I Love Netflix, but I'm Avoiding the Stock for Now

Netflix (NASDAQ:NFLX) is a company that fundamentally altered the world. After changing how physical movie rentals were done, the company ushered in an all-new content distribution paradigm by moving to digital streaming. Today, all you need is a computer, internet connection, and a Netflix subscription to gain access to a whole host of movies and television shows.

Over time, the company's management team has made seemingly one brilliant move after another. For example, Netflix's business model can be fairly easily replicated if it only stuck to distributing content owned by others. So, in recent years, the company has been funding and rolling out exclusive content. Perhaps more importantly, that exclusive content is often very good, and a critical component to keeping customers locked into its platform. That lock-in not only ensures that customers stay subscribed, but it makes it easier for Netflix to raise prices over time.

Image source: Getty Images.

Netflix is a phenomenal business run by a management team that really knows what it's doing. With that being said, I wouldn't buy the stock right now. Here's why.

Netflix is richly valued

Netflix is great, but the stock already prices in a lot of greatness. As of this writing, the stock trades at $363 per share. That's not the highest it's been over the last 52 weeks, but it's nearly 60% higher than the 52-week low that it set about a year ago. 

Now, the mere fact that a stock is performing well doesn't necessarily mean that the shares aren't worth buying (although I admit that I like to buy businesses that I really like when they're out of favor with Wall Street), but there are other signs that the stock might be overheated. 

On several different valuation metrics, Netflix is very richly priced. According to analysts, Netflix is set to generate $4.05 in earnings per share (EPS) in 2019 and $6.43 per share in 2020. This means that the stock trades at just shy of 90 times 2019 EPS and a little more than 56 times 2020 EPS estimates.

If we focus on its price-to-sales ratio, the business trades at about 7.8 times the revenue that analysts expect Netflix to generate in 2019 and 6.3 times their 2020 estimates. 

And, finally, if we peek at the company's free cash flow data, it has been burning cash for years, with the rate of that cash burn seemingly continuing to rise. 

NFLX Free Cash Flow (TTM) data by YCharts.

Put simply, for Netflix to justify its current stock price, it'll need to keep dramatically growing its revenue and EPS for years to come. And, sooner or later, the company is going to need to become free-cash-flow positive.

Investor takeaway

To be clear, I'm not trying to make the argument that you should go out and sell your Netflix shares today nor am I saying that the stock is a short (no matter how richly valued a stock is, shorting on valuation alone tends not to be a successful strategy). Netflix is a great business that I expect to thrive in the years to come. 

However, given that the stock is richly valued and has rallied so hard and fast over the last couple of months, now doesn't seem like a good time for new investors to jump into the stock or for current investors to add to their positions. 

That being said, for those who do want to get in on Netflix, I wouldn't say that you should wait until the stock trades at a bargain-basement valuation, either -- Netflix is the kind of stock that's likely to command a rich valuation for the foreseeable future as it continues to deliver impressive growth.

Indeed, I'd be opportunistic in looking for an entry point. Perhaps an overall market pullback or a worse-than-expected quarterly report might drive the shares down, creating a better opportunity for investors with longer-term investment horizons.

US-China trade dispute puts a chill on American natural gas export boom

The natural gas market is emerging from winter relatively unscathed despite potentially disruptive Chinese tariffs on U.S. gas. But the ongoing trade dispute is still putting a chill on cooperation between the two energy powerhouses and threatens to sideline billions in investment.

Chinese tariffs on U.S. natural gas have halted Beijing's purchases of U.S. LNG, a form of the fuel chilled to liquid form for transport by sea. The trade dispute has also delayed at least one LNG export terminal slated for construction in Louisiana and threatens to push back the start date for other facilities.

In the long-run, analysts say it's inevitable for gas trade to resume between China and the U.S. China is the engine behind growing LNG demand, while the U.S. is the world's top natural gas producer.

"They're just the elephant in the room and until there's clarity on where China is going to source their natural gas ... then it's hard for other buyers to make decisions about which projects to attach themselves to." -Katie Bays, head of energy and utilities, Height Capital Markets

"They're certainly a very good fit," said Alex Munton, principal analyst for gas and LNG at energy research firm Wood Mackenzie. "On the one hand, China is the fastest growing LNG market and the U.S. is the fastest growing LNG supplier."

But a breakthrough on gas trade depends on reaching a deal on separate issues that are difficult to resolve.

Beijing and Washington are reportedly hammering out a blueprint to address those tough issues, from assuring American companies have access to Chinese markets to protecting U.S. intellectual property. However, it now appears that negotiators will move the goal line back from the original March 1 deadline to strike a deal — forestalling a potential increase in tariffs, but delaying the removal of China's current 10 percent tax on U.S. LNG.

The dispute comes as developers are planning a second wave of U.S. LNG export terminals, mostly along the Gulf Coast. The trade feud is also continuing as the Federal Energy Regulatory Commission on Thursday broke an impasse that held up key approvals for new U.S. LNG export terminals.

show chapters Energy sector finding new markets in Europe, industry expert says    7:45 AM ET Mon, 28 Jan 2019 | 02:47

Greenlighting those projects usually requires lining up long-term customers who will commit to buying LNG once the terminal is complete.

Despite its appetite for LNG, China has not signed many of those contracts with U.S. companies. Only one American firm, LNG pioneer Cheniere, has signed a long-term contract with a Chinese company since Beijing approved the deals with state-owned enterprises nearly two years ago.

The 'elephant in the room'

Now, the tariffs are creating uncertainty for developers aiming to line up Chinese buyers. Last fall, Australia's LNG Limited said talks with potential Chinese customers stalled because of the tariffs, forcing the company to put off a final decision on financing its planned Magnolia export terminal in Louisiana.

"Clearly there is an issue for some projects if they are targeting the China market," Munton said. "We do think it's going to be difficult in the current context for deals to be signed."

Since Chinese companies are major players in the LNG market — China is now the second largest LNG importer — their reluctance to commit to U.S. projects threatens to keep other buyers on the sidelines, says Katie Bays, head of energy and utilities at Height Capital Markets.

"They're just the elephant in the room and until there's clarity on where China is going to source their natural gas ... then it's hard for other buyers to make decisions about which projects to attach themselves to," she said.

Still, some projects are moving forward. This month, Exxon Mobil and Qatar Petroleum decided to finance their Golden Pass project on the U.S. Gulf Coast.

Source: Golden Pass LNG The Golden Pass LNG Terminal in Sabine Pass, Texas.

But analysts say the project is somewhat unique since it's backed by the largest publicly traded oil company and the world's second largest LNG producing nation. Those heavyweights have the financial flexibility to invest through uncertainty, unlike an independent player like LNG Limited, which needs firm commitments from customers to move forward.

But there are signs there's enough demand beyond China to keep some U.S. LNG projects on track for the time being. Last year, developers signed agreements for about 20 million tons in annual sales to support new U.S. capacity, according to Wood Mackenzie.

LNG developers are still getting commitments from energy traders like Trafigura and Vitol, as well as big integrated oil and gas companies that also buy and sell the fuel. State-controlled companies from Poland to Taiwan are also signing agreements.

Proposed North American LNG export terminals, source: FERC

That should allow a few projects to move forward in 2019, including an expansion at Cheniere's Sabine Pass terminal and Venture Global's new Calcasieu Pass facility in Louisiana.

"I think there's enough room with China not embracing U.S. LNG to allow for further gains in LNG exports from the U.S., but it would make things easier if China would take contracts, and they have yet to do it," said Richard Redash, head of research for North American gas and power analytics at S&P Global Platts.

Growing players in LNG spot market

There are obstacles to U.S.-China LNG trade, but the two nations are growing players in the spot market, where LNG is purchased for immediate delivery.

While most LNG is still sold in long-term contracts, China sources about half of its LNG on the spot market, according to Bays. Meanwhile, the U.S. is also unique among suppliers because its relatively young LNG industry is built around selling into the spot market to a greater degree than in other countries.

China's tariff on U.S. LNG introduced inefficiencies into the spot market, threatening to raise prices for all buyers this winter. But warm temperatures in Asia and preemptive stockpiling by China and other regional buyers helped crush LNG prices, swamping any inflationary impact from tariffs.

show chapters GasLog CEO: Huge political drive in China to make LNG work    5:48 AM ET Fri, 24 Aug 2018 | 02:34

The benchmark JKM contract for Asian LNG fell from about $12 per million British thermal units when China imposed tariffs on U.S. LNG to just over $6 per mmBtu, according to S&P Global Platts.

Supply has also helped to push down prices. Despite the Chinese tariffs, S&P Global Platts reports the U.S. is still pushing out record amounts of LNG, nearly 5 billion cubic feet a day in February.

"The resource potential in the United States is huge and it can satiate a lot of what China needs," Redash said.

Yet he says the U.S. can't take the Chinese market for granted, even if Washington and Beijing end the trade dispute.

"There will be some competition on the global front on the supply side of the equation, and it's something that we have to watch very carefully, especially over the next year or two."

Las Vegas Sands' Crown Jewel May Already Be in Decline

Marina Bay Sands is likely the most profitable resort and casino in the history of the gaming industry. One of only two casinos in Singapore, Las Vegas Sands' (NYSE:LVS) crown jewel generates more than $1.5 billion of property EBITDA, a proxy for cash flow, each year, and has been an incredible success in Asia's gaming market. 

As profitable as Marina Bay Sands has been, though, it's nearly a decade old, and EBITDA has stagnated and even fallen recently. The problem is that Asia's gaming market is only getting more competitive, and Marina Bay Sands may not be the best positioned to grow. 

Image source: Getty Images.

What's going on at Marina Bay Sands

The chart below shows Marina Bay Sands' quarterly property EBITDA since 2011, shortly after the resort opened. You can see that there hasn't been much growth in the trendline, and if we dig deeper into the numbers we can see a sharper decline beginning in 2018. 

Data from Las Vegas Sands earnings reports. Image by the author.

Each quarter, Las Vegas Sands reports the rolling chip and non-rolling chip volume of tables in the casino. These are measures of the VIP and mass market play, respectively, but they remove luck. In every quarter in 2018 we see VIP play on the decline, and in three of four quarters mass market play fell versus a year ago. 

The drop in play isn't reflected in the EBITDA numbers above because 2018 has been an unusually lucky year for Marina Bay Sands. The first quarter in particular saw the casino win almost 50% more than normal luck would expect. Without that lucky quarter, results would likely show a decline in EBITDA shaping up. 

The key for Las Vegas Sands

Trends for Marina Bay Sands are important because the resort generates nearly a third of Las Vegas Sands' EBITDA overall. If revenue and EBITDA are falling, as gaming volume would predict, that doesn't bode well for the company's financial performance going forward. This isn't to say that Marina Bay Sands is a bad asset -- far from it. But we may have already seen the peak performance of the resort. 

Competition is already starting to creep into Asia, with Macau expanding gaming, Korea and the Philippines opening resorts, and Japan considering mega-resorts for itself. When Singapore was the only game for thousands of miles around it was a logical stop for gamblers, but now it's facing stiff competition. 

There's also fear, based in evidence, that China's economy may be starting to slow down. China fuels Asia's economy, and if it slows down there will be repercussions for Marina Bay Sands. If the resorts' performance has stagnated in a growing economy, it doesn't bode well for trends in a bad economy. 

Investors should keep an eye on Marina Bay Sands' gaming volume trends over the next few quarters for further deterioration in gaming. If players are no longer gambling like they used to it would be a huge hit to the company's earnings, and given the resort's size it would be a tough loss of revenue to make up. 

Wayfair’s Upcoming Earnings Is Best Viewed Through a Long-Term Lens

With its stock up 60% for the past twelve months, and higher to the tune of 47% just since the late-December low, investors have certainly given online retailer Wayfair (NYSE:W) the benefit of any doubt. On Friday morning, all those buyers will find out if their bets on Wayfair stock were warranted.

