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WFC | Masters champion Woods to skip Wells Fargo Championship | Reuters Next month s PGA Championship is likely to be the next tournament appearance for Tiger Woods following the news the Masters champion will not play in next week s Wells Fargo NYSE WFC Championship in Charlotte North Carolina Woods had until Friday afternoon to enter the Wells Fargo but the deadline came and went without his committing to the May 2 5 event at Quail Hollow where he played last year Tournament director Gary Sobba confirmed the absence of the 15 times major champion Woods does not like playing the week before a major championship which all but rules out an appearance at the May 9 12 Byron Nelson tournament in Dallas Therefore the PGA Championship to be held at Bethpage in New York from May 16 19 is where he will next be sighted
Woods ended a decade plus major drought when he won the Masters two weeks ago moving to within three of matching the record 18 major titles won by Jack Nicklaus |
WFC | Fed Eyes Inflation as Trump Pushes Rate Cut Decision Day Guide | Bloomberg Go inside the global economy with Stephanie Flanders in her new podcast Stephanomics Subscribe via Pocket Cast or iTunes
Federal Reserve policy makers may decide Wednesday that falling inflation reinforces a message of caution on interest rate moves rather than bowing to President Donald Trump s demands for drastic action to boost the U S economy
The Federal Open Market Committee is all but certain to hold interest rates steady at the close of a two day meeting in Washington and repeat in its policy statement at 2 p m that the central bank will be patient in making future moves
The meeting includes no updated forecasts though Chairman Jerome Powell will give his assessment at a press briefing 30 minutes later He can expect questions on political pressure after the president tweeted on Tuesday hours after the Fed meeting began that the economy would soar if we did some lowering of rates like one point and some quantitative easing
The president s entreaties came as another political drama swirled around the central bank on Capitol Hill where Trump s planned nomination of ally Stephen Moore to the Fed s board looked increasingly uncertain Several Republican senators expressed concern about Moore following reports on controversial public remarks and other matters
Powell and his colleagues have repeatedly said they ignore political pressure and focus on their congressionally mandated goals of price stability and maximum employment Here s what they re trying to focus on amid the noise
Policy Bias
Policy makers are confronting a puzzling outlook that could push some FOMC participants to look to easing in the future and others to tighten Inflation has weakened this year falling further from the committee s 2 percent target while growth accelerated in the first quarter after early signs that it would slow The upshot will likely be a prolonged pause with a few talking of when to cut
The concern for many committee members remains the downside risks to inflation said Lindsey Piegza chief economist at Stifel Nicolaus Co in Chicago Further downward pressure on prices could force the Fed to move from a neutral policy stance to a defensive policy stance sooner than later
Economic Outlook
Most changes in the Fed s statement are likely to be in its description of current conditions reflecting the first quarter growth of 3 2 percent which was more than expected and job growth of 196 000 in March The committee may upgrade its characterization of the labor market consumer spending and housing activity
What Bloomberg s Economists Say
Policy makers will offer little evidence that they are drifting from their patient posture at the current meeting While first quarter GDP topped expectations the details of the report showed slower momentum beneath the surface Furthermore the inflation data are once again sagging below policy makers 2 percent objective Carl Riccadonna Yelena Shulyatyeva and Eliza Winger Economists
The language on inflation should be particularly important after core inflation which excludes food and energy and is considered by the Fed as a more reliable barometer of underlying pressures cooled to 1 55 percent in March
The economic data is generally improving but that is unlikely to matter much until core inflation picks up said Sarah House senior economist with Wells Fargo NYSE WFC Securities in Charlotte North Carolina There is a high bar for additional tightening until core inflation consistently meets 2 percent
Patient Pause
Officials may discuss the reference to being patient in the FOMC statement regarding future rate moves But economists expect the word will remain in place because dropping it could trigger expectations of a near term move
That said Powell can also expect to be quizzed in the press conference about what would prompt a rate cut a question he dodged after the March FOMC meeting Investors see close to 70 percent odds that the central bank will have cut rates by the end of the year according to pricing in interest rate futures contracts Chicago Fed President Charles Evans said April 15 a decline to 1 5 percent core inflation could call for lower rates
There is no great reason to tweak anything said Stephen Stanley chief economist at Amherst Pierpont Securities in New York They are waiting to see the whites of the eyes of inflation before moving again The main impetus for any cut would be a weakening in the economy |
WFC | McIlroy celebrates 30th birthday at happy Quail hunting ground | Reuters Rory McIlroy is back in North Carolina at the site of his first PGA Tour victory focused on winning the Wells Fargo NYSE WFC Championship again though with one eye turned towards the next two majors which are looming quickly in view McIlroy is part of a strong field at Quail Hollow in Charlotte joined by world number two Justin Rose and defending champion Jason Day for the PGA Tour event starting on Thursday The Wells Fargo will be McIlroy s only start between the first and second majors of the year last month s Masters and this month s PGA Championship The betting favorite at Augusta National where he had a chance to complete the career Grand Slam of majors he never contended en route to a tie for 21st behind winner Tiger Woods McIlroy does not plan to make a reconnaissance trip to PGA venue Bethpage Black before the May 16 19 championship in New York where he expects length off the tee to be more important than precision I ve never done that for a PGA before and I ve done pretty well at them so just treating it like any other event he told reporters on Wednesday referring to his 2012 and 2014 victories I would assume Bethpage is going to feel like a normal PGA Tour set up You re not really going to have to do anything different He will however prepare differently for June s U S Open at Pebble Beach by playing immediately beforehand at the Canadian Open instead of following his past routine of having the week off The decision to play his way in he will also contest the Memorial tournament in Ohio a fortnight before comes following a poor recent record at the U S Open since winning it in 2011 I ve been pathetic at the U S Open so I ve changed that up to make that my third event in a row said the Northern Irishman who turns 30 on Saturday Three missed cuts in a row it is pathetic More immediately McIlroy who turns 30 on Saturday hopes to celebrate his birthday in style at the place where he scored his breakthrough PGA Tour victory in 2010 with a final round 62 He shot 61 in the third round en route to winning in 2015 making him the only twice winner of the event |
WFC | McIlroy shoots 66 to share first round lead at Wells Fargo | Reuters Rory McIlroy hit a brilliant recovery shot on his way to a share of the first round lead with American journeyman Joel Dahmen at the Wells Fargo NYSE WFC Championship in North Carolina on Thursday McIlroy the only double winner of the event at Quail Hollow where he once shot 61 was at home at his happy hunting ground picking up five back nine birdies on an idyllic spring afternoon in Charlotte The Northern Irishman missed a good birdie chance at the last and settled for a five under 66 a score matched by Dahmen who was bogey free They headed a large group including American Patrick Reed by one stroke while defending champion Jason Day of Australia was two back Two days before his 30th birthday McIlroy did not quite fire on all cylinders but managed to do what he says has elevated his performances this year score well without being at the top of his game I didn t play my best today but I managed my game well scrambled well and it added up to a good score at the end of the day he told reporters McIlroy s second shot from the right rough at the par four 12th where he was stymied from taking dead aim at the pin had the gallery buzzing He threaded his ball between two trees hitting a deliberate hook that could hardly have been better executed His ball skirted a greenside bunker before taking the slope and rolling deliciously down to four feet Never mind that he subsequently missed the birdie putt I probably didn t deserve to make the putt after the tee shot McIlroy said of the three wood that got him into trouble in the first place I said to my caddie Harry before the second shot Is left bunker OK That s where I assumed it was going to go but it came out perfect had a little more cut on it than I thought it would out of the rough took a nice couple of hops and got up there pretty close McIlroy was the best player in the world for the first three months of 2019 but could hardly have picked a worse place than Augusta National for his shoddiest performance of the year His fifth chance to complete the career grand slam ended with a tie for 21st at the Masters but two weeks off gave him a chance to analyze his performance He concluded that he had fallen into some minor technical faults with his driver Close behind McIlroy and Dahmen was 2018 Masters champion Reed who said it had been important to take advantage of the perfect morning conditions The biggest thing especially around this place is to play boring golf he said I was able to put the ball from point A to point B fairly well and make some putts |
WFC | Wells Fargo expects to refund monthly service fees to some customers | By Imani Moise Reuters Wells Fargo NYSE WFC Co said on Friday it expects to refund some servicing fees to customers who may have been confused about how to avoid monthly charges The San Francisco based bank said in a securities filing it was reviewing past disclosures to consumers about mininum debit card activity requirements to waive certain monthly fees Roughly 90 percent of customers successfully avoid paying servicing fees on checking accounts by meeting certain requirements said Wells Fargo spokesman Jim Seitz Consumers can get waivers for the monthly fee by connecting a qualifying direct deposit or keeping the a minimum daily balance among other things The bank has made changes to address guidelines for how to get a waiver through debit card use that had the potential to be confusing We have made improvements in how we communicate all of the ways customers qualify for a monthly service fee waiver and how they can track their progress Seitz said It s the right thing to do for our customers The disclosure adds to the long list of remediation efforts going on at the fourth largest U S bank by assets after a string of admissions that it may have improperly charged customers for various financial products The bank became mired in scandal in 2016 when it revealed it had opened potentially millions of unauthorized accounts Since then issues have cropped up in each of Wells Fargo s primary business segments Wells Fargo has said it is committed to compensating all customers affected by its actions and has already paid out tens of millions of dollars to make consumers whole
In the same filing the company also raised the high end of potential losses in excess of the company s accrual to 3 1 billion up from 2 7 billion at the end of last year |
WFC | Dufner matches career low round as McIlroy stumbles at Wells Fargo | Reuters Jason Dufner emerged from hibernation to take the second round lead at the Wells Fargo NYSE WFC Championship on Friday while Rory McIlroy stumbled in Charlotte North Carolina Dufner the 2013 PGA Championship winner whose recent form has been woeful never looked back after pitching in from 35 yards for birdie at the first hole at Quail Hollow He added a 40 foot birdie putt at the penultimate hole en route to an eight under par 63 that matched his career low round on the PGA Tour I played what I would consider the scorable holes really well and then I threw in some others the 42 year old told PGA Tour Radio That s what happens on a day when you get in the low 60s Everything kind of meshed together With an 11 under 131 halfway total Dufner headed fellow Americans Max Homa 63 and Joel Dahmen 66 by one stroke The three frontrunners all played in the more benign morning conditions and ended the day well clear of the pack Northern Irishman McIlroy 70 and American Patrick Reed 69 were next five shots behind Dufner in a tie for fourth Defending champion Jason Day 69 and world number two Justin Rose 67 were among a group lurking six shots off the pace On Thursday McIlroy spoke about how he got the most out of his round with a 66 despite not playing at his best It was the reverse on Friday as the two times champion at Quail Hollow played quite well for most of the day but could not close out a good score He remained near the lead until he messed up the easy par four eighth his 17th where his tee shot found a bunker from where he took five more strokes to negotiate the final 55 yards He also bogeyed his final hole Leader Dufner unhappy with the state of his stagnant career changed pretty much everything at the end of last season including his instructor swing equipment and caddie However it has taken a while for him to reap any benefit He has not had a top 60 finish all year and has slipped to 230th in the world rankings However he now hopes things are finally turning in the right direction
I m just settling in to playing some better golf said the five times PGA Tour winner |
WFC | Markets Breath Sigh Of Relief On Initial Earnings Results | Markets breathed a collective sigh of relief on Friday as both China data and the first of the US bank earnings came out firmly in the green China trade data recovered with the trade surplus surging to USD32 64 billion and the street ignoring collapsing imports while new loan growth held steady at 13 7 Over on Wall Street JP Morgan and Wells Fargo NYSE WFC both beat expectations and Disney jumped more than 11 0 to show that perhaps the recovery is not Mickey Mouse after all
Meanwhile the S P rose 0 7 the Nasdaq was up 0 45 and the Dow Jones jumped a very respectable 1 0 driven by Disney Bond yields in both Europe and the US continue to gently rise on the global recovery story with the inverted yield curve panic of recent times a distant short term memory in the minds of traders
Over the weekend Treasury Secretary Mnuchin made upbeat comments on progress with the US China trade talks and the joint World Bank IMF conference also made optimistic noises on the state of the world economy
This should ensure Asia enjoys a positive start to the week which will be a busy one both politically and from a data perspective Asia s highlights occur on Wednesday with the China GDP and Indonesia going to the polls Both have the potential to bring volatility to local markets Japan and Singapore release trade data the same day ensuring the midweek has a Big Wednesday look to it
FX
The US dollar steadily lost ground against major currencies on Friday as risk sentiment improved following China s trade balance data The euro EUR led the charge higher rising to 1 1300 on alleged M A flows The single currency was given an additional lift as Wall Street s positive earnings began to hit the wires also flowing through to China high beta currencies such as the Australian and New Zealand dollars the antipodeans both recorded 50 point rises
With no negative news to deflate Friday s positive outlook we expect Asian currencies to get off to a positive start today with only second tier Indonesia and India data to light up the tickers this afternoon
Equities
The positive risk environment flowing on from Wall Street on Friday should ensure Asia s stock markets all track higher as the week starts Indonesian election nerves will likely limit gains in Jakarta but the other markets should have a clear runway
The US reporting season turns into a daily deluge this week with rafts of heavyweights from different sectors reporting each day which should keep Wall Street honest readers may debate this possibility
Oil
The global growth story worries about the deteriorating situation in Libya and consequent potential production loss inevitably flowed into oil prices on Friday Brent crude rose 0 9 to USD71 50 a barrel while WTI jumped 0 3 to 463 80 a barrel
The rise in prices was muted by oil s recent standards reflecting the extremely overbought technical picture and the fact that a lot of good news has been pumped into prices Winter is coming to HBO this morning and it may also be coming to oil prices in the not too distant future
Gold
Gold fell slightly to USD1 290 00 an ounce on Friday supported by a weaker dollar but capped by rising equities and bond yields The best that can be said is at least the yellow metal held its own following its fall from grace last Thursday The USD1 280 00 region remains the critical longer term support
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WFC | P G operating margin grooming product sales dip on strong dollar shares drop | By Richa Naidu and Soundarya J Reuters Procter Gamble Co reported a decline in its third quarter operating margin on Tuesday and said a strong U S dollar hurt sales of its grooming products sending shares of the maker of Tide and Gillette products down as much as 3 3 in morning trading Soaring commodity and transportation costs have eroded margins across the consumer goods industry over the past year P G said its core operating margin declined by 60 basis points to 19 9 and was hurt by foreign exchange fluctuations This was considerably below the estimates of some analysts Bernstein analyst Ali Dibadj for example forecast an operating margin of 20 9 The world s no 1 maker of personal care goods which gets more than half its sales from outside North America has tried to offset the higher costs by upgrading several products and then raising their prices Indeed price hikes on P G s skincare and detergent lines which include Tide Olay and SK II helped the Cincinatti based company beat revenue and profit estimates We re pricing to recover the costs not to recover the margin and so we typically see margin compression Chief Financial Officer Jon Moeller said on a call to discuss earnings Moeller said he expected P G s operating margin to grow again going forward Higher prices are often met with resistance from retailers but Moeller said the rises had stuck so far P G which also makes Pampers diapers and Febreze air fresheners reported a 5 percent rise in organic sales a keenly watched metric that excludes the impact of currency changes and mergers and acquisitions Price hikes contributed 2 percentage points to organic sales growth Some rivals too have benefited after raising prices Kimberly Clark Corp which makes Kleenex tissues and Huggies diapers said on Monday it beat first quarter earnings and revenue estimates by hiking prices and cutting operating costs to offset a stronger dollar and higher raw material costs Still the impact of foreign exchange fluctuations dragged organic sales down by 1 at P G s grooming business which makes Gillette razors gels and foams some of the company s most internationally distributed products Shares of P G were down 2 5 at 103 37 Organic sales from fabric and home care P G s biggest unit surged 7 The beauty business saw a 9 rise in organic sales helped by the premium SK II brand Wells Fargo NYSE WFC analyst Bonnie Herzog said that while she approved of the price hikes and sales growth in beauty she was concerned about weak sales at P G s grooming and baby care businesses Net income rose to 2 75 billion or 1 04 per share in the quarter ended March 31 Excluding items the company earned 1 06 per share beating the average analyst estimate of 1 03 per share
Net sales rose 1 1 percent to 16 46 billion beating analysts average estimate of 16 37 billion according to IBES data from Refinitiv |
WFC | Dollar Climbs on Signs the U S Is Doing Better Than the Rest of the World | Bloomberg The dollar climbed Tuesday as investors snapped up American stocks and bonds with concerns about the European economy helping to underpin appetite for the relative safety of the U S currency
The Bloomberg Dollar Spot Index rose as much as 0 5 percent to the highest level since March 8 as the greenback advanced against all of its Group of 10 counterparts except the Japanese yen which is also often seen as a haven The move came as better than anticipated U S corporate earnings helped drive the S P 500 index of stocks above its highest ever closing level while benchmark equity gauges in Europe and much of Asia rose by less
The dollar s gain also follows disappointing data on European consumer confidence and comes ahead of U S growth figures this Friday that are predicted to show the economy humming along at an annualized pace of around 2 2 percent The prospect of increasing divergence between the outlook for the U S and the rest of the world buoyed the greenback even as the market continues to price in interest rate cuts from the Federal Reserve and Treasuries rallied While the Fed has signaled that it doesn t intend to hike this year it s seen as less dovish than many other global central banks and there is a risk that current market bets for easing are dialed back
The market pricing in a rate cut is a little pessimistic said Brendan McKenna a strategist at Wells Fargo NYSE WFC Co in New York If the data beats expectations it may cause a repricing in the market and push sentiment about the Fed more towards neutral rather than a rate cut |
WFC | Golf Woods says Nicklaus s record in crosshairs | By Rory Carroll Reuters Tiger Woods said Jack Nicklaus s record of 18 major championships is in his sights following his triumph at the Masters as he enjoys a career extension after a prolonged period of injury woes In his first comments since winning his 15th major title and fifth green jacket the 43 year old American said he always thought Nicklaus s mark was reachable provided his career was long enough It took him an entire career to get to 18 Woods said in an interview with streaming service GOLFTV So now that I ve had another extension to my career one that I didn t think I had a couple of years ago if I do things correctly and everything falls my way yeah it s a possibility I m never going to say it s not except for a couple of years ago when I couldn t walk he said with a laugh Now I just need to have a lot of things go my way and who s to say that it will or will not happen That s what the future holds I don t know The only thing I can promise you is this that I will be prepared Everything was going Woods s way during his final round in Augusta a win he said that had yet to sink in The former world number one was two shots behind the leading Francesco Molinari at the 12th at Augusta National when the British Open champion opened the door by finding water en route to a double bogey It went from a one horse race with all of us kind of chasing Francesco to now Pandora s box is opened up playing 13 where there s at least seven with a legitimate chance to win the tournament with six holes to go Woods birdied the next hole to grab the lead and held his nerve despite a logjam of contenders He will make his first start since the Masters at the May 2 5 Wells Fargo NYSE WFC Championship in North Carolina where he will bid to match Sam Snead s all time record of 82 PGA Tour victories However Woods said he was just happy to show his two children the positive side of a career that was derailed by personal problems and a litany of back injuries that convinced many the best golfer of his generation was done They never knew golf to be a good thing in my life and only the only thing they remember is that it brought this incredible amount of pain to their dad and they don t want to ever want to see their dad in pain he said
And so to now have them see this side of it the side that I ve experienced for so many years of my life but I had a battle to get back to this point and it feels good |
WFC | Markets Await U S Bank Earnings | Wall Street closed flat as investors looked ahead cautiously to the start of earnings season Whilst financial firms pushed higher on the expectation of decent figures a more general fear that first quarter earnings will disappoint kept stocks in check
The outlook is not that great and it is getting worse Q1 earnings are expected to decline 4 2 year on year worse that 3 9 decline forecast just a week earlier This will be the first time that earnings have declined since 2016 Wells Fargo NYSE WFC and JP Morgan kick off earnings today With an earnings decline on the cards the big banks more so than ever will be used as bellwethers for the rest of the S P 500
Whilst earnings will of course be watched closely this is of course a backward looking measure forward guidance will be key This is the information that will tell us whether Q1 negative earnings are just a bump in the road or whether this is the start of a far more sinister trend
Solid U S Labour Market Boosts Dollar
The dollar snapped a three day losing streak jumping 0 2 higher versus a basket of currencies The buck rallied as US data showed that the U S labour market continued to tighten U S jobless claims hit a 49 year low just 196 000 people filed for unemployment benefits The impressive stats come just a week after U S non farm payrolls showed job creation was alive and well in the U S A strong labour market brings inflationary pressure an essential ingredient for the Fed to even consider raising interest rates later in the year
Baker Hughes Rigg Count To Drive OilOil has been a big story this week with decent swings in the price Oil experienced strong gains at the beginning of the week owing to fears of supply outages in Libya as the conflict in the oil producing North African country escalated These fears combined with OPEC output cuts lifted oil to year to date highs An unexpected surge in U S oil inventories pulled oil back from 5 months highs Investors will now look towards U S Baker Hughes rig count
Last week s figures showed that the number of active oil rigs operating in the U S increased by 15 to 831 That was the first increase in 7 weeks 2 consecutive increases in active rigs plus an upsurge in U S crude stockpiles fears will be growing that U S energy producers are about to ramp up production Crude fell 1 4 across the previous session the price remains above its main sma s meaning that the bull trend is still intact
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WFC | Nicklaus major record in play again for Woods | By Andrew Both AUGUSTA Ga Reuters The Tiger Woods major watch stagnant for so long that it had almost been abandoned is back on and Jack Nicklaus might yet be proved correct As the years ticked by from 2008 and an injury riddled Woods got stuck for more than a decade on 14 major titles four short of Nicklaus s record the Golden Bear kept saying he still thought his mark was in jeopardy Such talk while Woods battled a potentially career ending back injury was widely dismissed as little more than politeness from someone who could hardly say anything else But in winning the Masters at Augusta on Sunday to end an 11 year major drought Woods crept within three of catching Nicklaus Nobody wants their record to be broken but I certainly wouldn t want Tiger to be hurt and not able to do it Nicklaus told Golf Channel He s got me shaking in my boots Though the odds are still against 43 year old Woods who is racing against Father Time as well as a fused spine that could cause more problems it is no longer inconceivable to imagine him winning three or four majors The next two are at venues well suited to his game and where he has won the PGA Championship at Bethpage and the 2000 U S Open at Pebble Beach where he triumphed by a massive 15 strokes Then it is the British Open at Royal Portrush in Northern Ireland where nobody in this year s field has played a tournament MAJOR RECORD His peers think Sunday s victory could loosen the dam wall if not completely open the floodgates Rickie Fowler and Justin Thomas neighbors in south Florida who often play with Woods expressed a mixture of excitement and trepidation It keeps 18 majors in play Fowler told a small group of reporters amid what for Augusta National amounted to frenzied scenes outside the clubhouse as thousands of spectators congregated hoping to catch a glimpse of the new champion I don t doubt that this is going to be his most special one yet To get his 15th after a long wait after a lot of years away from competitive golf being in a position where he wasn t sure he was going to play again it s cool stuff Thomas acknowledged he had needed to be convinced Woods could win another major I thought today was going to be big in how he handled it said the 2017 PGA Championship winner He s been there a lot more than anyone but it had been a while since he had a chance to win here Joint Masters runner up Brooks Koepka expects Woods to challenge Nicklaus s record I think 18 is a whole lot closer than people think he said More immediately Woods can become the most prolific winner in PGA Tour history He now has 81 victories one short of Sam Snead whose record could be tied as soon as next month when Woods is likely to make his next appearance at the Wells Fargo NYSE WFC Championship in Charlotte North Carolina Then it will be the PGA Championship from May 16 19 where the focus will be back on the pursuit of Nicklaus s record Woods however preferred to savor his fifth Green Jacket I don t know if he s worried or not Woods said when asked whether Nicklaus should be concerned at being caught I m just enjoying 15 |
WFC | Wells Fargo WFC Beats Q1 Earnings And Revenue Estimates | Wells Fargo WFC came out with quarterly earnings of 1 20 per share beating the Zacks Consensus Estimate of 1 08 per share This compares to earnings of 1 12 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 11 11 A quarter ago it was expected that this biggest U S mortgage lender would post earnings of 1 17 per share when it actually produced earnings of 1 21 delivering a surprise of 3 42
Over the last four quarters the company has surpassed consensus EPS estimates two times
Wells Fargo which belongs to the Zacks Banks Major Regional industry posted revenues of 21 61 billion for the quarter ended March 2019 surpassing the Zacks Consensus Estimate by 3 44 This compares to year ago revenues of 21 93 billion The company has topped consensus revenue estimates three times over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
Wells Fargo shares have added about 3 6 since the beginning of the year versus the S P 500 s gain of 15 2
What s Next for Wells Fargo
While Wells Fargo has underperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for Wells Fargo was mixed While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 3 Hold for the stock So the shares are expected to perform in line with the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 1 21 on 21 04 billion in revenues for the coming quarter and 4 93 on 84 86 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Banks Major Regional is currently in the bottom 37 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
WFC | Financials Kick Off Q1 2019 Earnings | JP Morgan JPM Wells Fargo NYSE WFC and PNC Bank PNC kickoff Q1 2019 SP 500 earnings tomorrow and then next week another 50 60 companies across the 11 SP 500 sectors report their Q1 19 results However Financials usually lead off the earnings reports and usually complete their earnings releases before the end of the month
Clients own JP Morgan as a top 5 holding and own WFC through the XLF and PNC through the KRE
Financials have been under performing for 15 months now with the sector returning just 8 6 in Q1 19 versus the SP 500 s 13 6
Here is a table from JP Morgan s Guide to the Markets published 4 1 19 that gives a little more detail on the Financial sector
The metrics that jumped out to me were the correlation to Treasury yields and the P E ratio s relative to longer term averages
Schwab where client assets are custodied does some good research led by LizAnn Sonders and her crew Brad Sorenson a member of that Schwab group published this piece today on Financials and the yield curve wondering out loud whether Financials were a Value or a Value Trap and I do think it s the right question
JP Morgan with its wide business model scope covers traditional corporate banking the capital markets and the consumer In the 4th quarter of 18 JPM missed on the consensus EPS estimate by 10 that s a lot printing 1 98 in EPS versus the 2 19 consensus with a lot of it due to expense growth which is also expected to be up mid single digits in Q1 19 The good news around the Q4 18 release was that consumer credit continues to perform very well and given the low 200k jobless claims data released today and the healthy non farm payroll report US consumer balance sheets should remain in very good shape
JPM per consensus on Friday morning April 12th 2019 is expected to report 2 35 in EPS on 28 4 billion in revenue for expected y y growth of 1 and 2
With the way the credit and equity markets performed in Q1 19 you would think the capital markets and the investment management businesses will show strong results for Q1 19
Wells Fargo no longer interests me as an individual holding since I consider it to be a damaged brand And the regional banks are often commodity like businesses enough to warrant the investment in the ETF without trying to pick individual stocks
Summary Conclusion Financials will lap the tax cuts from the first two quarters of 2018 so y y growth will look below average but the sector is out of favor from a sentiment perspective and the valuations are quite reasonable To answer the Brad Sorenson question I do think there is more value in Financials than risk today but I also think the long end of the curve particularly the 10 year Treasury yield has to rise back towards the 2 75 3 range to get rid of this inversion fear
A trade for JPM above the 200 day moving average at 107 57 should take the stock back towards the 2018 highs near 115 120
While JPM is richly valued on a book value and tangible book basis on an earnings basis see the above table and the longer term PE averages the stock looks 15 20 undervalued
JPM fell 13 in 2018 and returned 4 5 in Q1 19
SCHW fell 18 in 2018 and returned 3 37 in Q1 19
XLF fell 13 in 2018 and returned 8 48 in Q1 19
KRE fell 19 in 2018 and returned 10 24 in Q1 19 |
EBAY | NYSE Parent No Longer Considering eBay Merger | Just days after the informal negotiations were revealed Intercontinental Exchange NYSE ICE the parent of the NYSE has said it is no longer interested in pursuing an acquisition of eBay NASDAQ EBAY
Having defended its pursuit of the online marketplace to investors during its earnings conference call who were apparently less than thrilled the stock exchange operator said it was no longer interested in a deal
Based on investor conversations following today s ICE earnings call ICE has decided to cease exploring strategic opportunities with eBay it said in a statement But that s OK because eBay apparently wasn t interested in selling itself anyway
Just an exchange of ideas
eBay has been under pressure from activist investor Starboard Value to sell parts of its business Just days ago it published a letter calling on management to divest its classified ads business so that it could return to its roots in targeting its historical core buyer universe of self expressionists and treasure hunters
eBay has been in turmoil for some time and is without a chief executive officer which would make it a prime target for a takeover effort But that doesn t mean it wanted it
According to ICE CEO Jeff Sprecher Curiosity and the fact that we know people there led us to open a dialogue And that s kind of the end of the story since the pitch apparently fell on deaf ears
eBay s stock is down by 4 in morning trading while shares of ICE are up by a like amount a reversal of when the news broke and the tech stock s investors were heartened by the news and ICE investors aghast |
EBAY | Stocks making the biggest moves midday Uber eBay T Mobile more | Check out the companies making headlines in midday trading on Friday Uber Technologies Shares of Uber popped more than 9 on pace for its best day ever since its IPO in May after the ride hailing company said it forecast reaching a key profitability goal sooner than expected CEO Dara Khosrowshahi said Uber would move its EBITDA profitability target to Q4 2020 from a previous goal of becoming profitable by the end of 2021 The company also reported a better than expected loss per share Wynn Resorts Wynn Resorts dropped 3 1 bringing its one month losses to more than 8 as its business continues to be impacted by the coronavirus due to restricted travel in China and around the world Hotel and cruise line companies have been taking the hardest hits from the deadly epidemic with Las Vegas Sands and Carnival falling 4 and 12 respectively in the past month Activision The video game maker s shares rose over 2 after the company reported fourth quarter earnings of 1 23 a share stronger than the 1 19 a share Wall Street expected according to a Refinitiv survey Activision also raised its dividend by 11 to 41 cents a share although its forecast of fiscal year earnings and revenue were below analysts expectations according to FactSet T Mobile Shares rose more than 2 after the company reported fourth quarter earnings that beat analysts expectations on the top and bottom line Revenue came in at 11 88 billion which was ahead of the 11 82 billion analysts had been expecting according to estimates from FactSet The mobile service provider earned 87 cents per share in the quarter which topped the consensus estimate of 83 cents eBay eBay slumped 3 5 on Friday after NYSE parent company Intercontinental Exchange announced that it would not continue to explore a possible acquisition of the e commerce company The stock had jumped sharply on Tuesday after the potential deal was reported Shares are still trading above where they closed on Monday Pinterest Pinterest rose more than 12 in midday trading after the company reported better than expected profit and revenue for the fourth quarter Analysts were pleased to see that Pinterest continued to invest in efforts to monetize its platform as well as improvements to its shopping features Because of the timing of new product rollouts ad tech improvements and focus on self serve tools among other key areas of focus we may continue to see variability in growth rates but overall we see Pinterest s continued focus to drive shoppability on its site and tie together top of funnel consumer behavior with transactability as a unique opportunity wrote Wedbush analyst Ygal Arounian Canada Goose Canada Goose shares dropped more than 4 after the Canadian clothing company issued weaker than forecast guidance for fiscal 2020 The company expects earnings per share to range between 1 33 Canadian dollars per share and CA 1 37 per share That s below a FactSet estimate of CA 1 65 per share CNBC s Yun Li Pippa Stevens Michael Sheetz Fred Imbert and Jesse Pound contributed reporting |
EBAY | Google takes on EU in court over record antitrust fines | By Foo Yun Chee BRUSSELS Reuters Google O GOOGL will on Wednesday seek to overturn the first of three hefty European Union antitrust fines at Europe s second highest court in a landmark case that could determine how EU enforcers take on U S tech giants for abuse of market power The company will lay out its arguments against a 2 4 billion euro 2 6 billion fine handed out by the European Commission during a three day hearing at the General Court EU regulators said this penalty was for Google s favoring its own price comparison shopping service to the disadvantage of smaller European rivals The EU has fined Google a total of 8 25 billion euros in three separate cases including one involving its Android smartphone operating system This is four times more than its rival Microsoft s O MSFT EU fines of 2 2 billion euros Both companies regulatory troubles in Europe have lasted a decade Google is expected to launch a three pronged attack against the Commission s 2017 decision which also included an order to treat competitors equally It is wrong on the law the facts and the economics Shopping ads have always helped people find the products they are looking for quickly and easily and helped merchants to reach potential customers Google said in a statement The key issue is whether self preferencing is anti competitive and whether Amazon O AMZN and eBay O EBAY should be counted as Google s rivals For rivals the case centers on Google s role as a central online gatekeeper Google s search service acts as a de facto kingmaker If you are not found the rest cannot follow No company should be allows to abuse such position to promote its own services at the detriment of competitors and consumers alike said lawyer Thomas Hoppner who advises clients who are critical of Google The judgement will have repercussions for a large variety of industries that depend on fair ranking of their services on Google Search he said The court ruling is likely to come next year In the meantime Margrethe Vestager in her new beefed up role as Europe s digital chief will not be idle She is set to announce several proposals in the coming months to rein in dominant U S online groups amid push back by the United States and the companies |
