Colgate-Palmolive Strong Pricing Expansion to Drive Base Business Earnings Expansion
April 1, 2024
Image Source: Colgate-Palmolive By Brian Nelson, CFA Colgate-Palmolive (CL) put together a solid quarter when it reported fourth-quarter results in late January. During its fourth quarter, net sales and organic growth both came in at 7% thanks to strong pricing expansion, with the company’s base business earnings per share up 13%, to $0.87. Impressively, both the company’s GAAP gross margin and base business gross margin advanced 400 basis points, to 59.6%. The firm continues to dominate the toothpaste and manual toothbrush markets, with a global market share of 41.1% and 31.5%, respectively, year-to-date. Management had a lot to say about the quarterly results and outlook: We are pleased to have finished the year with another quarter of strong top and
Mondelez Expects Organic Growth to Slow in 2024
April 1, 2024
Image Source: Mondelez By Brian Nelson, CFA Back in late January, Mondelez International (MDLZ) reported better than expected fourth-quarter results. Net revenue advanced 7.1% in the quarter thanks to strong organic net revenue growth of 9.8% offset in part by weaker volume/mix. Gross margin increased 190 basis points in the quarter as the company pushed through meaningful price increases across its regional portfolio led by particular strength in Latin America. Adjusted diluted earnings per share increased 23.5% on a constant-currency basis. Management was upbeat on the performance in the press release: Our 2023 results underscore the strength of our execution, the importance of our investments and the resiliency of our portfolio, footprint, categories, and brands. We delivered double-digit top-line and earnings
Toll Brothers Notes Strong Start to Spring Selling Season
March 31, 2024
By Brian Nelson, CFA Back on February 20, luxury homebuilder Toll Brothers (TOL) released first-quarter results for fiscal 2024. Both revenue and GAAP earnings per share came in better than expected. Home sales revenue increased 10% in the quarter from the year-ago period, while delivered homes advanced 6%. Impressively, net signed contract value was up 42% from last year’s quarter, while the number of contracted homes increased 40%. Its backlog fell 18%, to $7.08 billion, however, but the company continues to benefit from higher home sales gross margins. Management’s commentary on the quarter was upbeat in the press release: We are very pleased with our strong first quarter results. We delivered 1,927 homes at an average price of approximately $1.0
Broadcom a Key Beneficiary of AI Investment
March 31, 2024
By Brian Nelson, CFA On March 7, Broadcom (AVGO) reported better than expected first-quarter results for fiscal 2024. Revenue advanced 34% from the same period a year ago, while adjusted EBITDA increased 26% on a year-over-year basis. On a non-GAAP basis, net income increased to ~$5.3 billion, up from ~$4.5 billion in the same period a year ago. Non-GAAP adjusted earnings per share increased to $10.99 from $10.33 in the year-ago period. Shares yield ~1.6% at the time of this writing, and the company continues to push through meaningful dividend increases. Management was upbeat when it came to artificial intelligence [AI] in its press release: We are pleased to have two strong drivers of revenue growth for Broadcom in the
General Mills Doing a Lot of Things Right, Shares Yield ~3.4%
March 30, 2024
Image Source: General Mills By Brian Nelson, CFA On March 20, General Mills (GIS) reported better-than-expected third quarter results for its fiscal 2024. Though net sales fell 1% in the period, the company’s adjusted operating profit advanced 14% in constant currency. On a two-year compound growth basis, the firm’s organic net sales increased 7%, so while there was some pressure on revenue in the quarter, most of it can be attributed to difficult comparisons. Our fair value estimate for General Mills stands at $60, with the company trading at a modest premium to those levels at the time of this writing. General Mills continues to focus on its Accelerate strategy, which breaks down into four pillars: boldly building brands, relentlessly
In the News: Inflation, Walgreens, SPACs/IPOs, and Marine Insured Losses
March 29, 2024
By Brian Nelson, CFA Inflation Remains Subdued Based on Latest PCE Reading On March 29, the Fed’s preferred metric with respect to its inflation assessment, the personal consumption expenditure (PCE) price index, was released and came in at a 2.8% year-over-year increase, excluding food and energy, for the month of February, roughly in line with expectations. The Fed’s aggressive rate-hiking cycle during 2022 seems to have been enough to get inflation back to reasonable levels, in our view, and we view the reading as a positive one as the Fed continues to work to get inflation back to 2.0%. The Fed is also aware that it doesn’t want to overshoot inflation to the downside (below 2.0%), so the reading for
Micron Issues Strong Outlook, Points to Multi-Year Opportunity in AI
March 28, 2024
Image Source: Micron By Brian Nelson, CFA On March 20, Micron (MU) reported better than expected second quarter fiscal 2024 results that showed considerable revenue growth and a nice beat with respect to non-GAAP earnings per share. Revenue advanced to $5.82 billion versus $3.69 billion in the same period last year, while non-GAAP net income swung into positive territory at $0.42 per share, up from a loss of $1.91 during the second quarter of fiscal 2023. Operating cash flow surged to $1.22 billion in the quarter from $343 million in the same period a year ago. Here’s what management had to say about the performance in the quarterly press release: Micron delivered fiscal Q2 results with revenue, gross margin and
Boeing Shakes Up Executive Team
March 27, 2024
Image Source: Kanesue By Brian Nelson, CFA On March 25, Boeing (BA) announced that CEO Dave Calhoun will step down as CEO at the end of 2024. The move comes weeks after an incident on an Alaska Airlines (ALK) flight where part of the fuselage blew out. The company’s Independent Board Chair Larry Kellner also announced that he would not stand for reelection at the next annual meeting. New Independent Board Chair Steve Mollenkopf will succeed Kellner and lead efforts to select Boeing’s next CEO. Mollenkopf has been on the board since 2020 and previously served as CEO of Qualcomm (QCOM). Further, Boeing Commercial Airplanes President and CEO Stan Deal will retire from Boeing effective immediately and be replaced
McCormick Targeting Strong Adjusted Earnings Growth in Fiscal 2024
March 26, 2024
Image Source: McCormick By Brian Nelson, CFA On March 26, spice maker McCormick & Company (MKC) reported solid first quarter fiscal 2024 results for the period ended February 29. The company’s sales advanced 2% on a constant-currency basis, while adjusted operating income increased 4% on a constant-currency basis. Adjusted earnings per share came in at $0.63 compared to $0.59 in the same period last year, showcasing a 7% year-over-year increase. The results were good enough to send the stock meaningfully higher following the report. McCormick’s top line in the quarter was bolstered by a 3% increase in pricing, which was offset in part by a 1% decline in volume due primarily to mix and the company’s decision to exit lower
Ameresco’s Shares Under Pressure Despite Record Backlog and Asset Pipeline Metrics
March 24, 2024
Image Source: Ameresco’s backlog of opportunities remains robust. By Valuentum Analysts The rise of ESG investing and the political shift towards encouraging developments within the realm of green energy–from renewable energy projects to efforts to reduce water consumption and much more–has created numerous opportunities for investors. Ameresco Inc (AMRC) offers energy efficiency solutions, infrastructure upgrades, and renewable energy solutions to its customers. The company also operates some of the renewable energy facilities it helps develop such as solar farms and biogas plants. Ameresco provides its services all over the globe though the U.S. remains its most important market (and the source of over 90% of its revenues). In the U.S., Ameresco will often help its clients secure the financing needed