Source: Shutterstock

That’s when the company will be releasing fourth-quarter numbers, indicating how well it did during last year’s all-important holiday shopping season.

Expectations are modest, all things considered. While sales are projected to have improved by nearly 37% year-over-year, the company has invested heavily in its growth. It has invested so heavily, in fact, that its persistent losses are expected to widen despite the scale-up.

Problem: Shareholders are generally growing weary that have to choose between market share and profitability.

Heavy Spending to Crimp Wayfair Stock Earnings

It’s a moving target to be sure.

Wayfair, an online retailer that specializes in home goods, hasn’t been afraid to pull several levers at the same time in an effort to expand its customer base and pump up its top line.

Case(s) in point: The launch of a private-label credit card, a fee-generating subscription service called MyWay, investments in its customer loyalty efforts and the launch of a mixed reality app that lets consumers visualize what a piece of furniture would look like in their home are just some of the savvy initiatives Wayfair has taken on of late.

They’re smart, business-building projects too. The company’s one million-plus credit card holders are expected to collectively spend on the order of $900 million with Wayfair this year.

These initiatives “work,” but they don’t come cheap. For its fourth fiscal quarter ending in December, analysts are looking for revenue of $1.97 billion, up 36.6% from the year-earlier top line of $1.44 billion. But, the year-ago loss of 58 cents per share of Wayfair stock is projected to widen to a loss of $1.28, as the e-commerce name pays for all the projects it’s taken on.

For the full year, analysts are modeling revenue of $6.73 billion and a per-share loss of $4.24. That revenue outlook is up 42.6%, but the expected loss is more than twice 2017’s loss of $1.97 per share of W stock.

Compare Brokers
Weighing Wayfair Stock

None of the nuance is unfamiliar to investors, who’ve seen fellow e-commerce players like Amazon.com (NASDAQ:AMZN) and Overstock.com (NASDAQ:OSTK) spend heavily in the name of establishing a customer base.

Not all names necessarily ever get into the black and stay there though. Amazon’s future looks reasonably secure in that it’s finally turning a reliable profit, but Overstock was only able to occasionally tease investors with actual operating income before CEO Patrick Byrne decided last year to sell its retail operations and focus in cryptocurrency.

Credit Suisse analyst Stephen Ju thinks it’s a long game, penning last month that the bullish thesis on Wayfair stock “is entirely predicated on the long-term growth and profitability trajectory that these investments will help drive.”

If true, it plays right into the hand Wayfair is holding. Ju also said the company’s market share in the home goods arena “remains strong and defensible in the near-to-medium term.”

Defensible, but not yet profitable.

And there’s the rub for current and prospective shareholders. The palatability of consistently unprofitable companies has been slowly but surely deteriorating.

That may not be a stumbling block for Wayfair in the distant, distant future. Ju believes by 2021, Wayfair’s net profit contribution per international customer will reach $4, and grow to $27 per year by 2024. The metrics for U.S. customers looks even better. The Credit Suisse analyst believes U.S. customers will contribute $27 in net profits by 2021, and ramp-up that number to $45 by 2024.

Much can happen, and change, in five years though. In the e-commerce arena, that may as well be 50 years. It’s certainly more than enough time for Amazon.com or Walmart (NYSE:WMT) to turn the key on something better focused on home goods than either has cultivated yet.

Bottom Line for W Stock

Still, the bulls have tipped their hand. Although it has been a volatile past couple of years, each pullback from Wayfair stock has been ultimately met with higher highs. If the company can convince investors it’s on track to meet its long-range profitability goals, the market may once again see the glass as half-full.

There’s no room for error though. Most investors are already skeptical the broad market’s got room and reason to keep rising. Anything less than a solid earnings beat and a healthy outlook for 2019 could easily put a wave of profit-taking in motion.

To that end, analysts are collectively looking for revenue of $8.86 billion this year to lead to a per-share loss of $4.37. If the costly initiatives are going to lead to profitability — or even smaller losses — nobody’s expecting it to start happening this year.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter

Top Insurance Stocks To Watch Right Now

tags:TOP,AON,WRB,PRU,PFG,AIG,

News articles about Health Insurance Innovations (NASDAQ:HIIQ) have trended somewhat positive on Tuesday, according to Accern Sentiment. The research group rates the sentiment of media coverage by analyzing more than 20 million blog and news sources in real-time. Accern ranks coverage of public companies on a scale of negative one to one, with scores closest to one being the most favorable. Health Insurance Innovations earned a coverage optimism score of 0.08 on Accern’s scale. Accern also assigned media coverage about the financial services provider an impact score of 45.5809854741364 out of 100, meaning that recent media coverage is somewhat unlikely to have an impact on the stock’s share price in the next few days.

Top Insurance Stocks To Watch Right Now: Topdanmark A/S (TOP)

Advisors' Opinion:

• [By Max Byerly]

  TopCoin (CURRENCY:TOP) traded flat against the U.S. dollar during the one day period ending at 7:00 AM E.T. on September 8th. In the last seven days, TopCoin has traded flat against the U.S. dollar. TopCoin has a total market capitalization of $0.00 and $0.00 worth of TopCoin was traded on exchanges in the last day. One TopCoin coin can now be bought for about $0.0008 or 0.00000010 BTC on major cryptocurrency exchanges.

• [By Logan Wallace]

  TopCoin (CURRENCY:TOP) traded down 15.4% against the dollar during the 1-day period ending at 7:00 AM E.T. on June 21st. During the last seven days, TopCoin has traded up 4% against the dollar. TopCoin has a market cap of $0.00 and approximately $123.00 worth of TopCoin was traded on exchanges in the last day. One TopCoin coin can currently be bought for about $0.0010 or 0.00000015 BTC on popular exchanges.

Top Insurance Stocks To Watch Right Now: Aon Corporation(AON)

Advisors' Opinion:

• [By Motley Fool Transcribing]

  Aon (NYSE:AON) Q4 2018 Earnings Conference CallFeb. 1, 2019 8:30 a.m. ET

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

  Operator

• [By Logan Wallace]

  CorVel (NASDAQ: CRVL) and AON (NYSE:AON) are both business services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, institutional ownership, dividends, profitability, analyst recommendations, earnings and valuation.

• [By Ethan Ryder]

  North Star Investment Management Corp. decreased its position in Aon PLC (NYSE:AON) by 17.9% during the 3rd quarter, Holdings Channel reports. The firm owned 2,515 shares of the financial services provider’s stock after selling 550 shares during the period. North Star Investment Management Corp.’s holdings in AON were worth $387,000 as of its most recent filing with the Securities and Exchange Commission.

• [By Max Byerly]

  Aon PLC (NYSE:AON) Director Jeffrey C. Campbell acquired 5,550 shares of the company’s stock in a transaction dated Monday, August 6th. The shares were purchased at an average cost of $143.84 per share, for a total transaction of $798,312.00. Following the purchase, the director now directly owns 7,084 shares in the company, valued at $1,018,962.56. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link.

• [By Shane Hupp]

  BB&T Securities LLC raised its holdings in Aon PLC (NYSE:AON) by 6.2% during the 1st quarter, HoldingsChannel.com reports. The institutional investor owned 23,068 shares of the financial services provider’s stock after purchasing an additional 1,352 shares during the period. BB&T Securities LLC’s holdings in AON were worth $3,237,000 as of its most recent filing with the Securities and Exchange Commission (SEC).

Top Insurance Stocks To Watch Right Now: W.R. Berkley Corporation(WRB)

Advisors' Opinion:

• [By Joseph Griffin]

  Get a free copy of the Zacks research report on W. R. Berkley (WRB)

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

• [By Logan Wallace]

  Get a free copy of the Zacks research report on W. R. Berkley (WRB)

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

• [By Ethan Ryder]

  ValuEngine cut shares of W. R. Berkley (NYSE:WRB) from a buy rating to a hold rating in a report released on Monday morning.

  WRB has been the topic of a number of other research reports. Bank of America cut shares of W. R. Berkley from a neutral rating to an underperform rating and set a $74.00 target price on the stock. in a report on Thursday, June 14th. They noted that the move was a valuation call. Zacks Investment Research cut shares of W. R. Berkley from a buy rating to a hold rating in a report on Tuesday, February 20th. Boenning Scattergood restated a hold rating on shares of W. R. Berkley in a report on Wednesday, April 25th. Finally, Goldman Sachs Group started coverage on shares of W. R. Berkley in a report on Monday. They set a sell rating and a $74.00 target price on the stock. They noted that the move was a valuation call. Four analysts have rated the stock with a sell rating and eight have issued a hold rating to the stock. W. R. Berkley currently has a consensus rating of Hold and a consensus price target of $70.78.

• [By Logan Wallace]

  Standard Life Aberdeen plc increased its stake in shares of W. R. Berkley Corp (NYSE:WRB) by 56.6% in the 2nd quarter, according to the company in its most recent filing with the Securities & Exchange Commission. The fund owned 15,374 shares of the insurance provider’s stock after purchasing an additional 5,555 shares during the period. Standard Life Aberdeen plc’s holdings in W. R. Berkley were worth $1,113,000 as of its most recent filing with the Securities & Exchange Commission.

Top Insurance Stocks To Watch Right Now: Prudential Financial Inc.(PRU)

Advisors' Opinion:

• [By Zacks]

  Well, given the growing demand for securitized mortgage deals, Barclays plans to package and sell these Irish loans over the next two months. The group of investors that has shown interest in buying residential mortgage backed securities includes M&G Investments, the investment management division of British insurer Prudential Plc (NYSE: PRU) and Pacific Investment Management Co. ("PIMCO").

• [By Logan Wallace]

  Soros Fund Management LLC boosted its position in shares of Prudential Financial Inc (NYSE:PRU) by 20.0% during the 2nd quarter, according to the company in its most recent disclosure with the Securities & Exchange Commission. The firm owned 118,775 shares of the financial services provider’s stock after buying an additional 19,822 shares during the period. Soros Fund Management LLC’s holdings in Prudential Financial were worth $11,107,000 as of its most recent SEC filing.

• [By Ethan Ryder]

  American Equity Investment Life (NYSE: AEL) and Prudential Financial (NYSE:PRU) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, analyst recommendations, profitability, dividends and valuation.

• [By Max Byerly]

  Prudential (LON:PRU) had its price objective trimmed by Barclays from GBX 2,144 ($28.38) to GBX 2,076 ($27.48) in a research report report published on Wednesday. The brokerage currently has an overweight rating on the financial services provider’s stock.

• [By Max Byerly]

  Wesbanco Bank Inc. raised its stake in Prudential Financial Inc (NYSE:PRU) by 5.9% during the second quarter, HoldingsChannel reports. The institutional investor owned 65,335 shares of the financial services provider’s stock after acquiring an additional 3,655 shares during the period. Wesbanco Bank Inc.’s holdings in Prudential Financial were worth $6,110,000 as of its most recent SEC filing.

• [By Motley Fool Transcribers]

  Prudential Financial Inc  (NYSE:PRU)Q4 2018 Earnings Conference CallFeb. 07, 2019, 11:00 a.m. ET

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

  Operator

Top Insurance Stocks To Watch Right Now: Principal Financial Group Inc(PFG)

Advisors' Opinion:

• [By Max Byerly]

  Shore Capital reissued their hold rating on shares of Provident Financial (LON:PFG) in a report issued on Thursday.

  PFG has been the subject of several other reports. Liberum Capital reissued a sell rating and set a GBX 483 ($6.48) price objective on shares of Provident Financial in a research note on Monday, February 26th. Peel Hunt reissued a hold rating and set a GBX 870 ($11.67) price objective on shares of Provident Financial in a research note on Tuesday, February 27th. JPMorgan Chase & Co. reduced their price objective on Provident Financial from GBX 1,100 ($14.76) to GBX 750 ($10.06) and set a neutral rating for the company in a research note on Thursday, May 10th. Barclays reissued an underweight rating and set a GBX 584 ($7.84) price objective on shares of Provident Financial in a research note on Wednesday, January 31st. Finally, Societe Generale lowered Provident Financial to a hold rating and set a GBX 1,050 ($14.09) price objective for the company. in a research note on Wednesday, February 28th. Two investment analysts have rated the stock with a sell rating, eleven have assigned a hold rating and two have assigned a buy rating to the company’s stock. Provident Financial presently has a consensus rating of Hold and a consensus price target of GBX 1,190.14 ($15.97).

