Revenue Dynamics for Express Scripts (ESRX)

• Thanks in part to PBM success, the growth of prescription drug expenditures has slowed to the low- to mid-single digit level, organic growth for ESRX is not likely to be much above this level. 
• The industry has consolidated, so the opportunity for acquired growth is also limited.
• The best chance for more rapid revenue growth is through the zero-sum game of poaching another PBM's client.

The Economics of Lenders

Financing companies are not “normal” companies and their assets are not “normal” assets.

A financing company’s main asset is the cash it loans to customers. Unlike a manufacturer’s assets—a metal-bending machine or a lathe, for instance—a financing company’s assets do not stay put at its headquarters, but instead get transferred to the control of its client.

Implied Volatility is Unimportant

Read any options trading article, listen to any pony-tailed pundit, and it will not be long before you'll hear the term "implied volatility." Pundits appear on cable news shows and opine about the VIX--an index representing the implied volatility of options contracts on S&P 500 futures--as if it was one of the most important financial gauges in the world.

Well, the joke is on them. Implied volatility is unimportant.

Oil Price Impact on GE - Part I

With Crude Oil futures trading below $50 / barrel (bbl), my attention has turned to the effects of low oil prices on General Electric’s business, and on how much an extended period of low oil prices is likely to affect IOI’s valuation of the stock.[1]

At the close of FY2013, 11% of General Electric’s revenues were directly derived from its Oil & Gas division (as shown in Figure 1 below), but it also has exposure to energy prices through its financing division, GE Capital Corporation (GECC).

Figure 1. Source: Company Statements, IOI Analysis

This article will investigate the impact of lower oil prices directly on the Oil & Gas division and my next will do the same for the Oil and Gas facing portion of GECC.