Brian Nelson

Dividend Aristocrat Caterpillar’s Dividend on Solid Ground

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Image Source: Caterpillar By Brian Nelson, CFA Caterpillar (CAT) recently reported third quarter results that missed on both the top and bottom lines. Performance declined across the board. Sales and revenues dropped 4% to $16.1 billion from $16.8 billion in the year-ago quarter (lower than what management had been anticipating), profit per share fell to $5.06 from $5.45 in the third quarter of 2023, while adjusted profit per share dropped to $5.17 from $5.52 in the same period a year ago. Weakness was driven by lower sales volume of $759 million, driven by lower sales equipment to end users. Changes in dealer inventories also negatively impacted sales. Caterpillar’s adjusted operating margin came in at 20.0% for the third quarter of … Read more

Lowe’s Experiences Softness in Bigger Ticket Discretionary Demand

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Image: Lowe’s shares have rallied nicely since the beginning of 2023. By Brian Nelson, CFA Home improvement retailer Lowe’s (LOW) recently reported third quarter results that showed a beat on both the top and bottom lines. Net sales fell 1.5% in the quarter as comparable sales fell 1.1%, which beat the consensus estimate expecting a fall of 3.3% in comparable sales. Management attributed the weakness to “continued softness in Do-It-Yourself [DIY] bigger-ticket discretionary demand” that was only “partly offset by storm-related sales and positive comparable sales in Pro and online.” Diluted earnings per share of $2.99 in the quarter, inclusive of a pre-tax gain associated with the 2022 sale of its Canadian retail business, compared to $3.06 in the same … Read more

Target Expects Ho Hum Holiday Results

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Image Source: Target By Brian Nelson, CFA Target (TGT) recently reported third quarter 2024 results that missed on both the top and bottom lines, and the retailer issued ho-hum guidance for the holiday fourth quarter. Third quarter comparable sales advanced 0.3% in the third quarter (versus consensus expectations of 1.5%) as strong traffic and digital performance were offset by a comparable store sales decline of 1.9%. Guest traffic grew 2.4% in the quarter, however, while digital comparable sales increased 10.8% thanks to growth in same-day delivery and drive up. Beauty comparable sales grew more than 6% in the quarter, while Food & Beverage and Essentials categories grew low-single digits compared to the same period last year. Its gross margin rate … Read more

HP Inc. Sets Q1’25 Expectations Below Consensus, Dividend Looks Healthy

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Image Source: HP Inc. By Brian Nelson, CFA HP Inc. (HPQ) recently reported fourth quarter results for its fiscal 2024. Fourth quarter net revenue was up 1.7% (2.3% in constant currency) from the prior-year period, while fourth quarter non-GAAP diluted earnings per share of $0.93 was roughly in-line with the company’s previously provided outlook between $0.89-$0.99. Net cash provided by operating activities was $1.6 billion, while free cash flow totaled $1.5 billion in the quarter. The company returned $1.2 billion to shareholders in the form of share purchases and dividends in the quarter, while it raised its dividend 5%. Management had the following to say about the quarterly results: We are pleased with our Q4 performance where we saw revenue … Read more

Keeping the Horse Before the Cart: Valuentum’s Economic Castle Rating

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Image Source: Ian By Brian Nelson, CFA “In business, I look for economic castles protected by unbreachable moats.” – Warren Buffett In the world of investing, no other saying may be more widespread. The teachings of Berkshire Hathaway’s (BRK.A, BRK.B) Warren Buffett have become a favorite among individual investors, having been adopted by money-management firms and sell-side firms alike in order to better connect with their clients and readers who have been ‘under siege’ by the topic in recent years. The phrase ‘economic moat’ – or sustainable competitive advantage – has simply become ubiquitous in the investment world and perhaps has lost much of its significance and meaning along the way. Most management teams across the globe are now eager … Read more

Dividend Increases/Decreases for the Week of January 3

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Below we provide a list of firms that raised their dividends during the week ending January 3. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                          Agricultural Bank of China (ACGBY): now $0.4001 per share semi-annual dividend, was $0.3101. Alamo (ALG): now $0.30 per share quarterly dividend, was $0.26. B3 S.A. – Brasil, Bolsa, Balcão (BOLSY): now $0.0282 per share quarterly dividend, was $0.0183. Bank OZK (OZK): now $0.42 per share quarterly dividend, was $0.41. Barloworld Limited (BRRAY): now $0.1718 per share semi-annual dividend, was $0.0684. Benchmark Bankshares, Inc. (BMBN): … Read more

FedEx Lowers Fiscal 2025 Guidance Again, Plans to Separate FedEx Freight

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Image: FedEx’s shares have come roaring back since its bottom in the back half of 2022. By Brian Nelson, CFA FedEx (FDX) recently reported mixed fiscal second quarter results with the company missing on the top line, but beating the consensus forecast for non-GAAP earnings per share. Non-GAAP adjusted revenue fell to $22 billion from $22.2 billion in the prior-year quarter, while adjusted operating income dropped to $1.38 billion from $1.42 billion in the same quarter of fiscal 2024. Its adjusted operating margin fell to 6.3% from 6.4%, while adjusted net income fell to $0.99 billion from $1.01 billion previously. Thanks to share buybacks, adjusted diluted earnings per share increased to $4.05 from $3.99 in the prior-year quarter. Here’s more … Read more

Costco’s Business Humming Along Nicely, But Stock Is Not Cheap

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Image Source: Costco By Brian Nelson, CFA Costco Wholesale (COST) recently reported first quarter results for fiscal 2025, with revenue and non-GAAP earnings per share coming in ahead of expectations. Net sales for the first quarter advanced 7.5%, to $60.99 billion from $56.72 billion in the year ago period. Total comparable store sales, after adjusting for the impact of changes in gasoline prices and foreign exchange, increased 7.1% versus the consensus estimate of 6.3%. Comparable traffic rose 5.1%, while comparable ticket edged higher 0.1%. Costco experienced 13.2% adjusted e-commerce expansion in the period. Costco shared some fun facts about growth in its business on the conference call: Our U.S. bakery division has reached new records of 4.2 million pies being … Read more

How Does 37% Sound?

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Image: The Schwab U.S. Large Cap Growth ETF (SCHG) is up more than 37% so far in 2024. By Brian Nelson, CFA How does 37% sound? That was the price-only performance of the Schwab U.S. Large Cap Growth ETF (SCHG) thus far in 2024. Over the preceding 5-year period, the SCHG is up over 140%. For years, I have pounded the table on the theory that there are not value or growth stocks, but rather undervalued, fairly valued, or overvalued stocks. It’s why many growth stocks can be undervalued. It’s the Theory of Universal Valuation found in Value Trap that ties myriad areas of finance to the well-known discounted cash-flow [DCF] model. Growth is a component of value. Hook, line, … Read more

Nike’s Revenue Under Considerable Pressure; Turnaround Will Take Time

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Image: Nike’s shares have been under considerable pressure as sales results disappoint. By Brian Nelson, CFA Nike (NKE) reported second quarter earnings on December 19 that beat on both the top and bottom lines. However, quarterly revenues still fell 8% on a reported basis and were down 9% on a currency-neutral basis. NIKE Brand revenues fell 7% on a reported basis and 8% on a currency-neutral basis. NIKE Direct revenues dropped 13% on a reported basis and 14% on a currency-neutral basis, while wholesale revenues fell 3% on a reported basis and 4% when holding currency neutral. Converse revenues declined across all territories, falling 17% on a reported basis and 18% on a currency-neutral basis. Nike’s gross margin dropped 100 … Read more