Good luck today guys, hope everyone makes some tendies

Edit 8:30PM Thanks for the love and awards guys, hope everyone ended the week off positive, enjoy your weekend.

Of note for Airlines (LUV, DAL, AAL, UAL), the Airlines for Americas trade association says the industry needs “immediate financial assistance” to protect the 11mln jobs it represents.
Of note for Banks (JPM, C, MS, BAC, GS), the Fed is encouraged by a notable increase in discount window borrowing as banks show a willingness to use the window as a funding source to support the flow of credit to households and businesses.
Of note for Car Rental Services (HTZ, CAR), both Hertz and Avis Budget Corp have requested aid from the US government.

Dow Jones

Apple Inc. (AAPL) supply chain is reportedly still facing supply disruptions even as China recovers due to factory closures of suppliers in Malaysia. Elsewhere, it has limited the number of purchases on its iPhones to two per customer in the US and China, according to Canalys.
Boeing Company (BA) is reportedly leaning towards a temporary halt of operations at its twin-aisle jetliner factories due to the spread of the coronavirus, according to people familiar with the matter, in a similar move to Airbus (AIR FP).
Johnson & Johnson (JNJ) Global Supply Chain Officer Wengel announced its supply chain is currently holding steady and meeting patient needs.
Walmart (WMT) announced it is planning to give special cash bonuses for hourly associates for their work during the current conditions with full-time associates receiving USD 300 and part-time associates receiving USD 150, which will equate to USD 365mln. WMT is to also accelerate its next bonus for store, club and supply chain associates which will equate to USD 180mln, overall it will equate to USD 550mln, the co. says. WMT is to also hire over 150k hourly employees as the number of shoppers increases.

Nasdaq 100

Amazon.com Inc. (AMZN)– Some sellers state its decision to stop receiving non-essential inventory in response to the coronavirus pandemic could limit sales they need to make payments on its loans from Amazon.
Tesla (TSLA) announced it decided to temporarily suspend production at its Fremont, California factory and NY Factory after March 23rd. Elsewhere, CEO Musk announced his factories are working on ventilators to address a potential shortage.
United Continental Holdings (UAL) – Apollo Global Management (APO) has reportedly purchased part of the airlines USD 2bln loan from a group of banks, according to people familiar with the matter.

