Read the right edition of a major magazine like Forbes or U.S. News and an interesting detail pops out - climbing the ladder all the way to the top is not the automatic byproduct of going to the right school. If people take a more comprehensive view of how Fortune 500 CEOs build their careers, they may realize that there are a number of worthwhile skills and experiences that can be had far away from ivy-covered walls. We look at what it actually takes to get to the top in business. (These 10 entrepreneurs' names will live on long into the future. Check out The 10 Greatest Entrepreneurs.)
Ivy Only Goes So Far
At an undergraduate level, less than 20% of Fortune 500 CEOs get their degrees from Ivy League schools (including Ivy League-caliber schools like Stanford). While those numbers go up when graduate degrees are added into the mix (roughly 12% of CEOs have some degree from Harvard alone), the reality is that the University of Wisconsin produces just as many CEOs at the undergraduate level as Harvard.
Of course these comparisons are crude; Wisconsin is far larger than Harvard. The point, though, is that quality can rise to the top in places other than the most highly-regarded universities in the United States. What's more, the Ivy League graduates more than 10,000 people each year, and clearly the vast majority of them will not go on to lead a Fortune 500 company. So it's not just the degree that leads to the executive suite, there is more that goes into the making of a CEO.
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Tuesday, April 26, 2011
Investopedia: Is Dover Worth The Trouble?
Multi-line industrial conglomerates like Dover (NYSE:DOV) often trade at a discount to their underlying cash-flow generating capabilities. To some extent this is a byproduct of straddling many different industry groups - they are harder to track and forecast, and many analysts and institutions decide they do not need the hassle. This is old hat for investors in names like Illinois Tool Works (NYSE:ITW), Danaher (NYSE:DHR) and so on, though sometimes these conglomerates do come into favor as a sector play.
In the case of Dover in particular, the company does not exactly make it easy for investors - the company's press release does not even often include an income statement or balance sheet. True, the company does offer a good amount of information, but it requires some effort. The real question for investors, then, is whether the stock is worth the work and the hassle.
A Solid Quarter Across the Board
Business is going well at Dover. Overall revenue growth of 24% was underlined by 19% organic growth (made up completely of volume growth). Growth was also relatively balanced - the company's Engineered Systems segment was the laggard with 16% revenue growth (if that can be called lagging), while Industrial Products, Fluid Management and Electronic Technologies grew 21%, 34% and 28% respectively. (For more, see Conglomerates: Cash Cows Or Corporate Chaos?)
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In the case of Dover in particular, the company does not exactly make it easy for investors - the company's press release does not even often include an income statement or balance sheet. True, the company does offer a good amount of information, but it requires some effort. The real question for investors, then, is whether the stock is worth the work and the hassle.
A Solid Quarter Across the Board
Business is going well at Dover. Overall revenue growth of 24% was underlined by 19% organic growth (made up completely of volume growth). Growth was also relatively balanced - the company's Engineered Systems segment was the laggard with 16% revenue growth (if that can be called lagging), while Industrial Products, Fluid Management and Electronic Technologies grew 21%, 34% and 28% respectively. (For more, see Conglomerates: Cash Cows Or Corporate Chaos?)
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Investopedia: Bad Times For Arkansas Best
While it is true that the industrial sector relies upon the transports to get their products to market, and that a recovery in the economy should be good for transports, that story has not played out so well in the trucking space. Although railroads like Union Pacific (NYSE:UNP) and Canadian National (NYSE:CNI) have shot up, many of the truckers are still down on a multi-year basis.
With very disappointing first quarter earnings, leading less-than-truckload (LTL) carrier Arkansas Best (Nasdaq:ABFS) is offering some evidence as to why that is. While demand for transport is definitely getting better, there is not much pricing power in the market and rising costs are becoming a larger problem. Of course, those investors with a contrarian streak might see this as an opportunity to pick up shares of a company that has generally been one of the better operators within its group. (For more, see Transport Stocks Ready To Roll.)
Q1 Was Supposed to Be Bad, but Not This Bad
It says something about the operating environment in the trucking space that Arkansas Best missed what were already pretty uninspiring estimates. Oddly enough, the company did fine on the revenue line - revenue jumped almost 21% from last year and surpassed the average estimate. Even here, though, are signs of some of the challenges in the business - tonnage per day was up over 17% and there was a nearly 16% jump in shipments, but weight per shipment increased just 3% and revenue per hundredweight was up just a bit over 2%.
