* US: Dow: 13102.50 (-1.82%), S&P 500: 1413.11 (-1.44%), NASDAQ: 2990.46 (-0.88%)
How Warren Buffett Uses Discount Rates To Value Stocks
Warren Buffett has never detailed the process he uses to value the businesses he acquires for Berkshire Hathaway. However, over the years, he has provided some limited insight into his methods. Q3 2020 hedge fund letters, conferences and more Based on these comments, it is widely assumed that Buffett uses a discount cash flow model Read More
* Europe: CAC: 3406.50 (-2.25%), DAX: 7173.69 (-2.15%), FTSE: 5799.95 (-1.43%).
* Asia-Pacific: Australia: 4543.10 (0.05%), China: 2114.45 (-0.87%), Hong Kong: 21697.55 (0.00%), India: 5691.40 (-0.45%), Japan: 9014.25 (0.04%).
* Metals: Gold: 1708.30 (-1.04%), Silver: 31.68 (-1.77%), Copper: 3.57 (-1.35%)
* Energy: Crude Oil: 86.52 (-2.40%), Natural Gas: 3.52 (2.14%)
* Commodities: Corn: 7.56 (-0.69%), Soya Bean: 15.55 (0.42%), Wheat: 8.68 (-1.08%)
* Currency: Euro (€) / US Dollar ($) (EURUSD): 1.2985 (-0.01%), British Pound Sterling (UK£) / US Dollar ($) (GBPUSD): 1.5954 (0.01%), US Dollar ($) / Japanese Yen (¥) (USDJPY): 79.8700 (0.03%)
* 10 year US Treasury: 1.757% (-0.006)
Market and Economy News Update
U.S. markets sell-off: U.S. markets closed sharply lower, with the Dow recording its worst one-day drop since June, following a slew of disappointing corporate earnings. The Dow Jones Industrial Average (INDEXDJX:.DJI) dropped 243.36 points, or 1.82 percent, to end at 13,102.53. The S&P 500 (INDEXSP:.INX) tumbled 20.71 points, or 1.44 percent, to finish at 1,413.11, while the NASDAQComposite (INDEXNASDAQ:.IXIC) lost 26.50 points, or 0.88 percent, to close at 2,990.46.
Oil prices tumble: Crude prices fell sharply on Tuesday to settle at their lowest since level mid-July amid concerns about a slowdown in global economic growth. Brent oil pieces fell for a sixth straight session. Crude oil for December delivery lost 2.4 percent, to settle at $86.52 a barrel on the New York Mercantile Exchange. Brent oil for December settlement slid 1.1 percent to $108.19 a barrel on the London-based ICE Futures Europe exchange.
Stocks in Focus
* Facebook Inc (NASDAQ:FB) reported third-quarter earnings excluding items of 12 cents per share that beat the average analysts’ estimate of 11 cents per share. Revenue for the period came in at $1.26 billion, also topping estimates of $1.23 billion.
* Netflix, Inc. (NASDAQ:NFLX) reported third quarter earnings of $7.7 million, or 13 cents per share, beating the average analysts estimate of 5 cents per share. Revenue gained 10 percent to $905.1 million, in line with forecasts. Netflix, Inc. (NASDAQ:NFLX) cut its estimate for full-year subscriber additions to between 4.7 million and 5.4 million.
* Apple Inc. (NASDAQ:AAPL) unveiled a new, smaller iPad tablet priced from $329. The tech giant also launched a thinner and lighter version of its 13-inch Macbook Pro.
* Broadcom Corporation (NASDAQ:BRCM) reported third quarter earnings excluding one-time items of 79 cents a share, 2 cents above the average analysts’ estimate. Revenue rose to $2.13 billion, from $1.96 billion, a year earlier, also topping estimates of $2.09 billion.
* Wells Fargo & Company (NYSE:WFC) came off its lows to end percent higher after its board authorized the buyback of an additional 200 million shares. The fourth-largest U.S. bank by assets also announced a quarterly dividend of 22 cent a share.
