Cost Structure – After Hours http://after-hours.org/ Thu, 17 Nov 2022 22:58:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://after-hours.org/wp-content/uploads/2021/07/icon-1-150x150.png Cost Structure – After Hours http://after-hours.org/ 32 32 Donaldson delivery and updated guidance for FY23 could be a catalyst (NYSE:DCI) https://after-hours.org/donaldson-delivery-and-updated-guidance-for-fy23-could-be-a-catalyst-nysedci/ Thu, 17 Nov 2022 22:58:00 +0000 https://after-hours.org/donaldson-delivery-and-updated-guidance-for-fy23-could-be-a-catalyst-nysedci/ Supersmario/iStock via Getty Images I liked the filtration specialist Donaldson (NYSE: DCI) for a while now, and not only have the stocks been up about 15% since my last update (easily beating the broader market and industrial sector), but they’ve continued to beat the market (and the industry group) since my initial writing for Seeking […]]]>

Supersmario/iStock via Getty Images

I liked the filtration specialist Donaldson (NYSE: DCI) for a while now, and not only have the stocks been up about 15% since my last update (easily beating the broader market and industrial sector), but they’ve continued to beat the market (and the industry group) since my initial writing for Seeking Alpha. The thesis then and now was to maximize the value of legacy heavy machinery and industrial filtration businesses while exploring opportunities to extend these core competencies to new markets such as food/ beverages, life sciences and other process markets where filtration matters (and gaining new, complementary, skills via M&A along the way).

I’ll be very curious to see what management says about the guidance when it releases its fiscal first quarter results later this month. The initial guidance for FY’23 in August surprised the street with its conservatism, and recent earnings/advice calls from heavy machinery companies have been relatively good. Additionally, at a time when many short-cycle businesses are beginning to revitalize, many heavy machinery businesses have good order books through 2023 and underlying business/utilization is still healthy.

With the performing stocks, I don’t see as much undervaluation here. I think stocks are still valued for long-term annualized returns in the high single digits (around 8%), but the near-term upside appears to be capped at around $60 with no stronger outlook. There’s worse than owning a good business at a reasonable price, but there are now more options for investors and I’m not as keen on chasing after Donaldson.

FQ1 should be set up for the upside

I might just end up eating those words, but I think Donaldson is ready for a beating when he releases fiscal first quarter results later this month. Industrial activity remained vigorous, with industrial air players such as Ingersoll-Rand (RI) and Atlas-Copco (OTCPK:ATLKY) reporting healthy demand, and while I’m concerned about declining conditions for the trucking industry, I think miles driven for Donaldson’s recently completed quarter should be fairly healthy. Likewise, I have some short-term concerns with construction and mining, but business has remained healthy and Donaldson is mostly (about 60%) a spare business.

Donaldson got a 12% increase in sales growth last quarter on price and I don’t see why there would be any significant sequential erosion (although the comps from a year ago are certainly stiffer). Working against the company, the forex is likely to have a bigger impact than expected (although analysts had a chance to adjust expectations after seeing other companies’ Q3 earnings), and there could also be headwinds related to the abandonment of activities.

Given that many companies are reporting some easing in input cost inflation and component shortages, I expect healthy sequential leverage on gross margin (about two points), and I think Healthy revenues and gross margin should drive a pace of operations.

Advice will become interesting

Management surprised analysts and investors last quarter by guiding FY23 growth significantly below expectations… +3% mid-term vs. +6% expectation. While aftermarket activity was expected to be healthy (up mid-single digit), management was looking for weakness in OE heavy machinery and weaker results in parts of the segment. industrial.

The outlook for new heavy-vehicle construction still looks quite healthy. Still constrained by limited component (and in some cases, labor) availability, many heavy machinery manufacturers enter 2023 with significant backlogs that should at least sustain the first half of the year. I think there will be a sharper correction in truck orders over the course of the year, and most likely one in construction as well, but I expect demand for agriculture and mining equipment to hold up fairly well given the age of existing fleets and favorable commodity prices. Aerospace and defense should also provide some strength given the continued recovery in air traffic, but it’s not a particularly big part of the business.

On the industrial side, I expect weaker demand in key industrial end-markets as short-cycle industries turn over. New growth opportunities in the food/beverage, life sciences and industrial filtration sectors should offset this quite well, but I think it is reasonable to be a little cautious.

Margins should be a source of strength. Business is pretty tough for Donaldson, and while there will eventually be pricing pressure as input costs come down, I don’t think those pressures will be particularly significant in 2023, so I expect that that the business is leveraging healthy pricing against an improving cost structure, helping to drive a point or more of EBITDA margin improvement.

Plenty of options to pursue growth and a healthy balance sheet to fund it

Donaldson continued to add elements in line with its stated strategy of continued growth in new filtration markets such as life sciences, acquiring Purilogics in June. They’re a small company, but I like their approach to membrane-based chromatography and it could prove to be a valuable staple over time. For readers unfamiliar with biochemistry and bioprocessing, chromatography is a key step in the production of biologics, as it is used to purify and separate target molecules such as mRNA, plasmid DNA, antibodies or proteins from their production environment.