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Investopedia: Johnson Controls Seeing Multiple Recoveries
Passenger vehicles and non-residential building are two sectors that have seen some pretty ugly conditions in recent memory, and that certainly showed up in a 25% revenue decline for Johnson Controls (NYSE:JCI) in 2009. Economic conditions have turned around, though, and the company has seen a strong rebound in its results. Now with signs of life in the building efficiency segment, could even better results be on the way for shareholders?
A Mixed Fiscal Second Quarter
Like so many other companies this quarter, Johnson Controls gave investors a mix of good news and some disappointment in its fiscal second quarter results. Revenue jumped 22% and was comfortably above even the high end of the range, as all units posted solid progress. The auto business led with over 25% growth, but even the building efficiency segment saw better than 18% improvement from last year. (For more, see Johnson Controls Sitting Well.)
Margins were more problematic, though. Gross margin ticked down 20 basis points, due largely to commodity inflation and product mix. Segment income did improve by over 30% and all segments did show year-on-year improvements in their operating margins. Unfortunately, analysts had expected even better improvement, particularly in the building segment. So while patient shareholders may not be too bothered or disappointed with 30% segment income growth, the short-term trading tenor may be negative.
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Investopedia: Teva's Rocky Road
It's usually a great idea to buy proven long-term winners when the Street goes momentarily sour on a company's ability to stay in the game for the long-term. Companies as different and varied as Coca-Cola (NYSE:KO), McDonalds (NYSE:MCD) and Stryker (NYSE:SYK) have rewarded contrarian thinking, and it is an established investment philosophy.
The question now is whether Teva Pharmaceuticals (Nasdaq:TEVA) is just such a play. Not only has the company had to deal with recent FDA violations in its facilities, but there is now widespread concern about the company's ability to maintain its lucrative multiple sclerosis franchise. What's more, there is another potential risk on the horizon - the end of a major run of patent expirations that have fueled generic growth across the industry. (For more, see 6 Drug Companies With Expiring Patents In 2011.)
Trouble in a Lucrative Franchise
Biogen Idec (Nasdaq:BIIB) recently released favorable trial results on its oral multiple sclerosis drug candidate BG-12. This drug showed more than double the rate of two-year relapse reduction (49%) of Teva's drug and a similar reduction in disease progression (38%). Like Teva's laquinimod, BG-12 is an oral drug, and also like Teva Biogen has an established MS business in place (selling drugs like Avonex and co-marketing Tysabri with Elan (NYSE:ELN).
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Monday, April 25, 2011
Investopedia: Despite The Noise, Abbott Still A Value
Sometimes investors have to hold their noses a bit to take advantage of mispricings in the market. Abbott Labs (NYSE:ABT) is a good case in point; the company has changed its reporting by classifying its businesses into three meaningless categories, it makes rampant use of "one-time" charges, and the growth profile is heavily overweight to a small number of products.
Still, cash flow is cash flow, and Abbott produces quite a lot of it, even though the Street does not seem all too willing to value it as highly as the cash flow from other medical technology names. (For more, see 5 Stocks With Solid Cash Flow.)
After Some Digging, a Solid Quarter
Abbott's first quarter results require a little digging and reinterpretation, but the numbers ultimately look pretty good. Reported revenue was up more than 17%, while organic revenue growth was more on the order of 5% to 6%. Growth was led again by the pharmaceutical business, which grew 24% this quarter. Vascular posted a decent result as well (up 13%), while diagnostics and nutrition both contributed high single-digit growth.
Likewise, the profitability side of the ledger was a bit murky, but the underlying results are solid. Gross profit improved more than a point from a year ago and would have been even better if not for the impact of foreign currency on the results. Moving along, Abbott continued its roughly eight-year tradition of "one time" items in the income statement, but operating income still grew around 13%. Stripping everything out and looking at a decidedly "home brew" organic EPS, Abbott's bottom line profitability increased at about the same rate as its organic sales - that is, mid-single-digits.
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Still, cash flow is cash flow, and Abbott produces quite a lot of it, even though the Street does not seem all too willing to value it as highly as the cash flow from other medical technology names. (For more, see 5 Stocks With Solid Cash Flow.)
