Cramer Remix: GE's CEO has breathed new life into a fallen franchise

General Electric CEO Larry Culp has simplified the company's report techniques and could be on the right path to fix the challenges in its power division, CNBC's Jim Cramer said Wednesday.

Culp, who became chief of GE in September, delivered his first annual letter to shareholders on Tuesday that Cramer said made a significant departure from pages of "incomprehensible" numbers about each of the conglomerate's businesses. The annual report laid out the 2018 performances of all eight segments on one condensed page.

"It's honest, it's forthright, it's straightforward, and short," the "Mad Money" host said. "It's the most un-GE piece of correspondence I've ever seen. The culture shock here is downright stunning."

Click here to find out why Cramer thinks Culp can revive the company's power business.

How to sleep like a baby Scott Mlyn | CNBC Jim Cramer

If investors want to start sleeping better at night, it's time to start thinking about what's going right with this economy, Cramer said.

While many Wall Street watchers have been fixated on what could go wrong on the market, the host explained six reasons he can't stop wiping sleep from his own eyes.

"Now, I know many of you probably think I'm whistling past the graveyard here," Cramer said. "I'm only whistling past the graveyard of underperforming portfolio managers who can't sleep at night because they've been scared away from a terrific rally by the parade of horribles that play like a constant loop inside their heads."

The United States economy is the strongest in the world and benefits from a two-punch combo that the host has never seen before, Cramer said. A "fabulous" employment rate on top of almost non-existent inflation should relive a lot of stock picker's worries, he said.

With the days inching closer to March, the last month of the first quarter in 2019, Cramer is anticipating the jobs report set to come out Friday.

Learn how to sleep free of worry like Cramer here.

It's not what you may think it is Mohamed Azakir | Reuters A farmer in a field of cannabis plants.

GW Pharmaceuticals' stock price shot up less than 14 percent during Wednesday's session coming off of its latest earnings report. In November, the biopharmaceutical company launched its first commercial drug called Epidiolex, which is an FDA-approved plant-derived cannabinoid medicine to treat patients with epilepsy.

The firm wants to introduce another drug called Sativex that contains THC, the chemical found in marijuana, that could be used to help those with multiple sclerosis.

In an interview with Cramer, CEO Justin Gover took the time to clear the confusion surrounding products that contain CBD and THC, which some people tend to get mixed up.

"Epidolex is not marijuana. It is a purified CBD formulation approved by the FDA," Gover said. "Our job has been to assure that we have a clear distinction between this medication and marijuana and in that respect I think we've achieved a great deal of understanding within the medical community. And for those that do understand that, they see this as just an important new treatment addition and they don't confuse it with the wider controversies around marijuana."

Click here to catch the interview in full.

Gatekeeper to the kingdom Scott Mlyn | CNBC Udi Mokady, CEO, Cyberark Software 

As the threat of cyberattacks become more and more widespread, companies are spending more money on defense systems.

As demand grows that has led to growth at Cyberarkdrug, a leading privileged access security provider whose stock has spiked more than 125 percent in the past year.

"I think there's been growing awareness that this is the most irreversible phase of an attack," CEO Udi Mokady said in a one on one with Cramer. "If they go the keys to the kingdom they control the network, they control the cloud, and this growing awareness really led ... this [to be a] top priority."

Hear the entire conversation about Cyberark and cybersecurity here.

Drivers wanted Yoon S. Byun | Boston Globe | Getty Images Alan S. McKim, CEO of Clean Harbors.

Clean Harbors is in the business of cleaning up industrial waste that is deemed hazardous. While President Donald Trump has made it a priority to cut back on regulations, Cramer said he thought the company could be hurt by some of the policy roll back.

CEO Alan McKim told the "Mad Money" host that states continue to enforce guidelines and that there is even more stringent regulations in some places. In fact, the company is looking to add more drivers to its payroll.

"We're always short qualified drivers. It's very difficult to find drivers, as you hear, on a national business," he said. "We're really anxious to expand our fleet and bring more drivers on."

Watch the the full conversation here.

Lightning round:

In Cramer's lightning round, the "Mad Money" host flew through his ideas on viewers' favorite companies:

Aurinia Pharmaceuticals Inc.: "No, not a takeover candidate. No, not without the approval because ... [if] it doesn't get the approval it's supposed to have then I tell you this one goes much lower. You wanna do it on approvals and—[CEO Richard] Glickman's good, I'd like to have him on the show but I am not going to endorse it until I know more."

Centene Corp.: "Listen, that group has been real weak all of a sudden. That whole group has been—there's an introduction of a bill that I think that will not pass about universal Medicare. It's driving all these stocks down and I think Centene's going down with it. It's a very inexpensive stock here and we have total faith in [CEO] Michael Neidorff and I say—not tomorrow because there'll be downgrades 'cause everybody's nervous, but on Friday" buy.

Waste Management Inc.: You know, when Mr. [David] Steiner was running that company I said, 'I don't know if it can get better.' Now Mr. [James] Fish is running it and the answer is, 'it's just keeps getting better' and for your daughter's IRA, I want you to stay long even though it just cracked par, which is ... Wall Street gibberish for $100. Stay long, or own Waste Management."

