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Hot Casino Stocks To Buy For 2019

Family and friends lend out about $89 billion in cash each year. More than a third of that total is used to help finance a new business while 6% of first-time home buyers get help from (usually) their parents. About a quarter of those loans were never paid back at all and more than 40% were only paid back partially.

The moral here is not to lend more than you can afford to lose. Sort of like playing poker or blackjack in a casino.

But what about lending your credit card to someone else, either a family member or good friend? How likely is that result in a bad outcome? According to a new survey of 2,253 U.S. adults by researchers at CreditCards.com, more than one-third of the time.

Nearly half (49%) of respondents who have ever owned a credit card admitted that they had lent the card to spouses, children, friends, co-workers or “other people” to make a purchase. More than a third (35%) experienced negative consequences.

Overspending by the card’s borrower hit 19% of the trusting souls, while 14% never got repaid and 10% reported that the card was lost, stolen or never returned. By extrapolation, the researchers estimate that 36 million Americans have been hurt by lending a credit card to someone else.

Hot Casino Stocks To Buy For 2019: Lorillard Inc(LO)

Advisors’ Opinion:

  • [By Shane Hupp]

    News articles about Lorillard (NYSE:LO) have been trending extremely positive recently, according to Accern Sentiment. Accern identifies negative and positive media coverage by analyzing more than twenty million news and blog sources in real-time. Accern ranks coverage of publicly-traded companies on a scale of negative one to one, with scores nearest to one being the most favorable. Lorillard earned a news impact score of 0.81 on Accern’s scale. Accern also gave news coverage about the company an impact score of 44.1727475800447 out of 100, indicating that recent media coverage is somewhat unlikely to have an effect on the stock’s share price in the next several days.

Hot Casino Stocks To Buy For 2019: International Speedway Corporation(ISCA)

Advisors’ Opinion:

  • [By Logan Wallace]

    Get a free copy of the Zacks research report on International Speedway Corp Class A (ISCA)

    For more information about research offerings from Zacks Investment Research, visit Zacks.com

  • [By Motley Fool Staff]

    International Speedway Corporation (NASDAQ: ISCA)Q2 2018 Earnings Conference callJul. 05, 2018, 1:00 pm ET

    Contents:
    Prepared Remarks Questions and Answers Call Participants
    Prepared Remarks:

    Operator

  • [By Logan Wallace]

    Get a free copy of the Zacks research report on International Speedway Corp Class A (ISCA)

    For more information about research offerings from Zacks Investment Research, visit Zacks.com

Hot Casino Stocks To Buy For 2019: Archrock, Inc.(AROC)

Advisors’ Opinion:

  • [By Stephan Byrd]

    Get a free copy of the Zacks research report on Archrock (AROC)

    For more information about research offerings from Zacks Investment Research, visit Zacks.com

  • [By Logan Wallace]

    Engineers Gate Manager LP boosted its stake in Archrock Inc (NYSE:AROC) by 241.6% in the 1st quarter, according to its most recent filing with the SEC. The fund owned 95,336 shares of the energy company’s stock after purchasing an additional 67,426 shares during the period. Engineers Gate Manager LP’s holdings in Archrock were worth $834,000 at the end of the most recent quarter.

  • [By Tyler Crowe]

    After years of struggling with the precipitous decline in oil prices and an onerous debt load, management at Archrock (NYSE:AROC) decided to bite the bullet and buy out its subsidiary master limited partnership Archrock Partners. According to management, the deal would free up some cash and lower its cost of capital. The combination of these two things would make it easier to grow the business and take advantage of the monumental growth of natural gas production in the U.S.

Hot Casino Stocks To Buy For 2019: Atlas Energy, L.P.(ATLS)

Advisors’ Opinion:

  • [By Max Byerly]

    Atlas Energy Group (OTCMKTS: ATLS) and Transglobe Energy (NASDAQ:TGA) are both small-cap oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Hot Casino Stocks To Buy For 2019: World Energy Solutions Inc(DE)

Advisors’ Opinion:

  • [By Lisa Levin]

    Friday morning, the industrial shares rose 0.42 percent. Meanwhile, top gainers in the sector included Deere & Company (NYSE: DE), up 5 percent, and American Woodmark Corporation (NASDAQ: AMWD) up 3 percent.

  • [By Lisa Levin]

    Some of the stocks that may grab investor focus today are:

    Wall Street expects Campbell Soup Company (NYSE: CPB) to report quarterly earnings at $0.61 per share on revenue of $2.14 billion before the opening bell. Campbell Soup shares fell 0.18 percent to $39.15 in after-hours trading.
    Applied Materials, Inc. (NASDAQ: AMAT) reported stronger-than-expected results for its second quarter, but issued weak sales outlook for the third quarter. Applied Materials shares fell 4.48 percent to $51.54 in the after-hours trading session.
    Analysts are expecting Deere & Company (NYSE: DE) to have earned $3.29 per share on revenue of $9.83 billion in the latest quarter. Deere will release earnings before the markets open. Deere shares dropped 1.23 percent to $145.00 in after-hours trading.
    AmTrust Financial Services Inc (NASDAQ: AFSI) shares rose over 5 percent in after-hours trading after a 13D filing from Carl Icahn shows a new 9.38 percent stake in the company. The filing also shows language from Icahn that strongly opposes a go-private transaction. AmTrust Financial shares climbed 5.81 percent to $14.21 in the after-hours trading session.

    Find out what's going on in today's market and bring any questions you have to Benzinga's PreMarket Prep.

  • [By ]

    Friday, Campbell Soup Co. (CPB) and Deere and Co. (DE) are set to report earnings.

    As the calendar suggests, earnings season is coming to a close. 

  • [By JJ Kinahan]

    Deere & Company (NYSE: DE) on Friday became the latest big name to run into that particular buzz saw, missing Wall Street analysts’ average projection for earnings per share with a tally of $3.14 and seeing its shares fall in pre-market futures trading before jumping higher once the market actually opened. Analysts had expected $3.33, according to third-party consensus estimates. In a way, however, DE was a victim of high expectations, because its earnings were up a lot year-over-year but down vs. the Street’s consensus.

  • [By JJ Kinahan]

    Deere & Company (NYSE: DE) stock has dropped a ways from its all-time high of $175.26 it hit on February 16 when the company last reported earnings. Since the start of May, DE has rallied from its recent low of $131.26 heading into its fiscal second-quarter results, scheduled for before market open on Friday, May 18.  

  • [By Max Byerly]

    PNC Financial Services Group Inc. trimmed its holdings in John Deere (NYSE:DE) by 2.0% in the first quarter, Holdings Channel reports. The fund owned 287,614 shares of the industrial products company’s stock after selling 5,932 shares during the period. PNC Financial Services Group Inc.’s holdings in John Deere were worth $44,671,000 at the end of the most recent reporting period.