After Some Digging, a Solid Quarter
Abbott's first quarter results require a little digging and reinterpretation, but the numbers ultimately look pretty good. Reported revenue was up more than 17%, while organic revenue growth was more on the order of 5% to 6%. Growth was led again by the pharmaceutical business, which grew 24% this quarter. Vascular posted a decent result as well (up 13%), while diagnostics and nutrition both contributed high single-digit growth.
Likewise, the profitability side of the ledger was a bit murky, but the underlying results are solid. Gross profit improved more than a point from a year ago and would have been even better if not for the impact of foreign currency on the results. Moving along, Abbott continued its roughly eight-year tradition of "one time" items in the income statement, but operating income still grew around 13%. Stripping everything out and looking at a decidedly "home brew" organic EPS, Abbott's bottom line profitability increased at about the same rate as its organic sales - that is, mid-single-digits.
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Investopedia: Chipotle Still Smokin'
Like the smoked jalapeno it's named after, Chipotle Mexican Grill (NYSE:CMG) offers more than just heat. Chipotle continues to post eye-popping traffic growth and strong margins, and there still looks to be plenty of expansion potential. It is also worth noting, though, that Chipotle sports a valuation that may be too spicy for even the boldest growth investors.
Another Great Quarter
Chipotle once again delivered impressive growth, exceeding the high end of the analyst range with 24% overall growth and nearly $510 million in revenue. While new store openings continue to be an important part of the story, the existing outlets are doing exceptionally well too - same-store sales growth was 12.4% for the first quarter, with higher pricing chipping in less than 1%. (For more, see Should Investors Ignore Monthly Sales?)
Profitability was a little more mixed, but still good news for the most part. Store-level margins contracted almost a full point, but still stand at an impressive 25.2%. Similarly, operating margin contracted a bit (from 15% to 14.7%), but operating income growth was still 22%. Growth was restrained a bit by promotional expenses tied to a buy-one-get-one-free offer, as well as higher food costs.
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Another Great Quarter
Chipotle once again delivered impressive growth, exceeding the high end of the analyst range with 24% overall growth and nearly $510 million in revenue. While new store openings continue to be an important part of the story, the existing outlets are doing exceptionally well too - same-store sales growth was 12.4% for the first quarter, with higher pricing chipping in less than 1%. (For more, see Should Investors Ignore Monthly Sales?)
Profitability was a little more mixed, but still good news for the most part. Store-level margins contracted almost a full point, but still stand at an impressive 25.2%. Similarly, operating margin contracted a bit (from 15% to 14.7%), but operating income growth was still 22%. Growth was restrained a bit by promotional expenses tied to a buy-one-get-one-free offer, as well as higher food costs.
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Investopedia: Signings A Small Thorn In IBM's Paw
Old-tech hasn't been getting much love lately, but this earnings cycle may help bring investors back to many of these old-school tech names. For although weak signings in the service business may send some investors to the sidelines, IBM (NYSE:IBM) reported an otherwise solid quarter and Big Blue remains a respectable less-risk play on technology.
A Mostly Solid First Quarter
IBM reported top-line growth of 8%, adjusted down to 5% on a constant currency basis. Growth was led by the Systems and Technology business (hardware, mostly), which posted 19% growth with strong mainframe and UNIX business. Software grew 6% this time around, while the services business rose by a like amount.
IBM also delivered solid operating leverage for the first quarter, though readers should realize that there are a lot of adjustments and moving parts here and the numbers will vary from investor to investor depending upon what charges they choose to add back. Nevertheless, gross margin ticked up almost a full point, while operating margin expanded nicely as adjusted operating profits grew more than 20%.
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A Mostly Solid First Quarter
IBM reported top-line growth of 8%, adjusted down to 5% on a constant currency basis. Growth was led by the Systems and Technology business (hardware, mostly), which posted 19% growth with strong mainframe and UNIX business. Software grew 6% this time around, while the services business rose by a like amount.
IBM also delivered solid operating leverage for the first quarter, though readers should realize that there are a lot of adjustments and moving parts here and the numbers will vary from investor to investor depending upon what charges they choose to add back. Nevertheless, gross margin ticked up almost a full point, while operating margin expanded nicely as adjusted operating profits grew more than 20%.
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Investopedia: F5 - Is This The End Of The Beginning Or The Beginning Of The End?
If premarket indications are accurate, folks who bought shares of application delivery company F5 Networks (Nasdaq:FFIV) thinking that the mid-$90s would be a floor are going to see a decent return for stepping up to buy. That said, bears seem poised to portray this as more of a "less bad than feared" quarter, as opposed to real outperformance.
