Earnings season is finally here!
Earnings season is finally back, with LVMH showing a solid first quarter with 29% revenue growth compared to Q1 2021. Fashion & Lather reported the highest revenue growth, and it's also their best margin business, with a 41.6% operating margin in 2021. It should be accretive to the overall margin in the first half of 2022.
Blackrock
Blackrock increased its earnings per share by 20% compared with Q1 2021 with great help from an increase in average assets under management from $8.8 trillion to $9.7 trillion. That’s a slight decrease in AUM from Q4 2021. The decrease is due to the slight decline in the global stock markets in 2022.
Blackrock has been steadily increasing its dividend for almost two decades, and they’ve retired 11% of their outstanding shares from 171 million shares down to 153 million since 2013.
UnitedHealth
I’ve liked this company for several years because they’ve been consistently increasing revenue and earnings while maintaining 22-25% returns on equity. No wonder why they have beaten the S&P 500 by a significant amount in the last five years.
UNH reported numbers this week, and they increased revenues by 14% compared with Q1 2021. Great numbers, but medical costs rose by almost 17% and offset most of the increased revenue. Earnings increased by only $165 million from $4862 to $5027, representing a slight increase of 3.4%. This small increase stems from many surgeries and treatments that were postponed due to covid and are now coming back, thus reducing the margins to more normal levels.
This company's price-to-earnings ratio has risen a lot over the years, and they're now priced at 24 times next year's earnings. That's a steep price to pay for an insurance company. UnitedHealth is expected to grow its earnings per share by 14% over the next five years and combined with dividends that could give shareholders a 15% cagr over five years. That could be unrealistic given rising rates and a high starting multiple. In my opinion, one should expect that the multiples could drop down towards the 20s or even lower towards more historical levels.
It’s been a couple of months since my last post. I’ve hoped you found this post interesting, and I wish you all a great easter!
I wrote about LVMH last year if you’re interested in the company
Disclosure
Always do your own research before investing! I hope that you enjoyed this post but it should not be considered an encouragement to buy the companies that I include in my portfolio or to be taken as financial advice. If you want to receive investment advice you should contact a professional.