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Tag Archives: Second Quarter

Daily News Breakdown 8/10/2015

11 Tuesday Aug 2015

Posted by Russell in Daily News Breakdown

≈ 1 Comment

Tags

China, Gold, Oil, Q2, Second Quarter

  • Google is now Alphabet

Google announced on Monday that they were forming a parent company called Alphabet.  Don’t worry this is not a splitting of the company Google, but rather a more streamlined consolidation of the company as a whole.  As we have seen recently Google has become more of a Berkshire Hathaway than just a search engine as they have dabbled in everything from cars to extending life indefinitely.  But what does this mean for investors?  In truth not much in the short-term; investors who currently own Google will just have their shares transformed into Alphabet stock and will keep their current number of shares.  However, in the long run we can look forward a company that is more focused as the parent company structure allows each department to coexist separately rather than a jumbled mess.

For a more detailed analysis from Jim Cramer click here

  • Shake Shack Earnings Beat the Street

Shake Shack released its Q2 2015 earnings on Monday and destroyed Wall Streets estimates of 3 cents per share on $43 million in revenue with $48.5 million in revenue on 9 cents per share.  The stock, in after hours trading, is up 7.73%.

  • People’s Bank of China Lets Yuan Depreciate

The PBOC set Tuesday’s Midpoint at 6.2298 per U.S. dollar which is a decrease of approximately 2% from Monday.  For a more detailed account click here

  • Gold Above $1,100 Again

Gold reached as high as $1,108.80 on Monday the highest price since July 21, 2015.  This was due to a less than expected jobs number released last week.

  • Oil Ends the Day Up

Oil ended the trading day Monday up 2.48% at $44.96.  This was due to an outage at a refinery in Whiting, Indiana due to a malfunction on Saturday.  However, the rally was short-lived as oil is now down 0.80% at $44.60.  The rally on Monday should not cause anybody to think that oil has hit the bottom.  Always remember to look at the bigger picture; in this case Saudi Arabia, Iran, and United States’ drillers.  Oil has not reached its bottom and I would not care to guess where that is until we receive accurate and definitive numbers out of Iran.

  • Kyushu Electric Power Restarts Reactor At Sendai Plant

After the 2011 Fukushima disaster all of Japan’s nuclear plants were shutdown for safety inspections and evaluations.  Since the plants were shutdown Japan began to rely on the importation of fossil fuels to power the country.  Even though over $100 million has been spent on fitting new safety equipment to the reactor there are still large protests over the restart of the power plants as Japan is in an earthquake prone area.

  • Australia to Cut Emissions

Australia has pledged to cut greenhouse gas emissions by 26% to 28% below 2005 levels by 2030.  As more countries pledge less reliance on fossil fuels is this the end of oil dominance?  I think so.  For more information please click here

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The Price of Oil and Q2 Reports

10 Monday Aug 2015

Posted by Russell in Commentary

≈ Leave a comment

Tags

Air Canada, Earnings, Oil, Q2, Second Quarter

There are a number of earnings reports coming out this week and with oil ending today below $45 I decided to discuss the potential impact of the price of oil on some of the companies releasing their Q2 2015 reports.

Recently the price of oil has crashed with a 52-week high of $93.34 to a 52-week low of $43.35; oil has dropped 22.70% in 2015 alone.  This has caused some obvious losers like oil and natural gas exploration companies but what about the not so obvious winners?  In Q1 2015 the average price of WTI crude was $48.54 this helped companies like Air Canada post record breaking profits.

Statista

One of the driving forces behind their outstanding quarter was the drop in the price of oil.  In Q1 2014 the cost of aircraft fuel was approximately 25% of total operating expenses of CAD$3.127 billion.  In Q1 2015 the cost of aircraft fuel was approximately 19% of total operating expenses of CAD$3.049 billion.

Q1 2015 is in gray Q1 2014 is in white (dollar amounts in Canadian Dollars)
According to the chart above the only operating expense that dropped significantly was Aircraft fuel decreasing by CAD$201 million a significant contributor to their CAD$78 million total operating expense improvement.
In Q2 2015 the average price of oil increased to $57.84 or an almost $10 increase.  This is important to keep in mind that while oil has been significantly down this year one should not expect the same savings on the price of fuel in Q2 2015 that we saw in Q1 2015.
I still believe that the price of oil has a long way to go before we see the bottom, with Iran potentially coming into the marketplace nobody knows in six months what the surplus of oil and gasoline is going to be.  For now lets all look forward to saving at the pump and seeing companies with high fuel costs post significant decrease in operating costs.
  • Industries with high fuel costs
    • Airlines
    • Waste Management
    • Transportation
    • Etc.
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