S&P 500

Accenture plc (ACN) had its PT cut at a number of brokers, however, they were positive on its ability to continue through the coronavirus crisis.
AFLAC Inc (AFL) American Family Life Assurance of Columbus and New York agreed to acquire Zurich North America's US corporate Life and Pensions. AFL expects the acquisition to be dilutive to 2020 adj. EPS by USD 0.02 to 0.03.
Altria Group Inc (MO) announced it is temporarily suspending operations at its Richmond manufacturing center.
Anthem Inc. (ANTM) announced it is offering up to 80 hours of paid emergency leave for qualifying needs, including if associates are experiencing coronavirus symptoms or for caring for young children whose school has been closed.
AT&T Inc. (T) announced it has cancelled is accelerates share repurchase programme of USD 4bln worth of stock, noting the impact of the coronavirus could be material although it cannot currently estimate the impact onto its financial or operational results.
Bank of America Corp (BAC) announced it is offering additional support for its consumer and small business clients in response to the coronavirus, where clients can request funds including overdraft fees, non-sufficient funds fees, and monthly maintenance fees through deposit accounts. Many customers can also request to defer any payments.
Carnival Corp. (CCL) preliminary Q1 20 (USD): EPS 0.22 (exp. 0.27), revenue 4.8bln (exp. 4.66bln); coronavirus resulted in a net loss of 0.23/shr.
Cintas Corporation (CTAS) Q3 20 (USD): Adj. EPS 2.16 (exp. 2.02), revenue 1.81bln (exp. 1.8bln), gross margin 45.5% (exp. 45.7%, prev. 44.9% Y/Y); announced it is not providing guidance for Q4 20 and it is suspending FY20 guidance due to uncertainty surrounding the coronavirus.
Coty, Inc (COTY) provided an update on the current situation: Expects Q3 20 revenue to fall approximately 20% like for like, with a meaningful impact on profit, it has also withdrawn FY20 guidance. It is recommending to the board that shareholders be given the option to receive up to 100% of their quarterly dividend in kind for the coming two quarters. Its largest shareholder JAB decided to fully repay the loan it used to finance the tender offer in 2019. It is taking initiatives to manufacture hand sanitizer. Notes activations on Amazon have seen US sales nearly double in recent weeks, as well as launching the Kylie skin-care Europe in upcoming weeks; it is also preparing for increased demand post coronavirus.
Danaher Corp. (DHR) announced the US FTC is on board with the acquisition of General Electric’s (GE) Life Sciences Biopharma Business. The closing of the deal is still subject to customary closing conditions as announced in the agreement, but DHR expects the deal to close on March 31st, 2020.
Ford Motor (F) announced it has plans to suspend production in Argentina and Brazil starting next week due to the coronavirus.
Kohl's Corp. (KSS) announced it is to close its stores nationwide through to at least April 1st, although customers will still be able to shop on its App. It also withdrew guidance for Q1 and FY20.
Mylan N.V. (MYL) announced it is increasing production of its malaria drug for potential use to combat the coronavirus.
Occidental Petroleum (OXY) is reportedly planning on naming its former CEO Stephen Chazen as its new chairman as it tries to improve amid weak demand and activism from Carl Icahn, according to WSJ citing people familiar with the matter.
Sysco Corp. (SYY) announced it will donate 2.5mln meals over the next four weeks as part of its response strategy to help against COVID-19. Elsewhere, it has withdrawn its three-year plan guidance due to the impact from the coronavirus.
Tiffany & Co. (TIF) Q4 19 (USD): Adj. EPS 1.80 (exp. 1.77), revenue 1.4bln (exp. 1.36bln); SSS +3%, SSS Ex-Hong Kong +5%, Gross Margin 63.3% (Prev. Y/Y 63.8%). Announced it will not be issuing FY20 guidance due to the pending merger with LVMH

Other

Crowdstrike (CRWD) Q4 19 (USD): Adj. EPS -0.02 (exp. -0.08), Revenue 152mln (exp. 137mln); FY21 Adj. EPS view -0.14 to -0.10 (exp. -0.18), revenue view 723-733mln (exp. 685mln)
Samsung (SSNLF) has reportedly been hit hard by Vietnam’s travel restrictions from South Korea, fueling concerns its Galaxy Note smartphones will fall behind schedule in its largest manufacturing hub outside South Korea
Teva (TEVA) announced it will be donating over 6mln doses of hydroxychloroquine sulfate tablets across the US to meet the urgent demand for the medicine as an investigational target to treat the coronavirus.

Additional US Equity Stories

Of note for casino names (MGM, CZR, WYNN, MLCO); Macau has halved its 2020 gaming revenue forecast due to the coronavirus and predicts a 56% fall from previous year to USD 16bln.
US Steel (X) Q1 20 (USD): Adj. EPS view -0.80 (exp. -0.84), EBITDA 30mln.
Coca Cola (KO) does not expect to meet its FY20 guidance, although does not foresee any near-term interruptions to its concentrate or beverage-based production. Meanwhile, it had its PT lowered at Deutsche Bank to USD 53/shr from USD 64/shr, although the desk reiterated its long-term buy rating.
Ross Stores (ROST) announced it is to temporarilty close all of its stores throughout the US due to the coronavirus.
Dollar Tree (DLTR) announced it is hiring 25,000 associates (both full and part time) to help across its stores in the US.
Synaptics Inc. (SYNA) downgraded to Underweight from Neutral at JP Morgan
Colgate Palmolive (CL) upgraded to Buy from Neutral at BofA
Accenture (CAN) upgraded to Buy from Neutral at MoffettNathansonMonster Beverage

Key Stats for Carnival Corp

With the Olympics in Rio, let's talk Carnival ;)

Ticker	CCL
Sector	Cruise Lines
Latest price	$46.71
Value	$34,900M
Daily vol	$163M
Date	02 August 2016

Useful Links

• Latest news from Google Finance and Yahoo Finance
• Latest results from SEC Edgar
• Website: http://www.carnivalcorp.com

Description

Carnival is a cruise company and provides vacations to cruise destinations throughout the world.

