GE Vernova Is a Great Clean Energy Idea
September 23, 2024
Image: GE Vernova has performed well since it was spun out of GE. By Brian Nelson, CFA Clean energy giant GE Vernova (GEV) recently reported second quarter financial results with total revenue advancing 1% (up 2% organically) thanks to strong performance in services, which grew 7% (up 9% on an organic basis). Total orders came in at $11.8 billion in the quarter, exceeding revenue by 1.4x. Adjusted EBITDA came in at $0.5 billion, with an adjusted EBITDA margin of 6.4%, which was up 320 basis points on an organic basis. Management’s commentary was upbeat in the press release: GE Vernova delivered another strong quarter with EBITDA margin expansion across all segments and substantial cash improvement. Global electrification and decarbonization trends
Incentives Pressuring Lennar’s Homebuilding Gross Margin
September 20, 2024
Image: Lennar’s shares have done quite well the past several years. By Brian Nelson, CFA Lennar (LEN) reported better than expected fiscal third quarter 2024 results on September 19 with revenue and GAAP earnings per share coming in ahead of the Street’s forecast. Total revenue advanced 7.9% in the quarter, while net earnings per diluted share increased 10%, to $4.26, up from $3.87 per diluted share in the same period a year ago. Deliveries increased 16% in the quarter, new orders increased 5%, while its backlog stood at 16,944 homes with a dollar value of $7.7 billion at the end of the period. Lennar’s homebuilding gross margin was 22.5% in the quarter, lower than expectations, however. Management commentary was upbeat
FedEx Reduces Fiscal 2025 Outlook
September 20, 2024
Image: FedEx’s shares have bounced back from the October 2022 lows, but its fiscal 2025 outlook disappointed the Street. By Brian Nelson, CFA FedEx (FDX) reported disappointing fiscal first quarter 2025 results on September 19 with both revenue and non-GAAP earnings per share coming in below the consensus forecast. Adjusted revenue fell to $21.6 billion from $21.7 billion in the year-ago period, while adjusted operating income fell to $1.21 billion from $1.59 billion in the same period last year. Our fair value estimate stands at $284 per share. FedEx’s adjusted operating margin contracted 170 basis points in the quarter on a year-over-year basis, while adjusted net income came in at $0.89 billion, down from $1.16 billion in last year’s quarter.
Brain Teaser – Reflexive versus Reflective
September 19, 2024
Dear members: — Jason Zweig of the Wall Street Journal, wrote in his pioneering text, Your Money and Your Brain, a few fun examples of how sometimes the psychological process of anchoring and adjustment can trip us up. — In one notable example, Zweig wrote about how two psychologists Amos Tversky and Daniel Kahneman had asked volunteers to spin a wheel of fortune numbered from 0 to 100. The contestants didn’t know that the wheel was rigged to produce either a 10 or a 65 for the experiment. — After spinning the wheel, the contestants were then asked whether the percentage of total United Nations membership made up of countries in Africa was higher or lower than the number that came up.
Korn Ferry’s Margin Performance Impressive in Fiscal First Quarter
September 16, 2024
Image: Korn Ferry’s shares have bounced nicely since its bottom in late 2023. By Brian Nelson, CFA Korn Ferry (KFY) recently reported better than expected fiscal first quarter 2025 results with both revenue and non-GAAP earnings per share coming higher than the consensus estimate. Fee revenue fell 3%, but Executive Search fee revenue grew 2%, while fee revenue for Consulting and Digital was flat. Revenue in Professional Search and Recruitment Process Outsourcing (“RPO”) faced pressure. Adjusted diluted earnings per share for its first quarter of fiscal 2025 was $1.18. Management was upbeat in its commentary in the press release: I am pleased with our first quarter results, as we generated $675 million in fee revenue. Earnings and profitability increased year
Adobe’s Fiscal Fourth Quarter Outlook Comes Up Short of Expectations
September 13, 2024
Image: Adobe’s shares traded down on a weaker than expected fiscal fourth quarter outlook. By Brian Nelson, CFA Adobe (ADBE) reported better than expected fiscal third quarter 2024 results on September 12, but the company’s outlook left something to be desired. In the quarter, Adobe grew revenue 11%, while non-GAAP earnings per share came in at $4.65, both above the consensus forecast. Non-GAAP operating income was $2.52 billion, while non-GAAP net income reached $2.08 billion. Operating cash flow was $2.02 billion, up from $1.87 billion in the year-ago quarter, while it exited the period with remaining performance obligations (“RPO”) of $18.14 billion. During the quarter, Adobe bought back 5.2 million shares. Free cash flow in the quarter was $1.96 billion.