EBAY | Shopify hits record high on better than expected 2020 sales forecast | Reuters Canadian e commerce company Shopify Inc s TO SHOP N SHOP full year revenue forecast above analysts estimates and better than expected quarterly earnings on higher holiday sales pushed its shares to a record high on Wednesday Last year the company set aside over 1 billion to strengthen its delivery network in its biggest market the United States which is dominated by bigger rivals Amazon com Inc O AMZN and eBay Inc O EBAY Shopify has been investing in warehouse technologies such as machine learning and robotics and in October bought warehouse technology provider 6 River Systems for about 450 million The company is trying to be more than just an e commerce platform Wedbush analyst Ygal Arounian said adding that it is aiming to offer warehouse robotics easy delivery through fulfillment centers and everything else that merchants need to succeed Gross merchandise volume GMV a metric used in the e commerce sector to measure transaction volumes rose 47 to 20 6 billion in the fourth quarter edging past estimates of 20 03 billion The coronavirus outbreak did not have a material impact on Shopify s GMV Chief Financial Officer Amy Shapero said in a post earnings call The company would invest and focus more on expanding outside the U S and Canada Shapero said It forecast 2020 revenue in the range of 2 13 billion to 2 16 billion above the average analyst estimate of 2 11 billion according to IBES data from Refinitiv Ottawa based Shopify posted net income of 771 000 or 1 cent per share for the quarter ended Dec 31 compared with net loss of 1 5 million or 1 cent per share a year earlier Excluding items it earned 43 cents per share easily beating the average estimate of 23 cents per share Total revenue jumped 47 to 505 2 million and beat estimates of 482 5 million The company reported worldwide sales of over 2 9 billion between Black Friday and Cyber Monday up about 61 from the same period in 2018
U S listed shares of the company were up nearly 18 at 580 in morning trade |
EBAY | Earnings Estimates Moving Higher For EBay EBAY Time To Buy | EBay EBAY could be a solid addition to your portfolio given a notable revision in the company s earnings estimates While the stock has been gaining lately the trend might continue since its earnings outlook is still improving
The rising trend in estimate revisions which is a result of growing analyst optimism on the earnings prospects of this e commerce company should get reflected in its stock price After all empirical research shows a strong correlation between trends in earnings estimate revisions and near term stock price movements This insight is at the core of our stock rating tool the Zacks Rank
The five grade Zacks Rank system which ranges from a Zacks Rank 1 Strong Buy to a Zacks Rank 5 Strong Sell has an impressive externally audited track record of outperformance with Zacks 1 Ranked stocks generating an average annual return of 25 since 2008
Consensus earnings estimates for the next quarter and full year have moved considerably higher for eBay as there has been strong agreement among the covering analysts in raising estimates
The chart below shows the evolution of forward 12 month Zacks Consensus EPS estimate
12 Month EPS
Current Quarter Estimate Revisions
The earnings estimate of 0 72 per share for the current quarter represents a change of 7 46 from the number reported a year ago
Over the last 30 days seven estimates have moved higher for eBay while one has gone lower As a result the Zacks Consensus Estimate has increased 5 09
Current Year Estimate Revisions
For the full year the earnings estimate of 3 02 per share represents a change of 6 71 from the year ago number
In terms of estimate revisions the trend for the current year also appears quite encouraging for eBay Over the past month 12 estimates have moved higher compared to two negative revisions helping the consensus estimate increase 5 44
Favorable Zacks Rank
Thanks to promising estimate revisions eBay currently carries a Zacks Rank 2 Buy The Zacks Rank is a tried and tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
Our research shows that stocks with Zacks Rank 1 Strong Buy and 2 Buy significantly outperform the S P 500
Bottom Line
eBay shares have added 5 over the past four weeks suggesting that investors are betting on its impressive estimate revisions So you may consider adding it to your portfolio right away to benefit from its earnings growth prospects |
EBAY | Tesla Disney Snapchat EBay It s All Good News | Tesla s NASDAQ TSLA story has overshadowed earnings season all week by their tremendous gain but oddly other companies are having another issue Disney NYSE DIS for example beat earnings but didn t see a nice bounce neither did Snapchat NYSE SNAP Surprising considering their DAU base grew more than expected
We take questions and come up with answers on this episode of Paper Traders Check out the episode to see what else we touch on and while you re there like subscribe drop a comment or tell us to get off the web We want to hear from you
The Best Place to Start Your Stock SearchToday you are invited to download the full list of 220 Zacks Rank 1 Strong Buy stocks absolutely free of charge Since 1988 Zacks Rank 1 stocks have nearly tripled the market with average gains of 26 per year Plus you can access the list of portfolio killing Zacks Rank 5 Strong Sells and other private research |
EBAY | MercadoLibre MELI Reports Loss In Q4 Revenues Improve Y Y | MercadoLibre Inc NASDAQ MELI reported fourth quarter 2019 loss of 1 11 per share missing the Zacks Consensus Estimate of a loss of 69 cents Moreover the figure is wider than a loss of 5 cents and 97 cents reported in the year ago quarter and previous quarter respectively Mounting marketing spending affected the company s profitability during the reported quarter Revenues improved 11 8 sequentially and 57 5 on a year over year basis 84 4 on an FX neutral basis to 674 3 million Further the figure surpassed the Zacks Consensus Estimate of 668 million The top line was driven by accelerating marketplace and non marketplace revenues which grew 55 3 and 60 year over year respectively Further increasing total payments volume TPV on the back of robust Mercado Pago and mobile point of sale MPOS business remained a major positive Moreover solid TPV growth via Mobile wallet across Brazil Argentina and Mexico remains a major positive Additionally strong performance of Mercado Fondo and Mercado Credito contributed to the results Further the company s rising gross merchandise volume GMV courtesy of robust e commerce platform was tailwind Also strong momentum across free shipment program led to robust shipments growth via Mercado Envios during the reported quarter Notably shares of the company plunged 2 2 following wider than expected fourth quarter loss Nevertheless the company s well performing FinTech and logistics businesses drove the top line Further its strong focus toward delivering enhanced user experience remains a positive All these are expected to instill optimism in the stock Coming to the price performance MercadoLibre has gained 80 7 over a year outperforming the s rally of 20 4 Quarter in DetailBrazil Net revenues in the fourth quarter were 428 3 million 63 5 of total revenues up 61 4 year over year This can be attributed to improved gross billings which surged 29 5 on a year over year basis Further gross merchandise volume GMV improved 23 year over year owing to growing number of items sold in this region However the company witnessed weak momentum in Brazil across Black Friday or seasonal campaign Argentina This market generated revenues of 132 4 million 19 6 of revenues which climbed 45 8 year over year Gross billings in this country improved 40 9 from the year ago quarter Further the company witnessed solid growth in GMV in this country which soared 109 year over year owing to robust marketing campaigns Mexico Net revenues in the reported quarter were 84 8 million 12 6 of revenues up 86 4 year over year This was primarily came on the back of robust GMV which improved 53 from the prior year quarter that can be attributed to solid execution of fulfillment operations marketing investments and product assortment Additionally gross billings were up 91 1 from the year ago quarter Other countries These markets generated revenues of 28 7 million 4 3 of total revenues surging 9 1 on a year over year basis The company s gross billings in these countries were up 9 8 on a year over year basis GMV growth was flat on a year over year basis MercadoLibre Inc Price Consensus and EPS Surprise
Key MetricsGMV of 3 9 billion improved 19 7 year over year and 39 7 on FX neutral basis Total confirmed registered users at the end of the reported quarter were 320 6 million improving 19 9 year over year However new confirmed registered users during the period were 14 6 million declining 22 3 on a year over year basis Number of successful items sold was 109 5 million up 27 9 year over year Moreover number of successful items shipped surged 49 1 year over year to 92 6 million This can be attributed to strong performance of MercadoEnvios and optimization strategies for the company s free shipping program Total payment volume TPV was up 63 5 on a year over year basis to 8 7 billion driven by strong performance of MercadoPago in off platform payments volume online to offline which grew 121 3 from the year ago quarter Further the company gained traction in QR payments in Brazil and Mexico which was a positive Additionally MPOS business witnessed TPV growth of 126 1 year over year Further rapid adoption of MercadoLibre s Mobile Wallet generated 1 3 billion in transactions This marked the first time it crossed 1 billion mark and contributed significantly to the results TPV on marketplace was 3 7 billion up 23 9 year over year Further total payments transactions increased 127 3 year over year to 285 5 million Unique buyers improved 26 8 year over year to 24 1 million Moreover unique sellers were 4 2 million up 2 4 from the prior year quarter Operating DetailsFor the fourth quarter gross margin was 45 7 contracting 210 basis points bps year over year This can be attributed to rising warehousing costs and inventory costs on account of strong sales of MPOS devices Operating expenses as a percentage of total revenues came in 55 9 expanding significantly by 790 bps year over year The company reported a loss from operations of 68 9 million significantly wider than the year ago quarter s loss of 820 000 Balance SheetAs of Dec 31 2019 cash and cash equivalents were 1 38 billion declining from 1 42 billion as of Sep 30 2019 Short term investments were 1 6 billion in the fourth quarter down from 1 7 billion in the previous quarter Accounts receivable amounted to 35 4 million up from 35 1 million in the third quarter Further inventory at the end of the fourth quarter was 8 6 million up from 4 6 million at the end of previous quarter Zacks Rank Other Key PicksMercadoLibre currently has a Zacks Rank 2 Buy Some other top ranked stocks in the retail wholesale sector are Zumiez Inc NASDAQ ZUMZ Alibaba Group Holding Limited NYSE BABA and eBay Inc NASDAQ EBAY While Zumiez sports a Zacks Rank 1 Strong Buy Alibaba and eBay carry a Zacks Rank 2 You can see Long term earnings growth rate for Zumiez Alibaba and eBay is currently pegged at 12 25 8 and 10 26 respectively Today s Best Stocks from Zacks Would you like to see the updated picks from our best market beating strategies From 2017 through 2019 while the S P 500 gained and impressive 53 6 five of our strategies returned 65 8 97 1 118 0 175 7 and even 186 7 This outperformance has not just been a recent phenomenon From 2000 2019 while the S P averaged 6 0 per year our top strategies averaged up to 54 7 per year |
WFC | Wells Fargo Co Earnings Revenue beat in Q1 | Investing com Wells Fargo Co NYSE WFC reported first quarter earnings that beat analysts expectations on Friday and revenue that topped forecasts
The firm reported earnings per share of 1 2 on revenue of 21 61B Analysts polled by Investing com expected EPS of 1 12 on revenue of 20 97B That compared to EPS of 1 12 on revenue of 21 93B in the same period a year earlier The company had reported EPS of 1 21 on revenue of 20 98B in the previous quarter
Wells Fargo Co shares gained 1 72 to trade at 48 56 in pre market trade following the report
Wells Fargo Co follows other major Financial sector earnings this month
On Friday JPMorgan reported first quarter EPS of 2 65 on revenue of 29 85B compared to forecasts of EPS of 2 36 on revenue of 28 47B
PNC Financial earnings matched analysts expectations on Friday with first quarter EPS of 2 61 on revenue of 4 29B Investing com analysts expected EPS of 2 61 on revenue of 4 27B
Stay up to date on all of the upcoming earnings reports by visiting Investing com s earnings calendar |
WFC | The Wait Is Almost Over | Remember the April episode of the Zacks Ultimate Strategy Session is now available for viewing Don t miss your chance to hear
Sheraz Mian and Dr John Blank Agree to Disagree on whether the end of the U S China trade war will spark a new leg in the bull market
Kevin Matras answers your questions in Zacks Mailbag
Sheraz and Kevin Cook choose one portfolio to give feedback for improvement
Market conditions from both fundamental and technical views
The full list of top performing stocks over the past 30 days
New stocks added to the ZU portfolio
And much more
Simply log on to Zacks com and view the April episode here And please let us know what you think of these monthly episodes Email all feedback to mailbag zacks com
The stock market continues to spin its wheels with earnings season in the driver s seat and a trade agreement hopefully riding shotgun The three major indices came off their lows in the session but two of them still declined as we wait for the quarterly reports to start rolling in tomorrow
What about that third index Well the S P did come all the way back and technically finished in the green though no one s going to brag about an improvement of 0 11 of a point or 0 It sits just outside a new milestone at 2888 32 waiting for some reason to break through 2900 and on to new highs
Meanwhile the NASDAQ slipped 0 21 to 7947 36 while the Dow was off 0 05 or a little more than 14 points to 26 143 05
So here we go The market has experienced holiday like low volume of late as we wait to see what earnings season has in store The suspense is nearly over as J P Morgan Chase and Wells Fargo NYSE WFC are scheduled to lead things off tomorrow with several other big banks going to the plate next week
The market is preparing for a soft quarter According to the most recent Earnings Trends from Sheraz Mian total S P 500 earnings are expected to slip 4 4 from last year This would mark the first decline since the second quarter of 2016 and would provide further proof of the market s recent concern of slowing growth
The great thing about low expectations though is that they are easier to outperform And with a recession not expected in the near term it s possible that the season could be softer than recent quarters but still better than expected If that s the case then the market may finally have found the catalyst to drive stocks to new highs
And while we re being optimistic everything about the trade negotiations with China appear to be moving in the right direction Treasury Secretary Steven Mnuchin talked about being hopeful just yesterday which goes along with other encouraging statements from the likes of President Trump White House economic advisor Larry Kudlow and even China President Xi
A better than expected earnings season and a trade resolution would be a great double feature for this skittish market and we may not have a long wait for either Today s Portfolio Highlights Surprise Trader It s about to get real busy for this portfolio as earnings season unofficially starts tomorrow with a couple of the big banks Dave has already hit the ground running with two picks in as many days On Thursday he added a 12 5 allocation in Chart Industries GTLS a Zacks Rank 2 Buy that manufactures highly engineered equipment servicing end market applications in energy industry life science and respiratory healthcare The company has a positive Earnings ESP of 7 48 for the quarter coming next Thursday before the market opens See the full write up for more on GTLS Counterstrike Shares of Domo DOMO shot up to 47 from 30 early last month after a strong quarterly report which included a positive surprise of 24 However this operator of a cloud based platform has pulled back right into Jeremy s wheelhouse The stock now has a solid risk reward and its chart reflects a 61 8 Fibonacci retracement which the editor just loves to see Therefore he added DOMO on Thursday with a 10 allocation Learn more about this new buy in the full write up Technology Innovators 5G is here and it s only just begun to invade the globe s cellular mobile communications Brian Bolan wants to get involved right now so he added Airgain AIRG on Thursday This Zacks Rank 1 Strong Buy is a provider of embedded antenna technologies The stock has been moving higher and it should continue to do so as 5G sparks tons of future orders The editor thinks AIRG could easily see 22 or more down the road He also appreciates the stock s three consecutive positive surprises all of which were triple digit beats Read a lot more about this new buy in the complete commentary
All the Best
Jim Giaquinto
Recommendations from Zacks Private Portfolios Believe it or not this article is not available on the Zacks com website The commentary is a partial overview of the daily activity from Zacks private recommendation services If you would like to follow our Buy and Sell signals in real time we ve made a special arrangement for readers of this website Starting today you can see all the recommendations from all of Zacks portfolios absolutely free for 7 days Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises which we ve predicted with an astonishing 80 accuracy Click here to test drive Zacks Ultimate for FREE |
EBAY | Can EBay EBAY Keep The Earnings Surprise Streak Alive | Have you been searching for a stock that might be well positioned to maintain its earnings beat streak in its upcoming report It is worth considering eBay EBAY which belongs to the Zacks Internet Commerce industry
When looking at the last two reports this e commerce company has recorded a strong streak of surpassing earnings estimates The company has topped estimates by 6 38 on average in the last two quarters
For the last reported quarter eBay came out with earnings of 0 67 per share versus the Zacks Consensus Estimate of 0 65 per share representing a surprise of 3 08 For the previous quarter the company was expected to post earnings of 0 62 per share and it actually produced earnings of 0 68 per share delivering a surprise of 9 68
Price and EPS Surprise
For eBay estimates have been trending higher thanks in part to this earnings surprise history And when you look at the stock s positive Zacks Earnings ESP Expected Surprise Prediction it s a great indicator of a future earnings beat especially when combined with its solid Zacks Rank
Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank 3 Hold or better produce a positive surprise nearly 70 of the time In other words if you have 10 stocks with this combination the number of stocks that beat the consensus estimate could be as high as seven
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
EBay has an Earnings ESP of 4 90 at the moment suggesting that analysts have grown bullish on its near term earnings potential When you combine this positive Earnings ESP with the stock s Zacks Rank 3 Hold it shows that another beat is possibly around the corner The company s next earnings report is expected to be released on January 28 2020
Investors should note however that a negative Earnings ESP reading is not indicative of an earnings miss but a negative value does reduce the predictive power of this metric
Many companies end up beating the consensus EPS estimate but that may not be the sole basis for their stocks moving higher On the other hand some stocks may hold their ground even if they end up missing the consensus estimate
Because of this it s really important to check a company s Earnings ESP ahead of its quarterly release to increase the odds of success Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported |
EBAY | EBay EBAY Beats Q4 Earnings And Revenue Estimates | EBay EBAY came out with quarterly earnings of 0 81 per share beating the Zacks Consensus Estimate of 0 75 per share This compares to earnings of 0 71 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 8 A quarter ago it was expected that this e commerce company would post earnings of 0 65 per share when it actually produced earnings of 0 67 delivering a surprise of 3 08
Over the last four quarters the company has surpassed consensus EPS estimates four times
EBay which belongs to the Zacks Internet Commerce industry posted revenues of 2 82 billion for the quarter ended December 2019 surpassing the Zacks Consensus Estimate by 0 55 This compares to year ago revenues of 2 88 billion The company has topped consensus revenue estimates four times over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
EBay shares have lost about 1 7 since the beginning of the year versus the S P 500 s gain of 0 4
What s Next for eBay
While eBay has underperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for eBay was unfavorable While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 4 Sell for the stock So the shares are expected to underperform the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 0 70 on 2 66 billion in revenues for the coming quarter and 2 89 on 11 02 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Internet Commerce is currently in the bottom 29 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
WFC | U S First Quarter Growth Looking Better But Rest of Year Is Not | Bloomberg Economists expect U S first quarter growth to decelerate less than previously thought even as they cut forecasts for the rest of the year projecting a second quarter rebound will fade as the effects of tax cuts wane
The median estimate for growth in the first three months of the year increased to 1 6 percent from 1 5 percent seen last month according to an April 5 10 Bloomberg News survey At the same time forecasts for the second quarter held at 2 6 percent while those for the third edged down to 2 2 percent and were also lower for the fourth at 2 percent
The shift left full year 2019 growth forecasts unchanged at 2 4 percent followed by 1 9 percent in 2020 indicating most economists remain skeptical that President Donald Trump will enjoy a second straight year of around 3 percent expansion The projections also reinforce the Federal Reserve s patient stance on interest rates as policy makers gauge slowing global growth and subdued inflation
The boost in first quarter estimates reflects forces such as slower imports and higher than expected inventory accumulation which could weigh on growth this year Mark Zandi chief economist at Moody s Analytics Inc has bumped up his first quarter forecast to 2 5 percent from 1 1 percent and lowered his estimates for the second third and fourth quarters compared with a March survey
For the first quarter growth has been juiced up by a much bigger gain in inventories than we had estimated a month ago Zandi said Inventories are becoming a problem and we have businesses working off those inventories in Q2 Q3 and into Q4
Surprise Drop
Businesses were surprised at how strongly quickly demand fell off coming into 2019 Zandi said They just produced too much
The Commerce Department will release its first quarter gross domestic product report April 26
From a broader perspective slower growth in 2019 is partly due to the waning impact of Republican tax cuts The fiscal stimulus helped push the full year growth rate in the fourth quarter to 3 percent a level Trump has boasted of achieving and now may be at risk
The hope for the tax bill was that cutting corporate taxes would provide a sustainable boost to business investment yet for whatever reason we just haven t seen that said Jay Bryson global economist at Wells Fargo NYSE WFC Co
The survey also showed economists expect Fed policy makers will keep rates on hold until through the end of next year A Bloomberg survey in late March showed 20 of 37 analysts polled believe the Fed is done raising rates in this cycle |
WFC | European shares edge lower as Unicredit Banco Santander fall | Reuters European shares ticked lower on Friday dragged down by banks while lingering worries over global growth kept investors on edge before the crucial earnings season in the United States The pan European STOXX 600 index was down 0 2 percent at 0718 GMT on track to end the week lower after two weeks of gains All major markets in the region fell Concern about sluggish global growth were reinforced this week by central banks in the euro zone and United States which maintained their dovish stances and separately warned of risks to the world economy Wall Street banks JP Morgan and Wells Fargo NYSE WFC report results on Friday opening a U S earnings season that analysts expect will see the first year on year contraction in quarterly profits since 2016 Banco Santander MC SAN and UniCredit pulled the banking sector down 0 5 percent All other European sectors were flat or lower Banco Santander dropped 0 8 percent after the Spanish bank announced an offer to buy the 25 percent stake it doesn t own in its Mexican unit in an all share deal worth around 2 6 billion euros 2 93 billion UniCredit fell 1 percent after Italy s biggest bank said it is one of the banks accused of running a cartel in trading euro zone government bonds between 2007 and 2012 as financial crises dragged down banks and several European economies London based online trading platform Plus500 LON PLUSP plunged 37 percent as revenue for the first quarter dropped to around a fifth of last year s hurt by a fall in trading volumes Its results dragged rival IG Group s shares down 7 percent to the bottom of STOXX 600 CMC Markets shed more than 5 percent Volkswagen DE VOWG p AG dipped after China s JAC Motors said the two companies had not held talks despite reports VW was interested in taking a stake in the Chinese electric vehicle maker Germany s Software AG rose after the company released preliminary results for the first quarter and raised the outlook for its Adabas Natural business line
Swiss train and carriage manufacturer Stadler Rail jumped 11 percent after its debut on the SIX Swiss Exchange |
WFC | Chart of the Day Well s Fargo Stock Likely To Drop Technicals Show | Wells Fargo NYSE WFC is scheduled to release Q1 corporate earnings Friday before market open Our expectation is a 1 12 EPS the same as for the corresponding quarter last year when earnings came in very short at 0 98
Analysts have cut this year s Q1 revenue outlook to 20 97 billion from forecasts of 21 7 billion for the same period last year Q1 2018 s actual results missed that estimate coming in at only 21 55 billion That disappointment followed five years in which all revenue results and almost all earnings met or beat estimates
While the stock has gained around 6 since the start of 2019 in the last month it s dropped almost 2 to close at 48 88 yesterday With the technicals also suggesting a downward momentum we believe the shares are likely to slip to at least 45
The stock has been trading within a pennant a continuation pattern late March The pattern develops presumably on profit taking after the drop from the 52 42 high that confirmed the resistance of the 200 DMA as well as on hopeful bulls
The pennant bearish in a downtrend has fallen since March 21 below its short term uptrend line since the December bottom In the medium term the price has been trading within a descending channel since January 2018 in which both buyers and sellers have agreed on the outlook for lower prices
The prices have fallen below the major MA s after the price as mentioned tested the 200 DMA and the 50 and 100 DMA overcame the current price amid the pattern s emergence Also the 100 DMA just demonstrated resistance over the 50 DMA
The MACD s short MA has been finding resistance below the long MA amid the pennant s formation and the RSI has posted a lower peak early February suggesting a downward path for momentum
Trading Strategies Short Position Setup
Conservative traders should wait for a decisive downside breakout of the pennant with at least a 3 penetration to 46 75 to weed out a bear trap then wait for a return move to retest the pattern s integrity with at least one long red candle engulfing a green or small candle of either color before committing to a short position
Moderate traders would be content with a 2 filter to about 47 while waiting for the potential pullback for a better entry but not necessarily for proof of trend
Aggressive traders may enter a short now as the price is near the pattern s top s resistance after finding resistance by the 50 100 DMA and the 50 s bowing down to the 100 DMA s resistance and falling below the short term uptrend line since the December rout after the price found resistance by both the 200 DMA and the channel top
Trade Sample
Entry 49
Stop Loss 50 round psychological number above the pattern
Risk 1
Target 45 above December trough the lowest since Oct 4
Reward 4
Risk Reward Ratio 1 4 |
EBAY | Activist Efforts Meets Potential Takeover Headlines for eBay | When it comes to activist investors Starboard Value LP is one of the better known names And when it comes to former great online growth stocks eBay Inc NASDAQ EBAY fits in that used to be and has been club quite nicely On top of activist investor news now eBay finds itself in the rumor mill as well Starboard Value is shown to hold more than a 1 stake in the outstanding shares of eBay and the activist investor group is now going back after eBay to make more change Starboard sent a letter to eBay acknowledging that eBay did cooperate with both Starboard and Elliott Management but they also want more action According to the investment group eBay s strategic review is nearly 12 months since the commitments and not enough progress has been made Specifically Starboard cited that no clarity has been provided on a separation of Classifieds and that the operating review targets anticipate only limited margin expansion while revenue growth has continued to decelerate The group also noted that eBay has not added a new director and has not announced the departure of an incumbent independent director div connatix margin bottom 1 5em div connatix img margin unset According to Starboard s value proposal and despite the 4 05 billion sale of StubHub the letter said We continue to believe that eBay is deeply undervalued and that significant opportunities exist to create value for the benefit of all shareholders based on actions that are within the control of management and the Board We believe eBay has an opportunity to create significant shareholder value through the separation of eBay Classifieds Group Classifieds and that at peer trading levels the implied valuation of the core Marketplace business Marketplace is extremely attractive with opportunities to improve revenue trends execution and profitability in the core business Where the reports stands out on the Classified unit is that other classified operations have a media value of 22 times expected EBIDTA but eBay is valued at only 8 times forward EBITDA Starboard s letter said In our view eBay s Classifieds business is similarly attractive to many of these companies and would trade at a similar valuation if it were a standalone public company The Company has guided to high single digit growth and with the recent added disclosure of segment margins we estimate that Classifieds Adj EBITDA margins are in the low mid 40 range Based on this financial profile and peer trading levels we believe that a separation of Classifieds would unlock a tremendous amount of value for eBay s shareholders and create significant upside in the stock As for the unlocking a potential sale is one issue but so is the tax free spin off proposal eBay issued a response and showed multiple instances where the company has made efforts to make changes from delivering on financial commitments scaling growth initiatives increasing margins returning capital to shareholders transforming its portfolio of operations and refreshing its board of directors The statement said The eBay Board of Directors includes a director jointly nominated and agreed upon with Starboard a representative of one of our largest shareholders Elliott Management and other strong experienced and independent directors The Board and eBay s management team are aligned in their commitment to taking all appropriate steps to drive the value of the Company Our Board and management team have implemented changes based on investor input and have taken significant actions to deliver long term shareholder value and strengthen the business Through that lens we will review Starboard s letter and perspectives as we continue to rigorously review our business and opportunities for growth and value creation eBay shares had been down under 35 earlier on Tuesday but the stock popped up over 8 to 37 40 on word that IntercontentalExchange Inc NYSE ICE has approached eBay multiple times about a potential takeover ICE s market cap is 54 billion most investors think of it as one of the few global leaders in stocks futures and other securities trading Suddenly the trading volume was double the normal daily volume With a 52 week range of 33 53 to 42 00 eBay has a market cap of 30 billion and the Refinitiv consensus analyst target has now dropped down to 38 73
By Jon C Ogg |
WFC | How Wells Fargo s regulators and employees drove out its CEO | By Imani Moise and Pete Schroeder NEW YORK WASHINGTON Reuters The day after former Wells Fargo NYSE WFC Co Chief Executive Tim Sloan told U S lawmakers he was transforming the bank s high pressure culture Federal Reserve officials met privately with bank employees At the meeting on March 13 which has not been previously reported Fed officials were told by four bank employees that little had changed within the bank s culture since the scandal that engulfed Wells Fargo almost three years ago Among those present at the meeting was Fed Governor Lael Brainard who is overseeing a decree requiring that Wells Fargo fix its risk management before it can resume growing two sources with direct knowledge of the matter said The employees belonged to an advocacy group Committee For Better Banks which confirmed the meeting Brainard told the group she was there to listen and get insight into the mood among Wells Fargo staff but declined to say if or how the Fed would respond the sources said While regulators occasionally meet with consumer advocacy or industry groups it is unusual for a Fed board member to meet with an individual firm s employees It is not clear who asked for the meeting Sloan abruptly departed the bank last month making him the second CEO to leave Wells Fargo in the wake of its sales practice scandal Sloan who declined to comment on this story through a representative has previously said he stepped down because he felt the external attention on him had become a distraction His departure was at least partly the result of the board s conclusion that Sloan had failed to convince regulators that he could transform the bank and rally a staff that had low confidence in its leadership according to a source with knowledge of the board s thinking Wells Fargo spokesman Mark Folk declined to comment on regulatory matters but disputed the employee group s characterization of the bank s culture Sloan s struggles underscore the challenges faced by the bank s next chief executive They will not only have to transform the bank and its sales practices but also persuade regulators and its 260 000 employees that they have done so Finding a new CEO who can win over the bank s employees is as important as finding someone who can charm regulators and Wall Street said Russell Raath president of management consulting firm Kotter The whole bank needs to know that this person cares about their contribution to the top and bottom line he said STRAINED RELATIONSHIP Wells Fargo s relationship with regulators has been strained since 2016 when employee whistleblowers revealed the bank had opened potentially millions of unauthorized accounts Internal and regulatory probes have since discovered other issues in the bank s businesses resulting in billions of dollars in fines and penalties In February 2018 Wells Fargo signed a Fed consent order that required the bank to fix its risk management and governance problems before it could grow its balance sheet Two months later the Office of the Comptroller of the Currency OCC Wells Fargo s other key regulator ordered the bank to make similar fixes and repay customers to whom it had improperly sold mortgages and auto insurance In December Reuters reported that the Fed had rejected the bank s initial remediation plan putting it behind schedule Days later Federal Reserve Chairman Jerome Powell told Congress the Fed would not lift the asset cap until it was satisfied that Wells Fargo had fixed its risk problems LOW MORALE An internal company wide survey around that time also pointed to low morale according to the Committee For Better Banks and other Wells Fargo employees The bank internally published a write up about the survey saying Wells Fargo found itself at a challenging and interesting crossroads Some employees felt that the description sugar coated the findings sources said That sparked dozens of comments from workers criticizing management for being out of touch according to the sources and screenshots of the internal site reviewed by Reuters A consumer loan underwriter complained on the internal site that the concerns about pay and employee benefits were falling on deaf ears For years team members have been expressing their concerns and frustrations the employee wrote The only response if any are canned answers and talking points which we all know is baloney An analysis of the survey Wells Fargo published publicly showed only 38 percent of employees felt senior management understood obstacles faced by frontline workers Wells Fargo s Folk said the company seeks and values input from employees and that the bank has already made a number of improvements based on the feedback He pointed to other categories in the survey that showed employees believed in the bank s values and were satisfied For example 72 percent of employees said they believe Wells Fargo is a good place to work REGULATORY REBUKE Sloan testified before Congress on March 12 in a hearing about the bank s progress since 2016 As a gesture of goodwill Wells Fargo took the unusual step of offering the OCC the opportunity to review his testimony in advance according to a source with direct knowledge of the matter It is unclear how the OCC responded In his testimony Sloan detailed Wells Fargo s extensive transformation efforts but regulators remained skeptical Sloan had barely finished speaking when the OCC said it was still disappointed by the bank s remediation efforts The next day after Wells Fargo disclosed Sloan had gotten a 5 percent pay raise the Fed responded that it expects boards to hold management accountable A week later Powell told reporters the bank had suffered a remarkably widespread series of breakdowns that needed to be addressed in a fundamental way These rebukes undermined Sloan s position at the bank the source with knowledge of the board s thinking said On March 26 Sloan told the board he had decided to resign according to a regulatory filing Three days later he publicly stepped down |
WFC | U S consumer watchdog says all options on table for enforcing Wells Fargo order | By Michelle Price and Imani Moise WASHINGTON NEW YORK Reuters The U S Consumer Financial Protection Bureau CFPB has told Congress that all options are on the table for enforcing a 2018 consent order against Wells Fargo NYSE WFC raising the prospect of potential future penalties or other sanctions against the bank In a letter to Democratic Senators Elizabeth Warren and Sherrod Brown published by the lawmakers on Tuesday CFPB Director Kathy Kraninger said she was unhappy with Wells Fargo s progress fixing its risk management issues I am not satisfied with the bank s progress to date and have instructed staff to take all appropriate actions to ensure the bank complies with the consent order and Federal consumer financial law she wrote in the letter dated April 5 Broadly speaking I consider all options on the table for enforcing Bureau consent orders Kraninger added Wells Fargo Wells declined to comment In April 2018 the CFPB and the Office of the Comptroller of the Currency OCC jointly fined Wells Fargo 1 billion for mis selling auto loans and mortgage products and ordered the bank to repay harmed customers and fix its controls and processes The terms of the consent order give Kraninger and OCC Director Joseph Otting extensive powers to sanction the bank with additional penalties business restrictions or the removal of bank personnel if they believe it has failed to devise a satisfactory remediation plan The OCC is fully engaged and prepared to ensure Wells Fargo corrects the identified deficiencies Otting wrote in a separate April 3 letter to Warren Federal Reserve Chair Jerome Powell also writing to the senators on April 3 repeated his pledge to retain an asset cap the Fed imposed on the bank in February 2018 until it has met its obligations under that separate consent order The bank has said it is committed to compensating all customers affected by its actions and has already payed out tens of millions of dollars to make consumers whole Senators Warren and Brown wrote to the three regulators on March 22 seeking reassurance that they would take a tough line on the bank and calling on them to remove Chief Executive Tim Sloan Sloan announced he was resigning on March 28
Reuters reported on Tuesday that Sloan s departure was at least partly the result of the board s conclusion that he had failed to convince regulators that he could transform the bank and rally a staff that had low confidence in its leadership |
EBAY | Why eBay Stock Fell Wednesday | What happened
Shares of eBay NASDAQ EBAY took a hit on Wednesday falling as much as 5 1 As of market close however the stock was down 4 5
The pullback in the online marketplace specialist s stock price comes despite eBay s better than expected earnings per share in the fourth quarter of 2019 The decline is likely primarily due to the company s softer than expected outlook for its first quarter 2020 revenue
So what
eBay s fourth quarter revenue fell 2 year over year to 2 8 billion This was in line with analysts average forecast for the metric Non GAAP adjusted earnings per share of 0 81 however was ahead of a consensus estimate for 0 76
eBay said active buyers across its platform rose 2 year over year to 183 million But the tech company s total gross merchandise volume fell 5 or 4 on a constant currency basis over this same timeframe
Now what
