Early movers Insight: GE, HON, SWK, STI, COST, MCD, WEN
BUZ INVESTORS Early movers Insight which companies are making headlines before the bell
GE seesaws after Q1 results
Q1 non-GAAP EPS (what GE calls its “Industrial operating + Verticals EPS”) of $0.21, flat as reported, but +12% Y/Y excluding gains and restructuring.
Backlog of $324B up 3% Y/Y; Orders up 10%, with organic revenues up 7%.
$4.4B was returned to shareholders during the quarter, including $2.3B through buybacks.
“GE is continuing its portfolio transformation and investing in innovations in GE Digital and GE Additive. Our planned combination of GE Oil & Gas and Baker Hughes remains on track, and we expect the deal to close in mid-2017,” CEO Jeff Immelt in a statement.
Early movers Insight
The company also reaffirmed its 2017 operating framework for Industrial operating + Verticals EPS, organic revenue growth, and Industrial operating margin expansion.
Conference call at 8:30 a.m. ET
Honeywell +2.1% raising guidance range
Q1 adjusted EPS of $1.66 up 11% Y/Y, and topping estimates by $0.04.
Organic sales growth by segment in Q1: Aerospace flat; Home and Building +3%; Performance Materials +5%; Safety and Productivity +3%.
“Honeywell reported a strong start to 2017, with over 2% organic sales growth, 70 bps of segment margin expansion, and free cash flow of nearly $800M that was more than six times greater than 2016,” CEO Darius Adamczyk declared. “As a result of our performance, we are raising the low end of our full-year guidance by $0.05. We now anticipate that 2017 earnings per share will be $6.90 to $7.10, up 7%-10%, excluding divestitures, any pension mark-to-market adjustments, and 2016 debt refinancing charges.
Conference call at 9:30 a.m. ET.
Stanley Black & Decker Reports 1Q 2017 Results
1Q’17 Key Points:
- Net sales for the quarter were $2.8 billion, up 5% versus prior year, as positive volume (+5%) and acquisitions (+3%) more than offset currency (-1%) and divestitures (-2%).
- Gross margin rate for the quarter was 38.0%. Excluding charges, the gross margin rate was 38.2%, up 160 basis points from prior year as productivity and cost actions more than offset currency and commodity inflation.
- SG&A expenses were 24.4% of sales. Excluding charges, SG&A expenses were 24.0% of sales compared to 23.5% in 1Q’16, reflecting investments in SFS 2.0 growth initiatives moderated by continued tight cost management.
- Operating margin rate was 13.6%. Excluding charges, operating margin rate was 14.2% compared to 13.1% in 1Q’16, as operational actions to improve profitability more than offset unfavorable currency, growth investments and commodity inflation.
- Restructuring charges for the quarter were $15.8 million. Excluding restructuring charges relating to M&A, restructuring charges for the quarter were $15.3 million compared to $8.0 million in 1Q’16. In addition and as planned, the Company incurred $12.5 million relating to the settlement of a Canadian pension plan.
SunTrust Reports First Quarter 2017 Results
- Net income available to common shareholders was $451 million, or $0.91 per average common diluted share, compared to $0.90 for the prior quarter and $0.84 for the first quarter of 2016.
- This quarter was favorably impacted by $0.04 per share of discrete tax benefits.
- Total revenue increased 3% compared to the prior quarter and 7% compared to the first quarter of 2016.
- These increases were driven largely by higher net interest income and record investment banking performance in the first quarter of 2017.
- Net interest margin was 3.09% in the current quarter, up 9 basis points sequentially and up 5 basis points compared to the prior year, driven by higher earning asset yields as a result of the steeper yield curve and the increase in benchmark interest rates. Compared to the prior year, the net interest margin was also favorably impacted by continued positive mix shift in the loan portfolio.
- Provision for credit losses increased $18 million sequentially as a result of a reserve release in the prior quarter.
- Noninterest expense increased 5% sequentially and 11% compared to the prior year.
- The sequential increase was driven primarily by the seasonal increase in employee benefit costs in addition to incremental costs associated with the Pillar acquisition.
- Compared to the prior year, the increase was driven largely by higher compensation associated with improved business and stock price performance, ongoing investments in talent, higher FDIC premiums, and costs associated with efficiency initiatives including branch closures.
- The efficiency and tangible efficiency ratios in the current quarter were 65.2% and 64.6%, respectively, both higher than the prior quarter as strong revenue growth was offset by seasonally higher noninterest expense (as outlined above).
Costco was upgraded to “overweight”
Costco was upgraded to “overweight” from “equal weight” at Barclays, which said its research indicates that the vast majority of customers visit Costco specifically to buy food. Barclays notes that this indicates Costco is largely protected from competition from Amazon
BMO Capital sees McDonald’s rally extending
BMO Capital initiates coverage on McDonald’s (NYSE:MCD) with a Buy rating.
The investment firm begins coverage on the restaurant operator with a price target of $153. The consensus price target on McDonald’s from Wall Street firms is $130.30.
Shares of McDonald’s are up 0.53% premarket to $133.98 vs. a 52-week trading range of $110.33 to $133.44 (set yesterday)
BMO Capital sees +20% upside for Wendy’s
BMO Capital initiates coverage on Wendy’s (NYSE:WEN) with a Buy rating.
The investment firm believes that valuation on Wendy’s is at an attractive level and sees upside from the new business model.
BMO’s price target of $17 reps 22% upside potential for the restaurant stock.