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Westinghouse Air Brake Technologies Corp (WAB) Files 10-K for the Fiscal Year Ended on December 31,

Westinghouse Air Brake Technologies Corp (NYSE:WAB) files its latest 10-K with SEC for the fiscal year ended on December 31, 2018. Westinghouse Air Brake Technologies Corp is a provider of value-added, technology-based products and services for the rail industry. It provides its products and services through two main business segments, the Freight and Transit. Westinghouse Air Brake Technologies Corp has a market cap of $12.31 billion; its shares were traded at around $75.80 with a P/E ratio of 24.76 and P/S ratio of 1.69. The dividend yield of Westinghouse Air Brake Technologies Corp stocks is 0.64%. Westinghouse Air Brake Technologies Corp had annual average EBITDA growth of 11.20% over the past ten years.

For the last quarter Westinghouse Air Brake Technologies Corp reported a revenue of $1.1 billion, compared with the revenue of $1.1 billion during the same period a year ago. For the latest fiscal year the company reported a revenue of $4.4 billion, an increase of 12.4% from last year. For the last five years Westinghouse Air Brake Technologies Corp had an average revenue growth rate of 9.8% a year.

The reported diluted earnings per share was $3.05 for the year, an increase of 12.1% from previous year. Over the last five years Westinghouse Air Brake Technologies Corp had an average EPS decline of 2.8% a year. The Westinghouse Air Brake Technologies Corp had a decent operating margin of 10.85%, compared with the operating margin of 10.86% a year before. The 10-year historical median operating margin of Westinghouse Air Brake Technologies Corp is 14.70%. The profitability rank of the company is 7 (out of 10).

At the end of the fiscal year, Westinghouse Air Brake Technologies Corp has the cash and cash equivalents of $580.9 million, compared with $233.4 million in the previous year. The long term debt was $3.8 billion, compared with $1.8 billion in the previous year. The interest coverage to the debt is at a comfortable level of 15. Westinghouse Air Brake Technologies Corp has a financial strength rank of 5 (out of 10).

At the current stock price of $75.80, Westinghouse Air Brake Technologies Corp is traded at 14% discount to its historical median P/S valuation band of $88.11. The P/S ratio of the stock is 1.69, while the historical median P/S ratio is 1.95. The stock lost 11.21% during the past 12 months.

For the complete 20-year historical financial data of WAB, click here.

Following Earnings Beat, Hertz Stock Still Needs One Thing

Hertz Global (NYSE:HTZ) blew away earnings and revenue estimates for both the fourth quarter of 2018 and the full calendar year. The automobile rental company saw its spike higher immediately in after-hours trading. Although this sent Hertz stock initially higher, the equity now trades closer to the top of its long-held range.

Source: Steve Damron via Flickr

Hence, for the Hertz, Dollar, and Thrifty brands to move higher, it will need to escape this range before it can sustain a rally.

Hertz Stock Beat Quarterly, Yearly Estimates

Hertz stock opened trading 7% ahead of yesterday’s close following its earnings beat before falling back. For the fourth quarter, the Estero, Florida-based firm reported a loss of 55 cents per share. This showed an unexpected improvement as the company had lost 77 cents per share in the same quarter last year. Analysts had expected a loss of 90 cents per share.

Revenues of $2.29 billion also blew away estimates and rose by 9.6% from the $2.09 billion in revenue in the fourth quarter of 2017. Analysts had expected $2.15 billion in revenue.

For 2018, the company reported revenues of $9.5 billion, beating expectations by $150 million. Earnings also came in ahead of estimates. HTZ lost 17 cents per share, 35 cents per share ahead of the 52-cent per share loss analysts had expected. In 2017, the company lost $1.59 per share and reported revenues of $8.8 billion.

HTZ Stock Still Affected by a Multi-Year Slump

Hertz stock has suffered since it peaked at over $125 per share in late 2014. The rise of rideshare services such as Uber and Lyft have reduced overall demand for rentals. Weak rental pricing and depreciation costs associated with its fleet also contributed to losses. As a result, HTZ stock still trades more than 80% below its 2014 high.

While the massive swoon eventually ended, HTZ has traded in a range for the last two years. Hertz has risen substantially from the $13.05 low it saw in late December. However, the post-earnings spike still leaves it short of the 52-week high HTZ saw last spring.

It Is On the Road to Recovery … Almost

Some degree of optimism has returned to the sector. Avis (NASDAQ:CAR) received an upgrade from Goldman Sachs earlier in the month. Goldman declined to upgrade HTZ at that time on the belief that Hertz stock would miss estimates. Not only did Hertz stock beat estimates, analysts now believe it will return to profitability in 2019.

Thanks to this profit recovery, Wall Street predicts 200% profit growth for 2019. It also forecasts that profits will see an average growth rate of 85.7% per year over the next five years. With those increases in store, I do not see the current forward price-to-earnings (P/E) ratio of 37.1.