Looking ahead management said it expects first quarter revenue between 2 55 billion and 2 60 billion This range is below analysts average forecast for revenue of 2 64 billion during the period Management forecast non GAAP EPS between 0 70 and 0 73 This compares to an average analyst estimate of 0 70 |
EBAY | eBay s Guidance Underwhelms Again | eBay NASDAQ EBAY may have released slightly better than expected fourth quarter 2019 results on Tuesday after the markets closed but you wouldn t know it with shares of the online marketplace platform down nearly 5 since then in response
It certainly didn t help that eBay stepped over a low bar beating the conservative guidance that left investors wanting more three months ago To that end eBay s drop can be credited once again to its seemingly light view of the months ahead
Before we get there let s take a closer look at eBay s latest quarter starting with its headline numbers
Data source eBay GAAP generally accepted accounting principles
Adjusted for one time items eBay s non GAAP adjusted earnings from continuing operations fell a more modest 2 to 661 million And thanks to the company s ambitious stock repurchase efforts including 28 million shares bought back for 1 billion alone in Q4 eBay managed to increase its adjusted earnings per share by 15 to 0 81
By comparison both the top and bottom lines compared favorably to the midpoints of eBay s own outlook provided in October which called for revenue of between 2 77 billion and 2 82 billion and adjusted earnings per share of 0 73 to 0 76
The trends underlying these results were mostly encouraging active buyers increased 2 year over year remaining steady from last quarter to 183 million And revenue would have been flat had it not been for the negative effects of foreign currencies eBay s marketplace platforms gross merchandise volume GMV also fell 5 as reported down 4 on a currency neutral basis to 22 billion translating to revenue of 2 2 billion down 3 as reported and 1 at constant currencies
eBay also continued to advance its younger strategic growth initiatives The company s new Promoted Listings service saw revenue soar 73 year over year to 136 million with more than 1 1 million sellers promoting advertising over 320 million listings in the holiday quarter up from one million active sellers and 300 million listings in the third quarter On the managed payments side eBay has now processed more than 2 billion of gross merchandise volume for nearly 25 000 sellers up from 1 1 billion last quarter
Meanwhile outside of the core marketplace segment classifieds platform revenue rose 3 as reported 6 at constant currency to 269 million and StubHub revenue grew 2 to 321 million
That said in a culmination of a months long strategic review process to determine the future of its non core subsidiaries eBay also reached a deal during the quarter to divest StubHub to global ticket marketplace specialist viagogo for 4 05 billion That transaction should close by the end of the current first quarter of 2020
Perspective on guidance
As we enter 2020 our priorities are clear we will continue to drive revenue through our growth initiatives deliver more seller tools improve the buyer experience by leveraging our structured data foundation all while driving more margin expansion said eBay CEO Scott Schenkel We believe these efforts will position us for sustainable profitable long term growth and I am excited by the opportunities ahead
For the first quarter of 2020 eBay anticipates revenue of between 2 55 billion and 2 60 billion the midpoint of which would represent roughly flat organic currency neutral growth from last year That should translate to GAAP earnings per share of 0 50 to 0 53 and adjusted earnings per share of 0 70 to 0 73 By comparison most analysts were looking for Q1 earnings near the low end of that range but on higher revenue of 2 64 billion
As such eBay sees full year 2020 revenue of between 10 72 billion and 10 92 billion good for organic currency neutral growth of 1 to 3 with adjusted earnings per share of 2 95 to 3 05 Keep in mind however that this outlook assumes all current subsidiaries including StubHub will be in place for the entire year Here again Wall Street was modeling lower earnings of 2 86 per share but on revenue right at the top end of eBay s guidance range
In the end while eBay is doing an admirable job expanding margins and propping up its bottom line it s obvious the market is bothered by its top line headwinds as other online shopping platforms like Amazon com continue to enjoy enviable growth As long as that dynamic holds true that is until eBay shows more tangible progress toward fulfilling its promise for sustainable profitable long term growth I suspect eBay s share price will remain under pressure |
EBAY | Cramer s lightning round Stay away from eBay | It s that time again Mad Money host Jim Cramer rings the lightning round bell which means he s giving his answers to callers stock questions at rapid speed |
EBAY | Everything Jim Cramer said about the stock market on Mad Money next week s earnings coronavirus uncertainty and eBay s stock | CNBC s Jim Cramer offers a preview of next week s busy earnings schedule which includes quarterly reports from companies such as Clorox and Disney The Mad Money host also argues there is still too much uncertainty about the coronavirus and the stock market Cramer then takes viewers calls on eBay and Peloton |
EBAY | EBay 4 after Starboard ramps up the pressure | EBay NASDAQ EBAY is higher in early trading after Starboard Value gets vocal again on the direction of the company The hedge fund wants eBay to separate the classifieds business and come up with a more aggressive operating plan We continue to believe that eBay is deeply undervalued and that significant opportunities exist to create value for the benefit of all shareholders based on actions that are within the control of management and the Board Shares of eBay are up 4 36 premarket to 35 89 |
EBAY | eBay Earnings Show Worsening Volume Trends | Investors had low expectations heading into eBay s NASDAQ EBAY fourth quarter earnings release last week While integrated e commerce giants like Amazon com and Walmart have been enjoying robust sales growth the online marketplace has struggled with losses in part due to state tax law changes that effectively raised prices on many of its products
Last week eBay announced results that did little to change that overall weak operating picture The company also projected another year of sluggish growth but robust cash generation
Let s dive right in and see what the report had to say
Sales trends weakened
eBay remained a powerful force in e commerce during the holiday season with its marketplace ranking second in online retailing traffic Yet the business failed to improve on the weak operating trends that shareholders witnessed through most of 2019 Growth in its buyer pool fell to just 2 in fact after having held at 4 through the last four quarters
Sales volumes declined in both the U S and international segments too with the 8 domestic slump representing a new low On a global basis organic growth slowed to 1 versus 3 in the prior quarter and 5 a year ago Major pressures included the rollout of new state tax collection requirements and eBay s decision to scale back on inefficient marketing channels
On the bright side the company achieved good growth in its promoted listings program and its payments processing These wins offset the falling sales volumes to keep revenue inching higher
Solid profit trends
The news was better on the financial side of the business eBay managed to reach its profitability goal for the year with operating margin ticking up to 29 3 of sales from 29 2 That success was supported by steadily increasing seller fees as the company capitalized on its many improvements to the selling experience
Cost cuts played a big role too with marketing expenses diving to 28 of sales in Q4 compared with 32 a year ago I am proud of how well our teams have executed interim CEO Scott Schenkel said in a press release and the innovative solutions we have provided for our buyers and sellers Executives also highlighted the fact that eBay s robust cash flow supported the return of 5 5 billion to shareholders through stock buybacks and dividend payments
A busy year ahead
eBay is still hunting for a permanent CEO to lead the company through its next growth phase and investors can count on its 4 billion sale of StubHub to close around mid 2020 In the meantime the tech giant s operating outlook is conservative The company predicts organic growth between 1 and 3 which implies continued struggles with negative volumes especially in the U S market
Its financial outlook is a testament to its efficient asset light sales model Earnings are projected to rise by 4 to 8 this year as eBay generates around 2 3 billion of free cash flow representing over 20 of its revenue base
Those metrics plus the extra cash raised from its StubHub sale will give management plenty of resources it can direct toward the business and to stock buybacks and special dividends But investors aren t likely to gain confidence in this stock until they see concrete signs of stabilizing volume trends in the core marketplace business |
EBAY | Why Is EBay EBAY Down 1 9 Since Last Earnings Report | It has been about a month since the last earnings report for eBay EBAY Shares have lost about 1 9 in that time frame underperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is eBay due for a breakout Before we dive into how investors and analysts have reacted as of late let s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts eBay Surpasses Earnings and Revenue Estimates in Q3eBay reported third quarter 2019 non GAAP earnings of 67 cents beating the Zacks Consensus Estimate by 2 cents The reported figure also improved 19 6 year over year Net revenues of 2 65 billion also surpassed the Zacks Consensus Estimate of 2 64 billion The top line was flat on a year over year basis up 2 on an FX neutral basis The company witnessed strong performance by its Classifieds platform during the reported quarter Further eBay experienced strong momentum across its managed payments offerings which processed over 500 million worth of payments during the third quarter However StubHub volume failed to exhibit year over year growth which affected eBay s gross merchandise volume GMV eBay s shares have plunged almost 8 in pre market trading which can be blamed on the disappointing fourth quarter guidance Nevertheless the company s introduction of tools advanced features and seller protections is likely to aid its momentum among customers and sellers in the near term Revenues and GMVIn the second quarter the Marketplace platform accounted for 2 1 down 1 year over year on a reported basis and up 1 on an FX Neutral basis Further Marketplace GMV was 20 5 billion down 5 year over year on a reported basis and 2 on a FX Neutral basis StubHub contributed 1 2 billion of GMV flat with the year ago quarter level It generated 306 million of revenues up 5 on a year over year basis The Classifieds platforms performed well during the quarter contributing 265 million to revenues up 4 year over year on a reported basis and 8 on an FX Neutral basis Total GMV of 21 7 million in the third quarter was down 4 year over year on a reported basis and 2 on an FX neutral basis During the quarter global active buyers customers increased 4 from the year ago period to 183 million Margins and IncomeIn the third quarter eBay s gross margin was 76 4 down 60 basis points bps year over year Adjusted operating expenses of 1 49 billion increased 0 3 from the prior year quarter This was due to the 1 9 and 14 1 respective hike in product development and general administrative expenses Non GAAP operating margin was 26 6 in the third quarter up 20 bps year over year Balance Sheet and Cash FlowAs of Sep 30 2019 cash equivalents and short term investments came in at 3 1 billion down from 4 5 billion as on Jun 30 2019 Further eBay s balance sheet is highly leveraged with a long term debt of 7 2 billion at the end of the third quarter The company generated 1 billion of cash from operating activities and had free cash flow of 913 million during the reported quarter It made dividend payments worth 115 million GuidanceFor the fourth quarter of 2019 eBay expects revenues within 2 77 2 82 billion Non GAAP earnings are expected within 73 76 cents For 2019 the company expects revenues between 10 75 billion and 10 80 billion indicating FX neutral growth of 2 3 Adjusted earnings per share are expected within 2 75 2 78
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in estimates review
VGM Scores
Currently eBay has a nice Growth Score of B a grade with the same score on the momentum front Following the exact same course the stock was allocated a grade of B on the value side putting it in the top 40 for this investment strategy
Overall the stock has an aggregate VGM Score of B If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift Notably eBay has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
WFC | Wells Fargo s Insider CEO Failed to Outrun Political Fury | Bloomberg Maybe Tim Sloan was doomed from the start as Wells Fargo NYSE WFC Co s chief executive officer a situation summed up by Elizabeth Warren s reaction to his departure About damn time
After 2 1 2 years running Wells Fargo and more than three decades working there Sloan said this week that his leadership had become a distraction and the best way for the bank to move forward was without him Chair Betsy Duke said the board will look externally for a new CEO
Sloan 58 wasn t brought down by a new scandal or by some revelation he was directly involved in Wells Fargo s past wrongdoing Instead his exit followed unyielding criticism from politicians and mounting pressure from regulators This month two of the bank s most important overseers the Federal Reserve and Office of the Comptroller of the Currency bluntly proclaimed their dissatisfaction signaling they weren t about to stop inflicting pain that s included a cap on the lender s growth and a 1 billion settlement
It seems like it is the culmination of an extraordinarily slow realization by the board that there s no way that they could turn the corner with Sloan in the leadership position said Jeremy Robinson Leon president of corporate communications firm Group Gordon The fact that Sloan was promoted to the CEO position in 2016 was a blatant unforced error
Wells Fargo s choice for a successor to John Stumpf raised eyebrows from day one Stumpf was ousted after the revelation that employees had opened millions of potentially fake accounts to meet sales goals From the board s perspective Sloan was the obvious choice for an orderly transition He had been groomed for the post serving as finance chief operating chief and president None of the nation s four largest commercial banks has installed an outsider as CEO since they were created in a wave of mergers in the 1990s
Yet some quickly questioned how a longtime insider could be the right person to clean up the bank Warren among others argued unequivocally that he was not His hands are too dirty from overseeing years of scams and scandals she said earlier this year
Ironically such criticisms only gained steam as Sloan and regulators set out to overhaul the San Francisco based company rooting through past complaints and employee testimonials to unearth more scandals across a range of business lines For critics every discovery amounted to new evidence that an insider shouldn t be in charge
Throughout his tenure as CEO Sloan and the board tried touting efforts to overhaul Wells Fargo You name it we ve changed it he said last year in an interview with Bloomberg At times the bank even noted that his team not regulators had found a glitch or abuse fixed it and was already making customers whole But to the public the drumbeat of new allegations probes and fines was just too loud
At the same time authorities kept telegraphing that Sloan s reforms weren t enough Wells Fargo has more than a dozen unresolved consent orders with regulators meaning that the company hasn t yet finished fixing internal controls or taking other steps to address lapses or weaknesses In January the bank told analysts and investors the Fed s asset cap would likely stay in place longer than previously expected
Presence in Washington
Wells Fargo never seemed totally comfortable in the world of Capitol Hill politics some 2 400 miles away from its headquarters It viewed itself as simpler than Wall Street behemoths and under Stumpf even quit the main lobbying association for the largest bank s CEOs Its low key strategy worked for a time especially during the financial crisis when Wells Fargo avoided much of the political furor that engulfed the industry But the bank s light touch also left it with fewer allies
Though Wells Fargo revamped its Washington office in 2017 as scandals widened its presence remained muted Before Sloan appeared before the House Financial Services Committee this month one lawmaker who often backs legislative proposals from the financial services industry and raises money from it told Bloomberg he was surprised that he had never met anyone from Wells Fargo s Washington office He said he knew lobbyists from all other major banks
The situation came to a head at this month s hearing where Sloan spent four hours responding to tough questions from lawmakers in both parties Even after he calmly described the bank s commitment to improving the OCC issued an unusual public rebuke
We continue to be disappointed with Wells Fargo Bank N A s performance under our consent orders and its inability to execute effective corporate governance and a successful risk management program the agency said in a statement on March 12
Series of Breakdowns
The terse statement did more damage to Sloan than hours of criticism from both parties Capital Alpha Partners analyst Ian Katz wrote in a note to clients this week
That was a clear message to the bank s board that management wasn t doing its job Katz said It s not at all uncommon for lawmakers such as Maxine Waters the committee chairwoman to verbally rip into companies and executives But for the generally bank friendly OCC to do so on the record is rare indeed
A week later Fed Chairman Jerome Powell reiterated that the central bank won t lift its asset cap on Wells Fargo until the firm s problems are addressed The Fed barred Wells Fargo from growing beyond its size at the end of 2017 until the bank rights its missteps to the regulator s satisfaction
What happened at Wells Fargo really was a remarkably widespread series of breakdowns Powell said noting that it s gone on and on It eventually became clear that these are deep problems that needed to be addressed in a fundamental kind of a way
Updates with description of bank s lobbying under the subheadline Presence in Washington |
WFC | Erdogan s Golden Chance to Make Up to Markets May Not Last Long | Bloomberg Traders are waiting to see which of the two routes President Recep Tayyip Erdogan takes after the ruling party suffered losses in municipal elections over the weekend double down on populism or use four election free years to backtrack and embrace free market reforms
Monday s gains in the lira suggest some investors are betting he ll begin to adopt a more tempered approach after Sunday s setback at the polls Turkey s biggest cities turned against him for the first time since 1994 after his growth at all cost leaning precipitated a run on the currency last year dragging the economy into its first recession since the global financial crisis
After a roller coaster ride in the lira in the past two weeks accentuated by policy changes investors want reassurance That may come next week when Finance Treasury Minister Berat Albayrak is due to unveil a new economic plan having pledged to take Turkey on a post election reform path Until then Erdogan could blindside the market at any moment with more of his unorthodox economic beliefs including the claim that higher interest rates cause inflation
The big risk is that he s going to be more interventionist because he ll be impatient for change said Nigel Rendell a London based senior analyst at Medley Global Advisors On monetary policy Erdogan s bit his tongue for the past six months or so which has coincided with broad lira stability but not sure how much longer this can last
The central bank has signaled it will maintain a hawkish stance until the pace of price growth slows but investors are worried that Erdogan could override that imposing policies that would stoke an inflation rate running at four times the official target Just last week he said consumer inflation will slow if Turkey lowers interest rates
The latest volatility all started when a sudden rundown of central bank reserves last month caught investors by surprise sparking speculation that the bank was intervening to support the currency As the lira declined the authorities took steps that led overnight rates to peak at 1 300 percent
The market would like more clarity on the recent outsized and seemingly inexplicable swings on the country s low net FX reserves which have unnerved many market watchers said Paul Greer a London based money manager at Fidelity International Investors will also be eager to see a commitment from Turkey to maintaining a stable fiscal trajectory and a tight monetary policy
The lira climbed as much as 2 6 percent to 5 4288 against the dollar on Monday erasing a more than 2 percent drop earlier in the day
I think with the country so deep in recession and the lira being so fragile my base case is that he looks to set policy that will be more short term focused regardless of when the next election is said Brendan McKenna a currency strategist at Wells Fargo NYSE WFC Securities in New York |
WFC | U S China trade optimism to help yuan overcome concerns over weakening economy Reuters poll | By Vivek Mishra BENGALURU Reuters The Chinese yuan will hold on to its recent gains against the dollar and likely make a modest push forward from current levels over the coming year as optimism about a U S China trade deal offsets anxiety over weak domestic economic growth a Reuters poll showed Having slumped about 6 percent versus the dollar in 2018 with analysts wagering in early January of a move toward 7 per dollar by mid year the yuan has defied pressure and gained around 2 5 percent this year That rebound was largely driven by progress in trade talks between Washington and Beijing and the People s Bank of China PBoC setting consistently higher mid point reference rates The yuan was expected to gain 0 6 percent to 6 66 per dollar in a year from about 6 70 on Wednesday according to the latest poll of over 60 foreign exchange strategists taken over the past week That is a modest upgrade to last month s forecast Trump s backing away from tariff escalation previously implicit in our forecasts means our USD CNY projections have to be lower noted Cliff Tan East Asian head of global markets research at MUFG Market watchers have shifted their attention to the latest round of negotiations being held in Washington after both sides cited progress in discussions in Beijing last week There will be a currency component in any ultimate U S China trade deal and FX markets initially took that to mean USD CNY has become a one way bet stronger yuan But too strong a yuan may also make for awkward future currency diplomacy Tan said Expectations for a stronger yuan are also partly driven by changing fortunes for the dollar The dollar s outlook darkened after the Federal Reserve last month abandoned projections for further interest rate hikes this year on signs of an economic slowdown That could help unwind last year s slide in emerging market currencies The end of the Fed s tightening cycle now appears to be more clearly in sight and indeed there is some risk it has already been reached Overall evolving Fed policy should become an increasing headwind for the U S dollar and an increasing tailwind for the renminbi said Erik Nelson currency strategist at Wells Fargo NYSE WFC Forecasts in the latest poll showed a complete shift from a January survey when a majority of strategists had predicted the yuan to have breached or to trade at 7 per dollar by mid year In the latest poll analysts were mostly optimistic on the yuan and only four respondents still forecast it to reach 7 per dollar or weaker over the coming year attributing that pessimism to an economic slowdown and more policy easing We are extremely concerned about the ability of the Chinese economy to keep stimulating growth without a significant weakness in the value of the exchange rate said Jane Foley head of FX strategy at Rabobank who predicted the yuan to hit 7 per dollar rate by end Sept
Trade deal might give some short term celebration but again in order to keep the economy growing at the sort of rate that the government wants it to then it is reasonable to assume that the yuan will slide below 7 said Foley who was the most accurate foreign exchange forecaster on major currencies in Reuters polls last year Polling by Khushboo Mittal Editing by Shri Navaratnam |
WFC | Company News For Apr 1 2019 | BlackBerry Limited s NYSE BB shares rallied 13 6 after the company announced fourth quarter fiscal 2019 earnings per share of 0 11 higher than the Zacks Consensus Estimate of 0 04 a shareWells Fargo Company s NYSE WFC shares dipped 1 6 after the company s CEO Tim Sloan retired unexpectedly on Mar 28Shares of RH NYSE RH tanked 22 after the company reported fiscal fourth quarter 2019 revenues of 672 million lower than the Zacks Consensus Estimate of earnings of 687 millionShares of Celgene Corporation NASDAQ CELG rallied 7 9 after the company announced that a European regulator had given positive reviews for two triplet regimens based on the company s proprietary drugs |
WFC | Analysts Estimate Wells Fargo WFC To Report A Decline In Earnings What To Look Out For | The market expects Wells Fargo WFC to deliver a year over year decline in earnings on lower revenues when it reports results for the quarter ended March 2019 This widely known consensus outlook is important in assessing the company s earnings picture but a powerful factor that might influence its near term stock price is how the actual results compare to these estimates
The earnings report which is expected to be released on April 12 2019 might help the stock move higher if these key numbers are better than expectations On the other hand if they miss the stock may move lower
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management s discussion of business conditions on the earnings call it s worth handicapping the probability of a positive EPS surprise
Zacks Consensus Estimate
This biggest U S mortgage lender is expected to post quarterly earnings of 1 08 per share in its upcoming report which represents a year over year change of 3 6
Revenues are expected to be 20 81 billion down 5 1 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has been revised 1 22 lower over the last 30 days to the current level This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out Our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction has this insight at its core
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for Wells Fargo
For Wells Fargo the Most Accurate Estimate is lower than the Zacks Consensus Estimate suggesting that analysts have recently become bearish on the company s earnings prospects This has resulted in an Earnings ESP of 0 73
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that Wells Fargo will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
While calculating estimates for a company s future earnings analysts often consider to what extent it has been able to match past consensus estimates So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that Wells Fargo would post earnings of 1 17 per share when it actually produced earnings of 1 21 delivering a surprise of 3 42
Over the last four quarters the company has beaten consensus EPS estimates two times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
Wells Fargo doesn t appear a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
WFC | Is WFCMX A Strong Bond Fund Right Now | Government Mortgage Intermediate fund seekers should consider taking a look at Wells Fargo NYSE WFC Coreblder Shares Series M WFCMX WFCMX possesses a Zacks Mutual Fund Rank of 2 Buy which is based on nine forecasting factors like size cost and past performance
Objective
We classify WFCMX in the Government Mortgage Intermediate category an area full of potential choices Government Mortgage Intermediate funds focus on the mortgage backed securities MBS market which packages mortgages together and then sells off the pooled securities as a MBS Honing in on MBS that have at least three years to maturity but less than 10 this fund category presents a medium risk and yield profile
History of Fund Manager
Wells Fargo is responsible for WFCMX and the company is based out of San Francisco CA The Wells Fargo Coreblder Shares Series M made its debut in February of 2009 and WFCMX has managed to accumulate roughly 676 80 million in assets as of the most recently available information The fund s current manager is a team of investment professionals
Performance
Obviously what investors are looking for in these funds is strong performance relative to their peers This fund carries a 5 year annualized total return of 4 62 and it sits in the top third among its category peers If you re interested in shorter time frames do not dismiss looking at the fund s 3 year annualized total return of 3 29 which places it in the top third during this time frame
Bond Duration
Modified duration is a measure of a given bond s interest rate sensitivity so when judging how fixed income securities will respond in a shifting rate environment it is an excellent figure to look at
If you believe interest rates will rise this is an important factor to look at WFCMX has a modified duration of 6 31 which suggests that the fund will decline 6 31 for every hundred basis point increase in interest rates
Income
It is important to consider the fund s average coupon because income is often a big reason for purchasing a fixed income security Average coupon is a look at the average payout by the fund in a given year For example this fund s average coupon of 4 63 means that a 10 000 investment should result in a yearly payout of 463
If you are looking for a strong level of current income a higher coupon is a good choice though it could pose a reinvestment risk these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond
Since income is just one part of the bond picture investors need to consider risk relative to broad benchmarks With a beta of 0 99 this fund is less volatile than a broad market index of fixed income securities Taking this into account WFCMX has a positive alpha of 2 49 which measures performance on a risk adjusted basis
Ratings
Investors should also consider a bond s rating which is a grade AAA to D given to a bond that indicates its credit quality With this letter scale in mind WFCMX has 23 05 in high quality bonds rated at least AA or higher while 55 51 are of medium quality with ratings of A to BBB The fund has an average quality of A and focuses on high quality securities
Expenses
For investors taking a closer look at cost related metrics is key since costs are increasingly important for mutual fund investing Competition is heating up in this space and a lower cost product will likely outperform its otherwise identical counterpart all things being equal In terms of fees WFCMX is a no load fund It has an expense ratio of 0 compared to the category average of 0 06 From a cost perspective WFCMX is actually cheaper than its peers
Investors need to be aware that with this product the minimum initial investment is 0 each subsequent investment has no minimum amount
Bottom Line
This puts this fund from Wells Fargo in the top 40 of all mutual funds we have a rank on right now As a result this is likely an excellent choice for investors seeking an option in the Government Mortgage Intermediate category
Don t stop here for your research on Government Mortgage Intermediate funds We also have plenty more on our site in order to help you find the best possible fund for your portfolio Make sure to check out for more information about the world of funds and feel free to compare WFCMX to its peers as well for additional information For analysis of the rest of your portfolio make sure to visit Zacks com for our full suite of tools which will help you investigate all of your stocks and funds in one place |
EBAY | eBay Inc EBAY Q4 2019 Earnings Call Transcript | eBay Inc NASDAQ EBAY Q4 2019 Earnings CallJan 28 2020 5 00 p m ETContents
Prepared Remarks
Questions and Answers
Call Participants
Prepared Remarks
OperatorLadies and gentlemen thank you for standing by and welcome to the eBay Q4 2019 Earnings Call At this time all participants are in a listen only mode After the speakers presentation there will be a question and answer session Operator Instructions I would now like to hand the conference over to your speaker today Joe Billante Vice President of Investor Relations Thank you Please go ahead Joe Billante Vice President of Investor RelationsGood afternoon Thank you for joining us and welcome to eBay s earnings release conference call for the fourth quarter of 2019 Joining me today on the call are Scott Schenkel our Interim Chief Executive Officer and Andy Cring our Interim Chief Financial Officer We re providing a slide presentation to accompany Andy s commentary during the call which is available through the Investor Relations section of the eBay website at investors ebayinc com Before we begin I d like to remind you that during the course of this conference call we will discuss some non GAAP measures related to our performance You can find the reconciliation of these measures to the nearest comparable GAAP measures in the slide presentation accompanying this conference call Additionally all revenue and GMV growth rates mentioned in Scott and Andy s remarks represent FX neutral year over year comparisons unless they indicate otherwise In this conference call management will make forward looking statements including without limitation statements regarding our future performance and expected financial results These forward looking statements involve known and unknown risks and uncertainties and our actual results may differ materially from our forecast for a variety of reasons You can find more information about risks uncertainties and other factors that could affect our operating results in our most recent periodic reports on Form 10 K and Form 10 Q and our earnings release from earlier today You should not rely on any forward looking statements All information in this presentation is as of January 28 2020 and we do not intend and undertake no duty to update this information With that let me turn the call over to Scott Scott Schenkel Interim Chief Executive OfficerThanks Joe Good afternoon everyone As I mentioned last quarter our focus was to deliver our Q4 and full year commitments execute on our growth initiatives of managed payments and advertising improve the buyer experience and seller capabilities and make progress on our portfolio and operational reviews For 20 and beyond we would assess how to deliver for our buyers and sellers while ensuring focus we focus investments to serve our customers and shareholders Let me walk you through each of these in more detail Specific to our Q4 commitments volume was in line with our expectations down 4 while organic revenue was at the high end of our guide up 1 Margin was strong at over 29 inclusive of our ongoing investment in managed payments Non GAAP EPS was 0 81 up 15 substantially better than expected In addition we reached a deal to sell StubHub to viagogo for 4 05 billion while following a disciplined process that led to a favorable valuation For the full year 2019 GMV was down 2 while organic revenue growth was 3 at the high end of our January outlook Non GAAP earnings per share grew double digits each quarter and was above our guidance and we drove strong productivity allowing us to reinvest in the managed payments while delivering one point of margin accretion Additionally as part of our operating review we announced plans to further reduce expenses to reinvest in growth initiatives and improve profitability The net of these actions is expected to yield at least two points of margin accretion over the next three years Finally we returned 0 5 billion to shareholders through share buybacks and our first ever dividend Since separating from PayPal we have repurchased approximately 35 of shares outstanding net of dilution For the year GMV declined primarily due to two headwinds First we indicated that we would reduce marketing that was not activating buyers with high lifetime values while reducing near term GMV and buyer growth this also drive a drove a higher take rate and better profitability The second was the implementation by US states of internet sales tax This rollout happened faster than anticipated and affected small businesses and consumer sellers requiring marketplaces to collect and remit on their behalf We expect this headwind to continue until we lap a fully rolled out US internet sales tax landscape We remain hopeful and are advocating that the US will take a national approach to simplify compliance requirements and reduce the burden on small businesses While dealing with those volume headwinds organic revenue grew five points faster than GMV much of which came from our growth initiatives managed payments and advertising Regarding managed payments we continue to make great progress on our journey to transform our ecosystem Since launch we have processed more than 2 billion of GMV for almost 25 000 sellers on our payment rails While our pricing has been discounted to report to reward early participation to date sellers have saved almost 10 million in fees and they have more options on how and when they get paid As we exited the year our US volume approached the limit permitted under the operating agreement while in Germany we ramped from 0 to 3 faster than our US ramp We remain confident in realizing an incremental 2 billion in revenue and 0 5 billion of operating income in 2022 Advertising continues to drive revenue growth In Q4 Promoted Listings delivered 136 million of revenue up 75 Over 1 1 million sellers promoted more than 320 million listings in the quarter For the year Promoted Listings revenue double and helped us reach our plan of more than 700 million in total advertising While we have started to lap significant acceleration from a year ago we still expect double digit advertising revenue growth going forward This performance was supported by deeper integration into listing flows and the seller hub which increased adoption In addition ad conversion was up due to improved algorithms which utilize structured data to enhance search ranking We remain on track with our plan to build a 1 billion advertising business Over the course of 2019 we improved the buyer experience by increasing the collection and use of structured data We collected more aspect data from sellers in fashion and home categories by making it easier to see what buyers were searching for in the listings flows and the seller tools When sellers uploaded that data these structured data in rich listings make search better and convert faster This additional data contributed to a improved merchandising algorithms and promoted listing relevance in search We also improved our seller hub over the course of the year In addition to the Terapeak integration one feature we launched with seller initiated offers where a seller can engage individual buyers with better deals This feature has grown to over 1 million offers per day with pricing options and an easy to use automated experience We are pleased that we delivered on our 2019 commitments As we enter 2020 our priorities are clear We will continue to drive revenue through our growth initiatives deliver more seller tools improve the buyer experience by leveraging our structured data foundation while driving more margin expansion Managed payments will reach an important milestone in July when our operating agreement expires and we will be ready to scale to rapidly scale additional countries and corridors while delivering a better customer experience For advertising we will provide sellers more tools to optimize their ad spend We expect this will increase conversion and improve pricing without adversely impacting the buyer experience For sellers we will expand insights and data in the seller hub while improving our guidance capabilities We will also remove friction from the consumer selling experience particularly on mobile For buyers we will build better vertical capabilities that will start in a few categories and scale across the platform With features such as payments for high dollar items with escrow and clear item condition definitions We will also focus on improving buyer trust through increased shipment tracking in our international markets All of these experience will all of these experiences will leverage aspect data which will lead the benefits in search recall ranking and relevance We also plan to collect more data in electronics fashion and home and garden to increase the overall aspect data population While delivering on these better experience for customers we will drive further margin expansion by simplifying our structure controlling cost and reducing ineffective marketing spend For buyer focused marketing we will rebalance spending between acquisition retention and frequency Finally there are two topics I would like to proactively address First regarding the portfolio Our primary objective is to maximize shareholder value We evaluate each business in our portfolio for long term synergies and value creation opportunities When we take action like with StubHub we utilize a consistent set of guiding principles including value to eBay shareholders speed of execution certainty to close and operational simplicity Our Board and leadership team continue to operate with these guiding principles and we anticipate having an update to share about our Classifieds business by the middle of this year We appreciate that our employees continue to maintain focus in a time of uncertainty about what the future structure of Classifieds might be While everyone is excited about the opportunities it could bring Second regarding the CEO search The Board is actively conducting a process with the support of a search firm and is considering internal and external candidates In the interim the leadership team has the full support of the Board and