Brian Nelson

Portion Packs Still in Strong Demand at Green Mountain; Free Cash Flow Surges in Fiscal 2013

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On Thursday, Green Mountain (GMCR) reported excellent fiscal fourth-quarter results. Fourth-quarter revenue advanced 22% from the same period a year ago (52-to-52 weeks) thanks to robust brewer sales and portion pack revenue growth (up 11% and 21%, respectively, as adjusted). The 21% increase in portion packs revenue was driven by a 26% increase in unit volume offset by pricing and mix. Portion packs revenue accounted for 74.2% of total net sales in the fiscal fourth quarter. The company’s gross margin expanded 240 basis points during the quarter, to 36%, thanks primarily to favorable green coffee costs and lower labor and overhead manufacturing costs. Non-GAAP operating income advanced to 18.2% of sales in the period from 16.4% in last year’s quarter. … Read more

GameStop Tumbles on Lower Than Expected Holiday Outlook

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One of the ‘Top 25 Overvalued Stocks on the Market’ reported third-quarter results Thursday. GameStop (GME) represents the latest firm that we highlighted as significantly overvalued to engage in a large pricing correction toward our fair value estimate. Third-quarter results at the world’s largest video game retailer weren’t the problem. Total global sales advanced 18.8%, while comparable store sales rose 20.5%. Sales of new software increased 43.1% thanks to strong performance from Grand Theft Auto V. Hardware sales also performed well, jumping 15.3% thanks to a strong sell-thru of Nintendo 2DS and 3DS. Pre-owned sales, however, declined 2%. The strong overall performance led to 675 basis points of market share gains. GameStop’s net earnings jumped 45.3%, to $68.6 million, while the … Read more

Deere Doing Much Better Than Caterpillar

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After Caterpillar’s (CAT) dismal third-quarter performance, it was quite refreshing to read about Deere’s (DE) record earnings performance in its fiscal fourth quarter results, released Wednesday. Though Deere’s worldwide net sales fell 3% in the quarter, the firm’s net income of $806.8 million, or $2.11 per share, set a record for the period (up 17% and 21%, respectively). Lower shipment volumes were more than offset by a much favorable pricing environment, which worked wonders on the company’s bottom line, particularly in its ‘Agricultural & Turf’ segment (where operating profit jumped 7%). Deere’s ‘Financial Services’ operations also experienced a nice 26% jump in operating profit during the quarter thanks to improving credit performance and crop-insurance margins. We continue to like the … Read more

Home Depot’s Third-Quarter Performance Better Than Lowe’s

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On Tuesday, Home Depot (HD) reported excellent third-quarter results. Total sales advanced 7.4% from the third quarter of last year as comparable store sales jumped by a similar amount – comparable sales for the US were 8.2%. Operating income jumped an impressive 32.3% from the same period a year ago, while net earnings for the period increased 28.4% on an adjusted basis, to $0.95 per share. The top-line strength and significant operating leverage was on display during the quarter, and Home Depot was quite positive for the remainder of fiscal 2013, too: Based on year-to-date performance and outlook for the remainder of the year, the company raised its fiscal 2013 sales guidance and now expects sales to be up approximately … Read more

TJX Companies and Urban Outfitters Post Strong Growth in 3Q

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TJX Companies (TJX) and Urban Outfitters (URBN) both showed impressive sales growth during their respective fiscal third quarters (results released this week). TJX Companies Has Years of Store Growth and Earnings Expansion Ahead of It TJX Companies, one of the largest off-price retailers of apparel and home furnishings in the US, released solid third-quarter results Tuesday. Net sales advanced 9%, while consolidated same-store sales increased 5% on top of 7% growth in the prior-year period. The company’s consolidated pre-tax profit margin advanced 0.9 percentage points thanks in part to buying and occupancy leverage and easier year-over-year overhead comparisons. Adjusted diluted earnings-per-share was solid during the quarter, advancing to $0.75 from $0.62 in the prior-year period (a 21% increase). Fiscal-year-to-date, cash … Read more

