PowerShares Dynamic Large Cap Value ETF

Analysts’ interest in Honeywell (HON) has been on the rise since its third-quarter earnings.

In this article, we’ll see whether ITW’s free cash flow can help to reduce its debt.

Illinois Tool Works (ITW), a specialized industrial equipment manufacturer, reported debt of $7.40 billion at the end of the third quarter.

Illinois Tool Works (ITW) reported its third-quarter earnings on October 24. The company reported an EPS of $1.90.

Honeywell’s (HON) Home and Building Technologies segment contributed 23.4% of the company’s total revenue in the third quarter.

Current valuation Southwest Airlines (LUV) has a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 7.1x. This is the highest multiple among the major airline carriers and is higher than its average valuation of 6.3x since September 2008. Peer comparisons American Airlines (AAL) is trading at a similar valuation […]

For fiscal 2018, LUV’s improving unit revenue environment is expected to increase revenue growth to 5.9% YoY to $22.4 billion.

Southwest Airlines’ fuel costs rose 10.1% year-over-year to $1.96 per gallon.

Southwest Airlines’ (LUV) 3Q17 capacity grew 3.1% year-over-year to ~39.1 billion miles.

Currently, American Airlines (AAL) is trading at a forward EV-to-EBITDA ratio of 6.7x.

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For August 2017, AAL’s international traffic increased 6.9% year-over-year. Year-to-date, its international traffic has increased 5.5% YoY.

American Airlines’ (AAL) capacity grew 3.2% year-over-year in August, significantly higher than its 0.4% year-over-year growth reported in the previous seven months.

AAL has paid little attention to its total debt, which rose from $20.8 billion at the end of 2015 to $24.3 billion at the end of 2016 and $24.5 billion at the end of 1Q17.

In the last week of June 2017, Qatar Airways’ CEO, Akbar Al Baker, disclosed the carrier’s interest in buying a 10% stake worth $808 million in American Airlines through the open market.

United Continental’s (UAL) EBITDA is expected to fall 10% to $1.8 billion.

At the start of the year, United announced its plan to grow its capacity by 0%–1%, in line with GDP growth expectations.

The global revenues from Merck’s Animal Health business totaled $939 million during 1Q17—13% growth over 1Q16.

AAL’s utilization rose 0.3% YoY (year-over-year) in February, then by 1.8% YoY in April and 0.2% YoY in May.

For May 2017, American Airlines (AAL) reported a 2.3% YoY (year-over-year) growth in capacity—its highest growth so far in 2017.

Currently, American Airlines (AAL) is valued at 6.6x its forward EV-to-EBITDA ratio (enterprise value to earnings before interest, tax, depreciation, and amortization).

As opposed to most other airlines that have been reducing their debts, American Airlines’ (AAL) debt has risen, partly due to its focus on completing its integration with US Airways.

Analysts’ “hold” ratings on American Airlines stock have risen significantly. Nine analysts, a total of 56.3%, now have “hold” ratings on the stock.

For 2016 overall, United Continental (UAL) has generated $5.5 billion in operating cash flow and $1.9 billion in free cash flow.

Airlines have long been known as capital destroyers. In times of profitability (such as now), they increase capacity to an extent that can’t be filled.

The Gardasil franchise is Merck’s (MRK) leading vaccines franchise.

Delta Air Lines started paying dividends only in 2013, and it’s one of the few airlines that pay dividends.

Until 3Q16, Delta Air Lines (DAL) had managed to keep its costs flat if not decreasing. However…

United expects to add $800 million to profits by increasing seats from 105 per departure to 121 per departure in 2018.

For 4Q16, analysts are expecting United Continental’s (UAL) EBITDA to fall 26% to $1.4 billion.

Berkshire Hathaway’s (BRK.B) November 2016 13F filing attracted considerable interest for airline investors. The 13F revealed Warren Buffett’s new investments in the airline sector—a sector he had written off during the past decade.

For November 2016, American Airlines’s (AAL) load factor fell 0.3% and year-to-date 2016, its load factor fell 1.3%.

In November 2016, American Airlines’s (AAL) traffic fell 0.2% year-over-year, slightly lagging its capacity growth in the same period. Year-to-date, AAL’s traffic has increased 0.3%.