What's more, with weak sequential growth becoming more of a trend now, it is fair to wonder if the hot growth phase is over for F5. Clearly there is plenty of business yet to be won and the story is by no means over, but a shift to a less frenzied pace of growth will likely mean new multiples for this stock and perhaps a different shareholder base than before.
Fiscal Second Quarter Brings Growth and Relief
F5's growth in its fiscal second quarter was either great or just okay, on the basis of which numbers an investor uses. Compared to last year, revenue jumped almost 35%. Sequential growth, though, was more on the order of 3% - suggesting that F5 has basically caught up with the IT capital equipment under-spend of the recession. Within the total revenue figure, product growth was 34% on an annual basis, while just a bit over 1% on a sequential comparison.
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What's more, with weak sequential growth becoming more of a trend now, it is fair to wonder if the hot growth phase is over for F5. Clearly there is plenty of business yet to be won and the story is by no means over, but a shift to a less frenzied pace of growth will likely mean new multiples for this stock and perhaps a different shareholder base than before.
Fiscal Second Quarter Brings Growth and Relief
F5's growth in its fiscal second quarter was either great or just okay, on the basis of which numbers an investor uses. Compared to last year, revenue jumped almost 35%. Sequential growth, though, was more on the order of 3% - suggesting that F5 has basically caught up with the IT capital equipment under-spend of the recession. Within the total revenue figure, product growth was 34% on an annual basis, while just a bit over 1% on a sequential comparison.
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Investopedia: VMware Singes The Shorts ... Again
Like it or not, "early" and "wrong" can mean the same thing in investing. It is hard to argue that VMware's (NYSE:VMW) valuation makes much sense or will be sustainable, but shorting this name has been a tricky proposition over the past couple of years. So even if the skeptics are right that VMware is apt to hit a wall in terms of growth and market penetration, this could still be a case where Wall Street's ability to remain irrational outlasts an individual investor's ability to stay short and remain solvent.
Another Strong Quarter
Beating estimates is nothing new here, and VMware once again outpaced even the high end of its revenue estimate range. Reported revenue jumped 33% this quarter, with license revenue growing 34% (to roughly half the total). Billings were also quite strong (up 44%), and the company has roughly $2 billion in deferred revenue on the books. Of the company's bookings, 22% were enterprise license agreements (ELAs) and that percentage continues to improve.
There was also strong momentum on the profitability side of the business. Operating income (on a non-GAAP basis) jumped 44% and operating margin rose more than two full points. What's important here is that VMware is not delivering this growth by stinting on its future - R&D spending rose 23% this quarter (again on an adjusted basis), while general and administrative expenses have stayed under control.
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Another Strong Quarter
Beating estimates is nothing new here, and VMware once again outpaced even the high end of its revenue estimate range. Reported revenue jumped 33% this quarter, with license revenue growing 34% (to roughly half the total). Billings were also quite strong (up 44%), and the company has roughly $2 billion in deferred revenue on the books. Of the company's bookings, 22% were enterprise license agreements (ELAs) and that percentage continues to improve.
There was also strong momentum on the profitability side of the business. Operating income (on a non-GAAP basis) jumped 44% and operating margin rose more than two full points. What's important here is that VMware is not delivering this growth by stinting on its future - R&D spending rose 23% this quarter (again on an adjusted basis), while general and administrative expenses have stayed under control.
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Investopedia: Can St. Jude Live Up To Newfound Expectations?
Investors run hot and cold on stocks all the time, but in all my time following St. Jude Medical (NYSE:STJ) I don't remember too many stretches where St. Jude was a favored name in the device space. That has all changed, though, and relatively quickly, as the company has managed to really sell Wall Street on the prospects for its deep pipeline. (For more on medical companies, check out Investing In Medical Equipment Companies.)
The company clearly has Wall Street's attention. Now the question is whether it can deliver on those promises. St. Jude does indeed have a deep pipeline and a good chance of being one of the most dynamic med-tech companies in the next few years (at least in terms of product launches). With so little underlying growth in many of its core markets, though, the company definitely has some work cut out for itself.
