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Steve Hach is the Senior Editor at ValuEngine.com, a Melbourne, Florida-based stock valuation and forecast service. ValuEngine utilizes Ivy League financial research as the basis for its coverage of more than 8000 US, Canadian, and other foreign stocks. Hach utilizes ValuEngine's complex... More
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  • Boeing Lands Major Deal At Paris Air Show
    --Order Up! Boeing Lands Major Deal at Paris Air Show

    The Boeing Company (NYSE:BA) is one of the world's major aerospace firms. The company operates in three principal segments: commercial airplanes; military aircraft and missiles; and space and communications.

    We saw last week that the airline industry is having some issues with growth this year and that while shareholders have been happy with various profit-raising measures, squeezing customers for every last dime may not be the wave of the future when it comes to earnings growth.

    Many airlines are using older aircraft which are beginning to be more trouble than they are worth do to poor fuel mileage, high maintenance costs, and outdated cabins. One possible path to greater profits is newer equipment that is more fuel efficient, carries more customers, and allows for the sale of even more profit-boosting amenities to a captive audience.

    It seems that this upgrade process is ongoing and may even be accelerating with the news today that Boeing has landed a mega deal for 100 brand new, state-of-the-art 737 Max aircraft at the Paris Air Show. The Wall Street Journal reports that Boeing, working with Aercap Holdings NV (NYSE:AER), has signed a $10.7 billion dollar deal for the new planes. Aercap is the world's largest independent lessor of aircraft.

    Aercap Holdings is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales.They also provides aircraft management services and performs aircraft and engine maintenance, repair and overhaul services and aircraft disassemblies through its certified repair stations.

    Aercap is rated more highly by our models than BA, we continue our STRONG BUY recommendation on AERCAP HLDGS NV for 2015-06-15. Based on the information we have gathered and our resulting research, we feel that AERCAP HLDGS NV has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE P/E Ratio and Company Size.

    The newly announced Aercap deal is in addition to 737 orders already announced for SMBC Aviation, Indonesia's Sriwijaya Air, and China's Rulli Airlines and Minshing Financial. The only bad news for Boeing seems to be word that Russian Carrier Aeroflot canceled an order for Boeing's 787.

    (click to enlarge)
    Boeing 737 Max in Southwest Livery

    So far, the Paris Air Show has thus resulted in more than 400 planes being sold from Boeing and European rival Airbus. The WSJ notes that " the new business Boeing and rival Airbus Group SE have racked up underscores the undiminished appetite for new aircraft from airlines and lessors, driven in part by robust world-wide growth in demand for air travel and low interest rates."

    Boeing also issued a forecast for more than 38,000 new jets over the next 20 years and expects that many of those will be for single-aisle jets like the 737. That's a lot of business for Boeing and Aerbus to fight over in the not-so-distant future.

    It appears that while airlines may have hit a temporary rough patch, increased competition means a move to new equipment and this will be good news for Boeing moving forward. Of course, it will take a while for analysts to adjust earnings estimates and to run the numbers on these latest sales announcements. We currently have a HOLD on Boeing, but that may change as we have seen some fluctuation in Boeing's rating, with the latest change in status coming on May 18th--downgrade to HOLD.

    Below is today's more extensive data on BA:

    VALUENGINE RECOMMENDATION: ValuEngine continues its HOLD recommendation on BOEING CO for 2015-06-15. Based on the information we have gathered and our resulting research, we feel that BOEING CO has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Book Market Ratio.


