Brian Nelson

Google’s Competitive Advantages As Strong As Ever Following Third Quarter Report

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Consensus estimates aside, Google (GOOG, GOOGL) issued a very strong third quarter Thursday. The firm reported consolidated revenues of $16.52 billion in the quarter, an increase of 20% on a year-over-year basis. Non-GAAP operating income for the period was $5.36 billion, which compares to non-GAAP operating income of $4.62 billion in last year’s quarter, an increase of 16%. Non-GAAP EPS in the third quarter of $6.35 advanced 12.8% over the $5.63 mark in the prior-year period. Much like that which occurred in eBay’s (EBAY) third quarter, which it reported earlier this week, operating leverage was absent in Google’s business model during the period. Google’s bottom-line growth rate was still solid, but we would have liked to see earnings growth in excess … Read more

Kinder Morgan Reports Third Quarter Results

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Kinder Morgan (KMI) has moved to the top of our watch list after it made the decision to bring in-house Kinder Morgan Energy Partners (KMP), Kinder Morgan Management (KMR), and El Paso Pipeline Partners (EPB), thereby reducing its business structure risk as a holder of master limited partnerships (MLP), which remain heavily dependent on access to external new capital (something we’re not fond of). Holding an MLP in the newsletter portfolios is not a risk we take lightly. On Wednesday, Kinder Morgan (KMI) reported that cash available to pay dividends advanced 2.6% in the third quarter, to $435 million. The solid performance facilitated a dividend increase to $0.44/share on a quarterly basis, a 2.3% jump from previous levels and a … Read more

eBay Is Still Way Too Cheap

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News hit several weeks ago that eBay (EBAY) would separate its Marketplaces operations and its PayPal operations into two publicly-traded companies, a move that we think is a good idea to unlock shareholder value. Creating two standalone businesses best positions eBay and PayPal to capitalize on their respective growth opportunities in the rapidly changing global commerce and payments landscape, and is the best path for creating sustainable shareholder value. eBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets…As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities. And we are confident following a thorough assessment of the relationships between eBay and … Read more

Netflix Crushed, Walmart’s Outlook Disappoints

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One of the most overvalued stocks on the market, Netflix (NFLX), issued third-quarter results Wednesday that sent shares tumbling. The company’s quarterly report wasn’t bad; the firm’s top line was in-line with expectations, and the firm’s bottom line beat consensus. However, the market wanted more. Market prognosticators were looking for the company in the third quarter to add ~3.6 million subscribers, which matched the company’s guidance. Netflix added only 3.01 million–not a bad mark, but disappointing relative to expectations. Remember: value is based on future projections of free cash flow, and what was embedded in Netflix’s stock price before the report needs now to be adjusted downward; hence the decline in shares. Even after the fall in price, however, you … Read more

Johnson & Johnson: Still a Solid Dividend Growth Pick

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Yesterday, a core holding in the Dividend Growth portfolio, Johnson & Johnson (JNJ), reported fantastic third-quarter results. Sales of $18.5 billion advanced more than 5% compared to the third quarter of 2013. Domestic sales leapt 11.6%, while international sales were roughly flat, off less than 1%. The results were muddied by the divestiture of its Ortho-Clinical Diagnostics business. Worldwide, domestic and international operational sales growth, adjusted for the divestiture, came in at 8.4%, 14.8% and 3.1%, respectively. Net earnings, excluding special items, were $4.3 billion and $1.50 per share in the quarter, up 9.5% and 10.3% on a year-over-year basis, respectively. These are fantastic growth rates for a company of Johnson & Johnson’s size. The biggest driver behind the company’s … Read more

Intel Still Resilient Despite “Peer Pressure”

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As we hinted on the day of Microchip’s (MCHP) warning, we thought Intel (INTC) may be a standout in the chip space, and the company didn’t disappoint. The company’s third-quarter results beat estimates on both the top and bottom lines, and management issued solid guidance. Intel is included in both the Best Ideas portfolio and Dividend Growth portfolio. The headlines were impressive. Intel’s third-quarter revenue of $14.6 billion advanced 8% on a year-over-year basis thanks in part to record quarterly unit shipments of PCs, servers, tablets, phones and Internet of Things. It was its best-ever third-quarter revenue performance. The firm also noted that the quarter marked the first time that it shipped more than 100 million microprocessors in a quarter. Equally … Read more