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Friday March 6, 2015

Finances

Finances
 

Comcast Reports Quarterly Earnings

Comcast Corporation (CMCSA) announced its fourth quarter and year-end results on Tuesday, February 24. Facing market changes, the company’s results barely outpaced pre-release estimates.

Comcast reported that quarterly revenue grew 4.8% to $17.7 billion. Full-year revenue grew 6.4% to $68.8 billion.

“2014 was a great year financially, operationally, and strategically for Comcast NBCUniversal,” said Comcast Chairman and CEO Brian L. Roberts. “We continued to execute incredibly well as we accelerated our innovation, launched new products, and brought amazing films, shows and theme park attractions to consumers.”

Earnings per share for the fourth quarter grew 2.8% to $0.74. On a full-year basis, earnings per share grew 25% to $3.20.

Like other cable and traditional media companies, Comcast has faced stiff competition from streaming media services like Netflix and Amazon. For example, in 2013 pay-TV companies lost 1.7 million subscribers as a result of competition from such services. This has forced traditional media companies to launch similar streaming services. Comcast has been no different. Its Xfinity Go app is a competitive attempt to keep subscribers and fend off challengers like Netflix and Amazon.

Comcast Corporation (CMCSA) shares ended the week at $59.38.

Domino’s Pizza Revenue Increases


Domino’s Pizza, Inc. (DPZ) announced its fourth quarter results on Tuesday, February 24. While the company’s quarterly profit missed estimates, its revenues exceeded expectations.

Domino’s reported that quarterly revenue increased 13.5% to $643 million. This increase was driven by a domestic same-store sales increase of 11.1%.

“Fundamental strength, with a growing global store base, robust sales and technological innovation, continues to truly drive the business,” said Domino’s President and CEO J. Patrick Doyle. “Franchisees are both energized and financially sound, which is fueling our store reimage program, sales and store growth.”

Net income during the quarter rose 7.5% to $48 million or $0.91 per share. Expectations were for earnings of $0.93 per share.

Domino’s has historically been known—rightly or wrongly—for low quality pizza. The company even admitted several years ago that customers thought its pizza tasted like cardboard. Despite this image, the company has revamped its pizza recipe and thereby helped its reputation with consumers. So far, it seems customers like what they are seeing—and tasting. Along with a domestic same-store sales increase this quarter, Domino’s also reported its 84th consecutive quarter of international same-store sales growth. It’s no wonder the company’s share price has risen 40% over the past year.

Domino’s Pizza, Inc. (DPZ) shares ended the week at $101.53.

Campbell’s Has Lackluster Quarter


Campbell’s Soup Company (CPB) reported its second quarter results on Wednesday, February 25. The company experienced revenue and earnings declines.

Sales during the quarter were $2.23 billion. This was a 2% decline compared to the $2.28 billion generated during the same period last year.

“Over the last three years, we’ve made solid progress advancing our dual mandate to strengthen the core business and at the same time expand into faster growing spaces; however, it has not been enough in this more challenged environment,” said Campbell’s President and CEO Denise Morrison. “After several months of careful study, we’ve announced a significant reorganization of our company creating three new divisions, each with clear portfolio roles.”

The company reported earnings per share during the quarter of $0.66. This was a 13% decrease from $0.76 per share during the comparable period last year.

Campbell’s has spent the last few years looking for a way to reinvigorate its business. Consumers are trending away from traditional brands such as Campbell’s in search of healthier options. This has caused Campbell’s to acquire newer brands and produce new products in an attempt to draw consumers back. As this most recent quarterly report shows, Campbell’s still has a hill to climb. Investors will be watching closely to see if the company can regain some of the market share it lost in recent years.

Campbell’s Soup Company (CPB) shares ended the week at $46.59.

The Dow started the week of 2/23 at 18,141 and closed at 18,133 on 2/27. The S&P 500 started the week at 2,110 and closed at 2,105. The NASDAQ started the week at 4,953 and closed at 4,964.
 

Treasury Yields Decline on Fed News

Treasury yields fell during the week of February 23 after Federal Reserve Chair Janet Yellen indicated the central bank is not locked into a timetable to increase interest rates. A pair of economic reports later in the week revealed that the U.S. economic recovery continues to be fragile.

The big news earlier this week involved two-days of testimony Fed Chair Janet Yellen gave to Congress. During her testimony she stated that she did not see inflation rising to the Fed’s 2% goal. She also indicated that the Fed will not be wedded to a particular timetable on raising interest rates, which have hung close to zero over the past few years. Specifically, Yellen said that the removal of the Fed’s pledge to be “patient” regarding rate increases would not necessarily indicate a rate increase was imminent.

Despite the Fed’s assurances, investors will no doubt import significant meaning to any change in the Fed’s language on rates. “It’s still going to be a big deal when they remove ‘patient’ from their forward-rate guidance, even if it doesn’t mean explicitly that rates are going to rise in two meetings,” said Thomas Simons, a Government-Debt Economist in New York.

Treasury yields this week also responded to a pair of disappointing economic reports. The MNI Chicago business index fell to 45.8 in February. This was a sharp drop from forecasts of 58 and a reading of 59.4 for January.

The Commerce Department also revised U.S. GDP growth downward for the fourth quarter. Instead of the previously reported 2.6%, the revised data showed the U.S. economy expanded at a slower 2.2% rate for the quarter.

The 10-year Treasury note yield finished the week of 2/23 at 2% while the 30-year Treasury note yield finished the week at 2.6%.
 

Interest Rates Inch Higher

Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, February 26. The results show mortgage rates rising this week on rising home sales and values.

The 30-year fixed rate mortgage averaged 3.8% this week. This was up from last week when it averaged 3.76%.

This week, the 15-year fixed rate mortgage averaged 3.07%. This number was an increase from last week when it averaged 3.05%.

“Mortgage rates rose for the third consecutive week in February following solid housing data,” said Len Kiefer, Deputy Chief Economist at Freddie Mac. “New home sales beat market expectations at an annual pace of 481,000 units, down slightly from 482,000 units in December, but up 5.3% from a year ago. Also, the S&P/Case-Shiller National House Price Index rose 4.6% over the 12-months ending in December 2014.”

The money market fund finished the week of 2/23 at 0.4%. The 1-year CD finished at 0.7%.

Published February 27, 2015

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