American Airlines’s (AAL) capacity grew 0.1% year-over-year in November 2016, similar to the growth seen during most of 2016. Year-to-date, AAL’s capacity has grown 1.9%.

As many as 30,000 pilots will reach the mandatory retirement age of 65 years by 2026. If there aren’t sufficient new hires to replace them, airlines could face a pilot shortage.

After 20 months of talks and a nine-month standoff, Delta Air Lines has finally managed to reach an agreement in principle with its pilots for a new contract.

Refiners such as PSX, MPC, VLO, and TSO are now focusing on diversifying their earnings models to shield themselves from the volatile refining environment.

AAL’s traffic growth has lagged capacity growth in most of 2016. The load factor has fallen by 0.9 percent points in 2016 YTD. This will pressure unit revenues.

MPC is currently trading at a forward PE (price-to-earnings) ratio of 12.3x, above its peer average of 11.7x.

Since the end of June, Marathon Petroleum’s (MPC) stock has risen by 28%. MPC has crossed over its 50-day and its 200-day moving averages during this period.

The analysts’ survey shows that six out of the 11 companies surveyed rated HollyFrontier (HFC) as “neutral” or “market perform.”

In 2Q16, Phillips 66’s (PSX) total adjusted net income of $499 million fell by 50% YoY (year-over-year) but rose by 39% quarter-over-quarter.

Chevron (CVX) reported a loss in 2Q16 due to its upstream segment. The upstream segment posted a loss in 2Q15 and a heavy loss in 2Q16.

Royal Dutch Shell released its 2Q16 results on July 28, 2016. The company’s 2Q16 earnings fell by 71% over 2Q15 to $1,175 million.

In 2Q16, Marathon Petroleum (MPC) posted revenues of $16.8 billion—this surpassed Wall Street analysts’ estimates. Its adjusted EPS stood at $1.07.

Nine out of ten companies surveyed rated Valero (VLO) a “buy,” “overweight,” or “outperform.”

Valero Energy (VLO) announced its results on July 26, 2016, before the market opened.

Wall Street analysts expect HollyFrontier to post EPS of $0.35, which is 76% lower than its 2Q15 adjusted EPS.

Tesoro is expected to post its 2Q16 results on August 3, 2016. Before we look at its 2Q16 estimates, let’s recap TSO’s 1Q16 performance compared to estimates.

Around 77% of the analysts rate Archer Daniels Midland a “hold” and 23% gave it a “buy” rating. No analysts rated it as a “sell.”

Archer Daniels Midland (ADM) is slated to report its 2Q16 results on August 2 before the market opens. The stock has gained 12% since its last quarter results.

Since mid-February 2016, Phillips 66 (PSX) has witnessed an 18% fall in its short interest.

Western Refining (WNR) recorded a fall in gross refining margins, from $16.80 per barrel in 1Q15 to $10.80 per barrel in 1Q16.

Changing oil prices have altered segment dynamics for ExxonMobil (XOM). Earnings from the company’s upstream segment have fallen steeply.

In 1Q16, PBF Energy’s revenues surpassed Wall Street analyst estimates by 12%. PBF’s 1Q16 adjusted EPS was -$0.65, as compared to the estimated -$0.47.

Suncor Energy (SU) has witnessed a 34% rise in its short interest since April 2016.

Between July 2014 and November 2015, Marathon Petroleum (MPC) stock rose 51%. But after that, the stock fell until early 2016.

Total SA (TOT) is expected to post its 2Q16 results on July 28, 2016. In 1Q16, TOT’s revenues of $27.5 billion surpassed Wall Street estimates.

With respect to the price-to-earnings ratio, larger players Marathon Petroleum (MPC), Tesoro (TSO), and Phillips 66 (PSX) trade higher than the average valuations.

Valero’s diesel crack indicators have been rising in 2Q16 compared to 1Q16. The US West Coast, where VLO has 0.3 MMbpd refining capacity, saw the largest rise of $3.20 per barrel.

Amid stock price volatility, Valero rose 20% from February 8–March 28, 2016, and crossed over its 50-day and 200-day moving averages.