Hot Casino Stocks To Buy For 2019: Endologix, Inc.(ELGX)

Advisors’ Opinion:

  • [By Stephan Byrd]

    Endologix (NASDAQ:ELGX) was upgraded by investment analysts at ValuEngine from a “strong sell” rating to a “sell” rating in a research report issued on Wednesday.

Top Value Stocks For 2019

Overseas Shipholding Group Inc. (NYSE:OSG) major shareholder Bluemountain Capital Managemen sold 189,425 shares of the stock in a transaction that occurred on Wednesday, June 27th. The stock was sold at an average price of $4.04, for a total transaction of $765,277.00. Following the completion of the sale, the insider now owns 8,198,641 shares of the company’s stock, valued at approximately $33,122,509.64. The transaction was disclosed in a filing with the SEC, which can be accessed through this link. Major shareholders that own 10% or more of a company’s shares are required to disclose their transactions with the SEC.

Bluemountain Capital Managemen also recently made the following trade(s):

Get Overseas Shipholding Group alerts:

On Thursday, June 14th, Bluemountain Capital Managemen sold 3,980 shares of Overseas Shipholding Group stock. The stock was sold at an average price of $3.93, for a total transaction of $15,641.40. On Wednesday, May 2nd, Bluemountain Capital Managemen sold 7,200 shares of Overseas Shipholding Group stock. The stock was sold at an average price of $3.77, for a total transaction of $27,144.00. On Monday, April 30th, Bluemountain Capital Managemen sold 5,600 shares of Overseas Shipholding Group stock. The stock was sold at an average price of $3.75, for a total transaction of $21,000.00. On Thursday, April 26th, Bluemountain Capital Managemen sold 42,150 shares of Overseas Shipholding Group stock. The stock was sold at an average price of $3.90, for a total transaction of $164,385.00. On Tuesday, April 24th, Bluemountain Capital Managemen sold 46,777 shares of Overseas Shipholding Group stock. The stock was sold at an average price of $3.95, for a total transaction of $184,769.15. On Friday, April 20th, Bluemountain Capital Managemen sold 750,000 shares of Overseas Shipholding Group stock. The stock was sold at an average price of $4.02, for a total transaction of $3,015,000.00.

OSG stock traded up $0.01 during midday trading on Friday, reaching $3.88. The company had a trading volume of 543,486 shares, compared to its average volume of 823,154. Overseas Shipholding Group Inc. has a 1 year low of $1.67 and a 1 year high of $4.16. The company has a quick ratio of 4.09, a current ratio of 4.48 and a debt-to-equity ratio of 1.18. The company has a market cap of $304.70 million, a price-to-earnings ratio of 6.24 and a beta of -0.08.

Top Value Stocks For 2019: World Energy Solutions Inc(DE)

Advisors’ Opinion:

  • [By Max Byerly]

    Cypress Capital Management LLC WY boosted its position in John Deere (NYSE:DE) by 68.8% in the first quarter, according to the company in its most recent 13F filing with the Securities & Exchange Commission. The institutional investor owned 1,350 shares of the industrial products company’s stock after purchasing an additional 550 shares during the period. Cypress Capital Management LLC WY’s holdings in John Deere were worth $210,000 at the end of the most recent quarter.

  • [By Taylor Cox]

    Notable Earnings

    Deere & Company (NYSE: DE) Q2 premarket
    Campbell Soup Company (NYSE: CPB) Q3 premarket
    AstraZeneca PLC (NYSE: AZN) Q1 premarket

    Investor Events

  • [By Lisa Levin]

    Friday afternoon, the industrial shares rose 0.64 percent. Meanwhile, top gainers in the sector included Deere & Company (NYSE: DE), up 7 percent, and FreightCar America, Inc. (NASDAQ: RAIL) up 6 percent.

Top Value Stocks For 2019: Quanta Services, Inc.(PWR)

Advisors’ Opinion:

  • [By Stephan Byrd]

    These are some of the media stories that may have impacted Accern’s analysis:

    Get Quanta Services alerts:

    Quanta Services (PWR) Up 5.7% Since Earnings Report: Can It Continue? (finance.yahoo.com) Quanta Services (PWR) Short Interest Update (americanbankingnews.com) Quanta Services (PWR) Given Average Rating of “Buy” by Analysts (americanbankingnews.com) Nvidia’s HGX-2 cloud server platform targets HPC and AI workloads (datacenterdynamics.com) NVIDIA Introduces HGX-2, Fusing HPC and AI Computing into Unified Architecture (itbusinessnet.com)

    PWR has been the topic of several research reports. Citigroup increased their target price on Quanta Services from $47.00 to $53.00 and gave the stock a “buy” rating in a research report on Tuesday, February 6th. Zacks Investment Research raised Quanta Services from a “hold” rating to a “buy” rating and set a $39.00 price objective on the stock in a research report on Friday, February 9th. DA Davidson reissued a “buy” rating on shares of Quanta Services in a research report on Thursday, February 22nd. Credit Suisse Group reissued an “outperform” rating and issued a $42.00 price objective (down from $46.00) on shares of Quanta Services in a research report on Friday, February 23rd. Finally, B. Riley cut their price objective on Quanta Services from $50.00 to $48.00 and set a “buy” rating on the stock in a research report on Monday, February 26th. One analyst has rated the stock with a sell rating, two have issued a hold rating and thirteen have issued a buy rating to the company. The stock has an average rating of “Buy” and a consensus target price of $45.23.

  • [By Max Byerly]

    Media coverage about Quanta Services (NYSE:PWR) has trended somewhat positive on Thursday, Accern reports. The research firm rates the sentiment of news coverage by analyzing more than 20 million news and blog sources in real time. Accern ranks coverage of public companies on a scale of negative one to one, with scores nearest to one being the most favorable. Quanta Services earned a media sentiment score of 0.08 on Accern’s scale. Accern also assigned media headlines about the construction company an impact score of 46.7873542160555 out of 100, indicating that recent news coverage is somewhat unlikely to have an effect on the company’s share price in the near term.

  • [By Shane Hupp]

    Quanta Services Inc (NYSE:PWR) saw unusually large options trading activity on Monday. Stock traders bought 930 call options on the company. This represents an increase of 594% compared to the typical daily volume of 134 call options.

  • [By ]

    Should President Trump follow through on plans to repair and replace U.S. infrastructure, Berkshire may want to get involved by buying companies poised to benefit from such spending, including Vulcan Material Co. (VMC) , Martin Marietta Materials Inc. (MLM) or Quanta Services Inc. (PWR) , which provides infrastructure services primarily to the oil and gas and electrical power industries.

