By Roger Choudhury
We screened for companies with high profit margins, and great potential for growth in 2011. These firms also come with renowned brand recognition and take on global perspectives. The following companies are in a league of themselves.
Ambev (ABV) made 25.2 billion reals ($15.2 billion) in net sales in 2010, which was an increase of 8.8%, after growing by 11.98% in 2009. The profit margins in 2010 and 2009 were 66.5% and 66.7%, and the EBT margins were 38.4% and 35.3%. EPS was up by 25.2% to 2.33 reals ($1.407), which implies a P/E of 19.9. Options investors have a positive outlook, as the 30-day put/call ratio is 0.5. Share price is down 1.5%, since the earnings release on March 3.
CEO, Nelson Jamel said, "Looking into 2011, we remain committed to develop top line growth through innovations and to improve productivity to fund our cost-connect-win strategy. The year started with a softer industry in Brazil impacted by heavy rains and our 2010 year end price increases, which should translate into a volume growth deceleration, particularly in Q1."
Santander-Chile Bank (SAN) made 42.049 billion euros ($58.8 billion), which was an increase of 6.8%, after falling 8.92% in 2009. The EBT margins in 2010 and 2009 were 28.66% and 29.87%. EPS dropped by 9.9% to 0.9356 euros ($1.308), implying a P/E of 65.1.
The company has a solid profit generation strategy due to a diversified presence around the world: continental Europe (9%), Portugal (4%), Brazil (25%), Latin America (18%), and UK (18%). The rest of the profits came from Santander Consumer Finance (7%), retail bank network (15%), and sovereign (4%).
YTD, SAN shares are down 8.7%.
Corning (GLW) made $6.6 billion in revenues and $3.5 billion in profits in 2010, which were increases of 22.93% and 77.19%. In 2009, revenues fell by 9.3%, and profits dropped by 61.8%. The profit margins in 2010 and 2009 were 45.97% and 38.8%, and the EBT margins were 57.98% and 35.85%. EPS climbed by 78.78% to $2.25 in 2010. This implies a P/E of 10.1. The company also has modest growth expectations in its display and life sciences segments.
On March 2, the company completed its acquisition of MobileAccess, provides distributed antenna system solutions for flexible wireless coverage in the rapidly growing wireless market. MobileAccess is being integrated into Corning Cable Systems as Corning MobileAccess.
MasterCard (MA) had an EBT margin of 49.77% in 2010 and 13.5% in 2009. Revenues grew by 8.64% to $5.5 billion, after only increasing by 2.15% in 2009. EPS shot up by 25.9% to $14.05, which implies a P/E of 17.7. The company expects its EPS to grow at a compound annual rate of over 20 percent for 2011 through 2013. The company also had a return on equity of 42.29% in 2010 and 53.86% in 2009. Share price is up 4.3% since the earnings release on February 3.
Mastercard is the world's second-largest credit and debit processing network.
Visa (V) made $8.06 billion in revenues in 2010, which was an increase of 16.70%, after increasing 10.35% in 2009. Profits came in at $2.96 billion in 2010, which was an increase of 26.05%, after jumping by 192.66% in 2009. The profit margin was 79.58% in 2010 and 77.77% in 2009. EPS grew by 29.35% in 2010. Also, for the trailing 12 months, EPS was $4.21, which implies a P/E of 17.7.
Compared to Q1 2010, in Q1 2011, revenues grew by 14.1% to $2.23 billion, profits grew by 16% to $884 million, and EPS rose from $1.03 to $1.23.
On March 1, Visa finished acquiring PlaySpan, a privately held company whose payments platform handles transactions for digital goods in online games, digital media and social networks around the world.
This move complements Visa’s 2010 CyberSource acquisition, and extends the company’s capabilities into one of the fastest-growing segments of eCommerce - digital and mobile commerce.
Visa shares are up 5.6%, since the earnings release on February 2.
Ctrip (CTRP) made 3.06 billion RMB ($466.8 million) in revenues in 2010, which was an increase of 44.4%, after +33.6% in 2009. Profits came in at 1.05 billion RMB ($160.15 million) or +57.7% in 2010, after climbing 48.38% in 2009. The respective EBT margins were 38.8% and 36.07%. EPS grew by 49.2% to 6.97 RMB ($1.06), which implies a P/E of 36.8. For the first quarter of 2011, the company expects to continue the net revenue growth year-on-year at a rate of approximately 20%.
