Documents

CFRA S&P Morning Briefing 19 Sep 2019

Description
Description:
Categories
Published
of 7
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Share
Transcript
    1 OF  7   Redistribution or reproduction is prohibited without written permission. Copyright ©2019 CFRA. This document is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek independent financial advice regarding the suitability and/or appropriateness of making an investment or implementing the investment strategies discussed in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such investments, if any, may fluctuate and that the value of such investments may rise or fall. Accordingly, investors may receive back less than they srcinally invested. Investors should seek advice concerning any impact this investment may have on their personal tax position from their own tax advisor. Please note the publication date of this document. It may contain specific information that is no longer current and should not be used to make an investment decision. Unless otherwise indicated, there is no intention to update this document. September 19, 2019   MARKET FOCUS Futures Lower ã  At time of publication this morning, 5:01 AM ET, S&P 500 index futures are pointing to a negative market opening when trading begins today. ã  Wednesday, U.S. financial markets sought clear direction in terms of equity indexes during the session on Wall Street. Stocks closed mixed and the S&P 500 index finished the trading day at 3,006.73, advancing 0.03 percent. ã  CFRA is anticipating that Darden Restaurants (DRI 127 ****) will report earnings per share of $1.36 for its fiscal first-quarter. The company reported earnings of $1.34 for last year's first-quarter. Capital IQ Consensus is looking for earnings of $1.36 per share. We project total sales growth of 6.4% in FY 20 (May), including a 53rd week, noting current plans to open about 44 net new restaurants during the year. Also, we note guidance for a 1%-2% increase in same-restaurant sales, likely paced by further improvement at the flagship Olive Garden and LongHorn Steakhouse (versus stagnant growth or further expected decline at Cheddar), and the benefit of recent menu price increases and favorable mix shifts.  ã  Steelcase Inc (SCS 16 ***) is due to release second-quarter results, with CFRA looking for per-share earnings of $0.42, vs. earnings of $0.41 per share for the same quarter one year ago and Capital IQ Consensus estimates of earnings per share of $0.43. Following a 12.7% increase in FY 19 (Feb.), we expect FY 20 revenue growth of 7.0%-8.0%, supported by 3.5%-4.5% organic growth. We expect demand in FY 20 to remain largely driven by increased projects, both large and small in the Americas and EMEA. Also, we see increases in employment and construction activity leading to a broadening in the revenue base in FY 20.  ã  CFRA MAINTAINS HOLD OPINION ON SHARES OF GENERAL MILLS, INC. (GIS 55 ***): We lift our 12-month target by $2 to $58, 16.8x our FY 21 (May) EPS estimate and a slight discount to the 10-year mean forward P/E multiple of 17.0x. We raise our FY 20 EPS estimate by $0.03 to $3.34 and FY 21's by $0.02 to $3.46. Organic sales fell 1% as flat growth in North America (N.A.) Retail (59% of net sales) and 7% growth in Pet (9%) more than offset declines in the other three segments (about 32%). GIS reiterated its FY 20 guidance, including organic sales growth of 1%-2%, stating that growth should accelerate in fiscal Q2. We think GIS may be putting heavy reliance on its Pet segment to meet FY 20 targets. We continue to be on the sidelines as we think there are better opportunities in the Packaged Foods space with more defensive characteristics. GIS will likely hold off on share repurchases and dividend hikes until it sufficiently de-levers its balance sheet; the current trailing net debt/adj-EBITDA ratio is about 3.9x, well ahead of its peer average ratio of about 3.5x. /Arun Sundaram  Morning Briefing Strategies and Investment Ideas from CFRA OVERNIGHT UPDATES  Europe higher. Tokyo rose 0.38%. Hong Kong fell 1.07%. Shanghai rose 0.46%.   