Visa Continues to Expect Low Teens Earnings Per Share Growth for the Full-Year 2024
July 24, 2024
Image: Visa’s asset light business model throws off a lot of free cash flow, while the firm returns cash to shareholders via buybacks and dividends. By Brian Nelson, CFA On July 23, Visa (V) reported mixed fiscal third quarter results with the company missing expectations on the top line and the firm’s non-GAAP earnings per share coming in-line with the consensus forecast. We’re not reading too much into the company’s mixed fiscal third quarter results and remain fans of the company’s competitive positioning and asset light business model. During the quarter, net revenue advanced 10%, while GAAP net income increased 17% and GAAP earnings per share increased 20% on a year-over-year basis. On a non-GAAP basis net income increased 9%,
Alphabet’s Free Cash Flow Faces Pressure in Second Quarter
July 24, 2024
Image: Alphabet’s shares have performed well so far in 2024. By Brian Nelson, CFA Alphabet (GOOG) (GOOGL) reported solid second quarter results July 23 that showed a beat on both the top and bottom lines. Revenue increased 15% in constant currency on a year-over-year basis, while the company’s operating margin advanced approximately 3 percentage points. Operating income surged to $27.4 billion, up 25.5% on a year-over-year basis. Diluted earnings per share increased 31.3%, to $1.89. Management commentary in the press release was upbeat: Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud. We are innovating at every layer of the AI stack. Our longstanding infrastructure leadership and in-house research teams position us well as technology
Coca-Cola’s Organic Growth Surprises to the Upside
July 23, 2024
Image: Coca-Cola’s shares are trading near all-time highs. By Brian Nelson, CFA Coca-Cola (KO) reported solid second quarter results on July 23, with net revenues up 3% and organic non-GAAP revenues advancing an impressive and better-than-expected 15% thanks to a 9% increase in price/mix and 6% growth in concentrate sales. Reported operating income grew 10%, and comparable currency-neutral operating income jumped 18%. The company’s operating margin expanded to 21.3% versus 20.1% in the prior-year period. Its comparable operating margin (non-GAAP) was 32.8% versus 31.6% in the same period a year ago. Comparable non-GAAP earnings per share advanced 7%, to $0.84. During the quarter, organic growth was particularly strong in its Europe, Middle East, and Africa region as well as its
Lockheed Martin Issues Strong Second Quarter Results, Raises Outlook
July 23, 2024
Image: Lockheed Martin’s shares have recovered nicely since their October 2023 bottom. By Brian Nelson, CFA Lockheed Martin reported better-than-expected second quarter results on July 23 and raised its 2024 outlook for sales, segment operating profit and earnings per share. Net sales increased to $18.1 billion in the second quarter from $16.7 billion in the year-ago period, while business segment operating profit came in at $2.04 billion, up from $1.86 billion in last year’s quarter. Diluted earnings per share expanded to $6.85 from $6.63 in the second quarter of 2023. Management’s commentary in the quarterly press release was quite positive: …demand for our defense technology solutions remains robust, with a backlog of nearly $160 billion, greater than two times annual
Philip Morris Puts Up Excellent Second Quarter Results, Raises 2024 Guidance
July 23, 2024
Image: Philip Morris’ stock has done quite well over the past few months. By Brian Nelson, CFA On July 23, Philip Morris (PM) reported excellent second quarter results with both revenue and non-GAAP earnings per share coming in better than expectations. Net revenue advanced 5.6% on a reported basis and 9.6% organically. Adjusted operating income increased 3.5% on a reported basis or 12.5% excluding currency and acquisitions. Its adjusted operating income margin increased 1.1 percentage points excluding currency and acquisitions, while adjusted diluted earnings per share increased 10.6%, excluding currency. Management’s commentary was upbeat: The excellent momentum of our smoke-free business continued with an outstanding second-quarter and first-half performance. The powerful combination of excellent underlying performance and proactive measures across