     






    ValuEngine Forecast
     Target
    Price*
    Expected
    Return
    1-Month142.820.37%
    3-Month143.150.60%
    6-Month144.431.50%
    1-Year148.654.47%
    2-Year141.30-0.70%
    3-Year133.61-6.10%

     















    Valuation & Rankings
    Valuation0.59% overvaluedValuation Rank(?) 62
    1-M Forecast Return0.37%1-M Forecast Return Rank 78
    12-M Return5.21%Momentum Rank(?) 61
    Sharpe Ratio0.79Sharpe Ratio Rank(?) 87
    5-Y Avg Annual Return15.67%5-Y Avg Annual Rtn Rank 80
    Volatility19.77%Volatility Rank(?) 79
    Expected EPS Growth4.81%EPSGrowth Rank(?) 34
    Market Cap (billions)101.44Size Rank 100
    Trailing P/E Ratio16.55Trailing P/E Rank(?) 72
    Forward P/E Ratio15.79Forward P/E Ratio Rank 56
    PEG Ratio3.44PEG Ratio Rank 12
    Price/Sales1.10Price/Sales Rank(?) 66
    Market/Book874.51Market/Book Rank(?) 1
    Beta0.98Beta Rank 50
    Alpha-0.05Alpha Rank 54

    Jun 16 11:52 AM | Link | Comment!
  • Wal-Mart Pay Raises Help Workers And Business?

    VALUATION WARNING: Overvalued stocks now make up 66.07% of our stocks assigned a valuation and 28.18% of those equities are calculated to be overvalued by 20% or more. ALL sectors are calculated to be overvalued--with nine at or near double digits.

    --Lesson (Re)Learned : Honey is Better then Vinegar Wal-Mart Pay Raises Help Workers and Business?

    Wal-Mart Stores, Inc. (NYSE:WMT) is the world's largest retailer. They are engaged in the operation of mass merchandising stores, which serve their customers primarily through the operation of three segments, which are the Wal-Mart Stores segment, the SAM'S Club segment and the International segment.

    For a very long time now, much of the information about retail giant Wal-Mart was decidedly negative. Crowded stores, substandard goods, closed-down main streets across the USA, poorly-paid workers, etc. For many shoppers, the lure of low prices was easily overcome by a reticence to subject one's self to the Wal-Mart "experience."

    It didn't help that a variety of viral stories on the internet discussed employees on government assistance, food drives for full-time workers, "random" scheduling that took no account of employee needs or family life, wealthy family heirs and heiresses on the Forbes list of the wealthiest prone to making gaffes, employees locked inside for night shifts, and other topics more reminiscent of the Gilded Age than one of the largest employers in the 21st Century United States.

    Faced with increasing labor issues like high turnover, union agitation, and various protests, the company responded in April with the news that they would immediately take steps to raise the wages of employees to a level that exceeded the US Federal minimum.

    Of course, as we noted at the time of that increase, one wonders whether this was a benevolent move on the part of workers, or more of a PR effort designed to undercut unions and perhaps stave off additional governmental regulation. it may have also had more to do with an improving economy and tightening labor market than good will as well. Shortly after Wal-Mart made its announcement, competitors like Target, TJ Maxx, and Marshalls announced similar pay increases for their workers.

    However, while it may have served a variety of purposes at the time, we are beginning to see signs that it may also have some beneficial effects for the firm itself beyond good PR. Company CEO Doug McMillon told shareholders at a briefing last Friday that managers have begun to report measurable decreases in turnover and a concurrent increase in job applications.

    At the same briefing, McMillan announced additional increases to the minimum wage for @100,000 US employees working in store delis and those that manage departments. He also went on to say that the company is considering further increases in minimum pay beyond the already promised increase to $10/hour. "This won't be the last jump,"McMillon noted. "There will be other moves above that as we manage the overall portfolio."

    There were also other changes announced which are designed to improve conditions for employees-- such as relaxed dress codes, more comfortable store HVAC settings, etc.

    Company management may be in the process of relearning the lesson that happy employees are better, more-productive employees and that good employees can play a role in boosting the bottom line. Or, they may merely be dealing with labor pressures due to a better economy--which may also hurt as shoppers with more revenue decide to head for the "greener pastures" of Target or competitors offering a nicer experience.

    Workers seem to be winning so far with this change in attitude, but it t will take some time to see if these changes also bolster the bottom line. The stock hit a 52-week low this week and has decreased @20% this year. Sales have been flat year-over-year, and Q1 earnings were down @6% yoy as well. Our models remain non-plussed and have ranked the stock a "3-Engine"--HOLD-- since September 10, 2014. The stock has declined @4% since the downgrade.