Best Buy Tumbles Back to Our Fair Value Estimate

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On Tuesday, Best Buy (BBY) reported decent third-quarter results considering the intense competition from both brick-and-mortar locations and online powerhouses. Revenue was essentially flat from the same period a year ago, as comparable store sales of 0.3% improved substantially from the year-ago period’s 5.1% decline (see image below). Leading the charge in the quarter was Best Buy’s online presence, where same-store sales advanced 15.1% in the quarter, accelerating from the 10.3% pace set in the third quarter of last fiscal year. Increased traffic, a higher average order value, and a higher number of online orders being placed in retail stores benefited domestic online revenue. The rate of the company’s international comparable same-store sales decline slowed to 6.4% from more than … Read more

Medtronic Posts Better Than Expected Fiscal 2Q Results

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Cardiac and vascular medical giant Medtronic (MDT) reported solid fiscal second quarter results Tuesday. Revenue advanced 3.3% on a constant-currency basis, while non-GAAP diluted earnings per share jumped to $0.91, up about 3% from last year’s period. Both measures were slightly better than expected, though we note margins could have been a bit stronger. International revenue jumped 5% on a constant currency basis, while emerging market revenue leapt 13% excluding currency. Revenue in the firm’s ‘Cardiac and Vascular’ group performed well (up 4%, excluding currency), as Implantable Cardioverter Defibrillators (ICDs)* grew 4% and drug-eluting stents advanced 8%, the latter bolstered by share gains from the firm’s Resolute Integrity drug-eluting stent. Sales in the company’s ‘Restorative Therapies’ segment jumped 2% (excluding … Read more

Salesforce.com Continues Rapid Revenue Expansion; Targets $5 Billion+ in Revenue for Fiscal 2015

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On Monday, Salesforce.com (CRM), one of the largest firms in enterprise cloud computing, reported excellent fiscal 2014 third quarter results. Revenue surged 36% year-over-year, while deferred revenue expansion largely kept pace (up 34% year-over-year). Unbilled deferred revenue, or business that is contracted but unbilled and off balance sheet, was $4.2 billion, up 40% from the same period a year-ago. Though non-GAAP earnings per share came in at a meager $0.09 during the period, the firm posted operating cash flow of $138 million, which was up 30% on a year-over-year basis. Capital expenditures jumped to $74 million from $51 million in the year-ago period, resulting in free cash flow of $64 million (or about 6% of sales). Salesforce.com ended the quarter … Read more

Stock Market Euphoria Continues; Dow Surpasses 16,000, S&P Jumps Above 1,800

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Disclaimer: This article is for informational purposes only and should not be considered a solicitation to buy or sell any security or to engage in any asset allocation decisions. Please seek professional advice from your financial advisor who knows your individual needs and risk tolerances. Key Takeaways è Stock prices have become disconnected from current fundamentals, and euphoria in the stock market is running wild. è We encourage investors to assess their exposure to small caps (equities with market capitalizations under $2 billion) and determine whether a price fall of 25% or more in coming years would be tolerable. Still, we’ll likely see higher prices for small caps before we see lower ones. è The current forward 12-month P/E ratio … Read more

Dividend Increases for the Week Ending November 15

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Below we provide a list of firms that raised their dividends during the week ending November 15. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here (or use our ‘Symbol’ search box in our website header). Firms Raising Their Dividends This Week Automatic Data Processing (ADP): now $0.48 per share quarterly dividend, was $0.435. EMC Insurance Group (EMCI): now $0.23 per share quarterly dividend, was $0.21. GasLog (GLOG): now $0.12 per share quarterly dividend, was $0.11. Griffon Corporation (GFF): now $0.03 per share quarterly dividend, was $0.025. LyondellBasell Industries N.V. (LYB): now $0.60 per share quarterly dividend, was $0.50. Medical Properties Trust (MPW): now $0.21 … Read more