Recent financials

Looking at their financials I am immediately annoyed by the presence of "Adjusted EPS", which unsurprisingly has been higher than EPS for each of the last 5 years. Also, it's remarkable how big the capex is every year, Over $2bn. Wow. That's a lotta boat. Other items that stand out are their need to highlight lots of FX rates, the price of oil, and the efficiency of their oil usage. Though am glad to see that passenger numbers continue to grow!

Metric	2015A	2014A	2013A	2012A	2011A
Passengers	10.8m	10.6m	10.1m	9.8m	9.6m
Revenue	$15.7bn	$15.8bn	$15.5bn	$15.4bn	$15.8bn
EPS	$2.26	$1.56	$1.36	$1.65	$2.42

Competition

From their filings:

We compete with land-based vacation alternatives throughout the world, such as hotels, resorts (including all-inclusive resorts), theme parks, organized tours, casinos, vacation ownership properties, and other internet-based alternative lodging sites. Our principal cruise competitors are Royal Caribbean, Norwegian and MSC Cruises. Almost 90% of all 2014 global cruise guests sailed with these competitors and us.

And from an industry dynamic

The 2015 annual penetration rates when computed based on the number of annual cruise guests as a percentage of the total population are as follows: 4.0% for Australia and New Zealand, 3.4% for North America, 2.7% for the United Kingdom (“UK”) and 1.9% for continental Europe. Cruising in China is in the early stages of development.

So it's a really consolidated sector with just 3 big players. Plus there's still rather a low penetration rate for the industry. And given aging populations, and the potential to say cruises are safer, maybe there are some pretty helpful dynamics here for CCL and it's peers.
Though, I fear that this is a rather capital intensive business. Whereas hotels can have franchises or lease the property, you sort of have to have a boat? Is that why the returns on equity are low compared to the hotel majors?

Companies	Latest Sales	Operating Profit	Return on Equity
Carnival Corp	$15,950M	29%	10%
Royal Caribbean Cruises Ltd	$8,401M	26%	9%
Norwegian Cruise Line Holdings Ltd	$4,484M	27%	14%
Hotels
Hilton Worldwide Holdings Inc	$11,552M	23%	29%
Marriott International Inc	$14,958M	10%	N/A
Marriott Vacations Worldwide Corp	$1,808M	14%	12%
Starwood Hotels & Resorts Worldwide Inc	$5,257M	20%	39%
Wyndham Worldwide Corporation	$5,582M	22%	63%
InterContinental Hotels Group PLC (ADR)	$1,803M	43%	N/A

Cash / Debt?

Carnival Corp has $8,910M of net debt. That is 1.9x it's latest operating profit. Not worrisome, and given the capital they have in terms of boats, I suppose it makes sense to load the business with debt! Though perhaps that wasn't a great strategy during a recession?

Wall Street thinks?

The professionals on Wall Street have a $57.00 for Carnival Corp and their recommendation to clients is Buy. That implies an upside of 22% to their target.

Valuation

The Cruise sector is clearly cheaper than the major hotels. Dramatically so. Though on a free cashflow basis Some of the hotels do manage to generate a similar amount of cash.

View Peers	Valuation	Forecast PE	Long-term Growth	Dividend Yield	FCF Yield
CCL	$34,900M	14x	16%	3%	14%
RCL	$15,467M	12x	21%	2%	12%
NCLH.O	$9,639M	11x	36%	0%	10%
Hotels
HLT	$23,082M	25x	13%	1%	11%
MAR.O	$18,111M	19x	16%	1%	7%
VAC	$2,046M	16x	16%	2%	8%
HOT	$13,176M	26x	5%	2%	6%
WYN	$7,657M	12x	N/A	3%	13%
IHG	$7,874M	20x	9%	2%	19%

Dividends

Carnival Corp is forecast to pay a dividend of $1.29 per share, compared with a historic dividend of $1.25 per share. That is a 3% growth. The forecast dividend of $1.29 compares to a forecast EPS of $3.33.

