Battle between two major players of US Airline Industry

This article presents a battle between two of the most popular US Airlines which are Delta Airlines and United Continental Holdings. There are so many companies slugging it out for your attention. We analyze the fights and let you decide on the winner. Delta Airlines (DAL) founded at 30^th May 1924 whereas its commercial operations commenced in June 17, 1929. On the other hand United Continental Holding (UAL) founded in 6^th April 1926 whereas its commercial operation commenced at March 28, 1931. The CEO of” DAL” is Richard Anderson whereas the behind UAL is Jeff Smisek. The market share by revenue of” DAL” stayed 16.3% in 2012 which is highest among all US carriers whereas for UAL it stood at 15.6% which is dip from 16% in 2012.

DAL scored 71 which are highest among all the US carriers, on the other hand the satisfaction index for UAL is lower than the best score of 69. DAL won Airline of the year which is published in Air Transport World Magazine’s 2014. As far as UAL is concerned it ranked as “Best Airline for North American Travel” by readers of Business Traveler Magazine.

On April 2008 Delta Airline merged with Northwest Airline whereas United Continental Holdings merged with Continental Airlines in May 2010. DAL destinations are in 56 countries whereas UAL destinations are in 62 countries. Delta skyMiles is one of a kind of a program in the US airlines industry which has no mileage expiration so users can redeem them whenever they want to. On the other hand UAL MileagePlus ranked the “Best Frequent-Flier Program” by readers of The Global Traveller for 10 consecutive years.

The Headquarter of Delta Airline is based in Atlanta, Georgia, US whereas UAL Headquarter is in Chicago, Illinois. The major Airport Hub for Delta Airline is Hartsfield-jackson Atlanta International Airport, Georgia. It is considered the world largest airline hub with nearly 1,000 Delta flights a day. For UAL George Bush International Airport, Houston, Texas is its major Airport Hub. The Fleet size of delta is around 722 Mainline Aircraft whereas it is 695 mainline Aircraft for UAL. Hence these two Airlines carries a major stake in US Airline Industry.

What makes ConocoPhillips distinct From the Rivals?

ConocoPhillips Co. is a multinational energy corporation whose headquarter is located in Houston, Texas in the United States. It is traded as COP in NYSE and was founded in August 30, 2002. The company products include oil, natural gas, petroleum, lubricants and petrochemicals.  It is the largest independent E &P Company in the Globe. It was created through the merger of Conoco Inc. and the Phillips petroleum co, and it was the fifth largest integrated oil company.

ConocoPhillips separate itself from most of the other major oil companies in the way that in 2013 the ConocoPhillips share price has started to decline. Whereas the other oil and gas exploration companies such as Exxon Mobil or chevron seems to have less impact on its share price during the last three month. ConocoPhillips due to its financial as well as operational result deserves to have more credit.

ConocoPhillips provided better outcomes as compare to Royal Dutch Shell as in the last month the adjusted Earnings per share reported is of $1.40 compared to the past quarter Earnings per share of $1.47. This slight 2% YOY decline is due to the weaker liquid prices.

From 2012 to2013 the net growth in production of ConocoPhillips remains at 30 MBOED where Canadian and the US liquids provide the largest share of growth. The driver of the Growth of ConocoPhillips is its high margin liquid products that will serve over the few years will bring more investment into play. In October 2013 the share price of ConocoPhillips (COP) has lost 12%. This price weakness has open the buying opportunity for the stock as valuation has come down but the fundamentals of the company and the positive catalyst are still remain intact.

COP now trades at 10.8x 2015 forward price-earnings multiple which are at 31% discount. Hence this current valuation should present a buy signals to the investors. Also the company, long term growth potential of 7.4% is not significantly differ from the estimates of S&P 500 companies. The stock offer a dividend yield of 4.2% which exceeds S&P 500 companies average of 1.9%.

