Q1 Earnings Estimates for Kraft

I’m short on time, but I wanted to get this out as soon as possible.  There’s more to come…

Kraft Q1 Earnings Estimates

Q1 Revenue:  $11.16 Bil

Q1 EPS:  $0.48

Income Statement
Three months ended March 31, 2010
Revenue	$11,155
Cost of Sales	$7,128
Gross Profit	$4,027
Operating Expenses:
M.A.R.	$2,651
Amortization	$7
Misc	-$15
Total	$2,643
Income from Operations	$1,384
Interest Expense	$336
Income before Taxes	$1,048
Provision for Income Taxes	$326
Noncontrolling Interest	$2
Net Income	$719
Diluted EPS	$0.48

Current Street consensus has Q1 Revenue at $10.95 Bil and Q1 EPS at $0.45.  Both of my estimates are slightly higher.  There is a wide range of predictions among analysts, so tomorrow afternoon’s report should be very interesting.

Don’t forget to click the “Follow” button in the upper-right portion of your screen.  Also, please feel free to comment at anytime!

KFT Ownership

Author:   NO

Author’s Family:  NO

Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.

The Street vs. Tyler Smithson: Exxon Mobil

The Street vs. Tyler Smithson

Exxon Mobil Q1 Results

Actual Q1 Revenue:  $90.25 Bil

Actual Q1 EPS:  $1.33

Adj. Q1 EPS:  $1.37

Here we go again, folks!  It’s now time to find out who better predicted quarterly earnings, The Street or Tyler Smithson. 

Exxon Mobil Q1
	Actual	Wall Street	% Error	Tyler Smithson	% Error
Q1 EPS	$1.33	$1.41	6.02%	$1.37	3.01%
Adj. Q1 EPS	$1.37	$1.41	2.92%	$1.37	0.00%
Q1 Rev	$90.25	$96.41	6.83%	$92.88	2.91%

Q1 EPS:  Exxon (“XOM”) reported a quarterly EPS figure of $1.33.  However, this number includes a charge of -$0.04 due to the recently passed healthcare legislation.  When adjusted for this expense (not “cost”), EPS actually came in at $1.37.  Analysts on average predicted an EPS figure of $1.41, a difference of 6.02% from $1.33, and 2.92% higher than the adjusted figure of $1.37.  On the other hand, Tyler Smithson forecasted Q1 EPS at $1.37, which is a difference of only 3.01% (half of The Street’s variation) from the reported figure of $1.33, and exactly the same as adjusted EPS.  Scorecard:  Smithson: 1, Wall Street: 0

Q1 Revenue:  Revenue was actually $90.25 Bil for the first quarter.  Analysts were shockingly far off on this one—6.83%—compared to 2.91% for Smithson.  When looking at revenue dollar-for-dollar, The Street was off a whopping $6.16 Bil!  This is in contrast to $2.63 Bil for Tyler Smithson.  Scorecard:  Smithson: 2, Wall Street: 0   BLOWOUT

This marks yet another instance where I have outperformed the big Wall Street firms.  I better predicted earnings for RIMM, GOOG, and now XOM, while also sounding the alarm for eBay shareholders.  I hope that many of my readers realize the importance of the information they have been given.  Stocks move according to earnings expectations, and those with accurate information slaughter those with inaccurate information. 

If you like what you’ve been reading over the past few weeks, then be sure to click “Follow” in the upper-right portion of your screen.  Considering just how accurate I was with Exxon’s earnings, I hope that many of you will become followers.

I’m not sure which company I’ll analyze next, but I hope to make that announcement in another day or two.  If you have any suggestions, I'd be happy to consider them, just leave a comment. 

XOM Ownership

Author:   NO

Author’s Family:  NO

Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.

A Glimpse Into Exxon's Future

Exxon Mobil Forward-Looking Analysis

Q2 Revenue Estimate:  $97.03 Bil

Q2 EPS Estimate:  $1.47.

1-Year Price Target:  $88.35..

Income Statement
Three months ended June 30, 2010
Operating Revenue	$97,027
Income from equity affiliates	$2,620
Other income	$642
Total Revenue	$100,288
Costs & Other Deductions	$88,733
Income before Taxes	$11,555
Income Taxes	$4,530
NI w/ NC Interests	$7,025
NI Attributed to NC Interests	$99
Net Income	$6,926
EPS	$1.47

Wall Street analysts are currently expecting second-quarter revenue and EPS to come in at $99.56 Bil and $1.44, respectively.  I am forecasting revenue to be approximately 2.5% below consensus and EPS to be $0.03 above.  The variation in EPS really boils down to different cost estimates in the quarter, with analysts forecasting higher operating costs quarter-over-quarter, while revenue variation is primarily a result of different revenue models.

For me, determining Exxon’s (“XOM”) price target was a lot of fun (I know I'm lame).  There are two main steps needed to create a price target.  First, a multiple (P/E) must be formulated, and second, the next four quarters of earnings must be estimated.  In the case of XOM, the first step was easy.  All I did was divide the current market price of $68.27 by the sum of the last three quarterly EPS figures (Q2, Q3, Q4) and my estimate for Q1.  The result was $68.27/$4.47, or a P/E of 15.28.  This is slightly less than the P/E reported on Yahoo! Finance because that figure does not factor in the EPS estimate for the first-quarter of 2010.  The “fun” part started with the second step—predicting 2010 quarterly EPS figures for Q2, Q3, and Q4.  In order to estimate Exxon’s earnings in these future quarters, I first had to predict revenue, which involved projecting future oil and gasoline prices.  Given that XOM’s revenue is nearly 100% dependent on energy prices, I needed to have accurate projections.  This is where Monte Carlo Simulation comes in (Sweet name, isn’t it?).  When I write these blog posts, I’m always afraid of my readers getting bogged down with statistics.  Therefore, all I’ll say about Monte Carlo Simulation is that it involved running tests on 5,000 random numbers in order to forecast future oil and gasoline prices.  These average quarterly projections were then used to predict future revenue and can be seen by the following table:

Crude Oil
Mean	$82.75	Q2
Mean	$82.38	Q3
Mean	$83.62	Q4
Gasoline
Mean	285.16	Q2
Mean	294.44	Q3
Mean	300.28	Q4

Once I had the estimate for 2010 earnings ($5.78), all I had to do was multiply the P/E by $5.78, resulting in a 1-year price target of $88.35.  Average analyst price target is currently $81.20, with a range of $70-$92.  I am on the high side, mostly because I am forecasting better cost-management throughout the year. 

Exxon will report earnings before the bell on Thursday, April 29^th and I will be here to post the results, along with my take on their overall performance. 

If you like what you’ve read, I hope you’ll click “Follow” in the upper-right portion of the screen.  I also encourage you to post a comment or “Buzz up!” the article. 

XOM Ownership

Author:   NO

Author’s Family:  NO

Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.