Rate Hike? What Rate Hike?; Chipotle’s Rocky Road to Recovery; McCormick’s Spicy Good Earnings

Easy does it?

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Well, if you’re looking for the Fed to raise rates, don’t hold your breath. Despite the fact that the Fed’s next meeting is planned for April 26th and 27th, experts think a move like that probably wont happen before July. It was initially believed that there would be four rate hikes over the course of the year, after the Fed raised the rates for the first time in nine years back in December. But now it looks like there will be just two.  Federal Reserve Chair Janet Yellen is still promising a gradual pace of rate increases, but even she admits that the economic climate just isn’t quite impressing these days. The Central Bank is paying very close attention to all the annoying economic issues going on in the world, like the global economic slump, the very very low oil prices and a relatively volatile stock market. Of course, it wouldn’t be right not to mention China’s own economic downturn.  Plus the Fed’s not too stoked about the rate of inflation, which has been holding steady at about 1% when its target is closer to a 2% rate. Add to that weak consumer spending and you’ve got a Fed that’s not looking to stir any fiscal trouble. Hence, the Fed has assured the country that it plans to “proceed cautiously” in its rate hike plans, which is awfully considerate, according to some people, anyway.

Burned burrito…

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Free burritos or not, Chiptole’s road to fiscal recovery is looking very far off.  Wedbush Securities analyst Nick Setyan came out with a new report that says he doesn’t expect the fast food chain to recover before 2018 – calling it “the best case-scenario” – and even lowered Chipotle’s price target from $450 – $400. Ouch. Before the food safety crisis, each Chipotle restaurant was pulling down $2.5 million in sales on average. But that’s not expected to happen again for quite some time, especially given the fact that Chipotle’s operating costs are only going to get higher and higher because of its more comprehensive and stringent food safety measures. And even though the company sent out coupons for nine million free burritos, with another 21 million free burrito vouchers en route, Chipotle will still eat a $62 million tab for that, as a burrito typically costs $7.10. But hey, whatever it takes to try and erase the ugliness of E. Coli and norovirus outbreaks, right? Even with all those vouchers being sent out, the company only expects that a quarter of them will actually get redeemed. Naturally, news of the report sent shares south when the stock is already down 37% since August. Shares of Chipotle closed today at 460.10.

Spice spice baby…

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Of all the companies to report earnings lately, this one’s pretty…spicy. Yes. I had to go there. McCormick & Co. just released its first quarter results and considering that the company’s products aren’t items typically used in bulk, the $13 billion company pulled in some very impressive figures. In the process, McCormick & Co. even managed to raise its 2016 outlook, and unlike other major food producers that have been struggling to keep up with a health/organic revolution,  McCormick hasn’t faced quite the same challenges. In fact, its stock is up around 28% in the last twelve months with a little help from some recent acquisitions. The spice-maker was expecting to earn between $3.65 to $3.72 per share. But now it’s looking like it’ll pick up between $3.68 and $3.75 per share for the year. Incidentally, despite China’s economic downturn, the country still managed to give McCormick some boffo growth. Perhaps there’s a correlation between economic stress and and a desire for spicy food? Hmm. Will have to explore that one…In any case, McCormick picked up a profit of $93.4 million on $1.03 billion in revenue and adding 73 cents per share. Analysts only expected 69 cents on $1.03 billion in revenue while the year before the company took in a profit of $70.5 million on $1.01 billion in revenue with 55 cents added per share. And if that’s not enough, McCormick also scored a new 52 week high today of 99.90.

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Economy Cools on Coal; Saving Chipotle One Burrito at a Time; Morgan Stanley Made a Mistake and Admits It!

Hot or coal?

