Thursday, January 29, 2015

MSC Industrial (MSM) Earnings Review and Analysis

MSC Industrial Direct  (NYSE: MSM  ) must have left investors with mixed feelings after its first-quarter results. In a nutshell, the earnings and second-quarter guidance were below analyst estimates, but the commentary around the trading environment was more positive than it has been for a while. Time to take a closer look.


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Tuesday, January 27, 2015

George Soros Investment Firm is Buying This Small Cap Stock

Whenever the investment fund of a legendary investor like George Soros takes a position in a mid-cap stock such as security products manufacturer Allegion  (NYSE: ALLE  ) , investors will usually want to look at the company themselves. Recent 13F SEC filings from Soros Fund Management reveal that the fund had 5,000 shares of Allegion at the end of 2013, 214,353 by the end of June of this year, and 1,627,956 (worth about $90.6 million at the current price) by the end of September. What might have attracted the fund to this company, and should retail investors follow its lead?


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Sunday, January 25, 2015

Return on Assets Analysis of 3M Company (MMM)

When making an analysis of an industrial conglomerate such as 3M Company  (NYSE: MMM  ) , many investors settle on comparing segmental operating margins. However, a deeper analysis would also involve looking at segmental return on assets, or ROA -- defined here as segmental income divided by assets. This is a useful measure that helps investors to understand how the company makes best use of its assets and where it should invest for growth. Let's see how this applies to 3M.


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Is Deere & Company (DE) a Stock to Buy?

Deere & Company (NYSE: DE  ) investors must make up one of the broadest of churches in the investing world. Commodity followers are looking for a cyclical bounce in crop prices next year. Meanwhile, income seekers are enjoying its near 2.5% dividend yield. However, the question for long-term investors is whether now is the time to initiate a position in Deere & Company stock?


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Thursday, January 22, 2015

United Technologies Investor Day Review

The sudden departure of United Technologies Corporation (NYSE: UTX  ) CEO Louis Chenevert must have baffled investors, but anyone expecting more color on the subject, or a change of strategic direction from the company, would have been disappointed by last week's investor meeting. Instead, newly appointed CEO Gregory Hayes outlined a set of targets consistent with the company's previous guidance. In this context, it's time for a refresh on United Technologies' strategic objectives and why the stock might be attractive for your portfolio.


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Wednesday, January 21, 2015

Heico (HEI) Earnings Review

Heico  (NYSE: HEI  )  this week delivered solid fourth‐quarter earnings, and guided toward 8%‐10% growth in net sales and net income for 2015. Moreover, management served notice of its intent to "aggressively pursue" acquisition opportunities to generate growth.



Heico's stock is slightly down on the year, even as the commercial aerospace sector has continued to grow strongly. However, given good growth in its commercial aviation end market and its increased cash flow generation, Heico has good growth opportunities going forward. Let's look into the details.


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Sunday, January 11, 2015

Why Deere & Company (DE) Could Fall

Analysts and investors are hoping for a trough in demand for Deere & Company (NYSE: DE  ) in 2015. If it occurs, the stock will likely move higher. On the other hand, there are no guarantees that a bottom will form, and the downside risk is significant if conditions don't improve. I've already examined the bullish case for the stock; now it's time to look at the reasons Deere's stock could fall.


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Tuesday, January 6, 2015

General Electric Company Return on Assets Analysis

One of the first things investors look at when analyzing an industrial conglomerate like General Electric  (NYSE: GE  ) is segmental margin. It's a good way to tell which units are outperforming and where the company should be investing. However, it's also important to look at the segmental income generated from assets, defined here as the return on assets, or ROA. This can actually be a more useful measure, because it indicates which of the company's segments are its most productive. In the case of General Electric, an ROA analysis produces some good news for investors interested in its strategic direction.


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Sunday, January 4, 2015

Why Deere & Company (DE) Stock Could Rise

Normally, when a company forecasts a 15% drop in sales for the following year, investors' immediate reaction is negative, but the rules of investing logic with a highly cyclical stock like Deere & Company (NYSE: DE  ) are very different. Indeed, analysts at JPMorgan and Wells Fargo subsequently upgraded their ratings for the stock after the recent announcement. Essentially, the bullish case for Deere & Company rests on the idea that 2015 will see a cyclical trough in key crop prices, and therefore end demand for its agricultural machinery will pick up. If this happens, Deere could soar, as the best time to pick up a cyclical stock is before the rest of the market realizes the upswing is about to take place.


