Brian Nelson

Microsoft’s Free Cash Flow Strong Despite Robust Strategic Growth Investments

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Image Source: Mike Mozart Microsoft continues to take advantage of strong demand for its hybrid cloud portfolio, and it is winning business from leading enterprise customers. Free cash flow generation remains strong despite significantly higher levels of strategic growth investments. By Kris Rosemann Shares of simulated Dividend Growth Newsletter portfolio idea Microsoft (MSFT) faced a bit of selling pressure following its fiscal second quarter report, results released January 30, as investors digested mixed quarterly results, a relative slowdown in Azure revenue growth, and roughly in-line guidance for the full fiscal year. We still like shares, and operating margin expansion and robust free cash flow generation drive optimism while management continues to focus on strategic growth investments. Overall revenue growth in the … Read more

Earnings Roundup: Big Name Dividend Payers

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Image Source: Simon Cunningham Let’s take a quick look at the fourth quarter earnings reports of a few wide-ranging, big-name dividend payers, all of which are leaders in their respective industries. Included in this article: Boeing, McDonald’s, and AT&T. By Kris Rosemann Boeing Reports Record Fourth Quarter Results Shares of aerospace giant and former simulated Dividend Growth Newsletter Portfolio idea Boeing (BA) rallied following its fourth quarter report, released January 30, as it turned in record fourth quarter marks for revenue, operating profit, and GAAP earnings per share. Revenue in the period advanced 14% on a year-over-year basis thanks to record commercial aerospace deliveries and higher defense and services volumes. Its ‘Commercial Airplanes’ segment led the way in terms of … Read more

Facebook +10% After Hours; How ‘Bout That VBI Rating!

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No changes to simulated newsletter portfolios. By Brian Nelson, CFA You’ve got to know when to hold ’em Know when to fold ’em Know when to walk away And know when to run — Kenny Rogers, The Gambler Facebook (FB) just reported solid fourth-quarter results (here are the slides). Was there really any doubt Facebook would come roaring back? After all, Facebook is 10-rated on the Valuentum Buying Index. Net balance sheet health and free cash flow generation are so important in determining when to “hold ’em” and when to “fold ’em.” When it was obvious that Kinder Morgan (KMI) and General Electric (GE) were in a lot of trouble and needed to be discarded, how can one truly sour on a company … Read more

A Great Couple Months! Apple Pops!

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Image shown: The markets continue to rally significantly since the near-term bottom in December. Here’s the email we sent to members December 26.  No changes to simulated newsletter portfolios. By Brian Nelson, CFA Hope you are doing great. Believe it or not, the wind chill may have hit 50 or 60 below-zero in Woodstock, Illinois this morning. The polar vortex has most of the Midwest running for cover. Even the Chicago Bears have changed their name to the Chicago Polar Bears. Just kidding. In any case, the markets don’t mind. We continue to recover from the December lows, and we’ve been staying mighty busy. For starters, if you haven’t read Value Trap: Theory of Universal Valuation, you’re not going to get as … Read more

Novartis Closes Out Busy Year; Proposes Dividend Hike

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Image Source: Novartis fourth quarter presentation European pharmaceutical giant Novartis had a busy year in 2018 on its quest to renew its focus on medicines, and management is excited about its future growth trajectory. We continue to like its free cash flow generation and dividend growth potential. By Kris Rosemann 2018 was a busy year for simulated Dividend Growth Newsletter idea Novartis (NVS), which reported fourth quarter results January 30. The company completed a strategic review resulting in the planned first half 2019 spin-off of its Alcon division, it agreed to sell its Sandoz US oral solids and dermatology portfolio, it sold its stake in the GlaxoSmithKline (GSK) consumer healthcare joint venture for $13 billion, and it invested in long-term … Read more

Apple’s Services Growth on Track; Weakness to Persist in China

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Image Source: William Hook Apple delivered fiscal first quarter results after the close January 29 that were largely in-line with recently adjusted expectations. China has been and will likely continue to be a soft spot, but the company’s Services revenue continues to impress. Strong free cash flow generation and balance sheet health are synonymous with the company. By Kris Rosemann Apple (AAPL) reported fiscal 2019 first quarter reports after the close January 29, but the market already had a good idea of what to expect due to a January 2 update from CEO Tim Cook that included a stark warning on the current demand environment in China (FXI, MCHI). Here’s some of what Valuentum’s President of Investment Research Brian Nelson … Read more

Caterpillar Crushed by Expectations for No Growth in China

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Image Source: Mining.com Heavy equipment giant Caterpillar saw its share price drop significantly following its fourth quarter report January 28 as it reported disappointing bottom-line results for the quarter and announced expectations for softness in China. By Kris Rosemann Concerns regarding macroeconomic uncertainty and the impact of the ongoing trade dispute between the US and China have dominated headlines of late, and these areas, as expressed through notable company outlooks, will remain in focus throughout this earnings season. Caterpillar’s (CAT) fourth quarter report, released January 28, was no exception as its comment on the recent demand environment and forward-looking expectations were closely dissected. The market was significantly disappointed with what it found, particularly as it relates to the company’s operating … Read more

Today’s Recorded Website Walk Through

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  No changes to simulated newsletter portfolios. By Brian Nelson, CFA Hi everyone, Today was busy.  A stock we have stayed far away from, NVIDIA Corp (NVDA) tumbled aggressively today, down nearly 14%. Shares of the equity are starting to bump against the low end of our fair value estimate range, but we expect a downward revision in the coming days. When it comes to semiconductors, we continue to prefer Xilinx (XLNX) and Intel (INTC). My colleague Kris Rosemann wrote up Intel’s recent quarterly report, released January 24, and you can find that write-up here (login required). Caterpillar (CAT) also released a doozy of a fourth-quarter report today, with shares trading off more than 9%. We don’t include any direct metals and mining … Read more

Intel Disappoints with 2019 Guidance; Sell-off Overdone

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Image shown: Intel’s revenue mix continues to shift towards its data-centric businesses and away from its PC-centric business. Source: Intel fourth quarter presentation Simulated newsletter portfolio idea Intel disappointed with its fourth quarter 2018 results and guidance for 2019 as multiple headwinds are expected to persist in the near term. Nevertheless, we don’t think the sell-off was entirely justified as the company continues to position itself to take advantage of the high-growth potential of its data-centric businesses. By Kris Rosemann Shares of simulated newsletter portfolio idea Intel (INTC) faced material selling pressure following the release of its 2018 fourth quarter results and 2019 guidance, released January 25, but we’re not convinced the sell-off was justified. Our fair value estimate for … Read more