I continue to see a big lead for Donaldson in life sciences, not to mention other end markets that have high-end filtration needs (like semiconductors). A recent partnership with wild type highlights this – the two companies will collaborate to design specialized bioreactors for Wildtype’s cultured/cultured seafood production needs. It basically involves growing seafood in a controlled laboratory/industrial environment using bioprocessing tools and techniques. I should call it a long-term opportunity today, but I think it illustrates how Donaldson could ultimately see growth in unexpected markets and not just traditional organic production.

Perspectives

Donaldson’s FY22 results were a little better than I expected (revenue and EBITDA beat about 2%), but I tempered my expectations a bit for FY23. My long-term revenue growth estimate is slightly lower (at around 5% to 5.5%) with the model moving forward a year, and I still see strong long-term opportunities outside the main markets served by the company.

Given good pricing leverage, I expect better EBITDA margins now, and I’m looking for about one point improvement in FY23 and about two points improvement in the next four years. Longer term, I expect Donaldson to generate low double-digit free cash flow margins, supporting normalized FCF growth of around 10%.

Discounted cash flow modeling suggests potential long-term annualized returns of just over 8% at the current price. Using my margin/yield driven EV/EBITDA formula, I think Donaldson can trade at over 13x EBITDA going forward, and I note that filtration companies (especially those exposed to life sciences) have often traded at multiples of 15x or more, so rerating going forward is a possibility.

The essential

Given my opinion of the company, the direction and the strategic plan here, I would like to be more bullish on these stocks. As it stands, however, I don’t see a particularly strong call for fundamental undervaluation unless Donaldson posts a solid pace and an upside quarter. I’m pretty bullish at the moment, mainly because I’ve discovered that good companies have a way of “growing up” towards valuations that may seem high, but I would really prefer to buy declining stocks if possible.

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Scotts Miracle-Gro (SMG) Appoints Matthew Garth as Chief Financial Officer https://after-hours.org/scotts-miracle-gro-smg-appoints-matthew-garth-as-chief-financial-officer/ Mon, 14 Nov 2022 11:56:54 +0000 https://after-hours.org/scotts-miracle-gro-smg-appoints-matthew-garth-as-chief-financial-officer/ News and research before you hear about it on CNBC and others. Claim your one week free trial for StreetInsider Premium here. The Scotts Miracle-Gro Company (NYSE: SMG) today announced that Matthew Garth has been named executive vice president and chief financial officer, effective December 1, 2022. Garth brings over 25 years of financial experience […]]]>

News and research before you hear about it on CNBC and others. Claim your one week free trial for StreetInsider Premium here.


The Scotts Miracle-Gro Company (NYSE: SMG) today announced that Matthew Garth has been named executive vice president and chief financial officer, effective December 1, 2022.

Garth brings over 25 years of financial experience to ScottsMiracle-Gro, having led a full range of corporate and operational finance functions, from treasury and investor relations to planning and analysis. financial, among others. Most recently, he was chief financial officer and senior vice president of treasury and finance for Minerals Technologies, Inc. (NYSE: MTX). He previously held senior financial positions at Alcoa, Inc.

“Matt displays an impressive combination of financial acumen and high performance, which makes him an invaluable addition to our leadership team,” said Jim Hagedorn, President and CEO of ScottsMiracle-Gro. “He led all aspects of the core finance function and successfully provided finance leadership during challenging times. Equally important, he is an action-oriented partner for the operational side of the business, which gives me confidence that he will quickly have a positive impact as we further adjust our cost structure and improve our performance. financial.

“Matt’s tenure in his previous leadership roles was attractive, as he demonstrated his willingness to not only take full responsibility for delivering long-term results, but to operate effectively in a wide variety of situations. “

Garth will succeed ScottsMiracle-Gro board member David Evans, who was appointed interim chief financial officer on August 30, 2022, and will continue in that role until Garth joins the company. Evans will remain as a close advisor to Garth throughout the calendar year to ensure a smooth transition.

“I want to thank Dave Evans for his strong leadership during a critical time for our business,” Hagedorn said. “The entire organization has benefited from his deep experience as a highly accomplished and respected financial operator.”

Evans, who was involved in the search process for a new CFO, said, “I’m impressed with Matt’s credentials and enthusiasm. Throughout his career, he has excelled as a financial leader whose contributions have led to growth and shareholder value.

At Minerals Technologies, Garth had global responsibility for finance, tax, treasury, audit, investor relations, information technology and shared services functions. At Alcoa, he was promoted to positions of increasing responsibility, including CFO of two multi-billion dollar companies and roles involving corporate finance, treasury, financial planning and analysis, investor relations, strategic planning, risk management and shareholder value creation. He holds a Bachelor of Science in Accounting from the University of Delaware and an MBA from Columbia University.

“I look forward to joining ScottsMiracle-Gro and working closely with the team to address near-term challenges and position the company for long-term financial strength and value creation,” said Garth.