ExxonMobil’s price-to-earnings (or PE) ratio has generally shown an uptrend in the past two years. In 1Q16, the stock traded at a PE of 26.4x.

Rising oil prices are usually favorable for upstream segment earnings of integrated energy companies. Petrobas (PBR) stock has more than doubled since mid-February.

Royal Dutch Shell (RDS.A) released its 1Q16 results on May 4, 2016. Its revenues missed Wall Street analysts’ estimates by 13%, and its reported EPS stood at $0.14.

Western Refining’s adjusted EBITDA from the Western segment fell from $171 million in 1Q15 to $51 million in 1Q16 due to a decline in refining margins.

Chevron (CVX) reported a loss in 1Q16 due to its upstream segment, which reported a steep plunge in its earnings to -$1.5 billion.

Exxon Mobil (XOM) posted its 1Q16 results on April 29, 2016. Its quarterly revenues surpassed Wall Street estimates by 10%.

Three of ten companies surveyed have rated BP a “buy” or “outperform.” The highest 12-month price target for BP stands at $43, indicating a 26% rise from its current levels.

Archer Daniels Midland will report its fiscal 1Q16 results before the opening bell on May 3. The stock gained 23% since its 4Q15 earnings release.

Royal Dutch Shell (RDS.A) is set to release its 1Q16 results on May 4, 2016. In this series, we’ll look at 1Q16 estimates, segment outlook, stock performance, capex, costs, and restructuring plans.

In 4Q15, Valero Energy (VLO) noted a fall in gross margin to $10.90 per barrel compared to $11.20 per barrel in 4Q14.

In 1Q16, Exxon Mobil’s upstream segment is likely to witness lower earnings due to a fall in crude oil prices.

Marathon Petroleum’s (MPC) refining segment’s operating income fell by 80% to $207 million in 4Q15 compared to 4Q14.

Marathon Petroleum (MPC) has 2,770 Speedway outlets and 5,600 “Marathon” brand outlets spread across the US.

Valero’s net debt-to-EBITDA ratio stood at 0.4x in 4Q15. This is lower than the industry average ratio of 1.1x.

Sinking oil prices have changed segment dynamics considerably for Petrobras.

In 2015, Petrobras’s (PBR) cash flow from operations stood at $26 billion, falling from $27 billion in 2014.

Shell is trading at a total debt-to-capital ratio of 26% compared to ExxonMobil and Chevron, which are trading at 18% and 20%, respectively.

With higher capex in sight, it will be important for investors to monitor WNR’s leverage curve.

Amid tumbling crude oil and natural gas prices, ExxonMobil (XOM), an integrated energy giant, has raised $12 billion via a bond issue.

Suncor Energy (SU) has 462 Mbpd (thousand barrels per day) of refining capacity spread over Canada and the United States. The refineries are well-configured to consume oil sands feedstock.

Western Refining’s refining segment earnings, which depend on refining margins, will likely be stressed. It’s impacted by refined product cracks.

HFC’s stock performance has been quite volatile over the past year. The stock hit highs of $54 in August 2015 and lows of $30 in February 2016…

PBF’s net debt-to-adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) stood at 0.64x in 3Q15.

Exxon Mobil Corporation (XOM) announced its results on February 2, 2016, before the market opened. Although XOM surpassed its estimates for 4Q15, the stock experienced a weak opening.

CVX’s refining and chemical segments noted falls in earnings in 4Q15. Chevron’s downstream segment saw its earnings fall to $1 billion in 4Q15.

Valero expects capex to be ~$2.6 billion in 2016. The capex is aimed at increasing feedstock flexibility, higher value products, and sustaining growth.

Tesoro Corporation (TSO) is expected to post its 4Q15 results on February 1, 2016. Before we proceed with the 4Q15 estimates, let’s recap TSO’s 3Q15 performance versus estimates.

Valero Energy’s stock price, amid volatility, has risen in 2015, and the stock gained by 43% in the trailing-twelve-month period as of January 19, 2016.

HollyFrontier (HFC) is currently trading at a forward PE (price-to-earnings) ratio of 8.9x, below the peer average of 9.1x.

Archer Daniels reported its second quarter results for fiscal 2015 in the first week of August, with net earnings of $386 million, or $0.62 per share.