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Sunday May 26, 2019

Finances

Finances
 

Twitter's Shares Soar

Twitter, Inc. (TWTR) released its quarterly earnings report on Tuesday, April 23. The company topped earnings and revenue estimates, causing shares to soar more than 15% following the report's release.

Twitter reported quarterly revenue of $787 million. This is up 18% from last year's first quarter revenue of $665 million and above the $776 million in revenue that Wall Street predicted.

"We are taking a more proactive approach to reducing abuse and its effects on Twitter," said Jack Dorsey, Twitter's CEO. "We are reducing the burden on victims and, where possible, taking action before abuse is reported. For example, we are now removing 2.5x more Tweets that share personal information and ~38% of abusive Tweets that are taken down every week are being proactively detected by machine learning models."

The company announced earnings of $288.49 million for the quarter, which was up from earnings of $122.99 million one year ago. On an adjusted earnings per share basis, the company reported earnings of $0.37 per share, which was more than double the $0.15 per share that analysts predicted.

Twitter announced that its monthly active users (MAUs) totaled 330 million for the quarter, surpassing expectations of 318 million users. This was up from the previous quarter, when MAUs totaled 312 million. Following the company's earnings release, shares surged 15.6% to close at $39.77.

Twitter, Inc. (TWTR) shares closed at $38.67, up 12.4% for the week.

Coca-Cola's Earnings Pop


The Coca-Cola Company (KO) reported quarterly earnings on Tuesday, April 23. The beverage company reported earnings and revenue that surpassed Wall Street's estimates.

Coca-Cola announced revenue of $8.02 billion for the first quarter. This is up from revenue of $7.63 billion reported in the same quarter last year and above the $7.88 billion in revenue that analysts expected.

"We're encouraged by our first quarter results as our disciplined growth strategies continue to deliver strong underlying performance," said Coca-Cola CEO James Quincey. "We remain confident in our full year guidance as we continue to make progress on our transformation as a consumer-centric total beverage company."

The company reported earnings of $1.68 billion for the quarter, up from earnings of $1.37 billion one year ago. On an adjusted earnings per share basis, the company posted earnings of $0.48 per share, which beat analysts' earnings estimates of $0.46 per share.

Coca-Cola's revenue in the first quarter was boosted by an uptick in its sports drinks and water sales. Revenue from water, enhanced water and sports drinks jumped 6% in the quarter, while sales of the company's sparkling soda drinks (including the original Coca-Cola) rose only 1%. The company plans to roll out Coca-Cola coffee to 25 markets this year, after successfully introducing Coke Plus Cafe Espresso in Southeast Asia last year.

The Coca-Cola Company (KO) shares closed at $48.27, up 1.8% for the week.

Procter & Gamble Reports Upbeat Earnings


The Procter & Gamble Company (PG) announced quarterly earnings on Tuesday, April 23. The parent company of Febreze, Olay, Gillette and Charmin reported increased earnings and revenue in the third quarter.

Revenue for the quarter reached $16.46 billion. This is up from revenue of $16.28 billion reported during the same quarter last year and above the $16.37 billion in revenue that analysts expected.

"We delivered another quarter of strong organic sales growth, enabling us to further increase our outlook for the year," said Procter & Gamble CEO David Taylor. "Cash generation also remains strong, supporting an increase in our cash productivity target and extending our long track record of dividend increases."

Procter & Gamble reported quarterly net earnings of $2.78 billion, up from earnings of $2.54 billion one year ago. On an adjusted earnings per share basis, the company posted earnings of $1.06 per share, surpassing the $1.03 per share that analysts predicted.

The company's strongest performing business in the quarter was its Beauty segment, which reported a 9% increase in revenue. The company's Fabric and Home Care segments' sales increased 7%, while its Health Care segment rose 5%. Proctor & Gamble's lowest performing business in the third quarter was its Grooming segment, which includes its Gillette brand. Sales in the company's Grooming segment fell 1% year-over-year.

The Procter & Gamble Company (PG) shares closed at $105.86, relatively unchanged for the week.

The Dow started the week at 26,511 and closed at 26,543 on 4/26. The S&P 500 started the week at 2,899 and closed at 2,940. The NASDAQ started the week at 7,969 and closed at 8,146.
 

Treasury Yields Slip On Rising GDP

Yields on U.S. Treasury bonds edged downward in response to the latest GDP report released by the U.S. Department of Commerce on Friday, April 26. On Friday, lower-than-expected inflation data was released.

Friday's report showed a stronger-than-expected increase in GDP of 3.2% for the first quarter of 2019. The report exceeded economists' expectations of 2.3% GDP growth.

"We did see strengthening throughout the quarter with momentum building," said Ms. Zentner, chief United States economist at Morgan Stanley. "We've got nice consumer spending momentum going into the second quarter."

During early trading on Friday, the benchmark 10-year Treasury note yield was at 2.499%. The 30-year Treasury bond yield was at 3.087%.

On Friday, the most recent data for the Fed's preferred inflation gauge, the core personal consumption expenditure (PCE), revealed that inflation fell to 1.3% for the first quarter of 2019. This is down from 1.8% in the fourth quarter of 2018 and missed economists' predictions of a 1.4% increase.

"The Fed has two goals," said John Bredemus, head of capital markets at Allianz Investment Management. "Their job is to keep inflation in control, but inflation is not hitting its target. There's no reason for the Fed to tighten at all."

The 10-year Treasury note yield closed at 2.50% on 4/26 while the 30-year Treasury bond yield was 2.93%.
 

Mortgage Rates Increase

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, April 25. The report showed rates were higher this week, when compared with last week.

The 30-year fixed rate mortgage averaged 4.20% this week, up from 4.17% last week. During this time last year, the 30-year fixed rate mortgage averaged 4.58%.

This week, the 15-year fixed rate mortgage averaged 3.64%, up from last week when it averaged 3.62%. Last year at this time, the 15-year fixed rate mortgage averaged 4.02%.

"Despite the recent rise in mortgage rates, both existing and new home sales continue to show strength — indicating the lagged effect of lower rates on housing demand," said Sam Khater, Chief Economist at Freddie Mac. "This, along with improved affordability, should push housing activity higher in the coming months."

Based on published national averages, the money market account closed at 1.32% on 4/26. The one-year CD finished at 2.70%.

Published April 26, 2019

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