Top Value Stocks For 2019: Xcel Energy Inc.(XEL)

Advisors’ Opinion:

  • [By Maxx Chatsko]

    The rise of wind power wouldn’t have been possible without two companies in particular, which combine to own 20.7 gigawatts of wind capacity, or about 24% of the country’s total. Investors wouldn’t be surprised to learn that clean energy provider NextEra Energy is one of the renewable energy stocks most important to American wind power.However, the relatively unheard of natural gas and electric utility Xcel Energy (NASDAQ:XEL) doesn’t seem to garner nearly the same level of attention. Overlooking it could be a mistake.

  • [By Logan Wallace]

    These are some of the news articles that may have effected Accern Sentiment Analysis’s scoring:

    Get Xcel Energy alerts:

    Head-To-Head Analysis: Xcel Energy (XEL) versus Endesa (ELEZF) (americanbankingnews.com) Contrasting Evergy (EVRG) and Xcel Energy (XEL) (americanbankingnews.com) Endesa (ELEZF) versus Xcel Energy (XEL) Head-To-Head Analysis (americanbankingnews.com) Selecting A Utility: Look Back, Look Forward, Or Look At Your Bill (seekingalpha.com) Colorado regulator raises Xcel Energy efficiency target by 25% (seekingalpha.com)

    A number of analysts have recently issued reports on XEL shares. Zacks Investment Research raised Xcel Energy from a “hold” rating to a “buy” rating and set a $51.00 price objective for the company in a research report on Saturday, June 2nd. Mizuho raised Xcel Energy from a “neutral” rating to a “buy” rating and set a $44.00 price objective for the company in a research report on Tuesday, March 27th. SunTrust Banks set a $43.00 price objective on Xcel Energy and gave the company a “hold” rating in a research report on Monday, March 19th. Bank of America cut Xcel Energy from a “buy” rating to a “neutral” rating and set a $47.00 price objective for the company. in a research report on Wednesday. Finally, Morgan Stanley cut their price objective on Xcel Energy from $49.00 to $46.00 and set an “overweight” rating for the company in a research report on Wednesday, June 13th. Six equities research analysts have rated the stock with a hold rating, five have issued a buy rating and one has issued a strong buy rating to the stock. Xcel Energy currently has a consensus rating of “Buy” and a consensus target price of $47.00.

  • [By Maxx Chatsko]

    Many stakeholders and technologies have played a role in this changing of the guard, but two companies in particular made incredible contributions: NextEra Energy (NYSE:NEE) and Xcel Energy (NASDAQ:XEL). The pair of renewable utility holding companies ended 2017 with a combined 20.7 gigawatts of wind power in their generation mix. Throw in budding solar portfolios and their total renewable energy capacity tops 24 GW.

Top Value Stocks For 2019: Tejon Ranch Co(TRC)

Advisors’ Opinion:

  • [By Ethan Ryder]

    Terracoin (CURRENCY:TRC) traded down 14.6% against the dollar during the 24 hour period ending at 23:00 PM ET on May 17th. In the last week, Terracoin has traded 20.7% higher against the dollar. Terracoin has a market cap of $4.06 million and $4,377.00 worth of Terracoin was traded on exchanges in the last 24 hours. One Terracoin coin can now be bought for about $0.18 or 0.00002218 BTC on popular exchanges including CoinExchange, Trade Satoshi, C-CEX and Cryptopia.

7 Stocks To Watch For May 18, 2018

Some of the stocks that may grab investor focus today are:

Wall Street expects Campbell Soup Company (NYSE: CPB) to report quarterly earnings at $0.61 per share on revenue of $2.14 billion before the opening bell. Campbell Soup shares fell 0.18 percent to $39.15 in after-hours trading.
Applied Materials, Inc. (NASDAQ: AMAT) reported stronger-than-expected results for its second quarter, but issued weak sales outlook for the third quarter. Applied Materials shares fell 4.48 percent to $51.54 in the after-hours trading session.
Analysts are expecting Deere & Company (NYSE: DE) to have earned $3.29 per share on revenue of $9.83 billion in the latest quarter. Deere will release earnings before the markets open. Deere shares dropped 1.23 percent to $145.00 in after-hours trading.
AmTrust Financial Services Inc (NASDAQ: AFSI) shares rose over 5 percent in after-hours trading after a 13D filing from Carl Icahn shows a new 9.38 percent stake in the company. The filing also shows language from Icahn that strongly opposes a go-private transaction. AmTrust Financial shares climbed 5.81 percent to $14.21 in the after-hours trading session.

Find out what's going on in today's market and bring any questions you have to Benzinga's PreMarket Prep.

Analysts expect AstraZeneca plc (ADR) (NYSE: AZN) to report quarterly earnings at $0.35 per share on revenue of $5.24 billion before the opening bell. AstraZeneca shares declined 1.21 percent to $36.00 in after-hours trading.
Nordstrom, Inc. (NYSE: JWN) reported upbeat results for its first quarter. Comparable-store sales rose 0.6 percent. Nordstrom shares fell 7.03 percent to $47.33 in after-hours trading.
Boot Barn Holdings Inc (NYSE: BOOT) disclosed a 7.2 million common stock offering. Boot Barn shares dropped 3.14 percent to $23.72 in the after-hours trading session.

10 Stocks to Short as China Hits Back

U.S. equity markets have been much choppier so far in 2018, to say the least. Volatility has doubled. February saw the first market correction in two years. And since then, U.S. stocks have swung back and forth, with a number of big one-day moves along the way.

One of the more recent catalysts of the market’s nervousness has been an increasing fear of a trade war. What started with tariffs on imported aluminum and steel could end … well, anywhere. Given that the U.S. and China alone traded over $650 billion in goods and services, a tit-for-tat escalation could hurt both economies. And should other countries get involved, the worldwide impact could be severe.

All that said, the market hasn’t exactly plunged so far. And I tend to agree with James Brumely, who on this site called from some much-needed perspective on the confrontation. Trade alone isn’t a reason to flee the U.S. equity market, and it isn’t enough of a reason, alone, to sell or short a specific stock. Stocks like Deere & Company (NYSE:DE), Caterpillar Inc. (NYSE:CAT) and Boeing Co (NYSE:BA) are obvious short targets, but they have already have sold off, and perhaps too far.

But for these 10 stocks, trade fears add to an already-existing short case. For investors who see trade war risk as a real possibility, all 10 can provide hedges against long positions, or aggressive short bets. And for investors more sanguine on a tariff battle, there’s still enough reason elsewhere to at least consider taking a short position.