Q1 Results: Not As Good As They Seem
St. Jude reported $1.38 billion in first quarter sales, and that was spot-on with analyst expectations. The company's stated growth rate of 9% looks pretty good (as does the currency-neutral rate of 7.7%), but the organic growth picture isn't so impressive. Organic growth for the first quarter was more on the order of 2%, or a bit more than 4% if the some year-ago CRM business is netted out. Now, low-single-digit organic growth is not that out of line with the rest of the medical device sector, but "matching the market" is not the expectations out there for this name.
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The company clearly has Wall Street's attention. Now the question is whether it can deliver on those promises. St. Jude does indeed have a deep pipeline and a good chance of being one of the most dynamic med-tech companies in the next few years (at least in terms of product launches). With so little underlying growth in many of its core markets, though, the company definitely has some work cut out for itself.
Q1 Results: Not As Good As They Seem
St. Jude reported $1.38 billion in first quarter sales, and that was spot-on with analyst expectations. The company's stated growth rate of 9% looks pretty good (as does the currency-neutral rate of 7.7%), but the organic growth picture isn't so impressive. Organic growth for the first quarter was more on the order of 2%, or a bit more than 4% if the some year-ago CRM business is netted out. Now, low-single-digit organic growth is not that out of line with the rest of the medical device sector, but "matching the market" is not the expectations out there for this name.
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Investopedia: Eaton Shows Broad Recovery Continues
Conglomerates like Eaton (NYSE:ETN), Dover (NYSE:DOV) and Illinois Tool Works (NYSE:ITW) can be a pain for investors to follow with all of their moving parts. On the flip side, they can also give you a quick look at a wide range of industries and how they're performing at any point in time. To that end, while a weak aerospace industry is still a drag on Eaton, overall there continues to be a strong recovery across many industry segments. (To read more on conglomerates, check out Conglomerates: Risky Proposition?)
Good On Top, Not So Good in the Middle
Eaton seemed to have no problem booking sales in the first quarter. Overall revenue rose nearly 23% and surpassed the high end of the analyst range by about $100 million. Within the overall revenue number, the electrical business was a standpoint performer with 21% growth, and that's clearly a good thing as the electrical business is nearly 45% of the total. The hydraulic, automotive and truck segments all showed very strong growth as well, while the aerospace business was a laggard at just over 3% growth.
Top-line performance was clearly strong for Eaton, but profitability was a bit more problematic. Gross margin did increase slightly and the company did deliver over 61% growth in operating income but expectations were broadly higher than this - particularly problematic since the company surpassed revenue estimates so handily. Aerospace and automotive were relative laggards (segment operating profit margins declined), while the other units simply failed to improve as much as hoped. Still, overall segment profit growth of 46% is hardly a bad outcome. (To learn more about this type of analysis, See Fundamental Analysis For Traders.)
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Good On Top, Not So Good in the Middle
Eaton seemed to have no problem booking sales in the first quarter. Overall revenue rose nearly 23% and surpassed the high end of the analyst range by about $100 million. Within the overall revenue number, the electrical business was a standpoint performer with 21% growth, and that's clearly a good thing as the electrical business is nearly 45% of the total. The hydraulic, automotive and truck segments all showed very strong growth as well, while the aerospace business was a laggard at just over 3% growth.
Top-line performance was clearly strong for Eaton, but profitability was a bit more problematic. Gross margin did increase slightly and the company did deliver over 61% growth in operating income but expectations were broadly higher than this - particularly problematic since the company surpassed revenue estimates so handily. Aerospace and automotive were relative laggards (segment operating profit margins declined), while the other units simply failed to improve as much as hoped. Still, overall segment profit growth of 46% is hardly a bad outcome. (To learn more about this type of analysis, See Fundamental Analysis For Traders.)
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Friday, April 22, 2011
FinancialEdge: The Least Accessbile Markets To Investors
There's evidence aplenty that investing in overseas markets is a very good way to improve the returns from a portfolio while actually reducing overall risk. What's more, evidence indicates that individual stock selection can outperform mutual funds and exchange traded funds (ETFs). It stands to reason, then, that investing in individual foreign equities could be a great way to boost returns and lower overall portfolio risk. If only it were that easy.
While there are indeed many good reasons to invest overseas, it is not nearly so easy as it sounds. In fact, investors face rather limited choices unless they are willing to take on larger risks and a longer investment timeframe. Let us consider, then, some of the least-accessible markets to U.S. investors.