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Friday, January 2, 2015

General Electric Company CEOs: Welch vs Immelt



Comparing the tenures of Jack Welch and Jeff Immelt as CEO of General Electric  (NYSE: GE  ) is almost a pointless endeavor from an investor's perspective. In the end, the primary focus of General Electric investors is shareholder return, and in the 13 years of Immelt's leadership, the stock's return (adjusted for dividends and stock splits) is just 9.4% compared to Welch's 5,400% during his 20-year stint as CEO, from 1981 to 2001. The difference is stark. However, Immelt is a much better leader than those numbers might suggest; here's why I think he's taking the company in the right direction.


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Tuesday, December 30, 2014

George Soros Fund Management Stock Pick

When a legendary investor like George Soros takes a large position in a stock like electrical products manufacturer Hubbell Incorporated (NYSE: HUB-B  ) , it's usually a good idea to take notice. So why is George Soros buying stock in Hubbell Incorporated, and should you be buying too?

Soros Fund Management buys Hubbell Incorporated stock

A look at SEC filings from Soros Fund Management reveals that his investment firm had picked up 306,371 shares by the end of June, and another 311,985 shares by the end of September. At the current price of around $107, the position is worth around $66 million -- a pretty significant position.



Introducing Hubbell Incorporated

 Hubbell generates more than 80% of its sales from the US and has two operating segments:


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Sunday, December 28, 2014

Deere & Company (DE) Earnings Call



Deere & Company (NYSE: DE  ) recently beat fourth-quarter estimates, but served notice that 2015 is likely to be a tough year. It's hardly surprising given the price weakness in key crops like corn, wheat, soybeans, and cotton. Ultimately the company's fortunes will be tied to the cyclicality of the farming sector, and investors should follow events closely because a potential turnaround in crop prices will likely lead to the stock moving higher. However, before you rush to take a view, here are five things management thinks you should know.


DE Chart
DE data by YCharts

Deere & Company guidance disappoints; farmers' cash receipts seen as key

In a nutshell, management guided toward a decline in net sales of 15% mainly due to a forecast 20% net sales decline in its agriculture and turf segment.


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Tuesday, December 23, 2014

Is Johnson Controls a Buy?

Johnson Controls  (NYSE: JCI  ) investors must be disappointed this year as they have watched their stock underperform the S&P 500 by nearly 14% to date in 2014, at the time of this writing. However, the poor stock price performance largely has resulted from end-market conditions rather than anything the company has done. On the contrary, the multi-industrial company's management has made a host of exciting initiatives that could propel earnings higher in the future. With these initiatives in place, and some of its end markets starting to look better, is now the time to buy into Johnson Controls?


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Wednesday, December 17, 2014

Is UPS a Buy?

When you decide to buy or sell stock in a company like United Parcel Service, Inc.  (NYSE: UPS  ) , there are two key questions you should ask yourself. The first is whether its earnings projections and financial numbers make the stock a good value. The second is whether you believe in the company's ability to hit the numbers. This article will deal with these considerations in turn so you can better decide whether UPS stock is a buy for you.

UPS Forecasts and historical numbers

UPS recently hosted an investor conference in which it laid out its long-term financial targets. For now, let's look at what management expects from the business in the 2015-2019 time frame.


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Saturday, December 13, 2014

Chinese Dating Site Jiayuan.com (DATE) Earnings Analysis

China's largest online dating platform, Jiayuan.com International Ltd (NASDAQ: DATE  ) , is very much a company in transition and its latest earnings report reflects the changes afoot. Essentially, the company is in the process of redesigning and relaunching its mobile offering in December, and the company is looking forward to increasing the monetization of its mobile platform. Unfortunately, this shift has somewhat skewed the key metrics at the company. Here is a look at its third-quarter results, reported this morning.