BONDS:  10-year notes at 1.775%, 30-year bonds at 2.216%. FOREIGN EXCHANGE:  Euro at $1.1056, Sterling at $1.2491, Dollar at 107.98 yen. PRECIOUS METALS:  Gold at $1,505.30. ENERGY:  WTI crude at $58.24, London Brent crude at $63.84. CFRA   MarketScope Advisor    · Investment Research   ·   News & Commentary   ·   Insight & Analysis   · Tools & Screeners   www.marketscope.com   1 - 800 - 220 - 0502   @cfraresearch      2 OF  7       S    E    P    T    E    M    B    E    R    1    9     2    0    1    9       M    O    R    N    I    N    G     B    R    I    E    F    I    N    G   EQUITY RESEARCH Opinion Lowered On Shares of FedEx Corp  U.S.  09/18/2019 ã  CFRA CUTS VIEW ON SHARES OF FEDEX CORP. (FDX 151 ****) TO BUY FROM STRONG BUY: We cut our 12-month target price to $193 from $220, 15x our FY 20 (May) EPS estimate of $12.88 (cut from $14.71), below peers and below FDX's five-year average to reflect a slowing global economy. We cut our FY 21 EPS estimate to $15.08 from $16.36.  August-quarter (fiscal Q1) EPS of $3.05 versus $3.46 missed our $3.18 estimate and the consensus of $3.15. Revenues were slightly below our expectations, and operating margins contracted. FedEx says the global economy is slowing and that it is implementing additional cost-cutting initiatives including cuts to air capacity once peak-demand (holiday demand) is over. We remain positive on FDX's strong presence in global trade, likely strong e-commerce growth and the potential for operating leverage over time. However, given a slowing economy, weaker forward guidance and less visibility into timing of improved operations, we no longer think the stock deserves our top recommendation. A well-below historic valuation supports our Buy opinion. /Jim Corridore  Equity research is available on the Research Notes page on MarketScope Advisor at http://advisor.marketscope.com.  INVESTMENT POLICY Economic and Stock Market Outlooks  09/18/2019 ã  The FOMC cut rates, as expected, but the quantity and necessity of future rate cuts were called into question. Subsequent equity market declines reflected investor disappointment. The FOMC forecast revealed downward revisions in the dot-plot central tendencies and issued new forecasts for 2022 that matched the figures previously projected by Action Economics (AE) for 2021. The medians now show no further rate cuts through 2020, according to AE, with quarter-point hikes now expected in 2021 and 2022. Economic growth is forecast by AE to remain firm in the low 2% area from 2019 through 2021, while core PCE should rise gradually to around 2.1% into 2021, keeping the 10-year yield below 2% over the coming two years. This is an excerpt of the story, for the rest please visit the Investment Strategy page on MarketScope Advisor at http://advisor.marketscope.com.  For advisors interested in subscription and pricing information to MarketScope Advisor, http://advisor.marketscope.com, or for retail investors interested in The Outlook, https://www.cfraoutlook.com, please contact the sales team at 1(800) 220-0502 or cservices@cfraresearch.com.    3 OF  7       S    E    P    T    E    M    B    E    R    1    9     2    0    1    9       M    O    R    N    I    N    G     B    R    I    E    F    I    N    G   Glossary STARS  Since January 1, 1987, CFRA Equity and Fund Research Services, and its predecessor S&P Capital IQ Equity Research has ranked a universe of U.S. common stocks, ADRs (American Depositary Receipts), and ADSs (American Depositary Shares) based on a given equity's potential for future performance. Similarly, we have ranked Asian and European equities since June 30, 2002. Under proprietary STARS (STock Appreciation Ranking System), equity analysts rank equities according to their individual forecast of an equity's future total return potential versus the expected total return of a relevant benchmark (e.g., a regional index (S&P Asia 50 Index, S&P Europe 350® Index or S&P 500® Index)), based on a 12-month time horizon. STARS was designed to meet the needs of investors looking to put their investment decisions in perspective. Data used to assist in determining the STARS ranking may be the result of the analyst's own models as well as internal proprietary models resulting from dynamic data inputs. S&P Global Market Intelligence's Quality Rank  (also known as S&P Capital IQ Earnings & Dividend Rankings ) - Growth and stability of earnings and dividends are deemed key elements in establishing S&P Global Market Intelligence's earnings and dividend rankings for common stocks, which are designed to capsulize the nature of this record in a single symbol. It should be noted, however, that the process also takes into consideration certain adjustments and modifications deemed desirable in establishing such rankings. The final score for each stock is measured against a scoring matrix determined by analysis of the scores of a large and representative sample of stocks. The range of scores in the array of this sample has been aligned with the following ladder of rankings: A+ Highest B Below