For Immediate Release
Chicago, IL – December 6, 2018 – Zacks Equity Research Amedisys Inc. (AMED - Free Report) as the Bull of the Day, Colgate-Palmolive (CL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Deutsche Bank (DB - Free Report) , Societe General (SCGLY - Free Report) and Danske Bank (DNKEY - Free Report) .
Here is a synopsis of all four stocks:
Bull of the Day:
Headquartered in Baton Rouge, LA, Amedisys Inc. is a leading provider of at-home healthcare, from home health to hospice to personal care. This can include home-based recovery and rehabilitation after an operation or injury, care focused on empowering them to manage a chronic disease, palliative care for those with a terminal illness, or hospice care at the end of life.
Impressive Q3 Earnings
During the third quarter, EPS of 95 cents crushed the Zacks Consensus Estimate of 77 cents and grew almost 70% year-over-year.
Revenues of $417 million also beat our consensus estimate and jumped 11.7% from the prior year quarter.
Amedisys’s Home Health division generated revenues of $294 million, while Medicare revenues increased 8.7%. Its Hospice division saw revenues of $103.4 million, up 7.8% year-over-year.
Gross margin expanded 100 basis points (bps) to 40.2% in Q3.
In the company’s earnings release, CEO Paul B. Kusserow said “I am proud of our third quarter results and the strong execution of our team. We are pleased with the growth trends we continue to see in home health. Our performance in home health helped drive our significant results this quarter and I am delighted with the progress the home health segment has made this year.”
Year-to-date, AMED stock has gained over 150%. In comparison, the S&P 500 is up about 1%.
Estimates have been rising lately too, pushing the stock towards a Zacks Rank #1 (Strong Buy).
For the current fiscal year, Amedisys’s earnings are expected to grow 62% year-over-year. The Zacks Consensus Estimate has moved 17 cents higher in the past 60 days from $3.58 to $3.41 cents per share.
Next year looks pretty strong too, and earnings are expected to grow almost 13%; the consensus estimate sits at $4.04 cents per share, with eight upward revisions in the last two months.
AMED’s strong performance in 2018, plus encouraging growth in its Home Health and Hospice divisions, puts the company in a good spot heading into the new year. Plus, its recent acquisition of hospice care provider Compassionate Care Hospice will give Amedisys even more market share in the industry, making it the third-largest hospice provider in America.
For those investors looking for a healthcare stock to add to their portfolio, AMED should definitely be on the shortlist.
Bear of the Day:
Colgate-Palmolive (CL - Free Report) is a leading global consumer products company that focuses on oral care, personal care, home care, and pet nutrition. Colgate, which still holds 42% of the global toothpaste market, has some of the biggest brand names in its portfolio, including Colgate, Palmolive, Softsoap, Irish Spring, Tom’s of Maine, and Murphy’s Oil Soap.
Shares of Colgate-Palmolive have slumped about 16% since January, and lower-than-expected results in its third-quarter earnings report didn’t much help the stock.
Overall, Q3 was challenging for CL, with soft category growth rates across the company’s various markets.
Earnings of 72 cents per share matched the Zacks Consensus Estimate, but is down 1% from the price-year quarter.
Revenues fell 3% to $3.85 billion, missing our consensus estimate. Volume sales were flat during the period, and organic sales slipped 0.5%. Top line growth was also affected by trade inventory reductions in China and volatility in Brazil.
Adjusted gross margin also fell, down 120 basis points to 59.2% due to higher raw material and packaging costs. Adjusted operating margin was down 190 basis points.
CEO Ian Cook was disappointed in the results, saying “The third quarter was a challenging one with category growth rates remaining soft in many markets and unfavorable movements in foreign exchange."
It didn’t take long for analysts to lower their estimates for fiscal 2018, and nine have slashed their earnings outlook in the last 60 days; our consensus has fallen 6 cents from $3.02 to $2.96. But, earnings could grow around 3% for this time period.
The consensus estimate has fallen for next fiscal year, too, down 17 cents from $3.22 to $3.05 per share. Nine analysts have also cut their estimates for this time period as well.
CL is a Zacks Rank #5 (Strong Sell).
Looking ahead, Cook said he does still see some of the same challenges for Q4, but noted uncertainty in the global markets. Colgate-Palmolive anticipates a low-single-digit organic sales increase, but lowered adjusted earnings guidance just a bit from mid-single-digit growth to 3%-4%.
If you’re an investor looking for a similar consumer staples stock pick to add to your portfolio, you may want to consider Church & Dwight Co., owner of the Arm & Hammer baking soda brand. This cleaning materials company is a #2 (Buy) on the Zacks Rank, and currently expects 17.5% earnings growth for the year.
EU to Finalize Bank Reform Before End of the Year
On Tuesday, Finance ministers finally agreed upon a set of policies directed toward strengthening the EU banking sector. The agreement came after almost two years of discussion on the so-called "banking package" that was proposed by the European Commission in November 2016.
The agreed upon measures are expected to ensure financial stability by addressing issues that previously was ignored. Also, banks' lending capacity is likely to improve and thus better support the EU economy.
Commission Vice-President Valdis Dombrovskis expressed his delight at the parliament and council reaching an agreement on the banking package, after months of “very complex and technical discussions.” He further added, “This very important risk-reducing package complements the progress that has already been achieved over the past years, and lays the basis for further progress on strengthening the Banking Union."
While some matters are yet to be decided upon, the Commission expects to finalize the political agreement by the end of the year.
Key Highlights of the Meeting
Riskier European banks will be subject to higher capital requirements and they will require to adopt methodologies that are able to reflect more accurately the actual risks to which the institutions are exposed.
Pre-determined leverage ratio would be implemented on the banks to keep them from excessive leverage along with a fixed net stable funding ratio to control the dependence on short-term wholesale funding and to reduce long-term funding risk.
Notably, Global Systemically Important Institutions such as Deutsche Bank or Societe General are required to hold minimum levels of capital and other instruments, which bear losses in resolution. This requirement — Total Loss-Absorbing Capacity — is expected to increase the resilience of institutions and enhance financial stability.
Further, measures that target to bolster lending capacity of banks are directed toward relaxing requirements for smaller and less complex banks. Rules regarding CRD/CRR and those relating to deferral and remuneration using instruments, such as shares are to be made proportionate to institutions structure. Also, reporting and disclosure requirements are to be relaxed for small banks.
Take on Actions to Tackle Money Laundering
Addressing the prior instances of alleged money laundering activities in the region, such as Danske Bank scandal that refers to almost $230 billion in transactions that were processed by its Estonian branch during 2007-2015, the council has adopted a number of short-term non-legislative actions. These will enhance the supervision of anti-money laundering (AML) activities.
A 'post-mortem' review of the recent alleged money laundering cases involving EU banks is to be conducted to acknowledge the factor that enabled or led to them. Also, the key areas that need closer scrutiny by prudential supervisors in relation to money laundering or terrorist financing risks are to be identified.
The action plan has a key objective of improving supervision and exchange of information between the relevant authorities. This will be done by monitoring implementation of the ESAs' risk-based supervision joint guidelines and expand them to include guidance on best practices for the imposition of administrative sanctions in cases of breach of AML rules.
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