Kroger Raises Identical Sales Growth Outlook
September 12, 2024
Image: Kroger’s shares have been choppy during the past couple years. By Brian Nelson, CFA On September 12, Kroger (KR) reported mixed second quarter results with revenue coming up short of the consensus forecast, but non-GAAP earnings per share exceeding what the Street was looking for. Total sales advanced 0.2% in the quarter helped by identical sales without fuel increasing 1.2%, which lapped a 1% increase in identical sales growth during the same quarter a year ago. Adjusted earnings per share in the quarter came in at $0.93, down modestly from the year-ago period. Commentary in the press release was upbeat: Kroger achieved solid results in the second quarter demonstrating the strength and resiliency of our model. We are growing
Medtronic Raises Fiscal 2025 Guidance
September 11, 2024
By Brian Nelson, CFA Medical device giant Medtronic (MDT) recently reported fiscal first quarter fiscal 2025 results that came in better than expectations. Adjusted revenue was $8 billion in the quarter led by 5.3% organic growth. Adjusted diluted earnings per share was $1.23, up 2.5% and 7.5% in constant currency. In the quarter, its Cardiovascular segment experienced 6.9% organic growth, its Neuroscience segment experienced 5.3% organic growth, its Diabetes segment experienced 12.6% organic growth, while its Medical Surgical segment experienced 1% organic growth. Year-to-date, operating cash flow was $1 billion, while free cash flow was $0.5 billion. ESG Matters Image Source: Medtronic Medtronic has a number of long-term sustainability objectives that are worth mentioning. It expects to reduce greenhouse gas
Oracle Expects Increased Revenue Growth Throughout Fiscal 2025
September 10, 2024
Image: Oracle’s shares have performed quite well during the past couple years. By Brian Nelson, CFA Oracle (ORCL) reported better than expected fiscal first quarter results on September 9, with revenue and non-GAAP earnings per share exceeding the consensus forecast. Total revenue expanded 7% in the quarter (up 8% in constant currency), while non-GAAP earnings per share advanced 17%, to $1.39 (up 18% in constant currency). Cloud services revenue advanced 21% (up 22% in constant currency), while cloud license and on-premise license revenues increased 7% (up 8% in constant currency). Non-GAAP operating income increased 13%, to $5.7 billion, up 14% in constant currency, while its non-GAAP operating margin came in at 43%. Non-GAAP net income increased 18%, to $4 billion,
Broadcom Misses with Guidance for Its Fiscal Fourth Quarter
September 8, 2024
Image: Broadcom’s shares fell after the company issued fiscal fourth quarter guidance that came up short with respect to the consensus estimate. By Brian Nelson, CFA On September 5, Broadcom Inc. (AVGO) reported better than expected fiscal third quarter results with revenue and non-GAAP earnings per share exceeding the consensus forecast. Revenue was up 47% from the same quarter a year ago, while non-GAAP diluted earnings per share was $1.24 for the period. Adjusted EBITDA came in at 63% of revenue, while traditional free cash flow, as measured by cash flow from operations less all capital spending, of $4.89 billion amounted to 37% of revenue. Management was upbeat with its comments in the press release: Broadcom’s third quarter results reflect