* Mattress maker Tempur-Pedic International Inc. (NYSE:TPX) swung to a third quarter loss of $2 million, or 3 cents a share, from a profit of $62 million, or 90 cents a share, in the year-ago period. The company slashed its full-year profit forecast.
* Teen clothing retailer American Eagle Outfitters (NYSE:AEO) fell 3.8 percent after current quarter profit outlook disappointed investors. The company said it was on track to meet its fiscal third-quarter profit prediction of 37 cents or 38 cents per share. Analysts were however expecting a profit of 39 cents per share. The company also projected full-year revenue of $3.44 million that topped estimates of $3.41 billion.
* Satellite radio broadcaster Sirius XM Radio Inc (NASDAQ:SIRI) said Chief Executive Officer Mel Karmazin will step down on February 1, 2013.
* Juniper Networks, Inc. (NYSE:JNPR) reported third quarter earnings excluding one-time items of 22 cents a share, 5 cents above the average analysts’ estimate. Revenue came in at $1.12 billion, beating Street expectations for $1.07 billion.
* Casual dining chain Buffalo Wild Wings (NASDAQ:BWLD) said third-quarter profit fell to $10.7 million, or 57 cents per share, from $11.3 million, or 61 cents per share, in the same period last year. Sales surged 25 percent to $246.9 million. Analysts were expecting earnings of 60 cents per share on revenue of $253.9 million.
* Freight services company C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) reported third quarter profit of $116 million, or 72 cents a share, up from $114 million, or 70 cents a share, in the year-ago period. Revenue increased to $2.88 billion, from $2.69 billion, a year earlier Analysts had projected earnings of 73 cents a share and revenue of $2.97 billion.
* Gilead Sciences, Inc. (NASDAQ:GILD) reported third quarter adjusted earnings of $1 a share that beat estimates of 94 cents a share. Sales for the period stood at $2.42 billion, also topping estimates of $2.34 billion.
* Grain handler Archer Daniels Midland Company (NYSE:ADM) reached a preliminary deal to sell its 23 percent stake in Mexican corn flour processor Gruma to Fernando Chico Pardo, the chairman of Mexican airport operator Asur.
* Health care provider Health Management Associates, Inc. (NYSE:HMA) moved 4 percent lower following weaker-than-expected earnings. Third quarter earnings excluding certain items stood at 18 cents per share, missing estimates of 20 cents per share. Revenue increased 18 percent to $1.44 billion, also trailing estimates of $1.45 billion.
* AK Steel Holding Corporation (NYSE:AKS) reported third quarter adjusted loss of 25 cents per share that beat Wall Street estimates for a loss of 36 cents per share. Revenue slipped 7.7 percent to $1.46 billion, trailing estimates of $1.48 billion. The company said it expects to post a loss in the fourth quarter.
* Monster Beverage Corp (NASDAQ:MNST) slid 10 percent after it was removed from the Conviction Buy list at Goldman Sachs Group Inc. The shares plunged 14 percent yesterday amid reports that five people may have died recently drinking the company’s caffeine-laden energy drink.
* U.K.-based technology group ARM Holdings plc (ADR) (NASDAQ:ARMH) (LON:ARM) closed 11 percent higher after the company said smart phone royalties helped boost third quarter earnings above forecasts.
* Annapolis Bancorp, Inc. (NASDAQ:ANNB) soared 52 percent after the lender agreed to be acquired by Pittsburgh bank F.N.B. Corp (NYSE:FNB) in an all-stock deal valued at about $12.09 a share.
* Transportation company Hub Group Inc (NASDAQ:HUBG) jumped 2.5 percent after reporting better-than-expected third-quarter earnings.
* Insurer StanCorp Financial Group, Inc. (NYSE:SFG) jumped to a three-month high after reporting better-than-expected third quarter operating earnings.
