Boeing Keeps Raking in Aircraft Orders
May 24, 2013
Boeing (click ticker for report: ) updated its ‘Orders and Deliveries‘ page on its website this week, and we were pleased to see a nice uptick in orders. We keep a close eye on commercial aircraft orders as the pace remains a key driver of sentiment within the aerospace industry, even though Boeing and Airbus are effectively “sold out” for at least the next 12 months. According to the disclosure, the plane-maker has booked roughly 428 net orders through May 21 of this year, which puts the aerospace giant well on its way to achieving a book-to-bill north of 1 (signaling backlog expansion). Though our positive thesis on the aerospace supply chain–AAR (AIR), Astronics (ATRO), Rockwell Collins (COL), HEICO (HEI), Hexcel Corp (HXL), Precision Castparts (PCP), Spirit AeroSystems (SPR),
More Retail Weaknessâ€â€This Time It’s Target
May 23, 2013
US retail powerhouse Target (click ticker for report: ) reported a mixed bag for its first quarter Wednesday morning, highlighting what seemed to be a difficult start to the calendar year for several retailers. Sales fell short of consensus estimates, growing just 1% year-over-year to $16.7 billion. Earnings per share, adjusted for several charges, were 5% lower than a year ago at $1.05, which was still slightly better than consensus expectations. Thanks to the sale of receivables, free cash flow totaled $2.3 billion. Consistent with what we saw from competitor Wal-Mart’s (click ticker for report: ) results, the core business in the US was relatively soft, with same-store sales falling 0.6% during the period. Overall sales were still 0.5% higher
Red Robin: Gradual Improvements in Core Operations
May 23, 2013
We like Red Robin’s business, but even after a solid first quarter, we aren’t interested in shares.
Microsoft Wants to Be the Apple of Your Living Room
May 22, 2013
Earlier today, Dividend Growth Newsletter holding Microsoft (click ticker for report: ) finally unveiled its next generation console, the Xbox One. It wasn’t hard to tell that something big was around the corner for the next generation console, as the company had made some new hires including former CBS executive Nancy Tellem to head the firm’s content development initiative. Let’s take a look at the revelations and how it might impact the company. Steven Speilberg produces a Halo TV show As we mentioned earlier, Xbox’s move into exclusive content was not at all a surprise. In fact, we assumed we might hear about an exclusive TV show or movie even earlier. However, we were a little stunned to see legendary
Best Buy’s Comps Are Soft; Risk/Reward Not Compelling
May 22, 2013
After shares nearly flirted with $10 in December, electronics retailer Best Buy (click ticker for report: ) has seen its stock more than double thanks to moderating sales declines and a store revamping strategy that displayed great promise. However, Best Buy’s first quarter fell short of consensus expectations as the Street got a bit ahead of itself in gauging the velocity of the turnaround. Revenue declined 10% year-over-year to $9.3 billion, which was well below consensus estimates. Adjusted earnings per share fell 58% compared to the prior year to $0.32 per share, which was a touch better than consensus expectations. Free cash flow swung to negative $179 million for the quarter, reflecting the firm’s inability to earn net income more
Dividend Growth Gem Medtronic Is a Cash Cow
May 22, 2013
Dividend Growth Newsletter holding Medtronic (click ticker for report: ) reported wonderful fourth quarter results. Revenue grew 4% on a reported basis (5% ex-currency) to $4.5 billion, easily exceeding consensus estimates. Earnings per share, excluding the impact of restructuring, were 11% higher than a year ago at $1.10 per share, largely exceeding consensus expectations. Free cash flow for the full-year was terrific, registering $4.4 billion. Spinal therapies have been a source of weakness in prior quarters, but revenue came in flat for the quarter, helping the firm’s regenerative therapies group increase sales 4% year-over-year for the quarter to $2.1 billion. Though the sales decline in spinal therapies moderated, the company posted 11% growth in its surgical technologies business, which continues
Housing Recovery Powers Home Depot
May 21, 2013
Home improvement giant Home Depot (click ticker for report: ) kicked off fiscal year 2013 with a strong start. Revenue rose 7% year-over-year to $19.1 billion, soaring past consensus expectations. Earnings also easily exceeded consensus estimates, growing 22% year-over-year to $0.83 per share. Free cash flow improved 7% compared to the prior year period to $2.4 billion. In spite of facing a difficult weather comparison, same-store sales were 4.3% higher on a comparable basis, with US same-store sales up 4.8%. The company received some benefit from ongoing demand from rebuilding efforts resulting from Hurricane Sandy, but we believe the broad based strength underscores the resiliency of the housing market in the US. Also helping to boost results was a shift
Campbell Soup’s Solid Results Continue
May 21, 2013
Packaged food and beverage company Campbell Soup (click ticker for report: ) reported solid third quarter results Monday morning. Revenue, boosted by the acquisition of Bolthouse Farms, grew 15% year-over-year to $2.1 billion, modestly exceeding consensus estimates. Earnings per share were also a touch better than consensus expectations, increasing 11% year-over-year to $0.62 on an adjusted basis. Free cash flow year-to-date totaled $659 million, which is roughly equal to the tally during the same period a year ago. For a company in a mostly mature business, Campbell posted solid results in its US Simple Meals segment, where sales rose 11% year-over-year to $627 million. Of all things to drive the growth, it was soup, which posted a 14% jump in
National Oilwell Varco Doubles Its Dividend
May 21, 2013
Drilling component and equipment provider National Oilwell Varco (click ticker for report: ) announced that it will double its quarterly dividend to $0.26 per share. Shares yield 1.5% at current levels. We’re not surprised by the raise, as the firm registered excellent dividend growth potential and dividend safety on our scale (click here to learn more about our dividend methodology). We expect robust dividend expansion from National Oilwell Varco going forward.
Yahoo! Buys Tumblr: Instagram or Flickr?
May 20, 2013
Former web titan Yahoo! (click ticker for report: ) made headlines this morning after announcing it acquired social media/blog site Tumblr for $1.1 billion, mostly in cash. Even though Tumblr generates little revenue, Facebook (click ticker for report: ) did acquire Instagram for $1 billion (in cash/stock at the time) when the company didn’t post any revenue. Given the amount of venture capital readily flowing into Internet media companies, a valuation that seems ridiculous in any other industry has simply become the going rate in tech (right or wrong). Ultimately, if the present value of the future free cash flows generated by the acquired asset is greater than the price paid for the asset, we’d view an acquisition as value-creative.