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Disney plans job cuts as part of company-wide spending review https://after-hours.org/disney-plans-job-cuts-as-part-of-company-wide-spending-review/ Fri, 11 Nov 2022 23:58:51 +0000 https://after-hours.org/disney-plans-job-cuts-as-part-of-company-wide-spending-review/ Walt Disney plans to cut jobs and institute a hiring freeze as the company tries to stop red ink from its streaming operations, which have racked up billions in losses over the past three years. “We’re going to have to make some tough and uncomfortable decisions,” Disney Chief Executive Bob Chapek wrote in a memo […]]]>

Walt Disney plans to cut jobs and institute a hiring freeze as the company tries to stop red ink from its streaming operations, which have racked up billions in losses over the past three years.

“We’re going to have to make some tough and uncomfortable decisions,” Disney Chief Executive Bob Chapek wrote in a memo to staff seen by the Financial Times.

Chapek launched a “cost structure task force” led by two lieutenants, Christine McCarthy, chief financial officer, and Horacio Gutierrez, general counsel. The group “will review all avenues of operations and labor to find cost savings, and we anticipate some staff reductions as part of this review,” the memo said. Disney did not disclose goals for the cuts.

The moves come after Disney reported financial results on Tuesday that disappointed Wall Street, sending shares down more than 11%. Disney’s streaming services, led by Disney Plus, reported operating losses of $1.5 billion, largely due to soaring content spend and marketing spend – two areas targeted for cost cuts in Chapek’s memo.

He said the company would not “sacrifice quality”, adding that investments must be “effective and bring tangible benefits to both the public and the company”.

Chapek said this week that streaming losses will start to “reduce” in the current quarter, with Disney Plus expected to make its first profit in 2024. As part of the push to profitability, the company will raise the price of its services streaming and will introduce a new ad-supported tier for Disney Plus next month.

As part of its cost-cutting program, Disney will also limit business travel to “essential travel” and encourage meetings to be held virtually.

Like other Hollywood companies, it’s adjusting to the end of the grow-at-all-costs phase of the streaming wars. At the height of the coronavirus pandemic, Wall Street cheered as Disney, Netflix and Warner Bros spent big on content to add new streaming subscribers. But after Netflix’s subscriber growth hit a wall earlier this year, investors demanded to see a path to profitability.

Netflix has since made job cuts and Warner Bros. Discovery is also aiming to cut its workforce, with a number of its divisions – including its marketing division and CNN – bracing for layoffs.

The picture is darker in digital media, with Twitter cutting 3,700 jobs following Elon Musk’s takeover, and Facebook’s parent company Meta cutting 11,000 workers.

Disney shares rose 5% on Friday. The stock is down 40 percent this year.

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How do Microsoft’s layoffs affect its stock market outlook? (NASDAQ: MSFT) https://after-hours.org/how-do-microsofts-layoffs-affect-its-stock-market-outlook-nasdaq-msft/ Thu, 03 Nov 2022 16:00:33 +0000 https://after-hours.org/how-do-microsofts-layoffs-affect-its-stock-market-outlook-nasdaq-msft/ AnryMos Summary in seconds I have a buy investment rating for Microsoft Corporation (NASDAQ: MSFT) shares. I assessed the five-year or mid-term outlook for MSFT with my previous write-up on September 6, 2022. I turn my attention to Microsoft’s recent layoffs with this current update. MSFT reportedly recently laid off some of its employees, which […]]]>

AnryMos

Summary in seconds

I have a buy investment rating for Microsoft Corporation (NASDAQ: MSFT) shares.

I assessed the five-year or mid-term outlook for MSFT with my previous write-up on September 6, 2022. I turn my attention to Microsoft’s recent layoffs with this current update.

MSFT reportedly recently laid off some of its employees, which is in line with company guidelines to maintain short-term workforce stability. Given the company’s expense management initiatives such as those related to staffing, Microsoft is forecasting a “double-digit” increase in operating profit for fiscal year 2023 (YE June 30). Despite management’s reasonably good guidance for the current fiscal year, MSFT’s EV/EBIT and P/E valuation multiples are now close to their respective three-year all-time lows. As such, I deem Microsoft’s stock to be undervalued and am assigning a buy rating to the stock.

How many workers is Microsoft laying off?

Microsoft released the company’s financial results for the first quarter of fiscal 2023 last week (October 25), and management’s comments during MSFT’s recent quarterly earnings call on the same day caught the attention of investors on his layoffs.

In its first quarter fiscal 2023 investor briefing, MSFT indicated that “our sequential headcount growth from the first quarter (fiscal 2023) through the second quarter (fiscal 2023) will be minimal.” In other words, Microsoft’s guidelines imply that there will be no significant increase in the number of company employees between September 30, 2022 and December 31, 2022.

Earlier, on October 18, 2022, Looking for new Alphas article quoted a the wall street journal report which mentions that Microsoft “laid off nearly 1,000 employees in several divisions”.

Key measures of MSFT actions

There are a few metrics investors should watch with regards to Microsoft’s recent layoffs and its goal to keep its workforce stable on a quarterly basis for the second quarter of fiscal 2023.

The company only reveals its official number of employees once a year with its 10-K documents. MSFT previously disclosed in its 10-K filing for fiscal year 2022 that it “employed approximately 221,000 people” at the end of the first half of this year. This suggests that Microsoft is laying off around 0.5% of its workforce.

Notably, the total number of Microsoft employees increased significantly +22% in fiscal year 2022 compared to its workforce of 181,000 at the end of fiscal year 2021. The substantial increase in the workforce of MSFT was driven by both M&A transactions (acquisition of Nuance and Xander) and a faster pace of recruitment for its existing businesses.

