Dividend Growth Holding Phillips 66’s Earnings Boom
May 3, 2013
Earlier this week, Dividend Growth Newsletter holding Phillips 66 (click ticker for report: ) reported strong first quarter results on the back of fantastic refining margins. Adjusted earnings per share surged 83% year-over-year to $2.19, handily exceeding consensus estimates. The firm generated over $1.4 billion in free cash flow which it returned to shareholders in part via the repurchase of 6.4 million shares for $382 million and $194 million in dividends. Refining profitability drove a high percentage of the earnings growth at Phillips 66, as refining profits doubled to $909 million. The firm realized a profit margin of $13.94 per barrel. Advantaged crude, which the firm purchases at a discount to relative global benchmarks, jumped 800 basis points year-over-year to
Intel’s New Management Team Looks Fit for the Challenge
May 2, 2013
Earlier this morning, Best Ideas and Dividend Growth Newsletters holding Intel (click ticker for report: ) announced that it has ended its search to find a replacement for current President and CEO Paul Otellini. Stepping into the CEO role will be current COO Brian Krzanich, while Renee James will take the helm as President. Krzanich appears to be a typical Intel hire, in our view. Every Intel CEO has come from within after spending several years at the firm. Krzanich joined the company in 1982, and has since held various roles throughout the development and business side of the firm. His expertise lies in manufacturing, which has been a crown jewel of Intel’s competitive advantage over the past several years.
Visa’s Second Quarter Was Fantastic
May 2, 2013
Credit and debit payment network provider Visa (click ticker for report: ) announced fantastic second-quarter results Wednesday afternoon. Revenue for the quarter jumped 15% year-over-year to $3 billion, easily exceeding consensus estimates. Earnings per share, adjusted for a one-time tax benefit during the second quarter of the prior year, increased 20% year-over-year to $1.92. Due to litigation expenses, free cash flow does not look great year-to-date, but management is confident the company can generate $6 billion in free cash flow for the full-year. Considerable focus on the call addressed the company’s new exclusive card branding with JP Morgan’s (click ticker for report: ) credit unit—not surprising given CEO Charlie Scharf’s previous position as Chase’s retail financial services chief. The deal
The May Edition of Our Dividend Growth Newsletter!
May 1, 2013
All-Time Market Highs Complicate The Yield Hunt – By Brian Nelson, CFA Our Dividend Growth Portfolio (see page 5) continues to post strong results, with several names hitting fresh all-time highs over the past few weeks. With our cash balance relatively high, we anticipate to capitalize on any material pullback by adding to existing positions or opening new ones. We’ve had our sights on a few names on our watchlist (page 12) that we believe could add some outperformance and diversification to our portfolio. Although market fundamentals remain relatively strong, the increase in equity prices has had the unfortunate effect of making attractive yields scarcer. Strong earnings performance during the first quarter has pushed down the yields of some of
FAQ: Where Can I Find the Valuentum Dividend Cushion Score?
April 30, 2013
Valuentum Catches Pitney Bowes’ Dividend Cut
April 30, 2013
After we had warned about the firm’s dividend safety for several months, Valuentum subscribers were spared from Pitney Bowes’ (click ticker for report: ) dividend cut. In order to save cash, the firm slashed its quarterly dividend 50% to 18.75 cents per share from 37.5 cents per share. Shares no longer have a double-digit yield, and shares are falling drastically today.
Gross Margins Weigh on Buffalo Wild Wings
April 30, 2013
Best Ideas Newsletter holding Buffalo Wild Wings (click ticker for report: ) reported a mixed bag for its first quarter as high wing costs weighed on profitability. Revenue managed to grow 22% year-over-year to $304 million, exceeding consensus expectations. Earnings per share were disappointing, falling 11% year-over-year to $0.87. Free cash flow turned negative after it was in the positive $20 million range in the same period a year ago. In spite of industry-wide negative sales trends, Buffalo Wild Wings was able to muster positive same-store sales growth of 2.2% at franchised owned restaurants 1.4% at company owned locations. This occurred after the firm was impacted by one less week of NFL play and after the company kicked off the
Amazon’s Story Doesn’t Change
April 29, 2013
Online mega-retailer Amazon (click ticker for report: ) reported strong first quarter results. Revenue was slightly worse than consensus estimates anticipated, growing 22% year-over-year to $16 billion. Conversely, earnings per share exceeded consensus expectations, but still fell 35% year-over-year to $0.18. Amazon reports a metric of trailing twelve months (TTM) free cash flow, which declined 85% sequentially to $177 million as the firm invests heavily in fulfillment centers and distribution. Amazon’s earnings guidance was relatively weak, with the firm anticipating it will post operating income of negative $340 million to positive $10 million in the second quarter—meaning the company isn’t likely to come anywhere near the consensus expectation of $0.22 per share. Revenue is anticipated to fall between $14.9 billion
Don’t Get Too Floored By Lumber Liquidators’ Performance
April 29, 2013
Over the past year, one of the more amazing performers has been hardwood floor supplier Lumber Liquidators (click ticker for report: ). Shares have steadily climbed a whopping 185% over the past year and are up 55% year-to-date. However, we do not believe such robust performance is likely to continue. Fundamentally, little is wrong with the company’s recent performance. In fact, Lumber Liquidators is benefitting from a strong rebound in the US housing market. Flooring is one of the more obvious features of a house, making it an obvious area to improve from almost all aspects of ownership, whether it be selling, buying, or renting. With hardwood floors still in vogue, the firm is capitalizing on this demand, experiencing a
Exxon Mobil Struggles For Growth
April 26, 2013
Supermajor oil producer Exxon Mobil (click ticker for report: ) reported lackluster revenue of $108.8 billion, which fell a bit shy of consensus estimates. Earnings per share increased 6% year-over-year to $2.12, exceeding consensus expectations. However, earnings were only modestly higher, growing 1% year-over-year to $9.5 billion. Unfortunately for Exxon, operating cash flow declined 30% compared to the same period a year ago, to $13.6 billion. This came at the same time the firm invested $11.8 billion in capital expenditures and exploration, thus free cash flow declined precipitously. Though Exxon is among the largest companies in the world, its earnings stream contains several moving parts and remains reliant on global oil prices. Exxon’s upstream segment struggled with lower volumes and