Before going into detail, readers should note that Jiayuan is a Chinese company and primarily reports in RMB. All the numbers in this article will be quoted and calculated in RMB, unless otherwise stated.




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Thursday, December 11, 2014

The Bearish Case for Johnson Controls Inc Stock (JCI)

Johnson Controls  (NYSE: JCI  ) investors will be buoyed by the stock's recent strong run, but can it continue? Management has ample reason to believe it can improve revenue and margin growth across its segments in 2015. I've already examined the bullish case for the stock in a previous article; now it's time to look at the bearish case.


3 bearish factors for Johnson Controls

Before going into detail, I should note that I'm positive on management's restructuring efforts and internal execution. However, the company's valuation and the potential for deterioration in China's economy -- and ultimately car sales -- suggest there may be better ways to play the other positive end-market trends the company is seeing. (More on that in a future article.)


The company's segmental income in fiscal 2014 was a roughly three-way split among the building efficiency (heating, ventilation, and air conditioning), power solutions (car batteries), and automotive experience (car seating and interiors) businesses. Two of the three risks the company faces relate specifically to the auto experience segment.


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Sunday, December 7, 2014

The Bullish Case for Johnson Controls (JCI) Stock

Johnson Controls (NYSE: JCI  ) investors have watched their stock put in a strong recovery in the last month, and the share price is only down a few percentage points on the year, as I write. About a month ago, Fools looked at just why the stock had slumped in 2014, and more recently at the five things management hopes will improve company performance. Now, it's time to look at things from another perspective and ask: What are the three things that could take the stock higher?


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Wednesday, December 3, 2014

United Parcel Service (UPS) Investor Conference Review

Until last week, it had been three years since United Parcel Service (NYSE: UPS  ) last had an investor conference, and much had changed with its end-market conditions in the interim. At the recent conference, management updated UPS investors on its long-term outlook and on how it is adjusting to these changes. With this in mind, it's time to look at what is new with UPS and what it might mean to the shipping and logistics company's investors.



United Parcel Service's end-market trends

 Before getting into details, here is a chart of UPS' trailing-four-quarters segmental income so Fools can see the relative importance of each business.


Source: United Parcel Service Presentations.



Since 2011, there have been three separate and somewhat unexpected changes in end markets for UPS and its main rival, FedEx (NYSE: FDX  )


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Monday, December 1, 2014

Emerson Electric Earnings Call

With its recent fourth-quarter results, dividend investor favorite Emerson Electric (NYSE: EMR  ) showed that it's been performing well in the face of mixed end markets. You may have already read the details of the earnings report, but now it's time to look at what management wants you to know about the company's future direction.

Global growth and dividends


There are two key things to understand about the company. First, it's largely a play on global macroeconomic conditions, with an added growth kicker from emerging-market spending on infrastructure projects. Second, it's a Dividend Aristocrat -- a company that has increased its dividend for 25 years or more. Moreover, the underlying evidence suggests that it has the potential, and management the will, to continue rewarding income-seeking investors well into the future. Let's look at five key takeaways from the earnings call in the context of these two points.


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Sunday, November 30, 2014

Palo Alto Networks, Fortinet, and Check Point Software: Which Stock to Buy?

ector, but the decision over buying or selling the stock isn't as easy as you might think. Investors often buy or sell stocks based on their relative valuation within their peer group, but with the network security sector it isn't quite so easy. Why is this so? Furthermore, is Palo Alto Networks a buy or sell?



You say value, I say growth

It's tricky to compare valuations in the network security sector, because the leading players are at different stages of their development, and this makes them attractive to a different type of investor. For example, a value investor might look at a mature, highly cash generative, stock like Check Point Software (NASDAQ: CHKP  ) at conclude that it's the best in class. Meanwhile, growth at reasonable price,or GARP, investor will like the look of Fortinet's (NASDAQ: FTNT  ) mix of mid-teens revenue growth and solid free-cash flow generation, while a growth investor will favor Palo Alto's 30% plus growth rates, even if its free-cash flow yield is low.



I'm going to graphically introduce some of these ideas for you, and then get into the numbers. First, a quick look at revenue growth for these three companies in the last four years and the analyst forecast for the fifth year, reveals that they really are at different stages of development.


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