Stocks to Short: Wynn Resorts (WYNN) Wynn Resorts, Limited (WYNN) Stock Gets Hit by the Fundamentals, Not #MeToo Source: Aurlmas via Flickr (Modified)

To be sure, it would take a tremendous escalation for trade issues to hit Wynn Resorts, Limited (NASDAQ:WYNN). So at the moment, the risk of WYNN getting caught in the crossfire of a U.S.-China confrontation looks slim.

That said, the risk also could be enormous. Wynn’s concession in Macau expires in 2022. If China truly wanted to take a scalp, Wynn, Las Vegas Sands Corp. (NYSE:LVS), and MGM Resorts International (NYSE:MGM) all could potentially be at risk of being replaced.

Even a lesser action like adding additional concessions to the additional six in Macau could have a significant competitive impact on revenue and profits. And Wynn would be most at risk in this scenario, as it generates the greatest share of its earnings in Macau relative to its two other U.S.-based counterparts.

Again, that is a doomsday — and still relatively unlikely — scenario. But even some re-pricing of that risk could hit Wynn stock. And that’s not the company’s only problem in the region. As the Macau Daily Times (an English-language paper) reported, the sexual harassment allegations surrounding former CEO Steve Wynn present a risk to the company’s concession renewal.

Steve Wynn’s complete exit from the company may ameliorate that problem. But there’s also the risk that a trade war could hit the Chinese economy — and slow the stream of high rollers visiting Wynn’s properties in the enclave and driving baccarat profits on the Vegas Strip.

Add to that the possibility of a sale of its unfinished Massachusetts property and even rumors of a tie-up with MGM aren’t likely to keep WYNN afloat. And if any of the negative scenarios here actually play out, Wynn stock easily could tumble 20% or more.

Stocks to Short: RBC Bearings (ROLL) Stocks to Short: RBC Bearings (ROLL)Source: Shutterstock

The short case for RBC Bearings Incorporated (NASDAQ:ROLL) in this environment has a couple of different aspects. The first is that the company is a major supplier to the aerospace industry, which drives roughly two-thirds of revenue. So with Boeing stock one of the biggest victims of trade war fears, ROLL should have similar exposure of its own.

The second is that RBC has a good deal of exposure to steel prices, which could hit its margins. Normally, RBC has been able to pass increases along to customers, but Boeing and others may not pay up if it has its own margin concerns to worry about. The other one-third of ROLL revenue comes from industrial companies in construction and mining, oil and gas, heavy truck and rail, among other sectors. Those customers, too, could feel some pain from higher tariffs, and rising costs, making pass-through pricing difficult in that segment as well.

Meanwhile, ROLL hasn’t taken much of a hit yet and it looks rather expensive. While BA stock trades at less than 20x forward EPS, ROLL is at a whopping 26x. Profit growth really hasn’t been that impressive the last few years; instead, investors are pricing in what the company expects to be a strong performance starting in the second half of this year. But if margin pressure gets in the way – and RBC already has disappointed on that front in the past – growth will disappoint, and that premium multiple will come down.

RBC doesn’t have much of a short interest — barely 1% of the float — and it has held its valuation for some time. But the chart of late looks weaker, and if trade fears do ramp up, ROLL seems likely to head down.

Stocks to Short: Harley-Davidson (HOG) Stocks to Short: Harley-Davidson (HOG)Source: Crysis Rubel via Flickr (Modified)

Harley-Davidson Inc (NYSE:HOG) already was a heavy short target before the events of the last few weeks. That’s still the case, with almost 15% of the float sold short. And those shorts are winning, with HOG down nearly 17% YTD after a disappointing Q4 earnings report in late January.

I wrote ahead of that report that Harley-Davidson was riding into irrelevance, and I still believe that to be the case. Sales are stagnant even in a growing economy. The idea that millennials are going to buy loud, unsafe Harleys strikes me as somewhere between overly optimistic and delusional. To be fair, Harley-Davidson has struggled with the strong dollar, but even as the yen has strengthened, competitors like Yamaha Motor Co., Ltd. (OTCMKTS:YAMHF) are having success.

Trade concerns only add to an already-solid short case here, even with HOG trading at a ‘cheap’ 11x forward EPS multiple.

Harley-Davidson has admitted it could see a “significant impact” on sales in the case of rising tariffs. The European Union already has targeted the company in response to the initial steel and aluminum tariffs. HOG stock didn’t need any more bad news, but considering its debt, higher input costs, and lower sales, there’s a combination for a very severe downturn in Harley-Davidson stock, particularly if trade wars escalate.

Stocks to Short: Cloud Peak Energy (CLD) Stocks to Short: Cloud Peak Energy (CLD)Source: Via Stock Snap

President Trump has made no secret of his desire to help coal companies, and he has already taken steps toward that goal. But a battle with China very well may do more harm than good — and impact coal stocks like Cloud Peak Energy Inc. (NYSE:CLD).

It’s China whose demand actually has driven higher U.S. coal exports of late. But China could pull the rug out on that growth. China clearly has targeted Trump’s base in its initial response — and that could lead to either tariffs on coal and/or a pivot to other suppliers like Australia and Indonesia.

As the weakest publicly traded producer, that makes CLD worth a look from the short side. Cloud Peak is reliant on thermal coal, unlike, say, Arch Coal Inc (NYSE:ARCH), whose coking coal is used in steel production. Demand for thermal coal (used for power production) is in a long-term decline both in the U.S. and abroad, no matter how the Administration tries to help.

Heading into 2018, Cloud Peak was expecting a ~20% increase in exports in 2018 — without that demand, sales and profits are likely to fall. The stock already has fallen 44% just since mid-January, as investor sentiment clearly has turned negative.

Adjusted EBITDA was stable in 2017 after a significant decline the year before – but a rebound looks unlikely. With a concerning high debt load, and borrowing costs of 12%, there’s a potential for a restructuring down the line. (Both Arch and Peabody Energy Corporation (NYSE:BTU) have recently emerged from bankruptcy themselves.) Any pressure from a trade war could accelerate that timeline — and provide 100% return to a short.

Stocks to Short: LSI Industries (LYTS) Stocks to Short: LSI Industries (LYTS)Source: Shutterstock

Admittedly, LSI Industries, Inc. (NASDAQ:LYTS) is an out-of-the-box short here. The case for shorting LYTS perhaps isn’t quite as strong, and comes down more to a potential trade ahead of the company’s first quarter report later this month.

But LSI, who manufactures lighting and signage for retail companies (among them gas stations), does have exposure to trade fears in a number of ways. The first is in terms of input cost inflation. Per the company’s 10-K, raw materials account for 60% of the company’s cost of sales. And the cost of those raw materials already is rising — climbing 5-6% in fiscal 2017, with inflation continuing into calendar 2018.