we continue to make changes to better serve our customers employees and shareholders Over the past few months we have reprioritized our product roadmap reallocated marketing investments and simplified our structure By elevating our largest on platform marketplaces regions and global marketing organization to the executive leadership team we are increasing focus on the marketplace business which is where we see the biggest value creation opportunity Our top 2020 priorities remain clear deliver our growth initiatives provide more seller tools improved buyer experiences leverage our structured data foundation all while delivering margin expansion We believe these changes will result in a better balance of sustainable growth and profitability that maximizes long term shareholder value Our teams are excited about the challenge and look forward to delivering on these commitments Now let me turn it over to Andy to provide more details on our financial performance Mr Cring Andy Cring Interim Chief Financial OfficerThank you Scott I will begin my prepared remarks with our Q4 financial highlights starting on slide four of the earnings presentation In Q4 we generated 2 8 billion of revenue 0 81 of non GAAP EPS and 672 million of free cash flow while returning 1 1 billion to shareholders through share repurchases and cash dividends Moving to active buyers on slide five We have 183 million active buyers representing 2 year on year growth This is a two point deceleration from Q3 driven in part by reduced marketing spend that was driving growth in buyers with lower engagement and a higher churn than we expected Moving to slide six In Q4 we enabled 23 3 billion of GMV down 4 decelerating two points versus the prior quarter In the US we generated 8 9 billion down 8 while we delivered 14 4 billion internationally down 1 Moving to revenue on slide seven We generated net revenues of 2 8 billion up 1 organically We delivered 2 3 billion of transaction revenue up 1 and 539 million of marketing services and other revenue down 5 inclusive of a seven point headwind from the sale of brands4friends Turning to slide eight Our Marketplace platform GMV was down 4 in Q4 decelerating two points versus the prior quarter US GMV was down 9 driven by a six point impact from internet sales tax and four points from the continued reduction and redistribution of marketing spend The impact of internet sales tax in Q4 was three points worse than Q3 as 11 more states including California and Texas went live in October International GMV was down 1 decelerating two points versus Q3 primarily driven by lower consumer confidence in the UK from uncertainties surrounding Brexit and a reduced on platform marketing spend Total Marketplace s revenue was 2 2 billion down 1 decelerating two points from the prior quarter Transaction revenue grew 1 a three point deceleration the gap between revenue and GMV growth continues The five point gap in Q4 was driven by three factors Over three points from promoted listings nearly one point from category mix effects and nearly another point from the continued growth in managed payments Looking forward we expect the contribution of payments revenue to significantly increase in the second half of 2020 leading to revenue growth remaining at higher levels than GMV growth until fully scaled Marketing services and other revenue was down 17 decelerating four points versus Q3 The year on year decline is driven by 13 points from the sale of brands4friends and the continued reduction of third party ads Marketplace segment margin was 32 up nearly one point year on year primarily due to reduced marketing and continued cost leverage partially offset by our investment in managed payments For the full year the Marketplace platform generated 85 5 billion of GMV down 2 and 8 6 billion of revenue up 2 Turning to slide nine StubHub GMV was down 5 decelerating five points from Q3 mostly from the weak event landscapes landscape in concerts and theater StubHub revenue grew 2 year on year versus 5 in Q3 Transaction revenue was down 2 a two point deceleration driven by volume partially offset by a higher take rate from pricing changes and event mix MS O has more than tripled year on year for the fourth straight quarter delivering 16 million of revenue in Q4 Most of StubHubs MS O revenue was first party sales which represents which provides buyers access to unique and exclusive inventory and insurance for purchase tickets StubHub segment margin was 22 down nearly four points primarily driven by investments in our first party business and consulting costs partially offset by lower marketing spend For the full year StubHub delivered 4 7 billion of GMV down 1 and 1 1 billion in revenue growing 4 Moving to slide 10 In Q4 Classifieds revenue grew 6 decelerating two points Our German businesses continued strong double digit growth driven by our market leading horizontal eBay Kleinanzeigen and our vertical motors platform Mobile de Phonetic In addition we are delivering strong growth in verticals across the portfolio The quarter on quarter deceleration is primarily driven by continued headwinds in horizontal display advertising across our markets outside of Germany Segment margin for Classifieds was 43 down one point year on year For the full year Classifieds generated nearly 1 1 billion of revenue up 9 versus the prior year Turning to slide 11 and major cost drivers In Q4 we delivered non GAAP operating margin of 29 this is up 10 basis points year on year inclusive of a full point of investment in managed payments and additional pressure from the growth in our first party inventory programs in Korea and StubHub More than offset by reductions in marketing and the divestiture of brands4friends Cost of revenue was up 160 basis points year on year as a percentage of revenue driven by scaling managed payments and our first party inventory programs partially offset by the divestiture of brands4friends Q4 sales and marketing expense was down over three points versus the prior year primarily driven by a double digit reduction in marketing and promotional spend in our Marketplace on platform business While increasing year over year investments in our Marketplace off platform businesses Product development costs were up 70 basis points from investments in managed payments and in Classifieds to expand our vertical offering G A was up one point mostly driven by portfolio and operating review costs and our continued investment in managed payments For the year operating margin was 28 2 up one point and in line with our original 2019 full year guidance Turning to EPS on slide 12 In Q4 we delivered 0 81 of non GAAP EPS up 15 versus the prior year Our seventh consecutive quarter of double digit non GAAP EPS expansion The non GAAP EPS growth was driven primarily by our share repurchase program a lower tax rate and operating efficiencies partially offset by FX and our investment in managed payments Favorability versus our guidance in October was mostly driven by continued cost control and an end period tax benefit For the year we delivered 22 growth in non GAAP EPS primarily driven by our share repurchase program and expanding operating leverage GAAP EPS for the quarter was 0 69 down 14 versus last year The decrease in GAAP EPS is mostly driven by a higher tax rate as we lap a 2018 deferred tax adjustment partially offset by gains associated with the Adyen warrant and share repurchases As always you can find the detailed reconciliation of GAAP to non GAAP financial measures in our press release and earnings presentation Moving to slide 13 In Q4 we generated 672 million of free cash flow down 39 mostly driven by timing of both working capital and cash taxes We had another strong year of cash generation finishing 2019 with nearly 2 6 billion of free cash flow a 27 increase year on year driven by lower cash taxes improved working capital and lower capital expenditures Moving to slide 14 Our capital allocation strategy and key tenets and targets have not changed For the quarter we ended with cash and investments of 3 8 billion and debt of 7 8 billion In Q4 we repurchased nearly 28 million shares at an average price of 36 19 per share amounting to 1 billion We ended the year with 2 2 billion of share repurchase authorization remaining Turning to slide 15 In July we shared progress on our capital allocation plan for 2019 Looking at that same view today we have delivered against all the markers we set out for the year We initiated and executed our first ever dividend We completed 5 billion in share repurchases we ended the year with cash of 3 8 billion above our year end target of 3 5 billion driven by our over performance on free cash flow And we maintained our BBB rating while delivering on our stated ratio targets of 1 5 times net debt and below 3 times gross debt to EBITDA Moving to full year guidance on slide 16 The 2020 guidance we are providing assumes our current portfolio including StubHub is in place for the entire year We will provide updates as appropriate moving forward I also want to provide a little more context on the impact of internet sales tax Throughout 2019 as states implemented marketplace responsibility to collect sales tax our sellers and our volume were negatively impacted In each state we saw an immediate drop in volume followed by relatively stable growth rates in the months that followed We expect growth to recover as we lap the launch dates in affected states An early data from the states that launched in January of 2019 shows that recovery Given these dynamics we expect a negative impact of internet sales tax to be modestly larger in the first half with more states launching and then start to taper off in the second half as we lap quarters where a larger number of states went live in 2019 Please refer to the appendix of the earnings deck for additional details on the impact of internet sales tax on our US Marketplace business throughout 2019 including the timing of one state launched With that as background we are projecting 2020 revenue between 10 72 billion and 10 92 billion growing 1 to 3 on an organic FX neutral basis and minus 1 to plus 1 on an as reported basis We anticipate two points of growth to come from the continued ramp of managed payments and one point from advertising which we expect to be approximately 800 million in 2020 Underlying this guidance we expect Marketplace year over year volume to declined low single digits consistent with our 2019 performance As an incremental point of internet sales tax pressure will be offset with improvements in conversion We expect StubHub to deliver low single digit revenue growth And in Classifieds we expect similar top line growth to 2019 We anticipate the stronger US dollar and the disposition of brands4friends to negatively impact 2020 revenue by approximately 200 million compared to 2019 We plan to deliver additional operating margin expansion while we invest in the long term growth of our business We expect margin of 28 5 to 29 5 for the year which at the midpoint represents an increase of 80 basis points versus 2019 This margin expansion will be driven by continued marketing optimization focused product and technology investments best in class corporate functional costs and more effective procurement partially offset by approximately one point from our investment in managed payments and currency headwinds We expect non GAAP effective tax rate in the range of 15 5 to 17 5 With regards to capital allocation our guidance implies approximately 1 5 billion of share repurchases in 2020 inclusive of dilution offset In January our Board approved a 14 increase to our quarterly dividend raising it to 0 16 per share The dividend will be payable to shareholders of record as of March 2nd with a payment date of March 20th Our Board has also approved an additional share repurchase authorization of 5 billion with no expiration We have not made any assumptions in this guidance for the use of StubHub proceeds Should the deal close in Q1 as anticipated You can expect that we will deploy that cash in a manner consistent with our capital allocation tenets We are projecting non GAAP EPS of 2 95 to 3 05 per share up 4 to 8 This includes the impact of modest top line growth additional margin leverage and the ongoing benefit of our share repurchase program Growth is partially offset by our investment in managed payments and approximately seven points from the combination of a stronger US dollar less interest income based on lower cash balances and a higher tax rate as certain benefits impacting 2019 won t repeat We expect free cash flow of 2 2 billion to 2 4 billion which assumes capital expenditures in the range of 4 to 6 Full year GAAP EPS is projected to be 2 18 to 2 28 per share Turning to slide 17 For Q1 we are projecting revenue between 2 55 billion and 2 60 billion growing minus 1 to plus 1 on an organic FX neutral basis It s important to note that given the second half ramp of managed payments following the end of the operating agreement and the lapping of the internet sales tax headwind that we expect our second half performance will reflect higher growth rates for volume and revenue compared to the first half We expect non GAAP EPS of 0 70 to 0 73 per share representing 4 to 9 growth EPS growth is driven primarily by the combined effect benefit of lower share count and operational growth partially offset by investments in managed payments In addition there are four points of headwinds from the combination of a stronger US dollar and less interest income based on lower cash balances partially offset by a lower non GAAP tax rate We are expecting GAAP EPS in the range of 0 50 to 0 53 per share in Q1 In summary while 2019 volume growth was challenged we delivered on our financial commitments and our growth initiatives while laying a strong foundation for 2020 and beyond We ramped managed payments according to plan and scaled better buyer and seller experiences including launching in a second market We delivered strong advertising revenue including triple digits within promoted listings In 2019 we delivered a point of margin expansion despite pressure from lower volume and our investment in managed payments We executed a comprehensive operating review and are on track to deliver at least an additional two points of margin expansion over the next three years We continue to return capital to shareholders initiating our first ever dividend and we repurchased 5 billion of our stock We continue to make progress on our portfolio review divesting brands4friends and reached an agreement to sell StubHub at a favorable valuation We ve reorganized the leadership and operational teams to deliver better outcomes in our Marketplace on platform business increasing focus on our customers and speed of decision making We entered 2020 focused on our top priorities managed payments advertising providing more seller tools improving buyer experiences and leveraging our structured data foundation As we navigate through a period of lower volume growth our plan is to deliver continued revenue and earnings growth margin expansion and a consistent capital allocation strategy to maximize shareholder value And now we d be happy to answer your questions Operator Questions and Answers Operator Operator Instructions The first question comes from Heath Terry of Goldman Sachs Please go ahead your line is open Heath Terry Goldman Sachs AnalystThanks I was wondering if you could give us just a if you could just give us a sense of the guidance as we look at 2020 Is there a is there a way to kind of disaggregate the impact both of the internet sales tax which you guys have given us a lot of information on which I think we all appreciate But some of your initiatives around focusing more on what you see is being kind of the core eBay revenue or the core eBay businesses and sort of chasing what I think in the past you kind of described as being less profitable revenue as you look to sort of focus more on sort of the higher value or core eBay experience Is there a way to disaggregate sort of the impact that that s having on guidance or the impact that that s having on the growth that you re guiding to for this year And then as we think about sort of the process around the Classified side of the business you ve in the past talked about sort of the complication of pursuing anything less than a full sale of the asset And I was just wondering if you could give us a bit of an update on sort of your thoughts around as you ve gotten further into this sort of what would make sense along those lines as well Thank you Andy Cring Interim Chief Financial OfficerSure Heath it s Andy I ll start with a couple of answers on guidance and then I think Scott will kick in on the Classified side It s I think what I tried to point out in the script and as you think about the volume guidance being relatively consistent year to year in the low single digit for Marketplaces It will have a very different dynamic half to half The first half of the year with IST really at full ramp will look more like Q4 and the second half of the year will start to will start to accelerate a little bit as we lap out of some of those states When you elevate up and you look at that on a full year basis we go from about a little over a point of IST impact in 2019 to something a little over a point of it or two points of impact in 2020 So an additional point of pressure from IST or two full points of negative volume pressure from IST in 20 So that s how to think about that And then on the less profitable revenue piece We continue to refine how we allocate the marketing spend And I think similar to the IST dynamic it won t be drastically different impact 19 versus 20 where we feel like we will have roughly a point of negative impact from continued refining continuing to refine how we allocate the marketing spend and eliminating some of the lower ROI spend Scott Schenkel Interim Chief Executive OfficerYeah Heath on the sale of Classifieds look it s as I think everyone understands it s a great business and a wonderful space We ve got one of the leading if not the leading asset in the industry And this is about shareholder value creation So at this point I would not exclude any option Although it s unlikely that we would pursue an option of divesting platform by platform which a lot of people have reached out on that That s not really in our I think our best interest or in line with maximizing shareholder value creation But it s completely doable and we re looking at all those options And as I said in fact I have an update on that by mid year Heath Terry Goldman Sachs AnalystGreat Thank you both OperatorYour next question is from Eric Sheridan of UBS Please go ahead your line is open Eric Sheridan UBS AnalystThank you so much for taking the questions Maybe two if I can on the marketing piece How far long are you on the marketing optimization against your goals of multiple years Are you talk about continuing to reduce exposure to the lower ROI channels Just want to get a better sense of like the linearity going forward through 20 and beyond of how you ll sort of accomplish those goals And then with the growth headwind you might be facing in the first half as you characterized it as the two half type year in 2020 Any thoughts around leaning into some of the paid marketing channels that are delivering for you And sort of how did you have first half second half component to the marketing expenditures in 2020 or how we should think about that Thanks so much guys Scott Schenkel Interim Chief Executive OfficerYeah Eric this is Scott I would characterize that 2020 marketing costs is coming down approximately in line with the same as we came down in 2019 And so we don t expect material headwinds in growth but it will be reducing our underlying marketing spend But within that for sure we will be reallocating as I mentioned And that would include reallocating into a paid search to help to help growth where we think it makes the most sense and where the returns makes sense as well Next question or a follow up OperatorYour next question comes from Colin Sebastian of Baird Please go ahead your line is open Colin Sebastian Robert W Baird AnalystThank you First I guess on the pricing experiments with sneakers I m wondering what you re seeing there in terms of listing activity and would determine if that s a model that could work in other categories outside of shoes And then maybe as a follow up on the marketing spend but more specifically on the sequential plateauing of active buyers Since I think in past quarters you guys have indicated that this is an important KPI in terms of the health of the platform overall and potential future growth Are there any specific efforts geared at reaccelerating the number of active buyers Thank you Scott Schenkel Interim Chief Executive OfficerFirst on sneakers Yeah look it s an interesting question and certainly interesting in terms of what we did in December As you might know our online marketplace has one of the widest and most and most unique set of inventory of sneakers out there And we have a history of experimenting with different types of selling promotions across different markets And in this case what we announced in December was a sneakers promotion that was a continuation of our practice of experimentation It s in two markets and in sneakers over 100 And so what we re looking for is really how does the monetization change as you think about no final value fees in sneakers over 100 but there is other dynamics at play here including our first party ads and another dynamics where we re trying to look at conversion and accelerated active buyers in those categories And so to date we ve seen some added benefits not only with additional promoted listings but also with additional listings by sellers activity by buyers and GMV And so as we look at that and then consider what we re going to do with the product it gets pretty interesting from here And we ll see where we go from here But right now it s a very small scale but very interesting experiment Andy Cring Interim Chief Financial OfficerYeah I think the only thing I d add to that Scott to your point It s one category in two markets but it s a way we cannot Phonetic really highlight the breadth and depth of the inventory we have across this competitive vertical So feel good about that And then active buyers Scott Schenkel Interim Chief Executive OfficerLook on active buyers couple of thoughts First off active buyers is always important We ve indexed recently and overweighted on getting active buyers new active buyers into this ecosystem And as we ve been highlighting over the course of 2019 that s favored active buyer growth particularly with new and what we call new and reactivated buyers As we look into 2019 20 we will continue investing in new buyers but we re going to migrate some of that spend into getting those new buyers that we brought into the ecosystem over the next last four quarters and get them to try and buy more And so it s going to be more about generating the GMV and the GMV from them while we look at and continue to explore ways to expand the GMV per buyer in our retained buyer base Which by the way in Q4 was very stable which is I think great news And as we pivot into next year you can expect us to look a little bit less toward bringing a whole bunch of new buyers in but making continuing some investments there but expanding more into converting those buyers that we brought in the last year and our retained buyer base as well Colin Sebastian Robert W Baird AnalystAll right That s helpful Thank you Andy Cring Interim Chief Financial OfficerYeah Thanks OperatorYour next question is from Ross Sandler of Barclays Please go ahead your line is open Ross Sandler Barclays AnalystHey guys Just two questions So thanks for the detail on slide 20 on the IST So are you basically saying that if we look at these four quarters that the improvement that you re seeing ex IST is that just lapping the couponing initiatives or are there other things that you re working on that are driving that uptick from down 6 to only down 3 in recent quarters And then as we look forward your guidance assumes like the year starts kind of flat in 2020 and the back half is going to be up about 4 So is that GMV growth picking up or is that from payments kicking in in second half Any color there on those two that would be great Andy Cring Interim Chief Financial OfficerYeah I think on the half versus half it s both It s certainly an improved an increased lift from payments As I said we ll get two points roughly two points of revenue growth from payments in the year And remember we re capped through July on what we can what we can do in the US and we ll quickly get to that cap in Germany here in the first and second quarter So the majority of that two points of revenue growth is going to be coming in the second half And then with and in GMV as well you have the combined impact of the conversion improvements and the initiatives we re working on that some of the things that Scott mentioned In addition to a point of improvement half over half just from lapping out of IST Scott Schenkel Interim Chief Executive OfficerThanks Ross OperatorYour next question comes from Stephen Ju of Credit Suisse Please go ahead your line is open Stephen Ju Credit Suisse AnalystOkay Thank you So Scott just wanted to understand how you re thinking on payments maybe evolving now that you have another quarter of ops under your in the rear view So I think in the past you guys had articulated a hard fork scenario when the contract comes off to I guess now more of a gradual transition So has that thinking changed in terms of the speed at which you re willing to go especially now that you re running up against the guardrails in terms of what you can do Second any directional commentary you can offer about what percent of your sellers have bought into using our promoted listings And what that buy in percent may look like in the newer markets in the West versus some of the I guess the older markets like Korea where this has been live for some time now Thanks Andy Cring Interim Chief Financial OfficerYeah A couple of thoughts on payments First I don t I view our payments evolution is going right on track right now And the gradualness is only in the near term in the sense that we re guardrailed with what we can do between now and July Once we re independent of the operating agreement with PayPal we will go hard at not only the two markets that we re in and expand the number of sellers and the GMV that s covered in the ecosystem in both US and Germany but we will expand into the markets in other quarters And so we re on track if not better than we thought as we look toward the second half of the year Scott Schenkel Interim Chief Executive OfficerWith regards to Promoted Listings maybe I ll let Andy if he has any numbers weigh in on that But on the Promoted Listings within the US I mean what you see sorry within the market on platform Marketplaces business is roughly 30 of listings are actually getting some form of promoted listings utilization And as we look forward we will learn from our Korea business which has a much higher percentage but a completely different take rate And so what we said over time is that as we scale promoted listings and modify how we think about not only the user experience but also the monetization of those assets to make sure that it s a valuable thing for sellers And they view it as marketing expense versus just a take rate and a requirement And you can look I would expect us to continue to iterate that as we move forward within the plans that we ve laid out Andy Cring Interim Chief Financial OfficerAnd in terms of number of sellers or percentage of sellers Through the year we grew the number of sellers promoting items by over 80 And we exited the year that was more than 1 1 million sellers and represents more than 320 million listings in Q4 Scott Schenkel Interim Chief Executive Officer320 million Andy Cring Interim Chief Financial Officer320 million Sorry Stephen Ju Credit Suisse AnalystThank you Scott Schenkel Interim Chief Executive OfficerThanks Steve OperatorYour next question comes from Edward Yruma of KeyBanc Capital Markets Please go ahead your line is open Edward Yruma KeyBanc Capital Markets AnalystHey good evening Thanks for taking the question I guess first on payments are you noticing any change in conversion on when a seller is using payments and whether they re seeing any negative impact from switching over And then second maybe just a follow up to one of the earlier questions Scott you talked about really embracing authentically eBay And I guess just trying to think about some of the verticals that you ve been very successful at historically Any sense that you ll be able to kind of restart maybe a more favorable growth dynamic in those verticals through greater focus Thank you Scott Schenkel Interim Chief Executive OfficerYeah So on payments conversion impact no it s not down I think that s just sort of a simple answer What you do see with payments is different user behavior as you would imagine Buyer side now have more alternatives and sellers have a series of tools from which how to manage their payments and connect their payments with their listing activity which makes it easier for them And so I think on both sides of the equation this is a net positive and certainly the conversion is fine On authentically eBay look the way I alluded to it last time and what I would point you to in the script from today and the points that I made is as we think about not only how we prioritize the product plans for 2020 but also as we think about which verticals that we experiment in And again this is based on leveraging the structured data work that we ve done the aspects that we ve expanded upon recently and as we look toward 2020 and beyond really indexing higher on verticals that are more authentically eBay that people think of And as much as it s that it s about also the inventory that they think of us in When we talk about vintage collectibles interesting items et cetera people think of us and we just have to be more relevant not only in how we show up on our search results but how that inventory is searchable and findable on the site in a way that doesn t undermine new buyers coming into the ecosystem as we talked about a lot last year and prior And then most importantly over time also indexing on brand So more to come on that as we move forward but for right now I think that s I think Pete and the team has done an excellent job over the course of the planning horizon and setting us up for a 20 plan that is very clearly focused on vertical categories along with Jordan and the other regional country leaders to really focus on where we think we can win Edward Yruma KeyBanc Capital Markets AnalystGreat Thanks so much OperatorYour next question comes from Dan Salmon of BMO Capital Markets Please go ahead your line is open Dan Salmon BMO Capital Markets AnalystHi guys Good afternoon Maybe just a quick follow up on the display advertising headwinds in Classifieds if you could just expand on that a little bit Scott And maybe in particular why you re not seeing it in Germany And then second just thanks for the update as well on the CEO search I may have missed it but I don t think you put a time line on that one but just curious to see how you think about how we might expect that to play out while the strategic review continues as well Thanks Scott Schenkel Interim Chief Executive OfficerYeah absolutely Look on the CEO search online we didn t lay out a plan or a timeline But just to reemphasize the Board and a subcommittee of the Board is working very actively to find and interview and find the best possible candidate With regards to headwinds in Classified I think it s important to note that there is a combination of factors going on particularly in our horizontal platform businesses And each one has adjust to a different degree In particular display ads are impacted by a what Andy called out which is the shift to mobile devices And that s been happening over time and it s continuing and in some countries accelerating And the second is kind of the downstream impact of a lot of the changes within the privacy laws as well as what Google has done And that limits to some extent both the market of display ads and the effectiveness as well as then what s showing up on our site And I think that s pretty consistent across other players in the industry That said look as we head toward 2020 and beyond I think that will normalize and I think the teams have done an excellent job As Andy called out particularly in Kleinanzeigen as well as our automotive verticals to continue to expand and grow And so I don t see this as a structural long term concern it s just more of something that we ve got to work through not dissimilar to the internet sales tax Dan Salmon BMO Capital Markets AnalystOkay great Thanks Scott Schenkel Interim Chief Executive OfficerThanks Dan OperatorYour next question comes from Brian Fitzgerald of Wells Fargo Please go ahead your line is open Brian Fitzgerald Wells Fargo AnalystThanks guys Maybe related to Stephen s question second question but asked a little differently With promoted listings revenue up 32 sequentially but actual number of Pro Listings I think was less than 10 growth there Can you walk us through what s the strongest driver there Is it higher bids Is it improved conversions And how much runway for pricings and conversions can we see there going forward Thanks Scott Schenkel Interim Chief Executive OfficerYeah Brian it s a great question I think you answered it It s a combination of conversion I mentioned that in my script and Andy alluded to it as well that a number of things that we ve been doing in the ecosystem under the underlying structured data improvements and aspects that we ve been collecting has given us the capability to then serve those ads up with more certainty about what people are looking for and what might fit on that page to improve conversion The other side of it then obviously prices fluctuate have been have gotten a little bit better And then I think finally you re going to see us continue to look at where and how we place these ads to make sure that they re accretive to the user experience Thanks Brian Brian Fitzgerald Wells Fargo AnalystThanks Scott OperatorYour next question comes from Justin Post of Bank of America Please go ahead your line is open Justin Post Bank of America AnalystGreat A couple of questions First on international it s decelerated obviously sales taxes aren t an issue Are there any countries that you d call out that are doing better or worse And what are your big product initiatives to maybe help with the users and the growth there that you d call out for international markets And the second question is obviously you believe eBay stock is a good value here been aggressive with buybacks and helping grow earnings Is core eBay at all part of the strategic review Are you looking at some of your options there Thank you Andy Cring Interim Chief Financial OfficerThanks Justin Internationally I think the two countries to call out are the UK and Korea for different reasons The UK is primarily macroeconomic we ve been tracking our performance relatively well with what s happening on a market basis And just the uncertainty around Brexit has put pressure on the growth rates in the UK And then Korea as we ve mentioned for several quarters though it s been stable over the last quarter but the continued pressure from lower margin a tougher competitive couponing environment in Korea Scott Schenkel Interim Chief Executive OfficerYeah I mean as we look at helping international I think you got to pivot to on and off platform And if you look at our platform first off Japan and Turkey continue to grow really well Korea as Andy mentioned is relatively stable in a very tough macro situation And keeping in mind that they actually make money in that market whereas I don t think anyone else does And they re doing that team is doing a fantastic job of iterating on how to deliver growth in a market that has those dynamics And I d call out two things for them One maybe more applicable to the rest of the platform which is loyalty programs They ve done an excellent job with Smile Club and other parts of the loyalty program to really capture over 2 million Koreans at this point that are part of our paid loyalty program that bring great inventory a wonderful payments capability with credit included and first party inventory listings and the kind of capability to bring great value there As well as a very retail centric first party set of inventory that s offered on the platform And that s a bigger and bigger part of that part of the business every month The team has done an excellent job And so while they may not be growing at the same rate as some of the others that lose 1 billion a year they are doing an excellent job at managing at managing and driving our profitable growth even if it s lower than the overall And if you look at if you look at the on platform businesses there is a combination by market We ve talked about German the ePlus where we ve got a loyalty program there and we certainly learned and have incorporated aspects from Korea into the German platform We have the same in the UK and the same in the US and we continue to iterate around those But I wouldn t point to any one per se other than maybe in the UK and we alluded to this in the past but what you ll see in 2020 is a very unique integration with Royal Mail that s going to allow tracking which doesn t happen today on Royal Mail it s going to allow tracking on eBay that will be a unique eBay And so consumers in the UK will be able to see where their packages are and improve their trust and confidence in receiving and when they re going to receive their item But there is a lot of different ones by country but generally speaking the larger platform on platform dynamics that I talked about will apply to most of those countries across the board Andy Cring Interim Chief Financial OfficerAnd then on Justin Post Bank of America AnalystOkay And go ahead Andy Cring Interim Chief Financial OfficerYeah So look we do like the stock is a good buy which is why we continue to be aggressive with the buyback In terms of core eBay being part of the review it s Scott Schenkel Interim Chief Executive OfficerEverything is part of the review The way we approach it is exactly as we ve talked to you about which is we are disciplined in how we look at it and we continue to iterate with the Board So I wouldn t call anything specific out at this point but we look at everything Justin Post Bank of America AnalystOkay Thank you Andy Cring Interim Chief Financial OfficerOkay Operator we can Indecipherable for one more OperatorCertainly Your last question will be from Brian Nowak of Morgan Stanley Please go ahead your line is open Brian Nowak Morgan Stanley AnalystGreat Thanks for taking my question I have two The first one on 2020 GMV I think you talked about how you re going to have the IST challenges offset by higher conversion Maybe talk to us about some of the qualitative changes of the product improvements that you see driving that higher conversion throughout 2020 And then back to the 4Q flat buyer number You mentioned now there is some higher churn than expected can you just sort of talk to us about what you saw in the consumers that we re churning Was it an inventory issue Was it payment friction So what did you observe that was causing that higher churn and how do you fix that going into 2020 Thanks Andy Cring Interim Chief Financial OfficerI ll start with the buyer number Brian It s actually up 2 year on year So just to be clear it s 183 million buyers The churn I don t think it s anything special in Q4 It s more a continuation of what we saw in Q3 And it s really following the increase in marketing we spent the buyer driven marketing spend that we had in the second half of last year first half of this year where we attempted to reactivate buyers and attract new buyers And what we saw with those cohorts is visited less frequently spent less and we re turning out at a higher rate And that became the CLV and the value of those buyers started to not be worth the marketing dollars we spent on them So that s why we ve been pivoting away from that toward retention and focused on some higher value buyers Scott Schenkel Interim Chief Executive OfficerYeah With 2020 GMV the internet sales tax headwinds really what you see is particularly a high higher ASP items especially in electronics categories that when people encounter at checkout sales tax they bounce away And the good news in that is that they are at least coming back and we re not losing them other than that transaction And so what you see is there is a chunk of GMV that s not returning but it s not getting worse in the states that we ve seen so far And so I don t really see the dynamics there changing And in the underlying conversion we ve had some minor benefits but I wouldn t point to one thing above all the others I think in a marketplace in an ecosystem like ours it s imperative to be working on the seller experience and making seller tools and seller dynamics better as well as the buy side And I think broadly speaking some of the efforts that we did in 2019 as we look at conversion improve And as we look toward 2021 improve We re not pointing to one thing but it s a series of things trying to improve the overall ecosystem Thanks for the question Brian Operator Operator Closing Remarks Duration 59 minutesCall participants Joe Billante Vice President of Investor RelationsScott Schenkel Interim Chief Executive OfficerAndy Cring Interim Chief Financial OfficerHeath Terry Goldman Sachs AnalystEric Sheridan UBS AnalystColin Sebastian Robert W Baird AnalystRoss Sandler Barclays AnalystStephen Ju Credit Suisse AnalystEdward Yruma KeyBanc Capital Markets AnalystDan Salmon BMO Capital Markets AnalystBrian Fitzgerald Wells Fargo AnalystJustin Post Bank of America AnalystBrian Nowak Morgan Stanley Analyst
