Notes on the 2017 Massachusetts Investor Conference (Part 2)

Affordable Housing. According to U.S. News and World Report, Massachusetts ranks as the best state in the nation in 2017, with top 5 scores in education, health care and economy. All around the state, there has been a resurgence in urban areas and revitalization of town centers. Massachusetts is a one of the most desirable places to live, but it is also one of the least affordable. Continue reading

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Notes on the 2017 Massachusetts Investor Conference (Part 1)

The Massachusetts economy is experiencing its most robust expansion since the late 1980s. Third quarter GDP growth was clocked at 5.9%, according to Mass Benchmarks. Leading indicators anticipate 2017 fourth quarter GDP growth of 3.3% and 2018 first quarter growth of 3.0%. Massachusetts’ unemployment rate was 3.9%, below the national average of 4.1%. Job creation has been strong and broad-based, except for manufacturing. Early in the recovery cycle, hiring was concentrated among white collar workers, but more recently, blue collar workers have been the primary beneficiaries of continued job growth. Continue reading

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Notes and Analysis From GE’s Investor Update

“You can’t grow long-term if you can’t eat short-term. Anybody can manage short. Anybody can manage long. Balancing those two things is what management is”
      -Jack Welch

As everyone knows, this has been a tough year for GE shareholders.  GE’s stock is down 40.8% year-to-date (thru 11/17) on a total return basis.  By comparison, the S&P 500 has delivered a 17.3% positive total return.  GE’s stark underperformance reflects both the decline in its earnings expectations – its 2017 operating EPS guidance (industrial operating + verticals) has been cut from $1.60-$1.70 at the beginning of the year to $1.05-$1.10 currently – and now the halving of the dividend.  2018 has been characterized as a “reset” year.  Management currently anticipates 2018 adjusted EPS of $1.00-$1.07, which is roughly half of the previous target of $2.00.  According to management, the change in performance and outlook reflects primarily sharply reduced expectations for GE’s Power business and continued weak performance in Oil & Gas and Transportation. Continue reading

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Notes and Analysis from HPE’s Analyst Meeting

Key takeaways:

  • Through its HPE Next transformation plan, HPE will spend $1.1 billion over the next two years to achieve annualized cost cuts of $1.5 billion by the end of 2020. It will reinvest about half of the savings to beef up global sales and marketing efforts.  HPE Next will streamline the company and make it more responsive to customers.
  • HPE’s key strategic emphasis is to accelerate growth by offering high margin services and solutions driven by its innovations in hybrid IT and the intelligent edge.
  • Management offered pro forma non-GAAP EPS guidance of $1.00 for 2017 and $1.15-$1.25 for 2018.
  • Longer term, HPE has set as targets 0%-1% annual revenue growth,4%-5% operating profit growth and 7%-9% EPS growth.
  • At 14.3 times pro forma 2017 EPS and 12.0 times projected 2018 EPS, HPE is cheap to the market and its peer group.

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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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