So far, LSI has been able to offset those hikes with internal improvements. Indeed, LYTS stock soared after a strong fiscal Q2 report in January. But the pressure may be rising. And with China a major manufacturer of LED lighting, tariffs could disrupt that supply chain for LSI as well.

At the same time, the overall lighting market remains weak. And retrofitting spend may come down further if LSI customers see reason to be nervous about the broader economy. With LYTS trading at a mid-teen EBITDA multiple, the combination of slowing (or negative) revenue growth and higher costs could lead to an ugly fiscal Q3. And it could send LYTS down big, particularly if that EBITDA margin drops toward 10-12x.

Stocks to Short: Callaway Golf (ELY) Stocks to Short: Callaway Golf (ELY)Source: Shutterstock

Callaway Golf Co (NYSE:ELY) is another short based on the thesis that raw material costs will rise. Callaway obviously has substantial sensitivity to metal prices — steel in particular — which could affect margins.

And that would be a problem for Callaway, because its sales growth simply isn’t that torrid. The company expects just 2-3% revenue growth in 2018, outside of help from a recent acquisition. Callaway has done a phenomenal job of late taking market share, including in golf balls, but flat end markets suggest any pricing pressure could be an issue long-term.

Meanwhile, ELY stock is hardly cheap, trading at roughly 25x the midpoint of 2018 EPS guidance. Add to that potential pressure in the Chinese market itself – Asia ex-Japan drove 6% of 2017 sales – and there’s a case to make a quick buck on the short side from ELY. Moderate EPS growth projections just a bit and cut the EPS multiple down to a still-hefty 20-22x and Callaway stock drops as much as 20%.

Stocks to Short: PolyOne (POL) Stocks to Short: PolyOne (POL)Source: Via LyondellBasell

Keeping with the input cost theme, PolyOne Corporation (NYSE:POL) may be an under-the-radar victim of tariffs. The specialty chemical manufacturer already is struggling with pricing pressure, leading to weakness coming out of its Q4 earnings report in January. China’s initial tariff list included 44 chemicals, which raised alarms in the petrochemical industry served by PolyOne.

So far, PolyOne has been able to offset the pricing pressure, with 2017 the company’s eighth straight year of adjusted EPS growth. But a multi-year economic recovery has helped, and consensus expectations of 15% EPS growth this year look too high.

Here, too, there’s a case for a combination effect of both lower margins and lower sales. And while POL isn’t particularly expensive at 15x forward EPS, the cyclical nature of the space generally leads to low multiples. It’s not hard to see POL stumbling at some point this year, which at least could send the stock back toward the mid-30s range at which it traded last year — roughly 20% downside from current levels.

Stocks to Short: Campbell’s Soup (CPB) Stocks to Short: Campbell's Soup (CPB)Source: Meal Makeover Moms via Flickr (Modified)

As I’ve written several times in the past, I don’t particularly like the CPG (consumer packaged goods) space. Within that space, Campbell Soup Company (NYSE:CPB) looks like one of the weakest offerings – and an attractive short on its own.

Indeed, 12% of CPB’s float already is sold short. And with the stock down by one-third from 2016 levels, the shorts have been right so far. I don’t think that trade is over yet, either.

Campbell’s is the most indebted among major food companies. Investors were unimpressed with the company’s expensive acquisition of Snyder’s-Lance, and soup sales are falling. CPB may look cheap on an EPS basis, but including the debt its EV/EBITDA multiple still is in line with faster-growing companies. And that debt could pressure the stock if Campbell’s can’t execute a turnaround over the next couple of quarters.

On top of all of that, Campbell’s aluminum prices are going to rise – as the company itself has said. And with little room for the company to raise prices in a brutal grocery space, that could further pressure margins.

More broadly, Campbell Soup hardly seems a good business at the moment. It’s a low-growth giant at a time when smaller, nimbler companies are winning in food. All told, CPB still looks like a short. And to hedge that short, investors can go long J M Smucker Co (NYSE:SJM), which has a few of the same category risks and much, much better rewards.

Stocks to Short: Tiffany (TIF) Tiffany & Co. (TIF) Stock Looks Risky at These Elevated Levels Source: Shutterstock

Tiffany & Co. (NYSE:TIF) could have a very real problem if a trade war escalates. Growth already is pretty tepid, with the company’s Q4 sales and full-year outlook both disappointing investors last month. TIF stock still looks reasonably expensive, at 22.5x the midpoint of that EPS guidance. As both Luke Lango and Will Healy argued on this site, Tiffany already looked like an avoid at best.

The company is struggling with its engagement ring business. Millennials aren’t interested. But the company’s one clear growth engine was…China. China represented roughly 60% of the company’s Asia-Pacific sales in 2017, according to the 10-K. That’s about 16% of the company’s total sales. And the Asia-Pacific region was the one bright spot in terms of 2017 sales, with 8% constant-currency growth, most of which came from China.

Take that growth driver away – whether through tariffs, regulation, or anti-American sentiment from Chinese customers – and Tiffany starts to look a low-growth dinosaur. And that’s not a profile that is going to garner a 20x+ EPS multiple. TIF stock has bounced largely on turnaround hopes and the growth opportunity in Asia. If one of those two pillars of the bull case crumbles, Tiffany stock is going to do the same.

Stocks to Short: La-Z-Boy (LZB) Stocks to Short: La-Z-Boy (LZB)Source: Shuttershock

The entire consumer furniture space, including La-Z-Boy Incorporated (NYSE:LZB) has been choppy at best for years now. And that’s a pretty significant concern. Given a strong U.S. economy and a solid (if not roaring) housing market, profit growth should be much more impressive than it has been, particularly the past few years.

That’s particularly true for LZB, whose 4-4-5 strategy has involved buying licensed stores and building out new locations. Yet increased marketing costs and higher raw material prices have pressured margins, and LZB shares really haven’t moved for about four years now.

The short case for LZB is that potential trade pressure will be just enough to tip earnings negative – and push the stock down into the mid-20s, at least. La-Z-Boy imports from Chinese suppliers; it could face cost inflation there. Steel prices could hurt. So could polyurethane (used for foam) if chemical tariffs are expanded.

Meanwhile, La-Z-Boy will struggle to take pricing. Wayfair Inc (NYSE:W) is competing on price (and losing money in the process). Smaller rivals Bassett Furniture Industries Inc. (NASDAQ:BSET) and Hooker Furniture Corporation (NASDAQ:HOFT) both have cited success in the motion upholstery category – the most important for La-Z-Boy.

With no debt on the balance sheet, LZB isn’t likely to plunge. But investors looking for a quick double-digit return on trade fears, or a weak fiscal Q4 report in June, should consider shorting or selling calls in LZB.

As of this writing, Vince Martin is long shares of Hooker Furniture Corporation, and has no positions in any other securities mentioned.