Catalysts

In the last 3 months the stock price has moved by -6% that compares with a change in the earnings forecasts of -2%. That's against a backdrop of sales up 3% in the first 6 months, with reasonable demand.
Here's a link to the management team's latest call with Wall Street brokers.

(Signs for) the remainder of the year are very strong for our brands enabling us to raise our revenue yield expectations and affirming our conviction to deliver over 20% earnings growth this year.

Though they do go on to say that their "return on capital" is just 9% though they hope to get it to double digits. And they expressed confidence in their financial position which allowed them authorise a new share buyback.
Sure the geopolitical uncertainty isn't good for the travel industry, but aren't cruise ships pottering round the Caribbean insulated from that? Yes Brexit is bad with £ earnings now worth less in $. Though on the other hand, surely there is a great opportunity for secular growth in China and the rest of Asia?
At 14x earnings, it's not ridiculous a valuation, is it? Even if FX is a headwind. Though a 9% Return on Capital is the counter balance?
So...party time?
View the archive of Stock a Day posts at it's subreddit stockaday.
And please send us suggestions on what you'd like us to research next!
If you'd like to join the writing team please get in touch. Our writing template is available here if you'd like to use it to pen your own stockAday type posts :).
Disclosure: I have no positions in any stocks mentioned. However I may initiate a position within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Reddit, moderators, and the author do not advise making investment decisions based on discussion in these posts. Analysis is not subject to validation and users take action at their own risk.
Author notes: u/shane_stockflare works at a financial data company, Stockflare, and is a Chartered Financial Analyst. Previously he worked at Credit Suisse, where he was an equity research analyst covering tech stocks and at Citigroup where he was an investment banker.

Key Stats for Carnival Corp

With the Olympics in Rio, let's talk Carnival ;)

Ticker	CCL
Sector	Cruise Lines
Latest price	$46.71
Value	$34,900M
Daily vol	$163M
Date	02 August 2016

Useful Links

• Latest news from Google Finance and Yahoo Finance
• Latest results from SEC Edgar
• Website: http://www.carnivalcorp.com

Description

Carnival is a cruise company and provides vacations to cruise destinations throughout the world.

Recent financials

Looking at their financials I am immediately annoyed by the presence of "Adjusted EPS", which unsurprisingly has been higher than EPS for each of the last 5 years. Also, it's remarkable how big the capex is every year, Over $2bn. Wow. That's a lotta boat. Other items that stand out are their need to highlight lots of FX rates, the price of oil, and the efficiency of their oil usage. Though am glad to see that passenger numbers continue to grow!

Metric	2015A	2014A	2013A	2012A	2011A
Passengers	10.8m	10.6m	10.1m	9.8m	9.6m
Revenue	$15.7bn	$15.8bn	$15.5bn	$15.4bn	$15.8bn
EPS	$2.26	$1.56	$1.36	$1.65	$2.42

Competition

From their filings:

We compete with land-based vacation alternatives throughout the world, such as hotels, resorts (including all-inclusive resorts), theme parks, organized tours, casinos, vacation ownership properties, and other internet-based alternative lodging sites. Our principal cruise competitors are Royal Caribbean, Norwegian and MSC Cruises. Almost 90% of all 2014 global cruise guests sailed with these competitors and us.

And from an industry dynamic

The 2015 annual penetration rates when computed based on the number of annual cruise guests as a percentage of the total population are as follows: 4.0% for Australia and New Zealand, 3.4% for North America, 2.7% for the United Kingdom (“UK”) and 1.9% for continental Europe. Cruising in China is in the early stages of development.

