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UTC Just Missed And Cut Guidance... And Why This Is Great News For Its Shareholders
Moments ago yet another industrial bellwether company, United Technologies, which is at the nexus of the building and aerospace industries, reported Q4 EPS and revenues, which missed, but worse, cut 2015 EPS guidance from $7.00 - $7.25 to $6.85-$7.05, blaming FX headwinds. Well, yeah, it's always something. And that something is why 2015 EPS on not only a GAAP but increasingly non-GAAP basis will be lower in 2015 than in 2014.
However, while the guide-down means that UTC will soon join the seemingly endless parade of (mostly energy) companies that have laid off employees, there is great news for shareholders. Because even as the company see less growth opportunities and can barely keep up with Wall Street expectations, it has found a great way to reward those who buy its stock: by buying it right back from them.
To wit:
UTC expects to invest $1.7 billion in capital expenditures in 2015, and continues to estimate cash flow from operations less capital expenditures in the range of 90 to 100 percent of net income attributable to common shareowners. The company now expects share repurchase of $3 billion and acquisitions of approximately $1 billion in 2015, following $1.5 billion and $530 million, respectively, in 2014.
In short: UTC will "invest" twice as much in boosting its own stock price as it will in organic growth. So how does this budget compare to previous years?
Here is the answer.
Alas, with the Fed out - for the time being - the only "growth" left is in the "equity-linked compensation" column of management.
And just to prove that this particular "strategy" is not lost on anyone else, here is Dunkin:
- DUNKIN' NOW SEES ADJ. EPS FOR YR $1.83-$1.87, SAW $1.88-$1.91
- DUNKIN' BRANDS TO BUYBACK $700M SHRS
Sadly this balance sheet engineering will only end when bond investors scrambling for even the smallest crumb of additional yield, stop handing over "Other people's money" to management teams whose only value-added now, and for the past 2 years, has been to buy back their own stock.
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I've got to start drinking earlier in the day...
I saw you there, Sacrilege.
Me too. Looks like I picked a bad week to stop sniffing coke.
Damn...Looks like I picked the wrong week to quit sniffing glue.
Seems like Radioshacking your company to maximize CEO stock option compensation is the 'new black'...
Well good thing I own United Technologies, UTX, and not United Technologies, UTC!
Good thing I'm still drinking tequila!
And UTX vs UTC.. What fucking difference does it make?
... a bad week to stop sniffing glue.
https://www.youtube.com/watch?v=hd1ciPnTGKg
*music still playing the background*
keep dancin' bitchez!
share buybacks are always a smart thing to do at ATH's, especially when you issue ZIRP debt/bonds to do it (with the intent of defaulting on those bonds eventually)
... i don't think the fed is "out" ... perhaps with outright qe but their stealth etf purchases seem to be on going on daily basis ...
I want the truth...I cannot handle it though....
https://www.youtube.com/watch?v=9FnO3igOkOk
gotta keep that nebulous 'wealth effect' afloat!
it'd be great if someone tried to do an empirical study of the wealth effect and its consequences, I'm sure it would highlight all those lottery winners who ended up broke.
Well heck with everyone else's currency well nigh worthless why the heck not?!!
Its not like there is a shortage of productive capacity right now. We appear to have discovered the "flux capacitor" with all this free energy as well.
Jet engines, nuclear reactors, elevators, air conditioners ...
DOUBLE THAT ORDER!
I wondered why futures were green. I've been posting it for 6 years...why stop now