On Friday (4/13), General Electric (GE) filed an 8-K that quantified the impact of adopting new accounting standards (and certain voluntary changes in accounting policies) on its previously reported results for 2016 and 2017. In total, these changes reduce previously reported 2017 GAAP earnings by $2.79 billion or $0.32 per share and 2016 GAAP earnings by $1.23 billion or $0.15 per share. The changes also reduce year-end 2017 assets by $8.7 billion and shareholders’ equity by $8.5 billion or $0.98 per share. Continue reading
Last week, stocks fell sharply. The S&P 500 ended the week down 5.16% in price. The Lark Research Homebuilder Stock Price Index fell 6.02%, underperforming the broader market. Continue reading
GE announced this morning that it will take an after-tax charge of $6.2 billion in the 2017 fourth quarter against the value of GE Capital’s run-off insurance portfolio, North American Life & Health (NALH). In addition, GE Capital will make $15 billion of statutory reserve contributions over the next seven years, including $3 billion in February and $2 billion annually from 2019 to 2024. Continue reading
Affordable Housing. According to U.S. News and World Report, Massachusetts ranks as the best state in the nation in 2017, with top 5 scores in education, health care and economy. All around the state, there has been a resurgence in urban areas and revitalization of town centers. Massachusetts is a one of the most desirable places to live, but it is also one of the least affordable. Continue reading
The Massachusetts economy is experiencing its most robust expansion since the late 1980s. Third quarter GDP growth was clocked at 5.9%, according to Mass Benchmarks. Leading indicators anticipate 2017 fourth quarter GDP growth of 3.3% and 2018 first quarter growth of 3.0%. Massachusetts’ unemployment rate was 3.9%, below the national average of 4.1%. Job creation has been strong and broad-based, except for manufacturing. Early in the recovery cycle, hiring was concentrated among white collar workers, but more recently, blue collar workers have been the primary beneficiaries of continued job growth. Continue reading
“You can’t grow long-term if you can’t eat short-term. Anybody can manage short. Anybody can manage long. Balancing those two things is what management is”
As everyone knows, this has been a tough year for GE shareholders. GE’s stock is down 40.8% year-to-date (thru 11/17) on a total return basis. By comparison, the S&P 500 has delivered a 17.3% positive total return. GE’s stark underperformance reflects both the decline in its earnings expectations – its 2017 operating EPS guidance (industrial operating + verticals) has been cut from $1.60-$1.70 at the beginning of the year to $1.05-$1.10 currently – and now the halving of the dividend. 2018 has been characterized as a “reset” year. Management currently anticipates 2018 adjusted EPS of $1.00-$1.07, which is roughly half of the previous target of $2.00. According to management, the change in performance and outlook reflects primarily sharply reduced expectations for GE’s Power business and continued weak performance in Oil & Gas and Transportation. Continue reading
- Through its HPE Next transformation plan, HPE will spend $1.1 billion over the next two years to achieve annualized cost cuts of $1.5 billion by the end of 2020. It will reinvest about half of the savings to beef up global sales and marketing efforts. HPE Next will streamline the company and make it more responsive to customers.
- HPE’s key strategic emphasis is to accelerate growth by offering high margin services and solutions driven by its innovations in hybrid IT and the intelligent edge.
- Management offered pro forma non-GAAP EPS guidance of $1.00 for 2017 and $1.15-$1.25 for 2018.
- Longer term, HPE has set as targets 0%-1% annual revenue growth,4%-5% operating profit growth and 7%-9% EPS growth.
- At 14.3 times pro forma 2017 EPS and 12.0 times projected 2018 EPS, HPE is cheap to the market and its peer group.
- Ken Chennault announces retirement in February 2018 and Steve Squeri will become Chairman & CEO
- Third Quarter EPS of $1.50 vs. $1.20 last year and consensus of $1.48
- Management raised full year 2017 guidance from $5.40-$5.80 to $5.80-$5.90
- Earnings growth driven mostly by decline in tax rate and decline in share count. However, one-time impairment charges offset the increase in tax credits booked in the quarter. Continue reading