    As a bonus to our Newsletter readers,
    we are offering a FREE DOWNLOAD of one of our Stock Reports

    Read our Complete Detailed Valuation Report on Wal-Mart HERE.

    Below is today's data on WMT:

    VALUENGINE RECOMMENDATION:ValuEngine continues its HOLD recommendation on WAL-MART STORES for 2015-06-10. Based on the information we have gathered and our resulting research, we feel that WAL-MART STORES has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Earnings Growth Rate.


     






    ValuEngine Forecast
     Target
    Price*
    Expected
    Return
    1-Month73.170.33%
    3-Month73.821.22%
    6-Month74.452.08%
    1-Year75.823.96%
    2-Year70.23-3.70%
    3-Year76.144.40%

     















    Valuation & Rankings
    Valuation0.84% overvaluedValuation Rank(?) 65
    1-M Forecast Return0.33%1-M Forecast Return Rank 75
    12-M Return-5.00%Momentum Rank(?) 43
    Sharpe Ratio0.51Sharpe Ratio Rank(?) 75
    5-Y Avg Annual Return7.69%5-Y Avg Annual Rtn Rank 61
    Volatility15.17%Volatility Rank(?) 89
    Expected EPS Growth-2.01%EPSGrowth Rank(?) 23
    Market Cap (billions)235.07Size Rank 100
    Trailing P/E Ratio14.66Trailing P/E Rank(?) 79
    Forward P/E Ratio14.97Forward P/E Ratio Rank 62
    PEG Ration/aPEG Ratio Rank n/a
    Price/Sales0.48Price/Sales Rank(?) 84
    Market/Book3.76Market/Book Rank(?) 34
    Beta0.43Beta Rank 75
    Alpha-0.07Alpha Rank 50

    Tags: WMT, retail
    Jun 11 3:27 PM | Link | Comment!
  • Apple Announces Latest Updates And Changes

    VALUATION WATCH: Overvalued stocks now make up 62.79% of our stocks assigned a valuation and 25.44% of those equities are calculated to be overvalued by 20% or more. ALL sectors are calculated to be overvalued--with eight at or near double digits.

    --Yet Another Bite... Apple Announces Latest Updates and Changes

    Apple Inc. (NASDAQ:AAPL) is engaged in designing, manufacturing and marketing mobile communication and media devices, personal computers, and portable digital music players. The Company's products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and Mac OS X operating systems, iCloud, and a range of accessory, service and support offerings. It sells its products worldwide through its online stores, its retail stores, its direct sales force, third-party wholesalers, and resellers. Apple Inc. is headquartered in Cupertino, California.

    June is the time for the annual Apple Worldwide Developers Conference (WWDC). Held in San Francisco, this event allows the company to present key updates and changes to Apple operating systems, apps, computers, phones, tablets, and other aspects of its business to the media and the programmers who provide additional software for the tech juggernaut.

    This year's WWDC started Monday, and will run for the rest of the week. So far, the company has announced major updates and changes to both its computer and mobile operating systems. For the laptops and desktops, OSX will see a new iteration, OS X 10.11 "El Capitan." For those iPhones and iPads, iOS 9 will be released. It does not appear that these will be major upgrades, rather some additional features will be added, multi-tasking tweaked, Siri will be improved, etc. In addition, the latest Apple 'must have," the Apple Watch, will get an operating system update as well.

    Perhaps the biggest news from WWDC so far is the announcement that the company will create its own streaming music service to be run from iTunes, "Apple Music." This wasn't much of a surprise, as the company has been positioning itself for this circumstance for years, and it was a major reason for the $3 billion deal to purchase Beats back in May, 2014. The new streaming service will launch at the end of this month and cost $9.99. Initially it will run on Apple systems only. Android users will have to wait until the Fall to use the service.

