Today’s news: Blackstone Group (BX), Schlumberger NV (SLB) and Synchrony Financial (SYF) reported second-quarter results.
Blackstone Group (BX - yield 4.5%*), the world’s largest manager of alternative assets, reported second-quarter results yesterday. Distributable earnings of $0.57 per share, which reflect cash available for paying dividends, were higher than the $0.49 that analysts expected. The next quarterly distribution will be $0.48 per share. Credit Suisse commented, “We view this earnings release as very positive. Blackstone reported (sales of assets) of $10.6 billion, which was above our estimate of $8.9 billion and higher quarter-over-quarter.”
Assets under management (AUM) rose to $545.5 billion vs. $511.8 billion in the first quarter. Blackstone expects AUM to increase over $100 billion in full-year 2019. Blackstone repurchased 7 million shares of stock during the quarter, and authorized new share repurchases totaling $1 billion.
CEO Stephen Schwarzman remarked, “We marked the firm’s final quarter as a publicly-traded partnership, culminating in our transition to a corporation as of July 1. Investor reception to the conversion has been exceedingly positive, and we are beginning to see the benefits of having a vastly larger universe of potential shareholders.”
One investment firm raised their price target for BX to 56, three companies raised their targets to 52, and one firm lowered their target from 53 to 52. (Yes, it’s unusual that they almost all chose the same price target.) BX remains in an uptrend. At 46.20, the stock did not have a big reaction to the earnings report. It’s okay to buy this big-dividend growth & income stock now. Investors should definitely jump on any opportunity to buy below 42. Buy.
*The payout varies each quarter with the total of the last four announced payouts equaling $2.07 and yielding 4.7%.
Schlumberger NV (SLB - yield 5.3%) reported a good second quarter this morning. Revenue of $8.27 billion beat the expected $8.11 billion, reflecting strength in international business and North American weakness. Adjusted earnings per share (EPS) of $0.35 came in on target. Business backlog grew from $2.63 billion to $2.71 billion during the quarter. Investors can read the earnings press release here.
Schlumberger’s current COO Olivier Le Peuch was promoted to CEO, replacing retiring CEO Paal Kibsgaard. Le Peuch has been with the company over 30 years, and has participated in a variety of Schlumberger’s M&A transactions.
Regarding business prospects, Kibsgaard commented, “The increasing international market investment and a reduction in North America land capex represent a positive market shift for Schlumberger and the welcome return of a very familiar opportunity set. With our unmatched global strength, our modernized execution platform, and our expanded technology portfolio now ready for broad digital implementation, we are well positioned to generate superior earnings growth, margin expansion, and free cash flow in the emerging international upcycle.”
During the quarter, Schlumberger repurchased 2.5 million shares of stock.
Changes to earnings estimates will be reflected in the coming weeks. The market expects very strong earnings growth from Schlumberger in 2020. The share price declined to 37.81 this week alongside falling oil prices. SLB will likely linger near this price before rising again. Buy.
Synchrony Financial (SYF - yield 2.5%), a consumer finance company, reported a strong second-quarter earnings beat this morning. Diluted EPS of $1.24 included a $0.27 benefit from a $247 million reserve release related to a credit portfolio that’s been in transit to Walmart’s new business partner, Capital One. Adjusted diluted EPS was $0.97, which beat the consensus estimate of $0.95. The press release conveyed strong credit quality, and was well-received by the market.
Synchrony repurchased $725 million of stock during the quarter, and authorized new share repurchases totaling $4 billion. The company officially raised the quarterly dividend payout from $0.21 to $0.22 per share, bringing the current yield up to 2.5%.
SYF is an undervalued, mid-cap growth & income stock. SYF has been gradually and consistently rising toward 38-39 this year, where it peaked in January 2018. Buy SYF now. Strong Buy.