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Feel free to play it naughty this year as Santa may not be able to scrounge up some coal to put in your stocking anyway. That’s because Peabody Energy, the largest American coal miner, might just be going bust, joining a slew of other coal companies. The company announced that it will be delaying a $71 million interest payment that’s due this week – and that, my friends, often signals that a company could be on the brink of filing for Chapter 11 bankruptcy protection. Not that this would come as any great surprise since the stock lost over 95% of its value in the last twelve months and today tanked over 40%. Two years ago the company’s stock hit a high of $299.10. Now it’s barely hanging on as it closed at $2.20 today. The fact is that the global economy is slow enough to wreak havoc on major industries, in this case, coal. Only 33% of power came from coal in 2015. The coal industry has had to contend with stricter environmental standards that have put a major crimp in production. With natural gas being used more and more, seeing as how its cheaper and less polluting, several other coal companies have already gone under. And while nobody is crying over less pollution, it does mean that thousands of people will be out of jobs. Tens of thousands. As for Peabody Energy, the company has thirty days to make that $71 million or face default.

Burritos for all….

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It appears all is not lost at Chipotle as the food joint managed to recoup about 30% of its sales with the help of some free food – burritos, in fact. There is a lot of irony at work here. According to Chipotle CFO Jack Hartung, “Free burritos—turns out it works. It brings people into the restaurants.” It’s a good thing something is bringing folks back into the restaurants after that ugly E.Coli outbreak that sent millions of customers scrambling as far away from the restaurants as possible. As part of the company’s turnaround plan, Chipotle sent out coupons for free burritos to about 7 million customers. Then it decided that maybe sending out 21 million more coupons might not be such a bad idea. It wasn’t since 5.3 million customers already downloaded the first coupon and then, 2.5 million actually walked into a Chipotle, picked up their free burrito and, presumably, purchased a couple of other items off the menu as well. Hey, once you get ’em in the door…In any case, this quarter marked the first time that Chipotle actually forecasted a quarterly loss. Ever. Naturally, the company is still reeling from the losses over the outbreak. However, it’s also expecting to incur some heavy expenses for marketing and, of course, free burritos.

Um, about that price target…

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Wall Street insiders made a mistake and they are actually admitting it. Analysts at Morgan Stanley used to just love LinkedIn and thought the world of the platform. But that love has waned and thus the brokerage has downgraded the stock, savagely slashing the price target from $190 to $125. After all, LinkedIn’s earnings didn’t impress. Far from it, in fact, and the stock has gone down a whopping 54% in just the last three months. Morgan Stanley analyst Brian Nowak eloquently said of LinkedIn, “With its current product offering, LinkedIn isn’t likely to be as big of a platform as we previously thought.” That was harsh, I tell you. And just like that, shares of the company went down on all because the brokerages had a fiscal change of heart.

Google Exec’s Royal Pay Day; Why Chipotle Wouldn’t Serve Lunch Today; Yelping Early on Earnings

Does that include the corporate jet?

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Sundar Pichai may not just yet be a household name – something that strikes me as totally weird – but remember that name. He is, after all, one of the highest paid CEO’s of a publicly traded company, and he just scored a record $199 million Google (GOOG) stock award  – the highest ever…for a Google exec. This not-so-minor tidbit was revealed following a February 3 regulatory filing where Pichai disclosed that he received…wait for it…a whopping 273,328 class C shares of Google. Google, by the way, closed today at 682.74. You do the math. Those shares are set to vest quarterly – as long as Pichai manages to last at Google through 2019. And why wouldn’t he. With his last stock award worth about $250 million, Pichai’s Google stake stands at a staggering $650 million. Although, to be fair, tech stocks did take a hit today, with shares of Google parent company Alphabet falling – if only just by 2%. But I suspect Pichai will still come out on top. So perhaps you might want to check Google’s job board. Diane Greene, who heads Google’s cloud business, snagged $42.8 million, while Google CFO Ruth Porat will be taking home $38.3 million in equity.