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For Tesla, Less Is More

Page 14 of Tesla’s (NASDAQ:TSLA) 2017 10-K states:

Segment Information

We operate as two reportable segments: automotive and energy generation and storage.

The automotive segment includes the design, development, manufacturing, and sales of electric vehicles. The energy generation and storage segment includes the design, manufacture, installation, and sale or lease of stationary energy storage products and solar energy systems, and sale of electricity generated by our solar energy systems to customers.

As stated, Tesla has two reportable business segments, the automotive segment and the energy generation and storage segment.

What does “Full Disclosure” mean to the SEC and to the Financial Accounting Standards Board (FASB, which governs the accounting standards that public companies must comply with)? It is a basic Generally Accepted Accounting Principle (GAAP). As stated on page 1,314 of “Intermediate Accounting by Kieso, Weygandt, and Warfield, 2010:

The full disclosure principle calls for financial reporting of any financial facts significant enough to influence the judgment of an informed reader.”

The same page also states:

For example, recently the SEC required companies to provide expanded disclosures about their contractual obligations. In light of the off-balance sheet accounting frauds at companies like Enron, the benefits of these expanded disclosures seem fairly obvious to the investing public.”

I’ve stated it a number of times and I’ve seen other posters on SA state the same thing, and that is that Tesla does not seem transparent enough with its financial reporting. That thought came into focus when I thought about the company’s reportable business segments. I knew there was a specific standard or two that governed segment reporting. So, I decided to research the matter and see what information was required to be reported and then compare that with what Tesla reported, as well as what other companies, with more than one reportable segment reported.

The accounting standard governing business segment reporting is Statement of Financial Accounting Standards (SFAS) 131: Disclosures About Segments of an Enterprise and Related Information. SFAS 131 replaced SFAS 14: Financial Reporting for Segments of a Business Enterprise in 1997. The reason for the updated standard on business segment reporting was because financial analysts found SFAS 14 inadequate. (See paragraphs 42 and after of the Standard). They wanted financial statement data to be disaggregated to a greater degree than required by SFAS 14.

With FASB changing over to the accounting standards codification (ASC), this standard is now ASC 280: Segment Reporting, but it’s the same content as SFAS 131. Because the content is identical, I will refer to text from SFAS 131, instead of ASC 280. The codification is harder to access because you have to register at FASB’s website, so I can’t link to the text with it, whereas SFAS 131’s text is readily accessible.

SFAS 131 requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise about which separate financial information is available that’s evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the basis that it is used internally for evaluating segment performance and deciding how to allocate resources to segments.

The reason that SFAS 131 was created was to:

Better understand the enterprise’s performance through expanded disclosures. Better assess its prospects for future net cash flows. Make more informed judgments about the enterprise as a whole.

It appears that Tesla meets the technical requirements of SFAS 131: Disclosures About Segments of an Enterprise and Related Information, but has failed to comply with the spirit of the standard. That’s my opinion after researching this subject.

SFAS 131 requires that a public business enterprise report a measure of profit or loss, certain specific revenue and expense items, and assets by segment. It also requires reconciliations of total segment revenues, total segment profit or loss, total segment assets, and other amounts disclosed for segments to corresponding amounts in the enterprise’s general-purpose financial statements. Information about the revenues derived from the enterprise’s products or services, about the countries in which the enterprise earns revenues and hold assets, and about major customers also is required to be reported, regardless of whether that information is used in making operating decisions.

An operating segment of an enterprise is defined by SFAS 131, paragraph 10 as:

10 …a component of an enterprise:

a. That engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same enterprise).

b. Whose operating results are regularly reviewed by the enterprise’s CODM to make decisions about resources to be allocated to the segment and assess its performance, and

c. For which discrete financial information is available.”

Then paragraph 12 states:

12. The term chief operating decision maker identifies a function, not necessarily a manager with a specific title. That function is to allocate resources to and assess the performance of the segments of an enterprise.”

This means that the CODM, as defined in the previous paragraph, may be a group of persons and not just one person.

The following defines what a “reportable business segment” is which requires disaggregated segment reporting:

Quantitative Thresholds

18. An enterprise shall report separately information about an operating segment that meets any of the following quantitative thresholds:

a. Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10 percent or more of the combined revenue, internal and external, of all reported operating segments.

b. The absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount, of (1) the combined reported profit of all operating segments that did not report a loss or (2) the combined reported loss of all operating segments that did report a loss.

c. Its assets are 10 percent or more of the combined assets of all operating segments.

So, now we know what business segments are and which business segments must be reported separately from consolidated amounts.

I’m including here the SEC’s explanation of why it changed its guidance to conform to SFAS 131.

Let’s now examine, from SFAS 131, what is required to be disclosed by reported operating segments:

Disclosures

25. An enterprise shall disclose the following:

a. General information as described in paragraph 26

b. Information about reported segment profit or loss, including certain revenues and expenses included in reported segment profit or loss, segment assets, and the basis of measurement, as described in paragraphs 27-31

c. Reconciliations of the totals of segment revenues, reported profit or loss, assets, and other significant items to corresponding enterprise amounts as described in paragraph 32

d. Interim period information as described in paragraph 33.

26. An enterprise shall disclose the following general information:

a. Factors used to identify the enterprise’s reportable segments, including the basis of organization (for example, whether management has chosen to organize the enterprise around differences in products and services, geographic areas, regulatory environments, or a combination of factors and whether operating segments have been aggregated).

b. Types of products and services from which each reportable segment derives its revenues.”

Information about Profit or Loss and Assets

27. An enterprise shall report a measure of profit or loss and total assets for each reportable segment. An enterprise also shall disclose the following about each reportable segment if the specified amounts are included in the measure of segment profit or loss reviewed by the chief operating decision maker:

a. Revenues from external customers

b. Revenues from transactions with other operating segments of the same enterprise

c. Interest revenue

d. Interest expense

e. Depreciation, depletion, and amortization expense

f. Unusual items as described in paragraph 26 of APB Opinion No. 30, Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions

g. Equity in the net income of investees accounted for my the equity method

h. Income tax expense or benefit

i. Extraordinary items

j. Significant noncash items other than depreciation, depletion, and amortization expense.

28. An enterprise shall disclose the following about each reportable segment if the specified amounts are included in the determination of segment assets reviewed by the chief operating decision maker:

a. The amount of investment in equity method investees.

b. Total expenditures for additions to live-lived assets other than financial instruments, long-term customer relationships of a financial institution, mortgage and other servicing rights, deferred policy acquisition costs, and deferred tax assets.

Now we come to a very important part of the standard. It’s this paragraph that seems to be a loophole for Tesla to circumvent what was intended by SFAS 131.