Starting from Scratch
In terms of nominal GDP, Poland and the Czech Republic are the 20th and 45th largest economies, respectively, and both have been tapped many times in the past as attractive emerging markets within Europe. Yet, American investors have exactly zero choice when it comes to listed ADRs. That's right. There are zero listed ADRs hailing from Poland or the Czech Republic on U.S. exchanges. (For background on ADRs, see What Are Depositary Receipts?)
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While there are indeed many good reasons to invest overseas, it is not nearly so easy as it sounds. In fact, investors face rather limited choices unless they are willing to take on larger risks and a longer investment timeframe. Let us consider, then, some of the least-accessible markets to U.S. investors.
Starting from Scratch
In terms of nominal GDP, Poland and the Czech Republic are the 20th and 45th largest economies, respectively, and both have been tapped many times in the past as attractive emerging markets within Europe. Yet, American investors have exactly zero choice when it comes to listed ADRs. That's right. There are zero listed ADRs hailing from Poland or the Czech Republic on U.S. exchanges. (For background on ADRs, see What Are Depositary Receipts?)
To read the full column, please click the link below:
http://financialedge.investopedia.com/financial-edge/0411/The-Least-Accessible-Markets-To-Investors.aspx
Thursday, April 21, 2011
Investopedia: Does Stryker Need Further Reconstruction?
Stryker (NYSE:SYK) has been relatively active of late in recrafting its business, but the first quarter's results suggest that management's work may not be done yet. Stryker remains a good core holding for GARP-oriented investors, but management is going to need to deliver better results on the "guh" side of GARP to get the Street excited again.
An Okay (but Not Great) Quarter
Stryker did not disappoint, per se. But analysts are not going to be thrilled with the company's numbers nevertheless. Revenue grew more than 12% on a reported basis, with core constant currency organic revenue growth of 4%. That continues a rather unfortunate trend of unimpressive growth that stretches back a few years now.
While that revenue growth met expectations, the composition is the tricky bit. The orthopedics business was flat, while the MedSurg unit was up more than 12%, with double-digit growth in instruments and endoscopy. Even though companies like Johnson & Johnson (NYSE:JNJ) and Covidien (NYSE:COV) have long done well in endoscopy and its a good repeat business, other aspects of MedSurg are more tied to hospital capital budgets - that, and the margins, are largely why analysts don't love that unit so much.
Speaking of profitability, Stryker saw better gross margin on an adjusted basis. Adjusted operating income rose 10%, but margins still contracted all the same. So, the company met its numbers but not in a way that is going to have anybody pounding the table.
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An Okay (but Not Great) Quarter
Stryker did not disappoint, per se. But analysts are not going to be thrilled with the company's numbers nevertheless. Revenue grew more than 12% on a reported basis, with core constant currency organic revenue growth of 4%. That continues a rather unfortunate trend of unimpressive growth that stretches back a few years now.
While that revenue growth met expectations, the composition is the tricky bit. The orthopedics business was flat, while the MedSurg unit was up more than 12%, with double-digit growth in instruments and endoscopy. Even though companies like Johnson & Johnson (NYSE:JNJ) and Covidien (NYSE:COV) have long done well in endoscopy and its a good repeat business, other aspects of MedSurg are more tied to hospital capital budgets - that, and the margins, are largely why analysts don't love that unit so much.
Speaking of profitability, Stryker saw better gross margin on an adjusted basis. Adjusted operating income rose 10%, but margins still contracted all the same. So, the company met its numbers but not in a way that is going to have anybody pounding the table.
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FinancialEdge: The World's Richest Royals
On April 29, Kate Middleton will cease to be a commoner and will marry into one of the oldest and wealthiest royal families still in existence. While the royal family fulfills only a ceremonial role in U.K. politics (and fodder for those keen on fashion or gossip) and Miss Middleton will be assuming no rulership or political power, there is no question that her lifestyle and living conditions are about to change dramatically. (For related reading, also take a look at America's Richest Sports Team Owners.)
With the upcoming nuptials in mind, it is worth a look a look at the those surviving royal families that still command significant resources and/or power. Unlike entrepreneurs, these are individuals who owe their wealth to circumstances of birth and the privileges of their position, not to actual talent or effort. Nevertheless, many of them command resources that cannot be ignored.