Summary:

This article suggests that how ConocoPhillips differ itself form the other major competitors like Chevron and Exxon Mobil. In 2013 the share price of ConocoPhillips started to be in the decreasing side as compare to its competitors who have the less impact on their share prices during past three month but due to its financial and operational results ConocoPhillips deserves to have more credits as there performance are better as far as there results in these operations are concerned. The ConocoPhillips adjusted Earnings per share reported $1.40 compared to the past quarter Earnings per share of $1.47. This decline is due to the weaker liquid prices. In 2013 the net growth in production of ConocoPhillips remains at 30 MBOED where Canadian and the US liquids provide the largest share of growth. The growth drivers of ConocoPhillips are its high margin liquid products that will serve over the few years and will bring more investment into play. ConocoPhillips is trading at 31% discount; hence the current valuation gives the bullish trend which is attractive for the investors.

Nike VS Adidas-The Better Fit:

Nike, Inc. (NKE) was founded as Blue Ribbon Sports by Bill Bowerman and Phil Knight in January 1964; it was then officially renamed as Nike in 1971. Nike is a leader in the global athletic footwear and as per the 2013 data from Brand Directory, it is considered as the 60^th most popular brand in the world compared to Adidas at 187. The two major segments of Nike are Nike Brand and Other Businesses but over 90% of the company total revenue is generated from Nike Brand segment. The other Businesses segment includes Nike Golf, Converse and Hurley International.

In its fiscal second quarter Nike posted better revenues and earnings than expected because of its retail channels strength and  shift of the consumer toward high-end products and this could increase the Nike stock price . Nike expects that the world’s middle class population will increase to 1 billion consumers over the next decade and Nike is availing that opportunity as it concentrated its marketing effort in India and china particularly. Nike could also avail a benefit from five year deal of $1.1 billion with National Football League by supplying them gear.

Nike is also capitalizing yoga apparel market for women which is growing at a rapid pace, and by the end of 2019 global market share of Nike in all athletic apparel will grow to 6.5%. Additionally Nike running shoes called Flyknit also gain the popular among the consumers. . Western Europe is the region where Nike has a highest percentage future orders which increased to 26% whereas future orders in central and Eastern Europe increased to 13%. In North America and china orders raise to 11% and 4% respectively. China sales are weakened in the past but the recent improvement shows healthy sign for the Nike to achieve high future growth.

Adidas was registered in 1949 and was founded by Adolf Dassler in 1948 in Germany. Its Revenue Growth rate is 9.4%. In 2012 its Net Sales figure is around $14.88 billion. Adidas famous brand include Adidas Originals or the Heritage Line, Adidas Performance and Adidas Y-3. Some of the most famous brand ambassadors includes soccer star Lionel Messi, tennis player Novak Djokovic and basketball star Derrick Rose. Adidas produces the kits of many football teams around the world, and also produces the ball used in the UEFA champion League matches and Fifa World cup tournament since 1970. Adidas produces more than 245 million pairs of shoes in 2011. Adidas holds the uniform rights to the National Basketball Association, National Hockey League and Major League Soccer.

Impressive Fourth quarter Results of American Express:

American Express stock name is listed with the ticker name of AXP is the largest credit card issuing company in the world by the purchase volume. The company is capable of processing the thousands of millions of financial transactions on daily basis and is considered as the premium network for the high spending card members. This credit card issuing company is also helping the small business owners to succeed through the delivery of the purchasing power as well as the flexibility and financial stability. The customers are also provided commercial payment tools and means and they are also offered the expertise so that it is helpful for them to control themselves their spending and hence saving billions of dollars.

American Express fourth quarter results reported for fiscal 2013 shows highly impressive performance. The net income rise 100% to $ 1.3 billion. Card member spending rises 8% during the holiday which is the strong holiday expenditure among its members thanks to its impressive quarterly results.

 American Express brings 1.5 times as much net income despite of the low profit margin ratio of 15.4% versus master cards 38.2% which is mainly because high end customers are cater by the Amex and it has higher annual card fees. The popularity of American Express card is also because American Express cards fraud rates are very low and enjoy the good credit quality. Its rival companies operate an open loop network whereas the American Express network of closed loop will facilitates it to run a single fraud screen effectively.

According to the management of American Express, the billing earnings has leveraged  economic growth of US as the previous trends shows that the main source of revenue is customer billings which is increased by 4.5 times  comparing with the economic growth of the country. This reveals that when the economies grow by 1% then the revenue of the company from billing will grow by 4.5% which will reflect in the stock price. The expected growth rate of the economy of US in 2014 will be 3% and the American Express estimates that it’s billing to climb 13.5% in 2014. The stronger billing measures taken to control spending will increases credit card company profits in 2014. The bottom line grows by 11% from last year in fiscal 2014.