Measurement

29. The amount of each segment item reported shall be the measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segment and assessing its performance. Adjustments and eliminations made in preparing an enterprise’s general-purpose financial statements and allocations of revenues, expenses, and gains or losses shall be included in determining reported segment profit or loss only if they are included in the measure of the segment’s profit or loss that’s used by the chief operating decision maker. Similarly, only those assets that are included in the measure of the segment’s assets that’s used by the chief operating decision maker shall be reported for that segment. If amounts are allocated to reported segment profit or loss or assets, those amounts shall be allocated on a reasonable basis.”

Are you still with me? It is a lot to digest. There is more, but I want to stop here and begin the analysis of Tesla’s disclosures. Tesla reports its business segment information under Note 23 of the 2017 10-K, pages 117 and 118:

Note 23 Segment Reporting and Information about Geographic Areas

We have two operating and reportable segments: (i) automotive and (ii) energy generation and storage. The automotive segment includes the design, development, manufacturing and sales of electric vehicles. Additionally, the automotive segment is also comprised of services and other, which includes after-sales vehicle services, used vehicle sales, powertrain sales and services by Grohmann. The energy generation and storage segment includes the design, manufacture, installation and sales of solar energy generation and energy storage products. Our CODM does not evaluate operating segments using asset or liability information. The following table presents revenues and gross margins by reportable segment (in thousands):”

Note on page 117 that Tesla’s “measure of profit or loss” which they use “for purposes of making decisions about allocating resources to the segment and assessing its performance” is Gross Profit.

At this point I have to ask: Really? You mean to say that Mr. Musk and Mr. Ahuja, or whoever the CODM is, meet with the people responsible for the two business segments to review operating performance and the only measure of profit or loss that they review is Gross Profit? Are you serious?

I mean, you have business segment operating expenses like:

Payroll for design, development, manufacturing, and sales. SG&A for both operating segments, like utilities, telephones both stationary and mobile, internet usage charges, and general office supplies for administrative employees and sales employees. Depreciation for general purpose office equipment like computers, printers, telephones, desks, chairs. Depreciation on the buildings that house administrative and sales employees. Amortization on computer software used to manage both segments. Marketing costs Other things I have not mentioned or thought of.

All of these costs can be easily identified with either the Automotive segment or the Energy Generation and Storage segment. I am certain that Tesla’s CODM reviews these business segment costs and reviews operating income or loss by business segment in order to assess operating performance for each segment. But, SFAS 131 doesn’t define what the term “a measure of profit or loss” is. Therefore, the Standard provides Tesla with a loophole whereby they are not required to disclose operating income or loss by business segment. As a consequence, in Tesla’s case the new Standard provides a loophole whereby less disaggregated financial information may be disclosed than the old one. That’s exactly the opposite of what was intended with the issuance of the new Standard.

To support my claim that Tesla’s CODM looks at details of operating performance on a segment level basis that go well beyond the Gross Profit level, Take a look at this article from October 25, 2017.

” Tesla said at the time of the acquisition it would cut costs by $150 million in the first full year after closing the deal, which will occur November 21, 2017. SolarCity cofounders Peter and Lyndon Rive have both left the company since it was acquired by Tesla. The Rives are cousins of Tesla CEO Elon Musk. “

The word “synergies,” however, means cost cutting, and at least some of the cost cutting will come in the form of layoffs.

Like all companies, Tesla conducts an annual performance review during which a manager and employee discuss the results that were achieved, as well as how those results were achieved, during the performance period. This includes both constructive feedback and recognition of top performers with additional compensation and equity awards, as well as promotions in many cases. As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures. Tesla is continuing to grow and hire new employees around the world.”

SFAS 131 provides an example of Segment Information to be reported, in paragraph 122:

Diversified Company evaluates performance based on profit or loss from operations before income taxes not including nonrecurring gains and losses and foreign exchange gains and losses.”

Did you get that? The example in SFAS 131, itself, uses what to evaluate performance? Operating Income or Loss.

The example company also has a finance segment that meets the reportable segment criteria. Tesla has a finance division in its Auto Segment. That division doesn’t meet the reportable segment criteria? Interesting. Very interesting.

IMO, Tesla does, in fact, assess business segment performance at the operating income or loss level. My own accounting work experience tells me that. Common sense tells you that. I was born at night, but not last night. So, even though Tesla meets the technical requirements of SFAS 131, by reporting “a measure of profit or loss,” the company fails to comply with the very intent of the standard, in my opinion.

There’s another matter, also, the reporting of segment assets. Tesla doesn’t report their assets by segment, but only by a consolidated total. Again, it appears that Tesla meets the technical requirements of SFAS 131, but fails to comply with its spirit. Within Note 23 of the 2017 10-K, on page 117, Tesla states: Our CODM does not evaluate operating segments using asset or liability information.

Paragraph 29 of the standard states: “The amount of each segment item reported shall be the measure reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segment and assessing its performance. “

So, with Tesla’s statement, they comply with the technical requirements of the standard since, according to the company, the CODM doesn’t evaluate operating segments using asset or liability information.

But, is it really true that Tesla doesn’t evaluate segment operating performance or the allocation of resources (assets) using asset information? Has Tesla consolidated SolarCity and reduced the amount of assets under its management, as a result? Yes, they have. Does Tesla continue to monitor and manage the amount of its assets, company wide? Obviously, they do. And what about “capex?” So if this isn’t reviewing resource allocation (assets) and making decisions about resource allocation (assets), then I’m from Mars. I think any public company manages the allocation of resources using asset information, as can readily be seen by the asset information provided by other enterprises with more than one segment. Ford (NYSE:F), GM (NYSE:GM), John Deere (NYSE:DE), GE (NYSE:GE), Johnson & Johnson (NYSE:JNJ), Caterpillar (NYSE:CAT), and every other company that I’ve researched, that has more than one business segment, provides operating income, asset information, depreciation, and other information by segment. But not Tesla. I find it hard to believe that Tesla doesn’t review and evaluate operating performance or resource allocation with asset information.

Let’s go on, now, and review a few other paragraphs of the standard.

32. An enterprise shall provide reconciliations of all of the following:

a. The total of the reportable segment’s revenues to the enterprise’s consolidated revenues.

b. The total of the reportable segments’ measures of profit or loss to the enterprise’s consolidated income before income taxes, extraordinary items, discontinued operations, and the cumulative effect of changes in accounting principles.

c. The total of the reportable segments’ assets to the enterprise’s consolidated assets.

d. The total of the reportable segments’ amounts for every other significant item of information disclosed to the corresponding consolidated amount.

All significant reconciling items shall be separately identified and described. For example, the amount of each significant adjustment to reconcile accounting methods used in determining segment profit or loss to the enterprise’s consolidated amounts shall be separately identified and described.

