Berkshire Hathaway’s Headline Looks Great But Operating Earnings Down
November 6, 2012
Legendary investor Warren Buffett’s insurance and investment giant Berkshire Hathaway (BRK.A) reported a strong headline number Friday afternoon. Revenue jumped 22% year-over-year to $41 billion, greater than the consensus estimate. Reported earnings surged 72% year-over-year to $3.9 billion, which also exceeded consensus estimates. Buffett’s favorite metric, book value, is up 11.9% year-to-date to $111,718 per Class A share. Operating earnings weren’t quite as strong, dragged down 9% year-over-year to $5.5 billion when excluding non-cash items. Insurance underwriting gains significantly swayed profitability, as Berkshire Reinsurance swung to a $100 million loss from a $1.375 billion profit during the same quarter last year. Geico’s underwriting income nearly tripled, but its $435 million profit was not nearly enough to overcome the weakness from
Annaly Capital Management’s Third Quarter Results: Don’t Say We Didn’t Warn You!
November 6, 2012
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Emerson Beats Estimates But the Firm Issues Cautious Guidance
November 6, 2012
Dividend growth gem Emerson Electric (click ticker for report: ) reported better than expected earnings for its fiscal fourth quarter Tuesday morning. Adjusted earnings per share jumped 7% year-over-year to $1.11 per share, which was much higher than consensus estimates. Revenue growth remained subdued, ticking up just 2% year-over-year to $6.7 billion. We don’t expect to make a change to our fair value estimate. The firm’s process management segment continues to be a standout component, with sales growing 18% year-over-year on a reported basis (21% ex-currency) to $2.4 billion. Every geographic region performed well, with the US growing 16%, Asia up 24%, and Europe up 11%. Improvements in the supply chain, as well as cost control initiatives, helped operating margins
Revenue Growth at LinkedIn Remains Strong But Shares Are Expensive
November 6, 2012
Business networking leader LinkedIn (click ticker for report: ) reported relatively strong third quarter results last Thursday afternoon. Revenue growth continued its robust path, surging 81% year-over-year to a consensus beating $252 million. Excluding several items, earnings accelerated 267% year-over-year to $0.22 per share—more than double the consensus estimate. Unlike most firms’ non-GAAP items, which exclude “one-time” expenses, LinkedIn’s earnings exclude very real costs like stock-based compensation and amortization of intangible asset acquisitions—perhaps non-cash, but still material, in our view. Regardless, the company’s third quarter results reflected relatively strong performance. Talent (Hiring) Solutions revenue increased 95% year-over-year to $138.4 million. The segment continues to steal market share away the old line of online hiring solutions, including Monster Worldwide (click ticker
Valuentum’s DCF Valuation Model Template for Individual Investors
November 6, 2012
Have you ever wanted to model a company just like a stock analyst? As part of Valuentum’s mission to serve the individual investor, we’ve developed a discounted cash-flow model that you can use to estimate the value of any operating firm that you wish. The model, built by Brian Nelson, who has developed valuation models and has trained hundreds of financial analysts for such large organizations as Morningstar, offers individual investors the opportunity to truly peer into the analytics of this process and learn the in’s and out’s of valuation. What’s more, we’ve made it easy for you. In just 30 minutes of your time, you can build a full income statement, balance sheet, and cash flow statement, including both historical data and your very own forecasts. Plus, you can see
AIG Beats Estimates; Shares Remain Attractive
November 5, 2012
Thursday afternoon, insurance giant AIG (click ticker for report: ) reported it swung to a profit for its third quarter. The company earned after-tax operating income of $1.00 per share, compared to a loss of $1.58 per share during the third quarter of 2011 and consensus estimates of $0.86 per share. Equally impressive, book value increased 10% sequentially to $61.49 per share. However, the US Treasury’s 15.9% stake in the company continues to weigh on the firm’s stock price performance, as the timing of share sales remains uncertain. Regardless, AIG’s operating performance is far more important to the company’s long-term return outlook than US Treasury sales, in our view. Performance, though relatively strong based on headlines numbers, was a mixed
Downstream Profits Alleviate E&P Weakness at Exxon Mobil
November 5, 2012
Diversified oil giant Exxon Mobil (click ticker for report: ) reported weak third quarter results Thursday morning. The firm saw revenue decline 7% year-over-year to $115.7 billion, which was slightly better than consensus expectations. Earnings per share fell just 2% year-over-year to $2.09, which also exceeded consensus estimates. Exxon’s third quarter reflected the divergence between E&P (exploration & production) versus downstream refining. However, unlike ConocoPhillips (click ticker for report: ), which spun-off Phillips 66 (click ticker for report: ), Exxon owns both businesses, thus allowing this quarter’s weakness in E&P to be offset by downstream operations. E&P (also known as upstream) earnings fell 29% year-over-year to $5.9 billion due to waning oil and gas production, which fell 7.5%. Chemical earnings
Priceline Posts Fantastic Third-Quarter Results
November 2, 2012
Online travel service and hotel reservations firm Priceline (click ticker for report: ) reported fantastic third-quarter results Thursday that showed solid gross travel bookings expansion and better-than-expected performance in Europe. Our fair value estimate remains unchanged. The company’s revenue advanced 17.4% from the year-ago period thanks to solid performance in its international operations, where sales grew 42% on a local currency basis. Third-quarter travel bookings increased 25.2% and 33.8% on a local currency basis from the same period a year ago. Image Source: Priceline Priceline’s operating income jumped 22.6% and GAAP earnings per share increased over 27% during the period. On a non-GAAP basis, earnings per share increased roughly 25% from last year’s quarter, to $12.40, better than consensus expectations of
Chevron Reports Difficult Third-Quarter Results But We Like Its Cash Flow Profile
November 2, 2012
Chevron (click ticker for report: ) reported lower revenue and earnings in its third quarter Friday. Sales and other operating revenue fell roughly $5 billion, while net income dropped about $2.5 billion (or about 33%) from the same period a year ago. Both its upstream and downstream operations suffered as a result of difficult year-over-year comparisons, scheduled maintenance downtime, and negative foreign currency movements. We don’t expect to make a material change to our fair value estimate, however. The firm’s global net oil-equivalent production was 2.52 million barrels per day in the quarter, down from 2.6 million barrels per day in the year-ago period. Planned maintenance downtime, expected field declines, and shut-ins of the Frade Field in Brazil and in
Starbucks Posts Solid Fiscal Fourth-Quarter Results on Strong Comparable Store Sales Expansion
November 2, 2012
On Thursday, Starbucks (click ticker for report: ) reported solid fiscal fourth-quarter results that showed strong comparable store sales growth and impressive profitability gains. The firm also announced a 24% increase in its dividend, but its projected 1.6% dividend yield is still too minute to consider the company for addition to the portfolio of our Dividend Growth Newsletter. We don’t expect any change to our fair value estimate to be material. The coffee giant’s revenue advanced 11% thanks to global comparable sales growth of 6%, comprising of 5 percentage points of higher traffic and the balance coming from an increase in the average ticket. The firm’s Americas growth was strong on moderately better pricing trends compared to consolidated performance, revealing the resiliency
