American Express (AXP) 2017 Third Quarter Results

  • Ken Chennault announces retirement in February 2018 and Steve Squeri will become Chairman & CEO
  • Third Quarter EPS of $1.50 vs. $1.20 last year and consensus of $1.48
  • Management raised full year 2017 guidance from $5.40-$5.80 to $5.80-$5.90
  • Earnings growth driven mostly by decline in tax rate and decline in share count.  However, one-time impairment charges offset the increase in tax credits booked in the quarter. Continue reading
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GM’s Q3 Results Beat Expectations

General Motors Company (GM) reported third quarter EPS of $0.08 vs. $1.76 in the prior year.  Excluding unusual items – a $2.3 billion, $1.24 per share deferred tax adjustment related to the sale of GM’s European operations in 2017 and a ($69 million), ($0.05) per share adjustment to reverse a small gain on an ignition switch recall in 2016 – third quarter non-GAAP EPS was $1.32 vs. $1.71.  Analysts had expected EPS of $1.12. Continue reading

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Sears Canada Moves Toward Liquidation

Sears Canada (SCC.TO) announced yesterday (10/10) that it would seek court approval to close all of its stores and lay off nearly all of its 13,000 employees.  The move comes after the company’s Executive Chairman Brandon Strazl failed to obtain sufficient financing for his bid to acquire the company.  The Board of Sears Canada has approved the liquidation.  A court hearing is scheduled for October 13.  If nothing changes, the company could begin liquidation sales on October 19. Continue reading

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Potential Implications of GE’s Latest Management Transitions

On Friday (10/6), after the market close, General Electric (GE) announced that three of its senior executives, all Vice Chairs – John Rice, CEO of GE’s Global Growth Operations, Beth Comstock, CEO of GE’s Business Innovations and Jeff Bornstein, CFO – will retire from the company on December 31, 2017.  Jamie Miller, currently the CEO of GE’s Transportation business was named CFO effective November 1, 2017. Continue reading

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Sears Holdings (SHLD): On a Course to Bankruptcy

It has been about 12 years since Edward S. Lampert acquired Sears and merged it with Kmart to create Sears Holdings (SHLD).  Despite numerous spin-offs, asset sales and store closings, which have provided positive returns to shareholders, Sears Holdings today remains unable to stem the slide in its sales and net operating losses.  In fact, SHLD’s financial performance has worsened considerably over the past few years. Continue reading

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Imperial Oil (IMO): The Poor Stepchild of Exxon Mobil

Imperial Oil (IMO), in which Exxon Mobil Corp. has a 69.6% stake, is the largest integrated oil company in Canada.  Across the value chain, it is a leading producer of oil (primarily through its assets in the Athabasca oil sands), the largest refiner of crude oil, a leading marketer of petroleum products and a major producer of petrochemicals. Continue reading

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HPE’s Transformation Continues with The Seattle Spin-Off

Since it was spun off from Hewlett-Packard Company in November 2015, Hewlett Packard Enterprise Company (HPE) has made several important strategic moves to remake its business. Continue reading

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Housing Market Outlook

Housing has been a consistent bright spot in an otherwise mediocre recovery. Critics complain that the recovery in housing has been lukewarm, because production levels are still well below levels seen in the years before the housing bust. Yet, housing production and new home sales have grown at double-digit rates on average since the 2011 trough. Continue reading

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The Fed Keeps Interest Rates on Hold

At the conclusion of its two-day meeting on July 26, the FOMC kept the Fed Funds target rate unchanged.  While this was expected by the financial markets, I thought that the FOMC might still actually raise the target rate.  At the very least, I expected some hint in its statement that it might act sooner than markets were expecting. Continue reading

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The Market’s Mistaken View on Fed Rate Hikes

The consensus view of the financial markets suggests that the FOMC will next raise its target Fed Funds rate in December (by a quarter point).  Currently, the target range is 1.00%-1.25%. Fed Funds futures currently suggest (as of July 13) a 97% probability that the Fed Funds target rate will remain unchanged at its upcoming meeting on July 26. The current probability of the target rate remaining unchanged stays high until December, when the probability of a quarter-point increase rises to 49% and a half-point increase rises to 8.4%. Thus, the Fed Funds futures market does not see a better than 50% probability of any increase until December.  Most economists and market strategists echo the view of the futures market. Continue reading

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