In this episode, we focus on the second-quarter earnings of several companies, discuss the economic implications of recent events, and provide our stock picks of the week.
In this episode, co-hosts Engineer My Freedom and European Dji discuss the latest earnings reports from dividend stocks, the impact of COVID-19 on the economy, and their personal stock picks. They also touch on the broader economic landscape, including the recent decline in Germany’s GDP and its implications for Europe.
Economic Overview
Germany’s GDP Decline
European Dji highlights the alarming news regarding Germany’s GDP, which saw a decrease of 10%, marking the worst decline since 1970. This significant drop raises concerns about the economic health of Europe, especially since Germany is considered the strongest economy in the region. The hosts reflect on how this downturn may affect various sectors, particularly those reliant on consumer spending, such as restaurants and bars.
Vaccine Developments
The discussion shifts to the ongoing efforts to develop a COVID-19 vaccine, with Britain securing deals for 250 million doses. The hosts express cautious optimism about the potential for a vaccine, noting that while it may help control the virus, it does not guarantee its complete eradication. They emphasize the importance of understanding how society will adapt to living with the virus moving forward.
Earnings Reports Analysis
Danone
European Dji shares insights on Danone’s recent earnings report, revealing a 3.6% decline in sales, primarily due to reduced demand for bottled water during lockdowns. Despite this, the company’s dairy and plant-based segments showed growth, and e-commerce sales increased by 30%. The hosts discuss the importance of adapting to changing consumer behaviors and the potential for recovery as economies reopen.
Pfizer
The conversation then turns to Pfizer, which reported a 6% increase in biopharma revenue, despite a 31% decline in its Upjohn segment. The company raised its revenue guidance, indicating a positive outlook. The hosts note Pfizer’s involvement in the COVID-19 vaccine development as a potential growth driver, making it a stock to watch.
UPS
UPS’s earnings report reveals a 13.4% increase in sales, driven by a 62.5% surge in the B2C market. However, the hosts caution that while revenue growth is impressive, the company’s EPS growth did not match expectations. They highlight concerns about UPS’s pension liabilities, which constitute a significant portion of its balance sheet, and the need for careful evaluation of its operational efficiency.
ADP
ADP’s earnings report shows a 3% decline in revenue, with forecasts indicating further decreases in the coming years. Despite this, the hosts believe ADP remains a solid investment due to its cash flow coverage and potential for recovery.
Stock Picks of the Week
Novartis
European Dji selects Novartis as his stock pick, citing its strong position in the pharmaceutical industry and a current dividend yield of 3.86%. He notes the company’s focus on personalized healthcare and its potential for future growth.
Walgreens Boots Alliance
Engineer My Freedom picks Walgreens Boots Alliance, highlighting its undervaluation and strong cash flow coverage. He emphasizes the company’s extensive presence in the healthcare market and its efforts to enhance its online capabilities.
Conclusion
Thank you for joining us for this episode of Dividend Talk. We look forward to sharing more insights and stock analyses in future episodes!
Novartis Analysis: https://europeandgi.com/2020/02/15/stock-analysis-5-reasons-to-consider-novartis-ag/
Podcast relating to Gsheet Analysis: https://anchor.fm/dividend-talk/episodes/Ep-5—How-to-Find-Dividend-Growth-Stocks-egtjj5/a-a2nsfjk
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