Brian Nelson

Visa and MasterCard Gushing with Cash

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Best Ideas Newsletter portfolio holding Visa (V) and its rival MasterCard (MA) reported results for their respective calendar third quarters. Visa’s top-line continues to expand, growing 8.8% year-over-year during its fiscal year 2013 fourth quarter to $2.9 billion, a tad shy of consensus estimates on nearly $1.1 trillion in gross dollar volume. The combination of the firm inking more major deals than usual (which increased incentives) and foreign exchange effects lowered reported revenue growth by 1.5 percentage points. Visa’s net income per share jumped 20% year-over-year to $1.85, in-line with consensus estimates. For the fiscal year, earnings per share soared 23% year-over-year to $7.59. Free cash flow, adjusted for some timing issues related to the merchants opting out of the … Read more

The Curious Cases of Intuitive Surgical and Teva Pharma: What We Have Learned

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Within every portfolio, there will be a couple companies that do not live up to immediate expectations. Two such companies in our Best Ideas portfolio that haven’t yet delivered on our theses are Intuitive Surgical (ISRG) and Teva Pharma (TEVA). We hold the Healthcare Select SPDR ETF (XLV) in the Best Ideas portfolio as well (it has been a top performer) and our healthcare picks—Johnson & Johnson (JNJ) and Medtronic (MDT)—have performed wonderfully in our Dividend Growth portfolio, but we’re still waiting for our theses to be confirmed with respect to Intuitive Surgical and Teva Pharma. Before we go any further, however, we think it is important to reiterate that the size of the weighting of a position in our … Read more

Third-Quarter Results Strengthen Our Confidence in Facebook

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Best Ideas Newsletter portfolio option position Facebook (FB) once again flexed its advertising muscle when it reported fantastic third-quarter results Wednesday. Revenue swelled 60% year-over-year to $2 billion, soaring past consensus estimates, while non-GAAP earnings per share rose 108% year-over-year to $0.25, also above consensus estimates. Year-to-date, free cash flow is phenomenal at $2.1 billion, equal to 40% of total revenue. The Words that Clouded the Quarter “Our best synopsis on youth engagement in the U.S. reveals that usage of Facebook among U.S. teens overall was stable from Q2 to Q3. So we did see a decrease in daily users specifically among younger teens.”           –      CFO David Ebersman   In spite of overwhelmingly positive financial results and a few … Read more

LinkedIn’s Growth Doesn’t Disappoint But Its Valuation Is Absurd

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Professional social networking giant LinkedIn (LNKD) posted another strong quarter Tuesday night after the market close. Revenue exceeded consensus estimates as it soared 56% year-over-year to $393 million. The bottom line followed suit, as non-GAAP earnings per share jumped 77% year-over-year to $0.39. LinkedIn also revealed decent free cash flow, which stands at $133 million year-to-date, equal to 12% of total revenue. However, Mr. Market was none too pleased with LinkedIn’s guidance, but we’ll get into that later.  Engagement Remains Strong Image Source: LNKD 3Q13 Slides Though down slightly sequentially, LinkedIn continues to take steps with respect to engagement. According to comScore (shown above), LinkedIn had 142 million unique visitors during its third quarter, an increase of 29% on a year-over-year … Read more

The Valuentum Dividend Cushion Predicts CONSOL’s Dividend Cut

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Coal and natural gas firm CONSOL (CNX) became the latest company whose dividend cut Monday had been successfully predicted by the Valuentum Dividend Cushion. With a Valuentum Dividend Cushion score of -3.5 before the board’s decision to conserve cash and slash the payout, it appeared to us that the move was inevitable (a measure below 1 is suspicious, while a measure that is negative is highly concerning). Out of our 1,000+ company coverage universe, CONSOL’s dividend was assessed by us to be among the 10 weakest. We make available the most-visited ‘Dividend Yields to Avoid’ article on the left column of our home page under ‘Stock Screens,’ and we update the list of firms that receive the dubious honor periodically. … Read more

Looking for Alpha? It’s In Our Best Ideas Newsletter

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Best Ideas portfolio holdings Buffalo Wild Wings (BWLD) and Baidu (BIDU) reported fantastic third-quarter results after the close yesterday, sending both of their shares higher in Wednesday trading! Buffalo Wild Wings closed at $141.22 per share, up over 9% on the trading session, while Baidu closed at $164.93 per share, up nearly 3.5% for the day. Baidu was added to our Best Ideas portfolio August 1, 2013 at $133.60 per share (click here for Best Ideas portfolio transaction log). If you didn’t receive that email, contact us immediately at info@valuentum.com. A 23% gain in just a couple months isn’t too bad, and we’re expecting further upside to shares. Buffalo Wild Wings has been a holding in our Best Ideas portfolio … Read more

Lack of New Container Supply Helps TAL International Maintain Growth

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Intermodal freight lessor TAL International () posted modest third quarter results, as the market for global shipping remains weak. Revenue increased 6.4% year-over-year to $143.9 million, short of consensus expectations, while adjusted net income per share fell short of consensus estimates at $1.03 (up 8.4% year-over-year). Adjusted EBITDA grew only 1.3% year-over-year to $142.8 million. Still, TAL increased its quarterly dividend to $0.70 per share, an increase of 2.9%.  Utilization: Strong But Declining Image Source: Company Filings, Valuentum In spite of what TAL identified as a relatively weak market, utilization rates were above 97% compared to the industry average of the low-to mid-90% range. However, management noted that current utilization rates are hovering at 96.9%, which means that rates are … Read more

Evaluating AT&T’s 3Q Performance

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A Few Words from CFO John Stephens Telecom giant AT&T (T) announced strong third quarter results October 23. Revenue increased 2.2% year-over-year to $32.2 billion, just below consensus expectations. Earnings per share, excluding one-time items, increased 6.5% year-over-year to $0.66, a penny above consensus estimates. However, due to an increase in capital expenditures, free cash flow has fallen more than $3 billion year-to-date to $11.1 billion, equal to 11.6% of revenue.  Smartphone Takeover Image Source: T 3Q13 Slides  As has become the norm, wireless revenue drove AT&T’s top-line growth, expanding 5.1% year-over-year to $17.1 billion. The strong performance was driven by an increase in wireless data revenue of 17.6%, as a higher percentage of consumers opt for higher ARPU plans. During the third quarter, … Read more

Apple’s Products and Free Cash Flow Are Amazing

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Best Ideas Newsletter and Dividend Growth Newsletter portfolio holding Apple (AAPL) posted decent fiscal fourth quarter results Monday, finishing off a tremendously profitable 2013 fiscal year. Revenue increased 4% year-over-year during the fourth quarter to $37.5 billion, easily exceeding consensus estimates. For the full-year, the iPad maker’s revenue grew 14% to $170.9 billion—more revenue than Chipotle, Netflix, Tesla, and Facebook combined. Earnings per share easily exceeded consensus estimates but fell 4.7% year-over-year to $8.26. For the full-year, earnings per share declined 10% to $39.75. However, Apple generated $45.5 billion in free cash flow for fiscal 2013, up about $3 billion year-over-year and equal to 27% of revenue. iPhone Refresh a Success   Apple sold 33.8 million iPhones during the quarter, an … Read more