The growth in staff also coincided with an increase in operating costs. Specifically, Microsoft’s research and development, sales and marketing, and general and administrative expenses increased by +18%, +8%, and +16%, respectively, for fiscal year 2022.

Why is Microsoft laying off employees?

The key MSFT indicators highlighted in the previous section help to understand why Microsoft is laying off employees. The number of employees and the company’s operating expenses are increasing, which is not favorable given the difficult economic context.

Microsoft stressed during its first-quarter fiscal 2023 earnings briefing that the company’s goal is “to use this (additional) headcount in the most productive way possible.” More importantly, MSFT emphasized on the last quarterly earnings call that it “will be disciplined in managing our cost structure” to “respond to the macro.”

The company’s efforts to slow the pace of recruitment have already paid off to some extent in the first quarter of the current fiscal year. As reported in its latest quarterly earnings presentation, Microsoft’s actual operating costs for the first quarter of fiscal 2023 were $13.2 billion and were lower than its previous management forecast in the range of $13.3 to $13.4 billion. This is a key factor contributing to MSFT’s +2% earnings growth in the first quarter of FY2023.

What is Microsoft’s business outlook now?

Along with announcing its financial results for the first quarter of fiscal year 2023, Microsoft offered its guidance for fiscal year 2023.

According to its press release and outlook presentation, Microsoft expects the rate of increase in its operating costs to “moderate materially throughout the year (fiscal 2023)”, which should result in by a 1% decline in its FY2023 operating profit margin. MSFT attributed expectations of a slower pace of operating expense growth for the year to “the company’s focus on productivity growth from the significant investments in the workforce that we have made over the past year” during its first quarter fiscal 2023 earnings call.

It should be noted that MSFT’s guidance indicates “double-digit revenue and operating income growth at constant currency” for the company in fiscal 2023, consistent with management’s comments during the recent quarterly results briefing.

I think it’s encouraging to see Microsoft strike a good balance between maintaining short-term profitability and investing to drive long-term growth.

Microsoft’s expected “double-digit” increase (I’m guessing it’ll be in the lower teen percentage range) in FY2023 operating profit is very likely to be lower than actual growth in the operating profit of +21% in constant currency for the company in fiscal 2022, but operating profit growth above +10% will still be quite good in this difficult economic environment.

It is reasonable to assume that MSFT could have guided much stronger FY2023 operating income growth, had it chosen to reduce capital expenditures and further reduce its workforce. As I mentioned earlier in this article, Microsoft has reportedly laid off about 0.5% of its employees and is only aiming for a stable workforce (rather than a substantial reduction) in the future.

This particular Q&A on the company’s first quarter investor call sends a clear signal that Microsoft won’t sacrifice long-term growth to maintain near-term profitability at all costs. An analyst from UBS (UBS) questioned why Microsoft “chose not to cut OPEX (opex)” despite “weakness on the Windows side.” In response, Microsoft Chief Financial Officer Amy Hood replied that “it’s important to stay consistent in this down market” and to “continue to invest where we see substantial opportunity and growth”.

In a nutshell, I have a favorable view of Microsoft’s business prospects. In the short term, MSFT has made layoffs and slowed the pace of new hires in order to control costs and maintain a good level of profitability. But MSFT’s medium to long-term prospects are not affected, as the company does not withdraw its investments in areas that have good long-term growth potential.

Is the MSFT stock a buy, sell or hold?

MSFT stock continues to warrant a buy rating in my view. Microsoft’s near-term outlook is decent judging by the company’s management forecast for operating profit growth, and its valuations are attractive.

MSFT’s current valuation multiples are approaching three-year all-time lows. The market now values ​​Microsoft at a normalized P/E multiple for the next twelve months of 23.1 times according to the consensus. S&P Capital IQ data, which is only +4% higher than its historic three-year P/E ratio of 22.2x. Similarly, MSFT’s current consensus on the next twelve months EV/EBIT measure of 18.4x is only +3% above its three-year low of 17.8x EV/EBIT.

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Local legislative candidates divided on solutions to inflation https://after-hours.org/local-legislative-candidates-divided-on-solutions-to-inflation/ Fri, 28 Oct 2022 15:58:39 +0000 https://after-hours.org/local-legislative-candidates-divided-on-solutions-to-inflation/ As voters prepare to cast their ballots this fall, inflation and the high cost of living have become major concerns in southwestern Connecticut. In local elections for the state legislature, candidates lay out different strategies to ease consumer pain at checkouts and gas pumps. In a recent voter survey conducted by Hearst Connecticut Media, voters […]]]>

As voters prepare to cast their ballots this fall, inflation and the high cost of living have become major concerns in southwestern Connecticut.

In local elections for the state legislature, candidates lay out different strategies to ease consumer pain at checkouts and gas pumps.

In a recent voter survey conducted by Hearst Connecticut Media, voters placed cost-of-living increases and abortion as the top issues they consider when considering candidates for the Nov. 8 election.

On the issue of inflation, there is a substantial divide over how candidates for House of Representatives and state Senate seats craft proposed solutions, based on party lines.