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WFC | Michigan State turns back Minnesota moves to Sweet 16 | Michigan State is back in the Sweet 16 After failing to get out of the first weekend of the NCAA Tournament in each of the previous three seasons No 2 Michigan State started quickly then followed star guard Cassius Winston to a 70 50 victory over No 10 Minnesota in the East Region at Wells Fargo NYSE WFC Arena in Des Moines Iowa Michigan State 30 6 advances to the regional semifinals for the 14th time under coach Tom Izzo and for the first time since 2015 when the Spartans reached the Final Four The Spartans will take on No 3 LSU on Friday in Washington at Capital One Arena Winston finished with 13 points and nine assists but his seven straight points in the second half after Minnesota had cut Michigan State s lead down to single digits allowed the Spartans to pull away His seven points started a 9 0 run that became a 12 2 surge as Michigan State went up 52 33 with 10 53 to play on a 3 pointer from Aaron Henry Xavier Tillman led the Spartans with 14 points while Henry had nine points and nine rebounds Amir Coffey did his best to keep Minnesota 22 14 in the game scoring 27 as the already short handed Golden Gophers were without Jordan Murphy who played only four minutes because of a bad back Isaiah Washington scored 11 Michigan State could do no wrong early in the game making nine of its first 10 shots and going 13 for 16 to open a 20 point lead after Nick Ward scored on a layup to give the Spartans a 31 11 lead with six minutes left in the first half But the Spartans 11 turnovers in the first half led to 12 points for the Gophers Michigan State s only points over the final six minutes of the half came when Henry scored after a Ward miss as Minnesota took advantage pulling to within 33 19 by halftime Almost four minutes into the second half Minnesota started to chip away at the lead and got the pro Gophers crowd to come to their feet
An 8 0 run that included six points from Coffey got Minnesota to within 40 31 but Winston then hit two mid range jumpers then a 3 pointer in transition to turn back the Minnesota comeback Field Level Media |
WFC | U S housing consumer confidence data point to slowing economy | By Lucia Mutikani WASHINGTON Reuters U S homebuilding fell more than expected in February as construction of single family homes dropped to near a two year low offering more evidence of a sharp slowdown in economic activity early in the year Concerns over the economy were also underscored by other data on Tuesday showing consumer confidence ebbing in March with households a bit pessimistic about the labor market The economy is facing rising headwinds including slowing global growth fading fiscal stimulus trade tensions and uncertainty over Britain s departure from the European Union Those concerns contributed to the Federal Reserve s decision last week to bring its three year campaign to tighten monetary policy to an abrupt end as it abandoned projections for any interest rate hikes this year The sugar high is just about over said Joel Naroff chief economist at Naroff Economic Advisors in Holland Pennsylvania The risks are more toward the downside than the upside Housing starts decreased 8 7 percent to a seasonally adjusted annual rate of 1 162 million units last month the Commerce Department said The percent decline was the largest in eight months and bad weather could have contributed to the sharp drop in homebuilding last month Homebuilding fell in three of the four regions in February Housing starts data for January and December were revised higher Building permits fell 1 6 percent to a rate of 1 296 million units in February While that was the second straight monthly drop in permits they are now outpacing starts which suggests a pickup in homebuilding in the months ahead Economists polled by Reuters had forecast housing starts falling to a pace of 1 213 million units in February The housing market hit a soft patch last year squeezed by higher mortgage rates pricier lumber and land and labor shortages which led to tight inventories and more expensive homes But borrowing costs have eased in the wake of the Fed s signaling of a long pause in hiking rates The 30 year fixed mortgage rate dropped to an average of 4 28 percent last week the lowest in more than a year from 4 31 in the prior week according to data from mortgage finance agency Freddie Mac House price inflation is also slowing A report from S P Case Shiller on Tuesday showed house prices in the 20 metro area increased 3 6 percent from a year ago in January the smallest gain since September 2012 after rising 4 1 percent in December The moderation in mortgage rates and house prices is likely to improve affordability especially for first time homebuyers who have been largely priced out of the market But homebuilders remain constrained in their ability to construct more homes for the lower end of the market A survey last week showed confidence among homebuilders was steady in March with builders still complaining about the scarcity of skilled workers and land as well as zoning restrictions in many major metro areas STORM CLOUDS The run up in interest rates last year did some real damage said Mark Vitner a senior economist at Wells Fargo NYSE WFC Securities in Charlotte North Carolina Even with the recent slide in interest rates which reflects weakening economic conditions we do not feel we will see a rebound in housing demand until the storm clouds emanating from slower global economic growth clear later this year The dollar was little changed against a basket of currencies while U S Treasury prices fell Stocks on Wall Street were trading higher Single family homebuilding which accounts for the largest share of the housing market tumbled 17 0 percent to a rate of 805 000 units in February the lowest level since May 2017 The percentage drop in single family homebuilding was the largest since February 2015 Permits to build single family homes were unchanged in February at a pace of 821 000 Starts for the volatile multi family housing segment jumped 17 8 percent to a rate of 357 000 units in February Permits for the construction of multi family homes fell 4 2 percent to a pace of 475 000 units last month The weak housing data strengthens the view that the economy lost considerable momentum early in the first quarter Retail sales rose moderately in January after tumbling in December and the manufacturing sector is struggling with output falling in February for a second straight month The Atlanta Fed is forecasting gross domestic product rising at a 1 3 percent annualized rate in the first quarter The economy grew at a 2 6 percent in the October December period A third report from the Conference Board on Tuesday showed its consumer confidence index fell 7 3 points to a reading of 124 1 in March While noting that consumer confidence has been volatile in recent months the Conference Board said the overall trend in confidence has been softening since last summer pointing to a moderation in economic growth Consumers assessment of both current business and labor market conditions weakened in March The survey s so called labor market differential derived from data about respondents who think jobs are hard to get and those who think jobs are plentiful fell to an eight month low It was the second straight monthly decline in this measure which closely correlates to the unemployment rate in the Labor Department s employment report The unemployment rate is at 3 8 percent and job growth decelerated sharply in February
It does suggest that we may see the very low jobless rate become a little less low in March said Jennifer Lee a senior economist at BMO Capital Markets in Toronto It all comes down to the job market It is the single most important factor underpinning confidence and spending |
WFC | Contagion Fears Return as Turkey Keeps Investors Trapped in Lira | Bloomberg The most vulnerable corners of emerging markets are bracing for turbulence as Turkey s stand off with investors begins to test the nerves of traders
Currencies from South Africa s rand to Brazil s real are witnessing a spike in their expected volatility signaling concern they may weaken the most along with the lira over the next month The volatility has evoked memories of last year when a meltdown in the Turkish exchange rate spurred panic selling across emerging markets
Read Investors Scramble for Liras as Turkish Swap Rates Touch 1 000
Volatility in the lira has posted the biggest four day surge since 2004 as officials adopt measures to create a scarcity of the currency to prevent a slump in its value As overnight borrowing rates crossed 1 000 percent traders have dumped the nation s stocks and bonds days before an election that will test the popularity of President Recep Tayyip Erdogan
Read AllianceBernstein Says Turkey s Lira Measures Aren t Sustainable
Still the reaction from elsewhere in global emerging markets has been muted The MSCI EM Currency Index is down less than 1 percent since the turmoil erupted last week Further losses will depend on what actions are taken Turkish authorities
Here are comments from money managers on the risk to other nations such as South Africa if Turkey fails to relax controls
Nick Eisinger co head of Vanguard Asset Management s global emerging market active fixed income funds in London
There is a risk of contagion and we are seeing a little bit of that in currency space such as Indonesia and South Africa
Brendan McKenna a strategist at Wells Fargo NYSE WFC Securities in New York
It looks like there is some contagion mostly focused on the high beta currencies the South African rand and the Brazilian real That s not that uncommon Those currencies felt some pain after the lira crisis last year too
Koon Chow a senior strategist at Union Bancaire Privee in London
The impact is probably limited unless we see a trend depreciation of the lira A one off lira depreciation should not have if it happened much of an effect because we are in a climate of low Treasury yields and low volatility Of course there is a risk of a knee jerk impact given the price action across currencies in July and August last year South Africa is most vulnerable because of its largish current account deficits
Marcin Lipka a senior analyst at Cinkciarzpl in Poland
No contagion effect at least so far As the overall sentiment to emerging markets is neutral or somewhat positive The local election in Turkey is troublesome Erdogan s AKP is losing support in the largest cities and the authorities are overly optimistic regarding the economy |
WFC | Wells Fargo CEO Tim Sloan steps down | By Imani Moise and David Henry Reuters Wells Fargo NYSE WFC Co said on Thursday Tim Sloan will resign immediately as chief executive becoming the second CEO to leave the bank in the fallout of a wide ranging sales practices scandal The board said in a statement it concluded it was best to seek an outside candidate to replace Sloan The bank s general counsel C Allen Parker one of the few newcomers in the bank s top ranks will serve as interim chief executive The move amounted to an admission that the board erred three years ago by appointing another insider after the previous CEO John Stumpf resigned following revelations that Wells Fargo had opened potentially millions of unauthorized consumer accounts Prior to becoming CEO Sloan served as chief operating officer and head of the wholesale bank In a Thursday conference call Sloan 58 said he decided to leave because the focus on him had become a distraction inhibiting the bank from moving forward I want to assure all of our stakeholders that this was my decision and is not related to our first quarter financial performance the long term outlook for the company or any newly discovered issues he said On the call analysts tried unsuccessfully to get a direct answer to whether regulators had given Sloan the final push or even whether the bank had been surprised by the most recent criticism from the Comptroller of the Currency Board Chair Betsy Duke declined to say what qualifications directors want in the next CEO including whether they will insist on having an executive with banking industry experience She said the person will be someone who really wants the challenge and the opportunity That is the person we want She added the bank has not yet spoken with anyone regarding the CEO position and the search committee will meet for the first time on Friday As recently as a week ago the board had reiterated its unanimous support for Sloan Critics had accused Sloan who was part of the management team while the wrongdoing was happening of being too entrenched in Wells Fargo s culture to change it even as the bank tried to do just that and move past its scandals In March 2018 the U S Federal Reserve imposed an unprecedented asset cap on Wells Fargo barring it from growing its balance sheet until it improved risk management controls Wells Fargo has said it expects to operate under the cap for the remainder of the year It is not yet clear what was the final straw for Sloan However the banks primary regulators the Office of the Comptroller of the Currency and the Federal Reserve criticized the bank in recent weeks What happened at Wells Fargo really was a remarkably widespread series of breakdowns really in their risk management apparatus Fed Chairman Jerome Powell said The Fed and the Office of the Comptroller of the Currency both declined to comment on Sloan s departure As Wells Fargo tried to move on it got rid of the lofty sales incentives that led to the fake accounts and repaid millions to customers who were improperly charged fees But reputational issues continued to hang over the bank as it racked up billions in settlements and fines Wells Fargo has long prided itself on its homegrown culture But the bank s insularity proved burdensome in recovering from the scandal The best thing he Sloan could do for the company was to retire In the long run it is the right move RBC Capital Markets analyst Gerard Cassidy said Sloan had become a perpetual target for politicians who repeatedly called for his removal U S Senators Elizabeth Warren and Sherrod Brown recently called for his resignation Earlier this month he was grilled by the House of Representatives Financial Services Committee Parker the interim head joined Wells Fargo from an outside law firm as general counsel in March 2017 to help turn around the bank At the time he was the only one of 11 top executives who had not been at the bank during the scandal Parker will receive an annual base salary of 2 million according to filings Sloan s departure came two weeks before the fourth largest U S bank by assets was due to report first quarter results and a month before its annual shareholder meeting In 2016 the bank agreed to pay 185 million to the U S Consumer Financial Protection Bureau and other agencies the largest fine of its kind to settle a sales practice scandal in its consumer retail bank Two weeks ago the bank said Sloan received a 5 percent pay raise for 2018 with base salary of 2 4 million 14 million in stock awards and a 2 million bonus based on the bank s financial performance
The bank said in a filing that Sloan will not receive any additional compensation for his sudden exit though he still stands to earn millions in stock awards as part of the company s retirement plan |
WFC | GCP Student Living Strong H119 Progress And Positive Outlook | Strong growth continued at GCP Student Living PLC LON DIGS in H119 Rental income benefited from development refurbishment completions above inflation rental growth and continued full occupancy Profitability showed the benefit of scale economies with the operating margin increasing Dividend cover increased strongly to 81 well on track for full coverage on a fully developed and let basis The existing portfolio is performing well H119 NAV total return of 7 9 developments are on track to deliver further income growth and the company continues to identify attractive opportunities for further growth
7 9 H119 NAV total return
H119 rental income grew c 21 including a full period contribution from Scape Wembley opened in September 2017 a three month contribution from Scape Bloomsbury opened in September 2018 above inflation rental growth of 3 5 and full occupancy The operating margin increased to c 59 from c 57 in H118 adjusted earnings grew 35 to 9 9m and adjusted EPS by 30 to 2 49p H1 DPS increased 3 4 y o y to 3 06p The portfolio valuation benefited from rental growth operational progress and a further tightening of market yields NAV per share increased to 157 93p from 149 12p at end FY18
Strong student and investor demand in London
Positively for DIGS with 92 of its portfolio in and around London international student applications are up 9 0 compared with last year Despite Brexit EU applications also show slight growth Government plans to boost international student numbers and income are also a positive DIGS s bookings are ahead of the same time last year In the investment market recent transactions indicate continuing strong investor interest in London assets in particular As well as highlighting the attractiveness of the DIGS existing portfolio it suggests potential for further valuation gains With London planning policy reinforcing a tight supply situation DIGS will soon decide on whether to exercise its option agreement with Scape Student Living to acquire an additional attractive new build asset adjacent to Queen Mary University of London and Scape East
Positive fundamentals support growth and returns
Growing dividends are supported by continuing strong fundamentals in DIGS s chosen markets and should be fully covered on a fully operational basis The shares trade at a small discount to NAV despite share price and NAV returns since IPO continuing to be well above the 8 10 target and good potential for further income and capital growth
London focused student accommodation
GCP Student Living DIGS is a specialist UK real estate investment trust REIT investing in student residential assets and differentiated by a focus on assets in and around London The shares have been listed since May 2013 and the company has a premium listing on the FCA s Official List trading on the Premium segment of the Main Market of the London Stock Exchange The investment objective is to provide shareholders with attractive total returns in the longer term through the potential for modest capital appreciation and regular sustainable dividends with RPI inflation linked characteristics
The student housing sector continues to attract investor interest for its favourable risk adjusted yields good levels of rental growth and less exposure to the economic led cycles that affect traditional commercial property sectors such as offices industrial and retail property DIGS is focused on assets in or around London in order to benefit from a structurally positive demand supply balance which is no longer the case in all regions of the UK The London market continues to see increasing numbers of international and post graduate students driving demand for purpose built student accommodation PBSA while planning restrictions and competing demands limit supply Geographically DIGS will also invest in other markets that offer similar market dynamics eg Brighton Within these markets the investment manager targets high specification modern purpose built accommodation with proximity to a suitable higher education institution and or a major transport hub Such properties in the chosen locations may be more likely to both appeal to students today and offer longevity of income potential to support long term value creation even if the current yields may be lower
At 31 December 2018 the portfolio comprised the 11 assets shown at the bottom of Exhibit 1 providing c 4 100 beds of which c 3 100 are operational and fully let for the 2018 19 academic year The portfolio value was 841 5m reflecting a net initial yield NIY of 4 74
Gravis the external investment manager was established in 2008 and is privately owned by its directors and founding members It currently manages 2 6bn in assets including two other listed closed end vehicles Nick Barker from Gravis is the fund manager with day to day responsibility for the provision of investment advice to DIGS The primary asset manager is Scape Student Living which is closely aligned with Gravis the directors of which own 50 of Scape
Strong income growth and increased dividend cover
Interim results for the six months ended 31 December 2018 H119 show the current portfolio performing well and continuing to grow Rental income grew strongly benefiting from development refurbishment completions above inflation rental growth and continued full occupancy Profitability is additionally showing the benefit of scale economies Dividends have been set and investment decisions made based on the investment manager s expectation that they will be covered by earnings on a fully developed and let basis With dividend cover increasing to 81 the H119 results provide evidence that the company is well on track to achieve this EPRA and IFRS NAV per share increased by 5 9 during H119 to 157 93p Including dividends paid during the period the six month NAV total return was 7 9
Key financial highlights from the H119 results
Rental income increased by c 21 compared with H118 to 20 9m and gross profit by 22 to 16 4m with the gross margin increasing slightly to 78 4 The drivers of rental income growth included a full period contribution from Scape Wembley which opened for the 2017 18 academic year a first time c three month contribution from Scape Bloomsbury which opened for the 2018 19 academic year following refurbishment and average 3 5 rental growth across the portfolio The portfolio was again fully occupied for the 2018 19 academic year
The scale benefits of the growing portfolio can be seen in both increased profits and enhanced profitability Administrative costs which comprise fund running costs including the investment manager s fee and other third party service provider costs grew by 10 This was well below the growth in income and as a result operating profit before property valuation movements increased by 26 to 12 4m The operating margin was 59 4 compared with 56 8 in H118 and 57 for the full FY18 year
On a net basis finance costs were little changed with H119 property investment funded primarily from cash balances including the 37 5m net proceeds from the September 2018 share placing To part fund future investments and existing fund commitments debt facilities were increased by 100m but as yet remain undrawn
The value of the investment portfolio has increased to 841 5m including investment spending and a net fair value movement of 39 9m equivalent to 5 1 of the opening value The gains were driven by both rental growth the completion and opening of Scape Bloomsbury and yield compression with the latter given evidential support by a number of important market transactions in and around London The end H119 blended net initial yield on the DIGS portfolio was 4 74 compared with 5 04 at end FY18
Including the revaluation gains IFRS earnings increased by 26 compared with H118 to 48 9m Adjusted earnings which excludes the valuation gain adjusts for other one off items and includes licence fees on forward funding developments increased by 35 to 9 9m Adjusted EPS increased 30 to 2 49p
Dividends declared during H119 were 3 06p an increase of 3 4 from the 2 96p declared in H118 and also ahead of the 2 99p declared in H218 As the company had previously guided the opening of Scape Bloomsbury has contributed to a strong increase in coverage of dividends by adjusted earnings It was 81 in H119 compared with 70 in H218 and 67 for FY18 as a whole On a fully operational and let basis DIGS continues to expect dividends paid to be fully covered by earnings
DIGS says that bookings for the 2019 20 academic year are ahead of the level at the same time last year and that repeat bookings have continued to increase over time
Significant recent operational developments
Scape Bloomsbury providing 432 beds in the heart of central London was completed ahead of schedule in time for the 2018 19 academic year DIGS had initially expected to open the first five floors in September and the top three floors in December but was able to fully open in September with higher than budgeted overall initial occupancy
Construction work on the c 450 bed forward funded office project at Circus Street in central Brighton is proceeding in line with expectations towards planned completion in time for the 2019 20 academic year Unlike the majority of DIGS assets Circus Street is let on a 21 year RPI linked lease to Kaplan at an initial rent of 2 9m The development includes a standalone speculatively developed integrated Grade A office building which is generating strong interest from potential occupiers and investors given a tight Brighton market It will be retained or sold and the capital recycled when completed and stabilised depending on the nature of the tenant Licencing fee income at a rate of 5 5 of the funding extended is recognised in adjusted income
In July 2018 DIGS entered into a conditional contract to acquire and forward fund Scape Brighton its second asset in the city situated on the University of Brighton s main campus Scape Brighton is expected to provide 555 beds and extensive communal areas with c 1 500 sq ft of retail space on the primary campus of Brighton University Construction work began in November 2018 and the asset is expected to be operational in September 2020 in time for the 2020 21 academic year DIGS provided approximately 24m of forward funding in H119 which is initially accounted for as a loan receivable asset on the balance sheet
Under the contractual arrangement with Scape Student Living that has allowed DIGS to acquire several attractive newly developed assets since IPO the company has an option to acquire Scape Canalside a 412 bed new build asset located adjacent to Queen Mary University of London in the same locality as the group s existing c 590 bed Scape East asset Scape Canalside is expected to reach practical completion by July 2019 and DIGS must soon decide whether to exercise its option or not The asset is highly attractive to DIGS and the decision substantially rests on it having access to suitable funding The design of Scape Canalside and its market positioning are complementary to the existing Scape East asset and similarly it benefits from close proximity to Queen Mary University a strong Russell Group higher education institution The increasingly stringent planning environment in London also increases the attractiveness of the option providing access to a further significant high quality purpose built asset Recent transaction activity see below suggests an increasing scarcity value for schemes that have already received planning approval
Increased more flexible funding in place
At the end of H119 DIGS had a cash balance of 19 8m with drawn debt of 235m at a blended fixed rate of 2 96 and a remaining term of seven years The loan to value ratio was 25 7 DIGS s outstanding commitments include the remaining construction work at Circus Street Brighton the forward funding commitment to Scape Brighton and the forward purchase agreement for Scape Canalside To provide the funding for this additional portfolio growth DIGS has in recent months increased its equity and debt capital resources
In September 2018 DIGS completed the placing of 25 5m new shares at a price of 149 50p raising 38 1m of gross new equity capital 37 5m net
In July 2018 it agreed a 45m three year re drawable credit facility RCF with Wells Fargo NYSE WFC at a margin of 1 85 pa above three month Libor The RCF provides more flexible debt finance than fixed long term debt and will be available for use in funding the completion of Circus Street Brighton and initial construction costs at Scape Brighton as well as general corporate purposes
In December 2018 DIGS added a 55m development loan facility also with Wells Fargo intended to part fund the construction of Scape Brighton The facility has a margin of 3 1 pa above three month Libor during the construction phase falling to 2 0 pa above Libor once the asset has been completed and stabilised
In aggregate the new debt facilities with Wells Fargo provide DIGS with 100m of flexible floating rate debt This will avoid the need for DIGS to hold excess cash ahead of development funding and extends the positive spread between the licence fees on development forward funding and the cost of the debt which should further support increasing dividend cover
Positive market developments
Continuing above inflation rental growth
In terms of income returns DIGS targets regular sustainable dividends with RPI inflation linked characteristics A relatively small proportion of rental income is contractually directly linked to RPI Circus Street at completion will be an exception and so the inflation linked characteristic relies on the selection of suitable assets and locations with favourable demand supply dynamics that have the potential to deliver continuing rental growth Exhibit 5 shows that DIGS has been able to sustain rental growth in excess of both RPI and the market over several years
London remains differentiated
From a student demand supply perspective the differentiating features of the London market can be summarised as
It is home to more than 300 000 full time students more than any other city in the UK
Four of the top 50 universities in the world are in London as are five of the 24 Russell Group universities widely perceived as representing some of the best universities in the country
As a result of the high standard of education available and the wider appeal of London as a place in which to live a quarter of all of the c 460 000 international students studying in the UK are based there
London universities are only able to supply accommodation to c 30 of their first year and international students
Two significant trends that favour DIGS s London area focus are for the strongest universities to attract an increasing share of applicants and the continuing strength of international student applications
Since the UK government raised tuition fees to a maximum of 9 000 pa in 2012 and subsequently increased to 9 250 which was followed by a removal of the cap on undergraduate student numbers in 2015 there is clear evidence that many students are influenced in their choice of university by its cost and the expected future benefit This has enabled the top universities to grow in size while maintaining their academic requirements Given its concentration of top universities home to six of the top 40 London has benefited
In Exhibit 9 we focus on the three UK listed student accommodation companies DIGS Unite and Empiric showing summary valuation and share price performance data Reflecting positive sector fundamentals all three stocks are trading very close to 12 month share price highs DIGS offers a higher dividend yield compared with Unite and trades at a lower P NAV Empiric has a higher yield but as it continues to reposition itself from internally driven trading problems in 2017 the prospects for dividend growth are modest
In the near term the continuing strong fundamentals in DIGS s target areas of the market and the further benefit to earnings cash flow and dividend cover from the completion of assets currently under development are positive indicators for DIGS s performance Perhaps even more important is the DIGS focus on larger and more efficient well designed and purpose built assets in good locations in supply constrained markets factors which provide comfort that the portfolio will be capable of sustaining performance over the long term |
EBAY | Job cuts hit eBay s HQ | EBay EBAY 0 5 cut at least 200 employees last week as the company continues to restructure its business according to Business Insider
Sources indicate that most of the job cuts were at the San Jose headquarters
The job eliminations only affect a low single digit percentage of the overall workforce according to an eBay spokesperson |
EBAY | eBay Earnings 3 Things to Watch | The past year has been a busy one for shareholders of eBay NASDAQ EBAY The online marketplace s growth rebound fizzled in 2019 with sales falling under the weight of intense competition and added sales taxes in the core U S market Yet investors received some good news too mainly in the form of eBay s 4 billion divestment of its StubHub ticket business
Through all of that the stock barely kept pace with a booming market last year despite having been up by nearly 50 at one point in 2019 Yet eBay has a prime chance to improve on that narrative when it announces holiday season sales results in just a few days
Let s look at three metrics worth following when eBay reports fourth quarter earnings on Tuesday Jan 28 after the market close
1 Growth trends
Most investors who follow the stock are expecting eBay to post a 2 sales decline on Tuesday But that reported revenue figure has a lot of noise in it from currency exchange movements given the company s substantial international business
For a clearer picture of demand trends follow eBay s buyer pool which has been growing at a steady 4 clip for more than a year Gains in that area have become increasingly important given the marketplace s worsening sales volume trends Its volume has declined by 5 or more in the U S market in each of the last three quarters in fact and it is expected to continue being pressured by the higher sales taxes that are raising prices for buyers eBay s international growth has slowed for four consecutive quarters too reaching just 1 in the third quarter
These mostly weak trends will put pressure on interim CEO Scott Schenkel and his team to show some progress that ideally improves on last quarter s 3 slump in global marketplace revenue
2 Prime cash flow
eBay s asset light sales model has always been much more profitable than the ones relied on by more integrated retailers like Amazon com and Walmart which maintain their own vast inventory and fulfillment operations That profitability gap has only increased recently thanks in part to eBay s higher fees The transaction fee that it charges buyers rose to 9 7 last quarter up from 8 8 in mid 2018
Continued success here should show up in two important metrics operating margin and cash flow On the margin front look for the tech stock s operating margin to improve for the second straight quarter rising to 28 of sales from 27 in Q3 Free cash flow should land at around 2 3 billion for the year equating to 21 of eBay s annual sales haul
3 Looking ahead
Investors will get to see a detailed financial outlook when eBay posts its 2020 forecast on Tuesday Assuming it achieves management s 2019 prediction the company will have the chance to target a rebound after growth slowed to 2 from 5 in 2018 Another sluggish outlook on the other hand will add even more pressure on executives to discuss how eBay plans to stem its market share slide
The company will likely highlight the soaring direct capital returns that will be supported by its StubHub sale But investors won t be in a celebratory mood until they see a clear path back toward faster marketplace growth especially given the booming e commerce industry |
EBAY | eBay Earnings Revenue Beat in Q4 | Investing com eBay reported on Tuesday fourth quarter earnings that beat analysts forecasts and revenue that topped expectations
eBay announced earnings per share of 0 81 on revenue of 2 82B Analysts polled by Investing com forecast EPS of 0 76 on revenue of 2 81B That compared with EPS of 0 71 on revenue of 2 88B in the same period a year earlier eBay had announced EPS of 0 67 on revenue of 2 65B in the prior quarter Analysts are expecting EPS of 0 71 and revenue of 2 64B in the next quarter
eBay share s are up 0 28 for the year to date and is trading at 35 55 still down 13 79 from its 52 week high of 42 00 set on July 18 2019
eBay shares lost 1 82 to trade at 35 55 in after hours trade following the report
eBay NASDAQ EBAY follows other major Services sector earnings this month
eBay s report follows an earnings beat by Comcast on Thursday who reported EPS of 0 79 on revenue of 28 4B was in comparison with expected EPS of 0 77 on revenue of 28 17B
Netflix had beat expectations on January 21 with fourth quarter EPS of 1 3 on revenue of 5 47B compared with forecast for EPS of 0 52 on revenue of 5 45B
Stay up to date on all of the upcoming earnings reports by visiting Investing com s earnings calendar |
EBAY | EBay EBAY Surpasses Q3 Earnings And Revenue Estimates | EBay EBAY came out with quarterly earnings of 0 67 per share beating the Zacks Consensus Estimate of 0 65 per share This compares to earnings of 0 56 per share a year ago These figures are adjusted for non recurring items
This quarterly report represents an earnings surprise of 3 08 A quarter ago it was expected that this e commerce company would post earnings of 0 62 per share when it actually produced earnings of 0 68 delivering a surprise of 9 68
Over the last four quarters the company has surpassed consensus EPS estimates four times
EBay which belongs to the Zacks Internet Commerce industry posted revenues of 2 65 billion for the quarter ended September 2019 surpassing the Zacks Consensus Estimate by 0 22 This compares to year ago revenues of 2 65 billion The company has topped consensus revenue estimates four times over the last four quarters
The sustainability of the stock s immediate price movement based on the recently released numbers and future earnings expectations will mostly depend on management s commentary on the earnings call
EBay shares have added about 38 7 since the beginning of the year versus the S P 500 s gain of 19 5
What s Next for eBay
While eBay has outperformed the market so far this year the question that comes to investors minds is what s next for the stock
There are no easy answers to this key question but one reliable measure that can help investors address this is the company s earnings outlook Not only does this include current consensus earnings expectations for the coming quarter s but also how these expectations have changed lately
Empirical research shows a strong correlation between near term stock movements and trends in earnings estimate revisions Investors can track such revisions by themselves or rely on a tried and tested rating tool like the Zacks Rank which has an impressive track record of harnessing the power of earnings estimate revisions
Ahead of this earnings release the estimate revisions trend for eBay was favorable While the magnitude and direction of estimate revisions could change following the company s just released earnings report the current status translates into a Zacks Rank 2 Buy for the stock So the shares are expected to outperform the market in the near future You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead The current consensus EPS estimate is 0 76 on 2 85 billion in revenues for the coming quarter and 2 75 on 10 82 billion in revenues for the current fiscal year
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well In terms of the Zacks Industry Rank Internet Commerce is currently in the top 27 of the 250 plus Zacks industries Our research shows that the top 50 of the Zacks ranked industries outperform the bottom 50 by a factor of more than 2 to 1 |
EBAY | EBAY Vs MONOY Which Stock Is The Better Value Option | Investors interested in stocks from the Internet Commerce sector have probably already heard of eBay EBAY and MONOTARO MONOY But which of these two stocks is more attractive to value investors We ll need to take a closer look to find out
There are plenty of strategies for discovering value stocks but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns The proven Zacks Rank emphasizes companies with positive estimate revision trends and our Style Scores highlight stocks with specific traits
Both eBay and MONOTARO have a Zacks Rank of 2 Buy right now Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions However value investors will care about much more than just this
Value investors are also interested in a number of tried and true valuation metrics that help show when a company is undervalued at its current share price levels
The Style Score Value grade factors in a variety of key fundamental metrics including the popular P E ratio P S ratio earnings yield cash flow per share and a number of other key stats that are commonly used by value investors
EBAY currently has a forward P E ratio of 12 93 while MONOY has a forward P E of 62 88 We also note that EBAY has a PEG ratio of 1 38 This metric is used similarly to the famous P E ratio but the PEG ratio also takes into account the stock s expected earnings growth rate MONOY currently has a PEG ratio of 3 29
Another notable valuation metric for EBAY is its P B ratio of 9 14 The P B ratio is used to compare a stock s market value with its book value which is defined as total assets minus total liabilities For comparison MONOY has a P B of 24 73
These metrics and several others help EBAY earn a Value grade of B while MONOY has been given a Value grade of F
Both EBAY and MONOY are impressive stocks with solid earnings outlooks but based on these valuation figures we feel that EBAY is the superior value option right now |
