Tag: earnings

IT’S A SMALL CLUB AND YOU’RE NOT IN IT

Not only do these guys “earn” obscene amounts of money in the rigged casino called Wall Street, they have a tax deduction written just for them called the “carried interest deduction”. It allows them to pay absolutely no taxes on the earnings related to their fund’s performance. Most of these guys pay little or no taxes on these “earnings”. A garbage truck driver making $50,000 per year probably pays more in taxes than some of these billionaire hedge fund managers. That’s called winning in the oligarchy we call America.

Infographic: The Globe's Highest-Earning Hedge Fund Managers | Statista
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On The Impossibility Of A Soft Landing

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While the robo-traders play tag with the chart points, it is worth considering how it will all end. After all, at today’s close the broad market (S&P 500) was valued at 24.3X LTM earnings per share. That is, valuations are in the nosebleed section of history, but financial history has tumbled into the sub-basement of future possibilities.

Stated differently, every first year spread-sheet jockey knows that what drives LBO models and NPV calculations is the assumed terminal year growth rate. Get imaginative enough about the possibilities out there, and you can come up with a swell return on today’s investment even if the next few years look a little rocky—-or even alot so.

So never mind that earnings have fallen five straight quarters and at $86.53 per share are now down 18.5% from their September 2014 LTM peak. Also ignore the fact that this quarter will be down 10% and that there is no rational basis for a rebound any time soon.

But somewhere behind the robo-machines which line the casino there is a corporals guard of carbon units buying what Wall Street is dumping. And whether they know it or not, at 24.3X they are betting on one whopping big terminal growth rate on the far side of the deflationary turmoil now afflicting the global economy.

Here’s the thing, however. The current deflationary wave is not a one-time detour which will pass in due course. Per the above analogy, we do not have merely two years of bad numbers in a 10-year LBO model with a robust terminal value at the end.

What we have, instead, is merely the initial shock waves from the actions of central banks which are trashing the joint. Lurking on the other side, therefore, is unfathomable risk, not extraordinary growth.

In a word, the stock market is not worth even 15X its current earnings or 1300. At length, the carbon units out there catching today’s bouncing dead cats will thank their lucky stars if their losses are only 40% from here.

Continue reading “On The Impossibility Of A Soft Landing”

Non-GAAP Earnings Are About To Plunge The Most Since 2009; As For GAAP Don’ Even Ask…

Tyler Durden's picture

Submitted by Tyler Durden on 03/07/2016 09:15 -0500

Now that Q4 EPS is almost in the history books with 494 S&P500 companies reporting, we can look at the numbers: blended 4Q EPS is $29.49 (-2.9% y/y) with GAAP EPS of $19.92. As DB admits, a 67% GAAP-to-non GAAP ratio is well below the normal ~90% ex. recessions, exacerbated by asset impairments and restructuring costs especially at Energy.

This is how DB shows this almost unprecedented divergence between GAAP and non-GAAP “earnings”:

 

This is merely a recreation of charts we first showed one week ago, when we commented on the widest spread between GAAP and non-GAAP since the financial crisis:

 

The chart below shows where the GAAP to non-GAAP divergence is most acute.

 

Ok, we get it: on a GAAP basis it is not a recession any more, it is a depression, just as that Houston CEO letter explained.

Continue reading “Non-GAAP Earnings Are About To Plunge The Most Since 2009; As For GAAP Don’ Even Ask…”

WHY STOCKS WILL CRASH IN TWO CHARTS

“Things always become obvious after the fact” – Nassim Nicholas Taleb

“Facts do not cease to exist because they are ignored.”  – Aldous Huxley

The S&P 500 currently stands at 2,126, fractionally below its all-time high. It is now 300% above the 2009 low and 34% above the 2008 and 2001 previous highs. Most people believe this is the new normal. They are comfortably numb in their ignorance of facts, reality, the truth, and the inevitability of a bleak future. When the herd is convinced progress and never ending gains are the norm, the apparent stability and normality always degenerates into instability and extreme anxiety. As many honest analysts have proven, with unequivocal facts and proven valuation measurements, the stock market is as overvalued as it was in 1929, 2000, and 2007.

Facts haven’t mattered, as belief in the infallibility and omniscience of Federal Reserve bankers, has convinced “professionals” to program their high frequency trading supercomputers to buy the all-time high. If central bankers were really omniscient and low interest rates guaranteed endless stock market gains, then why did the stock market crash in 2000 and 2008? The Federal Reserve’s monetary policies created the bubbles in 2000, 2007 and today. There was no particular event which caused the crashes in 2000 and 2008. Extreme overvaluation, created by warped Federal Reserve monetary policies and corrupt Washington D.C. fiscal policies, is what made the previous bubbles burst and will lead the current bubble to rupture.

Benjamin Graham and John Maynard Keynes understood how irrational markets could be over the short term, but eventually they would reach fair value:

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” – Graham

“The market can stay irrational longer than you can stay solvent.” – Keynes

Graham’s quote reflects the difference between hope and reality. This explains the ridiculous overvaluation of Amazon, Shake Shack, Twitter, Linkedin, Tesla, Google, and the other high flying new paradigm stocks. Story stocks soar because the herd believes the stories peddled by Wall Street and company executives. Five of these six stocks don’t have a PE ratio because you need earnings to calculate a PE ratio. In the long run the market will weigh the value these companies based upon profits and cashflow. It is the same story for the market as a whole. There is no question who is to blame for what now amounts to a three headed hydra of bubbles poised to burst.