    Perhaps what is most notable here--and what many analysts are discussing, is the genuine lack of a "WOW" factor. Apple has long been masterful at providing truly innovative products that simply cannot be ignored by its legions of "fanboys" and "fangirls." Basically on life support until the return of Steve Jobs and the creation of the iPod, iPhone, and iPad, Apple had products that were simply better than the rest with powerful, intuitive user interfaces that could not be matched.

    However, the recent WWDC has left many wanting more. We don't see innovation here, we see imitation. Imitation of competitors reminiscent of --GASP--Microsoft. Except Apple is actually imitating Microsoft with some of its tweaks--like the changes made to iPads to allow app "splitting" which first appeared in Windows 8.

    Or, the latest tweaks to the much-maligned Apple Maps app, which now feature integration for public transportation routes which has been available to Google Maps users for years? And the new "Proactive" feature for the iPhone which tailors phone content to the user in the same way Google's "Now" has also been doing for years?

    Reporters and analysts are discussing many of the latest WWDC announcements in reference to other, existing applications, features, and competitors whereas everything used to be starting from the brain of Jobs and his highly-creative Cupertino team of developers and designers.

    Of course, only time will tell if this is a problem, if Apple is faltering, or if the rest of the world has just caught up. It does not appear that users are any less enthusiastic for anything Apple. The initial Apple Watch sales data has been impressive--despite the typical hiccups with both hardware and software featured in the product. And, there have been reports that demand is outstripping supply.

    Critics have been predicting the company's downfall for decades. But since the devilish inter day S&P 500 low of 666 on March 9, 2009, the stock is up @1000%. Now the most oft-cited issue is that the company is so big that similar growth cannot continue at the same pace. It's just a tech behemoth awash in cash and would have to consume so much of the rest of the competitive universe that it simply cannot go on the same way. The stellar track record has to come back down to Earth at some point, doesn't it?

    One thing is for sure, the death of Apple co-founder and long-time CEO Steve Jobs hasn't had much of an effect on the stock's performance, and people betting against the company haven't done well. Our models remain enamored of the company, we have had a BUY on it since January 5, 2015.

    FULL DISCLOSURE: While we must admit that we long ago put our Mac Mini and iPod touch out to pasture in lieu of a Dell Windows machine and a Google Android Nexus 7 tablet, we still get frustrated when we get text messages from friends we cannot read because we don't have an iPhone.

    As a bonus to our Newsletter readers,
    we are offering a FREE DOWNLOAD of one of our Stock Reports

    Read our Complete Detailed Valuation Report on Apple HERE.

    Below is today's data on AAPL:

    VALUENGINE RECOMMENDATION: ValuEngine continues its BUY recommendation on APPLE INC for 2015-06-09. Based on the information we have gathered and our resulting research, we feel that APPLE INC has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Company Size and Sharpe Ratio.


     






    ValuEngine Forecast
     Target
    Price*
    Expected
    Return
    1-Month128.510.86%
    3-Month129.451.60%
    6-Month132.914.31%
    1-Year140.5310.29%
    2-Year146.4614.94%
    3-Year93.98-26.24%

     















    Valuation & Rankings
    Valuation13.64% overvaluedValuation Rank(?) 36
    1-M Forecast Return0.86%1-M Forecast Return Rank 95
    12-M Return40.91%Momentum Rank(?) 90
    Sharpe Ratio1.06Sharpe Ratio Rank(?) 93
    5-Y Avg Annual Return25.34%5-Y Avg Annual Rtn Rank 92
    Volatility23.90%Volatility Rank(?) 71
    Expected EPS Growth9.32%EPSGrowth Rank(?) 42
    Market Cap (billions)742.19Size Rank 100
    Trailing P/E Ratio15.16Trailing P/E Rank(?) 77
    Forward P/E Ratio13.87Forward P/E Ratio Rank 68
    PEG Ratio1.63PEG Ratio Rank 31
    Price/Sales3.50Price/Sales Rank(?) 28
    Market/Book6.17Market/Book Rank(?) 22
    Beta0.83Beta Rank 58
    Alpha0.29Alpha Rank 90

    Tags: AAPL, technology
    Jun 10 2:16 PM | Link | Comment!
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