WFC | Instant View Steady Fed sees no more hikes in 2019 | NEW YORK Reuters The Federal Reserve held interest rates steady on Wednesday and its policymakers abandoned projections for further rate hikes this year as the U S central bank flagged an expected slowdown in the economy In a major shift in its perspective the Fed also now expects to raise borrowing costs only once more through 2021 and no longer anticipates the need to guard against inflation with restrictive monetary policy Market reaction Stocks The S P 500 reversed losses to turn 0 3 percent higher The Dow turned 0 1 percent higher Bonds The 10 year U S Treasury note yield fell to 2 5405 percent and the 2 year yield fell to 2 4003 percent Forex The dollar index reversed slight gains and was off 0 63 percent Comments Brian Jacobsen senior investment strategist Wells Fargo NYSE WFC Asset Management Milwaukee Wisconsin I didn t think they d do it but they came across as more dovish than what was expected Wrapping up the balance sheet run off by the end of September rather than the end of December was the biggest surprise Beginning in October they will keep allowing the MBSs to run off but replace them with Treasuries There was also more consensus on no hikes for 2019 than I thought there would be While the ECB s dovish tilt was taken as a bearish omen for the Eurozone economy the Fed s dovish tilt is viewed as much more bullish The key difference was in the messaging The ECB s was couched in terms of weakness The Fed s is couched in terms of caution Danielle Hale chief economist Realtor com Washington It s no surprise that the Fed decided to hold rates steady today given its January pledge of taking a patient approach to reviewing data and making interest rate decisions But today s meeting also gives us clues about the road ahead for mortgage rates which are influenced by both short term rates and the longer term economic outlook Despite current short term rate increases recent economic forecasts have been less certain which has caused mortgage rates to slip recently With today s downgrade of the forecast for 2019 and 2020 from the Fed and lowered expectations for the median Fed Funds rate in this time we expect this trend to continue with steadiness or even further potential declines in mortgage rates While a plus for home buyers if concerns about the economic outlook rattle consumer and home buyer confidence it could offset the benefit of lower mortgage rates Mohamed El Erian chief economic adviser Allianz DE ALVG Newport Beach California The Federal Reserve continued its move to a significantly more dovish policy stance delivering to bullish investors exactly what they were hoping and betting for in terms of the outlook for interest rates and balance sheet Doug Ramsey chief investment officer Leuthold Group Minneapolis Minnesota It sounded like to me as if I were listening to the European Central Bank I had to read the Fed statement twice It was a surprise I think we are on the cusp of that Does the Fed know something we don t What I found most interesting is more of the change in tone than substance by the Fed at this point We are cautious on the stock market and moderately bullish on the bond market We continue to forecast an economic slowdown I wouldn t be surprised to see a rate cut later this year around the fourth quarter And I wouldn t necessarily take that as a bullish thing Peter Cardillo chief market economist Spartan Capital Securities New York It s very dovish obviously They talked about the balance sheet reductions and it does appear now they have abandoned raising rates for the remainder of the year But that came also with lower economic activity not by much but they lowered some of their forecasts Basically this should be positive for stocks and hard assets as well If rates go down it s less of a headwind for stocks It doesn t mean we ll turn into a super bull market Andre Bakhos managing director New Vines Capital LLC Bernardsville New Jersey The markets are viewing the fact that there will be no more rate hikes this year positively and it creates a risk on scenario and if we can get a trade deal done in this stabilizing environment it could set up very nicely down the line The markets have rallied very strongly on the news and that type of strong move is indicative of a sigh of relief and what one would deem as the best case scenario In other words a slowing economy is good as it keeps rates low it shows that we can have growth even though the economy is slowing down and that helps markets This is going to create a good trading environment and net on net this is a sigh of relief for traders and something the markets could focus on in the nearer term while we wait for a better visibility in China Leslie Falconio senior strategist UBS Global Wealth Management s Chief Investment Office New York We anticipated the Fed removing one dot in 2019 and leaving one dot They ve removed both hikes in 2019 They ve removed two hikes in 2020 leaving only one hike That s a bit dovish which is pushing yields down They came out a bit more dovish than what the market was anticipating and what we were anticipating The yield curve is therefore steepening The long end is underperforming a little in Treasuries When it comes to the balance sheet although we were anticipating for the balance sheet runoff to cease we needed confirmation for exactly when they d do that The market had already priced that the fed wouldn t raise this year That s why you re not getting as big a move The market was right It was pricing out two hikes this year and from what the Fed gave us the market was correct Luke Tilley chief economist Wilmington Trust Wilmington Delaware The Fed moved in a much more dovish direction than anticipated on the rate hikes That should be pretty supportive to the market The action on the balance sheet is also supportive of markets We are not concerned that the Fed has downgraded its GDP forecast Our forecast has been about 2 percent growth for 2019 for quite some time so the Fed is coming down closer to our expectation The dovishness on rates is less about anticipated growth and more about the fact that we simply don t have any signs of inflation picking up Chuck tomes associate portfolio manager Manulife Asset Management Boston Overall it seems the Fed was able to solidify their dovish view as there are no rate hikes priced in for this year and only one rate hike for 2020 That was more dovish than people were expecting at the margin even though the market was looking for a dovish Fed today The dollar has come under pressure against a large number of currencies around the world Josh Bivens director of research the Economic Policy Institute Washington D C This is a welcome pause from the too regular increases of the past couple of years It is also a pause warranted by the economic data There are clear signs that past rate increases are slowing spending growth through traditional transmission channels slower residential investment growth and lower net exports and 2019 will see the fiscal boost from tax cuts and higher spending levels fade rapidly While wage growth is clearly healthier in recent years productivity has also staged what looks increasingly like a durable if unspectacular rebound This productivity rebound has helped keep price inflation firmly within or even under the Fed s long run targets At this point the key challenge facing the Fed in coming years is likely not going to be how to keep inflation in check instead it will be how to keep the recovery going as long as possible to let workers finally eke out some significant gains Indications that the Fed is unlikely to raise rates this year suggest they realize this Gennadiy Goldberg interest rate strategist TD Securities New York It s fairly dovish I d say given that there were 11 dots going to zero hikes in 2019 which is certainly quite a move lower The fact that they ve announced balance sheet runoff ending I think is certainly quite dovish as well In a sense I think this is quite a bit more dovish than the market was priced for and that s why you re seeing Treasuries rally and equities rally as well I think the expectation in the markets was a lowering to one dot I think that was really the consensus and the fact that we ve had 11 at zero so effectively no hikes this year sends a pretty dovish signal to the market Joe Manimbo senior market analyst Western Union Business Solutions Washington The Fed exceeded markets dovish expectations which took a toll on the greenback The Fed did a big about face on policy The fact that the Fed threw in the towel on a 2019 rate hike was particularly dovish Still with the Fed erring more on supporting growth it could reduce the chance of a rate cut in the months ahead As for the timing on the end of balance sheet normalization September is the early side of expectations Evan Brown head of macro asset allocation strategy UBS Asset Management New York It definitely skewed on the dovish side of expectations The main surprise is that the Fed projects zero hikes in 2019 Whereas our broad expectation and the expectation of consensus was for them to leave in at least one hike in 2019 So they re effectively saying they re done for the year There s one hike projected for 2020 but there s a long time between now and then and so the market is effectively taking the view that the Fed is done tightening The balance sheet rolloff information is coming in in line with expectations The main surprise is having no hikes in 2019 for the median dot projection and there was a surprisingly high number of FOMC members who were in favor of that Walter Todd chief investment officer Greenwood Capital Greenwood South Carolina
The market had already priced in no hikes for 2019 but the Fed kind of validated that with the dots That s somewhat significant The clarification on when they are going to end the balance sheet maybe that was sooner than people anticipated end of September That s the two things that the market is maybe reacting to at this point Americas Economics and Markets Desk 1 646 223 6300 |
WFC | Minnesota stuns Louisville for first tourney win since 13 | Minnesota spent the better part of the last few weeks of the regular season on the NCAA Tournament bubble But a strong finish not only put the Golden Gophers into the tournament but gave them plenty of momentum as well exactly what they needed to earn their first tournament victory since 2013 Gabe Kalscheur scored 24 points to lead 10th seeded Minnesota to an 86 76 victory over seventh seeded Louisville on Thursday in the first round of the East Region at Wells Fargo NYSE WFC Arena in Des Moines Iowa The Gophers 22 13 advance to take on the winner of No 2 Michigan State vs No 15 Bradley Kalscheur was 5 for 11 from 3 point range as Minnesota made 11 triples its second highest total all season Jordan Murphy and Amir Coffey scored 18 points each while Daniel Oturu and Dupree McBrayer each scored 13 for the Gophers Minnesota in the NCAA Tournament after missing out last season won its first tournament game since 2013 when it opened with a victory over UCLA The victory Thursday was just the second NCAA Tournament win for the Gophers officially since 1990 Tournament runs in 1994 1995 and the Final Four appearance in 1997 were all vacated because of NCAA violations We were really locked in Minnesota coach Richard Pitino told CBS after the game For 40 minutes we stuck to the scouting report We disrupted them we bothered them We beat a really good Louisville team Louisville 20 14 entered the game having won just two of its last seven games and could never seize the momentum against Minnesota Christen Cunningham scored 22 to lead the Cardinals while Steven Enoch scored 14 Darius Perry added 12 points while Jordan Nwora scored 10 and grabbed 11 rebounds Minnesota shook of a poor start from the field by making 10 of its final 14 shots in the opening half taking multiple seven point leads and getting a Coffey 3 pointer in the final seconds to take a 38 33 lead into the locker room Things continued to go well for the Gophers as they pushed the lead to 62 43 on three free throws from Kalscheur with 9 48 to play However Louisville started to chip away and pulled within nine on a 3 pointer from Perry with 2 44 to play cutting Minnesota s lead to 76 67 Perry followed that with a drive and running layup to get the Cardinals within seven but Minnesota got late stops and made enough free throws to put the game away Get some rest Pitino told CBS when asked about what s next for the Gophers Murphy s banged up Just get off our feet That was a war that was a long game And then get excited about whoever we re going to play This is a really special moment for our team
The game also had some personal meaning for Pitino whose father Rick coached Louisville for 16 seasons He won a national championship with Louisville in 2013 though the title was later vacated for rules violations Field Level Media |
EBAY | Polish watchdog accuses online marketplace Allegro of unfair practices | WARSAW Reuters Polish online marketplace Allegro abused its dominant position by using its technical know how to favor its own shop over other sellers competition watchdog UOKiK said on Tuesday threatening the company with a fine of up to 10 of revenue
Allegro a Polish equivalent of eBay NASDAQ EBAY which allows both professional retailers and members of the public to sell on its platform used an algorithm not available to other sellers to favorably position offers from its own shop UOKiK said
In our opinion Allegro used information it had gathered including an algorithm for deciding on the relevance of items to favor its own shop UOKiK president Marek Niechcial told reporters
The company knew how to position products so buyers chose them more often than those from competitors shops
UOKiK also said that some sales or promotion functions were only available for the official Allegro shop
Allegro said it would fully cooperate with UOKiK
We take compliance very seriously especially since we fully support UOKiK s objectives in protecting consumer rights and protecting fair competition it said in a statement
We are a Polish company proudly supporting the development of the digital economy and we are convinced that the current proceedings will confirm the high standards that we follow in this regard
Bought by private equity funds Cinven Permira and Mid Europa for 3 25 billion in 2016 Allegro is by far the most popular e commerce platform in Poland with 79 of Polish consumers using the site according to a Kantar study carried out for UOKiK |
EBAY | Facebook and eBay ban users trading fake reviews after warning from the UK | Facebook and eBay have signed agreements with Britain s competition watchdog promising to tackle misleading reviews The regulator said Facebook pulled 188 groups and 24 users while eBay permanently banned 140 users involved in selling fake write ups But it says it s also discovered new examples of fake reviews being sold on Facebook s Instagram |
EBAY | Facebook and eBay pledge to better tackle fake reviews | LONDON Reuters Facebook NASDAQ FB and eBay NASDAQ EBAY have promised to better identify probe and respond to fake and misleading reviews Britain s Competition and Markets Authority CMA said on Wednesday after pressing the online platforms to tackle the issue Customer reviews have become an integral part of online shopping on several websites and apps but the regulator has expressed concerns that some comments may not be genuine Facebook has removed 188 groups and disabled 24 user accounts whilst eBay has permanently banned 140 users since the summer according to the CMA The CMA has also found examples via photo posting app Instagram which owner Facebook has promised to investigate Millions of people base their shopping decisions on reviews and if these are misleading or untrue then shoppers could end up being misled into buying something that isn t right for them leaving businesses who play by the rules missing out said CMA Chief Executive Andrea Coscelli The CMA said neither company was intentionally allowing such content and both had committed to tackle the problem We maintain zero tolerance for fake or misleading reviews and will continue to take action against any seller that breaches our user polices said a spokeswoman at eBay Facebook said it was working to stop such fraudulent activity including exploring the use of automated technology to help remove content before it was seen
While we have invested heavily to prevent this kind of activity across our services we know there is more work to do and are working with the CMA to address this issue |
EBAY | Vikings Rudolph says gloves meant for charity wound up on eBay | By Amy Tennery
NEW YORK Reuters Minnesota Vikings tight end Kyle Rudolph said on Wednesday that he was duped into donating a pair of game worn gloves to what he thought was a charity then saw them advertised for sale on eBay NASDAQ EBAY
Rudolph said on Twitter that someone approached him in the locker room after he caught the winning touchdown in his team s wild card game on Sunday against the New Orleans Saints
A member of the media in the locker room after the game asked if he could have my gloves for a charity benefit so I said of course and I will even sign them for you Well he got me sold on eBay 3 days later Rudolph KyleRudolph82 wrote
Rudolph learned of the sale after a social media user pointed out the gloves on the online marketplace eBay which regularly sees sports memorabilia listed for sale
A screenshot of the eBay listing showed the autographed gloves were sold for 375 50
Rudolph said he did not know who requested the gloves and it was unclear who posted the apparel to eBay which did not immediately respond to a request for comment
The saga saw a satisfying twist however after another Twitter user responded saying he had purchased the gloves and offered to donate them after learning of their origins
I m the guy who bought them I will gladly donate to a charity of your choice tweeted Jason King kingy1940
Hey Jason really cool of you to do this Rudolph wrote in return UMNChildrens will greatly appreciate it and I will make sure to get you my pair from this weekends game |
EBAY | Jefferies turns bearish on eBay | Jefferies analyst Brent Thill cuts eBay NASDAQ EBAY to Underperform from Hold saying the online auction company is losing relevance for consumers
EBAY dips 0 9 in premarket trading
Company s experiencing sluggish growth as e commerce competition intensifies in new and used goods Thill writes in a note
Flags eBay s market share decline to 7 vs 15 in 2008
Cuts price target to Street low 31 from 38 average price target is 40 37
Thill s recommendation contrasts with Quant rating of Bullish before this action Sell Side average rating was Neutral 6 Very Bullish 3 Bullish 25 Neutral 2 Very Bearish |
EBAY | EBay EBAY Earnings Expected To Grow Should You Buy | Wall Street expects a year over year increase in earnings on lower revenues when eBay EBAY reports results for the quarter ended September 2019 While this widely known consensus outlook is important in gauging the company s earnings picture a powerful factor that could impact its near term stock price is how the actual results compare to these estimates
The stock might move higher if these key numbers top expectations in the upcoming earnings report which is expected to be released on October 23 On the other hand if they miss the stock may move lower
While management s discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations it s worth having a handicapping insight into the odds of a positive EPS surprise
Zacks Consensus Estimate
This e commerce company is expected to post quarterly earnings of 0 65 per share in its upcoming report which represents a year over year change of 16 1
Revenues are expected to be 2 65 billion down 0 1 from the year ago quarter
Estimate Revisions Trend
The consensus EPS estimate for the quarter has remained unchanged over the last 30 days This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts
Price Consensus and EPS Surprise
Earnings Whisper
Estimate revisions ahead of a company s earnings release offer clues to the business conditions for the period whose results are coming out Our proprietary surprise prediction model the Zacks Earnings ESP Expected Surprise Prediction has this insight at its core
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
Thus a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate However the model s predictive power is significant for positive ESP readings only
A positive Earnings ESP is a strong predictor of an earnings beat particularly when combined with a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold Our research shows that stocks with this combination produce a positive surprise nearly 70 of the time and a solid Zacks Rank actually increases the predictive power of Earnings ESP
Please note that a negative Earnings ESP reading is not indicative of an earnings miss Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and or Zacks Rank of 4 Sell or 5 Strong Sell
How Have the Numbers Shaped Up for eBay
For eBay the Most Accurate Estimate is the same as the Zacks Consensus Estimate suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate This has resulted in an Earnings ESP of 0
On the other hand the stock currently carries a Zacks Rank of 3
So this combination makes it difficult to conclusively predict that eBay will beat the consensus EPS estimate
Does Earnings Surprise History Hold Any Clue
Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings So it s worth taking a look at the surprise history for gauging its influence on the upcoming number
For the last reported quarter it was expected that eBay would post earnings of 0 62 per share when it actually produced earnings of 0 68 delivering a surprise of 9 68
Over the last four quarters the company has beaten consensus EPS estimates four times
Bottom Line
An earnings beat or miss may not be the sole basis for a stock moving higher or lower Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors Similarly unforeseen catalysts help a number of stocks gain despite an earnings miss
That said betting on stocks that are expected to beat earnings expectations does increase the odds of success This is why it s worth checking a company s Earnings ESP and Zacks Rank ahead of its quarterly release Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported
EBay doesn t appear a compelling earnings beat candidate However investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release |
EBAY | Why EBay EBAY Is Poised To Beat Earnings Estimates Again | If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report you should consider eBay EBAY This company which is in the Zacks Internet Commerce industry shows potential for another earnings beat
When looking at the last two reports this e commerce company has recorded a strong streak of surpassing earnings estimates The company has topped estimates by 8 01 on average in the last two quarters
For the most recent quarter eBay was expected to post earnings of 0 62 per share but it reported 0 68 per share instead representing a surprise of 9 68 For the previous quarter the consensus estimate was 0 63 per share while it actually produced 0 67 per share a surprise of 6 35
Price and EPS Surprise
For eBay estimates have been trending higher thanks in part to this earnings surprise history And when you look at the stock s positive Zacks Earnings ESP Expected Surprise Prediction it s a great indicator of a future earnings beat especially when combined with its solid Zacks Rank
Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank 3 Hold or better produce a positive surprise nearly 70 of the time In other words if you have 10 stocks with this combination the number of stocks that beat the consensus estimate could be as high as seven
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change The idea here is that analysts revising their estimates right before an earnings release have the latest information which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier
EBay has an Earnings ESP of 5 31 at the moment suggesting that analysts have grown bullish on its near term earnings potential When you combine this positive Earnings ESP with the stock s Zacks Rank 3 Hold it shows that another beat is possibly around the corner The company s next earnings report is expected to be released on October 23 2019
With the Earnings ESP metric it s important to note that a negative value reduces its predictive power however a negative Earnings ESP does not indicate an earnings miss
Many companies end up beating the consensus EPS estimate though this is not the only reason why their shares gain Additionally some stocks may remain stable even if they end up missing the consensus estimate
Because of this it s really important to check a company s Earnings ESP ahead of its quarterly release to increase the odds of success Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they ve reported |
EBAY | Fortive FTV Gears Up For Q3 Earnings What s In The Cards | Fortive Corporation NYSE FTV is slated to report third quarter 2019 results on Oct 24 In the last reported quarter it delivered a positive earnings surprise of 1 12 The company topped the Zacks Consensus Estimate in three of the trailing four quarters recording average positive surprise of 1 53 Performance in the Last Reported QuarterFortive had reported second quarter 2019 non GAAP earnings of 90 cents per share which surpassed the Zacks Consensus Estimate by a penny and increased 18 4 from the year ago period In addition revenues of 1 86 billion outpaced the Zacks Consensus Estimate by 3 29 and improved 2 on a year over year basis
Fortive Corporation Price and EPS Surprise
Estimates for Q3Fortive expects third quarter 2019 non GAAP earnings in the range of 83 88 cents per share The Zacks Consensus Estimate for earnings is currently pegged at 87 cents indicating growth of 1 16 from the year ago quarter The Zacks Consensus Estimate for revenues is currently pegged at 1 88 billion indicating growth of 2 3 from the year ago quarter Let s see how things have shaped up for this announcement Acquisitions Portfolio Strength Key CatalystsFortive has made strong endeavors toward innovation and expansion of key offerings on the back of strong and accretive acquisitions The acquisitions including Industrial Scientific and Landauer are expected to have driven its performance in the to be reported quarter Also the company completed the acquisition of Advanced Sterilization Products from Johnson Johnson s JNJ subsidiary Ethicon Inc for approximately 2 7 billion Third quarter revenues are expected to have benefited from this deal Strength in the Professional Instrumentation segment driven by acquisitions is anticipated to be reflected in the upcoming quarterly results The Zacks Consensus Estimate for revenues from Professional Instrumentation is pegged at 1 2 billion indicating a 3 8 year over year increase The Zacks Consensus Estimate for revenues from the Industrial Technologies segment for the to be reported quarter is pegged at 760 million suggesting 4 year over year improvement Earnings WhispersOur proven model predicts an earnings beat for Fortive this time around The combination of a positive and a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold increases the chances of an earnings beat Earnings ESP The company has an Earnings ESP of 0 77 You can uncover the best stocks to buy or sell before they re reported with our Zacks Rank Currently Fortive has a Zacks Rank 3 Other Stocks That Warrant a LookHere are a few other stocks worth considering as our model shows that these too have the right combination of elements to deliver an earnings beat in the upcoming releases Cadence Bancorp NYSE CADE has an Earnings ESP of 5 69 and a Zacks Rank 3 You can see Veoneer Inc NYSE VNE has an Earnings ESP of 7 17 and a Zacks Rank 2 eBay Inc NASDAQ EBAY has an Earnings ESP of 5 31 and a Zacks Rank of 3 7 Best Stocks for the Next 30 DaysJust released Experts distill 7 elite stocks from the current list of 220 Zacks Rank 1 Strong Buys They deem these tickers Most Likely for Early Price Pops Since 1988 the full list has beaten the market more than 2X over with an average gain of 24 50 per year So be sure to give these hand picked 7 your immediate attention |
WFC | Wells Fargo officials enter 240 million settlement over bogus accounts | By Jonathan Stempel and Dena Aubin Reuters Wells Fargo NYSE WFC Co executives and directors have reached a 240 million settlement with U S shareholders over the creation by bank employees of millions of unauthorized customer accounts The settlement was filed late Thursday with the federal court in San Francisco and requires a judge s approval It resolves claims that the officials breached their fiduciary duties by knowing about or consciously disregarding the bogus accounts and failing to stop their creation Insurers for 20 current and former Wells Fargo executives and directors including Chief Executive Tim Sloan and his predecessor John Stumpf will pay the 240 million to the bank The officials denied wrongdoing Wells Fargo spokesman Peter Gilchrist declined to comment on Friday The San Francisco based bank has been beset by scandals over its sales practices since agreeing in September 2016 to pay 190 million to settle government claims that it created the customer accounts without permission Outrage over the settlement and the bank s handling of the fallout led to Stumpf s departure Other sales abuses later surfaced including Wells Fargo s charging for unnecessary auto insurance and imposing excessive mortgage fees The shareholders in Thursday s settlement were led by pension plans in Alabama and Colorado Their lawyers called the accord the largest insurer funded cash settlement in a U S shareholder derivative lawsuit surpassing News Corp s 139 million accord in 2013 over its handling of a phone hacking scandal in Britain Shareholders bring derivative lawsuits on behalf of companies typically when the defendants are corporate officers or board members with proceeds going to the companies Last May Wells Fargo reached a 480 million settlement of a securities fraud lawsuit brought by shareholders over the unauthorized accounts On Wednesday Wells Fargo said it might have to pay up to 2 7 billion more than it had set aside as of Dec 31 to resolve legal matters up from 2 2 billion three months earlier In January Wells Fargo issued a report saying it had improved risk oversight and accountability including by eliminating sales goals and clawing back compensation from executives Sloan nonetheless remains under pressure and faces calls from Massachusetts Senator Elizabeth Warren a Democrat running in the 2020 presidential campaign for his ouster
The case is In re Wells Fargo Co Shareholder Derivative Litigation U S District Court Northern District of California No 16 05541 |
WFC | Wells Fargo CEO to tout risk management remediation to U S Congress | By Imani Moise Reuters Wells Fargo NYSE WFC Co Chief Executive Tim Sloan will tout the scandal plagued bank s progress in repaying wrongly charged customers and highlight changes to its risk management in testimony to U S lawmakers on Tuesday according to prepared remarks Since 2016 Wells Fargo has reviewed 165 million accounts contacted more than 40 million customers and payed out millions in compensation stemming from sales practices issues Sloan said in an opening statement to the House Financial Services Committee that was posted on the bank s website on Monday The remarks detailed other steps the bank has taken to improve its culture and interactions with customers in order to move past a series of sales practices scandals But Sloan will likely face tough questions on Tuesday from House Democrats like U S Representatives Maxine Waters and Alexandria Ocasio Cortez who are seeking to ramp up oversight of big banks Wells Fargo s remediation efforts have also faced scrutiny from U S regulators who say the plans were not thorough enough The bank has improved risk management controls by centralizing oversight and restructuring its board in order to prevent new problems from developing the remarks said Last year the Federal Reserve imposed a consent order on the bank preventing it from growing its balance sheet until it proves it has improved its risk management controls Sloan said the bank has thousands of employees working to satisfy the Fed s requirements and that Wells Fargo executives and board members have been meeting regularly with U S banking regulators to address their concerns and seek input
Earlier this year the bank said it expects to operate under the asset cap until the end of 2019 pushing back prior guidance by six months |
WFC | Wells Fargo s CEO Tim Sloan Disputes Claim His Bank Is Too Big to Manage | Bloomberg Wells Fargo NYSE WFC Co Chief Executive Officer Tim Sloan detailed efforts he s taken to turn the bank around and pushed back against a lawmaker s claims that it s too big to manage
Sloan told the House Financial Services Committee Tuesday that the lender is working to address 14 open consent orders from regulators
It s my job as CEO to make sure things change and they are changing Sloan said
Maxine Waters the California Democrat who chairs the panel said a litany of scandals over the last three years and the Federal Reserve s unprecedented decision to impose an asset cap prove the firm is too big to manage Sloan disagreed
You have not been able to keep Wells Fargo out of trouble Waters says Why should Wells Fargo continue to be the size that it is |
WFC | Wells Fargo CEO Draws Bipartisan Rebuke at Tough House Hearing | Bloomberg More than two years after Wells Fargo NYSE WFC Co erupted into scandals Chief Executive Officer Tim Sloan returned to Capitol Hill to lay out his efforts to clean up the mess The bank has apparently made little progress in winning over lawmakers
Democrats and Republicans on the House Financial Services Committee took turns grilling Sloan for more than four hours Tuesday with several expressing doubts that the three decade insider should be running the firm Committee Chairwoman Maxine Waters was joined by some colleagues in her call to go further raising the specter of a breakup by describing the bank as too big to manage
You have not been able to keep Wells Fargo out of trouble said Waters a Democrat from the company s home state of California Why should Wells Fargo continue to be the size that it is
The confrontation with lawmakers underscored how far Wells Fargo has yet to go to win back the public 30 months after it was fined for opening millions of bogus accounts for consumers The bank has been working to address widespread abuses that have made it a target for both major parties and President Donald Trump dragging on its stock and prompting the Federal Reserve to impose an unprecedented ban on growth
Regulator Disappointed
During the hearing the Office of the Comptroller of the Currency issued a statement saying it continues to be disappointed with the bank and its inability to execute effective corporate governance and a successful risk management program
Meanwhile lawmakers suggested regulators and other authorities should be harder on the firm potentially forcing out more executives or bringing criminal charges They demanded the company do more to make customers whole and advocated stiffer rules for the entire industry Brad Sherman another California Democrat yelled at Sloan to end forced arbitration and support overdraft protection legislation
Tensions also flared as Democrats including Carolyn Maloney of New York and Ayanna Pressley of Massachusetts demanded Wells Fargo stop providing financial services to the National Rifle Association and firearms companies
Why does Wells Fargo continue to put companies over people Maloney asked saying the gun industry is literally killing children
We don t put profits over people Sloan responded He said it isn t up to banks to enforce legislation that doesn t exist
Criticism of Wells Fargo came from so many that Kentucky Republican Andy Barr opened his questions by expressing surprise I m shocked that you re not in an orange suit and little jail cell today That drew gasps in the room before he went on to argue against dissolving the bank instead giving executives a chance to fix problems
The issue within the institution was not a matter of size it was a matter of culture Barr said
Sloan who took the helm weeks after first scandal emerged in September 2016 remained calm as he fielded questions He argued the San Francisco based lender isn t too big to manage and categorically denied assertions in a New York Times article over the weekend That report cited Wells Fargo employees who said its culture hasn t changed and that misaligned sales incentives still exist The assertions are just wrong Sloan said
It s my job as CEO to make sure things change and they are changing Sloan said He said repeatedly that although he can t promise perfection he s the right person to lead the company and that it s getting better
The board has credited him for rooting out and fixing past problems addressing regulators concerns tightening internal oversight and taking other steps to improve earnings
More Hearings
Sloan is the first head of a major U S bank to appear before the House committee since Democrats assumed control of the chamber in January They re planning a series of sessions this year to examine big banks and may call in other CEOs in coming months
Wells Fargo s scandals have been wide ranging and costly Following the revelation that employees opened millions of accounts without customers permission to meet sales goals issues have emerged in consumer lending wholesale and wealth management units The company forced unnecessary insurance policies on auto lending customers charged borrowers improper fees to lock in mortgage rates and foreclosed on struggling home buyers who could have had debts modified
Last year the bank paid 1 billion to federal regulators to settle allegations it mistreated consumers In December it settled with 50 states and the District of Columbia for 575 million The abuses led the Fed to bar the bank from growing total assets beyond their level at the end of 2017 until lapses are fully addressed
Unknown Damage
Waters ended the session with a promise to reintroduce legislation aimed at holding big banks accountable which would among other things give regulators the authority to break up lenders that abuse consumers
Patrick McHenry the top Republican on the committee acknowledged that Sloan has made some progress but expressed concern that Fed and the OCC still don t seem comfortable with measures taken so far
We don t know with certainty how many consumers were affected McHenry said Nor do we know the full extent of the damage |
WFC | 4 Wells Fargo Advantage Mutual Funds For Striking Gains | Wells Fargo NYSE WFC Advantage Funds managed more than 466 billion of assets as of Dec 31 2018 from diverse mutual funds categories The fund family manages a wide variety of mutual funds from domestic and foreign funds to money market funds asset allocation funds and fixed income funds The Wells Fargo Fund family claims that it offers funds in every key category each guided by professional investment teams that have been chosen because of their proven time tested strategies The team also helps investors to clarify their investment ideas and identifies their risk tolerance Additionally the owner of the Wells Fargo Advantage Funds brand Wells Fargo is one of the top four banks in the United States and has been maintaining its standard in the financial services sector for more than 150 years It is a highly diversified financial services company with operations limited not only to the domestic market Below we share with you four top ranked Wells Fargo Advantage Funds Each has earned a Strong Buy and is expected to outperform its peers in the future To view the Zacks Rank and past performance of all Wells Fargo Advantage Funds investors can Wells Fargo Intermediate Tax AMT Fr A seeks appreciation of current income exempt from federal income tax The fund invests the lion s share of its assets in municipal securities the interest earned from which is exempt from federal income tax including federal alternative minimum tax AMT The fund may also invest about 15 of its assets in below investment grade municipal securities Wells Fargo Intermediate Tax AMT Fr Ahas three year annualized returns of 1 6 WFTAXhas an expense ratio of 0 70 compared with the category average of 0 76 Wells Fargo Precious Metals Inst seeks appreciation of capital in the long run The fund invests the lion s share of its assets in investments which are related to precious metals This apart the fund invests about 40 of its assets in equity securities from emerging markets EKWYX also invests about one fourth of its assets in debt securities related to precious metals as well as common or preferred stocks of subsidiaries of the fund that invest in precious metals and minerals Wells Fargo Precious Metals Inst has three year annualized returns of 4 As of January 2019 EKWYX held 36 issues with 8 92 of its assets invested in Barrick Gold Corp Wells Fargo CoreBuilder Shares Series M seeks maximization of returns through growth of income and capital WFCMX invests more than 60 of its assets in municipal securities which offer federal income tax exempted interest Wells Fargo CoreBuilder Shares Series M has three year annualized returns of 3 3 Robert J Miller is one of the fund managers of WFCMX since 2008 Wells Fargo Advantage Core Bond A seeks total returns through growth of capital and income MBFAX invests the majority of its assets in bonds that are rated investment grade MBFAX may invest a maximum of a quarter of its assets in asset backed securities which are not from the mortgage backed category Not more than one fifth of MBFAX s assets are expected to be invested in foreign debt securities that are denominated in dollar Wells Fargo Advantage Core Bond A has a three year annualized return of 1 3 As of January 2019 MBFAX held 831 issues with 2 47 of its assets invested in UnitedStatesTreasury Notes 2 To view the Zacks Rank and past performance of all Wells Fargo Advantage Funds investors can Want key mutual fund info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing mutual funds each week |
EBAY | Vintage Marvel Comics book sells for record 1 26 million at auction | Reuters A 1939 comic book that introduced Marvel characters for the first time sold for a record 1 26 million at auction Dallas based auctioneer Heritage Auctions said on Thursday
Marvel Comics No 1 features the first appearances of characters including Human Torch and the Sub Mariner Decades later Marvel debuted Spider Man the Incredible Hulk and other superheroes that have headlined recent blockbuster movies
The item was originally purchased at a newsstand by a Pennsylvania mailman The book s condition was rated as 9 4 on a scale of 1 to 10 the auctioneer said
The sale was part of a four day auction of vintage comic books and comic art
The previous record holder for a Marvel Comics book was a 1962 issue featuring the first appearance of Spider Man which sold for 1 1 million in 2011
A handful of other comic books have topped the 1 million price tag In 2014 a Superman comic was purchased for 3 2 million on eBay NASDAQ EBAY |
EBAY | Rise of Skywalker actor John Boyega I left the script under my bed | Reuters British actor John Boyega said on Wednesday that he left his copy of the closely guarded script for the new Star Wars movie under his bed and that it ended up for sale on eBay NASDAQ EBAY
Boyega who plays Stormtrooper turned resistance fighter Finn in Star Wars The Rise of Skywalker told U S television show Good Morning America that a cleaner had found the script and put it on the eBay auction site
Director J J Abrams said earlier this week that the team behind the film spotted the eBay listing and was able to get it back before it was sold meaning the secrets in the plot are still safe
I was moving apartments and I left the script under my bed I was just like you know what I ll leave it under my bed Boyega said on Wednesday When I wake up in the morning I ll take it and move but my boys came over and you know we started partying a little bit and then the script just it just stayed there
Then a few weeks after a cleaner comes in finds the script and then puts it on eBay for like 65 British pounds So the person didn t know the true value he added
Scripts for Star Wars movies are among the most closely guarded in the film world Many actors only get the parts of the script for their specific scenes and critics do not get to see the film in advance
Boyega said that even he did not know the ending of the film which concludes the Skywalker saga first brought to life in the 1977 original
