The projected pe ratio on 2018 earnings is 145 below

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The projected P/E ratio on 2018 earnings is 14.5, below the market multiple of 18.7. As for earnings expectations, analysts now expect full-year earnings to increase 28.5% in 2018 and 12.4% in 2017, up from 3.3% in 2016. Although yields are now close to the market average, we note that many banks, REITS and insurance companies slashed or suspended dividends during the financial crisis of 2008-2009, and have been slow to return them to precrisis levels. Dividends and share repurchases also remain subject to regulatory approval for large banks deemed too-big-to-fail. VALUATION BHF shares trade at just 5.2-times our 2019 EPS forecast, below the average of 9.0 for a peer group that includes Voya Financial, Prudential, and Lincoln National. They are also trading at a price/book multiple of 0.4, well below the peer average of 1.1. The company has substantially reduced its roster of policies and appears to have limited prospects for revenue and earnings growth over the next several years. Additionally, we don’t find the shares appealing due to the lack of a dividend or repurchase program. As such, we believe that BHF is fairly valued at current levels and that a HOLD rating is appropriate. On May 14, HOLD-rated BHF closed at $48.80, up $0.69. (Jacob Kilstein, CFA, 5/14/18)
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M ARKET D IGEST - 5 - CHEESECAKE FACTORY INC. (NGS: CAKE, $51.92) .......................................................... HOLD CAKE: Maintaining HOLD * During the 1Q18 conference call, management raised its 2018 same-store sales growth guidance from 0-1%, to 1%-2%. * Cheesecake’s earnings are driven by same-store sales, which we expect to improve; however, we expect mid- single-digit wage increases to weigh on EPS. * We are lowering our 2018 EPS estimate from $2.80 to $2.70 and reducing our 2019 estimate from $3.00 to $2.90 per share. * We believe that CAKE is fairly valued at 19.3-times our revised 2018 EPS estimate, below the average for other casual dining chains. ANALYSIS INVESTMENT THESIS We are maintaining our HOLD rating on Cheesecake Factory Inc. (NGS: CAKE). The company recently posted solid first-quarter comp sales. The improvement reflected 2.7% higher prices and unchanged product mix, offset in part by a 60-basis- point decline in customer traffic. However, we are disappointed that first-quarter earnings missed expectations and believe that wages will continue to trend higher throughout 2018. RECENT DEVELOPMENTS On April 25, Cheesecake Factory reported 1Q18 adjusted EPS of $0.56, down $0.16 from the prior-year period, but below management’s $0.66-$0.70 guidance range. EPS missed the consensus forecast of $0.68 per share. Earnings benefited from the repurchase of approximately 700,000 shares during the quarter and 2.6 million shares in 2017. Same-store sales increased 2.1%, reflecting 2.7% higher prices and unchanged product mix, offset in part by a 60 basis-point decline in customer traffic. Management had projected 0.5%-1.5% higher comp sales, and the Street had called for an increase of 0.8%. In 1Q18, total revenues rose nearly 5.0% to $591 million, about $7 million above consensus.
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  • Spring '12
  • DirkJenter
  • Finance, ........., BHF, Market Digest

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