Mattel (MAT) reported revenue of $1.08 billion, down 0.7% from last year, and missing the consensus estimate of $1.09 billion by 1%. Earnings per share, however, exceeded the consensus estimate of $0.16 by 18.75%, coming in at $0.19. Key metrics showed mixed performance: Barbie sales fell 5.9% to $266.10 million, Fisher-Price dropped 17.5% to $135.90 million, while Hot Wheels rose 3.9% to $327.40 million, and other brands reached $471.90 million, beating estimates.
Xerox (XRX) reported revenue of $1.58 billion, down from $1.75 billion last year, missing FactSet’s estimate of $1.6 billion. The company posted a profit of $18 million (11 cents a share) compared to a loss of $61 million last year, but missed the expected 47 cents a share. Revenue guidance for 2024 was cut to a decline of 5%-6%, down from 3%-5%, due to reductions in non-strategic revenue and reinvention actions.
Polaris (PII) cut its guidance after Q2 earnings tumbled due to cautious customer sentiment amid inflation and high interest rates. Revenue fell 12.3% year-over-year to $1.96 billion, missing analysts’ expectations. GAAP profit dropped to $1.21 per share from $2.32 last year. Key financial results include $1.99 billion in revenue (down 11% from Q2 2023), $68.7 million in net income (down 49%), and a profit margin of 3.5% (down from 6.0%). EPS declined to $1.21 from $2.35.
Barnes Group (B) made significant progress in its transformation to an aerospace-focused company in Q2 2024. Sales increased by 13% to $382 million, with organic sales up 5%. Adjusted operating margin was 12.4%, and adjusted EPS was $0.37, down 36%. The company recorded a goodwill impairment for Automation. For 2024, the company is forecasting sales growth of 10%-12%, adjusted EBITDA margin of 20%-22%, and adjusted EPS of $1.55-$1.75. Despite industry challenges, Barnes expects continued growth in aerospace aftermarket sales and benefits from the MB Aerospace acquisition.
Newell Brands (NWL) reported a second-quarter net income of $45 million, or 11 cents per share. Adjusted earnings were 36 cents per share, beating Wall Street expectations of 21 cents per share. Revenue was $2.03 billion, slightly below the forecast of $2.04 billion. For the current quarter, Newell expects earnings of 14 to 17 cents per share and full-year earnings of 60 to 65 cents per share.
Mohawk Industries (MHK) reported quarterly earnings of $3 per share, beating the Zacks Consensus Estimate of $2.76, an 8.70% surprise. This compares to $2.76 per share a year ago. The company posted revenues of $2.8 billion, missing estimates by 1.47%, down from $2.95 billion last year. Over the last four quarters, Mohawk has surpassed consensus EPS estimates four times and revenue estimates three times.
RATING CHANGE: Shares of MHK have risen about 22.9% year-to-date, outperforming the S&P 500’s 13.8% gain, and are beginning to approach our price target of 165. As such, we are moving this one to HOLD.
Friday, July 26, 2024, Subscribers-Only Podcast:
Covering recent news and analysis for our portfolio companies and other topics relevant to value/contrarian investors.
Today’s podcast is about 9 minutes long and covers:
- Initial note
- Earnings, ratings changes, and the comments below
- Comments on recommended companies
- AMMO, Inc. (POWW) announced that it will release financial results for its fiscal first quarter 2025 ended June 30, 2024, after the stock market closes on Thursday, August 8, 2024.
- Western Union (WU) announced that its board of directors declared a quarterly cash dividend of $0.235 per common share, payable September 30, 2024, to stockholders of record at the close of business on September 16, 2024.
- Goodyear Tire & Rubber Company (GT) will report second-quarter 2024 financial results after market close on Wednesday, July 31, followed by an investor conference call at 8:00 a.m. ET on Thursday, August 1.
- First Quantum (FM.TO) CEO Tristan Pascall said on Wednesday that he did not see the company’s Cobre Panama mine reopening this year. The company is open and committed to a dialogue with new Panamanian President Jose Raul Mulino about the mine, but negotiations have yet to begin in earnest.
- US Steel (X) and its potential acquirer Nippon Steel have hired former Secretary of State Mike Pompeo to assist in the effort to complete the merger.
- Bayer AG (BAYRY) subsidiary Monsanto agreed to a $160 million settlement with Seattle for its part in polluting a river that runs through the middle of the city and empties into Puget Sound. Although Monsanto stopped producing polychlorinated biphenyls (PCBs) in 1977, the chemicals continue to exist in paints, caulking and sealants on local buildings.
Please know that while I don’t yet personally own shares of all Cabot Turnaround Letter recommended stocks – including the stocks mentioned in this note – that will materially change over time.
Please feel free to share your ideas and suggestions for the podcast and the letter with an email to either me at mwarder@cabotwealth.com or to our friendly customer support team at support@cabotwealth.com. Due to the time and space limits, we may not be able to cover every topic, but we will work to cover as much as possible or respond by email.
