In today's edition: American troops withdraw, police budgets are cut, Intel and Kimberly-Clark Fall, warehouses are filling.
Companies report to us
Last week a number of companies, on which we previously did reviews and investment ideas, reported on the results of the last quarter.
Software and IT Service Provider Teradata (NYSE: TDC) will report only 6 May, but the company has already announced results much better than expected: revenue in the region of 491 million dollars with an expectation of 449 million, EPS around 45-47 cents vs. 11-13 cents expected. Teradata management speaks of growth in financial performance in all business categories. The shares of the company were much prettier from all these statements., but you already know about it, if you read our telegram channel.
Intel (NASDAQ: INTC) reported for the first quarter. Revenue compared to the same period last year fell from 19.83 to 19.7 billion dollars, and profit from 5,66 up to 3.4 billion. But even this result turned out to be higher than the market expectations - it should be taken into account, that the company had to pay a fine for violating someone else's patent for 2.18 billion. Analysts expected earnings per share in the area 1,12 $, but it turned out 1,39 $ per share.
But the stock still fell., because the segment of products for data centers, important for the company, showed a drop in 20% and investors worried about the long-term prospects of the business.
American consumer paper manufacturer Kimberly-Clark (NYSE: KMB) also reported for the last quarter - and not in the best way: revenue fell by 5%, and profit - by 10,41%. The reason for the drop in sales is simple: people have already bought enough toilet paper and other essentials, but by no means began to spend them in greater quantities. At the same time, the company's expenses increased..
The company cut its revenue and earnings forecast for 2021: sales growth is expected in the range of 3-5% against previously expected 4-6%, and earnings per share - in the region of 7.3-7.55 $ against the previously expected 7.75-8 $.
Their police protect them
US police officer Derek Chauvin convicted of killing African-American George Floyd. Actually, this murder led to a wave of protests from the Black Lives Matter movement (NOT YET), which shocked America and dominated the mainstream political agenda in the United States.
One of the most important demands of the movement was the reduction in the budgets of the police departments.. A number of large cities have obeyed this requirement.: Austin cut the cop budget for 35%, and Seattle - to 20%. Judging by that, How the US celebrates the condemnation of Chauvin, Expect further cuts in police funding — and more demand for private security. What does this have to do with the stock market?? Most direct.
We already had a whole bunch of ideas and company reviews, working in the field of security, — investors may well count on the growth of orders at these enterprises:
- Allegion
- Resideo
- Alarm.com
- Napco
- Brink’s
US pulls out of Afghanistan
Nearly 20-year American saga in Afghanistan comes to an end: to 11 September, the Americans will withdraw most of the troops from the country. The war was fabulous meaningless: Taliban control most of Afghanistan, and the multibillion dollar aid from the United States to the country, seems to be, settled on offshore accounts of Afghan corrupt officials. This whole story is of great importance to us in connection with the fact, that we had a lot of analysis of American military companies.
Although we don't know, what percentage of the products of these companies is used on the battlefield in Afghanistan, we can speculate about, how they might be affected by the end of this war.
Aircraft manufacturers Lockheed Martin (NYSE: LMT) and defense business Boeing (NYSE: BA) nothing to fear: heavy combat aviation is not much needed in the conditions of the Afghan war. To the Shipbuilders of Huntington Ingalls (NYSE: HII) don't worry too much either.: it is unlikely that US Navy officials, in planning spending on ships and submarines, heavily counted on confrontation with Afghanistan, which has no access to the sea.
But here at General Dynamics (NYSE: GD) и Northrop Grumman (NYSE: NIGHT) a very noticeable percentage of sales are solutions, necessary armies directly on the battlefield, so they may lose revenue.. Probably, will cause sadness for Oshkosh shareholders (NYSE: OSK): the company is not military in the strict sense of the word, but she makes spare parts for combat vehicles, And, may be, in this segment, after the withdrawal of US troops from Afghanistan, it is worth waiting for a fall. Maybe, a seasonal drop in sales will also occur at the supplier of drones AeroVironment (NASDAQ: AVAV), but you can't be sure: after all, the scope of drones is constantly growing - the company's drones may well be purchased by the military for other purposes, for example, for military intelligence in Africa.
It is hard to say, what to expect Raytheon (NYSE: RTX) and L3Harris (NYSE: LHX) are suppliers of rather complex and high-tech goods and services, which can be used as in the war in Afghanistan, and against larger and more developed rivals such as the DPRK. The same can be said about the "military IT people" from Parsons - it's not clear, how widely their solutions are used directly on the battlefield in Afghanistan.
However, can hardly be expected, that this was the last US war, - rather the opposite. And all the mentioned issuers in this case will be able to earn:
- Raytheon
- Northrop Grumman
- Huntington Ingalls Industries
- General Dynamics
- L3Harris Technologies
- Lockheed Martin
- Boeing
- Parsons
- Oshkosh
- AeroVironment
A pharmacist is coming to them
Experts from the American Society of Health System Pharmacists release a study on drug costs, available by prescription in the US. The main indicators there are as follows:
- In 2020, expenses increased by 4,9% - up to 535.3 billion dollars.
- The cost of medicines in hospitals fell by 5%, but more than 10% home drug sales increased.
- Drug spending is expected to rise by 4-6% in 2021, mostly driven by, who are not treated in hospitals.
All this is quite important information for those, who invested in the pharmacy business. For example, this information should be considered by shareholders of Walgreens Boots Alliance (NASDAQ: WBA), whose business has just begun to recover from the effects of the pandemic.
Warehouse closed, everyone went to unload
Everything is mixed up in the world of logistics: news from all over the world talk about, that in the field of delivery of goods, activity is growing - and along with this comes problems. According to Maersk, the recent "traffic jam" in the Suez Canal area will be felt in the third quarter of this year in delays in the delivery of goods and other troubles.
The Baltic Freight Index - the cost of shipping - due to a combination of growing demand and insufficient supply, reached its highest values for 10 years. And along with this, according to a survey by the Hong Kong company Qima among 700 companies in various fields, they are all switching from Chinese suppliers to alternatives from Vietnam, Turkey and India. For whom it is important? For all companies, who own physical goods in some form: all the above points lead to an increase in the delivery time of goods to warehouses and increase the final cost of goods for companies, reflected in the reporting.
At the moment 44% small businesses complain about lack of resources, caused by late deliveries. And this affects the financial statements of their clients from among large companies..
Whoever feels good in such a situation is the REIT, who work in the field of logistics: customers will soon start fighting for a place in warehouses. For example, the idea with Prologis is again relevant (NYSE: PLD).
