Chipotle Issues Strong First-Quarter Performance; Shares are Extremely Expensive
April 20, 2012
Chipotle () reported strong results after the close Thursday. Though the firm continues to post solid same-store-sales growth and has a nice earnings trajectory, we think the burrito-maker is one of the most overvalued companies on the market today. We continue to steer clear of the shares and may open a put position on the company in the portfolio of our Best Ideas Newsletter in coming periods. However, we’re waiting for the firm’s upward momentum to slow before betting on a price fall. In its first quarter, revenue advanced over 25% thanks to a better-than-expected 12.7% jump in comparable restaurant sales, which were bolstered by higher traffic and menu price increases implemented last year. The upscale burrito chain’s restaurant level
eBay Popping 16%+ Today; We Continue to Expect Further Upside
April 19, 2012
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Yum! Brands Posts Solid First-Quarter Results; China Growth Strong, US Performance Improving
April 19, 2012
Yum! Brands () issued strong first-quarter results after the close Wednesday that showed improving domestic performance but cost pressures in its fastest-growing markets. We still believe Yum! Brands is the best way to play restaurant expansion in emerging markets (namely China), but the firm’s shares already reflect this opportunity, in our opinion. We are sticking with our fair value estimate ($55 at the high end of our estimated range). Worldwide systems sales of the owner of Pizza Hut, Taco Bell and KFC Chains grew 7% (before currency) during the quarter, propelled largely by 28% growth in China (growth in the US was meager at just 1%). On a reported basis, total revenues advanced 13%. However, the domestic top-line performance was
Best Idea eBay Releases Fantastic First-Quarter Results; Raises 2012 Guidance
April 18, 2012
Best Idea eBay () reported fantastic first-quarter results after the close Wednesday. Both revenue and net income expanded at a nice double-digit pace, as PayPal continues to drive strong performance. In after-hours trading, the shares are up 6%+ (to over $38 per share) on the report. We are strongly considering adding to our existing position in the portfolio of our Best Ideas Newsletter, as we think the shares are conservatively worth $46 each (with upside to the high $50’s based on the upper end of our fair value range). << View Our Newsletter Archives In the first quarter, the global commerce platform and payments leader’s revenue advanced an impressive 29% from the same period a year ago. Net income on a
Intuitive Surgical Posts Strong First-Quarter Results
April 18, 2012
Intuitive Surgical (), one of the more well-known momentum firms on the market today, reported excellent first-quarter earnings after the close Tuesday. We don’t view the firm as yet a ‘Valuentum’ stock (a style of investing that we ascribe to) as it has yet to reach a valuation that we find attractive. We’re sticking with our fair value estimate for Intuitive Surgical at this time. << More on ‘Valuentum’ Investing The robotic medical-equipment firm, best known for its da Vinci Surgical System (click here), reported first-quarter 2012 revenue of $495 million, which advanced an impressive 28% from the same period a year ago (consensus was at $477 million). The key drivers continue to be higher robotic procedure adoption and higher
Best Idea Intel Continues to Deliver Solid Results and Return Cash to Shareholders
April 18, 2012
Best Idea Intel () reported another strong quarter Tuesday. Some of the financial highlights include a strong gross margin of 64% (65.1% non-GAAP), earnings per share of $0.53 (versus consensus expectations of $0.50 per share), and $3 billion in cash flow generated from operations. Additionally, during its first quarter, the company bought back $1.5 billion in stock and paid out $1 billion in dividends. Management still has the authorization for an additional $8.6 billion in share buybacks (which are value-creating at these price levels), and we think the company’s excellent dividend payout (0.84 per share; 3% annual yield) could increase meaningfully in coming years. Our fair value estimate remains unchanged. Though revenue only advanced modestly on a year-over-year basis thanks to inventory
IBM Raises Full-Year Earnings Guidance; 1Q Beat Due to Lower Quality Drivers; Services Backlog Falls
April 18, 2012
International Business Machines () posted mixed first-quarter results after the close Tuesday. Though the firm showed material bottom-line expansion, the firm’s top-line growth was relatively modest and its services backlog fell before adjusting for a favorable impact from currency. We are sticking with our fair value estimate for the company. Revenue was essentially flat from the same period a year ago as software, services and a doubling of cloud-based revenue helped offset a stiff decline in hardware sales. We were pleased to see the strength in software revenue (up 5%), but we’re slightly disappointed in the company’s services business, where revenue edged up just 1% and services backlog declined 2% before adjusting for currency. We’ll be keeping this important, “yellow flag” data
Despite Lackluster Results, Johnson & Johnson Remains a Solid Dividend-Growth Holding
April 17, 2012
Johnson & Johnson (JNJ) issued relatively uneventful first-quarter results Tuesday. We don’t expect to make a change to our fair value estimate, and we continue to like the company as a holding in the portfolio of our Dividend Growth Newsletter. << View Our Dividend Growth Newsletter Archives First-quarter revenue was roughly flat from the same period a year ago, as domestic sales declines and a negative currency impact more than offset international strength. Net earnings in the quarter were also less-than-compelling with earnings per share advancing a meager 1.5%, to $1.37. However, J&J did update its earnings guidance for the full year to as much as $5.17 per share at the high end of the range, but most of the
Coca-Cola Reports Strong First-Quarter Results; Hits 14-Year Highs
April 17, 2012
Coca-Cola (KO) reported strong first-quarter 2012 results Tuesday that revealed 5% global volume growth with expansion across every geographic operating group. Though we liked the performance during the period, we see no reason to change our fair value estimate on the firm at this time. The world’s biggest drink maker’s first-quarter net revenue advanced 6%, and the firm leveraged that sales expansion into operating-income growth of 10%. The revenue expansion was driven evenly by concentrate sales and positive pricing. However, currency-neutral operating income grew in line with the pace of sales as the company faced difficult comparisons with respect to commodity costs in the quarter. Earnings per share came in at $0.89 in the quarter (consensus was at $0.88), with cash
We Still Like ConocoPhillips as a Solid Dividend-Growth Idea
April 16, 2012
On Monday, ConocoPhillips (COP) said on its investor-update call that it expects to grow its cash flow to $22 billion by 2016 – that’s up from about $16 billion this year, an 8.2% compound annual growth rate. The firm also noted that it expects to allocate roughly 20% to 25% of its annual cash flow to dividend payments. We continue to like this high-yielder (3.6% annual payout) in the portfolio of our Dividend Growth newsletter and expect the company to experience high-single-digit dividend growth for some time to come. Conoco’s 3-Year Repositioning Plan “ConocoPhillips continues to execute its asset disposition program, targeting $10 billion in proceeds during 2012. During the quarter, the company closed on the sale of its Vietnam