Democrats point to a $650 million tax relief package that went into effect in June, including a $250 tax credit per child, aimed at bolstering family income. Democratic candidates are also touting the removal of the state gasoline tax through the end of November, as well as lowering the cost of public transportation. They cite measures they and their political allies spearheaded in Hartford that eased the financial burden on middle- and low-income people.

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Volaris stock: A story of growth reaching a limit (NYSE: VLRS) https://after-hours.org/volaris-stock-a-story-of-growth-reaching-a-limit-nyse-vlrs/ Tue, 25 Oct 2022 16:48:00 +0000 https://after-hours.org/volaris-stock-a-story-of-growth-reaching-a-limit-nyse-vlrs/ Boarding1Now/iStock Editorial via Getty Images Airline stocks are hot right now, mostly to buy at times to sell, as economic pressures cast doubt on the continued robustness of air travel demand. In the latest earnings releases, we have seen a bullish trend tone among airline executives who believe in countercyclical behavior in air travel demand […]]]>

Boarding1Now/iStock Editorial via Getty Images

Airline stocks are hot right now, mostly to buy at times to sell, as economic pressures cast doubt on the continued robustness of air travel demand. In the latest earnings releases, we have seen a bullish trend tone among airline executives who believe in countercyclical behavior in air travel demand patterns for at least the coming quarter. In this report, I will analyze the results of Volaris (NYSE: VLRS) showing that even if the growth is strong, the airline seems to encounter certain limits.

Unleash growth potential

Mexico air transport market

Mexico air transport market (Volaris)

From a simple look at the relationship between travel per capita and GDP per capita, there seems to be a lot of growth when comparing countries with similar GDP per capita to Mexico, where Volaris is active. Obviously, a distribution of GDP also plays an important role, but overall Volaris seems to be active in a market that has plenty of room to grow. In addition, almost 50% of the routes operated by Volaris are not in competition with other airlines competing only with luxury bus travel which has seen its market share shrink for several consecutive years.

Among the other airlines, the main competitor and the biggest threat in the future would be Viva, which has reached a merger agreement with Avianca. Volaris’ strength is the low-cost structure that allows it to keep ticket prices low. The company has a cost per available seat mile comparable to Wizz Air, allowing it to offer ticket prices at which many other airlines would no longer be profitable.

Weak Point in Recent Earnings Results

Q3 2022 results Volaris

Q3 2022 results Volaris (Volaris)

Operating revenue rose more than 20%, but none of that trickled down to the bottom line, as costs rose 51.7%. At present, it is not surprising that the reason for the high operating costs of airlines is the high price of fuel. Fuel costs increased 108.2% year over year, due to higher unit fuel costs and higher gallons consumed. The operating margin fell from 24.4% to 4.6%. The decline in operating profit in the current fuel price environment does not worry me. Ideally, with high demand levels, we would like to see operating profit increase, but with high fuel prices, which is unrealistic for most airlines.

Q3 2022 operational statistics

Q3 2022 operational statistics (Volaris)

What I found somewhat unfortunate was that while most airlines are seeing continued strong growth in TRASM, Volaris is actually seeing a decline in TRASM. Year-over-year capacity addition was 22% and, with stable load factors, should normally result in similar passenger revenue growth. However, during the quarter, this was offset by lower unit revenue. Average base fares fell to $56, marking a 1.8% drop, while ancillary revenue fell 2.5% to $39, marking a 2.1% drop in revenue per passenger to 95 $. This is what I found most disappointing as it could be an indication that for Volaris the days of strong demand driven unit revenue growth are over and it needs to drive prices down to fill airplanes. Analysts had expected higher revenue of $27.6 million. More than half of the shortfall is due to lower average prices.

Was it so bad? The answer is no. While Volaris missed the top line, its earnings per share of $0.30 was strong and CASM-Ex and CASM-Ex Adjusted were also down, showing that the costs Volaris can control and reduce have been reduced.

2022 outlook more or less the same

Volaris A320neo

CBD Aviation

For 2022, Volaris now expects capacity growth of 25%, compared to 23-25% previously. While maintaining its revenue guide of $2.8 billion to $3.0 billion with EBITDAR margins in the 20s and CapEx in the upper end of the previously forecast $140-145 million. So overall, Volaris is still on track to meet its targets and its CASM-ex growth should actually be 1% instead of the 1-3% previously forecast.

Conclusion: Volaris Stock A Speculative Penetration Buy

The reality is that fuel prices currently have a significant impact on airline profit and loss statements and there is really nothing airlines can do about this high fuel price environment, apart from seeing where it can pass on costs and operating the most efficient planes. Volaris, with a low unit cost base, is relatively well positioned but even the airline suffers from these higher costs. Somewhat disappointingly, unit revenue declined, raising questions about the robustness of average fares going forward.

In this regard, I consider Volaris a somewhat risky investment, but in the longer term, with strong cost control and under-penetration of air travel in general in Mexico, I think Volaris is one of the airlines which could be very well positioned to benefit from a catch-up in the adoption of air transport in Mexico.