So it's a really consolidated sector with just 3 big players. Plus there's still rather a low penetration rate for the industry. And given aging populations, and the potential to say cruises are safer, maybe there are some pretty helpful dynamics here for CCL and it's peers.
Though, I fear that this is a rather capital intensive business. Whereas hotels can have franchises or lease the property, you sort of have to have a boat? Is that why the returns on equity are low compared to the hotel majors?

Companies	Latest Sales	Operating Profit	Return on Equity
Carnival Corp	$15,950M	29%	10%
Royal Caribbean Cruises Ltd	$8,401M	26%	9%
Norwegian Cruise Line Holdings Ltd	$4,484M	27%	14%
Hotels
Hilton Worldwide Holdings Inc	$11,552M	23%	29%
Marriott International Inc	$14,958M	10%	N/A
Marriott Vacations Worldwide Corp	$1,808M	14%	12%
Starwood Hotels & Resorts Worldwide Inc	$5,257M	20%	39%
Wyndham Worldwide Corporation	$5,582M	22%	63%
InterContinental Hotels Group PLC (ADR)	$1,803M	43%	N/A

Cash / Debt?

Carnival Corp has $8,910M of net debt. That is 1.9x it's latest operating profit. Not worrisome, and given the capital they have in terms of boats, I suppose it makes sense to load the business with debt! Though perhaps that wasn't a great strategy during a recession?

Wall Street thinks?

The professionals on Wall Street have a $57.00 for Carnival Corp and their recommendation to clients is Buy. That implies an upside of 22% to their target.

Valuation

The Cruise sector is clearly cheaper than the major hotels. Dramatically so. Though on a free cashflow basis Some of the hotels do manage to generate a similar amount of cash.

View Peers	Valuation	Forecast PE	Long-term Growth	Dividend Yield	FCF Yield
CCL	$34,900M	14x	16%	3%	14%
RCL	$15,467M	12x	21%	2%	12%
NCLH.O	$9,639M	11x	36%	0%	10%
Hotels
HLT	$23,082M	25x	13%	1%	11%
MAR.O	$18,111M	19x	16%	1%	7%
VAC	$2,046M	16x	16%	2%	8%
HOT	$13,176M	26x	5%	2%	6%
WYN	$7,657M	12x	N/A	3%	13%
IHG	$7,874M	20x	9%	2%	19%

Dividends

Carnival Corp is forecast to pay a dividend of $1.29 per share, compared with a historic dividend of $1.25 per share. That is a 3% growth. The forecast dividend of $1.29 compares to a forecast EPS of $3.33.

Catalysts

In the last 3 months the stock price has moved by -6% that compares with a change in the earnings forecasts of -2%. That's against a backdrop of sales up 3% in the first 6 months, with reasonable demand.
Here's a link to the management team's latest call with Wall Street brokers.

(Signs for) the remainder of the year are very strong for our brands enabling us to raise our revenue yield expectations and affirming our conviction to deliver over 20% earnings growth this year.

Though they do go on to say that their "return on capital" is just 9% though they hope to get it to double digits. And they expressed confidence in their financial position which allowed them authorise a new share buyback.
Sure the geopolitical uncertainty isn't good for the travel industry, but aren't cruise ships pottering round the Caribbean insulated from that? Yes Brexit is bad with £ earnings now worth less in $. Though on the other hand, surely there is a great opportunity for secular growth in China and the rest of Asia?
At 14x earnings, it's not ridiculous a valuation, is it? Even if FX is a headwind. Though a 9% Return on Capital is the counter balance?
So...party time?
View the archive of Stock a Day posts at it's subreddit stockaday.
And please send us suggestions on what you'd like us to research next!
If you'd like to join the writing team please get in touch. Our writing template is available here if you'd like to use it to pen your own stockAday type posts :).
Disclosure: I have no positions in any stocks mentioned. However I may initiate a position within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Reddit, moderators, and the author do not advise making investment decisions based on discussion in these posts. Analysis is not subject to validation and users take action at their own risk.
Author notes: u/shane_stockflare works at a financial data company, Stockflare, and is a Chartered Financial Analyst. Previously he worked at Credit Suisse, where he was an equity research analyst covering tech stocks and at Citigroup where he was an investment banker.