Still, the range-bound nature of the stock concerns me. Today’s surge takes the Hertz stock price closer to the top of the range. For this reason, I do not think buyers should get in without knowing that HTZ has broken out of this range. If I were to buy, I would want to wait to see the stock maintain a price above the 2017 high of $27.27 per share.

Concluding Thoughts on Hertz Stock

After years of stagnation, Hertz stock may have finally positioned itself for sustained growth. The noticeable beat on earnings for both the fourth quarter and 2018 sent HTZ stock shooting higher in after-hours trading and at the morning open. Though losses remain, analysts predict it will again move to profitability in 2019.

The stock suffered for years amid the rise of ridesharing and the weak pricing in the rental car market. Now, the price of Hertz stock accounts for those factors. Today, it appears HTZ has figured out how to turn a profit in an environment where many have turned to ridesharing.

However, before we can declare recovery, investors must remember that Hertz stock remains range-bound. It has not exceeded $30 per share since 2016 and has rarely traded above $25 per share in that time. If it can return to multi-year highs, I see little else that can stop Hertz stock.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.

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Mattel's Analyst Day Spooks the Bulls: 4 Key Takeaways

Mattel (NASDAQ:MAT) held its annual Toy Fair analyst day on Feb. 15, and investors clearly weren't impressed. The toy company's stock, which rallied after its fourth-quarter earnings a week earlier, gave up a large portion of its post-earnings gains. Let's examine the four key issues that spooked the bulls and attracted the bears.

1. Flat sales growth

Mattel's sales fell 8% (7% on a constant currency basis) in fiscal 2018, due to the liquidation of Toys R Us, sluggish sales in China, and weak demand for Fisher-Price, Thomas & Friends, and American Girl products.

Image source: Getty Images.

Analysts previously forecast Mattel's revenue to rise about 2% this year. But during the Toy Fair presentation, CFO Joe Euteneuer announced that Mattel would post flat constant currency sales growth in 2019 instead. He also noted that currency headwinds would have a "low single-digit negative impact" on Mattel's gross sales -- so its reported growth will be negative.

Euteneuer also noted that Barbie and Hot Wheels, its two core growth engines last quarter, would post continued growth but not to the extent of the gains in 2018. The outlook for Barbie was particularly disappointing, since the bulls expected the brand's sales to accelerate with the launch of new 60th anniversary products this year.

Mattel expects Fisher-Price sales to stabilize by the end of the year, but Thomas & Friends and American Girl are both expected to continue their declines.

2. Historically weak margins

The bulls cheered last quarter when Mattel's gross margin expanded 540 basis points annually to 46.6% last quarter, marking its first fourth-quarter gross margin expansion since 2013. That expansion boosted Mattel's full-year gross margin to 39.8% -- marking a 250 basis point improvement from 2017.

Euteneuer anticipates Mattel's gross margin to expand again to the low 40s in 2019. That forecast wasn't bad, but it would still remain well below its historical gross margins:

Metric 2013 2014 2015 2016 2017 2018

Gross margin	63.6%	49.8%	49.2%	46.8%	37.3%	39.8%

Data source: Mattel Toy Fair presentation.

Investors were probably expecting a more meaningful margin expansion, since rival Hasbro's (NASDAQ:HAS) average gross margin remained in the low 50s over the past 12 months.

3. Lower-than-expected adjusted EBITDA

Mattel expects its sluggish sales growth and slow gross margin expansion to throttle its adjusted EBITDA growth. Analysts originally predicted Mattel's adjusted EBITDA to surge 179% this year, but its new forecast calls for just 77%-102% growth.

For the year, Mattel sees its adjusted operating income to be "slightly positive," compared to operating losses of $207 million and $115 million in 2018, respectively.

That outlook seems solid, but it indicates that Mattel's return to profitability following two full-year losses could come in weaker than expected. This means that Mattel's forward P/E of 31 -- which is based on earlier analyst forecasts -- will rise significantly after analysts update their estimates. Hasbro, by comparison, trades at just 17 times forward earnings.

4. Questionable media ambitions

Mattel highlighted four films during its presentation: Hot Wheels and Barbie movies from AT&T's Warner Bros., a Masters of the Universe movie from Sony, and an American Girl film from MGM. It also unveiled a slate of 22 new licensed TV shows.

Image source: Getty Images.

These films and TV shows don't pose major financial risks to Mattel, since it's merely licensing out its brands and offering creative input to studios. However, Mattel is throttling its SG&A spending as it expands those media efforts, which indicates that it wants to supplant traditional ads with TV shows and movies. This strategy mirrors Hasbro's approach with Transformers and G.I. Joe.

That effort might pay off for certain brands, like Barbie or Hot Wheels, but it might not revive interest in weaker brands like American Girl. This strategy, which only kicked into high gear last fall with the launch of the new Mattel Films division, could quickly collapse if its films bomb or its TV shows fail to reach enough viewers.

The bottom line

I recently predicted that Mattel would rally higher this year, based on the strength of its core brands, its expanding margins, rising earnings, and valuation. Its Toy Fair presentation threw some cold water on my thesis, but I think Mattel's overall fundamentals are still improving. I think investors should watch the stock for a few more quarters before making a long-term call.