In Q4 2010, Ctrip made an investment in Dining Secretary China, which is a leading provider of free online and offline restaurant reservations for diners. Dining Secretary operates in many cities in China, serving diners and restaurants with a call center. Through this alliance, the two companies will be able to leverage their high-quality service experience, computerized operating platform, and expertise in the restaurant reservation business to provide more comprehensive services to our customers.
Ctrip.com is the a leading travel service provider for hotel accommodations, airline tickets, packaged tours and corporate travel management in China.
Dolby Labs (DLB) made $923 million in revenues in FY 2010, ending in September, which was an increase of 28.2%, after rising 12.38% in 2009. The respective EBT margins were 47.36% and 51.62%. EPS also grew from $2.11 to $2.46 or +16.59%. For the trailing 12 months, EPS was $2.62. So, the current P/E ratio is 20.8.
When compared to Q1 2010, in Q1 2011, revenues were up by 9.9% to $243 million, and EPS rose from $0.59 to $0.76. Also, on December 7, 2010, major China-based cinema company Dadi Media Group recently ordered 600 Dolby Digital Cinema systems. The orders include 600 Dolby Screen Servers and 600 Dolby CP750 Digital Cinema Processors. Dadi plans to have these digital cinema systems installed by the end of 2011.
Baidu (BIDU) made 7.9 billion RMB ($1.2 billion) in revenues in 2010, which was an increase of 77.9%, after rising 39.07% in 2009. The respective EBT margins were 51.3% and 37.84%. EPS rose sharply by 136.4% to 10.096 RMB ($1.537), which implies a P/E of 79.5. Baidu currently expects to generate total revenues in an amount ranging from 2.380 billion RMB ($362.3 million) to 2.450 billion RMB ($372.9 million) for the first quarter of 2011, representing an 83.9% to 89.3% year-over-year increase.
The company is the leading Chinese language Internet search provider.
Altera (ALTR) returned 35.5% on invested capital, and had revenues of $1.95 billion in 2010. From 2006 to 2010, Altera showed gross margins of 66.7%, 64.5%, 67.1%, 66.8%, and 70.99%, respectively. Also, in those years, respectively, the Company produced EBT margins of 27.98%, 26.7%, 30.66%, 25.56%, and 44.4%. The ROE in 2010 is 45.9%. In 2010, EPS grew by 196.4% to $2.49, which implies a P/E of 17.8. In FY 2011, the company expects gross margin to be 71% to 72%, and sales growth to be down 1% to 5%.
Altera is a global semiconductor company, serving over 13,000 customers within the Telecom and Wireless, Industrial Automation, Military and Automotive, Networking, Computer and Storage, and Other market segments. The Other market segment includes sub-segments of broadcast, consumer, medical and test.
ALTR is up 16%, since the earnings release on January 25.
BHP Billiton (BHP) had EBT margins of 37.07% and 23.14% in FY 2010 and FY 2009. The company made $52.79 billion in revenues in FY 2010, which was an increase of 5.15%, after falling by 15.57% in 2009. For the trailing 12 months, EPS is $6.12, which implies a P/E of 15.6.
For the half year, ended December 31, 2010, revenues were up by 39% to $34.1 billion. BHP Billiton is cautiously optimistic on the short term outlook for the global economy given the continuation of robust growth in emerging markets and further positive signs of a sustainable recovery in major developed economies such as the U.S. The company also expects to close its purchase of Chesapeake Energy’s (CHK) Fayetteville shale-gas holdings in Arkansas by the end of the Q1 2011.
TransOcean (RIG) made $9.57 billion in revenues in 2010, which was a decrease of 17.13%, after falling another 8.82% in 2009. The EBT margin shrunk to 13.57% in 2010, but was 33.96% in 2009. EPS fell by 69.61% to $2.99, which implies a P/E of 28.4.
Transocean is the world’s largest offshore drilling company. Shares of RIG are up 4.08%, since the earnings release on February 23.