Facebook’s Mobile Ads Remain Strong
January 31, 2013
Social networking giant Facebook (click ticker for report: ) announced solid fourth-quarter earnings Thursday afternoon. Revenue surged 40% year-over-year to $1.6 billion, easily exceeding consensus expectations. Earnings were also better than anticipated, jumping 13% year-over-year to $0.17 per share. Advertising revenues grew 41% year-over-year to $1.3 billion, driven mostly by mobile. Payments revenue increased 8% sequentially, but was flat year-over-year when adjusted for accounting changes. We believe this segment will be less material to the firm’s overall revenue mix going forward, so we aren’t too worried about this segment’s performance. The real story of the quarter was mobile (shown below). Mobile monthly average users (MAUs) surged 57% year over year and 13% sequentially—and the daily active users (DAU) for mobile
Refining Stocks Are Shaping Up to Have a Strong 2013
January 31, 2013
A number of refiners recently reported strong results in their respective fourth quarters. We had been watching the group’s tremendous performance via Phillips 66 (PSX), a holding in our Dividend Growth portfolio, but let’s dig into the firm’s peers to highlight a few industry trends. Valero On Tuesday, Valero (click ticker for report: ) announced a “blowout” fourth quarter, with earnings growing to $1.82 from $0.08 per share, trouncing the consensus estimate. Revenue was roughly flat, so what drove such substantial earnings growth? CEO Bill Klesse said it best: “Also in the fourth quarter of 2012, we replaced all imported light foreign crude oils with cheaper domestic crude oils at our Gulf Coast and Memphis refineries. Since we expect U.S.
Boeing’s Fourth Quarter Supports Our Thesis on Aerospace
January 30, 2013
On Wednesday, aerospace giant Boeing (click ticker for report: ) reported strong fourth-quarter results. We’re holding steady with our fair value estimate, despite the constant flow of negative news about the 787 Dreamliner. Boeing’s total revenue advanced 14% in the period, though modest operating margin contraction led to a slightly lower pace of core operating earnings growth, which came in at 9% (on a non-GAAP basis). Operating cash flow surged 42% as the company continues to better handle inventories related to the 787 Dreamliner. However, the firm’s revolutionary plane currently remains grounded due to a series of battery problems, and its decision not to slow production could begin to pressure cash flow again to a degree. Still, we remain confident
Dividend Growth Portfolio Holding Phillips 66 Caps Off 2012 with an Outstanding Fourth Quarter
January 30, 2013
Dividend Growth Newsletter portfolio holding Phillips 66 (click ticker for report: ) announced another fantastic quarter Wednesday morning. The company has been one of the biggest winners in the portfolio of our Dividend Growth Newsletter. We expect to update our dividend report on the firm soon. Adjusted earnings per share jumped over 240% year-over-year to $2.06, smashing consensus estimates. Earnings for the year jumped 50% to $8.46, highlighting the considerable operating leverage inherent to the refinery business. Shares are now up over 90% since being spun off from ConocoPhillips (click ticker for report: ) in 2012. Cash flow generation was superb, as the firm raked in $1.3 billion in operating cash flow. $1 billion was used to reduce debt, leaving the
Amazon Reports Strong Sales Growth
January 30, 2013
Online retail kingpin Amazon (click ticker for report: ) reported strong sales growth during its fourth quarter. Revenue jumped 22% year-over-year to $21.3 billion, slightly below expectations, but still strong. Earnings, as is the norm for Amazon, missed the mark, falling nearly 50% year-over-year to $0.21 per share. Although classic value investors and growth investors alike remain baffled by Amazon’s current price-to-earnings multiple (the firm posted a net loss for 2012), we do not think multiple analysis really tells the story at Amazon. Nor does near-term free cash flow, which was 81% lower on 7% higher operating cash flow during the period. Amazon is investing for the future, and given its current sales pace, we think the market is pricing in a dramatic rise in
Pfizer and Eli Lilly Report Strong Performance; Drug Pipelines Continue to Advance
January 30, 2013
Pfizer (click ticker for report: ) and Eli Lilly (click ticker for report: ) reported their respective fourth-quarter results Tuesday, and we were pleased with the performance. Pfizer’s $15.1 billion in revenue (down 7%) and $0.47 in adjusted earnings per share (down 4%) topped estimates, while Eli Lilly’s $5.96 billion in revenue (down 1%) and $0.85 in earnings per share (down 2%) also surprised the Street to the upside. Both companies are dealing with patent expiration on blockbuster drugs—Pfizer’s cholesterol-fighter Lipitor and Lilly’s schizophrenia drug Zyprexa. Pfizer expects to stem the losses from Lipitor with new drugs such as Xeljanz for rheumatoid arthritis and Eliquis, an anti-clotting drug that helps prevent stroke and systemic embolism in patients with nonvalvular atrial
Ford Posts a Fantastic Fourth Quarter
January 29, 2013
Earlier this morning, Best Ideas Newsletter portfolio holding Ford (click ticker for report: ) reported fantastic fourth-quarter results that capped off one of the company’s strongest years in its long history. Revenue increased 5% year-over-year to $36.5 billion, easily exceeding consensus estimates. Pre-tax operating profit more than doubled to $1.2 billion, which was also better than anticipated. We see no reason to change our above-market fair value estimate, and we remain very bullish on the company (Image Source: F Earnings Presentation). Not surprisingly, North America (shown above) continued to be the standout segment, with revenue increasing nearly 13% year-over-year and the firm’s operating margin advancing 390 basis points higher. There is some concern about the company losing US market share
JC Penney Brings Back Discounting; Was the Fourth Quarter Horrible?
January 29, 2013
Last week, rumors swirled that JC Penney (click ticker for report: ) was pressuring its suppliers to place MSRPs (manufacturer’s suggested retail price) on its products so JCP could appear to be giving consumers a discount on a product (a sale without it actually being on-sale). Earlier today, that move was confirmed, and sales and MSRPs will be reintroduced at Penney’s stores around the country. Much-maligned CEO Ron Johnson noted that the strategy shift was an “evolution” rather than an admittance of failure. Yet, the idea of including MSRPs or comparable prices isn’t at all a unique idea—just look at any TJX (click ticker for report: ) store, Nordstrom Rack (click ticker for report: ), or Ross (click ticker for
Record Performance in 2012 at Caterpillar
January 29, 2013
Let’s dig into Caterpillar’s fourth-quarter results and economic outlook for 2013.
Marissa Mayer’s Yahoo! Revitalization Continues
January 29, 2013
Monday afternoon, former tech darling Yahoo! (click ticker for report: ) reported solid fourth-quarter results. Revenue jumped 2% year-over-year to $1.35 billion, and revenue ex-TAC (traffic acquisition costs) came in at $1.2 billion, a 4% year-over-year increase that was in line with consensus expectations. Operating earnings per share jumped 28% year-over-year to $0.32, easily exceeding consensus estimates. As wonderful as it is to see revenue grow, the real story at Yahoo! remains the turnaround that CEO Marissa Mayer has embarked upon. Given the incredibly competitive market for talent in the tech industry, Mayer has worked to transform the company into one of Silicon Valley’s best places to work. She noted in the conference call: To date, we introduced rigorous hiring