I don t actually don t know because we shot several different things he said I m curious I think I watch the movie next week for the first time
Disney s The Rise of Skywalker starts its worldwide rollout on Dec 18 and could take up to 200 million at the North American box office on its opening weekend according to Variety
Its stars include original Star Wars actors Mark Hamill and the late Carrie Fisher whose role as Princess Leia was pieced together after her sudden death in 2016 using unused footage from her last film Star Wars The Last Jedi |
EBAY | Does The RealReal Have A Path To Profitability | Luxury consignment marketplace The RealReal NASDAQ REAL IPO d on June 28 at a price of 20 share The stock reached a high of 28 on its first day of trading before steadily declining over the next two months to a low of 13 share on August 27 Since then REAL has rebounded by 33 to 17 share
This wild volatility reflects the key underlying question for REAL Is it an innovative new business model that has found a profitable niche Or is REAL whose CEO previously ran Pets com destined to crash and burn in the same manner
This report aims to help investors sort through REAL s financial filings to understand the fundamentals and valuation of this recent IPO
Filling An Underserved NicheREAL operates an online marketplace that allows people to sell secondhand luxury goods such as designer clothing jewelry and art In 2018 the company facilitated 1 6 million transactions with a total value of 710 million from over 400 thousand different buyers Selling and buying secondhand luxury goods online presents a unique challenge due to the proliferation of knockoff goods If for instance someone posts a Gucci handbag for sale on eBay NASDAQ EBAY it s difficult if not impossible for any potential buyers to verify its authenticity As a result buyers will not want to pay full price which means sellers of authentic goods will not want to sell on the platform This creates a negative feedback loop that results in the majority of luxury goods posted on EBAY being fake REAL solves this problem by authenticating all the merchandise sold on its site and handling all elements of the sales process including photography pricing fulfillment and returns This more intensive service allows REAL to retain a significant portion of the money buyers spend on its site REAL s take rate the percentage of each order that it keeps as a percent of revenue was 36 in 2018 EBAY s take rate was just 9 and craft goods marketplace Etsy s NASDAQ ETSY take rate was 15 as shown in Figure 1 Sources New Constructs LLC and company filingsHigh Cost Business ModelWhile REAL gets to keep a much larger portion of the money spent on its site than its peers it also has to spend much more to earn that revenue It pays the cost of authenticating merchandising shipping and accepting returns for all the items it sells
What s more many of the above costs are not reported in cost of goods sold Instead they are reported as Operations and Technology expenses According to REAL s S 1
Operations and technology expense principally includes personnel related costs for employees involved with the authentication merchandising and fulfillment of goods sold through our online marketplace as well as our general information technology expense We would argue that many of these costs are directly related to the delivery of REAL s service and should be included in cost of revenue By reporting these costs separately REAL makes its gross margin look higher and presents a potentially misleading picture of its path to profitability
Figure 2 shows that REAL s gross margin has stayed consistent at 65 since 2017 However if we include operations and technology expense as part of cost of revenue its Adjusted Gross Margin declined from 22 in 2017 to 15 TTM
Sources New Constructs LLC and company filings
REAL says that it expects operations and technology expenses to decrease as a percentage of revenue over the longer term but Figure 2 shows that they re currently not making any progress towards that goal
Overall REAL s after tax operating NOPAT decreased from 47 million in 2017 to 66 million in 2018 but its NOPAT margin improved slightly from 35 to 32 over the same time
REAL seems like it should have a profitable business model It fulfills an underserved niche and has relatively little direct competition However the company has yet to show significant concrete progress towards achieving profitability
It s possible that this business is simply not a profitable space which would explain why so few other firms have filled this niche
Could REAL Benefit from a Recession While luxury goods manufacturers struggle during economic downturns REAL s consignment business could actually benefit from poor economic conditions Shoppers that normally buy new luxury items might substitute and buy used during a recession At the same time the company could also get a large influx of new sellers needing extra cash as well Of course it s also possible that the overall decline in spending on luxury goods during a recession would more than offset this substitution effect and be a net negative for REAL As with so many other recent IPO s we ve never seen this company operate during an economic downturn so we have no real idea how it will perform Still there s at least some reason for investors to hope that this company is better equipped to handle a recession Public Shareholders Have Rights A Break from Recent NormsREAL s corporate governance also separates it from many other recent IPO s While most companies now go public with dual class share structures that give insiders and early investors extra voting rights REAL has just a single class of voting stock Public shareholders get to have an equal voice in corporate governance
This voting power is especially important because shareholders have reason to be skeptical of REAL s leadership Founder and CEO Julie Wainwright first rose to prominence as the CEO of Pets com the ill fated e commerce company that became the poster child of tech bubble excess in the late 90 s
Wainwright s resume won t give investors much confidence but at least shareholders have the power to potentially replace her if REAL doesn t start showing signs of profitability
DCF Model Reveals High ExpectationsWhen we use our dynamic DCF model to analyze the future cash flow expectations baked into the current stock price we see that REAL is expensive but still has potential upside
To justify its current valuation of 17 share REAL must achieve 12 NOPAT margins comparable to ETSY and grow revenue by 23 compounded annually for the next eight years See the math behind this dynamic DCF scenario
If REAL can grow revenue at the same rate but achieve NOPAT margins of 19 equal to EBAY the stock is worth 30 share today a 73 upside to the current stock price See the math behind this dynamic DCF scenario
A 23 compound annual growth rate seems very achievable for a company that grew revenue by 50 year over year through the first six months of 2019 so the issue is margins Given the high take rate REAL should be able to achieve comparable margins to its peers with some cost controls in which case the stock is undervalued However the poor performance of the stock since its IPO shows that investors are not satisfied with future promises and want to see progress towards profitability right now
Critical Details Found in Financial Filings by Our Robo Analyst Technology
As investors focus more on fundamental research research automation technology is needed to analyze all the critical financial details in financial filings Below are specifics on the adjustments we make based on Robo Analyst findings in The RealReal s S 1
Income Statement we made 11 million of adjustments with a net effect of removing 9 million in non operating expense 4 of revenue You can see all the adjustments made to REAL s income statement here
Balance Sheet we made 124 million of adjustments to calculate invested capital with a net increase of 82 million The most notable adjustment was 96 million in operating leases This adjustment represented 204 of reported net assets While most companies are now required to report operating leases on the balance sheet REAL is classified as an emerging growth company and can delay its adoption of the new standard until 2020 You can see all the adjustments made to REAL s balance sheet here
Valuation we made 227 million of adjustments with a net effect of decreasing shareholder value by 227 million You can see all the adjustments made to REAL s valuation here |
WFC | Warren Says Wells Fargo Must Fire CEO Before Fed Ends Growth Cap | Bloomberg U S Senator Elizabeth Warren renewed her call for the ousting of Wells Fargo NYSE WFC Co Chief Executive Officer Tim Sloan saying the Federal Reserve shouldn t lift an order restricting the bank s growth until he s gone
A recent report of misconduct in the bank s wholesale division which Sloan ran prior to taking the top job demonstrates that he isn t the right person to run Wells Fargo the Democratic presidential candidate said Friday in a letter to Federal Reserve Chairman Jerome Powell A 2015 anti money laundering consent order with the Office of the Comptroller of the Currency followed by the alleged altering of documents to satisfy the order show Sloan s direct ties to bad behavior Warren said
Wells Fargo is fundamentally broken and there is no evidence whatsoever that these problems can be fixed under Mr Sloan s watch the Massachusetts senator wrote The Federal Reserve should take no action to remove the growth cap until Wells Fargo replaces Mr Sloan as CEO
The San Francisco based lender has credited Sloan for leading an overhaul of the bank over the past two years rooting out and fixing past problems addressing regulators concerns tightening internal oversight streamlining structure and taking other steps to improve earnings The most recent word from the bank s chair Betsy Duke is that the board stands behind Sloan
Warren has repeatedly criticized Wells Fargo amid customer abuse revelations that erupted more than two years ago with a phony accounts scandal Last year the Fed imposed an unprecedented sanction on the bank forbidding it from boosting total assets beyond their end of 2017 level Following a letter from Warren Powell later agreed that the ban would stay in place until the full Fed board determined the bank has made enough progress in fixing its missteps
Sloan told investors last month the bank plans to operate under the asset cap through the end of 2019 longer than previously forecast |
WFC | Fed s Powell heads to Congress amid shifting landscape | By Howard Schneider and Ann Saphir WASHINGTON Reuters Federal Reserve Chairman Jerome Powell worked hard to strengthen ties with Congress during his first year as head of the U S central bank doubling the pace of meetings with lawmakers over his predecessors and courting Democrats and Republicans alike The value of that effort will get a very public test this week when Powell heads to Capitol Hill for hearings in a political and economic environment that has shifted dramatically since he last appeared before Congress in July 2018 GRAPHIC Powell s time on Capitol Hill Democrats won control of the U S House of Representatives in the November elections and some new lawmakers are pushing programs like a Green New Deal that could have long term implications for the Fed two members of the Senate Banking Committee and at least one member of the House Financial Services Committee may run for president in 2020 and President Donald Trump s public criticism of the Fed has raised questions about whether its independence has been compromised GRAPHIC Powell s sessions with Democrats versus Republicans On top of that what appeared to be a blue sky economy in July has become clouded by a global growth slowdown weak inflation and bouts of volatility in U S bond and stock markets that some have blamed on policy and communications missteps by Powell himself U S Representative Emanuel Cleaver a Democrat of Missouri and chair of the House subcommittee on monetary policy said some of the incoming Democrats on the committee might ask Powell about ideas like the Green New Deal that featured in their campaigns With Democrats now in charge he said he expected to restate openly and with a little more influence support for the Fed s independence from the White House My fear with the constant tweeting directed toward Chairman Powell and the Fed is that a lot of Americans may want to blame the Fed for any failings of the U S economy Cleaver said The Fed raised rates four times in 2018 but in a sharp pivot last month said it would be patient in deciding when to tighten policy again if at all Investors interpreted the move as indicating that the tightening cycle had ended After appearances in February and July in which the mood was largely congenial and the economy on an even keel all of these things are coming together to make Powell s testimony particularly challenging said Boston College economics professor Peter Ireland The Fed chief by law appears before separate Senate and House committees twice a year POINTS OF FRICTION In a companion report issued last week the Fed described a U S economy that was doing well on many fronts but facing weaker growth in the year to come and a number of intensifying risks Powell will elaborate on that document in written testimony and in answers to lawmakers questions first before the Senate committee on Tuesday and on the following day before the House panel The Senate hearing is scheduled to start at 10 a m EST 1500 GMT The Fed chairman is no stranger to the key players Over the last year he has had one on one meetings with a majority of the members of the Senate Banking Committee and about a third of the House Financial Services Committee including sessions with Sherrod Brown of Ohio who is the ranking Democrat on the Senate panel and Maxine Waters a Democrat from California who chairs the full House panel Brown is exploring a possible run for president as is his Democratic colleague on the Senate Banking Committee Elizabeth Warren of Massachusetts Last week Warren teed up one point of pressure for Powell repeating her call that the Fed use its regulatory powers to force out Wells Fargo NYSE WFC Co Chief Executive Officer Tim Sloan over the bank s prior misconduct Tougher oversight of major banks and Wall Street is among the top issues of Warren s presidential campaign Aside from questions about Trump there could be other points of friction The newest members of the House committee include first year lawmakers like Alexandria Ocasio Cortez a Democrat from New York who have proposed in broad outline major changes in national environmental and economic policy Some versions of the plan involve relying on the Fed to create the credit needed to pay for it a controversial proposition to mainstream central bankers |
WFC | Pensions May Sell 26 Billion in Stocks by Thursday Wells Fargo | Bloomberg This week will see an unusually busy month end rebalancing among U S pension funds after the electric rally in stocks in recent weeks forces some to shift more than usual into fixed income according to Wells Fargo NYSE WFC Co
Bonds will likely get a 24 billion boost while stocks will see a 26 billion outflow by the end of the month Wells Fargo strategists led by Boris Rjavinski wrote in a Feb 25 report Pension rebalancing flows tend to be heftier at the ends of quarters as not all funds update monthly the strategists said But with stocks running laps around bonds managers may not be prefer to wait that long
We expect many funds that would normally wait until quarter end to join the more frequent monthly rebalancers in the next few days the strategists wrote This would be a significant size asset reallocation in historical context and certainly one of the largest non quarter end pension portfolio adjustments
Most of the equity outflows are projected to be from domestic large cap and small cap portfolios while global developed stocks may see modest selling and emerging markets hardly any at all the Wells Fargo team wrote Initial inflows into fixed income will likely be via liquid Treasury futures contracts they predicted
Sizable pension flows from equities to bonds could amplify other market drivers this week especially if anything ranging from the U S North Korea summit to Federal Reserve Chairman Jerome Powell s testimony before Congress triggers a risk off move the strategists said |
WFC | Why some U S fund managers like China regardless of trade deal | By David Randall NEW YORK Reuters U S President Donald Trump s decision to delay raising tariffs on 200 billion worth of Chinese goods has helped push global stock markets broadly higher as investors hope for a resolution in the trade war between the world s two largest economies Yet some U S based fund managers from firms including Wells Fargo NYSE WFC Asset Management Causeway Capital Management and Janus Henderson Investors say they are becoming more bullish on China regardless of whether a trade agreement is reached over the next few months That is because China has responded to the threat of escalating trade tariffs by increasing its monetary and fiscal stimulus softening the potential blow as its economic growth rate falls to the slowest pace in 28 years China s central bank has cut the reserve requirement ratios for commercial banks making lending easier while tax cuts and increased infrastructure spending are expected to bolster the economy China s banks made a record 477 billion in new loans in January The stimulus Chinese officials have started to drip feed to the economy will likely result in a confluence of positive sentiment and positive growth surprises said Brian Jacobsen senior investment strategist at Wells Fargo Asset Management At the same time Chinese stocks which fell into a bear market last year in part because of the trade tariffs offer more compelling value than other emerging markets countries said Arjun Jayaraman a portfolio manager of the 4 5 billion Causeway Emerging Markets fund which has gained 14 2 percent a year over the last three years according to Morningstar A lot of negative views are still in the market but some of the more draconian fears about a continued lack of credit in the economy have been somewhat assuaged he said We re seeing more lending to the private sector and higher quality growth As a result Jayaraman s fund has been increasing its stake in consumer focused internet plays such as Tencent Holdings Ltd and Alibaba NYSE BABA Group Holdings Ltd along with banks and property companies Not all investors are excited about the return of stimulus Singapore based Yoojeong Oh investment director at Aberdeen Standard Investments which manages over 700 billion in assets said the move away from deleveraging the Chinese economy is a worry for us Yet she remains bullish on Chinese equities because her portfolio is focused chiefly on spending by Chinese consumers What we ve really looked at in China are those companies focused on the domestic growth story which I think is a much more exciting story than trying to find the export companies selling into lower growth developed markets she said As a result intra Asia trade is a good equities bet over the next few years she said CAUGHT IN THE TREND The move by U S fund managers into Chinese equities comes as investors have been moving steadily back into emerging markets after many abandoned the category amid the global stock market turmoil in the last quarter of 2018 Emerging market stocks are now the most popular trade among global fund managers according to BAML data though much of those bets are going into Latin American countries such as Brazil rather than China according to the firm s research Overall China s CSI 300 index of large cap companies is up 22 3 percent for the year to date or about 11 percentage points more than the U S benchmark S P 500 index That suggests global investors expect a positive trade resolution between the United States and China that along with China s stimulus will continue to bring Chinese equities out of a bear market said Ashwin Alankar global head of asset allocation at Janus Henderson Investors
China has been a dog over the last two years relative to the rest of the world so we re starting to see some reversion to the mean he said |
WFC | Wells Fargo starts settlement talks with Justice Dept SEC | NEW YORK Reuters Wells Fargo NYSE WFC Co said on Wednesday that it entered preliminary settlement discussions with the U S Department of Justice and the Securities and Exchange Commission over previously disclosed probes into its sales practices In an annual regulatory filing the bank said it raised the maximum figure it could exceed its legal reserves by as much as 2 7 billion an increase of 500 million since it last reported the number in November The bank said it raised the figure which is called a reasonable possible loss and is separate from the bank s legal reserves because of several legal matters including ones related to its sales practices Wells Fargo has faced a long list of penalties related to a sales scandal beginning in 2015 which initially related to employees in the consumer bank opening millions of accounts in customers names without their permission It has since spread to other bank businesses from mortgage banking to auto lending To date the bank has paid out over 4 billion in settlements and fines related to the scandal and has faced probes from the Consumer Financial Protection Bureau the Office of the Comptroller of the Currency the Los Angeles city attorney and the New York attorney general
Lingering investigations by the SEC the Department of Justice and the Department of Labor represent the largest open questions hanging over the bank s head |
WFC | Forex Dollar Flat as Upbeat U S Data Fuels Rate Hike Calls | Investing com The U S dollar was flat against a basket of major currencies Thursday as stronger U S economic data raised expectations the Federal Reserve may consider hiking rates this year
The U S dollar index which measures the greenback s strength against a trade weighted basket of six major currencies fell 0 02 to 96 06
Gross domestic product increased at a 2 6 annual rate in the fourth quarter the Commerce Department said in its advance estimate on Thursday in line with economists forecasts
The Chicago PMI rose to a reading of 64 7 in this month from 56 7 last month topping economists estimates for a reading of 58 1
Growth is probably not strong enough right now to induce the Fed to resume its tightening cycle Wells Fargo NYSE WFC said But we look for the FOMC to tap on the brakes again with another 25 bps rate hike later this year probably sometime in the third quarter
The report comes just a day after Federal Reserve Chairman Jerome Powell delivered an upbeat assessment of the economy and said the central bank was looking at adjust its runoff of the balance sheet policy later this year
GBP USD fell 0 32 to 1 3266 after hitting a seven month high on Wednesday amid growing expectations that a no deal Brexit will be averted
U K Prime Minister Theresa May said earlier this week British lawmakers would get the chance to vote on a delay to Brexit If her withdrawal gets voted down on March 12
EUR USD rose 0 40 to 1 1380 while USD JPY rose 0 35 to Y111 37 The yen came under pressure as strong U S economic data pushed the U S 10 Year higher supporting an uptick in greenback
USD CAD gained 0 01 to C 1 3155 |
WFC | Can The Bull Market Run For Another 10 Years | The current stock bull market already the longest in U S history turns 10 years old this month It s been a phenomenally profitable time to participate especially if you ve stuck to an investment strategy that favors dividend paying stocks
As you can see in the chart below the amount of cash that S P 500 index companies have returned to shareholders has grown each year since 2009 In the final three months of 2018 alone S P companies paid out 119 8 billion a quarterly record Total dividends for the full year stood at 456 3 billion up 9 percent from the previous year another new record
Thanks to corporate tax reform stock buybacks also shot up to an all time high of more than 800 billion in 2018 For the first time since 2008 this amount topped what S P companies spent to replace or upgrade offices and equipment
While I m on this topic a lot of noise has been made lately about how much companies spent last year repurchasing shares of their own stock Many critics of President Donald Trump s tax overhaul suggest that buybacks have been made at the expense of investing and giving workers raises This is misleading to say the least Capital expenditures grew substantially from 2017 to 2018 at their fastest pace since 2011 in fact and often the same companies that were buying back their stock also increased their investments in their own business and workers
Buffett Says He d Buy The S P Today
For a while now some financial analysts and pundits have been predicting the end of the business cycle and the bull market s 10 year anniversary is only likely to intensify those calls
The truth is that business cycles do not die from old age alone In the past they ve unraveled as a result of economic shocks debt crises wars changes in monetary policy but never simply because investors believed they overstayed their welcome
In other words I don t think there s any reason why this bull run can t last another 10 years
Legendary investor Warren Buffett told CNBC just last week that he thinks the aging bull still looks attractive and if given the choice right now between investing in S P 500 index companies and a 10 year bond he d go with the former
If I had a choice today for a 10 year purchase of a 10 year bond or buying the S P 500 and holding it for 10 years I d buy the S P in a second Buffett said
A couple of caveats here One you can t invest directly in an index And two Buffett is a billionaire many times over and so his threshold for risk even at 88 years old is probably somewhere in the upper stratosphere
Be that as it may there s research available to support Buffett s rosy 10 year outlook Below is a brief excerpt from Oxford Club Chief Income Strategist Marc Lichtenfeld s 2012 bestseller Get Rich With Dividends
Investing in the stock market works Since 1937 if you invested in the broad market index you made money in 69 out of 76 rolling 10 year periods for a 91 percent win rate That includes reinvesting dividends
A 91 percent win rate Put another way it s historically been very rare for a portfolio of S P stocks not to have generated positive returns on a rolling 10 year basis
According to Marc only two out of the past 20 years 2008 and 2009 were losers for the 10 year period with dividends reinvested thanks to the financial crisis And that s only if you had cashed out at the worst possible time Even the tech bubble of the late 1990s and early 2000s wasn t enough to prevent most investors from losing their principal investments made a decade earlier
What does all of this mean It means investors have historically been rewarded when they ve taken a longer term outlook and stayed disciplined and I might add focused on companies that were raising their dividends and then reinvested those dividends
Expecting a Recession It Might Pay To Stay Invested
If you believe that a recession or bear market will strike later this year or next it still might not be time to get out of stocks altogether That s because returns have tended to be strongest 12 months or so before the start of a recession as opposed to two or three years before
Take a look at the chart below Based on Morningstar data compiled by Wells Fargo NYSE WFC average returns for large cap stocks have been highest at almost 25 percent for investors who sold 12 months before an economic downturn Small cap stock returns have been even higher at 36 4 percent In both cases profits have been much smaller for investors who got out two or three years prior to a recession As I ve noted already past performance is no guarantee of future results
Also note the returns for intermediate term government bonds As you might expect they were much smaller than those of large cap or small cap stocks no matter when you cashed out But don t let that deter you There s a place in most people s portfolios for fixed income as it can help counter potential equity volatility that has tended to arise late in the business cycle
Active Management Late In The Cycle
Ten years is a long time but again I don t necessarily think investors should rotate completely out of stocks just yet I do however believe that if you re going to stay invested you might want to consider an actively managed fund Passive ETFs are inexpensive and can give you broad exposure to the U S market but they re generally not as nimble as a fund managed by an investment professional
And nimbleness is what you should be seeking if you re worried about a downturn Most ETFs rebalance on a quarterly or sometimes monthly basis That s perfectly fine for many investors but if you re interested in a fund that can respond more quickly to unexpected market hiccups or rallies an actively managed mutual fund might be a better fit
Past performance does not guarantee future results
Stock markets can be volatile and share prices can fluctuate in response to sector related and other risks as described in the fund prospectus All opinions expressed and data provided are subject to change without notice Some of these opinions may not be appropriate to every investor The S P 500 index is a basket of 500 of the largest U S stocks weighted by market capitalization The index is widely considered to be the best indicator of how large U S stocks are performing on a day to day basis The Total Return Index calculates the results when cash payouts are automatically reinvested The S P Municipal Bond Intermediate Index consists of bonds in the S P Municipal Bond Index with a minimum maturity of 3 years and a maximum maturity of 15 years The Dow Jones U S Large Cap Total Stock Market Index is a subset of the Dow Jones U S Total Stock Market Index which measures all U S equity securities with readily available prices The index represents the largest 750stocks and is float adjusted market cap weighted The Dow Jones U S Small Cap Total Stock Market Index is a subset of the Dow Jones U S Total Stock Market Index which measures all U S equity securities with readily available prices The index represents the stocks ranked 751 2 500 by full market capitalization and is float adjusted market cap weighted |
WFC | 10 Year Bull Market To Rage Ahead In 2019 10 ETF Bets | The U S equity bull market completes 10 years tomorrow On Mar 7 2009 the S P 500 touched a bear market nadir of 666 79 only to stage an astral rally The run is the longest ever and the
Over the last decade the global investing backdrop has witnessed various key happenings These include the subprime mortgage crisis the fall of the investment bank Lehman Brothers in September 2008 the United States losing its triple A credit rating the Fed s QE to boost an economy in recession the Euro zone debt crisis Abenomics in Japan the Taper Tantrum in the United States China s soft landing issues oil price massacre initiation of QE by ECB Brexit the start of Trump era U S China trade tensions and more such things
The net result is that the global economy is on a moderate footing now Though there are no recessionary fears right now slowdown concerns are rife
How Was the Journey in the Last Decade
The S P 500 which declined about 47 from Mar 9 2008 to Mar 9 2009 gained about 386 8 in the last 10 years as of Mar 7 2019 SPDR Dow Jones Industrial Average NYSE DIA ETF Trust V DIA and Invesco QQQ Trust were up 384 3 and 617 8 respectively in the last 10 years
Will Bulls Keep Running in 2019
We do believe that 2019 should be a year for stocks as dovish central banks amid slowing global economy will keep pumping cheap money into the economy Last year s trade tensions have eased considerably this year with cues of improvement in the U S China trade relation However as markets have rallied ahead of any concrete trade deal in early 2019 the real news may not boost markets as much as expected
Against this backdrop we would like to note a few ETFs that could be good picks for 2019
iShares Edge MSCI USA Quality Factor ETF
The fund picks stocks through three fundamental variables return on equity earnings variability and debt to equity The fund in fact outperformed the S P 500 by a slight margin this year
Vanguard Dividend Appreciation ETF AX VIG
This is yet another quality exposure Funds that focus on stocks with consistent dividend growth are likely to outperform in troubled times read
iShares US Dividend and Buyback ETF
Shareholder value maximization played great roles in pushing markets higher over the past decade Buybacks have shown an improving trend since 2009 and finally beat capital expenditure last year for the first time since 2008 The trend has been pretty favorable for dividends too It says that such activities will continue to benefit markets
Vanguard ESG U S Stock ETF
The ESG investing theme has been pretty popular of late Investors appear to be bothered about the future of the environment and the effect it might have on their investing portfolio This is because lesser focus on environmental issues by the companies may result in lawsuits fines and damages per The fund charges a low expense ratio of 12 bps in the space
Oppenheimer Russell 2000 Dynamic Multifactor ETF
Small caps were outperforming a year before the economic downturn Based on Morningstar data compiled by Wells Fargo NYSE WFC as average returns for small cap stocks were higher than large caps So investors can definitely try out this small cap ETF This is especially true given small caps are more exposed to a faster growing U S economy
iShares US Insurance ETF
we believe continued economic growth rising long term interest rates and the likelihood of higher investment income should drive insurers this year
SPDR S P Software Services NYSE XSW ETF
Rising demand for emerging technologies and especially cloud per Gartner should make the space a winner Gartner projects a 3 2 uptick in global IT spending to 3 77 trillion in 2019 read
iShares US Aerospace Defense ETF HM ITA
This is one of the most dependable areas for investors Growing demand from emerging markets and rising geopolitical tensions are likely hold the sector up The fund can benefit specifically if there is a trade deal read
iShares Currency Hedged MSCI Germany ETF
The Euro zone is slowing down Most recently the ECB predicted that Eurozone GDP would increase only 1 1 in 2019 0 7 percentage points down from its December 2018 prediction The bank also revamped a stimulus program of cheap loans to bolster the economy An ultra easy monetary policy is thus expected to be there in 2019 and benefit currency hedged ETFs like HEZU
ETFMG Alternative Harvest ETF SNX MJ
Though it is a risky bet investors can keep this marijuana ETF in its portfolio just because of its growing acceptance in almost every sphere of life Be it medical food and beverage or cosmetics marijuana is making its presence felt read
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WFC | The Zacks Analyst Blog Highlights DIVB ESGV And OMFS | For Immediate Release
Chicago IL March 11 2019 Zacks com announces the list of stocks featured in the Analyst Blog Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets Stocks recently featured in the blog include iShares US Dividend and Buyback ETF Vanguard ESG U S Stock ETF and Oppenheimer Russell 2000 Dynamic Multifactor ETF
Here are highlights from Friday s Analyst Blog
10 Year Bull Market to Rage Ahead ETFs to Bet On
The U S equity bull market completes 10 years tomorrow On Mar 7 2009 the S P 500 touched a bear market nadir of 666 79 only to stage an astral rally The run is the longest ever and the
Over the last decade the global investing backdrop has witnessed various key happenings These include the subprime mortgage crisis the fall of the investment bank Lehman Brothers in September 2008 the United States losing its triple A credit rating the Fed s QE to boost an economy in recession the Euro zone debt crisis Abenomics in Japan the Taper Tantrum in the United States China s soft landing issues oil price massacre initiation of QE by ECB Brexit the start of Trump era U S China trade tensions and more such things
The net result is that the global economy is on a moderate footing now Though there are no recessionary fears right now slowdown concerns are rife
How Was the Journey in the Last Decade
The S P 500 which declined about 47 from Mar 9 2008 to Mar 9 2009 gained about 386 8 in the last 10 years as of Mar 7 2019 SPDR Dow Jones Industrial Average NYSE DIA ETF Trust and Invesco QQQ Trust were up 384 3 and 617 8 respectively in the last 10 years
Will Bulls Keep Running in 2019
We do believe that 2019 should be a year for stocks as dovish central banks amid slowing global economy will keep pumping cheap money into the economy Last year s trade tensions have eased considerably this year with cues of improvement in the U S China trade relation However as markets have rallied ahead of any concrete trade deal in early 2019 the real news may not boost markets as much as expected
Against this backdrop we would like to note a few ETFs that could be good picks for 2019
iShares Edge MSCI USA Quality Factor ETF
The fund picks stocks through three fundamental variables return on equity earnings variability and debt to equity The fund in fact outperformed the S P 500 by a slight margin this year
Vanguard Dividend Appreciation ETF
This is yet another quality exposure Funds that focus on stocks with consistent dividend growth are likely to outperform in troubled times read
iShares US Dividend and Buyback ETF
Shareholder value maximization played great roles in pushing markets higher over the past decade Buybacks have shown an improving trend since 2009 and finally beat capital expenditure last year for the first time since 2008 The trend has been pretty favorable for dividends too It says that such activities will continue to benefit markets
Vanguard ESG U S Stock ETF
The ESG investing theme has been pretty popular of late Investors appear to be bothered about the future of the environment and the effect it might have on their investing portfolio This is because lesser focus on environmental issues by the companies may result in lawsuits fines and damages per The fund charges a low expense ratio of 12 bps in the space
Oppenheimer Russell 2000 Dynamic Multifactor ETF
Small caps were outperforming a year before the economic downturn Based on Morningstar data compiled by Wells Fargo NYSE WFC as average returns for small cap stocks were higher than large caps So investors can definitely try out this small cap ETF This is especially true given small caps are more exposed to a faster growing U S economy
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Past performance is no guarantee of future results Inherent in any investment is the potential for loss This material is being provided for informational purposes only and nothing herein constitutes investment legal accounting or tax advice or a recommendation to buy sell or hold a security No recommendation or advice is being given as to whether any investment is suitable for a particular investor It should not be assumed that any investments in securities companies sectors or markets identified and described were or will be profitable All information is current as of the date of herein and is subject to change without notice Any views or opinions expressed may not reflect those of the firm as a whole Zacks Investment Research does not engage in investment banking market making or asset management activities of any securities These returns are from hypothetical portfolios consisting of stocks with Zacks Rank 1 that were rebalanced monthly with zero transaction costs These are not the returns of actual portfolios of stocks The S P 500 is an unmanaged index Visit for information about the performance numbers displayed in this press release |
EBAY | eBay Earnings Beat Revenue Inline In Q3 | Investing com eBay NASDAQ EBAY reported third quarter earnings that beat analysts expectations on Wednesday and revenue that was inline with forecasts
The firm reported earnings per share of 0 67 on revenue of 2 65B Analysts polled by Investing com forecast EPS of 0 64 on revenue of 2 65B That compared to EPS of 0 56 on revenue of 2 65B in the same period a year earlier The company had reported EPS of 0 68 on revenue of 2 69B in the previous quarter
eBay shares lost 4 13 to trade at 37 60 in after hours trade following the report
eBay follows other major Services sector earnings this monthOn Tuesday McDonald s reported third quarter EPS of 2 11 on revenue of 5 43B compared to forecasts of EPS of 2 21 on revenue of 5 49B
Costco earnings beat analysts expectations on October 3 with fourth quarter EPS of 2 69 on revenue of 47 5B Investing com analysts expected EPS of 2 54 on revenue of 47 44B
Stay up to date on all of the upcoming earnings reports by visiting Investing com s earnings calendar |
EBAY | EBay EBAY Upgraded To Buy Here s Why | eBay EBAY could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank 2 Buy This upgrade is essentially a reflection of an upward trend in earnings estimates one of the most powerful forces impacting stock prices
The sole determinant of the Zacks rating is a company s changing earnings picture The Zacks Consensus Estimate the consensus of EPS estimates from the sell side analysts covering the stock for the current and following years is tracked by the system
The power of a changing earnings picture in determining near term stock price movements makes the Zacks rating system highly useful for individual investors since it can be difficult to make decisions based on rating upgrades by Wall Street analysts These are mostly driven by subjective factors that are hard to see and measure in real time
Therefore the Zacks rating upgrade for eBay basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price
Most Powerful Force Impacting Stock Prices
The change in a company s future earnings potential as reflected in earnings estimate revisions and the near term price movement of its stock are proven to be strongly correlated The influence of institutional investors has a partial contribution to this relationship as these big professionals use earnings and earnings estimates to calculate the fair value of a company s shares An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock and institutional investors typically buy or sell it Their bulk investment action then leads to price movement for the stock