• [By Logan Wallace]

  Provident Financial plc (LON:PFG) has received a consensus recommendation of “Hold” from the fifteen research firms that are covering the firm, Marketbeat Ratings reports. Two research analysts have rated the stock with a sell recommendation, eleven have given a hold recommendation and two have given a buy recommendation to the company. The average 1 year price target among brokerages that have updated their coverage on the stock in the last year is GBX 1,244.33 ($16.57).

• [By ]

  Principal Financial Group (Nasdaq: PFG) is a diversified financial firm with $540 billion in assets under management and leadership in retirement investment products, fund investments and life insurance. The company missed Q2 earnings on non-recurring items which sent the shares skidding lower but core business in retirement income solutions and insurance remains solid.

Top Insurance Stocks To Watch Right Now: American International Group Inc.(AIG)

Advisors' Opinion:

• [By Stephan Byrd]

  American International Group (NYSE:AIG)‘s stock had its “buy” rating reiterated by stock analysts at Wells Fargo & Co in a research note issued to investors on Wednesday. They presently have a $54.00 target price on the insurance provider’s stock. Wells Fargo & Co‘s price target indicates a potential upside of 33.12% from the stock’s current price.

• [By Motley Fool Transcribing]

  American International Group (NYSE:AIG) Q4 2018 Earnings Conference CallFeb. 14, 2019 8:00 a.m. ET

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

  Operator 

• [By ]

  Insurance company American International Group Inc. (AIG) stock fell 5.3% as harsh winter weather weighed on profits. But the company's long-term care exposure is relatively minimal.

Podcast | Stocks picks of the day: 'Market depth tilts towards sellers, upside may be capped'

Shitij Gandhi

Bulls seem to be losing control and bears are taking charge over the markets as once again Nifty indices not just slipped below its 200-days exponential moving average but also slipped below 10,600 mark on an intraday basis this week on the back of selling in heavyweights like TCS, Infosys & HDFC twins.

From the derivative front, call writing was observed at 10,800 and 10,900 strikes along with put unwinding at 10,700 and 10,800 strikes.

related news Top buy and sell ideas by Ashwani Gujral, Sudarshan Sukhani, Mitessh Thakkar for short term Podcast | Digging Deeper: All about the billions spent on diamonds and chocolates for love Evening Walk Down D-St: Nifty logs biggest losing streak since 2015; largecaps could face heat ahead

This clearly signifies that market depth has tilted towards sellers and any upside in the index may likely to remain capped.

On the technical front, 10,700-10,750 zone will act as crucial resistance while 10,500 levels should act as immediate support for Nifty moving forward.

The current trend is likely to remain bearish for the index with some stock specific action and volatility on cards.

Here is a list of three stocks which could give 9-12% return in the next 1 month:

Power Finance Corporation: Buy| Target: Rs 115| Stop Loss: Rs 100| Upside 9%

On the daily charts, the stock has been trading in a downward sloping channel and trading with the formation of the lower high and lower bottom after testing 110 levels in recent past.

This week we have observed a fresh breakout in prices above the falling trend line along with positive divergences on secondary oscillators.

Additionally, the stock has also managed to close above its 200-days exponential moving average (EMA) on the weekly interval which is again a bullish signal for the stock.

So, traders can accumulate the stock in a range of 105.50-107.50 for the upside target of 115 levels with a stop loss below 100.

Dalmia Bharat Sugar and Industries: Buy| Target: Rs 112| Stop Loss: Rs 94| Upside 12%

The stock has been maintaining above its long-term moving averages and has been trading in a range of 88-100 from last more than one month.

However, on the broader charts as well the stock has formed a W pattern along with double bottom which signifies limited downside in prices moving forward.

So, traders can accumulate the stock in a range of 100-102 for the upside target of 112 levels and a stop loss below 94.

ICICI Lombard General Insurance Company: Buy| Target: Rs 1022| Stop Loss: Rs 860| Upside 11%

After taking support at its 200-days exponential moving average (EMA) and is forming a double bottom pattern around 810 levels on a daily interval, stocks took V-shape recovery and once again reclaim 900 levels.

On the broader charts, as well the stock has been consolidating in range of 820-920 levels from last two months. We believe the breakout after the prolonged consolidation can trigger fresh buying into the stock which could move price higher towards new highs.

So, traders can buy the stock above a breakout level of 920 for the upside target of 1022 levels and a stop loss below 860.

(The author is a Senior Research Analyst, SMC Global Securities)

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. First Published on Feb 20, 2019 08:41 am

Renault (RNO) Given a €74.00 Price Target by JPMorgan Chase & Co. Analysts

JPMorgan Chase & Co. set a €74.00 ($86.05) target price on Renault (EPA:RNO) in a research report report published on Thursday morning. The firm currently has a neutral rating on the stock.

RNO has been the topic of a number of other research reports. Commerzbank set a €69.00 ($80.23) target price on Renault and gave the stock a neutral rating in a research note on Tuesday, November 20th. Societe Generale set a €69.00 ($80.23) target price on Renault and gave the stock a buy rating in a research note on Tuesday, November 20th. Kepler Capital Markets set a €85.00 ($98.84) target price on Renault and gave the stock a buy rating in a research note on Friday, January 11th. Morgan Stanley set a €75.00 ($87.21) price target on Renault and gave the stock a buy rating in a report on Thursday, December 6th. Finally, Barclays set a €80.00 ($93.02) price target on Renault and gave the stock a neutral rating in a report on Tuesday, January 15th. Eleven analysts have rated the stock with a hold rating and nine have assigned a buy rating to the stock. The company has a consensus rating of Hold and a consensus price target of €80.38 ($93.46).

Get Renault alerts:

Renault has a one year low of €73.71 ($85.71) and a one year high of €100.70 ($117.09).

Renault Company Profile

Renault SA designs, manufactures, sells, and distributes vehicles worldwide. The company operates through three segments: Automotive, Sales Financing, and AVTOVAZ. It primarily offers passenger and light commercial, and electric vehicles under the Renault, Dacia, Renault Samsung Motors, Alpine, Nissan, Datsun, and LADA brands.

Featured Article: The Discount Rate – What You Need to Know

Wealthtech Nutmeg Doubles Down With Goldman's Investment For Global Expansion

&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-824928050&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/824928050/960x0.jpg?fit=scale&q; data-height=&q;639&q; data-width=&q;960&q;&g; Getty

UK wealthtech &l;a href=&q;https://www.nutmeg.com/&q; target=&q;_blank&q;&g;Nutmeg r&l;/a&g;ecently completed a &l;a href=&q;https://www.fnlondon.com/articles/goldman-sachs-takes-stake-in-uk-wealth-manager-nutmeg-20190122&q; target=&q;_blank&q;&g;funding round of $58 million for global expansion co-led by Goldman Sachs.&l;/a&g; The move will likely see Goldman position Nutmeg alongside its retail savings platform Marcus.

Schroders, the 200 year old UK asset manager was an early investor in Nutmeg. Last year, &l;a href=&q;https://www.reuters.com/article/us-blackrock-scalablecapital-idUSKBN19A322&q; target=&q;_blank&q;&g;Blackrock took a stake in the Anglo-German robo&a;nbsp;Scalabeable Capital&l;/a&g; to help it expand, following an investment in&a;nbsp;&l;span&g;U.S. robo&a;nbsp;FutureAdvisor, which is selling B2B solutions to legacy wealth managers.&l;/span&g;

Tradition financial institutions and especially legacy banks are spending billions on technology and innovation to deliver digital solutions to better appeal to consumers, at the same time as driving down costs.

&l;span&g;Banks like JPMorgan and Wells Fargo have been working on their own robo solutions with Wells launching ThinkAdvisor. These along with startup robos in the U.S. like Wealthfront and Betterment are all competing with legacy asset managers like Vanguard, Fidelity and Charles Schwab all of whom have launched their own robo platforms.&l;/span&g;

One of the big focus areas in on the main prize - a new segment&a;nbsp;of digitally savy&a;nbsp;&l;a href=&q;https://communityrising.kasasa.com/gen-x-gen-y-gen-z/&q; target=&q;_blank&q;&g;generation x to y &l;/a&g;millenial&a;nbsp;consumers positioned to inherit wealth over the next decade from the most successful generation of wealth accumulators in history, the baby boomers - their parents and grandparents.

Nutmeg was founded by &l;a href=&q;https://www.linkedin.com/in/nick-hungerford-781a6713/&q; target=&q;_blank&q;&g;Nick Hungerford&l;/a&g;, a former Barclays Banker and Stanford University post-graduate who saw the early opportunities in wealthtech. Nick now sits on the Board of Nutmeg, overseeing his creation and resides in Singapore where he is busy in the community with a number of exciting projects.

An early mover and visionary in the fintech space, Nick was a co-founder of Innovate Finance, the U.K.&s;s not-for-profit fintech members association, and a fellow board member during my tenure as CEO in the halcyon days of our member growth and fintech ecosystem building.

I sat down with Nick to talk about what attracted Goldman&a;nbsp;to Nutmeg, the strengths of Nutmeg&a;rsquo;s offering, the future of the Wealth Management sector, and what&s;s going on in the Singapore fintech community.

&l;strong&g;Lawrence Wintermeyer: &l;/strong&g;What attracted Goldman Sachs to invest in Nutmeg in this latest round?

&l;strong&g;Nick Hungerford: &l;/strong&g;I believe there are three primary reasons: first, they see the potential of Nutmeg as a stand-alone business and the opportunity for financial return as a shareholder. Second, the opportunity for partnership development and the chance that Nutmeg can be rocket fuel for the Goldman strategy to move more into the retail market. Third, shared insights and vision: Nutmeg can learn a lot from Goldman and hopefully, Goldman will learn a bit from us. The learnings aren&a;rsquo;t just about financial products and investing, for example, Goldman has a huge number of amazing engineers Nutmeg can learn tech skills from. We can discuss culture and customer insights etc.

&l;strong&g;Lawrence Wintermeyer: &l;/strong&g;With $1.5 billion in assets under management, Nutmeg has become a scale wealthech player, what are the new global markets on the roadmap,&a;nbsp; will we see Nutmeg entering the US market?

&l;strong&g;Nick Hungerford: &l;/strong&g;First of all Nutmeg will focus on consolidating our dominant position in the UK and scaling into Asia. After that, and on a selective basis, we will look to Europe and the US. Our partnerships with Goldman, Fubon and Convoy set us up well for international expansion.

&l;strong&g;Wintermeyer: &l;/strong&g;The client proposition and user engagement platform in Nutmeg is recognized for standing out in a crowded marketplace, what&a;rsquo;s in the secret sauce that attracts and retains customers to the platform?

&l;strong&g;Hungerford: &l;/strong&g;Funnily enough given the recent Goldman announcement, I said in 2012 that I wanted customers of Nutmeg to feel like they were walking into Goldman Sachs&a;rsquo; Private Bank when they became customers of Nutmeg. It&a;rsquo;s a simple ethos to overly commit to giving our clients great service &a;ndash; more than that, great care &a;ndash; when they work with us. It&a;rsquo;s about sharing their experiences, for example feeling the pain when markets fall, by being customers ourselves. There are lots of technical answers to this question as well: we try and learn more about our customers all of the time to provide them with a personalized experience and so on. But the real secret lies in the care and concern that we have to ensure no Nutmeg customer feels anything other than we are doing all we can for them.

