Thursday, 11 February 2010 23:45
CVS Caremark: CVS beat the Street with an 11% increase in earnings on a 7% rise in sales. The company forecasts earnings of between $2.74 to $2.84 per share in 2010, equating to a forward PE of between 11-12 at current prices. Drugstore competetior Walgreen's trades at a PE of 15, while pharmacy benefit manager (PBM) Medco Health Solutions trades at a PE north of 20. CVS is a hybrid, part drugstore and part PBM, and trades at a significant discount to it pure play peers. Should the company fix the issues troubling its Caremark PBM unit, the stock is headed materially higher.
NYSE Euronext: NYX topped consensus estimates with 12% YOY earnings growth and 9% sequential growth. The big story here is that derivatives revenue growth rose 21% YOY and its market share of the U.S. options market rose to 24% in the 4th quarter. With increased regulation of "dark pools" and derivatives combined with NYX's strategy to align its own interests with that of Wall Street's biggest firms, NYX earnings shold continue to surprise to the upside. In the meantime, the shares trade at 10.8 times this year's consensus earnings estimate and offer a substantial 5% dividend yield.
Pepsico: PEP matched consensus earnings expectations on 4.5% revenue growth. The company maintained guidance that earnings are on track for between 11% and 13% growth in 2010. Pepsi further stated that they are on track to close the acquisition of its two largest bottlers and expects the transactions to reduce annual expenses by "hundreds of millions of dollars". Pepsico will buy back $5 billion of stock in 2010.
Diageo: While revenues continued to improve throughout its latest quarter, Diageo's earnings fell 10% for the first 6 months of its fiscal year from a year ago. Diageo remains committed to prior guidance for the full year that profit growth will be in the low single digits. A bright spot in the most current release is the 21% sales growth of Guinness beer in Southeast Asia. Diago raised its dividend 5% and now offers a 4.7% yield.
In other news, United Technologies increased its quarterly dividend by 10.4% and 3M increased its dividend by 3%.