Thailand Takes the Top Spot
Thailand's King Bhumibol holds the top spot on top important lists. Not only is Bhumibol the longest-reigning monarch alive today, but he is also the wealthiest. According to Forbes, Bhumibol's fortune is estimated to be worth upwards of $30 billion, much of that built through investments in native Thai businesses like Siam Cement and Siam Commercial Bank. Although King Bhumibol has relatively little power as a constitutional monarch, he has intervened in Thai politics many times to help resolve crises and stories of his poor health have led to sell-offs on the Thai Stock Exchange.
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With the upcoming nuptials in mind, it is worth a look a look at the those surviving royal families that still command significant resources and/or power. Unlike entrepreneurs, these are individuals who owe their wealth to circumstances of birth and the privileges of their position, not to actual talent or effort. Nevertheless, many of them command resources that cannot be ignored.
Thailand Takes the Top Spot
Thailand's King Bhumibol holds the top spot on top important lists. Not only is Bhumibol the longest-reigning monarch alive today, but he is also the wealthiest. According to Forbes, Bhumibol's fortune is estimated to be worth upwards of $30 billion, much of that built through investments in native Thai businesses like Siam Cement and Siam Commercial Bank. Although King Bhumibol has relatively little power as a constitutional monarch, he has intervened in Thai politics many times to help resolve crises and stories of his poor health have led to sell-offs on the Thai Stock Exchange.
To read the full column, please click the link:
http://financialedge.investopedia.com/financial-edge/0411/The-Worlds-Richest-Royals.aspx
Investopedia: Intuitive And The Price Of Scarcity
There is a definite lack of exciting growth stories in medical devices these days, and that is certainly part of the attraction of surgical robot maker Intuitive Surgical (Nasdaq:ISRG). Of course, a monopoly position in a potentially huge market and demonstrated improvements in patient outcomes does not hurt either.
The question is, though, will investors continue to willingly pay such a premium for the shares with current growth rates?
A Quarter that Isn't as Strong as It Looks
Intuitive once again surpassed the average revenue estimate, and 18% overall growth is not bad. What's more, instrument revenue growth of 28% was quite good and procedure growth of 30% clearly shows that the daVinci system is gaining share in its targeted procedure base.
On the other hand, system revenue rose less than 8% and the company booked 88 net new placements this quarter - continuing a fairly unimpressive recent trend of net placements. What's more, ASPs fell again - dropping 5% from last year and about 2% from the fourth quarter. Ironically, analysts used to fret when system growth was strong and instrument/procedure growth was not so impressive - now they have it the other way around and are still complaining. (For more, see Med-Tech Choice Is Simply Intuitive.
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Wednesday, April 20, 2011
Investopedia: The Difference Between Finance And Economics
Although they are often taught and presented as very separate disciplines, economics and finance are interrelated and inform and influence each other. Investors care about these studies because they also influence the markets to a great degree. Here we take a look at finance and economics, what they can teach investors and how they differ. (For background reading, see Is finance an art or a science?)
ECONOMICS
What is it?
Without falling back on dry academic definitions, economics is a social science that studies the production, consumption and distribution of goods and services, with an aim of explaining how economies work and how their agents interact. Although labeled a “social science” and often treated as one of the liberal arts, modern economics is in fact often very quantitative and heavily math-oriented in practice.
How is economics useful?
When economists succeed in their aims to understand how consumers and producers react to changing conditions, economics can provide powerful guidance and influence to policy-making at the national level. Said differently, there are very real consequences to how a nation approaches taxation, regulation, and government spending; economics can offer advice and analysis regarding these decisions.
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What is it?
Without falling back on dry academic definitions, economics is a social science that studies the production, consumption and distribution of goods and services, with an aim of explaining how economies work and how their agents interact. Although labeled a “social science” and often treated as one of the liberal arts, modern economics is in fact often very quantitative and heavily math-oriented in practice.
How is economics useful?
When economists succeed in their aims to understand how consumers and producers react to changing conditions, economics can provide powerful guidance and influence to policy-making at the national level. Said differently, there are very real consequences to how a nation approaches taxation, regulation, and government spending; economics can offer advice and analysis regarding these decisions.
To read the full piece, please go here:
http://www.investopedia.com/
Investopedia: Play Steel Dynamics For The Next Materials Story
Every commodity and resource boom is a little different, but it is not uncommon to see divergent trends between materials. Materials like copper and iron ore can have their runs only to be followed later by the likes of steel and aluminum. With steel prices starting to firm up, and industrial conditions staying strong, now might be a good time to consider the likes of Steel Dynamics (Nasdaq:STLD).