&l;strong&g;Wintermeyer: &l;/strong&g;Consumers have moved from actively managed funds to passive funds and ETFs in large scale in the West, and we are seeing a rise in &a;ldquo;algos&a;rdquo; for systematic investment management and all of these trends are leading to lower costs for investors.&a;nbsp; What is Nutmeg&s;s underlying investment management strategy?

&l;strong&g;Hungerford: &l;/strong&g;Our belief is that investors should focus on asset allocation to determine the risk reward balance (or target) and then implement that strategy using the lowest cost methodology possible. Clearly, this has to be low cost within reason and we need to factor in liquidity of securities, etc. Time and again cost have been shown to be critical drivers of returns.

&l;strong&g;Wintermeyer: &l;/strong&g;2018 saw greater volatility emerge in most asset classes with the equity markets underperforming the previous years&a;rsquo; bull run. How will the wealthtech challengers survive a downturn and poor performance in the equity markets?

&l;strong&g;Hungerford:&l;/strong&g; I don&a;rsquo;t think all wealthtech or fintech companies will survive a prolonged downturn. There are circa 550 &a;ldquo;Nutmegs&a;rdquo; around the world now and it&a;rsquo;s hard to see how they can all compete when customer acquisition costs mean that payback is not instant. I think we will see two or three major players in each region emerge.

&l;strong&g;Wintermeyer: &l;/strong&g;A number of successful challenger wealthtechs including Nutmeg now have legacy wealth management shareholders. How challenging is the future market for legacy wealth managers? Is investment in wealthtech challengers part of a strategy for incumbents to meet those future challenges?

&l;strong&g;Hungerford: &l;/strong&g;I think it&a;rsquo;s a smart strategy for them! I happen to think &a;ndash; and this is not a view shared by all of my wealthtech peers &a;ndash; that there is still a place, and lots to learn, from incumbent wealth managers. Many of them offer a great service to their clients, they have moments of innovation brilliance and there excellent leaders in some companies. That said, they have aging client bases and must adapt to changing digital times. Nutmeg can&a;rsquo;t get complacent: as the oldest digital wealth manager people will be calling us legacy soon!

&l;strong&g;Wintermeyer: &l;/strong&g;What is the story behind why you started Nutmeg and what were the early days of the journey like?

&l;strong&g;Hungerford: &l;/strong&g;I don&a;rsquo;t want to think about it! I was moving between friends houses in California, then the same in London before my sister and her now husband took me in. I was constantly getting rejected by investors who said that there was no way regulators would allow wealth management to be done without a face to face relationship. And of course, I wasn&a;rsquo;t earning any money! The passion was there because I had friends and family who wanted to be doing more with their money than just putting it in a zero percent deposit account. And I&a;rsquo;d worked in wealth management and knew that investing was eminently scalable.

&l;strong&g;Wintermeyer: &l;/strong&g;You moved from Tier 1 banker to Nutmeg founder&a;nbsp;and entrepreneur CEO, to Nutmeg board member and now venture capitalist. How has this journey been for you and what are some of your biggest lessons learned?

&l;strong&g;Hungerford: &l;/strong&g;My two biggest lessons would be first, humility. It&a;rsquo;s definitely something I lacked in banking because you have such smart, amazing people around you that you don&a;rsquo;t realize you are being carried along and start to believe your own hype. There is none of that in entrepreneurship, whereas a founder you are resupplying the toilet roll and constantly getting told your idea sucks. Second, loyalty. The shareholders who give you money at the start deserve huge credit. And I&a;rsquo;m so grateful to them. They will get first dibs on future businesses I start!

&l;strong&g;Wintermeyer: &l;/strong&g;You are now based in Singapore,&a;nbsp; what is your outlook for the fintech in Asia, and how key is the Singapore hub to the development of the fintech ecosystem in South Asia?

&l;strong&g;Hungerford: &l;/strong&g;Fintech here is taking off, with tremendous learning from overseas facilitating startups and of course some amazing companies in China that I think are some years ahead of anything in the U.S. or U.K. There are amazing possibilities for entrepreneurs here. However, there are structural issues &a;ndash; particularly in South East Asia &a;ndash; where the lack of passporting between countries means that there are small markets to go after.

With some more cooperation between regulators and governments, I can see South East Asia becoming possibly the world&a;rsquo;s leading fintech hub. Singapore is leading the way and has a regulator challenging the FCA for the title of world&a;rsquo;s most progressive. They need more countries around to follow their lead. For fintech enterprises outside of Asia it&a;rsquo;s critical they keep one eye on what&a;rsquo;s happening here if they don&a;rsquo;t want to be left behind.

&l;em&g;Nick Hungerford is a former banker and the founder of Nutmeg and is&a;nbsp;passionate about improving the availability and usability of financial products and services, financial literacy and the role of&a;nbsp;technology and innovation&a;nbsp;within the finance sector.&l;/em&g;

&a;nbsp;&l;/p&g;

Intuit Inc. (INTU) Shares Bought by Breakline Capital LLC

Breakline Capital LLC increased its stake in shares of Intuit Inc. (NASDAQ:INTU) by 1.5% in the 4th quarter, according to the company in its most recent filing with the Securities & Exchange Commission. The fund owned 22,972 shares of the software maker’s stock after purchasing an additional 336 shares during the period. Intuit accounts for approximately 4.1% of Breakline Capital LLC’s investment portfolio, making the stock its 10th biggest position. Breakline Capital LLC’s holdings in Intuit were worth $4,522,000 at the end of the most recent reporting period.

Several other institutional investors and hedge funds also recently added to or reduced their stakes in the stock. We Are One Seven LLC acquired a new stake in Intuit in the 4th quarter valued at about $33,000. Moody National Bank Trust Division acquired a new stake in Intuit in the 4th quarter valued at about $35,000. Csenge Advisory Group purchased a new stake in shares of Intuit in the 3rd quarter valued at approximately $54,000. Massey Quick Simon & CO. LLC grew its stake in shares of Intuit by 37.5% in the 4th quarter. Massey Quick Simon & CO. LLC now owns 275 shares of the software maker’s stock valued at $54,000 after buying an additional 75 shares during the period. Finally, CWM LLC grew its stake in shares of Intuit by 20.0% in the 4th quarter. CWM LLC now owns 336 shares of the software maker’s stock valued at $66,000 after buying an additional 56 shares during the period. Hedge funds and other institutional investors own 94.01% of the company’s stock.

Get Intuit alerts:

In other news, Chairman Scott D. Cook sold 152,001 shares of the firm’s stock in a transaction on Friday, November 23rd. The shares were sold at an average price of $197.41, for a total value of $30,006,517.41. The sale was disclosed in a document filed with the SEC, which is available through this hyperlink. Also, EVP Henry Tayloe Stansbury sold 3,650 shares of the firm’s stock in a transaction on Friday, December 21st. The shares were sold at an average price of $188.94, for a total transaction of $689,631.00. Following the completion of the sale, the executive vice president now owns 3,383 shares in the company, valued at $639,184.02. The disclosure for this sale can be found here. Insiders sold a total of 347,207 shares of company stock worth $68,710,900 over the last 90 days. Company insiders own 4.60% of the company’s stock.

Several analysts have recently weighed in on INTU shares. Morgan Stanley raised shares of Intuit from an “underweight” rating to an “equal weight” rating and set a $225.00 price target for the company in a research note on Monday, February 4th. Royal Bank of Canada raised shares of Intuit from a “sector perform” rating to an “outperform” rating and set a $93.00 price target for the company in a research note on Monday, November 26th. JPMorgan Chase & Co. cut shares of Intuit from a “neutral” rating to an “underweight” rating and set a $205.00 price target for the company. in a research note on Thursday, December 13th. Credit Suisse Group reaffirmed an “outperform” rating and set a $255.00 price objective (up previously from $250.00) on shares of Intuit in a research report on Tuesday, January 22nd. Finally, Deutsche Bank lowered their price objective on shares of Intuit from $265.00 to $250.00 and set a “buy” rating for the company in a research report on Tuesday, November 20th. Two research analysts have rated the stock with a sell rating, six have issued a hold rating, twelve have issued a buy rating and one has given a strong buy rating to the company. The stock presently has a consensus rating of “Buy” and a consensus target price of $225.63.

Intuit stock opened at $230.78 on Friday. The company has a market cap of $59.32 billion, a price-to-earnings ratio of 50.94, a price-to-earnings-growth ratio of 2.67 and a beta of 1.16. Intuit Inc. has a 52-week low of $162.59 and a 52-week high of $231.84. The company has a current ratio of 1.41, a quick ratio of 1.41 and a debt-to-equity ratio of 0.13.

Intuit (NASDAQ:INTU) last released its earnings results on Monday, November 19th. The software maker reported $0.29 earnings per share (EPS) for the quarter, topping the Zacks’ consensus estimate of $0.11 by $0.18. The company had revenue of $1.02 billion for the quarter, compared to analyst estimates of $971.45 million. Intuit had a net margin of 20.71% and a return on equity of 56.35%. The firm’s quarterly revenue was up 11.6% on a year-over-year basis. During the same period in the prior year, the business earned $0.11 EPS. Equities analysts expect that Intuit Inc. will post 5.26 earnings per share for the current fiscal year.

The firm also recently announced a quarterly dividend, which was paid on Friday, January 18th. Shareholders of record on Thursday, January 10th were issued a dividend of $0.47 per share. The ex-dividend date of this dividend was Wednesday, January 9th. This represents a $1.88 dividend on an annualized basis and a yield of 0.81%. Intuit’s dividend payout ratio (DPR) is presently 41.50%.

ILLEGAL ACTIVITY NOTICE: “Intuit Inc. (INTU) Shares Bought by Breakline Capital LLC” was originally posted by Ticker Report and is owned by of Ticker Report. If you are accessing this piece on another domain, it was copied illegally and republished in violation of United States and international copyright and trademark laws. The legal version of this piece can be accessed at https://www.tickerreport.com/banking-finance/4153637/intuit-inc-intu-shares-bought-by-breakline-capital-llc.html.

About Intuit

Intuit Inc provides financial management and compliance products and services for small businesses, consumers, self-employed, and accounting professionals in the United States, Canada, and internationally. The company's Small Business & Self-Employed segment provides QuickBooks online services and desktop software solutions comprising QuickBooks Enterprise, a hosted or server-based solution and QuickBooks Advanced, an online enterprise solution; QuickBooks Self-Employed solution; and QuickBooks Online Accountant and QuickBooks Accountant Desktop Plus solutions; payroll solutions, such as online payroll processing, direct deposit of employee paychecks, payroll reports, electronic payment of federal and state payroll taxes, and electronic filing of federal and state payroll tax forms.

Featured Story: Average Daily Trade Volume – What You Need to Know

Want to see what other hedge funds are holding INTU? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Intuit Inc. (NASDAQ:INTU).

Generac Holdings Inc (GNRC) Q4 2018 Earnings Conference Call Transcript

Image source: The Motley Fool.

Generac Holdings Inc  (NYSE:GNRC)Q4 2018 Earnings Conference CallFeb. 14, 2019, 9:00 a.m. ET

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

Operator

Good day, ladies and gentlemen and welcome to the Fourth Quarter 2018 Generac Holdings, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Chief Financial Officer, York Ragen. Mr. Ragen you may begin.

York Ragen -- Chief Financial Officer

Thank you. Good morning, everyone and welcome to our fourth quarter and full year 2018 earnings call. I'd like to thank everyone for joining us this morning. With me today is Aaron Jagdfeld, our President and Chief Executive Officer. We will begin our call today by commenting on forward-looking statements. Certain statements made during this presentation, as well as other information provided from time to time by Generac or its employees may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those in these forward-looking statements.

Please see our earnings release or SEC filings for a list of words or expressions that identify such statements and the associated risk factors. In addition, we'll make reference to certain non-GAAP measures during today's call. Additional information regarding these measures, including reconciliation to comparable U.S. GAAP measures is available in our earnings release and SEC filings.