Verizon’s First Half 2024 Operating Cash Flow Declines, Adjusted Earnings Fall
July 22, 2024
Image Source: Verizon By Brian Nelson, CFA On July 22, Verizon (VZ) reported mixed second-quarter results with revenue missing the consensus expectation but non-GAAP earnings per share coming in line. Total operating revenue was up 0.6% from the same quarter a year ago, but consolidated net income fell to $4.7 billion from $4.8 billion in last year’s quarter. Consolidated adjusted EBITDA was $12.3 billion, up from $12 billion in the second quarter of 2023. Earnings per share, excluding special items, was $1.15 in the quarter, worse than the $1.21 mark in the second quarter a year ago. On the wireless side of its business, total wireless service revenue increased 3.5% on a year-over-year basis, with retail postpaid phone net additions
Netflix Still Has a Long Runway of Growth Ahead of It
July 19, 2024
By Brian Nelson, CFA On July 18, Netflix (NFLX) reported strong second quarter results that showed revenue on a foreign exchange neutral basis increasing 22% thanks to a 16% increase in average paid memberships and a 5% increase in average revenue per member [ARM] on a foreign exchange neutral basis. Global revenue was modestly higher than the company’s beginning-of-quarter guidance thanks to strength in global streaming paid net additions. Netflix’s operating income surged in the quarter, up 42% from the same period a year ago, as its operating margin improved 5 percentage points to 27.2%, both “slightly above (its) guidance forecast due to higher-than-expected revenue.” Second quarter earnings per share came in at $4.88, up 48% on a year-over-year basis,
Crown Castle’s AFFO In Excess of Cash Dividends Paid
July 18, 2024
Image: Crown Castle’s shares look to be bottoming, and the firm’s AFFO is expected to remain well above cash dividends paid during 2024. By Brian Nelson, CFA On July 17, Crown Castle (CCI) reported mixed second quarter results in which adjusted funds from operations (AFFO) beat expectations, while revenue came in a bit light. The headline numbers weren’t great. Site rental revenues fell 9% in the second quarter of 2024, while net income dropped 45%. Adjusted EBITDA fell 15%, while AFFO dropped 21% on a per-share basis, to $1.62. On an organic basis, things looked a bit better. Organic contribution to site rental billings was $63 million, up 4.7% from the same period a year ago after excluding an unfavorable
Domino’s Suspends Long-term Global Net Store Growth Guidance
July 18, 2024
Image: Domino’s shares have done well since the beginning of 2023, but visibility into its long-term global net store growth has become murky given problems at one of its master franchisees. By Brian Nelson, CFA On July 18, Domino’s Pizza (DPZ) reported mixed second-quarter results that showed a slight miss on the top line, but a solid beat on the bottom line. Excluding foreign currency impacts, global retail sales increased 7.2% thanks to “higher supply chain, U.S. franchise advertising and U.S. franchise royalties and fees revenues,” while U.S. same store sales growth expanded 4.8% and international same store sales growth, excluding foreign currency, advanced 2.1%. Global net store growth was 175 in the quarter. The company’s U.S. company-owned gross margin
Taiwan Semiconductor Impresses in Second Quarter, Gives Strong Outlook
July 18, 2024
Image: Taiwan Semiconductor reported better-than-expected second quarter results. By Brian Nelson, CFA Taiwan Semiconductor (TSM) reported strong second quarter results on July 18. On a year-over-year basis, second-quarter revenue advanced more than 40%, while net income and diluted earnings per share increased more than 36%. Taiwan Semiconductor is experiencing strong momentum behind its operations as second-quarter revenue and net income showed a 13.6% and 9.9% sequential increase, respectively. Its revenue growth in the quarter was also better than guidance. The company’s gross margin, operating margin, and net profit margin were 53.2%, 42.5%, and 36.8% in the quarter, respectively. Its gross margin and operating margin came in ahead of guidance. During the second quarter, shipments of 3-nanometer accounted for 15% of
