Costco Outperforms Wal-Mart and Target
March 12, 2013
Even as Wal-Mart (click ticker for report: ) remains challenged, wholesaler Costco (click ticker for report: ) continues to report strong results. Revenue increased 8% year-over-year to $24.8 billion, falling slightly short of consensus estimates. Earnings jumped 37% year-over-year to $1.24 per share, roughly in-line with consensus expectations. Earnings included a one-time $0.14 per share benefit, net of which earnings still grew 22% year-over-year. Although revenue growth was only 8%, membership revenue jumped 15% year-over-year to $528 million. Membership revenues are driven by fantastic renewal rates, which in the US and Canada totaled 93.9% for business memberships and 88.8% for Gold Star memberships. With renewals so strong, the company has been able to easily pass on price increases, saying: “Continued
Yum!’s China Recovery Begins
March 12, 2013
After warning that same-store sales could decline as much as 25% during the first quarter in the wake of a poultry supplier scandal that shook consumer confidence in China, Yum! (click ticker for report: ) reported a same-store sales decline of 20% in its China division. Same-store sales at KFC dropped 24%, while Pizza Hut’s sales fell just 2%. We gathered that after McDonald’s (click ticker for report: ) results in China were “strong,” KFC might show some signs of stabilization, and that appears to be the case. More importantly, Yum!’s China division reported same-store sales growth in February. Although aggregate same-store sales grew just 2%, same-store sales at Pizza Hut jumped 13%, and same-store sales were flat at KFC
Gross Margins Recovering But Still Down At Urban Outfitters
March 12, 2013
Apparel retailer Urban Outfitters (click ticker for report: ) reported strong sales for its fiscal year 2013 fourth quarter. Revenue jumped 17% year-over-year to $856 million, exceeding consensus estimates. Earnings per share fell a penny shy of consensus estimates, but were more than twice as high as the year prior at $0.56 per share. A quick look at metrics might suggest that the business is improving—it is—but the performance is still lagging what Urban achieved in fiscal year 2011. Gross margins improved 650 basis points year-over-year to 36.6% due to lower markdowns and an increase of 18% in regular priced comp sales. Still, the 36.6% gross margin remains 310 basis points lower than the fourth quarter of fiscal year 2011,
Lance Armstrong Ruins Dick’s Sporting Goods’ Fourth Quarter
March 11, 2013
Monday morning, sporting goods retailer Dick’s Sporting Goods (click ticker for report: ) announced results for its fourth quarter. Revenue fell short of consensus expectations, growing 12% year-over-year to $1.8 billion, even though the firm had an extra selling week. Earnings per share fell well short of expectations, growing 17% year-over-year to $1.03 per share, even though the company had $0.03 added by the extra week of retailing. Dick’s Sporting Goods had been on a roll throughout most of 2011 and 2012, but same-store sales growth totaled just 1.2% year-over-year growth during the fourth quarter. Same-store sales at Dick’s Sporting Goods locations actually dipped 2.2%, though Golf Galaxy’s same-store sales increased 1.3%, and e-commerce sales soared 54%. Management identified hunting
House of Cards – A Sign That Netflix Can Become a Content Creator
March 11, 2013
Since activist investor Carl Icahn took a public stake, shares of Netflix (click ticker for report: ) have been on a tear. Shares really took off after the firm reported strong earnings for its fourth quarter and a bullish outlook for the first quarter of 2013. Shares have nearly doubled in 2013 alone, and it seems the market is getting even more bullish on Netflix. In our view, this has less to do with recent earnings trends, but rather, we believe the success of House of Cards has been a positive catalyst for the stock. The show has received fantastic reviews with an aggregate score of 9 on IMDB.com, and it has been mentioned in the same breaths as blockbuster
Pandora’s Market Share is Improving…But Profitability Continues to Flounder
March 11, 2013
Internet radio company Pandora (click ticker for report: ) announced the results for its fiscal year 2013 fourth quarter late last week. Results were mostly better than expected, with revenue surging 54% year-over-year to $125 million. Earnings were a penny higher than consensus forecasts, as the company lost just $0.04 per share, significantly better than the year prior. Pandora’s service continues to surge in popularity thanks to the convenience of mobile and continued market share gains. Hours listened jumped 53% year-over-year during the quarter to 4.05 billion hours, while hours listened for the year grew 70% year-over-year to 14.01 billion hours. Perhaps even more telling, the company’s share of the US radio market in February jumped to a whopping 8.48%,
Foot Locker Posts a Strong Fourth Quarter; Mr. Market Questions Guidance
March 10, 2013
Athletic footwear retailer Foot Locker (click ticker for report: ) announced fantastic fourth quarter results Friday morning, finishing off a tepid 2012. Revenue jumped 14% year-over-year to $1.7 billion thanks to an extra selling week, which was slightly better than consensus estimates. Earnings per share, adjusted for one-time impairment charges, jumped 33% year-over-year to $0.73 per share, slightly above consensus estimates. This did, however, include a $0.09 benefit from the extra week during the quarter. Same-store sales, one of our favorite metrics to measure the performance of retailers, were fantastic, growing 7.9% year-over-year. The winter quarter is notoriously strong as several of the companies partners, including Nike (click ticker for report: ) and adidas, release extremely popular basketball models; this winter
McDonald’s February Shows Stabilization
March 8, 2013
Dividend growth gem McDonald’s (click ticker for report: ) announced decent February results earlier this morning. On a reported basis, global same-store sales dropped 1.5% year-over-year, but when adjusted for a calendar shift, February same-store sales actually increased 1.7% globally. The US continued to be a weak spot, with same-store sales down 3.3% on a reported basis and flat on a comparable basis. This occurred during a month in which the company had several product introductions, but the firm also had to lap an incredibly difficult 11.1% same-store sales growth rate the firm posted in February 2012. We’re not incredibly disappointed in the US, and we will see comparisons get much easier toward the back half of the year. Europe
Firms Raising Their Dividends in the Week Ending March 8
March 8, 2013
The flurry of dividend increases continues. Below we provide a list of firms that upped their dividends for the week ending March 8. 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. Firms Raising Their Dividends This Week Allied World (AWH): now $0.50 per share share quarterly dividend, was $0.375. Agree Realty (ADC): now $0.41 per share quarterly dividend, was $0.40. Amtrust Financial (AFSI): now $0.14 per share quarterly dividend, was $0.10. Canadian Natural (CNQ): now C$0.125 per share quarterly dividend, was C$0.105. Colgate-Palmolive (CL): now $0.68 per share quarterly dividend, was $0.62. Covanta (CVA): now $0.165 per share quarterly dividend, was $0.15. Devon
Best Idea EDAC Technologies Caps off 2012 With Huge Earnings Growth
March 8, 2013
Best Ideas Newsletter holding EDAC Tech (click ticker for report: ) announced fantastic fourth quarter results. Revenue rose 25% year-over-year to $28.4 million during the period, leaving the company with full-year revenue of $106.5 million, 23% higher than a year ago. Earnings growth was also strong, growing 24% year-over-year during the fourth quarter to $0.26 per share. For the full year, earnings increased a whopping 53% to $1.06 per share. We saw a nice improvement in gross margins during the fourth quarter, rising 140 basis points year-over-year to 19.3%. The higher-margin processing business that EDAC acquired when it purchased EBTEC helped boost overall gross margins. On the other side of the cost equation, SG&A rose nearly 43% on an absolute