* Molex Incorporated (NASDAQ:MOLX) said net income fell 11 percent to $71.3 million, or 40 cents per share, from $80.5 million, or 46 cents per share, in the same period last year. Revenue for the quarter came in at $916.9 million. Analysts were expecting the electronic components and cables maker to report income of 40 cents per share and $920 million in revenue.
* Forest Laboratories, Inc. (NYSE:FRX) closed 0.9 percent lower after analysts at Morgan Stanley trimmed their earnings per share forecast for the stock.
* Gentex Corporation (NASDAQ:GNTX) said third quarter profit fell 3.5 percent to $41.9 million, or 29 cents a share, from $43.4 million, or 30 cents a share, a year earlier. Analysts were expecting per-share earnings of 28 cents. Sales were flat at $268.2 million.
* Business software company MicroStrategy Incorporated (NASDAQ:MSTR) tanked 7 percent following news of a management shake-up.
* Specialized electronics maker OSI Systems, Inc. (NASDAQ:OSIS) reported a 33 percent jump in third quarter profit to $6.3 million, or 31 cents a share, from $4.8 million, or 24 cents a share, a year earlier. Revenue gained 13 percent to $181.7 million. Analysts had projected earnings of 29 cents on revenue of $182 million. The company raised its current quarter earnings estimate.
Hedge Fund News Update
* High net worth private investors are turning their backs on hedge funds, at a time when pension funds and insurance companies have emerged as the fastest growing source of new money for these funds, according to a Reuters report.
* Former Citadel LLC senior portfolio manager, Kevin Scherer is planning to start a hedge fund in January. Continuum Investment Management will invest in residential and commercial mortgage debt and asset-backed securities, according to a Bloomberg report.
* Hong Kong-based hedge fund Double Haven Capital Management has acquired hedge fund platform DragonBack Capital.
* Cesar Gueikian, UBS AG’ top special-situations executive, has quit the bank to start a hedge fund, Bloomberg reported.
* Former Credit Suisse trader Charlie Chan’s Splendid Asia Macro Fund is now up 60 percent on the year as bets on real estate investment trusts, bonds and currencies paid off, Reuters reported.
Brokerage Upgrades and Downgrades on Tuesday, October 23, 2012
* Check Point Software Technologies Ltd. (NASDAQ:CHKP) was lifted to “overweight” from “neutral” by analysts at JPMorgan Chase.
* Cleco Corporation (NYSE:CNL) was upgraded to “buy” from “neutral” by analysts at Goldman Sachs.
* Duke Energy Corp (NYSE:DUK) was raised to an “overweight” rating from an “underweight” rating by analysts at JPMorgan Chase.
* National CineMedia, Inc. (NASDAQ:NCMI) was lifted to “buy” from “hold” by analysts at Stifel Nicolaus.
* Power Integrations, Inc. (NASDAQ:POWI) was upgraded to “buy” from “neutral” by analysts at Sterne Agee.
* Public Storage (NYSE:PSA) was raised to “hold” from “sell” by analysts at Cantor Fitzgerald with a target price of $143.50.
* RenaissanceRe Holdings Ltd. (NYSE:RNR) was lifted to “outperform” from “market perform” by analysts at Keefe, Bruyette & Woods.
* Teekay Offshore Partners L.P. (NYSE:TOO) was upgraded to “overweight” from “neutral” by analysts at JPMorgan Chase.
* The McClatchy Company (NYSE:MNI) was raised to “buy” from “neutral” by analysts at Citigroup.
* XL Group plc (NYSE:XL) was lifted to “outperform” from “market perform” by analysts at Keefe, Bruyette & Woods.
* Yahoo! Inc. (NASDAQ:YHOO) was upgraded to “positive” from “neutral” by analysts at Susquehanna.
* Access Midstream Partners LP (NYSE:ACMP) was downgraded to “neutral” from “buy” by analysts at UBS AG.