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3 things about waste management stocks that savvy investors know https://after-hours.org/3-things-about-waste-management-stocks-that-savvy-investors-know/ Sat, 22 Oct 2022 11:51:00 +0000 https://after-hours.org/3-things-about-waste-management-stocks-that-savvy-investors-know/ Waste Management (NYSE:WM) is known to be a stable mainstay, allowing the business to see stable returns despite the tumultuous economic climate. The company’s shares are down only 3% year-to-date, which is a better performance than even the Dow Jones Industrial Average — an index known to be less volatile than other major indices. Waste […]]]>

Waste Management (NYSE:WM) is known to be a stable mainstay, allowing the business to see stable returns despite the tumultuous economic climate. The company’s shares are down only 3% year-to-date, which is a better performance than even the Dow Jones Industrial Average — an index known to be less volatile than other major indices.

Waste Management is often seen as a boring business, but some investors may overlook a few facts showing that Waste Management may not be as “boring” a stock as many might think. While the Waste Management business isn’t building the latest innovative technology, its strength in the space and shareholder-friendly actions are quite exciting. Additionally, there may be more expansion in store for the industry, which Waste Management looks poised to capitalize on as a leader. Here’s why you might want to take a closer look at this safe stock.

Image source: Getty Images.

1. Waste Management has the (pricing) power!

This company could be considered a company with underappreciated pricing power – the ability to consistently raise prices without seeing customers leave. Waste Management has steadily increased its base price, which includes fees, surcharges and additional price increases for customers, from approximately 3.5% in 2015 to 4% in 2019. The company’s base price fell in 2020 but came back even stronger in 2021 and 2022. Waste Management’s base price in the second quarter of 2022 was 7.5%, a record for the company.

How does Waste Management have such pricing power? First, garbage collection and disposal is an indispensable service for businesses and consumers in all economic conditions. With Waste Management in the lead with nearly 25% market share, it would be difficult to switch suppliers, so many customers remain with Waste Management.

The second reason is the cost to customers versus other expenses. As COO John Morris explained on the second quarter conference call, Waste Management fees are a tiny part of a company’s overall cost structure. Waste management costs are typically only 0.5% of total company expenses. Therefore, customers are either ready to accept these small price increases or hardly notice them.

This helps the company raise prices without seeing significant churn. Although management did not say so explicitly, given the price stickiness, there is reason to believe that the company could continue to steadily increase its base price, which would translate into higher profitability. long-term.

2. Dividends are likely to rise

Another reason to be optimistic about Waste Management over the long term is its expected dividend appreciation. The company has increased its dividend for 19 consecutive years, putting it on track to become a Dividend Aristocrat (a company that has increased its dividend for at least 25 consecutive years).

Another thing to note is the company’s relatively low payout ratio. Waste Management only used about 38% of its net profit to pay its dividend in 2021, which is a very healthy number. As the company finds fewer ways to spend its net income, it could generate a larger dividend. In short, there is reason to believe that the company’s payout to shareholders will steadily improve over the long term.

3. There is more growth than you think

While it’s not like the tech market, the waste management space might be growing faster than you think. According to Markets and Markets, the total waste management industry is expected to grow at a compound annual rate of more than 5% from 2021 to 2026 to reach $543 billion. Considering Waste Management is top dog but has only generated $19 billion in revenue over the past 12 months, the company seems poised to benefit from this expansion.

Why is Waste Management positioned best? The company’s competitive advantage comes not only from its dominance, but also from the industry’s high barriers to entry. For example, building a landfill can cost up to $800,000 per acre, and Waste Management had 260 active landfills as of July 2022. Therefore, for other rivals to get the same amount of capital as Waste Management ( especially the smaller competitors), it would take plenty of time and money.

With rising dividends, a bigger-than-expected opportunity, and enduring pricing power that will likely continue to bolster the company’s bottom line, Waste Management has the potential to post lucrative long-term returns. That seems like reason enough to get excited about this “boring” stock. If you don’t already own any Waste Management stocks, you might want to put them on your watchlist.

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Jamie Louko holds positions in waste management. The Motley Fool recommends waste management. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Packaging Coating Additives Market 2022 Supply Analysis | Clariant, Lonza Group, 3M – Sioux City Catholic Globe https://after-hours.org/packaging-coating-additives-market-2022-supply-analysis-clariant-lonza-group-3m-sioux-city-catholic-globe/ Thu, 20 Oct 2022 03:15:48 +0000 https://after-hours.org/packaging-coating-additives-market-2022-supply-analysis-clariant-lonza-group-3m-sioux-city-catholic-globe/ United States- Market research report on the packaging coating additives market 2022 is a detailed report that features a unique amalgamation of expert industry knowledge. The report presents market trends and market size of each individual industry. This Packaging Coating Additives Market report begins with an overview of the market and highlights historical data pertaining […]]]>

United States- Market research report on the packaging coating additives market 2022 is a detailed report that features a unique amalgamation of expert industry knowledge. The report presents market trends and market size of each individual industry. This Packaging Coating Additives Market report begins with an overview of the market and highlights historical data pertaining to the Packaging Coating Additives industry coupled with insights on the current scenario.