Muy bien…

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You, like so very many others, probably didn’t get your Chipotle lunch fix today. And that’s not a bad thing. Stores were closed for the better part of the day as approximately 50,000 Chipotle employees gathered in 400 locations, ranging from movie theaters to conference centers, to discuss the Denver-based company’s food safety problems that have been plaguing sales at its 1,971 eateries. Chipotle CEO Monty Moran’s big plan for today’s gathering was to go over new procedures for food safety. That was probably a really great idea since an E. coli outbreak in October and a norovirus in December caused the company to temporarily shutter 43 locations, not to mention incur some brutal fiscal declines.To be fair, Chipotle’s 30% sales decrease are nothing compared to what happened to all those people who got sick. The fact that a Federal Grand jury issued a subpoena for a criminal investigation only adds insult to fiscal injury. But at least the CDC said that the outbreaks seem to be over. I’ll believe it when I hear that CDC employees themselves start ordering Chipotle’s legendary burritos. But if you don’t need those kind of assurances and are ready to chow down on a late lunch/early dinner of soft flour tacos, then bon appetite! Chipotle re-opened at 3:00 pm today.

Early reviews are in…

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Yelp’s earnings were released today –  a bit too early, mind you –  and brought with it the news that Yelp CFO Rob Krolik, who joined the company in 2011, will be stepping down. He will either stay on board until the company can find a suitable replacement or until December 15. Whichever comes first. Weird, I know. In any case, Yelp posted revenues of $153.7 million, handily beating estimates of $152.3 million, and also gained 11 cent per share even though analysts expected the company to report a loss of 3 cents per share. Shares of the company, incidentally, were down in the afternoon. Go figure. If you have yet to post an opinion/review to Yelp, rest assured that there were still 95 million other people who did it for you, letting you know the all the good, bad and ugly about our country’s countless dining establish, both fine and otherwise. Yelp’s been on a fierce mission to battle the competition out there by diversifying its restaurant bookings, offering event management and even doing payments. That’s in a addition to the company’s plans for expansion beyond the U.S. And Yelp has no time to waste as shares of its stock have been going down since March of 2014, when the company hits its high of $97.25.

 

 

Comcast: Streaming Video is so Last Year; Holy-Moly Guacamole, Chipotle is Losing Dinero; The Ultimate Biz Perks List

Who-lu?

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If online streaming video services are phasing out cable, you’d never know it judging by Comcast’s latest earnings. The company actually picked up 89,000 new subscribers – more than any other quarter in the last eight years. It was a particularly remarkable feat considering that last year at this time, the largest U.S. cable operator in the country only gained 6,000 subscribers. This means that for the year, Comcast only lost 36,000 subscribers. And yeah, that’s really good news. It’s really good because in 2014 Comcast lost over 194,000 subscribers. Time Warner Cable also announced it had picked up new subscribers. But Comcast did so well that it decided to raise it’s dividend by 10% to $1.10 – which was awfully generous of them. The nation’s leading high-speed internet operator managed to give a decent beating to analysts expectations earning $19.25 billion in revenue- an 8.5% increase over last year – instead of the projected $18.76 billion.  Comcast’s profits were up 5.2%, coming in at $2 billion, and adding 81 cents per share – just a teeny tiny penny below predictions. Oh well, maybe next time. Knowing that it’s future is/was on the line, Comcast has been trying to stay relevant in an age where streaming online video is all the rage. The company has been whipping out its fiscal A-game, offering better customer service, set-top box enhancements and smaller, more enticing bundles for current and prospective subscribers. Apparently it’s working.

The plot thickens…

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Just when you thought it was safe to go back in the fiscal Chipotle waters, along comes a subpoena, courtesy of a federal criminal probe stemming from a noro-virus outbreak in sunny California. Chipotle now needs to cough up documents going all the way back to January of 2013 and that’s not all. While Chipotle thought the worst was behind it, following the incredibly brutal E.Coli outbreak in some of its restaurants, the company announced that this year will be muy mal for investors. With huge marketing efforts in the wings, along with Herculean efforts to become the gold standard in food safety, Chipotle should be able to stay afloat. But it wont be pretty. The company’s fourth quarter earnings were pretty dismal with sales down more than a third and a whopping $10 billion shaved off its market cap. Apple and Alphabet  it is not. And with any bad news on Wall Street, particularly where there’s a subpoena involved, shares tumbled almost 3% and closed at 461.92.