* AMC Networks Inc (NASDAQ:AMCX) was lowered to “neutral” from “overweight” by analysts at JPMorgan Chase.
* CRH PLC (ADR) (NYSE:CRH) was cut to “neutral” from “overweight” by analysts at HSBC Plc.
* Edison International (NYSE:EIX) was downgraded to “neutral” from “buy” by analysts at Goldman Sachs.
* MicroStrategy Incorporated (NASDAQ:MSTR) was lowered by analysts at BMO Capital Markets from an “outperform” rating to a “market perform” rating with a target price of $130.
* NetApp Inc. (NASDAQ:NTAP) was cut to “neutral” from “outperform” by analysts at Robert W. Baird with a target price of $30.
* Northwest Bancshares, Inc. (NASDAQ:NWBI) was downgraded to “neutral” from “buy” by analysts at Sterne Agee.
* Omega Healthcare Investors Inc (NYSE:OHI) was lowered by analysts at Jefferies Group from a “buy” rating to a “hold” rating.
* Parker-Hannifin Corporation (NYSE:PH) was cut to “hold” from “buy” by analysts at Argus.
* Peabody Energy Corporation (NYSE:BTU) was downgraded to “neutral” from “buy” by analysts at Goldman Sachs.
* Pinnacle West Capital Corporation (NYSE:PNW) was lowered by analysts at Goldman Sachs from a “neutral” rating to a “sell” rating.
* SunTrust Banks, Inc. (NYSE:STI) was cut to “neutral” from “positive” by analysts at Susquehanna.
* Ventas, Inc. (NYSE:VTR) was downgraded to “hold” from “buy” by analysts at Jefferies Group.
* Western Digital Corp. (NASDAQ:WDC) was lowered by analysts at Credit Agricole from an “outperform” rating to an “underperform” rating.
* Willis Group Holdings PLC (NYSE:WSH) was cut to “market perform” from “outperform” by analysts at Keefe, Bruyette & Woods.
Earnings Calendar for Wednesday, October 24, 2012
Before Market Open:
* AT&T Inc. (NYSE:T)
* Akamai Technologies, Inc. (NASDAQ:AKAM)
* Avery Dennison Corporation (NYSE:AVY)
* The Boeing Company (NYSE:BA)
* Bristol Myers Squibb Co. (NYSE:BMY)
* Dr Pepper Snapple Group Inc. (NYSE:DPS)
* DTE Energy Company (NYSE:DTE)
* EMC Corporation (NYSE:EMC)
* General Dynamics Corporation (NYSE:GD)
* Corning Incorporated (NYSE:GLW)
* Kimberly Clark Corp (NYSE:KMB)
* Eli Lilly And Co. (NYSE:LLY)
* Lockheed Martin Ciorporation (NYSE:LMT)
* NASDAQ OMX Group, Inc. (NASDAQ:NDAQ)
* Northrop Grumman Corporation (NYSE:NOC)
* Praxair, Inc. (NYSE:PX)
* Thermo Fisher Scientific Inc. (NYSE:TMO)
* T. Rowe Price Group, Inc. (NASDAQ:TROW)
* Wyndham Worldwide Corporation (NYSE:WYN)
After Market Close:
* ASSURANT, INC. (NYSE:AIZ)
* Ameriprise Financial, Inc. (NYSE:AMP)
* AvalonBay Communities, Inc. (NYSE:AVB)
* Crown Castle International Corp. (NYSE:CCI)
* Cliffs Natural Resources, Inc (NYSE:CLF)
* Equifax Inc. (NYSE:EFX)
* Equity Residential (NYSE:EQR)
* LSI Corporation (NYSE:LSI)
* Owens-Illinois, Inc. (NYSE:OI)
* O`Reilly Automotive Inc (NASDAQ:ORLY)
* Range Resources Corp. (NYSE:RRC)
* Symantec Corporation (NASDAQ:SYMC)