstone Group (BX) released its second-quarter results Thursday morning, and the company's earnings of $1.15 a share surpassed the average analyst earnings estimate of $0.71 a share. In fact, the New York-based private equity firm's earnings were 61.97% higher than the estimate.

Blackstone's solid second-quarter earnings comes on the heels of other estimate-beating performances fromBank of America (BAC), Citigroup (C), Goldman Sachs (GS), JP Morgan Chase (JPM), and Morgan Stanley (MS). 

All six companies had different reasons for reporting better-than-expected net income. Blackstone's largest buyout fund passed a benchmark for investment performance that allowed the company to finally collect a profit.

Bank of America, Citigroup, and JP Morgan all reported weaker second-quarter earnings than a year earlier due to legal charges, but Bank of America's net income benefitted from higher revenue from stock trading while increases in lending and commercial banking helped Citigroup and JP Morgan's profits. Goldman Sachs saw higher revenue from its investment banking and investing and lending divisions, while Morgan Stanley's money management business played a crucial role in the company's earnings. 

These estimate-beating earnings inspired us to look for investment opportunities amongst financial sector stocks that have yet to report earnings. We began with a group of stocks that have a history of positive earnings surprises. This means that they've had four straight quarters of positive, estimate-beating earnings reports, with an average surprise of at least 5%. 

Sticking to our earnings theme, we screened for stocks that are undervalued with a price/earnings to growth (PEG) ratio below 1. This valuation ratio is calculated by dividing a stock's price-to-earnings (P/E) ratio by its expected annual earnings per share (EPS) growth. Therefore, the higher the stock's earnings growth, the lower its PEG ratio. When a stock's PEG is under 1, it is typically considered undervalued. 

For our final screen, we decided to incorporate analyst stock recommendations since they're the ones supplying estimates for company's earnings. We looked for stocks with an average analyst recommendation of "buy" or better. 

We were left with eight stocks on our list. Do you think these financial sector stocks will beat earnings estimates yet again? Use this list as a starting point for your own analysis, and let us know what you think in the comments.

Click on the interactive chart to view data over time. 

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1. AmTrust Financial Services, Inc. (AFSI, Earnings, Analysts, Financials): Operates as a multinational specialty property and casualty insurance company in the United States and internationally. Market cap at $2.66B, most recent closing price at $35.69.

 

2. Argo Group International Holdings, Ltd. (AGII, Earnings, Analysts, Financials): Underwrites specialty insurance and reinsurance products in the property and casualty market worldwide. Market cap at $1.19B, most recent closing price at $44.79.

 

3. American International Group, Inc. (AIG, Earnings, Analysts, Financials): The company operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. Market cap at $72.63B, most recent closing price at $49.45.

 

4. Popular, Inc. (BPOP, Earnings, Analysts, Financials): Provides a range of retail and commercial banking products and services primarily to corporate clients, small and middle size businesses, and retail clients in Puerto Rico and Mainland United States. Market cap at $2.83B, most recent closing price at $27.57.

 

5. E-House (China) Holdings Limited (EJ, Earnings, Analysts, Financials): Operates as a real estate services company in China. Market cap at $1.68B, most recent closing price at $12.59.

 

6. Navigators Group Inc. (NAVG, Earnings, Analysts, Financials): Engages in the underwriting and management of property and casualty insurance in the United States, the United Kingdom, Belgium, and Sweden. Market cap at $862.43M, most recent closing price at $60.85.

 

7. Nelnet Inc. (NNI, Earnings, Analysts, Financials): Focuses on providing fee-based processing services, and education-related products and services in the areas of loan financing, loan servicing, payment processing, and enrollment services. Market cap at $1.66B, most recent closing price at $35.78.

 

8. Och-Ziff Capital Management Group LLC (OZM, Earnings, Analysts, Financials): Och-Ziff Capital Management Group LLC is a publicly owned investment manager. Market cap at $2.12B, most recent closing price at $13.50.

 

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Read descriptions for all companies mentionedAccess a performance overview for all stocks in the listCompare analyst ratings for the companies mentionedCompare analyst ratings to annual returns for stocks mentionedReal-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)

Dig Deeper: Access Company Snapshots, Charts, Filings

AmTrust Financial Services, Inc.(AFSI, Chart, Download SEC Filings)Argo Group International Holdings, Ltd.(AGII, Chart, Download SEC Filings)American International Group, Inc.(AIG, Chart, Download SEC Filings)Popular, Inc.(BPOP, Chart, Download SEC Filings)E-House (China) Holdings Limited(EJ, Chart, Download SEC Filings)Navigators Group Inc.(NAVG, Chart, Download SEC Filings)Nelnet Inc.(NNI, Chart, Download SEC Filings)Och-Ziff Capital Management Group LLC(OZM, Chart, Download SEC Filings)

ABOUT US

© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member.

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