prev

SINGAPORE Q1 2015 REVIEW

Takeaway: VIP distress

CALL TO ACTION

Overall, the gaming environment in Singapore remains challenging, particularly in the VIP segment. While MBS held up due in part to high hold, Q1 2015 was another bad quarter for Genting Singapore. Its RWS property lost market share in every gaming category. With no obvious catalysts for growth, Genting Singapore shareholders can only hope for value enhancing corporate activity. Periodic share repurchases are not enough.

 

Please see our detailed note:  

http://docs.hedgeye.com/SING_1Q_2015.pdf


Penney on Bloomberg: Shake Shack Shares Set to Fall 60-70%

Penney on Bloomberg: Shake Shack Shares Set to Fall 60-70% - penney bloomberg

Hedgeye Risk Management Restaurants Analyst Howard Penney discusses the performance and valuation of Shake Shack on "Bloomberg Markets" and explains why he thinks shares are 'egregiously overpriced.'

 


Initial Claims | Aggregate Claims Improve While Energy Layoffs Rise

Takeaway: The overall labor market remains supportive while job losses in the energy sector continue to grow.

Below is the breakdown of this morning's initial claims data from Joshua Steiner and the Hedgeye Financials team. If you would like to setup a call with Josh or Jonathan or trial their research, please contact 

 

JOB SEPARATIONS:  AGGREGATE vs ENERGY

Claims improved once again last week, falling to a seasonally adjusted 264k, continuing an impressive push below the frictional floor of 300k.

 

In the first chart below, we show that the spread between our indexed basket of energy state claims and the U.S. as a whole has tightened for the last few weeks, moving from 31.8 on April 11 to 24.8 on May 2.

 

However, the second chart below shows that the labor market in the energy sector worsened again in April. Job cut announcements in the energy sector had been running at 16-20k/month in January and February, but then appeared to show some glimmer of improvement when they fell to 1k in March. That didn't last long, as the latest data shows 20k more energy workers let go in April. 

 

Initial Claims | Aggregate Claims Improve While Energy Layoffs Rise - Claims18 normal  1

 

Initial Claims | Aggregate Claims Improve While Energy Layoffs Rise - Challenger

 

The Data

Initial jobless claims fell 1k to 264k from 265k WoW, as the prior week's number was unrevised. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell by -8k WoW to 272k.

 

The 4-week rolling average of NSA claims, another way of evaluating the data, was -14.2% lower YoY, which is a sequential improvement versus the previous week's YoY change of -12.2%

 

Initial Claims | Aggregate Claims Improve While Energy Layoffs Rise - 5.14.15Claims2 normal

 

Initial Claims | Aggregate Claims Improve While Energy Layoffs Rise - 5.14.15Claims3 normal

 

Initial Claims | Aggregate Claims Improve While Energy Layoffs Rise - 5.14.15Claims4 normal

 

Initial Claims | Aggregate Claims Improve While Energy Layoffs Rise - 5.14.15Claims5 normal

 

Initial Claims | Aggregate Claims Improve While Energy Layoffs Rise - 5.14.15Claims6 normal

 

Joshua Steiner, CFA

 

Jonathan Casteleyn, CFA, CMT

 

 


real-time alerts

real edge in real-time

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.

May 14, 2015

May 14, 2015 - slide 1 fix


RTA Live: May 14, 2015

Here is the replay of today's edition of RTA Live.

 

 


KSS Quick Take - Not the Beat a $75 Stock Expected

Takeaway: Not the beat a $75 stock expected.

The headline beat does not mean much here, particularly given that the print is below where estimates were before it guided down in February. The key here is that the prevailing view over the past quarter has been that the KSS story is bullet proof. The company had just printed a 3.7% comp in 4Q, and people could not tell how much was easy comps, gas, or a structural change in the company’s model (new brands, beauty, rewards program). Management had an extremely active NDR schedule both on the road and at KSS HQ – where it seemed to perpetuate that the company was on the right path. Then the latest data from some of the more widely used services as well as commentary from its top competitor (JCP) all pointed toward comps of 4%+.

 

But here’s what we got…

  1. Only a 1.4% comp – far below the 4%+ expectation, and a sharp deceleration from the 3.7% comp that KSS reported previously that the Street seemed to think was straight-lineable throughout 2015.
  2. It was also well below JCP, which came in at 3.4%. We still think (based on our surveys) that KSS took $1bn in sales from JCP when it was down and out, and JCP will either earn it back, or buy it back. Either way, it’s bad for KSS.
  3. The upside was entirely due to lower SG&A spending, which grew at 1.6% versus guidance of 4-5%.  Let’s face it, if there’s any line item a company like KSS should be extremely accurate, it’s SG&A. It’s clear that they guided up on this line simply to take EPS numbers down for 1Q.  We think it will be tougher – if not impossible – to leverage this line once we see the changes in the credit program hit critical mass later this year (as outlined in our Black Book presentation on Tuesday replay link: CLICK HERE, materials link: CLICK HERE).
  4. Gross margins were up 18bps, which is nice. But at the same time we saw 5% growth in inventories, implying a 9-point negative swing in the sales/inventory spread – something we never want to see.

 

We still think that EPS will steadily march below $3.00 – at a time when consensus numbers are going over $6.00. There’ll be ebbs and flows by quarter, but overall we think this one will serve as an appropriate reminder when people are tempted to get bulled up on KSS’ multiple anytime in the future.

 


GET THE HEDGEYE MARKET BRIEF FREE

Enter your email address to receive our newsletter of 5 trending market topics. VIEW SAMPLE

By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails.

next