Stock of the day 01/05/2015 – HSBC Holdings PLC/Kellogg Co/Walt Disney Co

Tuesday is yet another big day of earnings on both sides of the pond, with HSBC Holdings PLC, Kellogg Co and Walt Disney Co all revealing their latest quarterly results.

The gradual declines HSBC Holdings PLC saw over 2014 have abated slight in the New Year. The bank opened 2015 at £6.13, and had fallen to 18 month low by the middle of March, trading at £5.59. However, some controversial comments toward the end of April, namely that they were considering leaving Britain, rapidly pushed the stock to a high of £6.59; things are fallen off slightly since then, with HSBC now trading at £6.45.


(Source: IT-Finance.com 01/05/2015)

That threat last week to leave Britain in the case of a ‘Brexit’, with increased bank levies and enforced ring-fencing also playing a part, appeared to please investors, who pushed the bank 5% higher after the news. This headquarter review that has placed a return to Hong Kong in the mix, with many feeling HSBC, for all its ‘Brexit’ bluster, is simply following where the money is.

Elsewhere, HSBC continues to deal with the ongoing saga of the Swiss tax scandal, with the latest reports suggesting the bank with axe 260 jobs in its Swiss banking arm. It is also in the process of the multi-billion dollar sale of its Brazilian bank, recently appointing Goldman Sachs to take care of proceedings.

In terms for first quarter results, analysts have forecast revenue of $15.75 billion and $4.45 billion in net income. After HSBC missed estimates with its fourth quarter release the stock could be punished if it fails to meet expectations for the second time in a row. Given the mixed nature of its 2015 so far, analysts have HSBC at a consensus rating of ‘hold’ with a target price of £6.41.

Moving away from banking to cereal, Kellogg Co will be hoping to turnaround a choppy 2015 when it announces its own results. The company started the year at $65.67 after an erratic, if overall positive, 2014. Towards the end of January the cereal giant had reached a high of $69.88; however, things were looking very different by the middle of March when the company reached a low of $61.54. Despite a slight upswing towards the end of that month, taking it back to $66.57, in the past 19 days of trading Kellogg has only seen 5 days of gains, leaving it at a current price of $63.28.


(Source: IT-Finance.com 01/05/2015)

There have been some notable recent movements from Kellogg’s. The company hired former Wendy’s CMO Craig Bahner to run its Morning Foods division, whilst promoting from within to make Paul Norman president of Kellogg North America. It also revealed it is expanding its Belleville plant with the intention of producing a wider range of cereals; in contrast, Kellogg’s is closing its Clearfield facility in what looks like a move away from frozen foods, in the process losing around 200 jobs.

In a rather unsympathetic comment, Kellogg’s complained at the start of April that the international move towards clamping down on tax avoidance will likely harm the company’s profits; a complaint that is especially egregious considering if effectively has been paying no corporation tax in the UK. Since that reveal, the stock has been steadily declining as investors’ slowly lost confidence in the company’s immediate future.

In terms of its first quarter results, analysts are forecasting earnings per share of $0.92; back in its fourth quarter results Kellogg’s missed earnings estimates to post $0.86 vs the $0.92 expected, so investors will be wary of another disappointment. Due to its recent slump, analysts have Kellogg Co at a consensus rating of ‘hold’ with an average price target of $58.80.

Finally, the media mega-company Walt Disney Co has been on a bit of a tear since mid-2011 and 2015 is looking no different ahead of its Q2 earnings release. After opening the year at $94.97 Disney had fallen to a low of $90.06 at the start of February. However, this slump wasn’t to last, and a string of impressive news pushed the stock to an all-time high of $111.65 at the end of April, a price it wasn’t able to sustain as it is now trading at $108.78.


(Source: IT-Finance.com 01/05/2015)

That post-February surge was prompted by a 12% jump in the aftermath of its Q1 2015 earnings, with another 4.5% climb on March 12th following its annual shareholders meeting. Disney even managed a 1% leap, adding around $2 billion in value, just because it debuted the latest Star Wars trailer in mid-April. It is this final stat that shows how much more potential Disney has, even at these high levels.

With its own cabal of mega-earners alongside the dominant forces of Star Wars and Marvel, Disney has an upcoming slate of films to die for. After already having great success with its live-action version of Cinderella back in March, Disney has just released the Avengers: Age of Ultron in the US, after it already made $200 million in its first week internationally, with Marvel’s other 2015 film Ant-Man and the two latest offerings from Pixar still to come.

However, these films pale in comparison to December’s release of the 7th Star Wars film, the biggest cinematic event of the year and potentially Disney’s crowning jewel. To put it simply, with multiple billion-dollar franchises no other film studio can compare to the box office potential of Walt Disney. And this doesn’t take into account its television, cable network channels, theme parks and merchandising. Unsurprisingly, analysts have given Walt Disney Co a consensus rating of ‘buy’ with an average target price of $106.00.