Average A High B- Lower A- Above Average C Lowest B+ Average D In Reorganization  NR Not Ranked EPS Estimates   CFRA’s earnings per share (EPS) estimates reflect analyst  projections of future EPS from continuing operations, and generally exclude various items that are viewed as special, non-recurring, or extraordinary. Also, EPS estimates reflect either forecasts of equity analysts; or, the consensus (average) EPS estimate, which are independently compiled by S&P Global Market Intelligence, a data provider to CFRA. Among the items typically excluded from EPS estimates are asset sale gains; impairment, restructuring or merger-related charges; legal and insurance settlements; in process research and development expenses; gains or losses on the extinguishment of debt; the cumulative effect of accounting changes; and earnings related to operations that have been classified by the company as discontinued. The inclusion of some items, such as stock option expense and recurring types of other charges, may vary, and depend on such factors as industry practice, analyst judgment, and the extent to which some types of data is disclosed by companies. 12-Month Target Price The equity analyst's projection of the market price a given security will command 12 months hence, based on a combination of intrinsic, relative, and private market valuation metrics, including Fair Value. CFRA Equity Research  CFRA Equity Research is produced and distributed by Accounting Research & Analytics, LLC d/b/a CFRA ( CFRA US ). Certain research is distributed by CFRA UK Limited (together with CFRA US, CFRA ). Certain research is  produced by Standard & Poor's Malaysia Sdn. Bhd ( CFRA Malaysia ) under contract to CFRA US. Abbreviations Used in Equity Research Reports  CAGR - Compound Annual Growth Rate CAPEX - Capital Expenditures CY - Calendar Year DCF - Discounted Cash Flow DDM - Dividend Discount Model EBIT - Earnings Before Interest and Taxes EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization EPS - Earnings Per Share EV - Enterprise Value FCF - Free Cash Flow FFO - Funds From Operations FY - Fiscal Year P/E - Price/Earnings P/NAV - Price to Net Asset Value PEG Ratio - P/E-to-Growth Ratio PV - Present Value R&D - Research & Development ROCE - Return on Capital Employed ROE - Return on Equity ROI - Return on Investment ROIC - Return on Invested Capital ROA - Return on Assets SG&A - Selling, General & Administrative Expenses SOTP - Sum-of-The-Parts WACC - Weighted Average Cost of Capital Dividends on American Depository Receipts (ADRs) and American Depository Shares (ADSs) are net of taxes (paid in the country of srcin).   Qualitative Risk Assessment  Reflects an equity analyst's view of a given company's operational risk, or the risk of a firm's ability to continue as an ongoing concern. The Qualitative Risk Assessment is a relative ranking to the U.S. STARS universe, and should be reflective of risk factors related to a company's operations, as opposed to risk and volatility measures associated with share  prices. For an ETF this reflects on a capitalization-weighted  basis, the average qualitative risk assessment assigned to holdings of the fund.    4 OF  7       S    E    P    T    E    M    B    E    R    1    9     2    0    1    9       M    O    R    N    I    N    G     B    R    I    E    F    I    N    G   STARS Ranking system and definition:   ★★★★★   5-STARS (Strong Buy):  Total return is expected to outperform the total return of a relevant benchmark, by a wide margin over the coming 12 months, with shares rising in price on an absolute basis. ★★★★★   4-STARS (Buy):  Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis. ★★★★★   3-STARS (Hold):  Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months, with shares generally rising in price on an absolute basis. ★★★★★   2-STARS (Sell):  Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months, and the share  price not anticipated to show a gain. ★★★★★   1-STAR   (Strong Sell):  Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months, with shares falling in price on an absolute basis. Relevant benchmarks:  In North America, the relevant benchmark is the S&P 500 Index, in Europe and in Asia, the relevant benchmarks are the S&P Europe 350 Index and the S&P Asia 50 Index, respectively.  
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks
SAVE OUR EARTH

We need your sign to support Project to invent "SMART AND CONTROLLABLE REFLECTIVE BALLOONS" to cover the Sun and Save Our Earth.

More details...

Sign Now!

We are very appreciated for your Prompt Action!

x