Clearway 4Q22 schedule and pre-Fed news dump ?3

14:07 01-Feb-23

So here's the Fed statement confirming the quarter point hike.  However:

The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive

I'm not going out on a limb by saying the market won't like that, IF it chooses to believe the guy who told us that inflation would be transitory.  However, guidance about pacing will be important in the absence of a dot plot.

Also for a laugh, I'll point out the only investor press release that Intel saw fit to issue today, after AMD taking market share prompting price cuts, in addition to the salary cut news.  It touts being included in a 4 year DARPA program to fight cyberattacks in the cloud by encrypting memory.  As a programmer, I could get on a soapbox about what horrible design that is, but that part wouldn't be funny.

Clearway Energy has scheduled its fourth quarter report for the morning of February 23rd.  The average of 3 analyst estimates is for a loss of 88 cents per share from $316M of revenue, declining to $274M this quarter.  As ever, those numbers won't matter nearly as much as execution , growth plans and the Fed outlook.  More on that last at the bottom...

In the meantime, I'll document a bunch on non-actionable news starting with Deloitte seeking to extend Xebec's purgatory to March 17th for its own benefit, after narrowing 101 applicants down to 19 and reaching a sale with only one of them.  That's for undisclosed terms on Tiger Filtration.

Moving to earnings, the market seems to like the Amdocs report:

• $1.45 of EPS beat by 13 cents
• from $1.2b of revenue, which is in line
• guided fiscal 2Q23 to $1.47+/-0.03 of EPS from $1.22+/-0.02b of revenue, which beats by a penny on the bottom line

I'm not surprised to see the company optimizing its operations and competing favorably against Nokia.  Optimization should continue throughout this year.  I still fail to see value at current prices, though, and also have some niggles about the exclusion of intangible amortization.

The Amdocs results are still far better than the interim report from its customer, Vodafone, which showed the European slowdown I've feared.  The company is looking to hike prices as it did in the U.K. and cut about 500 jobs.  There was no word about a permanent CEO choice.  I certainly wouldn't want the job.

For its part, Intel is cutting salaries as well as jobs.  That's leading to some apocalyptic pundit pronouncements.  I've always thought Intel was bloated and overdue for this sort action, but I'm more cautious than ever in the near term, as investors begin the realize that, short of trying to sell out its MBLY gains, the dividend is just about the only domino left to fall.

Speaking of IPOs, ABB should be ready to go ahead with its E-mobility business after completing the second final round of funding early this month, at a slightly higher valuation.  It's helping ABB to avoid the decline that VOD is seeing, but I still don't see either stock as attractive.

Most of this points to recession, which in turn is leading the market to think the Fed will have room to ease off.  However, ineffective governments that are unwilling to make budget cuts mean that most attempts to avoid a permanent state of decline simply lead to everyone getting smaller slice of the pie, and thus inflation in resources like energy and water.  This leaves me careful on development yield stocks like CWEN(A), and still unwilling to take chances on expensive ones, like ERII.  Maybe what Powell and his cohorts have to say will merit a separate update in a few hours, but I doubt it.