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Amazon through the growth prism
Markets often distinguish growth from value, but for an equity, growth defines value. For most stocks, this can be seen by the close relationship between the organic revenue growth being delivered by a company and the implied growth rating being discounted by the share’s operating FCF yield. A problem however arises when trying to price […]
Continue readingGoogle – markets chasing stories arrive late to the party
Markets love a good story. They’re so much easier to digest than actual analysis and usually provide a catalyst for action that brokers and journalists need to stimulate a transaction. Take for example Google’s Q2 results last Thursday. The results themselves were solid, but were neither significantly ahead of street estimates nor provided anything particularly […]
Continue readingGet the oil price right and make the right call on oil stocks
Invest in an oil major such as Exxon or Chevron and there are two over-riding factors to consider. The first and probably obvious one for Groups which traditionally make over three quarters of their income from pumping oil and gas out of the ground is the price of oil. While an oil spill and >$40bn […]
Continue readingTsipras makes Merkel an offer she can’t refuse
How should we interpret this week’s volte-face by Tsipras and the Syriza government in approving austerity concessions to the Troika that had been specifically rejected by Greek voters in a referendum less than a week before? Short term, this would seem to provide an opportunity for celebration for creditors and financial markets in that the […]
Continue readingGreek referendum – all part of the Varoufakis game
Greece votes a resounding 61% “No†to the Troika debt proposals, yet financial markets remain largely unfazed, with European equity markets declining initially by less than 2% and 10 year bond yields for Italy, Spain and Portugal harden by less than 10bps. With traders having been weaned on a succession of last minute resolutions to […]
Continue readingShrink EPS while showing rapid YoY growth
As with every reporting season one can play the game of “spot dodgyâ€. Unfortunately, the deluge of quarterly results with their more limited disclosure can make it tough to identify some of the more sophisticated scams. As always these can include the myriad of acquisition accounting tricks (fair value adjustments, acquisition timings, accounting policy adjustments, […]
Continue readingMarket complacency may be its undoing
Welcome to the Q1 reporting season. If you hadn’t noticed yet, Easter came early this year (good for retailers, airlines etc) and there is a minefield of shifting currencies and commodity prices to adjust for as well as some decidedly mixed macro data coming out from the major trading economies. If you’re selling out of […]
Continue readingKrafting an exit after struggling to restore growth
After a less than sparkling recovery in Q4 FY14 organic revenue growth to under +3.5% YoY, the Kraft management seems to have thrown in the towel to the current financial masters at Heinz (Berkshire Hathaway and 3G Capital) and agreed to its ‘merger’ offer. While conceding most of the plum jobs in the new combine […]
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