The American Express stock price suggests that it is fast growing and stable company as more and more people are switching to the AXP services for its numerous tools to satisfy the customer needs. For example, the company offers the information management and marketing tools for helping the entrepreneurs and merchants to build the business. This company is also regarded as the most reputed credit card issuing company that has never lost the customer loyalty and satisfaction with its services. The innovative ideas that keep emerging in terms of the services of the company also highlight the fact that the American Express stock price is stable and are profitable for all of those investors who want to buy the shares of the AXP either in bulk or at smaller quantity.

Summary:

The Article highlights the impressive performance of AXP in the fourth quarter results reported for fiscal 2013. The net income rise 100% to $ 1.3 billion. Card member spending rises 8% during the holiday which is the strong holiday expenditure among its members thanks to its impressive quarterly results. American Express brings 1.5 times as much net income despite of the low profit margin ratio of 15.4% versus master cards 38.2% which is mainly because high end customers are cater by the Amex and it has higher annual card fees. The popularity of American Express card is also because American Express cards fraud rates are very low and enjoy the good credit quality. When the US economy grows by 1% then the revenue of the company from billing will grow by 4.5% which will reflect in the stock price. Hence The American Express stock price suggests that it is fast growing and stable company as more and more people are switching to the AXP services for its numerous tools to satisfy the customer needs.

McDonald’s workers Files Law Suit over Minimum wage issue at three states of US:

McDonald’s Corp belongs to the sector of Consumer Discretionary listed with the ticker of “MCD” whereas its financial year ends at December 31^st. The company started off as a barbecue restaurant in 1940 by the McDonald brother but it was soon followed by opening the first McDonald franchise. McDonald has a network of 34,900 in 119 countries. The company ranks at number 111 in the fortune 500.  From Europe the company accounts for 39% of total revenue followed by US with 32%. McDonald’s primarily Utilizes a franchised-based business model with 81% of its outlets run as franchises as of September 30, 2013. McDonald operates 19% of its restaurants directly. Company-operated restaurants constitute 67% of total revenues generated by the company. McDonald’s also sells its company owned restaurants to franchiser. Franchised outlets contribute 33% of McDonald’s total revenues. The company is best known for its franchise model.

There is a growing protest movement going around related to the largest giant of fast food, McDonald who has not increased the hourly wages of the employees across the board. Its 2013 stock filing reveals that the campaigns related to the increased pay is one of the major risk factor that the company is facing and that will have the impact in the near future as well. This could pose a threat to the fast food global brand. 

In the mature market, hike in wages was the alarming situation for the company as according to the McDonald management “it would not be feasible to offset the higher labor cost with the price increase in products” These costs might intensify the issue related to the income inequality. 

Fast food workers advocate argue that the minimum wage should be $15 per hour. Most of the employees have the opinion that they have to bank on public assistance in order to meet their wants and needs as their current minimum wage is about $7.25 an hour.    

It was second year in a row that McDonald’s experienced the countrywide strikes from the fast food workers that are demanding $15 as a minimum wage. There is a growing movement in the social media campaigns as well. 

Will this hike in the minimum wage would have any impact on the company image or McDonald stock price still have to be figure out. According to the industry analyst there is a negligible impact on that industry that hire huge amount of minimum wage employees. Moreover the negative impact on the stock price is also minimal as stock prices are factored already in the prospective increase in wages.  In order to alert the investors related to the pending increase in wages McDonald take the help by using Security Exchange Commission filing.  

McDonald’s workers who have filed the suit claiming that they were not repaid or compensated for the cost that they incurred for cleaning their uniforms because the restaurant low pay driving the workers to clean their uniform on their own.

Looking at the earning highlights, McDonald beats the analyst expectations for EPS but slightly short of the consensus estimates for the revenues. Estimated EPS is about $1.509 but the actual happens to be $1.520. Similarly the estimated Revenue is about $7.33 billion but the actual one is $7.32 billion whose percentage change is -0.14%. The company-operated store revenues were about $4.92 billion in financial year 2013 whereas the franchise revenue in the same year is about $2.40 billion. The company also raised its quarterly dividend per share by 5% to $0.81.

