Diamonds and Dogs

11/19/15

I guess there is better coffee than Columbian. Keurig Green Mountain is our diamond today jumping over 17% after better than expected earnings.  While earnings did beat, sales and profits are down year over year.  Earnings per share came in at 61 cents down from 86 cents last year. Sales were down 13% to $1.04 billion. The outlook was not spectacular, but better than expected. Revenue is anticipated to be flat to up low-single-digits, adjusted for currency, while non-GAAP EPS is expected to be between $3.25 and $3.45. This earnings guidance is in-line with the average analyst estimate of $3.42. Keurig Green Mountain's stock is down 64% year to date so it looks like it won't take much good news to prop up the stock.

Obamacare is nice until companies don't want to participate in it anymore. UnitedHealth Care (UNH) is down over 5% sending shockwaves through the healthcare sector after lowering quarterly guidance and hinting they may soon stop offering insurance plans to people through Obamacare exchanges. The UnitedHealth news is hitting all the healthcare insurers including Aetna, Humana, Cigna, Anthem, Centene, Health Net, Wellcare, Molina Healthcare, and Magellan Heath all down 4% or more. This is because of the massive shifts towards Medicaid managed care companies in Obamacare exchanges. With consumers going away from traditional commercial insurers the company warns that it might soon stop offering insurance plans to people through Obamacare exchanges. They released data they have compiled to that shows that commercial insurers have had to scale back offerings and increase prices to offset losses taken in the exchanges. At the same time Medicaid companies are increasing on the markets with cheaper health plans that mirror what they offer in Medicaid.