Philip Morris’ Smoke-Free Portfolio Continues to Deliver
February 10, 2025
Image: Philip Morris’ shares have done quite well of late. By Brian Nelson, CFA Philip Morris (PM) reported better than expected fourth quarter results February 6 that revealed a beat on both the top and bottom lines. In the fourth quarter, net revenue grew 9.2% (9% organically), while gross profit advanced 15.1%. Philip Morris’ smoke-free business accounted for 40% of its total net revenues and approximately 42% of gross profit, up 0.7 percentage points and 0.9 percentage points, respectively, versus the same quarter last year. There is now an estimated 38.6 million adult users of Philip Morris’ smoke-free products, which is up 5.3 million versus December 2023. Management had the following to say about performance in the press release: 2024
Amazon Expects Elevated Capital Spending in 2025
February 10, 2025
Image: Amazon’s stock has done quite well in recent months. By Brian Nelson, CFA Amazon (AMZN) reported better than expected fourth quarter results February 6 that showed a beat on both the top and bottom lines. Net sales advanced 10% in the quarter on a year-over-year basis and 11% excluding foreign exchange. North America sales increased 10%, International segment sales increased 8% (9% excluding changes in foreign exchange rates), while AWS sales increased 19%, to $28.8 billion, slightly lower than expectations. Operating income surged higher to $21.2 billion in the fourth quarter, up from $13.2 billion in the same period last year. Net income increased to $20 billion in the fourth quarter, equating to $1.86 per diluted share, up from
Chipotle’s Long-term Growth Prospects Are Impressive
February 6, 2025
Image Source: Valuentum By Brian Nelson, CFA On February 4, Chipotle (CMG) reported fourth quarter results that were in-line with the consensus forecasts for the top and bottom lines. Total revenue in the fourth quarter increased 13.1%, while comparable restaurant sales advanced 5.4% consisting of higher transactions of 4% and a 1.4% increase in average check. The company’s operating margin increased ~20 basis points, to 14.6%. Its restaurant level operating margin fell to 24.8% from 25.4% in last year’s quarter, however, due to higher food, beverage and packaging costs as well as higher labor expenses. Adjusted diluted earnings per share nonetheless advanced 19%, to $0.25. During the quarter, Chipotle opened 119 company-owned restaurants with 95 of the locations including a
Alphabet’s Cash Flow Soars in Fourth Quarter
February 5, 2025
Image Source: TradingView By Brian Nelson, CFA On February 4, Alphabet (GOOG) (GOOGL) reported mixed fourth quarter results with revenue missing the consensus forecast, but GAAP earnings per share outpacing what Wall Street was looking for. Total revenue in the fourth quarter advanced 12%, while operating income leapt 30.7% (thanks to a five percentage point improvement in its operating margin) and net income jumped 28.3%. Diluted earnings per share rose 31.1%, to $2.15 per share, in the quarter. We continue to like Alphabet as a top weighting in the Best Ideas Newsletter portfolio. Management had the following to say about the quarter: Q4 was a strong quarter driven by our leadership in AI and momentum across the business. We are
Phillips 66 Outlines Strategic Priorities
February 4, 2025
Image Source: TradingView By Brian Nelson, CFA Phillips 66 (PSX) reported fourth quarter results on January 31 with non-GAAP earnings per share coming in ahead of the consensus forecast. The company reported fourth-quarter earnings of $8 million, or $0.01 per share, and an adjusted loss of $61 million, or $0.15 per share. Earnings in the quarter were impacted by $230 million pre-tax of accelerated depreciation related to its Los Angeles Refinery. In the fourth quarter, it returned $1.1 billion to shareholders through dividends and share repurchases. Phillips 66 registered record NGL fractionation and LPG export volumes in Midstream and set a record clean product yield in Refining. Management had the following to say about the quarter and outlook: During the
