The ongoing peace talks between Russian-backed separatists and Ukraine finally yielded a result yesterday when it was announced that a ceasefire will begin this Sunday. Fighting will continue up to that day, when each side has said they will pull back heavy weapons and commit to greater autonomy for the separatist regions in eastern Ukraine. Both sides must ensure the release and exchange of all hostages and illegally held prisoners. The agreement also allows Ukrainian officials to regain full control of their banking system. Should this ceasefire hold (far from a guarantee), it will end a 10 month conflict that has claimed more than 5,000 lives. The European markets welcomed this agreement, sending shares higher.
Earnings Season Nears End:
Of the 391 companies in the S&P 500 that have reported earnings, 77% have reported earnings above the average estimate while 58% have reported sales above the average estimate. The Telecom and Health Care sectors are reporting the highest growth in earnings for the quarter. Not surprisingly, the Energy sector is reporting the largest decline in earnings. A few notable highlights this week were:
Cisco Systems (CSCO) reported a 68% gain in net income even as costs rose due to recent job cuts. Cisco earned $0.53 per share last quarter, higher than the average analyst expectation of $0.51 per share. The company’s earnings were propelled by a major overhaul of a flagship line of networking hardware. The company noted that, though this overhaul is not an “obvious” demand now, they are doing this to stay ahead of the competition.
PepsiCo (PEP) reported that their revenue and profits were held down by foreign-currency effects last quarter in what seems to be a recurring theme for U.S. companies with large amounts of revenue generated abroad. PepsiCo reported $1.12 in earnings per share, higher than the average analyst estimate of $1.08. The Frito-Lay unit saw a 3% increase in revenue while the PepsiCo Americas beverage unit saw a 1% increase. The company stated they expect EPS to grow 7% this year and also announced its plan to increase its dividend by 7.3%.
Coca-Cola (KO) stated Tuesday they believe 2015 will be a challenging year and that profits will be pulled down by weakening foreign currencies and one-time charges. Though fourth quarter profits fell 55% over 2013, the company earned $0.44 per share, surpassing the average analyst estimate of $0.42 per share.
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