A Solid Open to the Year
Due in part to strong pricing, Steel Dynamics surpassed the average revenue estimate for the quarter. Investors should note, though, that there was a very wide range of published estimates ($1.1 billion to $2.2 billion). In any case, revenue rose nearly 30% from last year and almost 32% sequentially. Average selling prices rose 21% from the year-ago level, and more than 18% sequentially, while shipments rose about 10% on a sequential basis. (For more, see Steel Cycle Looks Good.)
The company's cost and profit performance was also stronger this time around. Scrap costs were higher, but operating efficiency handily surpassed that increase. Gross margin jumped more than a full point from last year, and nearly six full points from the fourth quarter. Operating margin improved even more - up more than 160 basis points from last year and more than tripling from the fourth quarter.
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U.S. Bancorp Worth Checking Out
The banking sector is still a big hot mess. Banks are still going under every Friday and good news usually consists of things getting less-bad. In this sort of environment, banks that were not very well run going into the crisis are looking better than the best-run banks ... mostly just because that recovery from "bad to less-bad" is much more pronounced for them.
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With that in mind, I would not expect any huzzahs and handsprings over the results posted by U.S. Bancorp (NYSE:USB) on Tuesday morning. Yes, USB is still one of the best-run large banks in the country and its conservative lending policies and diverse income streams will serve it well as loan demand rebounds. But all of that is already known by the market and the quarter-to-quarter improvements from bank companies like USB just do not look as impressive when stacked up against the likes of Zions Bancorp (Nasdaq: ZION), Popular (Nasdaq: BPOP) or TCF Financial (NYSE:TCB).
A Good Quarter All the Same
U.S. Bancorp's first quarter may not meet the standards for "great," but it was no worse than good enough. On an operating basis, the company did beat expectations, though not by much. Revenue slipped almost 4% from the fourth quarter, largely because of a sizable drop in fee income. Net interest income performance was alright - net interest margin fell (due to deposit growth), but earning assets grew and loan growth was up a bit as well.
USB saw much lower provisioning this quarter, falling 17% from the fourth quarter and more than 40% from the year-ago level. Within the balance sheet, NPLs were basically flat, though total non-performing assets (minus covered loans) did increase about 4% on a sequential basis. Expense control was also solid, as expenses fell about 7% on a sequential basis.
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Investopedia: Lilly Will Pay Investors For Patience
By no means is it easy to be a large-cap pharmaceutical company these days. The cost of developing new drugs has skyrocketed, patent expirations have gutted revenue growth and troubles with regulators and advocacy groups have weighed on shares. All of that said, pessimism seems to be at too high a level. Investors may want to consider the virtues of clipping coupons and waiting for companies like Lilly (NYSE:LLY) to come out from under the current cloud.
Q1 - Okay, But Not Great
Large cap companies often move with the agility of supertankers, so quarter-to-quarter financial changes tend to be slow and modest. Lilly reported 6% revenue growth this time around, with 5% growth in volume and flat pricing. Lilly gets a bit less than half of its revenue from overseas, and this was the growth driver this quarter - foreign sales jumped 13%, while U.S. sales rose just 1%. (For more, see Measuring The Medicine Makers.)
Of total pharmaceutical sales growth of 5%, major drugs like Zyprexa, Cymbalta and Alimta were significant contributors (growing 6%, 13% and 10% respectively). Unfortunately, that also serves to highlight the risk from generic competition that is soon coming for Zyprexa and then coming three years later for Cymbalta.
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Q1 - Okay, But Not Great
Large cap companies often move with the agility of supertankers, so quarter-to-quarter financial changes tend to be slow and modest. Lilly reported 6% revenue growth this time around, with 5% growth in volume and flat pricing. Lilly gets a bit less than half of its revenue from overseas, and this was the growth driver this quarter - foreign sales jumped 13%, while U.S. sales rose just 1%. (For more, see Measuring The Medicine Makers.)
Of total pharmaceutical sales growth of 5%, major drugs like Zyprexa, Cymbalta and Alimta were significant contributors (growing 6%, 13% and 10% respectively). Unfortunately, that also serves to highlight the risk from generic competition that is soon coming for Zyprexa and then coming three years later for Cymbalta.
To read the full piece, please click the link:
http://stocks.investopedia.
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