Tesla Remains a Net Cash Rich, Free Cash Flow Generating Powerhouse
February 4, 2025
Image: Tesla continues to attack costs with average cost of goods sold per vehicle reaching an all-time low in the fourth quarter of 2024. Image Source: Tesla By Brian Nelson, CFA Tesla (TSLA) reported disappointing fourth quarter results on January 29 with revenue and non-GAAP earnings per share coming in below the consensus forecasts. Total revenue advanced just 2% in the quarter, and total gross profit fell 6%, while income from operations dropped 23% on a year-over-year basis. Tesla’s profitability faced pressure as the firm navigated reduced S3XY vehicle average selling prices. Adjusted EBITDA, however, increased 25%, and non-GAAP earnings per share came in at $0.73, up 3% on a year-over-year basis. Tesla had the following to say about its
Altria Expects Modest Earnings Growth in 2025, Shares Yield 7.8%
February 2, 2025
Image Source: Altria By Brian Nelson, CFA Altria (MO) reported better than expected fourth quarter results on January 30, with both revenue and non-GAAP earnings per share exceeding the consensus forecasts. Revenue, net of excise taxes advanced 1.6%, while adjusted diluted earnings per share came in at $1.29, up more than 9% on a year-over-year basis. NJOY consumables reported shipment volume advanced 15.3% in the quarter, while NJOY devices reported shipment volume increased 22.2%. In its Smokeable Products segment, net revenues fell 0.2% due to lower shipment volume, partially offset by higher pricing, while adjusted segment operating companies income (OCI) increased 5.5%. In its Oral Tobacco Products segment, net revenue increased 2.7% driven by higher pricing, while segment adjusted OCI
ASML Holding’s Bookings Soar in Fourth Quarter
February 1, 2025
Image Source: TradingView By Brian Nelson, CFA On January 29, ASML Holding (ASML) reported better than expected fourth quarter results with revenue and GAAP earnings per share coming in ahead of the consensus forecasts. Fourth quarter net sales totaled €9.3 billion on a gross margin of 51.7%, with net income coming in at €2.7 billion. Management had previously guided net sales to be between €8.8 billion and €9.2 billion with a gross margin between 49% and 50% in the quarter. Net sales advanced 24.1% on a sequential basis, and net bookings were €7.1 billion, up considerably on a sequential basis when compared to the €2.6 billion it registered during the third quarter of 2024. Management had the following to say
IBM’s Generative AI Book of Business Doing Well
February 1, 2025
Image Source: TradingView By Brian Nelson, CFA IBM (IBM) reported mixed fourth quarter results on January 29, with the company’s revenue coming in line with expectations and the company beating the bottom-line forecast. Revenue advanced 1% (up 2% in constant currency) as strength in software revenue (+10.4%) offset weakness in consulting (-2%) and infrastructure (-7.6%) sales. Gross profit margin increased 40 basis points, to 59.5%, in the quarter. Management was upbeat in the press release: We closed the year with double-digit revenue growth in Software for the quarter, led by further acceleration in Red Hat. Clients globally continue to turn to IBM to transform with AI. Our generative AI book of business now stands at more than $5 billion inception-to-date,
Apple Reports Best Quarter Ever Despite Declining iPhone, China Sales
January 31, 2025
Image Source: TradingView By Brian Nelson, CFA On January 30, Apple (AAPL) reported better than expected fiscal first quarter results, with both revenue and GAAP earnings per share exceeding the consensus forecasts. Quarterly revenue was up 4% year-over-year, while quarterly diluted earnings per share advanced 10% year-over-year. Fiscal first quarter services revenue reached a record high, increasing 13.9% from the same period a year ago. Gross margin came in at 46.9%, up from 45.9% in last year’s quarter, while its operating margin came in at 34.5%, up from 33.8% in the year-ago period. Management was upbeat in the press release: …Apple is reporting our best quarter ever, with revenue of $124.3 billion, up 4 percent from a year ago. We