I will now turn the call over to Aaron.

Aaron Jagdfeld -- President and Chief Executive Officer

Thanks, York. Good morning, everyone. Happy Valentine's Day. Thank you for joining us today. Our fourth quarter results capped off a fantastic year for Generac in 2018 as we again experienced record quarterly sales through strong core organic growth of approximately 12%. Overall net sales increased 14% compared to the prior year when including the contribution from the Selmec acquisition, which was slightly offset by unfavorable foreign currency impacts during the quarter.

For the full year, net sales grew more than 20% to over $2 billion with EBITDA margins expanding 210 basis points over the prior year to 21% or approximately $425 million. Continued strength in all of our end markets underpin the increases in 2018 with demand for home standby generators in particular remaining very robust throughout the year as increased power outage activity over the last two years alongside the impact of our initiatives to grow the market resulted in continued penetration gains.

Shipments of C&I products were also significantly higher year-over-year driven by continued recovery in domestic mobile products and growth in demand for backup power in the telecom and healthcare sectors. In addition, strong organic sales growth was again experienced within the International segment, which was leverage into further improvement in adjusted EBITDA margins for the year.

Awareness for the home standby generators has benefited from elevated baseline power outage activity during the past two years with end user activations remaining very strong in the fourth quarter and the full year, particularly in the Northeast and Southeast regions. Our residential dealer base continued to expand during the year to an all-time high of more than 6,000. Production levels of home standby generators were at all-time highs for the company during the quarter, and demand for these products remain strong heading into 2019.

Shipments of portable generators were lower in the quarter compared to the prior year, which included the impacts of major hurricane activity, but were up significantly for the full year, driven by the elevated outage activity replenishment of channel inventories, and additional retail placement experience. Demand for domestic mobile products remained strong during the quarter and for the full year as the equipment rental markets further recovered in 2018, with the rebound in the oil and gas markets and increased construction activity both contributing to the continuing fleet refresh cycle.

Demand for stationary domestic C&I generators also increased in the fourth quarter as the elevated power outage environment drove broad based growth across a number of end markets. In particular, certain of our telecom account customers are investing heavily in hardening their networks in response to their customers' needs for consistent uptime. Demand for natural gas-fueled generators was particularly strong during the quarter and for the full year, while diesel gensets remain the dominant choice for C&I backup power globally, natural gas generators continues to gain acceptance as a substitute due to their economic and operational advantages.

In addition to the growth experienced domestically in the fourth quarter and for the full year, our international business also saw a strong growth in Mainland Europe, Latin America, Australia, Brazil and China. Adjusted EBITDA margins for the full year for our International segment continued to expand with improved operating leverage on the higher sales volumes being the biggest contributor to the improvement. We're also seeing success with the introduction of our gaseous fuel products into markets outside the U.S. and Canada with both Residential and C&I products experiencing impressive growth rates during the year, albeit off a small base.

We achieved a number of significant milestones in 2018 that, we believe, are important to the execution of our strategy. In May, we launched the latest version of our flagship home standby generator product line with Wi-Fi connectivity as a standard feature. As an industry first, we believe that the ability for a consumer or a dealer to remotely monitor a generator is a great first step toward enhancing the customer experience as well as enabling a deeper relationship with both end-users and distribution partners. With this new functionality, we have also introduced a new software platform known as fleet specifically for our dealers that allows them to track the status of every single one of their customers' generators.

By providing real-time information about the status of each machine as well as dramatically enhancing the level of diagnostic information available, we believe the dealers will be able to better track and schedule needed repairs or maintenance and we'll be able to do so with greater precision and speed with the outcome being to maximize the uptime of generators under their care.

We also believe that the connectivity layers we are building and now deploying, could have an important impact on other future opportunities by creating a gateway to the electrical system of a home or business. The market for certain services related to energy monitoring and management is rapidly developing. And we believe we can leverage our technical expertise in electronics and electrical systems, our broad distribution, our global footprint and our brand to participate in this exciting new space.

In 2018, we also expanded our position as the largest global manufacturer of gaseous fuel backup generators with the introduction of a 750-kilowatt machine, the largest output unit in our lineup. We are very pleased with the initial acceptance of the product as interest has been strong since its release mid-year. The substitution of natural gas power gensets for traditional diesel fuel products has accelerated in recent years as the performance of newer gas machines equals or exceeds that of diesel generators, while providing some tangible benefits for the end user by mitigating the need for fuel delivery, lower overall operating costs and cleaner emissions.

A core component of Generac strategy is to build on its leadership position in the market for natural gas gensets and throughout 2018. We introduced a number of new products, new programs and innovative technologies related to gaseous generators during the year. 2018 was also a record year for sales volumes, outside the U.S. and Canada for Generac with 22% of our overall revenues being generated primarily through our Pramac, Ottomotores, Tower Light and Motortech entities.

Building on our success in globalizing the company, we closed on the acquisition of a Mexican genset company Selmec in June of last year. Recall that Selmec is located in Mexico City and is a designer and manufacturer of commercial and industrial generators serving Latin America with a particular focus on the telecommunications market and strong service capabilities.

The integration of Selmec with our existing Ottomotores operations is well under way with the latest milestone achieved earlier this month as we opened a new headquarters facility in Mexico City to consolidate our commercial and administrative teams into a single location. Further integration activities are planned for 2019 as we look to realize the synergies of combining the systems and production activities of the two businesses.

In addition, in early 2019, Pramac acquired a majority share of Captiva Energy solutions. Captiva founded in 2010 and headquartered in Kolkata, India specializes in customized industrial generators. While relatively small in size, this acquisition gives us a physical presence in the important Indian backup power generation market and provides a platform to execute on the potential revenue and sourcing synergies that exist by integrating the Captiva operation into the broader Pramac business.

Finally, I'd like to spend a minute this morning to tell you about some exciting enhancements we're making to our long-term strategy that we call powering ahead. Over the last 10 years, we have used powering ahead as our blueprint for making investments and prioritizing our resources. In that time, we've effectively more than tripled the revenues of Generac while simultaneously quadrupling our served markets. As our business evolves from being a smaller more narrowly focused company to that of a larger globally focused leader in the power products industry, we believe that our strategy must also evolve.

Last year, you may recall that we added the strategic pillar of lead gas to powering ahead as we believe that our continued leadership in gaseous fuel generator technology has a critical element of our future growth and focus.

As we continue to think about other areas of our business and the markets that we serve that present significant opportunities for us, we can see the connectivity in the technologies and markets associated with the Internet of Things will play a vital role in the way we interact with customers and distribution partners well into the future. The ability to connect will have a profound impact on the way we develop new products, the way we think about our customer service models, the opportunities to better monetize our products over their entire lifecycle and the exciting prospects around potentially creating entirely new business models around energy monitoring and energy management.

As a result, we're adding a new pillar to our strategic plan simply called Connect and we are updating the name of our enterprisewide strategy to be called powering our future. As we have done for the last 10 years, we intend to continue to prioritize our resources and our efforts around our strategic plan. With powering our future, the four strategic objectives we have established of growing the residential generator market globally, gaining share in our existing markets, leading in gaseous generator technologies and using connectivity to develop new opportunities with our customers and distribution partners, will guide our focus and investments for the future. I'd now like to turn the call over to York to provide further details on the fourth quarter results. York?

York Ragen -- Chief Financial Officer

Thanks, Aaron. Before discussing fourth quarter results in more detail, recall that effective January 1, 2018, Generac adopted the new GAAP revenue recognition accounting standard. For comparability purposes, the full retrospective method was elected under the standard, which requires application to all periods presented. Although, the adoption of the standard did not have a material impact on our financial statements, so the prior year 2017 figures that we are discussing this morning have been adjusted accordingly.

In addition, upon finalizing our revenue recognition accounting under the new standard, we made certain immaterial prior quarter reclassifications to our consolidated statements of comprehensive income related to extended warranties. There was no impact on income from operations or net income as a result of these prior quarter reclassifications. See our press release for more information related to these prior quarter reclassifications.

Now looking at our fourth quarter 2018 results in more detail. Net sales for the quarter increased 14.3% to $563.4 million, as compared to $493 million in the fourth quarter of 2017. Excluding the 13.3 million, of contribution from the June 1, 2018 Selmec acquisition, and the slightly negative impact from foreign currency, core growth rate during the quarter was approximately 12%.

Looking at consolidated net sales by product class. Residential product sales during the fourth quarter increased 10.3% to $293.9 million, as compared to $266.6 million in the prior year quarter.

Despite the fact that the prior quarter included the immediate after effects of hurricanes Harvey, Irma, and Maria, the current year quarter still experienced very strong growth in shipments of home standby generators, as end market demand for these products continues to be robust. The elevated frequency and duration of power outages in recent years, coupled with our initiatives to drive adoption of automatic home standby generators on an everyday basis, has helped to make the category more mainstream in the marketplace, resulting in record shipments of home standby generators during the current year fourth quarter. Switching to portable generators, the prior year fourth quarter included the impact of hurricane Maria, and significant replenishment of portable generators with our retail partners on the back of the active hurricane season last year. As a result, shipments of portable generators, while still strong, were down in the current year fourth quarter versus prior year.

Looking at our commercial and industrial products, net sales for the fourth quarter of 2018 increased 17.5% to $223.2 million, as compared to $189.9 million in the prior year quarter. With core growth being approximately 15%, when excluding the M&A contribution from Selmec, and unfavorable foreign currency impacts.

Domestically, as Aaron mentioned, we are seeing very strong growth in the telecom market, a certain of our national telecom customers are in the middle of a large investment cycle for backup power equipment to harden their cell tower networks. In addition, demand for our mobile C&I products continues to be strong as our rental account customers, both nationals and independents, continue to replace their support equipment fleets for general rental and oil and gas purposes.

Finally, shipments and order rates from our industrial distributors continue to be very strong during the current year quarter in particular for natural gas fuel generators as the strong economic environment and the low natural gas prices are driving significant investment in non-residential construction, and the adoption of natural gas as a cost-effective fuel source for backup power.

Internationally, our Pramac, Tower Light and Motortech businesses grew modestly during the quarter, despite headwinds from the weakening euro. As we continue to drive market penetration across the globe, particularly in Mainland Europe, Australia, Brazil and China.

In Latin America, we also saw modest shipment growth for the quarter even with the certain geopolitical headwinds that are impacting that region, as we continue to make progress on the Ottomotores and Selmec integration and execute on synergies between the two companies.

Net sales for the other products category, primarily made up of service parts and extended warranty deferred revenue amortization, increased 26.5% to $46.3 million, as compared to $36.6 million in the fourth quarter of 2017, with core growth of approximately 13%. This strong core growth rate tracks with the rest of our business as the installed base of our products has expanded around the globe, and replacement part demand increased due to the elevated power outage activity in recent quarters.

Higher amortization of extended warranty deferred revenue also drove this increase. Gross profit margin was 36.3% compared to 37.1% in the prior year fourth quarter. A modestly favorable sales mix shift toward higher margin on standby generator sales, and price increases implemented since prior year, were more than offset by higher logistics and labor costs as well as the realization of unfavorable commodity and currency fluctuations relative to prior year levels.

Operating expenses increased $7.9 million or 9% as compared to the fourth quarter of 2017. As a percentage of net sales, operating expenses excluding intangible amortization declined 30 basis points versus the prior year, primarily due to improved operating leverage on the higher organic sales volumes. The increase in operating expense dollars over the prior year was primarily driven by incremental variable OpEx on the strong sales volumes, an increase in employee costs including long-term incentive compensation recorded during the current year quarter, and additional recurring operating expenses from the Selmec acquisition. These increases were partially offset by lower warranty and intangible amortization expenses.