The report further covers market drivers and market restraints acting on the industry. These drivers and restraints are presented with an explanation of their respective effect on the growth of the market over the forecast horizon. Going further, the report elaborates on the opportunities prevailing in the Packaging Coating Additives industry and their effect on the major players operating in the Packaging Coating Additives market. Detailed market segmentation forms the next part of this market research report. The market research report displayed on the Packaging Coating Additives Market 2022 is an in-depth analysis of the current and past performance of the Packaging Coating Additives market globally. Global Packaging Coating Additives Market 2022 “The report is produced by the team of experts to give the readers detailed information about market definition, specifications, classification, applications, its products and services.

SAMPLE LINK HERE: https://marketsresearch.biz/report/global-packaging-coating-additives-market-748101#request-sample

User of the Packaging Coating Additives market report will understand the vital fine details of major market players along with their company profile, product picture and specification, capacity, production, price, cost, gross and revenue , contact. Information covered, future launches, etc. This will help the user plan their strategies effectively. The Packaging Coating Additives Market report will guide the reader about the industry chain structure, industry overview and major regions status, industry policy analysis , industry news and many other details about the current market situation. The packaging coating additives market is a vast industry and the company should be aware of the basic requirements of the industry such as raw material suppliers, equipment suppliers and price analysis, structure manufacturing costs, overall price, cost and gross.

The major manufacturers covered in the report are

:

Crode
Basf
Clariant
Lonza Group
3M
Arkema group
Evonik Industries
Solvay
Akzo Nobel
Daikin Industries
Ampacet
Addcomp Netherlands
Kao
Industrial waxes Abril
Pcc Chemax
Munzing Chemistry

Packaging Coating Additives Market Segment By Type

:

Underwear
Antistatic
Antifog
Anti-lock
Antimicrobial

Packaging Coating Additives Market Segment By Application:

:

Food packaging
Industrial packaging
health care packaging
Consumer packaging
Others

The Packaging Coating Additives market report is segmented into various locations to make it easier for the user to grasp the available data. The Packaging Coating Additives market study covered in the report covered capacity, production, revenue, supply, import/export and consumption, price, cost and analysis of gross margin by regions (US, EU, China, Japan), and other regions can be added. Apart from this information, the report is well equipped with capacity and commercial production date, R&D status and technology source, raw material source analysis, manufacturing plant distribution activities conducted in the industry. packaging coating additives industry.

FULL REPORT HERE: https://marketsresearch.biz/report/global-packaging-coating-additives-market-748101

Finally, the feasibility of new investment projects is assessed and general research conclusions are offered.

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Size, Cost Structures, Growth Rate – Sioux City Catholic Globe https://after-hours.org/size-cost-structures-growth-rate-sioux-city-catholic-globe/ Mon, 17 Oct 2022 15:13:38 +0000 https://after-hours.org/size-cost-structures-growth-rate-sioux-city-catholic-globe/ The detailed Gear Motors Market 2022 report covers demand, growth, market scope and segmentations such as type, application, region (US, Europe, China, Japan, India, South Asia, etc.) Southeast, Latin America, Middle East and Africa) and manufacturers. “The final report will add the analysis of the impact of COVID-19 on this industry.” Global “Gear Motors Market” […]]]>

The detailed Gear Motors Market 2022 report covers demand, growth, market scope and segmentations such as type, application, region (US, Europe, China, Japan, India, South Asia, etc.) Southeast, Latin America, Middle East and Africa) and manufacturers.

“The final report will add the analysis of the impact of COVID-19 on this industry.”

Global “Gear Motors Market” Research Report 2022-2030 focuses on the product overview, scope, upstream and downstream market analysis, player profiles, market landscape by player, sales, revenue, price trend, market forecast, market driver analysis, restraints and challenges, opportunity analysis, size, segmentations (mainly covering product type, application and geography), competitive landscape, recent status and development trends. In addition, the report provides business strategies to overcome the threats posed by COVID-19 containing 104 page numbers, tables, figures and graphs.

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Market Analysis and Overview: Global Gear Motor Market

The Gear Motors market witnessed growth from USD xx million to USD xx million from 2014 to 2022. With a CAGR of xx%, this market is expected to reach USD xx million by 2030.

Leading companies reviewed in the Gear Motors Market‎ report are:

Eaton, Siemens, Baldor Electric, Sew-Eurodrive, Winergy, Bonfiglioli Riduttori, Brevini Power Transmission, China High Speed ​​Transmission Equipment, Elecon Engineering, Emerson Electric, Johnson Electric Holdings, Bauer Gear Motor, Watt Drive Antriebstechnik

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Segment by Type– Parallel Shaft Gear Motors– Angle Shaft Gear Motors– Planetary Gear Motors Segment by Application– Agricultural Equipment– Medical Equipment– Industrial Equipment– Safety Equipment

Major Regions or Countries Covered in this Report:
United States
Europe
China
Japan
India
South East Asia
Latin America
Middle East and Africa
Others

Years considered for this report:
Historical years: 2014-2021
Base year: 2021
Estimated year: 2022
Forecast period: 2022-2030

The objectives of the study for this report are:
To analyze the global Gear Motors Market size by product type, application, and region.
To understand the design of Gear Motors market by recognizing its various sub-fragments.
Studying Gear Motors by individual manufacturers growth, future trends.
To study the product overview and scope of the Gear Motors market segment, sales status and prospects
To study the manufacturing cost structure of the gear motor market
To understand upstream and downstream market analysis
Understand the market competitive situation and trends
Understand the market drivers, restraints, opportunities, and challenges faced in the Gear Motors Market
To analyze new product releases and new technologies
Analysis of industry development trends under the COVID-19 outbreak

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About Us:

Marketreports.info is the credible source for getting the market reports that will provide you with the direction your business needs. The market is changing rapidly with the continuous expansion of the industry. Technological advancements have provided today’s businesses with multi-faceted benefits driving daily economic changes. Thus, it is very important for a business to understand the patterns of market movements in order to better strategize. An effective strategy gives companies a head start in planning and an advantage over their competitors.

