Helmerich & Payne Beats Expectations by $0.17, Beats on Revenues
January 31, 2012
<< About Our Valuentum Buying Index (VBI) << Helmerich & Payne (HP) Fiscal First-Quarter Earnings Release << Our 16-page Equity Report on Helmerich & Payne (HP)
Putting Our Fair Value Estimate of RadioShack Under Review
January 30, 2012
RadioShack (RSH) announced after the close today that its fourth-quarter results would come in below our expectations due in large part to the underperformance of its Sprint postpaid wireless business. We plan to re-evaluate RadioShack’s position within the consumer electronics industry and expect to lower our fair value materially. We will publish an updated report shortly. << RadioShack’s press release
Reducing Our Fair Value Estimate on Fusion-iO on Lower Gross Margin Expectations
January 30, 2012
Fusion-iO (FIO), one of the more controversial companies in our coverage universe, posted fiscal second quarter results last Tuesday. As we pointed out to investors in this note, the firm could be a revolutionary company with a very bright future. However, due to a weaker gross margin outlook as well as share dilution from the December secondary offering, we have lowered our fair value estimate on Fusion-iO to $15 per share, significantly lower than its mid-$20s price tag currently. Our biggest concern about the firm is deteriorating levels of profitability. For one, Fusion iO’s gross margin in its fiscal second quarter came in very light, at around 51%, while consensus expectations were at least 400 basis points higher. This number was also down 770 basis points from the
Honeywell Expects Strong 2012 Despite Downturn in Europe During First Half
January 29, 2012
Honeywell (HON) posted solid results Friday that showed strong organic growth, impressive cash-flow generation, and margin expansion across all of its business segments. Our above-market fair value estimate remains unchanged. The industrial conglomerate’s fourth-quarter sales advanced 8% (7% organic) reflecting ongoing expansion in most of its end markets, new product introductions, and geographic expansion on key process initiatives. Honeywell experienced particular strength from its aerospace end market thanks to 20% growth in commercial original equipment and aftermarket volumes. Though we are reducing our aerospace exposure in the portfolio of our Best Ideas Newsletter to lock in some of our big gains of the previous few months, we continue to expect strength from this industry as commercial production rates at Boeing
Altria Posts Decent Fourth-Quarter Results; Dividend Yield Still Attractive
January 29, 2012
Altria (MO) posted fourth-quarter results Friday that showed strength in its smokeless product volume and higher pricing in its cigarette segment. We continue to like the firm’s exceptional dividend yield at today’s prices and think Altria remains a key component of both our Best Ideas and Dividend Growth portfolios. Our fair value estimate for Altria remains unchanged. Altria’s total fourth-quarter net revenues advanced 3.4% due to increased performance across all of its reportable segments. The company’s cigarette segment’s net revenue advanced about 3% thanks to higher list prices, offset in part by lower volume. Revenue in the company’s smokeless products’ segment increased 6.6% thanks to both higher volume and pricing. Total combined shipment volume for its Copenhagen and Skoal products
Best-Idea Ford Hits Profit Snag in Fourth Quarter; 2012 Pre-Tax Operating Profit to Hold Flat
January 27, 2012
Ford (F) posted fourth-quarter results that showed excellent top-line performance but weak underlying profitability that disappointed most investors. We continue to believe that Ford has substantial valuation upside and believe the firm to be a long-term holding in the portfolio of our Best Ideas Newsletter. We’re not playing the “quarterly earnings game” with the automaker’s shares and may add to our position in our Best Ideas Newsletter upon significant market weakness. Total revenue of $34.6 billion in the fourth quarter came in better than consensus expectations and represented a 2.1% increase from the same period a year ago. Fourth-quarter pre-tax operating profit came in at $1.1 billion, or $0.20 per share, down from $0.30 in last year’s quarter and below
Synaptics Experiencing Relative Strength Today
January 27, 2012
<< Synaptics Reports Second Quarter Fiscal 2012 Results
P&G Reduces 2012 Outlook; Expects Dividend Increase This Year
January 27, 2012
Proctor & Gamble (PG) reported fiscal second-quarter results Friday that were weighed down by higher commodity costs. The company reduced its 2012 outlook due to non-operating items (currency, taxes), but we think there may be more to the revision than management is leading investors to believe. Nonetheless, we are maintaining our fair value estimate range, which we think adequately captures such risks, and continue to hold the company in the portfolio of our Dividend Growth Newsletter. P&G’s revenue advanced 4% in its fiscal second quarter—all of it organic—thanks to growth in all six of the firm’s business segments. Volume contributed one percentage point to the increase, while broad-based price increases accounted for the balance. The firm’s core operating margin fell 160
Eastman Chemical Rockets to Over $50 Per Share; Converges to Our Fair Value Estimate
January 27, 2012
<< Eastman Chemical buying Solutia for about $3.38B << The November Edition of our Best Ideas Newsletetter; Company Spotlight: Eastman Chemical, page 5
Starbucks is Firing on All Cylinders But Shares Are Expensive
January 27, 2012
Starbucks (SBUX) reported excellent fiscal first-quarter results Thursday but its outlook fell below optimistic consensus forecasts. We don’t expect to make a material change to our $38 per share fair value estimate. Total revenue in the quarter expanded 16% to a record $3.4 billion on the heels of strong global comparable same-store-sales growth of 9% (7% increase in traffic and a 2% increase in the average ticket price). Same-store-sales growth was also 9% in the Americas region during the period, while it was only 2% in EMEA (Europe, Middle East, Russia, and Africa) as a result of softness in Europe. During the quarter, the company opened 241 net new stores globally and has now reached 500 stores in mainline China and Latin