Adjusted EBITDA attributable to the company, as defined in our earnings release, was $123.9 million in the fourth quarter of 2018 as compared to $109.9 million in the same period last year. Adjusted EBITDA margin, before deducting for non-controlling interests, was 22.4% in the quarter as compared to 22.8% in the prior year. This 40 basis point decline, compared to prior year, was mostly due to the previously mentioned higher input cost that impacted gross margins, offset by improved operating leverage on the organic increase in sales. For the full year 2018, adjusted EBITDA before deducting for non-controlling interests, came in at $424.6 million, resulting in a 21% margin and an impressive 34% increase over prior year.

I will now briefly discuss financial results for our two reporting segments. Domestic segment sales increased 14.3% to $437.8 million as compared to $382.9 million in the prior year quarter. As I previously discussed, strong broad-based end-market demand, driven by higher power outages severity and favorable economic conditions drove increased shipments across our Residential and C&I products in the current year fourth quarter. Adjusted EBITDA for the segment during the quarter was $115.5 million or 26.4% of net sales as compared to $101.9 million in the prior year or 26.6% of net sales. For the full year 2018 domestic segment sales increased 21% over the prior year while adjusted EBITDA margins increased 230 basis points.

International segment sales increased 14% to $125.6 million as compared to $110.2 million in the prior year quarter, including $13.3 million of contribution from the Selmec acquisition and a foreign currency headwind of approximately 4%. Core sales growth was approximately 6% when you exclude both Selmec and currency impacts. As I previously discussed, this overall core growth compared to the prior year was due to broad-based growth across our international subsidiaries, as we continue to drive market penetration across the globe. Note that we were still able to execute relatively strong year-over-year core growth in the international segment despite the prior year benefiting from larger project activity across certain of Pramac's global sales branches.

Adjusted EBITDA for the segment during the quarter before deducting for non-controlling interest was $10.6 million or 8.4% of net sales, as compared to $10.5 million or 9.6% of net sales in the prior year. Higher margin, larger project activity in the prior year quarter, and higher input costs drove the year-over-year decline. For the full year 2018, international segment sales increased 17.9% over the prior year, with core sales growth of approximately 13%. Adjusted EBITDA margins for the segment, before deducting for non-controlling interests increased to 8.1% of net sales during 2018, compared to 7.2% of net sales in the prior year.

We believe we are on track with our strategic plans to reach double-digit adjusted EBITDA margins for the international segment in the coming years.

Now, switching back to our financial performance for the fourth quarter of 2018 on a consolidated basis. GAAP net income for the company for the quarter, was $75.6 billion as compared to 80.9 million for the fourth quarter of 2017. The prior-year net income includes the impact of 28.4 million of non-cash gains largely from the revaluation of the company's net deferred tax liabilities associated with the enactment of the Tax Reform Act. As a result, GAAP income taxes during the fourth quarter of 2017, were only $2 million.

When excluding the aforementioned gain, GAAP income taxes in Q4 2017 would have been $30.4 million or an effective tax rate of 36.1% on an adjusted basis. This compares to GAAP income taxes during the fourth quarter of 2018 of $20 million or an effective tax rate of 20.7%. The large year-over-year decline in the GAAP tax rate on an adjusted basis is primarily due to the enactment of the Tax Reform Act, which resulted in lower federal tax rates in the United States.

In addition, a favorable provision-to-return adjustment was recorded in the current year fourth quarter related to the finalization of our 2017 federal and state income tax returns. Diluted net income per share for the company on a GAAP basis was $1.20 in the fourth quarter of 2018, compared to $1.29 in the prior year with the prior year earnings impacted by the aforementioned $28.4 million non-cash gain related to the Tax Reform Act or $0.45 per share.

The specific calculations for these earnings per share amounts are included in the reconciliation schedules of our earnings release. Adjusted net income for the company, as defined in our earnings release, was $88.1 million in the current year quarter or $1.42 per share versus $87.1 million in the prior year or $1.39 per share. The strong sales growth and related improvement in operating earnings just discussed were mostly offset by higher cash income taxes during the quarter.

With regards to cash income taxes, the fourth quarter of 2018 includes the impact of a cash income tax expense of $15.4 million as compared to $6 million in the prior year quarter. The current year reflects the cash income tax rate of 15% for the full year 2018 with the prior year fourth quarter was based on a cash tax rate of 12.5% for the full year 2017. Higher pre-tax earnings in 2018 in excess of our tax yield, coupled with the fact that 2017 benefited from certain incremental tax deductions that were accelerated into the 2017 tax return, resulted in a higher cash tax rate in 2018.

Cash flow from operations was $108.2 million, as compared to $136.7 million in the prior year fourth quarter and free cash flow, as defined in our earnings release, was $87.3 million as compared to $121.8 million in the same quarter last year. Higher operating earnings were more than offset by increased working capital investment due to the strong organic growth, incremental inventory purchases ahead of expected tariff changes, and higher capital expenditure levels.

Free cash flow for the full year 2018 was $204 million as compared to $228 million for 2017. During the current year quarter, we also made a voluntary $50 million payment on our ABL revolving credit facility paying off the entire outstanding balance as of December 31, 2018 with cash on hand. As of December 31, 2018, we had a total of $924 million of outstanding debt net of unamortized original issue discount and deferred financing costs.

Our gross debt leverage ratio at the end of the fourth quarter was 2.2 times on an as reported basis, a healthy decline for the 3.0 times at the end of 2017. Given our strong earnings and cash flow generation, we've demonstrated the rapid deleveraging capabilities of the company. Additionally, at the end of the year, we had $224 million of cash on hand and there was approximately $277 million available on our ABL revolving credit facility. Both our term loan and ABL now mature in the year 2023. Uses of cash during 2018 included $48 million for capital expenditures, $65 million for M&A, $24 million for the repayment of debt and approximately $26 million for stock repurchases.

With that, I'd now like to turn the call back over to Aaron to provide comments on our outlook for 2019.

Aaron Jagdfeld -- President and Chief Executive Officer

Thanks, York. As we have previously discussed this morning, end market demand for our products has continued to be strong as we enter 2019. As such, we expect net sales in the first half of the year to grow approximately 10% to 12% on an as reported basis and 8% to 10% on a core basis with higher growth rates in the first quarter compared to the second quarter.

This assumes an average baseline level of power outages during the period. Looking at the second half of 2019 net sales could range from low-single digit declines to low single digit increases depending on the severity of power outages during the year. The low end of the range would assume no major power outages and an average baseline outage environment while the high end of the range would assume more elevated outage activity which could include a major power outage event during the year.

Overall for the year, given these assumptions, net sales are expected to increase between 3% to 7% compared to the prior year on an as reported basis and 2% to 6% on a core growth basis. Net income margins before deducting for non-controlling interests are expected to be between 11% to 12% for the full year 2019 with adjusted EBITDA margins also before deducting for non-controlling interest expected to be between 20% to 21% for the year.

The low end of the range would assume no major power outages and an average baseline outage environment, and the high end of the range would assume more elevated power outage conditions. Furthermore, mix operating leverage and our level of promotion and marketing spend will all vary depending on the severity of power outages during the year. 2019 margins are also expected to be impacted by a number of other factors. Realization of higher input costs coming into the year along with the impact of regulatory tariffs are expected to be largely offset by price increases, favorable trends with respect to commodities, currencies and logistics costs and benefits from our profitability enhancement program throughout the year.

Consistent with historical seasonality, we expect adjusted EBITDA margins in the second half of the year to be higher relative to the first half with the sequential improvement being approximately 350 basis points to 500 basis points depending on the power outage environment experienced during the year. This 2019 outlook does not reflect potential business acquisitions or stock buybacks. Given our strong balance sheet and free cash flow generation, we have significant resources to drive further shareholder value as we execute on our long-term strategic priorities.

And now I'd like to turn the call back over to York to walk through some additional guidance details for 2019. York?

York Ragen -- Chief Financial Officer

Thanks, Aaron.

For 2019, our GAAP effective tax rate is expected to increase to between 25% to 27% as compared to the 22.5% full year rate for 2018. Based on our guidance provided for 2019, our cash income tax expense for the year is expected to be approximately 52 million to 60 million depending on the outage environment, which translates into an an anticipated full year 2019 cash income tax rate of approximately 17% to 18%. That compares to the 15% cash income tax rate for full year 2018.

The expected increase in our GAAP and cash tax rates compared to 2018 relates to certain favorable deductions that were accelerated and reflected in the 2018 rates in response to the Tax Reform Act that aren't expected to repeat in 2019. As a reminder, we still have a favorable tax shield as a result of a significant intangible amortization deduction in our corporate tax return that results in our cash income tax rate being notably lower than our GAAP income tax rate. With the passage of the Tax Reform Act, the tax affected annual value of this tax shield is expected to be approximately $30 million per year and expires fully in 2021.

In 2019, we expect interest expense to be approximately $41 million to $42 million, assuming no additional principal payments during the year and one expected rate increase in 2019. Our capital expenditures for 2019 reflect continued investments in expanding capacity and our forecast to be approximately 2.5% of our forecasted net sales for the year. Depreciation expense is forecast to be approximately 30 million in 2019 given our assumed CapEx guidance. GAAP intangible amortization expenses in 2019 is expected to be similar to 2018 levels at approximately $21 million to $22 million during the year. Stock compensation expense is also expected to be similar to 2018 at $14 million to $15 million per year.

For full year 2019, operating and free cash flow generation is once again expected to be strong and follow historical seasonality benefiting from the solid conversion of adjusted net income to free cash flow expected to be over 90% in 2019. This concludes our prepared remarks. At this time, we'd like to open up the call for questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question comes from Ross Gilardi of Merrill Lynch. You may proceed with your question.

Ross Gilardi -- Merrill Lynch -- Analyst

Yeah, thanks. Good morning, guys.

Aaron Jagdfeld -- President and Chief Executive Officer

Good morning, Ross.

York Ragen -- Chief Financial Officer

Good morning, Ross.

Ross Gilardi -- Merrill Lynch -- Analyst

Hey, Aaron, I was wondering if you could kick it off just talking a little bit more about your balance sheet. I mean at the midpoint of your guidance for EBITDA and free cash flow, and I think your net debt to EBITDA is going to be like 1.1 times by the end of '19 if you hit the numbers, I mean usually the -- I think the lowest since the IPO. So what's the plan. I mean obviously you had a lot of options, like how are you thinking about dividends, buybacks versus M&A?

Aaron Jagdfeld -- President and Chief Executive Officer

Yeah, I think, Ross, it's a great question and one that obviously internally, as a company, we -- given the position we're in and given that the prospects for the company going forward, there's -- we look at that and we say, OK, how can we best create an environment for our -- not only our future growth here at the company, but obviously for our shareholders and all stakeholders. And that's a -- there's a number of things you can do and we step through priority uses of cash every time and we've been very consistent even since the IPO on that. And the first thing we want to do is grow, continue to grow organically. And now thankfully, it doesn't take a tremendous amount of capital to do that, so we're pretty efficient that way. But that being said, we do have -- there is a number of CapEx, things that we continue to look at in terms of scaling the company right through some capacity expansion, things that we're focused on this year, you'll notice the CapEx guide that we gave here this morning is a little bit higher than maybe historically we've been around the 2% of net sales this morning closer to 2.5. And there is some capacity type of expansion things in there. You can imagine growing -- we grew 15% year before, 20% last year and when you do that, there's a lot of things that you need to do to get your capacity up. So that's one thing.

Beyond that, we've said that there are some very interesting things to accelerate our strategy through acquisitions through M&A activity, and we've done 12 acquisitions over the last six or seven years. And we have a pipeline that would indicate that additional acquisition activity in the future is something that could happen if we find the right asset at the right price that fits our strategy, and we think it can accelerate things and help us grow. That's certainly something where we're looking to. And there's the universe of potential acquisition targets for us is, it's pretty big, there's a lot of things I think we could do there not only from an international standpoint where some of things have been focused like the Selmec acquisition last year and the Captiva acquisition announced earlier this year. But also I think around some of these other potential business models and other opportunities we've been talking about that I mentioned in my prepared remarks.

