Today we shorted Carnival Cruise Lines (CCL) at $33.52 a share at 10:03 AM EDT in our Real-Time Alerts. Carnival bounced off an oversold low, but remains in a bearish TREND view per our Cruise Line specialist, Felix Wang.
McDonald’s is set to release March sales, along with 1Q13 earnings, tomorrow before the market open. Expectations are muted for March comparable sales but we believe the back half of the year is where there is most potential for a disconnect versus expectations. The stock has broken higher from $85 with no supporting increase in earnings estimates. The 1Q13 consensus estimate of $1.26 or 3% EPS growth looks aggressive but the company has many levers to manage the number. We will be hosting a call on April 25th to go through our bearish stance on MCD FY13 EPS versus expectations in more detail.
The company reported February sales on March 13th and, since then, MCD has outperformed the market by 340 bps. We continue to believe that the stock is ahead of the company’s fundamentals, with little upside to earnings for 2013 leaving the multiple embedded in the stock stretched.
Specific to the earnings release, we will be focused on the following:
The charts below illustrate what we believe the investment community will perceive as good, bad and neutral results for the US, Europe, and APMEA March sales.
Hedgeye held its 2Q13 Macro Call for institutional subscribers this week, which covered several themes we think will be big and noteworthy in the second quarter of 2013. We began the call with CEO Keith McCullough outlining his process. We use a combination of fundamental research combined with quantitative risk management.
The quantitative process involves using risk management signals and levels to determine entry and exit points for a stock or index. It involves a multi-duration model that includes: TRADE, TREND and TAIL. The fundamental research utilizes our world-class research team to find ideas that we can apply to our quantitative model.
We look at a combination of politics, monetary policy, economic health and other factors to see where certain companies and countries are at and how to trade them.
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Brazil's BOVESPA Index dropped -2.1% yesterday and is down -13.4% year-to-date. One of the worst performing markets on the planet, the country just experienced a 0.25% rate hike to 7.5% on central bank borrowing rates by Alexandre Tombini, the governor of the central bank of Brazil. It's the first rate hike since July 2011 and has given investors plenty to worry about. We like staying short commodities and short Brazil through the iShares MSCI Brazil Index ETF (EWZ).
In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance
CONSUMER TRENDS/PROMOTIONAL ENVIRONMENT
PENN’s quarter wasn’t too bad. The underperformance of the Southern Plains segment could have negative implications for PNK.
“Our first quarter adjusted EBITDA results were approximately $4 million below our guidance. Despite the first quarter challenges, operating results at Penn National’s East/West and Southern Plains segments exceeded the results contemplated in our guidance while the Midwest segment results met our expectations."
- Peter M. Carlino, Chairman and Chief Executive Officer of Penn National Gaming
CONF CALL NOTES
HIGHLIGHTS FROM THE RELEASE
“In Iowa, we await today’s decision from the Iowa Racing & Gaming Commission, related to our two proposed Hollywood branded gaming and entertainment development projects in Woodbury County"
This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.