Ackman Leaves the JC Penney Board
August 13, 2013
Tuesday morning, activist shareholder and hedge fund manager Bill Ackman resigned from the JC Penney (click ticker for report: ) board of directors. In a press release issued by the company, Ackman noted that during his entire board tenure, he’s always done what is best for the company, and he believes the best move at the moment is for him to step away from the board. Image Source: Valuentum, Company Filings Based on the stock’s initial reaction, we’re not sure if the market knows how to digest Ackman’s departure. On one hand, CEO Mike Ullman and Chairman Thomas Engibous no longer have to battle with Ackman over saving their jobs, but rather they can focus on engineering what continues to
China Still Plagues Yum! Brands
August 13, 2013
In an 8-K filed Monday afternoon, fast food giant Yum! Brands (click ticker for report: ) announced terrible July results in its Chinese division. Same-store sales declined 13% compared to the prior year, with same-store sales down 16% year-over-year at KFC, partially offset by 3% same-store sales growth at Pizza Hut. This implies that sales declines accelerated through the course of July, reversing the improving trend management mentioned on the second quarter conference call. Same-store sales declines had moderated in June to 10%, and it appears the firm’s sales in China could be decelerating even more dramatically (heading into August). Image Source: Valuentum, Company Filings As we can see in the above chart, same-store sales declines in the first half of 2013
Blackberry: Strategic Alternatives Signal Failure
August 12, 2013
After the launch of its new phone and operating system came and went without much fanfare, smartphone maker Blackberry (click ticker for report: ) announced that it is exploring strategic alternatives for the company. Although most tend to associate strategic alternatives with selling the company, Blackberry is also open to partnerships and joint-ventures. Let’s start with the obvious inference out of this news: Blackberry 10 didn’t save the company. If this wasn’t clear enough when Blackberry reported weak results for its fiscal year 2014 first quarter, we think the situation is obvious now. Consumers, particularly of the high-end smartphone variety, simply do not want Blackberry products. The app world is far inferior to competitors Apple (click ticker for report: )
Priceline Approaches $1,000
August 12, 2013
Online travel broker Priceline (click ticker for report: ) reported stellar second quarter results Thursday afternoon. Revenue surged 27% year-over-year to $1.7 billion, slightly above consensus estimates. Non-GAAP earnings per share jumped 24% year-over-year to $9.70, far ahead of consensus expectations. Free cash flow year-to-date totaled $740 million, an impressive 25% of total revenue. Our Fair Value Estimates Are Forward-Looking After finishing its acquisition of Kayak in May, Priceline posted gross bookings (total amount spent on travel/rental cars/etc.) of $10.1 billion, 38% higher than the same period a year ago. International bookings drove the lion’s share of the growth, surging 44% year-over-year to $8.6 billion. Image Source: PCLN 2Q 2013 With such robust growth, we think a few trends are
Monster Beverage Takes Market Share
August 11, 2013
Health concerns and broader category demand headwinds couldn’t stop Monster Beverage (click ticker for report: ) from posting decent second quarter growth. Net sales increased 6.5% year-over-year to $631 million, slightly below consensus estimates, but still a solid number in our view. Earnings per share increased 4.6% year-over-year to $0.62, again falling slightly short of consensus estimates, but by no means terrible given some of the legal issues surrounding the company. Demand for Monster products isn’t experiencing the same robust growth as is it did years ago, but we are seeing the company outperform many of its peers. According to the data that management from Nielsen on the conference call, Monster’s comparable sales jumped 16.4% year-over-year during July at convenience
Distribution Coverage Deteriorates at Linn Energy
August 9, 2013
Highly controversial oil producer Linn Energy (click ticker for report: ) announced mediocre second quarter results Thursday morning. Distributable cash flow (DCF) per unit declined 7% year-over-year to $0.65, even though net income rose 24% year-over-year to $1.47 per unit. Image Source: LINE 2Q 2013 Slides Among the most important metrics to watch at Linn Energy is its distribution coverage ratio. Not only is the shareholder base of Linn Energy highly interested in distributions, but the health of the firm is dependent on being able to generate cash flows to pay out distributions. If a firm’s cash flow is deteriorating, not only can the distribution be at risk, but the business itself could come under pressure. For its second quarter,
Dividend Increases for the Week Ending August 9 Included Leggett & Platt and Mondelez
August 9, 2013
Below we provide a list of firms that upped their dividends for the week ending August 9. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here (or use our ‘Symbol’ search box in our website header). Firms Raising Their Dividends This Week Anadarko Petroleum (APC): now $0.18 per share quarterly dividend, was $0.09. Badger Meter (BMI): now $0.18 per share quarterly dividend, was $0.17. Bank Mutual Corp (BKMU): now $0.03 per share quarterly dividend, was $0.02. Cogent Communications (CCOI): now C$0.14 per share quarterly dividend, was $0.13. Gamco Investors (GBL): now $0.06 per share quarterly dividend, was $0.05. Hampden Bancorp (HBNK): now $0.06 per share quarterly
Energy Transfer Partners’ Distribution Growth Could Return
August 9, 2013
Wednesday afternoon, Dividend Growth Newsletter portfolio holding Energy Transfer Partners (click ticker for report: ) announced solid second quarter results marked by nice growth in distributable cash flow (DCF). Because of its many acquisitions, revenue was significantly higher than the prior-year period at $11.6 billion, in-line with consensus expectations. Earnings per share were also significantly higher year-over-year at $0.53, which is also far better than consensus estimates. Ultimately, for a yield instrument like Energy Transfer Partners, cash flow metrics are far more important than headline numbers. After the Linn Energy (click ticker for report: ) distributable cash flow debacle, ETP has improved its distributable cash flow reporting, providing investors with DCF attributable to the partners of ETP. This excludes DCF
Tesla: The Electric Engine That Could
August 8, 2013
Electric carmaker Tesla (click ticker for report: ) zoomed past the Street’s expectations when it reported second quarter results Wednesday afternoon. Revenue exceeded consensus estimates, growing 14-fold year-over-year to $405 million. Adjusted earnings per share swung to a profit of $0.20, well above the loss expected from consensus expectations. The firm wasn’t free cash flow positive like it was in the previous quarter, but CEO Elon Musk noted that the negative operating cash flow was mainly a timing issue as several ZEV credits sat in receivables. Demand Is Robust We had no doubt about the strong demand for Tesla’s vehicles–the surprise during the quarter was to see the superb execution from the EV maker. Tesla was producing 400 vehicles per