Tesla includes a reconciliation of its reportable segment revenues to consolidated revenues. But I don’t see a reconciliation of the reportable segments’ profit or loss to the consolidated income or loss before income taxes, extraordinary items, etc. And a reconciliation of the reportable segments’ assets to consolidated assets is missing.

Then there’s paragraph 38 about reporting revenues from external customers by geographic region, and long-lived assets by geographic region. Tesla complies with this.

Then there’s paragraph 39:

Information about Major Customers

39. An enterprise shall provide information about the extent of its reliance on its major customers. If revenues from transactions with a single external customer amount to 10 percent or more of an enterprise’s revenues, the enterprise shall disclose that fact, the total amount of revenues from each such customer, and the identity of the segment or segments reporting the revenues. The enterprise need not disclose the identity of a major customer or the amount of revenues that each segment reports from that customer.

Tesla doesn’t provide any information in this regard, so, apparently it doesn’t derive at least 10 percent of its revenues from just one customer.

So, that’s the standard and you can review it at FASB’s website here.

Let’s further evaluate the adequacy of Tesla’s disclosures about its business segments by revealing what was intended when SFAS 131 replaced SFAS 14.

First, let’s review the statements of the sole FASB Board Member (there are seven board members) who dissented from the issuance of SFAS 131:

This Statement was adopted by the affirmative votes of six members of the Financial Accounting Standards Board. Mr. Leisenring dissented.

Mr. Leisenring dissents from the issuance of this Statement because it does not define segment profit or loss and does not require that whatever measure of profit or loss is reported be consistent with the attribution of assets to reportable segments.

By not defining segment profit or loss, this Statement allows any measure of performance to be displayed as segment profit or loss as long as that measure is reviewed by the chief operating decision maker. Items of revenue and expense directly attributable to a given segment need not be included in the reported operating results of that segment, and no allocation of items not directly attributable to a given segment is required. As a consequence, an item that results directly from one segment’s activities can be excluded from that segment’s profit or loss. Mr. Leisenring believes that, minimally, this Statement should require that amounts directly incurred by or directly attributable to a segment be included in that segment’s profit or loss and that assets identified with a particular segment be consistent with the measurement of that segment’s profit of loss.

Mr. Leisenring supports trying to assist users as described in paragraph 3 of this Statement but believes it is very unlikely that will be accomplished, even with the required disclosures and reconciliations to the entity’s annual financial statements, because of the failure to define profit or loss and to impose any attribution or allocation requirements for the measure of profit or loss.

Mr Leisenring supports the management approach for defining reportable segments and supports disclosure of selected segment information in condensed financial statements of interim periods issued to shareholders. Mr. Leisenring believes, however, that the definitions of revenues, operating profit or loss, and identifiable assets in paragraph 10 of Statement 14 should be retained in this Statement and applied to segments identified by the management approach.

I concur with Mr. Leisenring. Without defining profit or loss, companies like Tesla can skirt the spirit and intent of the new standard, as we see being done in Tesla’s 10-K, in my opinion.

So, I have a question. Is there any “material” information which Note 23 of Tesla’s financials discloses that isn’t contained within its Consolidated Income Statement? Very little, in my opinion. The intent of SFAS 131 was that MORE disaggregated financial data would be disclosed than was disclosed under SFAS 14. That isn’t the case with Tesla.

Here is the intent of the new Standard, in paragraphs 42 through 45:

Background Information

42. FASB Statement No. 14, Financial Reporting for Segments of a Business Enterprise, was issued in 1976. That Statement required that business enterprises report segment information on two bases: By industry and by geographic area. It also required disclosure of information about export sales and major customers.

43. The Board concluded at the time it issued Statement 14 that information about components of an enterprise, the products and services that it offers, its foreign operations, and its major customers is useful for understanding and making decisions about the enterprise as a whole……

44. In its 1993 position paper, Financial Reporting in the 1990s and Beyond, the Association for Investment Management and Research (AIMR) said:

(Segment data) is vital, essential, fundamental, indispensable, and integral to the investment analysis process. Analysts need to know and understand how the various components of a multifaceted enterprise behave economically. One weak member of the group is analogous to a section of blight on a piece of fruit – it has the potential to spread rot over the entirety. Even in the absence of weakness, different segments will generate dissimilar streams of cash flows to which are attached disparate risks and which bring about unique values. Thus, without disaggregation, there is no sensible way to predict the overall amounts, timing, or risks of a complete enterprise’s future cash flows. There is little dispute over the analytic usefulness of disaggregated financial data. (Pages 59 and 60).

45. Over the years, financial analysts consistently requested that financial statement data be disaggregated to a much greater degree than it is in current practice. Many analysts said that they found Statement 14 helpful but inadequate. In its 1993 position paper, the AIMR emphasized that:

There is no disagreement among AIMR members that segment information is totally vital to their work. There also is general agreement among them that the current segment reporting standard, Financial Accounting Standard No. 14, is inadequate.

Then, paragraph 93 of SFAS 131 states:

Although this Statement requires disclosure of more information about an individual operating segment than Statement 14 required for an industry segment, ….”

Clearly, what was intended with the new Standard was more disaggregated data, not less. But, with Tesla, less is more. I give Tesla a grade of F for this section of their 10-K. Their Business Segments are something of a “black box” due to the lack of disclosure about them.

In Contrast, I present John Deere’s Disclosure Note on Reported Segments. It’s three pages long:



I’ll wrap up the article with this. Where’s the beef? When businesses become materially diversified, investors and investment analysts want more information about the details behind the consolidated financial statements. In particular, they want Income Statement, Balance Sheet, and Cash Flow information on the individual segments that compose the total income or loss figures.

Much information is hidden in the consolidated numbers. If an investor or an analyst has only the consolidated figures, he or she cannot tell the extent to which differing product lines contribute to the company’s profitability (or lack of), risk and growth potential. Earnings of the individual segments enable investors and the analyst to evaluate the differences between segments in growth rate, risk, and profitability, and to forecast consolidated profits. SFAS 14 was written to better serve the investor and analysts by requiring segmented information be made available, including operating income or loss and the assets contributing to that income or loss. SFAS 131 replaced SFAS 14 so that even more and better segmented data would be made available. Tesla defeats the purpose for which SFAS 131 was issued, since it provides less information about operating income and assets (no data) than it would have been required to report under SFAS 14.

In short, take away Note 23 of Tesla’s 10-K and little material information has been omitted, meaning Note 23 tells us little more about the business segments than if the Note were not present.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I may buy puts on Tesla when and if the price reaches $350
It is highly risky to short this stock. Please understand the risks fully before doing so.