Fundamentally speaking rising earnings estimates and the consequent rating upgrade for eBay imply an improvement in the company s underlying business Investors should show their appreciation for this improving business trend by pushing the stock higher
Harnessing the Power of Earnings Estimate Revisions
As empirical research shows a strong correlation between trends in earnings estimate revisions and near term stock movements tracking such revisions for making an investment decision could be truly rewarding Here is where the tried and tested Zacks Rank stock rating system plays an important role as it effectively harnesses the power of earnings estimate revisions
The Zacks Rank stock rating system which uses four factors related to earnings estimates to classify stocks into five groups ranging from Zacks Rank 1 Strong Buy to Zacks Rank 5 Strong Sell has an impressive externally audited track record with Zacks Rank 1 stocks generating an average annual return of 25 since 1988 You can see the complete list of today s Zacks 1 Rank Strong Buy stocks here
Earnings Estimate Revisions for eBay
For the fiscal year ending December 2019 this e commerce company is expected to earn 2 75 per share which is a change of 1 4 from the year ago reported number
Analysts have been steadily raising their estimates for eBay Over the past three months the Zacks Consensus Estimate for the company has increased 3 8
Bottom Line
Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations the Zacks rating system maintains an equal proportion of buy and sell ratings for its entire universe of more than 4000 stocks at any point in time Irrespective of market conditions only the top 5 of the Zacks covered stocks get a Strong Buy rating and the next 15 get a Buy rating So the placement of a stock in the top 20 of the Zacks covered stocks indicates its superior earnings estimate revision feature making it a solid candidate for producing market beating returns in the near term
You can learn more about the Zacks Rank here
The upgrade of eBay to a Zacks Rank 2 positions it in the top 20 of the Zacks covered stocks in terms of estimate revisions implying that the stock might move higher in the near term |
WFC | Wells Fargo s 2019 net interest income dependent on loan growth deposits CFO | NEW YORK Reuters Wells Fargo NYSE WFC Co expects its net interest income a key measure of bank profitability to be up or down 2 percent for the year in 2019 depending on deposit pricing and loan growth Chief Financial Officer John Shrewsberry speaking at an investor conference in Florida said that loan growth could be driven by retail branches bankers who are increasingly comfortable referring clients to other businesses at the bank
Shrewsberry added that its wealth management business receives nearly 1 billion in new assets from referrals each month |
WFC | 3 Muni Bond Mutual Funds To Invest In | Mutual funds having significant exposure to municipal bonds also known as munis are excellent choices for risk averse investors looking to derive stable tax free returns These funds seek to provide returns with a low level of risk by investing in municipal debt securities issued by state and local governments These securities are believed to provide steady returns exempted from federal taxes and in many cases from state taxes as well which is why investors prefer these securities in a choppy market Though munis are expected to provide lower yields than taxable bonds they fetch better returns for investors in high tax brackets if we consider after tax returns Below we share with you three top ranked municipal bond mutual funds Each has earned a and is expected to outperform its peers in the future Investors can Vanguard New York Long Term Tax Exempt Investor generally invests in municipal debt securities of New York state local governments and other affiliates VNYTX invests a major portion of its assets in securities that are expected to provide returns exempted from federal and New York state taxes VNYTX generally maintains a dollar weighted average maturity between 10 and 25 years Vanguard New York Long Term Tax Exempt Investor has three year annualized returns of 2 1 Adam M Ferguson is the fund manager of VNYTX since 2013 Fidelity Advisor California Municipal Income A seeks tax exempted high current income FCMAX invests a large share of its assets in municipal debt securities that are rated as investment grade and expected to pay interest income free from federal and California personal income taxes FCMAX invests a minimum of one fourth of its assets in municipal securities Fidelity Advisor California Municipal Income A has three year annualized returns of 1 5 FCMAXhas an expense ratio of 0 80 compared with the category average of 0 86 Wells Fargo NYSE WFC Municipal Bond A invests the majority of its net assets in municipal securities whose interest is exempted from federal tax The fund also invests up to 20 of its assets in securities on whose interest federal AMT may be applicable Wells Fargo Municipal Bond A has three year annualized returns of 2 6 As of January 2019 WMFAX held 690 issues with 1 52 of its assets invested in FLORIDA ST 4 To view the Zacks Rank and past performance of all municipal bond mutual funds investors can Want key mutual fund info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing mutual funds each week |
EBAY | Exclusive Hedge fund Elliott pushes Mobile Mini to combine with WillScot sources | By Greg Roumeliotis
NEW YORK Reuters Hedge fund Elliott Management Corp has amassed a stake in Mobile Mini Inc O MINI the biggest U S provider of portable storage containers for businesses and is pushing it to merge with WillScot Corp O WSC the largest U S vendor of mobile office trailers people familiar with the matter said on Thursday
WillScot has made an offer for Mobile Mini that values it in the mid to high 30 per share range which would be funded for the most part by using WillScot shares as currency sources told Reuters on Wednesday
Mobile Mini shares were trading up 5 at 36 42 before news of Elliott s involvement giving the company a market value of 1 6 billion WillScot shares were up 4 at 16 23 giving it a market value of 1 9 billion
Elliott which has pursued changes at some of the biggest U S companies including AT T Inc N T and eBay Inc O EBAY believes that a combination with WillScot is the best transaction available to Mobile Mini the sources said
Reuters reported on Wednesday that Mobile Mini is also considering alternative transactions including acquiring the U S assets of mobile storage company General Finance Corp O GFN should the latter divest its Australian portable buildings and storage container business Royal Wolf Holdings
There is no certainty that WillScot will successfully negotiate a deal with Mobile Mini the sources said asking not to be identified because the matter is confidential The sources did not give details on the size of Elliott s stake in Mobile Mini
Elliott Mobile Mini and WillScot declined to comment
Headquartered in Baltimore Maryland WillScot has a fleet of approximately 160 000 modular space and portable storage units Private equity firm TDR Capital LLP is a major investor
Mobile Mini based in Phoenix Arizona has a rental fleet of about 198 000 storage containers and office units as well 12 700 liquid and solid containment units and pumps that it also rents out
Besides Elliott The Donerail Group an investment firm led by former activist hedge fund Starboard Value LP executive William Wyatt has built a stake in Mobile Mini to push it to explore a sale Reuters reported earlier this month
Beyond Royal Wolf General Finance owns Lone Star Tank Rental Inc and Pac Van providers of portable storage office and liquid storage tank containers mobile offices and modular buildings It is based in Pasadena California and has a market capitalization of 280 million |
EBAY | Samsung says will soon patch Galaxy S10 fingerprint recognition problem | SEOUL Reuters Samsung Electronics KS 005930 Co Ltd said on Thursday it will soon roll out a software patch to fix problems with fingerprint recognition on its flagship Galaxy S10 smartphone A British user told the Sun newspaper this week that a bug on her Galaxy S10 allowed it to be unlocked regardless of the biometric data registered in the device After she bought a third party screen protector her husband was able to unlock her phone using his fingerprint even though it was not registered The issue can happen when patterns of some protectors that come with silicone phone cases are recognized along with fingerprints the South Korean tech giant said in a notice on its customer support app South Korea s online only KaKaobank has told customers to stop using the Galaxy 10 fingerprint recognition function to log into its services until the issue is resolved Launched in March Galaxy S10 series phones have an in display sensor that uses ultrasound to detect the ridges of fingerprints which Samsung has touted as a revolutionary biometric authentication feature |
EBAY | Should Value Investors Buy EBay EBAY Stock | Here at Zacks we focus on our proven ranking system which places an emphasis on earnings estimates and estimate revisions to find winning stocks But we also understand that investors develop their own strategies so we are constantly looking at the latest trends in value growth and momentum to find strong companies for our readers
Looking at the history of these trends perhaps none is more beloved than value investing This strategy simply looks to identify companies that are being undervalued by the broader market Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large
On top of the Zacks Rank investors can also look at our innovative Style Scores system to find stocks with specific traits For example value investors will want to focus on the Value category Stocks with high Zacks Ranks and A grades for Value will be some of the highest quality value stocks on the market today
One stock to keep an eye on is eBay EBAY EBAY is currently sporting a Zacks Rank of 2 Buy as well as an A grade for Value The stock holds a P E ratio of 13 45 while its industry has an average P E of 38 81 Over the past 52 weeks EBAY s Forward P E has been as high as 14 12 and as low as 10 08 with a median of 13 23
EBAY is also sporting a PEG ratio of 1 42 This figure is similar to the commonly used P E ratio with the PEG ratio also factoring in a company s expected earnings growth rate EBAY s PEG compares to its industry s average PEG of 1 80 Within the past year EBAY s PEG has been as high as 1 49 and as low as 1 01 with a median of 1 39
Finally our model also underscores that EBAY has a P CF ratio of 11 13 This data point considers a firm s operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook EBAY s P CF compares to its industry s average P CF of 29 66 Over the past 52 weeks EBAY s P CF has been as high as 11 66 and as low as 242 33 with a median of 9 82
These are only a few of the key metrics included in eBay s strong Value grade but they help show that the stock is likely undervalued right now When factoring in the strength of its earnings outlook EBAY looks like an impressive value stock at the moment |
EBAY | Is EBay EBAY Stock Outpacing Its Retail Wholesale Peers This Year | For those looking to find strong Retail Wholesale stocks it is prudent to search for companies in the group that are outperforming their peers Is eBay EBAY one of those stocks right now By taking a look at the stock s year to date performance in comparison to its Retail Wholesale peers we might be able to answer that question
eBay is one of 223 individual stocks in the Retail Wholesale sector Collectively these companies sit at 4 in the Zacks Sector Rank The Zacks Sector Rank gauges the strength of our 16 individual sector groups by measuring the average Zacks Rank of the individual stocks within the groups
The Zacks Rank emphasizes earnings estimates and estimate revisions to find stocks with improving earnings outlooks This system has a long record of success and these stocks tend to be on track to beat the market over the next one to three months EBAY is currently sporting a Zacks Rank of 2 Buy
Within the past quarter the Zacks Consensus Estimate for EBAY s full year earnings has moved 3 44 higher This is a sign of improving analyst sentiment and a positive earnings outlook trend
Based on the latest available data EBAY has gained about 40 51 so far this year Meanwhile stocks in the Retail Wholesale group have gained about 15 02 on average This means that eBay is outperforming the sector as a whole this year
Looking more specifically EBAY belongs to the Internet Commerce industry a group that includes 27 individual stocks and currently sits at 114 in the Zacks Industry Rank This group has gained an average of 18 62 so far this year so EBAY is performing better in this area
Investors with an interest in Retail Wholesale stocks should continue to track EBAY The stock will be looking to continue its solid performance |
EBAY | Why Is EBay EBAY Down 0 8 Since Last Earnings Report | It has been about a month since the last earnings report for eBay EBAY Shares have lost about 0 8 in that time frame outperforming the S P 500
Will the recent negative trend continue leading up to its next earnings release or is eBay due for a breakout Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important drivers eBay Surpasses Earnings and Revenue Estimates in Q2eBay Inc NASDAQ EBAY reported second quarter 2019pro forma earnings of 68 cents surpassing the Zacks Consensus Estimate by 6 cents The reported figure also improved 28 3 year over year Moreover gross revenues of 2 69 billion increased 2 year over year up 4 on an Fx neutral basis and surpassed the Zacks Consensus Estimate by 0 5 The company continues to leverage structured data and Artificial Intelligence to improve user experience on its platform Notably this aided in the growth of active buyers on its platform in turn driving GMV Robust improvement of the Advertising and Payment platform drove eBay s top line growth Revenues and GMVIn the second quarter the Marketplace platform accounted for 2 2 billion of revenues up 1 year over year on a reported basis and 3 on an FX Neutral basis The increase was aided by continual expansion of new user experiences However Marketplace GMV was 21 5 billion down 5 year over year on a reported basis and 1 on a FX Neutral basis StubHub contributed 1 1 billion of GMV up 5 and 264 million in revenues increasing 7 on a year over year basis Classifieds platforms performed pretty well during the quarter contributing 271 million to revenues up 5 year over year and 12 on an FX Neutral basis Total GMV of 22 6 million in the second quarter was down 4 year over year on a reported basis but flat on an Fx neutral basis During the quarter global active buyers customers increased 4 from the year ago period to 182 million Margins and IncomePro forma gross margin in the quarter was 76 6 down 80 basis points bps year over year Adjusted operating expenses of 1 41 billion decreased 9 3 from the prior year quarter As a percentage of sales sales and marketing product development expenses as well as general administrative costs decreased Non GAAP operating margin was 26 9 in the second quarter up 170 bps year over year Balance Sheet and Cash FloweBay s balance sheet is highly leveraged with a long term debt of 7 2 billion Cash and short term investment balance was 4 5 billion at the end of the second quarter versus 4 4 billion in first quarter 2019 It generated 744 million in cash from operating activities and spent 182 million on capex Free cash flow during the quarter was 607 million The company repurchased shares worth 1 5 billion In addition it paid 120 million in cash dividends during the second quarter OutlookFor the third quarter of 2019 eBay expects revenues to grow 1 3 on an Fx neutral basis to 2 61 2 66 billion Non GAAP earnings are expected within 62 65 cents and GAAP earnings per share from continuing operations are expected in the range of 40 44 cents For full year 2019 the company expects revenues between 10 75 billion and 10 83 billion indicating Fx neutral growth of 2 3
How Have Estimates Been Moving Since Then
It turns out estimates review have trended upward during the past month
VGM Scores
Currently eBay has a nice Growth Score of B though it is lagging a lot on the Momentum Score front with a D However the stock was allocated a grade of B on the value side putting it in the top 40 for this investment strategy
Overall the stock has an aggregate VGM Score of B If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising It comes with little surprise eBay has a Zacks Rank 2 Buy We expect an above average return from the stock in the next few months |
WFC | LJM Partners sues unnamed manipulators it blames for volatility losses | By Trevor Hunnicutt NEW YORK Reuters LJM Partners Ltd on Friday filed a lawsuit against unnamed parties it holds responsible for hundreds of millions of dollars it lost after last year s jump in stock market volatility that effectively put the fund manager out of business LJM invested in complex derivatives that lost most of their value over two days in early February 2018 following the biggest ever single day jump in the VIX volatility index LJM later returned what remained of clients money The Chicago based fund manager was one of the largest casualties of the spike in volatility which wiped out several derivative linked investments that had delivered profits in calmer markets The losses have prompted more than two dozen lawsuits from various traders and firms that say they lost money due to manipulation of the VIX the widely followed fear gauge that acts as a barometer of future expected swings in the S P 500 stock index In its lawsuit filed in federal court in Chicago LJM said it wants Cboe Global Markets Inc which owns the VIX index to unveil the identities of parties it believes were responsible for manipulating the index and crashing the market Cboe which is not a party to the lawsuit declined comment It has previously said it monitors markets to identify problems The lawsuit alleges that when the S P 500 fell 4 1 percent on Feb 5 last year unnamed parties posted inflated prices for related options boosting the VIX to benefit positions they held in VIX linked products Those actions lifted the VIX and affected the price of other financial instruments that move in tandem with the options including some traded by LJM LJM said it was forced to trade in the instruments at artificial prices and suffered millions of dollars in losses as a result LJM said in the lawsuit that it had the right to obtain the identities of parties it believed to have manipulated the market from Cboe The fund manager filed an earlier claim blaming its VIX related losses on the actions of its broker a Wells Fargo NYSE WFC Co unit which it said forced the unwinding of its portfolio at a disadvantageous time Wells Fargo which asked a court for help retrieving 16 4 million from LJM denied those claims A judge dismissed LJM s claims against Wells Fargo in September but the fund manager has asked the court to reconsider The case is LJM Partners Ltd v John Does U S District Court Northern District of Illinois No 19 cv 00368 |
WFC | U S pensions seen moving 12 billion to bonds from stocks Wells Fargo | NEW YORK Reuters U S pension funds are projected to shift 12 billion into bonds from stocks in a rebalancing of their investments at the end of January amid a rebound in the stock market following a sharp sell off in late 2018 Wells Fargo NYSE WFC Securities analysts said on Friday The expected reallocation into fixed income from equities was far below the estimated 65 billion that occurred in late December the analysts said in a research note If the year end pension rebalancing was a major market earthquake the upcoming January month end shift would only qualify as a modest aftershock they wrote So far in January the S P 500 index has risen 6 4 percent while a gauge that tracks the U S investment grade bond market compiled by Barclays LON BARC and Bloomberg has increased 0 43 percent Pension flows would be heftier if this were quarter end rather than just month end since some funds adjust their asset allocation mix less frequently the analysts said |
WFC | Wells Fargo CEO defends his stewardship in response to Sen Warren CNBC | Reuters Wells Fargo NYSE WFC Co Chief Executive Tim Sloan in a CNBC interview on Friday said he is the right person to run the company in response to Senator Elizabeth Warren s repeated calls for him to be fired after a 2016 scandal Sloan told Jim Cramer on Mad Money that Warren could have her opinion but he would not be in his present role if he thought he was not doing his job I think I m the right person to run this company today he told Cramer Wells Fargo has been coping with a series of scandals since 2016 when it was reported that employees had opened potentially millions of phony accounts in customers names without their permission The bank has disclosed other problems since then including enrolling hundreds of thousands of customers in costly products such as auto insurance that they did not need or want Warren a progressive Democrat who announced in December that she had formed an exploratory committee to run for president in 2020 has called for Sloan s removal in the past but she could not compel the U S central bank to take such a step In October she wrote a letter to Fed Chairman Jerome Powell urging him to not allow the bank to grow in size until it replaced Sloan Sloan said in the Friday interview that he has taken responsibility and should not be criticized for doing so Judge me on what I said we would do and what we ve done he said Sloan said last week that Wells is planning to operate under the Fed ordered asset cap through the end of 2019 as the fourth largest U S lender s loan book shrank and revenue fell across all its major businesses last quarter |
WFC | Traders stick to view that Fed s next move is rate cut | By Ann Saphir Reuters Traders on Friday trimmed bets the Federal Reserve will cut interest rates after a U S government report showed hiring surged unexpectedly last month but prices of short term rate futures show they remain convinced the central bank s next move will be a rate cut rather than a hike Contracts tied to the Fed s policy rate have priced out any chance of a 2019 Fed rate hike since shortly after Fed Chairman Jerome Powell said on Wednesday the case for rate increases had weakened and that muted inflation allowed the Fed to be patient on policy After a Labor Department report on Friday showed employers added 304 000 jobs in January traders retreated a bit slicing the chance they see of a rate cut by year s end to about a one in five chance from as much as a one in three chance But prices in the futures markets still show traders see no rate hikes ahead
The real question will be what does it mean for the Fed and for markets which are clearly having some trouble with good economic data to the extent that it feeds into the Fed raising interest rates said Sameer Samana senior global market strategist at Wells Fargo NYSE WFC Investment Institute in St Louis |
WFC | Warning These 7 5 Dividends Are Circling The Drain | As investment strategist at CEF Insider it s my job to tip you off to the best closed end funds CEFs out there But it s also my job to steer you away from those that are well terrible
So today we re going to zero in on four CEFs whose massive dividends up to 12 7 might tempt you to buy But doing so will lock you into an ever shrinking income stream while the share price crumbles beneath your feet
The first red flag All four of these funds are from Wells Fargo NYSE WFC a bank that s been at the center of various scandals for years now starting with the 2016 fake account fraud that took down Wells CEO at the time
Wells Woeful Venture Into CEFs
Don t be surprised if you haven t heard that Wells offers CEFs it does so through its tiny Wells Fargo Asset Management business Its CEFs are the Wells Fargo Income Opportunities Fund EAD the Wells Fargo Multi Sector Income Fund ERC the Wells Fargo Utilities High Income Fund ERH and the Wells Fargo Global Dividend Opportunity Fund EOD
You should never buy any of these funds despite their enticing yields EOD pays a monster 12 7 for example with ERC s payout clocking in at 10 9 EAD and ERH yield 9 6 and 7 5 respectively
Don t be tempted because these seemingly attractive payouts are warning signs
The Dividend Trap
While many CEFs have great sustainable payouts upwards of 7 in the case of all four of Wells s funds high yields are masking awful news To see what I mean look at this chart
Payouts in a Death Spiral
Since the recession all of these funds payouts have fallen with only ERC s dividend in orange showing any signs of not going down the tubes But if you re thinking of buying ERC for its 10 9 income stream don t bother
Massive Underperformance
One of the reasons I like some CEFs is that they ve crushed the dumb index funds over a long period ERC however is not one of these stout performers
Lagging the Index
Since inception ERC has returned slightly more than half of what the SPDR S P 500 ETF NYSE SPY a low cost index fund that simply tracks the S P 500 would have given you And ERC has underperformed almost all of its CEF peers in this time
And this is the best CEF Wells can offer
All Laggards
As you can see not one of Wells Fargo s funds has managed to beat the fund that couldn t match the S P 500 And EOD just recently went from a loss to a measly 1 2 return in total over the last decade Such obscene underperformance doesn t deserve anyone s money And it definitely doesn t deserve any fees
High Fees But for What
All of Wells Fargo s CEFs charge fees of course but the scandalous thing is how high those fees are particularly compared to SPY which outperformed all of them let s remember
At the cheapest EAD s fees are 9 7 times higher than those of SPY while EOD s are over 14 times higher I m not averse to paying higher fees if they mean better performance but not only do these funds lag SPY they lag many other funds that invest in the same type of assets
The Amazing Shrinking Funds
With that in mind you should avoid these funds for another reason as they shrink Wells Fargo will have less motivation to properly oversee them and you only have to look at the headlines to see what can happen when the bank takes its eye off the ball
The following chart shows the net asset value of each of these funds or the total value of each CEF s portfolio
Wells CEF Assets Evaporate
The 1 billion EAD once had has shrunk to less than 600 million with no end in sight while all of Wells Fargo s other CEFs continue to shrink As these funds become a smaller part of Wells Fargo whose net income was over 20 billion for 2018 the bank could wind end up shutting them down only after their value and income streams have further melted away
Your 2019 Action Plan Beat Wall Street With These 5 Safe 8 Dividends
I don t know about you but I m sick of big Wall Street names like Wells locking in billions in profits while offering us subpar investments like these four funds
It s an outrage Especially when you consider that Wells could easily afford to hire top talent to run these CEFs and deliver a proper return to their investors
The worst part is that dud funds like these mask the fact that there are many amazing CEFs out there throwing off safe 8 cash dividends
Better yet many of these top quality funds are trading at incredible discounts right now thanks to the recent selloff
But you won t hear from them from your advisor and especially not from big banks like Wells which are 100 focused on selling their own products which all too often are unacceptable funds like the ones I just showed you
My No 1 Job Make CEF Investing Simple
This is exactly why I launched my CEF Insider service to help everyday investors like you tap the 20 yearly price upside and SAFE 8 dividends that are readily available in CEFs if you know where to look
You can start with the 5 unsung funds in my just released FREE report 5 Hidden Income Plays the ETF Companies Don t Want You to Know About It will show you
A fund that soared 1 250 since inception and pays an incredible 8 1 today Even so it s dirt cheap now and ready for its next ride up
The special dividend machine This 9 payer throws off one time cash payouts every year and every year this takes the herd by surprise even though it shouldn t driving incredible price gains
The fund that DOUBLED the market in the last decade and pays a safe 8 4 dividend now
The CEF that just dropped a mammoth 49 dividend hike on investors and is set to drop another massive increase this year too
A retirement cornerstone This CEF holds floating rate loans which ratchet higher when rates rise and will keep on throw off a huge income stream when they hold steady This smartly run fund takes that cash from some of America s strongest companies and hands it to you as a gaudy 8 4 dividend
Now I m ready to GIVE you this exclusive Special Report free Simply click here to grab your copy and discover these 5 CEFs names tickers best buy prices and everything I have on each one
Disclosure Brett Owens and Michael Foster are contrarian income investors who look for undervalued stocks funds across the U S markets Click here to learn how to profit from their strategies in the latest report 7 Great Dividend Growth Stocks for a Secure Retirement |
WFC | 4 Wells Fargo Advantage Mutual Funds Worth Considering | Wells Fargo NYSE WFC Advantage Funds managed more than 482 billion of assets as of Sep 30 2018 from diverse mutual funds categories The fund family manages a wide variety of mutual funds from domestic and foreign funds to money market funds asset allocation funds and fixed income funds The Wells Fargo Fund family claims that it offers funds in every key category each guided by professional investment teams that have been chosen because of their proven time tested strategies The team also helps investors to clarify their investment ideas and identifies their risk tolerance Additionally the owner of the Wells Fargo Advantage Funds brand Wells Fargo is one of the top four banks in the United States and has been maintaining its standard in the financial services sector for more than 150 years It is a highly diversified financial services company with operations limited not only to the domestic market Below we share with you four top ranked Wells Fargo Advantage Funds Each has earned a Strong Buy and is expected to outperform its peers in the future To view the Zacks Rank and past performance of all Wells Fargo Advantage Funds investors can Wells Fargo Advantage Pennsylvania Tax Free A seeks to provide tax exempted income EKVAX invests a chunk of its assets in municipal securities that are expected to provide interest income free from Pennsylvania individual income tax and federal income tax both of which include federal alternative minimum tax However EKVAX may invest a maximum of 20 of its assets in municipal securities that pay interests which are not exempted from federal income tax The Wells Fargo Advantage PA Tax Free A fund has three year annualized returns of 1 8 EKVAX has an expense ratio of 0 74 compared with the category average of 0 98 Wells Fargo Precious Metals Inst seeks appreciation of capital in the long run The fund invests the lion s share of its assets in investments which are related to precious metals This apart the fund invests about 40 of its assets in equity securities from emerging markets EKWYX also invests about one fourth of its assets in debt securities related to precious metals as well as common or preferred stocks of subsidiaries of the fund which invest in precious metals and minerals Wells Fargo Precious Metals Inst has three year annualized returns of 13 8 As of December 2018 EKWYX held 38 issues with 7 97 of its assets invested in Agnico Eagle Mines Ltd Wells Fargo Index Asset Allocation A seeks appreciation of capital as well as current income in the long run The fund invests approximately four fifths of its assets in equity as well as fixed income securities which replicate the holdings and weightings of companies that constitute the S P 500 Index and Bloomberg Barclays LON BARC U S Treasury Index Wells Fargo Index Asset Allocation A has three year annualized returns of 8 2 Petros N Bocray has been one of the fund managers of SFAAX since 2016 Wells Fargo Municipal Bond A seeks income which is free from federal income tax WMFAX invests the major part of its assets in municipal securities that offer federal income tax exempted income The fund may invest around one fifth of its assets in securities that are subjected to federal alternative minimum tax Wells Fargo Municipal Bond A has three year annualized returns of 2 6 WMFAX has an expense ratio of 0 75 compared with the category average of 0 86 To view the Zacks Rank and past performance of all Wells Fargo Advantage Funds investors can Want key mutual fund info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing mutual funds each week |
WFC | Wells Fargo WFC Up 0 2 Since Last Earnings Report Can It Continue | It has been about a month since the last earnings report for Wells Fargo WFC Shares have added about 0 2 in that time frame underperforming the S P 500
Will the recent positive trend continue leading up to its next earnings release or is Wells Fargo due for a pullback Before we dive into how investors and analysts have reacted as of late let s take a quick look at the most recent earnings report in order to get a better handle on the important drivers Wells Fargo Q4 Earnings Beat Estimates Costs DeclineBacked by lower expenses Wells Fargo delivered a positive earnings surprise of 3 4 in fourth quarter 2018 Earnings of 1 21 per share surpassed the Zacks Consensus Estimate of 1 17 Also the bottom line compared favorably with 1 16 recorded in the prior year quarter Net income for the quarter came in at 6 1 billion compared with 6 2 billion reported a year ago Decline in expenses and higher net interest income aided results Moreover improving credit quality was a tailwind However decline in fee income was an undermining factor Further reduction in loans and deposits acted as headwinds in the quarter For the year ended 2018 earnings were 4 28 up 18 cents from the prior year The bottom line also surpassed the Zacks Consensus Estimate of 4 25 The quarter s total revenues came in at 21 billion lagging the Zacks Consensus Estimate of 21 6 billion Also the top line compared unfavorably with the prior year quarter figure of 22 1 billion Revenues for the year were 86 4 billion down 2 3 year over year However revenues surpassed the Zacks Consensus Estimate of 86 3 billion On a year over year basis quarterly revenue generation at the business segments disappointed The Community Banking segment s total quarterly revenues decreased 2 2 Wholesale Banking revenues were down 6 9 and revenues in the Wealth and Investment Management unit fell nearly 9 Loans Non Interest Income Fall Costs Decline NII ImprovesWells Fargo s net interest income NII in the fourth quarter came in at 12 6 billion up 3 year over year Increased interest income from debt securities loans held for sale loans equity securities along with higher other interest income were mostly offset by higher interest expenses and lower mortgage loans held for sale Further net interest margin expanded 10 basis points year over year to 2 94 Non interest income at Wells Fargo came in at 8 3 billion down 14 primarily due to fall in almost all components of income including mortgage banking and insurance income This was partly offset by higher other income As of Dec 31 2018 total loans were 953 1 billion down slightly year over year This was due to reduction in consumer loans partly offset by higher commercial loans Total deposits came in at 1 3 trillion down 4 from the prior year quarter Non interest expenses at Wells Fargo were around 13 3 billion down 21 from the year earlier quarter This decline in costs primarily stemmed from fall in commission and incentive compensation along with lower other expenses The company s efficiency ratio of 63 6 came in below 76 2 recorded in the year ago quarter A fall in efficiency ratio indicates improvement in profitability Credit Quality ImprovesWells Fargo s credit quality metrics improved in the fourth quarter Allowance for credit losses including the allowance for unfunded commitments totaled 10 7 billion as of Dec 31 2018 down 10 5 year over year Provision for credit losses was 521 million falling 20 Net charge offs were 721 million or 0 30 of average loans in the fourth quarter down 5 2 from the year ago quarter s net charge offs of 751 million 0 31 Non performing assets were down 16 2 to 6 9 billion in the from 8 3 billion reported a year ago Capital PositionWells Fargo maintained a solid capital position In the October December quarter the company repurchased 142 7 million shares of its common stock which net of issuances reduced period end common shares outstanding by 130 3 million Wells Fargo s Tier 1 common equity under Basel III fully phased in decreased to 146 4 billion from 154 billion recorded in the prior year quarter The Tier 1 common equity to total risk weighted assets ratio was estimated at 11 7 under Basel III fully phased in as of Dec 31 2018 compared with 12 recorded in the year earlier quarter Book value per share advanced to 38 06 from 37 44 recorded in the comparable period last year OutlookFirst quarter 2019Mortgage originations for the quarter are expected to be down due to seasonality in the purchase market Production margin is expected to be within the range of last two quarters of 2018 Full Year 2019The company expects effective income tax rate to be about 18 excluding the impact of any unanticipated discrete items Near termManagement estimates the additional 2 billion targeted annual expense reductions by the end of 2019 to trickle down to the bottom line and be fully recognized in 2020 Also expenses are projected to be in the 52 53 billion range for 2019 and 50 51 billion range for 2020 Moreover ROE is anticipated to be 12 15 over the next two years ended 2020 while ROTCE is expected to be 14 17
How Have Estimates Been Moving Since Then
In the past month investors have witnessed a downward trend in fresh estimates
VGM Scores
At this time Wells Fargo has an average Growth Score of C though it is lagging a lot on the Momentum Score front with an F However the stock was allocated a grade of B on the value side putting it in the second quintile for this investment strategy
Overall the stock has an aggregate VGM Score of C If you aren t focused on one strategy this score is the one you should be interested in
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift Notably Wells Fargo has a Zacks Rank 3 Hold We expect an in line return from the stock in the next few months |
WFC | Wells Fargo WFC Dips More Than Broader Markets What You Should Know | Wells Fargo WFC closed the most recent trading day at 49 54 moving 0 54 from the previous trading session This move lagged the S P 500 s daily loss of 0 35 At the same time the Dow lost 0 4 and the tech heavy Nasdaq lost 0 39
Heading into today shares of the biggest U S mortgage lender had lost 0 62 over the past month lagging the Finance sector s gain of 3 21 and the S P 500 s gain of 4 48 in that time
Wall Street will be looking for positivity from WFC as it approaches its next earnings report date In that report analysts expect WFC to post earnings of 1 09 per share This would mark a year over year decline of 2 68 Meanwhile the Zacks Consensus Estimate for revenue is projecting net sales of 20 88 billion down 4 8 from the year ago period
For the full year our Zacks Consensus Estimates are projecting earnings of 4 96 per share and revenue of 85 01 billion which would represent changes of 15 89 and 1 62 respectively from the prior year
It is also important to note the recent changes to analyst estimates for WFC These recent revisions tend to reflect the evolving nature of short term business trends With this in mind we can consider positive estimate revisions a sign of optimism about the company s business outlook
Based on our research we believe these estimate revisions are directly related to near team stock moves To benefit from this we have developed the Zacks Rank a proprietary model which takes these estimate changes into account and provides an actionable rating system
The Zacks Rank system which ranges from 1 Strong Buy to 5 Strong Sell has an impressive outside audited track record of outperformance with 1 stocks generating an average annual return of 25 since 1988 Within the past 30 days our consensus EPS projection has moved 0 76 higher WFC currently has a Zacks Rank of 3 Hold
Valuation is also important so investors should note that WFC has a Forward P E ratio of 10 04 right now This represents a discount compared to its industry s average Forward P E of 10 97
Also we should mention that WFC has a PEG ratio of 0 9 The PEG ratio is similar to the widely used P E ratio but this metric also takes the company s expected earnings growth rate into account Banks Major Regional stocks are on average holding a PEG ratio of 1 3 based on yesterday s closing prices
The Banks Major Regional industry is part of the Finance sector This group has a Zacks Industry Rank of 163 putting it in the bottom 37 of all 250 industries
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors Our research shows that the top 50 rated industries outperform the bottom half by a factor of 2 to 1
To follow WFC in the coming trading sessions be sure to utilize Zacks com |
EBAY | Mining or Scam Hourly Mining Contracts Flood eBay | The auctions site eBay NASDAQ EBAY is now hosting the new trend in crypto assets the sale of small mining contracts However the nature of those deals raises questions possibly pointing to a scam
One of the deals promised the buyer to mine 0 25 Ethereum ETH for the price of 125 Basically the contract sold ETH at almost double the price of 213 05 The seller did not even need to mine but just send ETH to the buyer
There is also another type of contract which does not guarantee the production of coins Mining by nature does not guarantee rewards and the eBay buyer may end up just paying and hoping for a fraction of a coin Especially in the case of where the hashrate is near peak levels at 79 EH s
The third type of contract also basically sells obscure coins for a relatively high price In the case of Dogecoin DOGE the catch is that 100 DOGE will cost 0 58 to mine through the contract Additionally DOGE is not mined separately it is produced as a part of Litecoin LTC mining one more r |
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