Portfolio
| Market Cap | Recommendation | Symbol | Rec. Issue | Price at Rec. | Current Price * | Current Yield | Rating and Price Target |
| Small cap | Gannett Company | GCI | Aug 2017 | 9.22 | $ 4.82 | - | Buy (9) |
| Small cap | Duluth Holdings | DLTH | Feb 2020 | 8.68 | $ 3.80 | - | Buy (20) |
| Small cap | Dril-Quip | DRQ | May 2021 | 28.28 | $ 16.65 | - | Buy (44) |
| Small cap | Kopin Corp | KOPN | Aug 2023 | 2.03 | $ 1.04 | - | Buy (5) |
| Small cap | Ammo, Inc. | POWW | Oct 2023 | 1.99 | $ 1.93 | - | Buy (3.50) |
| Mid cap | Mattel | MAT | May 2015 | 28.43 | $ 18.90 | - | Buy (38) |
| Mid cap | Adient plc | ADNT | Oct 2018 | 39.77 | $ 25.07 | - | Buy (55) |
| Mid cap | Xerox Holdings | XRX | Dec 2020 | 21.91 | $ 10.60 | 9.4% | Buy (33) |
| Mid cap | Viatris | VTRS | Feb 2021 | 17.43 | $ 12.01 | 4.0% | Buy (26) |
| Mid cap | TreeHouse Foods | THS | Oct 2021 | 39.43 | $ 38.66 | - | Buy (60) |
| Mid cap | The Western Union Co. | WU | Dec 2021 | 16.40 | $ 12.78 | 7.4% | Buy (25) |
| Mid cap | Brookfield Reinsurance | BNRE | Jan 2022 | 61.32 | $ 47.14 | 0.7% | Buy (93) |
| Mid cap | Polaris | PII | Feb 2022 | 105.78 | $ 80.77 | 3.3% | Buy (160) |
| Mid cap | Goodyear Tire & Rubber | GT | Mar 2022 | 16.01 | $ 11.83 | - | Buy (24.50) |
| Mid cap | Janus Henderson Group | JHG | Jun 2022 | 27.17 | $ 36.25 | 4.3% | Buy (67) |
| Mid cap | Six Flags Entertainment | FUN | Dec 2022 | 38.62 | $ 47.58 | - | Buy (60) |
| Mid cap | Frontier Group Holdings | ULCC | Apr 2023 | 9.49 | $ 3.88 | - | Buy (15) |
| Mid cap | Advance Auto Parts | AAP | Sep 2023 | 64.08 | $ 60.69 | 1.6% | Buy (98) |
| Mid cap | Mohawk Industries | MHK | Jan 2024 | 103.11 | $ 158.36 | - | HOLD (165) |
| Mid cap | VF Corporation | VFC | Mar 2024 | 16.24 | $ 16.14 | 2.2% | Buy (25) |
| Mid cap | Barnes Group | B | Apr 2024 | 36.55 | $ 42.22 | 1.6% | Buy (55) |
| Mid cap | First Quantum Minerals | FM | Apr 2024 | 15.93 | $ 16.80 | 1.6% | Buy (40) |
| Mid cap | United States Steel | X | Jun 2024 | 37.12 | $ 40.49 | 0.5% | Buy (55) |
| Mid cap | Foot Locker | FL | Jul 2024 | 26.56 | $ 26.50 | 0.0% | Buy (55) |
| Large cap | General Electric | GE | Jul 2007 | 304.96 | $ 169.04 | 0.2% | Buy (160) |
| Large cap | Nokia Corporation | NOK | Mar 2015 | 8.02 | $ 3.82 | 3.4% | Buy (12) |
| Large cap | Macy’s | M | Jul 2016 | 33.61 | $ 16.52 | 3.4% | Buy (25) |
| Large cap | Newell Brands | NWL | Jun 2018 | 24.78 | $ 8.58 | 3.4% | Buy (39) |
| Large cap | Vodafone Group plc | VOD | Dec 2018 | 21.24 | $ 9.33 | 10.9% | Buy (32) |
| Large cap | Berkshire Hathaway | BRK.B | Apr 2020 | 183.18 | $ 437.20 | - | HOLD |
| Large cap | Western Digital Corporation | WDC | Oct 2020 | 38.47 | $ 67.46 | - | HOLD (78) |
| Large cap | Elanco Animal Health | ELAN | Apr 2021 | 27.85 | $ 12.93 | - | Buy (44) |
| Large cap | Walgreens Boots Alliance | WBA | Aug 2021 | 46.53 | $ 11.54 | 8.7% | Buy (70) |
| Large cap | Volkswagen AG | VWAGY | Aug 2022 | 19.76 | $ 11.93 | 7.7% | Buy (70) |
| Large cap | Warner Bros Discovery | WBD | Sep 2022 | 13.13 | $ 8.10 | - | Buy (20) |
| Large cap | Bayer AG | BAYRY | Feb 2023 | 15.41 | $ 7.41 | 7.3% | Buy (24) |
| Large cap | Tyson Foods | TSN | Jun 2023 | 52.01 | $ 60.88 | 3.2% | Buy (78) |
| Large cap | Agnico Eagle Mines | AEM | Nov 2023 | 49.80 | $ 73.59 | 2.3% | HOLD (75) |
| Large cap | Fidelity Natl Info Services | FIS | Dec 2023 | 55.50 | $ 76.13 | 2.7% | Buy (85) |
| Large cap | Baxter International | BAX | Feb 2024 | 38.79 | $ 35.57 | 3.3% | Buy (60) |
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