Quick Note: Reiterating Our View on Republic Services
April 27, 2012
Republic Services (RSG) posted disappointing first-quarter results and lowered its full-year outlook. Though we weren’t pleased with the performance of the garbage hauler, we are reiterating our view that the shares remain significantly underpriced at current levels. We will publish an expanded note about the firm’s quarter, including our updated take on the trash taker soon. << Republic Services, Inc. Reports First Quarter Results << Republic Services’ CEO Discusses Q1 2012 Results – Earnings Call Transcript
Starbucks Issues Strong Fiscal Second-Quarter Results; Raises Guidance
April 27, 2012
Starbucks () posted solid fiscal 2012 second-quarter results after the close Thursday. Though we liked the quarter, we think the share price is a bit ahead of the company’s valuation. We’ll likely be raising our fair value estimate for Starbucks after factoring in the stronger-than-expected performance, but we still believe the shares are significantly overpriced. The coffee chain’s revenue advanced 15% thanks to global comparable sales growth of 7% driven almost entirely by increased traffic. Starbucks’ China business did quite well, too, notching its seventh consecutive quarter of comparable sales growth exceeding 20%. Further, the company continues to experience strong sales of its Starbucks- and Tazo-branded K-Cup packs, with revenue in its Channel Development segment jumping almost 60%. During the quarter, Starbucks opened
Apple’s iPhone Drives Subscriber Growth at Sprint
April 26, 2012
Sprint Nextel (S) reported first-quarter 2012 earnings Wednesday. Revenue grew 6% compared to the first quarter of 2011, driven by higher average revenue per user, as subscribers continue to opt for smart phones tied to higher-priced data plans. The company sold over 1.5 million Apple (AAPL) iPhones, and we think that adding the phone to its lineup, though expensive, has allowed the company to compete with AT&T (T) and Verizon (VZ). A whopping 86% of Sprint platform post-paid phone sales were smartphones, and Sprint now has 69% of its postpaid customers using smartphones. We think this will continue to drive revenue growth as more customers opt for unlimited, premium data plans. Our fair value for Sprint remains unchanged. << Our
Dividend Growth Gem Johnson & Johnson Hikes Dividend 7%
April 26, 2012
On Thursday, Johnson & Johnson (JNJ) boosted its dividend 7%, and we continue to expect strong growth in its payout in coming years. We believe J&J remains a core holding in our Dividend Growth Newsletter. << About our Dividend Growth Newsletter — PR Newswire (April 26) “…the Board of Directors voted to increase the quarterly dividend for the 50th consecutive year from 57 cents per share to 61 cents per share. The dividend will be payable on June 12, 2012.”
Ancestry.com Delivers a Strong First-Quarter Report; Up 10%+ in After-Hours Trading
April 26, 2012
This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/529871-ancestry-com-delivers-a-strong-first-quarter-report-up-10-percent-in-after-hours-trading Best idea Ancestry.com () reported fantastic first-quarter results Wednesday, blowing by consensus estimates on both the top- and bottom-line. Adjusted EBITDA and subscriber growth numbers also came in better than expectations. We are reiterating our $41 per share fair value estimate on the company and expect the firm to catch a bid tomorrow on its better-than-expected outlook, recent roll-up of competitor Archives.com, commentary regarding the high probability of NBC extending its top-viewing TV show Who Do You Think You Are?, and excitement around the marketing initiatives for a searchable database of the US Federal 1940 Census, the biggest catalyst for genealogical research in the past decade. The company’s subscribers grew an
Best Idea EDAC Tech Issues Fantastic First-Quarter Results; Raising Our Fair Value
April 25, 2012
Best idea EDAC Tech (EDAC) reported strong fiscal 2012 first-quarter results Wednesday. We are raising our fair value estimate on the aerospace component supplier to $23 per share (was $15) as a result of a slightly lower discount rate in our cash-flow model, higher growth and profitability assumptions, and continued confidence in the recognition of the company’s burgeoning backlog, which now is roughly 3 times its annual run rate of sales. The shares are currently trading just above $13 each. << About our Best Ideas Newsletter EDAC Tech’s revenue advanced 19% to a record $24 million in the quarter, blowing by management’s conservative high-single-digit guidance offered in its previous report (and our low teens estimate). Net income more than tripled
Best Idea Buffalo Wild Wings Posts Strong First-Quarter Results
April 25, 2012
Best idea Buffalo Wild Wings () reported strong first-quarter results Tuesday that support our view that the firm’s expansion efforts are still in the early innings. Though we liked the firm’s quarter, Buffalo Wild Wings is getting a bit pricey at these levels and we may look to scale back our position even further in the portfolio of our Best Ideas Newsletter on continued strength. Our fair value estimate for the bar-and-restaurant chain remains unchanged. The firm’s first-quarter revenue advanced an impressive 37.9%, as sales from company-owned restaurants jumped more than 40% from the same period a year ago. Same-store-sales increased 9.2% at company-owned restaurants and 7.3% at franchised restaurants, indicating that the Buffalo-Wild-Wings concept continues to resonate with consumers. The
Our Thesis on Apple Remains Firmly Intact
April 24, 2012
On Tuesday, Apple () reported tremendous fiscal 2012 second-quarter results. The iPad-maker’s revenue came in at $39.2 billion, while net earnings were $11.6 billion, or $12.30 per diluted share, blowing by consensus estimates (which were $10.02 per share). We are maintaining our $636 per share fair value estimate at this time and expect the firm to converge to that level in short order. Apple’s growth rates were absolutely fantastic and compare to revenue of $24.7 billion and net earnings of $6 billion, or $6.40 per diluted share, in the same period a year ago. The company’s gross margin also advanced roughly 6 percentage points from the same period a year ago, revealing significant pricing power within its supply chain. As
IBM Increases Dividend; Annual Yield Still Not That Attractive
April 24, 2012
On Tuesday, IBM () boosted its dividend 13%, and we continue to expect double-digit growth in its payout in coming years. However, we like the dividend profiles of a few of its tech peers better, namely Microsoft (MSFT) and Intel (INTC). << About our Dividend Growth Newsletter — BusinessWire (April 24) “The IBM (IBM) board of directors today declared a regular quarterly cash dividend of $0.85 per common share, payable June 9, 2012 to stockholders of record May 10, 2012. Today’s dividend declaration represents an increase of $0.10, or 13 percent higher than the prior quarterly dividend of $0.75 per common share. This is the 17th year in a row that IBM has increased its quarterly cash dividend, and the
3M Issues First-Quarter Results; Raises Bottom End of Full-Year Guidance Range
April 24, 2012
3M (MMM) issued strong first-quarter results Tuesday that revealed expansion in almost every business segment. The company’s performance was one of the better ones we’ve seen from industrial firms so far this quarter. We also liked GE’s (GE) report here and Honeywell’s (HON) report here and were quite pleased with the recently upwardly-revised outlooks from Parker-Hannifin (PH) and Illinois Toolwork (ITW). 3M’s management followed the lead of its industrial peers and also raised the lower end of its full-year 2012 earnings-per-share outlook range. Our fair value estimate of the company remains unchanged, however. << Our 16-page Equity Report on 3M (MMM) – login required On a reported basis, net revenue advanced 2.4% thanks to an 8.6% jump in its Industrial and Transportation segment, a 5.5% improvement