After you step through those things, then you start talking about return of capital to shareholders. And you can do that in a number of different ways. We've done some special dividends in the past. I think we've done some buybacks in the past. Both of those are vehicles to do that. Paying down debt, I think, we look at that and we've got a really cost effective liability structure. It doesn't mature until 2023. We really think we've got it, we wouldn't get a great return honestly from taking out a lot of debt.

So we think putting the capital to work or returning it to shareholders is a better is a better way to go. But we'll evaluate those priorities as we kind of have in the past and we'll have to -- we'll have to figure out where we go from here. But we -- I really like the set up, we've got a lot of -- we've got a lot of dry powder here and we've got a lot of cool things that we're looking at that I'm pretty excited about.

Ross Gilardi -- Merrill Lynch -- Analyst

Okay. So you mentioned regular quarterly dividend. I mean does that still feel like something and you're not that interested in doing and then obviously you have (inaudible) specials in the past?

Aaron Jagdfeld -- President and Chief Executive Officer

Yeah, I would say that's about a quarterly dividend. I mean, it's something we've talked about we've discussed dividends and that's certainly one possibility. But I think at this stage, the way I think about the company as a growth company, the kind of growth we've experienced here, I think, of regular dividend. I don't know that we're in the right part of the cycle, yet to be thinking about that. And there are far too many opportunities for us to I think get a -- to continue to grow the company and get an overall longer-term better return with investing in whether -- again whether it's organic or whether it's through M&A activity. I just see too many potential areas where we can invest and use that capital for the benefit of all of our stakeholders.

And so, I'm just -- I'm not ready to say that we don't have enough opportunities there and I think that we've been -- we've been pretty clear on this point since our IPO. And maybe there is a point in the cycle where that's going to make sense, and we'll talk about that as a Board. But today, I'm just too excited about the future to say we should be thinking about deploying our capital that way versus through growth.

Ross Gilardi -- Merrill Lynch -- Analyst

Okay. And then just last (inaudible) topic and then I'll hand it over. This Captiva transaction with Pramac, I mean can you talk a little bit more about the mechanics of that and, Aaron, you seem sort of interested in the Indian market for a long time and this gives you a foot in the door. I mean do you potentially use this to create a much bigger platform in a market like India or is this -- at this point, we think of it as kind of exploratory, learn about the market and just sort of see what happens for the next three to five years.

Aaron Jagdfeld -- President and Chief Executive Officer

Yeah, it's a great question, Ross, and we kind of look at it as a giving us a toehold in a part of the world in India that we haven't really had any operations. We've done some sourcing there, but really no commercial activity and it's a huge generator market. There's a couple of markets like that around the world where we think we need to participate. And there -- we could have went in, could have kind of pushed all the chips into the middle and gone all in with a much larger acquisition if we wanted to go that route. But I think given our limited knowledge of the market, we felt it better to try this first. And if it works, I think it could be a springboard for something bigger.

I think we're looking at it from this standpoint, there is -- as we've been talking in our prepared remarks this morning, the substitution of natural gas generators for diesel gensets is something that's been going on for the last 20 or 30 years here in the United States. We're starting to see that pattern repeat in other parts of the world. India eventually we'll do that as well. The economics of natural gas infrastructure and the usage of natural gas for heating and cooking and other baseload power needs and things of that nature, the economic arguments are far too compelling in favor of natural gas, got a lower emissions profiles and many of the fuels that are burned in many other parts of the world. And we're going to need natural gas for a long time for baseload power production everywhere in the world.

India is starting to realize this, and they've got a lot of projects on the drawing board for natural gas pipeline infrastructure. As that infrastructure gets deployed, the opportunity to connect a backup power system like a generator to that pipeline becomes a reality and we think that being there and having a footprint in India to begin to push on that is an important part of our overall lead gas strategic pillar. And so that's really where we're -- we want to start out in India, it could be bigger for us long term, but I think it's a way for us to cut our teeth there.

Ross Gilardi -- Merrill Lynch -- Analyst

Got it. Thanks very much.

Aaron Jagdfeld -- President and Chief Executive Officer

You bet.

Operator

Thank you. And our next question comes from Charley Brady of SunTrust Robinson. You may proceed with your question.

Charley Brady -- SunTrust Robinson Humphrey -- Analyst

Hey, guys, thanks. Good morning, guys.

Aaron Jagdfeld -- President and Chief Executive Officer

Good morning, Charley.

York Ragen -- Chief Financial Officer

Good morning, Charley.

Charley Brady -- SunTrust Robinson Humphrey -- Analyst

I was wondering -- obviously, on the M&A, this new Powering Our Future and (inaudible) you're kind of adding in there. I'm wondering does that add sort of an additional pipeline to M&A and can you maybe talk about what would be potential ideas of you branching out beyond we were at into that area?

Aaron Jagdfeld -- President and Chief Executive Officer

Yeah, it's -- it's a great question. Charley anytime we only made a few adjustments to strategy over the last 10 years. And any time you do that, you have to evaluate -- again we use M&A to help us accelerate our strategy. So -- and I think we've been very consistent on that point. And as we add this new pillar of connect to our strategy and kind of rebranding the strategy powering our future, absolutely, the M&A funnel now is starting to fill up with different ideas, some of them technology oriented, some of them -- when you talk about other kind of monitoring type of opportunities, it's actually for our business development teams here and our corporate development teams, it's been interesting because we've -- we find that we've had to kind of interface with different parties and different people than we've been traditionally doing in the kind of, I'll call it, traditional equipment spaces. Right? So many of these business models are more around services, the business models can be very, as I've mentioned before, technology-oriented.

We're not ready to discuss details about the pipeline itself, but I think what you're going to see from us over the next several years is interesting. And again, this is what -- I've been at -- I've been here a long time, 25 years and I can't remember a time I've been more excited about the future of the company and what's going on in the industry. I think the utilities, the energy markets, there is going to be a tremendous amount of change coming in the next decade. The next 10 years is going to present just some amazing changes to all of that and we think we should have an opportunity to participate in how that market develops.

I don't know that anybody knows exactly how it's going to develop or what's going to what's going to happen, but people have ideas. I think that the traditional model of delivering power by utility to your home or your business, so I think that's going to change radically here in the next few years. And whether that's because of the addition of renewables or storage or decentralization of the grid and on-site power generation, distributed generation, there's a lot of different formats that this is going to take. But I think that the focus that we have on natural gas gensets and the focus that we're now putting on connectivity, I think, a really important parts of putting ourselves in the middle of many of those conversations down the line.

Charley Brady -- SunTrust Robinson Humphrey -- Analyst

Great. That's good color. And just I don't know if I missed it, but do you talking about the Florida nursing home assisted living facility, situation swing on there with providing the generators, is that bleeding into 2019 as you kind of alluded to in prior calls?

Aaron Jagdfeld -- President and Chief Executive Officer

Yeah, there was about a third of the facilities in Florida that were granted waivers for the end of the year deadline to get a backup power system in place. And so that will undoubtedly lead to some spillover here into 2019, the first half, most likely. In each of those waivers a little different depending on the situation in the size of the facility. But it's been nice -- Florida has been a great market, as you can imagine not only for the residential markets that we serve, but also in the C&I space and not just for healthcare. I mean, we've seen a marked increase in a number of other kind of commercial and industrial type applications for backup power there as you know, it was a state that went up what 10-11 years without any kind of this major disruptions in the grid there. And then, we've had a number of different things happen in the last few years.

So, it's back on the radar screen, Florida is doing well and there will be some spillover. I don't think it's going to be -- it's not to be major but our guidance does contemplate some amount of spillover.

Charley Brady -- SunTrust Robinson Humphrey -- Analyst

All right. Thanks. And just one more for me. On the price cost, you talked about I guess neutralizing that, but I'm just trying to get a little more color on or -- can you put through price increases, obviously and particularly on the home standby market development but pricing is a sensitive issue to that whole dynamic of the growth there. Are you going to be fully neutral for the year and is a ramp or are you fully neutral now today? Thanks.

York Ragen -- Chief Financial Officer

Charley, this is York. So, yeah, I think there are input cost headwinds and it's, and it's not just tariffs that we're talking -- we're (inaudible) the realization of just higher steel costs and aluminum and copper and logistics costs have really spiked up in Q4. Labor cost, the realization of all higher costs are going to spill into the front half of 2019. So you're probably going to have some headwinds on the price cost side in the front half of 2019.

But what we see though is today as those input costs are starting to moderate, if you look at steel, copper, aluminum, and if you look at our currencies with the euro and RMB and then logistics cost we see moderating. And then you layer on the price increases relative to the tariff situation. And then also combined that with all of these profitability enhancement initiatives that we have collectively, we think that's going to flip around in the back half of the '19, to neutralize that fully for the, full year. So we are cognizant on the price increase side of relative to home standby and price elasticity, but I think with relative to tariffs, that's just something that the market will bear, should show the tariffs come to fruition are at least at the 25% level on March 1.

Charley Brady -- SunTrust Robinson Humphrey -- Analyst

Thanks.

Operator

Thank you. And our next question comes from Jerry Revich from Goldman Sachs. You may proceed with your question.

Jerry Revich -- Goldman Sachs -- Analyst

Hi, good morning, everyone.

York Ragen -- Chief Financial Officer

Jerry, good morning.

Jerry Revich -- Goldman Sachs -- Analyst

You folks have really focused on the analytics and one interesting element that I'm wondering if you could talk about is if you're starting to see in your residential standby business, any replacement demand of units that were installed 15 to 20 years ago. Just to give us a sense for what the replacement market could look like once we get to the sweet spot of the units that were installed in the call it mid 2000s plus when the business really start to ramp for you. Any analytics that you could share with us in terms of the contribution from replacement or the ramp in replacements at all for that part of business, would be helpful.

York Ragen -- Chief Financial Officer

Yeah, Jerry, it's -- we haven't talked about it much, because the market is only 20-25 years old. It is interesting, I mean we do track all that information, and it's a very reliable steady march up in terms of the percentage of products that we sell today that go into a replacement -- as a replacement. And so today, we're sitting at about 5%, 6% of our volume there on the residential side is for replacement. But I think you may have hit an interesting nail on the head there which is there are -- because of the nature of the way that market has grown, there's faster points in the penetration curve that have happened over the last 10 to 20 years. And when you hit one of those patches and you hit that kind of replacement cycle, you should see this similar kind of offset in increase in the replacement cycle in terms of that growth, and we're seeing that.

So, as an example with Florida, again, it was 10-11 years ago, but there was prior to that, there were some pretty interesting up-cycles around Katrina back in 2005, you had the big power outages in Northeast in 2003. We're starting to get into those kind of time frames, a generator should last you between 15 to 20 years if well cared for. So like -- it's typical, like a typical piece of your homes infrastructure like an HVAC system, something like that, very similar. But we do see that it's starting to show up and we're kind of excited about that long term. Because, as we build this market out now, we've got -- our installed base is well over a 1.5 million machines actually, getting closer to 2 million here. There's a nice opportunity there longer term for replacement.

Jerry Revich -- Goldman Sachs -- Analyst

I appreciate the disclosures. And you mentioned really the 6,000 dealer network now. Can you just talk about your efforts to continue to drive high engagement in some of the newer dealers where after the post-storm enthusiasm might potentially fade as you laid out, call it into the back half of '19? What are you folks doing to drive continued engagement to make sure those 6,000 dot some of the newer ones stay green for you?

Aaron Jagdfeld -- President and Chief Executive Officer

Yeah, it's a challenge every time, right, because you add dealers, they generally come on-board, as the market is -- market demand cycle is higher. And then, when demand relaxes you've got it effectively train the dealers on how to market. And many of these dealers are in the electrical trades or HVAC trades and marketing maybe for an electrician doesn't come as kind of a standard part of your business practices, right?

