Nike’s Revenue to Face Pressure During First Half of Fiscal 2025
March 22, 2024
Image: Nike’s shares have faced considerable pressure from the beginning of 2022, and its outlook for the first half of fiscal 2025 wasn’t great. By Brian Nelson, CFA On March 21, Nike (NKE) reported better-than-expected third quarter fiscal 2024 results. Revenue during the quarter advanced modestly on a reported and currency-neutral basis as revenue from its Nike brand rose 2%, while sales for Converse fell 19% on a reported basis. Nike showcased its pricing strength in the period, with the company’s gross margin advancing 150 basis points, to 44.8%, despite higher input expenses and restructuring charges. Net income fell 5% in the fiscal third quarter, while diluted earnings per share dropped 3% in the period. Nike ended the quarter ending
Understanding Stock Splits
March 22, 2024
By Brian Nelson, CFA There are few financial topics more misunderstood, in my opinion, than stock splits. Some investors believe that a stock split is a value-creating endeavor brought about by “market forces” that have blessed their company’s stock for one reason or another. They believe that they will get more shares of the company at the same price, thereby doubling their investment value as a result. Unfortunately, this is not correct. In reality, a stock split is a move made at the complete discretion of the company’s board to reduce the nominal price of the company’s shares such that more individual investors can “afford” to buy more of the stock (increasing its ownership base). The primary reason stems from the common belief
Pfizer 6% Dividend Yield Speaks of Considerable Risk, Free Cash Flow Coming Up Short
March 21, 2024
Image: Pfizer’s shares have been under considerable pressure the past few years. By Brian Nelson, CFA Pfizer’s (PFE) revenue has faced pressure of late from expected declines in COVID-related sales from Comirnaty and Paxlovid, as the pharma giant navigates a post-COVID-19 world. However, excluding weakness from COVID-19 related revenue, the company’s underlying revenue grew 7% during 2023. Pfizer is working to build a strong oncology portfolio as it strives to realize billions in annualized cost savings to get to the other side of its troubles. Image: Pfizer’s 2024 financial guidance. For the full-year 2024, Pfizer is targeting revenue in the range of $58.5-$61.5 billion (was $58.5 billion in 2023) and adjusted diluted earnings per share in the range of
Phillips 66 Hovering Near All-Time Highs, Shares Yield ~2.7%
March 20, 2024
Image: Phillips 66’s shares continue to hover near all-time highs thanks to a favorable energy resource environment. By Brian Nelson, CFA Shares of refining giant Phillips 66 (PSX) continue to hover near all-time highs as the company benefits from a favorable energy resource environment. The company’s fourth quarter non-GAAP earnings per share of $3.09 beat expectations handily, as it hauled in $2.2 billion in operating cash flow in the period. Phillips full-year 2023 performance was solid as it generated $7 billion in operating cash flow and returned $5.9 billion to shareholders in the form of dividends and share buybacks. Shares yield ~2.7% at the time of this writing. Management remains shareholder-friendly and said much in its fourth-quarter press release: As we
Hasbro Is Down But Not Out, Shares Yield ~5.3%
March 19, 2024
Image: Hasbro’s shares have faced considerable pressure during the past few years. By Brian Nelson, CFA Hasbro’s (HAS) recently reported fourth-quarter results weren’t great and showed revenue declining 23% as it experienced material weakness in its Consumer Products segment (-25%) and Entertainment division (-49%) in the quarter. On an adjusted basis, backing out large impairment charges, the firm’s operating loss came in at $50 million in the quarter, while it recorded adjusted net earnings of $0.38 per share. Hasbro continues to navigate a difficult demand environment for physical toys, but the company’s free cash flow remains robust and was in excess of cash dividends paid during 2023. Shares yield ~5.3% at the time of this writing. Image: Hasbro had a
Altria Selling Portion of ABI Stake, Raises 2024 Guidance
March 15, 2024
Image: Altria’s shares reacted positively to news that it would sell a portion of its stake in Anheuser-Busch Inbev. By Brian Nelson, CFA On March 14, Altria Group (MO) announced that it would be selling in a secondary offering 35 million of its ~197 million shares of Anheuser-Busch Inbev (BUD) it owns to unlock value for shareholders. The cigarette maker noted that it would use the proceeds of the sale for accelerated share buybacks to the tune of a $2.4 billion increase to its existing $1 billion repurchase program, a move that we like quite a bit as it helps to reduce total dividend obligations paid to shareholders given Altria’s outsized dividend yield. The cigarette maker also raised its earnings
Dick’s Sporting Goods Soars, Raises Dividend 10%
March 14, 2024
Image: Dick’s Sporting Goods’ shares have soared since the doldrums of the COVID-19 meltdown. By Brian Nelson, CFA On March 14, Dividend Growth Newsletter portfolio holding Dick’s Sporting Goods (DKS) reported better-than-expected top and bottom-line performance for the fourth quarter and issued a solid outlook for fiscal 2024. Shares of Dick’s Sporting Goods have done fantastic since the worst of the COVID-19 meltdown years ago, and the momentum behind its business remains strong, as evidenced by a nice 10% increase in its quarterly dividend. We expect to raise our fair value estimate of Dick’s Sporting Goods upon our next valuation model update, and the company remains a key idea in the Dividend Growth Newsletter portfolio. Management’s commentary in the quarterly
Williams-Sonoma Beats in Fourth Quarter, Raises Dividend 26%
March 13, 2024
Image: Williams-Sonoma is facing revenue pressure, but free cash flow trends are robust. Image Source: Williams-Sonoma By Brian Nelson, CFA On March 13, Williams-Sonoma (WSM) surprised the Street to the upside with better-than-expected fourth quarter results, a huge dividend increase, and the launch of an incremental $1 billion in share repurchases. We expect to raise our fair value estimate as a result of the good news. Though the firm’s sales continue to face pressure due to a weakened housing market, its cash-based sources of intrinsic value are robust, and shares yield 1.6% on a forward estimated basis. The omni-channel specialty retailer for home goods that sports brands such as the Pottery Barn, West Elm as well as its namesake faced
Oracle Hits Optimistic Note in Fiscal Third Quarter
March 11, 2024
Image Source: Peter Kaminski By Brian Nelson, CFA On March 11, Oracle (ORCL) reported strong third-quarter fiscal 2024 results that showed total revenue advancing 7% on both a GAAP and constant-currency basis, roughly in-line with expectations, and non-GAAP earnings per share increasing 16%, to $1.41, beating the consensus forecast. Revenue growth rates were strong across the board, and the company’s total Remaining Performance Obligations soared 29%, to $80 billion at the end of the period. Though the quarter was solid, what the Street liked the most was management’s commentary in the press release: Large new cloud infrastructure contracts signed in Q3 drove Oracle’s total Remaining Performance Obligations up 29% to over $80 billion—an all-time record. We expect to continue receiving
How Some Members Use Valuentum’s Investment Services
March 11, 2024
By Brian Nelson, CFA Thank you for your membership to Valuentum. We serve a wide variety of investors, including dividend growth investors, value investors, and pure Valuentum investors, among others. Many different types of investors and professionals use our research and financial analysis in a whole host of applications from individual stock-selection to the evaluation of closed-end funds to an overlay in a money-management setting and beyond. We wanted to make sure that you know that, if you’re a dividend growth or income investor, that there are others that use our website to utilize the Valuentum process, fair value estimates and other metrics. Similarly, if you’re a practitioner of the Valuentum system, I wanted to make sure that you are