Continue reading “WHY STOCKS WILL CRASH IN TWO CHARTS”

IT’S ALL RELATIVE – ISN’T IT?

Home Depot stock will hit an all-time high today. They just reported excellent results according to their press release, which will be parroted by the pundits on CNBC. They are one of the better run retailers in the country. The reason they are doing relatively well is that they stopped building stores years ago, closed underperforming stores, and focused on the existing stores. They now operate 2,260 stores.

The MSM faux business journalists will be reporting the wonderful sales and profit figures versus last year. The internet is a wonderful thing. It took me two minutes to find their 3rd Quarter 2006 earnings announcement, which I’ve included below.

They are boasting about the $19.5 billion of sales they achieved this quarter. Seven years ago they achieved $23.1 billion of sales with 150 less stores. For the mathematically challenged, their sales are 16% lower than they were seven years ago.

But it gets better. They are thrilled with the $1.4 billion profit in the current quarter. It seems they generated a profit of $1.5 billion in 2005 and 2006.  So, in 2005 they made a profit of $1.5 billion on revenue of $20.4 billion, with 300 less stores than they operate today. I would say the ROI on those additional 300 stores hasn’t been so hot. No biggie. It only cost them $3 billion to build those stores to generate $100 million LESS profit.

You won’t get this info from Jim Cramer or the bimbos on CNBC. They will just continue the charade. Their job is to misinform and obfuscate the fact that our retail world is in a terminal contraction phase. Even the best retailers make less money today than they made in the mid-2000’s. Those are the facts.

 

The Home Depot Announces Third Quarter Results; Raises Fiscal Year 2013 Guidance

ATLANTA, Nov. 19, 2013 /PRNewswire via COMTEX/ — The Home Depot®, the world’s largest home improvement retailer, today reported sales of $19.5 billion for the third quarter of fiscal 2013, a 7.4 percent increase from the third quarter of fiscal 2012. On a like for like basis, comparable store sales for the third quarter of fiscal 2013 were positive 7.4 percent, and comp sales for U.S. stores were positive 8.2 percent.
Net earnings for the third quarter were $1.4 billion, or $0.95 per diluted share, compared with net earnings of $947 million, or $0.63 per diluted share, in the same period of fiscal 2012. For the third quarter of fiscal 2013, diluted earnings per share increased 50.8 percent from the same period in the prior year. The prior year results reflect a nonrecurring charge of approximately $165 million, net of tax, or $0.11 per diluted share, due to the closing of seven stores in China. On an adjusted basis, the Company reported a 28.4 percent increase in diluted earnings per share from the same period in the prior year.

 

The Home Depot Announces Third Quarter 2006 Results
Sales of $23.1 billion Net earnings of $1.5 billion Earnings per share of $0.73

ATLANTA, Nov 14, 2006 /PRNewswire-FirstCall via COMTEX News Network/ — The Home Depot(R), the world’s largest home improvement retailer, today reported third quarter net earnings of $1.5 billion, or 73 cents per diluted share, compared with $1.5 billion, or 72 cents per diluted share in the same period in fiscal 2005.

Sales for the third quarter of fiscal 2006 totaled $23.1 billion, an 11.3 percent increase from the third quarter of fiscal 2005.

LOBSTER IN A COAL MINE

I saw the headline this morning that Darden’s earnings declined, but THEY BEAT ESTIMATES!!!!

WOW!!! If they beat the estimates that have been dramatically decreased over the last three months than all must be well. What a fucking joke Wall Street and the MSM are.

Their earnings plunged by 18% over last year. Their comparable store sales are spiraling downward. These idiots took on $1 billion of debt in the last year as they have bought back $400 million of their own stock and have added 150 new restaurants.

Below is a chart from their earning release. Sales in February were rapidly deteriorating. The Obama tax increases, Obamacare health insurance premium increases, gasoline price increases, and “strong” jobs recovery are working their magic on the middle class.

Darden is the lobster in the coal mine. When the obese middle class are doing OK, they head out to Olive Garden for unlimited breadsticks or Red Lobster for unlimited crab legs. The middle class is not feeling OK. Ignore the MSM bullshit and look at the facts. The recession began last year and it’s getting worse. The proof is in the breadsticks. 

http://finance.yahoo.com/news/darden-restaurants-reports-third-quarter-110000313.html

Fiscal 2013 December, January and February U.S. Same-Restaurant Sales Results

Darden reported U.S. same-restaurant sales for the fiscal months of December, January and February as follows:

           
Olive Garden December   January   February
Same-Restaurant Sales -2.5%   -0.6%   -9.1%
Same-Restaurant Traffic       -3.7%   -0.9%   -7.0%
Pricing 2.3%   2.1%   1.2%
Menu-mix -1.2%   -1.7%   -3.4%
           
Red Lobster December   January   February
Same-Restaurant Sales -7.1%   -5.2%   -7.5%
Same-Restaurant Traffic           -5.5%   -1.7%   -6.0%
Pricing 1.2%   1.3%   1.2%
Menu-mix -2.8%   -4.8%   -2.7%
           
LongHorn Steakhouse December   January   February
Same-Restaurant Sales -3.6%   2.5%   -3.0%
Same-Restaurant Traffic       -4.4%   0.1%   -2.9%
Pricing 2.0%   2.0%   2.0%
Menu-mix -1.3%   0.4%   -2.2%