Very perk-y…

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Glassdoor has served up yet another list to remind you just how badly you need to find a new place to work. This time, the company is ranking other companies according to how friggin’ awesome their employee perks are. For instance, does your current place of employment offer you “Yay Days”? Didn’t think so. But, if you score a position at REI, you get two of ’em – that’s two paid days off to spend on an outdoor activity. Does your boss currently give you $500 to use towards travel? Didn’t think so again. In which case, you ought to check Airbnb’s job board because that company gives you that much money towards travel every quarter so long as that cash is used on Airbnb accommodations (otherwise, no dice).  Burton, purveyor of fine snowboards and accompanying gear, gives its employees season passes to the local slopes. Then there’s software provider Epic Systems that generously gives its employees a four-week paid sabbatical every five years. If you want to feel even worse about where you work, visit Glassdoor for the rest of the list top ranking companies and the amazing perks they offer.

 

 

Staple’D: FTC Wants to Quash Merger; Keurig Coffee Wants Privacy; Chipotle Earnings Not Coming Up Fresh

Deja vu…

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Nothing like a pesky lawsuit to put a crimp in your $6.3 billion proposed takeover plans. Which is exactly what happened to Staples Inc. when the FTC voted unanimously, in a 4-0 vote, to try and put the kibosh on the office supply retailer’s’ attempted takeover of Office Depot by filing a suit to block the deal. The deal, which was expected to generate $39 billion in revenue, has the FTC concerned that the merger would create just one mammoth national office supply retailer that would yield too much power to raise prices, whether it be private consumers or commercial entities, many of which have big vendor contracts. This is not the first time that Staples has tried to pick up Office Depot. Back in 1997, the company attempted to do the same thing but was blocked from doing so even back then. Because the office supply marketplace has changed so much, given the availability of office supplies via e-commerce, Staples was certain this time there would be no issue. Besides, in 2012 the FTC approved a merger between Office Depot and Office Max merged on the basis that there was enough competition from Amazon, Wal-Mart and other outfits that allowed for a healthy amount of competition. Instead, of a merger today, however,  shares of Staples Inc. fell 14%, the most in 18 months, while shares of Office Depot fell 18% on news of the FTC lawsuit.

Perky…

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Big news in the single-serve coffee pod marketplace – yeah that’s a real thing: Keuring Green Mountain Inc. is going private to the tune of $13.9 billion and getting $92 per share. For real. In fact, that price is a 78% premium over Friday’s closing price. For real again. So what would make a company like that want to go private? Well it was an offer the coffee maker couldn’t refuse. That’s part of it anyway. The company posted some disappointing numbers and is down 60% just this year. Besides the ever-increasing competition in the single-serve pod market, Keuring also struck out with its KOLD product. Enter German company JAB who wants to be the numero uno North American coffee purveyor. And why not? It’s a $6.1 billion industry there alone and makes $15 billion globally. Did I mention that North America drinks up a big 40% of that global market share? JAB already picked up Peet’s Coffee and Tea and Caribou Coffee as it attempts to compete with Nestle. So far, JAB has the upper hand. By a lot. Indeed, news of the deal sent Keurig stock up 74%, which is especially good for Coca Cola since it owns 25.87 million shares, a 17.4% stake that adds up to about $2.4 billion. That’s even more good news for Coke since that’s how much it can expect to get from JAB for its shares. Of course, with any major deal, it is subject to shareholder approval. But assuming the deal’s approved, it will likely close by April.

No más

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Even millenials can’t help Chipotle with this one. The fresh-food restaurant chain saw its shares hit its lowest point in eighteen months, all the way down to $515 per share. Never mind that the stock is currently trading at around $543 a share. But I digress. Much of that slide can be blamed on the e. coli outbreak that had the chain closing a number of its locations since most of the 52 people who picked up the virus said they had eaten at Chipotle. The company is expecting a drop in same store sales between 8% – 11% for its fourth quarter. Chipotle also now expects earnings per share from $2.45 – $2.88. That’s especially brutal when you consider that analysts were expecting about $4.06 to be added, not to mention the fact that at this time last year the company pulled in $3.85 per share. The stock has been on a downward slide since news of the e. coli outbreak was first reported back in October. The stock has fallen 22% since then and is down 18% for the year.