Procter & Gamble’s Organic Growth Fails to Impress
August 12, 2024
By Brian Nelson, CFA Procter & Gamble (PG) recently reported fiscal fourth quarter results that showed a miss on the top line, but non-GAAP earnings per share coming in better than expectations. The company reported flat sales performance during the June quarter as modest volume and higher pricing were offset by two percentage points of unfavorable foreign exchange impacts. Organic sales growth was 2% in the quarter. Core net earnings per share also increased 2%, to $1.40. Currency-neutral core EPS increased 6% versus the prior-year quarter. Management had a lot to say in the press release: Fiscal year 2024 was another year of strong results for P&G. The team met or exceeded our going-in plans for organic sales growth, core
Starbucks’ Mixed Results Speak to Cautious Consumer Environment
August 12, 2024
By Brian Nelson, CFA Starbucks (SBUX) recently reported mixed fiscal third quarter results with non-GAAP earnings per share coming in line with the consensus estimate, while revenue came up short. Global comparable store sales declined 3% in the 13-week period ended June 30, 2024, as comparable transactions declined 5%, while average ticket advanced 2%. Non-GAAP earnings per share of $0.93 fell 7% over the prior-year quarter (down 6% on a constant currency basis). Though Starbucks’ fiscal third quarter was mixed, we’re sticking with our $85 per-share fair value estimate for shares. Starbucks experienced weakness across both its North America stores and its International stores. North America comparable store sales fell 2% as a 3% increase in average ticket failed to
Eli Lilly Puts Up Strong Second Quarter Results, Raises Outlook
August 9, 2024
Image: Shares of Eli Lilly have been strong the past few years. By Brian Nelson, CFA Eli Lilly (LLY) reported better than expected second quarter results on August 8 with both revenue and non-GAAP earnings per share coming in better than the consensus forecast. Revenue jumped 36% in the quarter on a year-over-year basis thanks to strength in Mounjaro, Zepbound, and Verzenio. Volume increased 27%, while the company experienced a 10% increase in realized prices, offset by a 1% headwind with respect to foreign exchange. Non-GAAP net income and earnings per share both increased 86% in what was a blockbuster report from the pharma giant. Management had the following to say about the strong performance: Mounjaro, Zepbound and Verzenio led
Disney Achieves Profitability Across Combined Streaming Businesses
August 7, 2024
Image: Disney’s shares are under pressure despite marked improvement in earnings. By Brian Nelson, CFA On August 7, The Walt Disney Company (DIS) reported better than expected fiscal third quarter results with both revenue and non-GAAP earnings per share exceeding the consensus forecasts. Revenue advanced to $23.2 billion from $22.3 billion in the same quarter last year, while adjusted diluted earnings per share increased to $1.39 from $1.03 in the prior-year quarter. Revenue increased 4% in its Entertainment division, 5% in its Sports segment and 2% in its Experiences division. Segment operating income surged in its Entertainment division, while segment operating income faced pressure at Sports and Experiences. Management had the following to say about the quarter: Our performance in
Amazon’s Second Quarter Results Were Mixed But Free Cash Flow Improved Significantly
August 7, 2024
Image: Amazon traded aggressively lower following its second-quarter results. By Brian Nelson, CFA On August 1, Amazon (AMZN) reported mixed second quarter results for the period ended June 30, 2024, with revenue coming up short but GAAP earnings per share beating consensus. Adjusting for foreign currency, net sales advanced 11% led by 19% growth in AWS segment sales, which came in higher than expectations of 17.6% growth. Operating income advanced to $14.7 billion in the second quarter, up from $7.7 billion in the same period a year ago. AWS segment operating income increased more than 70% on a year-over-year basis. Net income increased to $13.5 billion in the second quarter compared to $6.7 billion in the second quarter of 2023.
What to Do During This Market Selloff
August 4, 2024
By Brian Nelson, CFA In short, nothing. The U.S. stock market (SPY) was chugging along nicely until what was interpreted as a very favorable Consumer Price Index (CPI) print on July 11 that sent a rotation out of large cap growth and big cap tech into the beaten down areas of smaller cap stocks, prompting a broader market sell-off. The reasoning goes that, with inflation largely under control, smaller companies will benefit more from future rate cuts via reduced interest expense relative to larger companies. Though this is true, to varying degrees, the magnitude of the rotation was somewhat surprising, as rate cuts should benefit large cap growth (SCHG) and big cap tech (XLK), too, but we’ve seen this rotation
Apple Beats Expectations, Remains a Free Cash Flow Cow
August 2, 2024
Image: Apple’s shares have done quite well since the beginning of 2022. By Brian Nelson, CFA Apple (AAPL) reported calendar second quarter (fiscal third quarter) results on August 1 that beat the consensus estimate for both revenue and GAAP earnings per share. The iPhone maker put up June quarter records for both revenue and earnings per share while its Services revenue hit a new all-time high. Quarterly revenue was up 5% year-over-year, while quarterly earnings per diluted share came in at $1.40, up 11% on a year-over-year basis. Apple’s quarterly commentary was positive: During the quarter, we were excited to announce incredible updates to our software platforms at our Worldwide Developers Conference, including Apple Intelligence, a breakthrough personal intelligence system
Microsoft’s Cash Flow Generation Robust, Azure Expected to Accelerate
July 31, 2024
Image Source: Microsoft By Brian Nelson, CFA On July 30, Microsoft reported better-than-expected calendar second quarter (fiscal fourth quarter) results with revenue and GAAP earnings per share beating the consensus forecasts. Revenue jumped 15% (16% in constant currency), while operating income advanced at a similar year-over-year pace. Net income of $22 billion increased 10% (11% in constant currency) on a year-over-year basis. Diluted earnings per share also increased 10% (11% in constant currency). Management was upbeat in the press release: Our strong performance this fiscal year speaks both to our innovation and to the trust customers continue to place in Microsoft. As a platform company, we are focused on meeting the mission-critical needs of our customers across our at-scale platforms