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Omega Healthcare at 9% yield is too good to pass up https://after-hours.org/omega-healthcare-at-9-yield-is-too-good-to-pass-up/ Fri, 14 Oct 2022 22:16:00 +0000 https://after-hours.org/omega-healthcare-at-9-yield-is-too-good-to-pass-up/ Denis_Vermenko It’s not hard these days to find high-quality REITs that yield more than 3%, because the era of TINA (there is no alternative) is now over. Indeed, income asset classes such as REITs, BDCs, and MLPs have a lot of competition for investment dollars, especially the 10-year Treasury note now yielding slightly above 4%. […]]]>

Denis_Vermenko

It’s not hard these days to find high-quality REITs that yield more than 3%, because the era of TINA (there is no alternative) is now over. Indeed, income asset classes such as REITs, BDCs, and MLPs have a lot of competition for investment dollars, especially the 10-year Treasury note now yielding slightly above 4%.

Some investors, especially retirees, may be looking for a higher initial yield, as this can help meet RMD requirements on retirement accounts without them having to sell their holdings. Plus, higher yielding stocks simply provide more financial flexibility to fund day-to-day expenses and dividend reinvestment opportunities.

This brings me to Omega Healthcare Investors (NYSE: IHO), which is a favorite income for many. With the stock now back to a 9% yield, I’m highlighting why it’s time to revisit this position, so let’s get started.

Why IHO?

Omega Healthcare Investors is the largest publicly traded owner of skilled nursing facilities. It has been listed on the stock exchange for 30 years and currently has 921 properties spread across the US and UK, comprising 63 operators and 92,000 beds. It is also geographically diverse with exposure to almost every region of the United States, and its top 3 states are Florida, Texas, and Indiana.

Starting with the negatives, it is no secret that the skilled nursing segment is a low-margin business as it depends on government programs for its funding. This industry is notorious for having low rent coverage, and labor shortages and wage inflation have only exacerbated these issues over the past year, putting pressure on operators.

While these are legitimate concerns, we should not ignore the fact that SNFs are mission critical and offer a much lower cost of care than acute care hospitals. Management noted that while the increased post-COVID cost structure may be permanent, a number of states have announced significant Medicaid rate increases to help offset higher costs.

It appears, however, that the industry is beginning to turn the page, as management has completed its restructuring work related to its Gulf Coast operator, and is well on its way to restructuring with Agemo, which accounts for 6% of the contractual rent, none of which was recognized during the second quarter. Notably, management noted that its other cash-strapped tenants have generally agreed to pay contractual rent as they work through various asset sales or transitions to new operators.

Importantly for income investors, OHI’s quarterly dividend of $0.67 remains covered by AFFO per share of $0.76 and funds available for distribution of $0.71, at distribution rates of 88% and 94%, respectively. Given OHI’s restructuring progress with Agemo, I expect OHI’s payout ratios to improve in the third quarter and beyond.

Meanwhile, it looks like OHI has prepared for this kind of adversity, as it has a strong BBB-rated balance sheet with a safe net debt to EBITDA ratio of 5.3x and a strong fixed charge coverage ratio of 4. ,2x. Additionally, 98% of OHI’s debt is fixed rate, making it less vulnerable to rising rates. This also means that it will take a number of years for OHI to realize a higher cost of debt, as not all of its debts mature at the same time, and this assumes a bad scenario in which interest rates interest and inflation will remain high for years to come.

In the long term, I believe OHI remains well positioned as the largest owner of skilled nursing facilities. This takes into account the growing elderly population over the next decade and the fact that 86% of states have a moratorium on new beds or CON (certificate of need) restrictions on new construction.

I find that the recent drop in the IHO price from near $34 to $30 offers another opportunity to layer on top of this high yield. He currently carries a forward P/FFO of just 10.2, well below his normal P/FFO of 12.5.

oh stock

IHO Assessment (FAST Charts)

Thanks to OHI’s chronic undervaluation and high dividend yield, OHI has actually easily beaten the S&P 500 (SPY) on a total return basis over the past decade, as shown below.

oh stock

IHO Total Yield (Looking for Alpha)

Key takeaway for investors

Omega Healthcare appears to be turning the page, as occupancy rates rise and states increase Medicaid funding to offset wage inflation in the skilled nursing segment. The dividend remains covered and I expect the payout ratio to improve for the remainder of the year as management works through restructuring activities. The recent drop in OHI’s share price has boosted its dividend yield by nearly 9%, making it an attractive option for income investors.

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