Apple Posts Record Revenues for 1QFY14, but AAPL stock Price Tanks on Weak Guidance:

Apple Inc. registered with the ticker name AAPL design, develops and sells consumer electronics, computer software and personal computers. This American multinational corporation headquartered is located in Cupertino. Apple was founded by the Steve jobs. Their best line product includes Mac computers, i. Pod players, smartphones and tablets. As far as revenue is concerned it is the second largest I.T Company.

For the first quarter of fiscal 2014, AAPL reported record revenues and the sole reason for AAPL earnings is that it sold more ipads and iPhones. On revenue of $57.6 billion the reported EPS is of $14.5 whereas the estimation of EPS is of $ 14.09.

The company has a record ipad sale of 26 million units beating all kinds of AAPL estimates by one million, Sales increases at a rate of 14% YOY. In the same way the sales of iPhones also increases while analyst were expecting the sales of 54 to 55 million units during the quarter while the actual was 51 million units. Hence the number fell short of what expected. The sales of Mac computers also rise as compare to previous years. The company expects its margin to be around 37% and 38% for the current quarter but following the AAPL stock news, the AAPL stock price shed 8.1% after hours.

Despite of the good AAPL earnings still there is a concern related to the company growing prospects. The consumers has become a price conscious. Most of the smart phone makers are competing on a price which ultimately gives consumer a benefit in the shape of reduced prices. But as far as Apple is concerned yet it has not decided to introduce low-end phones in the market.

When it comes to the new product launches, the company has also far behind in addition to growing price competition. Samsung and many other has launches its new product whereas no new Apple products have entered the market since the introduction of ipad in 2010. Also Apple IOS face a competition from Google Android operating system.

To counter the severe competition from other companies, Apple is maximizing its effort to gain its market share in emerging market. The company has also made a deal China Mobile (CHL) which is the world biggest carrier could also bolster sales. Also in late 2013 Japanese telecom and DoCoMo started offering iPhone. Apple has relaxed its policies and offered favorable terms on selling its devices through retail outlets that enables Russia’s second largest mobile operator, OAO MegaFon (MFON) an opportunity to sell its iPhones again in 2010.

In order to cash in the preference for bigger displays Apple is expecting to launch devices with large screen size. The company has also started a project of mobile payment system. In the iTunes store more that 400 million users use credit cards. AAPL estimates that this project will bring stronger results in the future.

Reasons for the rise in stock price of General Electric:

General Electric Co. (GE)  is considered to be one of the largest industrial conglomerates in the world that Cover many areas including household appliances, business and consumer financing, industrial products such as jet engines, power generation, water processing, as well as products for medical imaging. The segment of Aviation is one of the fastest growing segments whose five year revenue compound annual growth rate is of 3%. General Electric capital is involved in the businesses like Energy financial services, General Electric Capital Aviation Services, GECC Eliminations & Corporate Items and Consumer Lending & Leasing and consumer real Estate. Incorporated in New York, the conglomerate is headquartered in Fairfield, Connecticut, USA. As of 2013 the total numbers of employees in General Electric are 305,000 employees. GE was 26^th largest Fortune 500 firm in the U.S. in 2011, and the 14^th in terms of profitability.

In this article we discussed the reason for the pick up shares of GE stock which is because of General Electric continued incursion in to the energy market of all varieties. It shift the focus away from unpredictability that associated with General electric capitals recent form, and the main driver for the General electric big profits are its spending on energy and its concentration towards this segment, and the fact is that GE focus is not in just producing more energy but producing the energy in a cost effective and more efficient manner is the win-win situation for GE stock and its shareholder. GE’s stock prices have received glowing future projections in terms of market performance from experts across board in recent times. According to the Financial Times, as of February 8, this year, the conventional agreement and projections among 19 interviewed investment analysts following GE stocks recommend that the company is in a strong position to outperform the market. Operating earnings for General Electric which suggest the earnings from its core activities rise around 20% on year to year bases during fourth quarter and the key driver for the boost in profit was the sales from General Electric energy business. GE has continuously strengthened the dividend payout ratio. General Electric current stock yield is 3.5% which is very attractive for the investors but still it will further increases as the energy business continues to add more to the bottom line that is the Net income.