Demand for the Model S Looks Solid But Will Tesla Live Up to the Hype?
February 21, 2013
Electric vehicle maker Tesla (click ticker for report: ) announced fourth quarter results Wednesday afternoon that showed progress toward achieving breakeven. Revenue surged nearly 700% year-over-year to $306 million, exceeding consensus estimates. Tesla’s non-GAAP loss of $0.65 per share was worse than expected, and that loss balloons to $0.79 per share on a GAAP basis. The firm also burned through $101 million of cash, which was better than the prior quarter by about $60 million (but worse than the year-ago quarter by $20 million). Though it isn’t abnormal for a fast-growing company like Tesla to have a cash burn, we’d like to see the company at least breakeven with respect to operating cash flow, which it believes it can do
Cheesecake Factory and BJ’s Restaurants Buck the Earlier Trend
February 21, 2013
We’ve received fairly consistent guidance from the casual dining space recently, with chains generally anticipating 1.5% to 3% same-store sales growth, countered with higher input costs. This is by no means incredibly bullish for the US economy, but we are happy to see firms looking for growth (even though the broader signals point to mediocre expansion). We aren’t fans of the space in particular, but if we see results accelerate (or slow) materially, it could be a sign of broader strength (or weakness). Earlier this week we examined the solid results and guidance from casual diners Texas Roadhouse (click ticker for report: ) and Red Robin (click ticker for report: ). The results from the Cheesecake Factory (click ticker for
Clash of the Titans: Team Icahn Wins This Round
February 20, 2013
Since sparring on CNBC last month, hedge-fund legends Carl Icahn and Bill Ackman have stolen headlines, and the battle has moved on to Herbalife (HLF). With claims of a Ponzi scheme on one side of the battle countered by claims on the other side of selling the American dream and enabling entrepreneurs, the battle between Ackman and Icahn has resulted in a wild ride in shares of Herbalife. Still, with all the noise, we’re sticking to the fundamentals. On Tuesday, Herbalife reported that fourth quarter revenue rose 20% year-over-year to $1.1 billion, significantly higher than consensus estimates. Earnings jumped 22% year-over-year to $1.05 per share, easily exceeding consensus expectations. For the full year, the company grew sales 18% to $4.1
Is a Casual Dining Recovery Underway?
February 20, 2013
On Tuesday, casual dining firms Texas Roadhouse (click ticker for report: ) and Red Robin (click ticker for report: ) announced fourth-quarter results that were better than consensus expectations. This begs the question: could a prolonged slump in casual dining be nearing an end? Let’s take a look. Texas Roadhouse For the fourth quarter, Texas Roadhouse posted revenue growth of 12% year-over-year to $310 million, well above consensus estimates. The firm earned $0.19 per share, a 12% year-over-year increase and a penny better than consensus estimates. The chain also posted same-store sales growth of 4.4% at company restaurants and 4.5% at franchise owned restaurants. The firm was able to leverage this sales growth into operating-margin expansion of 70+ basis points
Dividend Growth Portfolio Holding Medtronic Posts Solid Third Quarter
February 19, 2013
Dividend Growth Newsletter holding Medtronic (click ticker for report: ) announced solid third quarter results Tuesday morning. Revenue grew 3% (4% excluding currency) year-over-year to $4 billion, roughly in line with consensus estimates. Earnings exceeded consensus expectations by a few cents, growing 11% year-over-year to $0.93 per share on an adjusted basis. International revenue growth outpaced that of the US, growing 5% (7% excluding currency) to $1.9 billion, driven by 20% growth in emerging markets (which now accounts for 12% of revenue). We’re huge fans of this long-term trend, and we believe that growing wealth in emerging markets will provide a powerful tailwind to the core business for years to come. US revenue was roughly flat, but we (once again)
Michael Kors’ Third Quarter Reveals Strength
February 19, 2013
On February 12, fast-growing retailer Michael Kors (KORS) announced spectacular fiscal year 2013 third quarter results. Revenue surged 70% year-over-year to $637 million, exceeding consensus expectations. Earnings were also fantastic, jumping 220% year-over-year to $0.64 per share, considerably above consensus estimates. Strength at the aspirational luxury brand hasn’t slowed yet, with same-store sales jumping 41% year-over-year, even as the company added 66 net new stores—a stark departure from competitor Coach (click ticker for report: ), which has struggled to compete with Michael Kors. Gross margins, while still well below those at Coach, jumped 80 basis points to 60.4%, reflecting the firm’s increase in its store base (as well as fewer discounts and a favorable shift in product mix). Though we
GM’s Fourth Quarter Narrowly Misses the Mark
February 16, 2013
Automaker General Motors (click ticker for report: ) announced solid fourth quarter results Thursday morning. Revenue rose 3% year-over-year to $39.3 billion, slightly exceeding consensus estimates. Earnings jumped 23% year-over-year to $0.48 (adjusted) per share, slightly below consensus expectations (Image Source: GM). Unlike competitor Ford (click ticker for report: ), GM continues to struggle with respect to profitability in North America. Sales grew 5% year-over-year to $24.2 billion, but operating margins declined 70 basis points to 5.8%, resulting in lower quarterly EBIT on a year-over-year basis. We’re not surprised, and we’ve speculated that the company might be putting too much inventory into dealer channels. GM reconciled the results (shown below), but it’s important to note that in the US, GM
2012 Was a Tough Year for Rio Tinto But the Future Looks Brighter
February 16, 2013
Best Ideas Newsletter holding Rio Tinto (click ticker for report: ) announced full year results for 2012 that were down substantially compared to 2011. Revenue tumbled 16% year-over-year to $50.9 billion, while earnings for the year were negative $1.61 per share, down substantially from earnings of $3.01 per share a year ago. However, most other operating metrics were much more positive, including the company’s decision to boost its dividend 15% to $1.67 per share—an annual yield of 2.9% at current levels. Valuentum subscribers know that Rio’s dividend is in good shape, even though operating results remained challenged (Image Source: RIO). Rio Tinto only swung to a loss due to an asset impairment charge, but underlying earnings and operating cash flow
Valuentum’s February Edition of Its Best Ideas Newsletter! New Heights Reached!
February 16, 2013
New Heights Reached Yet Again, by Brian Nelson, CFA We simply couldn’t wait to share all the good news with you in our weekly recap email (click here) today, so our intro article has been shortened. Our Best Ideas portfolio (see page 8) continues to reach new heights, but we think it is prudent to point out the size of our cash balance (nearly 30% of the portfolio). The Dow Jones is now roughly 200 points from its all-time high, and we’re expecting a near-term market pullback in the coming weeks. The threats of automatic government spending cuts (sequester) set to begin March 1 (and Congressional bickering), the ongoing convergence of S&P 500 firms’ current forward P/E ratio (13.4) to
Dividend Growth Holding PPL Boosts Dividend
February 15, 2013
After Exelon (click ticker for report: ) slashed its dividend (as we predicted), utility investors may be looking for a more stable dividend growth idea, and that is Dividend Growth Newsletter portfolio holding PPL (click ticker for report: ), in our view. PPL posted strong fourth quarter results Thursday morning, with revenue (net of a one-time hedging gain) jumping 6% year-over-year to $3.2 billion, exceeding consensus expectations. Earnings were a few cents better than consensus estimates, falling 31% year-over-year to $0.49 per share on an adjusted basis. Of course, this figure includes the spectacular gain from the prior year’s hedging activities, as well as a higher share count from the firm’s acquisition of the Midlands UK business in 2011. Most
