28 January 2020 by jbchevrel
Today I chose not to write about the coronavirus again, although the theme is still going on. US corporate earnings are now being reported. Some of the big tech companies whose performances have been crucial for benchmark indices will release results this week (AAPL FB MSFT) and next (GOOG). We could see the ‘earnings theme’ overshadow the ‘coronavirus theme’, at least temporarily. Meanwhile, yesterday after our London close, Whirlpool Corporation (WHR) reported strong Q4 and FY 2019 results. The guidance provided for 2020 was also very solid. In Q4, GAAP net earnings margin came at 5.4%, thus up +2.4% and ongoing (non-GAAP) EBIT margin came at 7.2%, up +1.0%, slightly ahead of their operational guidance. All regions were profitable during Q4, with NA demonstrating sustained strong EBIT margins of ~13%. This marked all-time records for both FY GAAP and ongoing (non-GAAP) earnings per diluted share. The CDS outperformed (tighter -5bp on the day vs CDX IG FV -1.8bp) the broader US IG market. Helping this move in credit, cash generation for FY 2019 was strong. The OCF came $1.2b and the FCF came $912m. The outlook was also solid for 2020, not very far from what has been generated in 2019, with a projected OCF of $1.3-1.4b and FCF of $800-900m. What could go wrong.