JP Morgan and Wells Fargo Post Solid First Quarters
April 15, 2013
Although not surprising, two of the United States’ largest banks, JP Morgan (click ticker for report: ) and Wells Fargo (click ticker for report: ) kicked off the first quarter with terrific earnings. JP Morgan exceeded earnings expectations, generating a record $1.59 per share in earnings on revenue of $25.8 billion. Wells Fargo’s results weren’t too shabby either, boasting record earnings per share of $0.93 on revenue of $21.3 billion. JP Morgan Much of JP Morgan’s quarter was driven by strong performance from the mortgage business, which earned a return on equity of 14% (image source: JPM Q1 2013 presentation). Originations grew 37% year-over-year and 3% sequentially to $52.7 billion. Net interest margins on mortgages continue to compress, and CFO
Firms Raising Their Dividends In The Week Ending April 12
April 13, 2013
The week ending April 12 was a light week in terms of dividend raises, but we did see some significant increases. Firms Raising Their Dividends This Week: Bank of New York Mellon (BK): now $0.15 per share quarterly dividend, was $0.13. First Merchants Corp (FRME): now $0.05 per share quarterly dividend, was $0.03. IDEX Corporation (IEX): now $0.23 per share quarterly dividend, was $0.20. Lakeland Financial (LKFN): now $0.19 per share quarterly dividend, was $0.17 Qualcomm (QCOM): now $0.35 per share quarterly dividend, was $0.25. Select Income REIT (SIR): now $0.44 per share quarterly dividend, was $0.42. Stage Stores (SSI) now $0.125 per share quarterly dividend, was $0.10. Weyerhaeuser Company (WY): now $0.20 per share quarterly dividend, was $0.17.
Why First Solar’s Analyst Day Did Not Sway Our View
April 11, 2013
For more than 18 months, Valuentum has been bearish on the future of the solar industry, with First Solar (click ticker for report: ) being a name we’ve carefully avoided. Shares went parabolic Tuesday afternoon, jumping over 40% at one point. CEO Jim Hughes also delivered some positive commentary about First Solar’s cost-per-watt pathway (below 40 cents in the near-future) and “off-grid” electricity sales potential. During its analyst day, the firm also provided much more bullish financial guidance than the Street had forecasted. First Solar anticipates full-year revenue of $3.8 billion to $4 billion to drive earnings per share of $4.00-$4.50. Operating cash flow is expected to be $800 million to $1 billion, but that matters little, in our view,
Buffalo Wild Wings Over $90
April 11, 2013
Shares of Best Ideas Newsletter holding Buffalo Wild Wings (click ticker for report: ) are trading back over $90 again today. We recently increased our fair value estimate to $92 per share, and we anticipate additional upside as the market becomes privy to the firm’s wonderful growth trajectory.
eBay Breaking Above $57
April 10, 2013
Shares of Best Ideas Newsletter holding eBay (click ticker for report: ) have recovered from a March pullback and are now hitting fresh 52-week highs. eBay looks poised to break above its all-time high of $58.
Used Cars Sales Remain Spectacular at CarMax
April 10, 2013
Used and wholesale car dealership CarMax (click ticker for report: ) reported wonderful results for its fiscal year 2013 fourth quarter. Revenue surged 14% year-over-year to $2.8 billion, easily exceeding consensus estimates. Earnings per share rose 12% year-over-year to $0.46, in-line with consensus expectations. With all of the hoopla surrounding new car purchases, CarMax continues to dominate the used car market. Comparable store unit sales increased 6% during the quarter, while total used unit sales jumped 12%. Average sales prices increased 4% year-over-year to $19,287, benefitting from increased market share in the 0-6 year old car market as well as constrained used vehicle supply. The stunning resiliency of used car prices indicates the robust level of demand for car upgrades
Intel and Microsoft Up 3% Today
April 9, 2013
Shares of Intel (click ticker for report: ) and Microsoft (click ticker for report: ) are both up over 3% today. We continue to believe both names have upside.
Rio Tinto Up Over 6%
April 9, 2013
Shares of Rio Tinto (click ticker for report: ) are spiking on the back of a strong first quarter from Alcoa (click ticker for report: ). We continue to hold the name in the portfolio of our Best Ideas Newsletter.
Good Bye Ron Johnson: JC Penney In Flux
April 9, 2013
After the market closed Monday afternoon, JC Penney (click ticker for report: ) announced much maligned CEO Ron Johnson is out, and the reins will be turned over to former CEO Mike Ullman. While we saw little chance of Johnson’s turnaround consummating in a retailing powerhouse at this point, we are shocked by the timing. If there was any chance that the JC Penney turnaround was going to work, Johnson had to be given some additional time to complete the changes. The abrupt decision indicates that the board clearly believes the Johnson’s strategy would continue to fail, and the return of Ullman suggests that JC Penney may return to its previous market position. Not everything Johnson did was necessarily bad—the
Shares of Baidu Are Just Too Cheap
April 9, 2013
Valuations for internet technology companies are literally all over the place. On one end of the spectrum sits LinkedIn (click ticker for report: ) and Amazon (click ticker for report: )—fast growing firms with sky-high PE multiples and tremendous credit given to the long-run. On the other end, we have Apple (click ticker for report: ) generating fantastic amounts of free cash flow, and trading with a single-digits forward PE. Chinese search giant Baidu (click ticker for report: ) falls closer to Apple, and we think shares look incredibly cheap at current levels. Let’s take a closer look at the search giant. Valuation Baidu’s valuation on a discounted cash flow basis looks extremely reasonable. We estimate shares to be worth