So, it's a new skill set that has to be learned. And we have a progression for dealer. There is there -- we do a lot of training. I think one of the things that is just an amazing part of this business, and I don't know that whether it's investors or others that maybe don't get it is that distribution that we've built, that 6,000 dealers, we've built that over 20 years. And we have poured countless dollars, time, blood, sweat and tears into building that out and to making these dealers, our representatives out in the market for a new product category like home standby generators.

And that just takes -- we burn a lot of calories, it's an ongoing effort. You can't relax at all, you have to constantly be coming up with new programs. I would say that one element of that we talked about this in our prepared remarks, but with our connectivity initiatives now, this new platform that we're introducing called fleet. The software platform that our team has been working on here, we just rolled that out, we had our annual dealer conference a couple weeks ago in Las Vegas, 2,500 people there, it was a massive event, and we talk about new programs fleet being one of them. But fleet is you can kind of think of that as a, obviously it by its name, you can see all of the generators under a dealer's care right there, they're customers' products, but -- and then can get a lot of diagnostic information, things like that, but the way we think about fleet longer term is a really important way to engage with dealers.

It could potentially be a totally different platform, any of these dealers there -- their "ERP system" is a spiral notebook on the dashboard of their van or truck. And you could think of fleet as being a potential platform for dispatch, for billing, for other things that we could inventory control, things of that nature. We see it as a really interesting way to interact with our dealers on a go-forward basis. So it's, things like that help us keep the engagement up even after the initial surge of excitement and demand passes after an event.

Jerry Revich -- Goldman Sachs -- Analyst

Okay. Yeah, thank you. I appreciate the discussion.

Aaron Jagdfeld -- President and Chief Executive Officer

Thanks, Jerry.

Operator

Thank you. And our next question comes from Jeff Hammond from KeyBanc Capital. Please proceed with your question.

Jeff Hammond -- KeyBanc Capital -- Analyst

Hey, good morning, guys.

Aaron Jagdfeld -- President and Chief Executive Officer

Good morning, Jeff.

York Ragen -- Chief Financial Officer

Good morning, Jeff.

Jeff Hammond -- KeyBanc Capital -- Analyst

So just on the 2% to 6% core, is there anyway to parse it out between commercial and residential?

York Ragen -- Chief Financial Officer

Yeah. So, if you -- the 2 to 6 core is collective. So, on the C&I business, I think, our prepared remarks talked about the strong end market demand we're seeing both domestically and internationally. There is a number of verticals that are turned on. And we see those continuing that strong demand into 2019 and pretty consistent throughout the year. So, for C&I purposes, we're seeing that high single-digit, low double-digit growth, really consistently throughout the year, at least that's our -- what our guide shows. And it's really consistent across domestic and international.

So I think the theme there is broad based strong demand for C&I. On the Resi side, what that would mean is probably flat to down slightly, the down slightly is mainly due to headwinds with regards to portables. So, still seeing Resi flat to slightly down with portables being the headwind there for the full year.

Jeff Hammond -- KeyBanc Capital -- Analyst

Okay. And then does that inform some of the margin dynamic where commercial would be lower mix?

York Ragen -- Chief Financial Officer

Yeah. Yeah, so on. If you look at -- I talked a little bit about price cost on the mix side that probably be -- there would be a slight negative mix hit on the margin side relative to from '19 -- from '18 to '19.

Jeff Hammond -- KeyBanc Capital -- Analyst

Okay. And then last question. Inventories moved up quite a bit and was a big drag on working capital. Can you just speak to how much of that is some of this pre-buy ahead of tariffs? What does your finished good inventory look like? And then just separately how you're feeling about channel inventories? Thanks.

York Ragen -- Chief Financial Officer

Yeah, so I mean the way I think about inventory levels because they did increase during the year. So when you think about portable generators.So last year at this time, we had just lived through hurricanes Harvey, Irma and Maria. Our inventory -- portable inventory level was wiped out there. So throughout 2018 here, we've actually been investing in replenishment in our warehouses of our portable inventory level. So just sort of every day portable replenishment thing with that way. On the tariff side, so we saw -- as we were entering the year, there was the threat of tariffs going to 25 -- from 10% to 25% relative to Chinese imported goods on January 1.

So, as a management team, we said, look, we -- to be smart to bring in some extra components on the across the board, across our product lines -- those impacted by -- that could be impacted by those tariffs. And we decided to invest in pre-buy of that inventory prior to that potential tariff change. And then the third piece of the puzzle is really just our strong 20% growth we're going to be just investing in more inventory to facilitate our growth.

So, I think that maybe one-third, one-third, one-third when you think of those categories that are driving that inventory increase. On the field inventory side, on the portable side, I think we're -- field inventory stocked ready to go, ready for a storm. On the home stand by side, I think, it's actually seasonally appropriate, seasonally consistent with where we should be very manageable where we're at this point of the curve coming into 2019.

So we're feeling OK on where our field inventories are for home stand by.

Jeff Hammond -- KeyBanc Capital -- Analyst

Okay, thanks, guys.

York Ragen -- Chief Financial Officer

Thanks.

Aaron Jagdfeld -- President and Chief Executive Officer

Thanks, Jeff.

Operator

Thank you. And our next question comes from Mike Halloran from Baird. You may proceed with your question.

Michael Patrick Halloran -- Robert W. Baird & Co. Incorporated -- Analyst

Good morning, guys.

Aaron Jagdfeld -- President and Chief Executive Officer

Good morning, Mike.

York Ragen -- Chief Financial Officer

Good morning, Mike.

Michael Patrick Halloran -- Robert W. Baird & Co. Incorporated -- Analyst

So first just clarify on the guidance to make sure I'm thinking about it right in terms of assumptions on outage activity. But thinking about the first half, it feels like you're essentially saying momentum for the back half of '18 plus an average underlying outage environment. And then when you think about the back half of the year, it's in the average underlying environment and then the range of outcomes is based on nominal larger opportunities versus the high end being more significant opportunities. Is that how you guys are breaking that out front half to back?

Aaron Jagdfeld -- President and Chief Executive Officer

Yeah. That's exactly it, Mike.

Michael Patrick Halloran -- Robert W. Baird & Co. Incorporated -- Analyst

Okay, perfect. And then regional variances, obviously, you said Southeast, Northeast are doing very well on the areas that aren't seeing as much impact from the larger scale things over the last couple of years. Maybe track how awareness is in those areas and what growth looks like dealer distribution penetration and things like that.

Aaron Jagdfeld -- President and Chief Executive Officer

Yes. So I mean it's a, it is interesting because you see this oscillation that'll happen where you get events like we had down in the Southeast and we had the -- the Nor'easters that were in the beginning of 2018 or in March 2018, the consecutive Nor'easters that have been I think kind of turning the Northeast to up has been. If you think the U.S. is a heat map, it's actually very interesting. We watch just even all the way down to the individual states, but even even actually more granular than that of course, but it is interesting. That Midwest was a really good market for us a year ago and this year there were quite a few storms and events in Michigan, in Ohio, Illinois, and that didn't repeat this year to the same level, and so that cooled off as an example. But -- it is interesting because what's going -- like if you look at it right now today, there's actually quite a bit more activity out West, so the West and the North West, the recency of a lot of the storms that are going on out there, I was just -- I was looking at outages this morning, we track them everywhere and there was a 130,000 people in California without power this morning from the latest event that was rolling through. And so that's just one state one area.

And yeah, very predictably, and we now have, as you can imagine, from a data perspective, we have a fair amount of data and there is a fair level of predictability around some of this that we could say reliably at this point over the next 12 months in California, we're going to have -- it's going to be -- it's going to be the growth rate will be better than its been. Same will happen in Northwest as well. So -- but it's -- it does move. Puerto Rico was really hot couple years ago now, now it's not. I mean there's, it's -- it really does cycle and oscillate, but it's interesting that, that being said, they grow these -- this is a step function growth that we've talked about. You get to this baseline level of growth that you kind of grow rapidly and then it tops out at a kind of a baseline level or bottoms out if you want to call it that. And then it stays there, but it's materially higher than where it was prior to the event. And then you get another event successively after that and it grows again. And so it's really quite amazing for mathematically speaking, how you can start to model that out.

Michael Patrick Halloran -- Robert W. Baird & Co. Incorporated -- Analyst

Now makes sense. And then I know it's early days, just customer and dealer receptivity to the connectivity solution as you're putting it out there. And then thoughts on that Resi versus the C&I side, and now implementation could phase variably between the two areas.

Aaron Jagdfeld -- President and Chief Executive Officer

Yeah -- no, it's a good question. Right now, a good chunk of our focus has been on the residential side. So I'll start there. Receptivity has been good. We -- you don't have a -- the challenge in that if there is a challenge is, like anything we roll-out to our distribution partners is there is an adoption rate, right? They have to adopt that, there's a learning curve. I mean it's like -- it's not like anything else in life -- unlike anything else in life, it's the same. And again we're talking about mainly electrical contractors here, they're not used to working with customers with their Wi-Fi networks and passwords. And so there is -- there has been a bit of learning that's going on, there's a lot of learning cycles going on in the market. But we have tens of thousands of units connected already in a very short period of time. And the data that it's giving us is amazing, it's great.

And the interaction level, the way we're able to increase the interaction with our customers, we can look at customers' products, we can understand what's going on. We can now -- this is a really cool thing, we can deliver over-the-air firmware updates to our machines. So as new features get developed in the products, we can deliver those features to customers. So there is additional future benefit potential coming from that.

It also then leads right into that fleet comment I made previously. It allows for our dealers to have a much better view of all of the products under their care to affect repairs a lot quicker and more accurately, and that's been a really good upside. The C&I piece is the next piece for us, and we've got our control platforms there, we've introduced a brand new control platform on our industrial products that are -- that's going to roll into products here over the next 12 to 24 months as we kind of cycle through it, it's a lot of product to get the new platform in. We call it our power zone control platform, but it's state-of-the-art. And it is -- it's by far and away the coolest generator control platform in the industry, and it was all developed internally. And again we -- this is -- I think one of the great benefits of the focus we bring to the market is we do a lot of this stuff internally and it's the same with the remote monitoring. We're doing it all internally. We're not leaving that to some other third-party. We feel that at the OEM, we want to have that direct conversation with our customers and our distribution partners.

Michael Patrick Halloran -- Robert W. Baird & Co. Incorporated -- Analyst

Thanks for the time. I appreciate it.

Aaron Jagdfeld -- President and Chief Executive Officer

Thanks, Mike.

York Ragen -- Chief Financial Officer

Thanks, Mike.

Operator

Thank you. (Operator Instructions) Our next question comes from Chip Moore of Canaccord. You may proceed with your question.

Chip Moore -- Canaccord Genuity -- Analyst

Thanks. Hey, guys.

York Ragen -- Chief Financial Officer

Hey, Chip.

Chip Moore -- Canaccord Genuity -- Analyst

On the 8% to 10% core in the first half, can you talk a bit more on visibility, I think you said it was more Q1 weighted. So some of the puts and takes there. And then maybe just remind us on baseline outage activity expectations. Does the events of the past couple of years that push that up or are you thinking -- how do we think about that? Thanks.

York Ragen -- Chief Financial Officer

Yeah, I think our prepared remarks -- the assumption there at least for the first half is that we're assuming just sort of long-term average levels which, if you -- actually if you do the math, that would actually be lower than what we experienced in 2018. So that 8% to 10% core growth that we were talking about in the first half, it actually -- it spreads across Resi and C&I relatively consistently. So we're seeing strength both in Resi and C&I as I mentioned. And then as we said in the prepared remarks, Q1 year given the strength that we're seeing coming into the year, we expect those Q1 growth rates to be higher than the second quarter. So, I think that was the level of commentary we were providing on that.

Chip Moore -- Canaccord Genuity -- Analyst

Got it. That's helpful. Thanks. And good to hear you talking more on this new connect strategy. Obviously, it's a robust ecosyst