Brian Nelson

Market Overreacts to Urban Outfitters’ 10-Q

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Clothing retailer Urban Outfitters (click ticker for report: ) filed its 10-Q report for its relatively strong second quarter. Shares proceeded to drop heavily on Tuesday after a line from the quarterly regulatory filing revealed that third-quarter comparable store sales growth was decent, but not running at a near double-digit pace. Taken directly from the 10-Q: “Thus far during the third quarter of fiscal 2014, comparable Retail segment net sales are mid-single-digit positive.” This “mid-single-digit” rate compares to the 8.5% growth rate the firm posted during its second quarter, driven largely by Free People and a recovery at Anthropologie, a name tied more directly to housing. Source: Company Filings Assuming the mid-single-digit growth rate is somewhere between 4-7%, Urban will … Read more

Is Innovation Back at McDonald’s?

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Tuesday morning, the world’s largest fast food company, McDonald’s (click ticker for report: ), posted weak August comparable sales results overshadowed by the potential for menu innovation. Aggregate same-store sales grew 1.9% year-over-year on top of a 3.7% gain during the same period during 2012. August Sales August sales at McDonald’s were volatile across geographies. US same-store sales grew just 0.2% year-over-year during August, which CEO Don Thompson blamed on a “challenging environment.” Interestingly, Thompson addressed the challenging environment, which we agree with, rather than blaming a bad economy, which has so often been the case. In fact, we think an improving economy may leave McDonald’s at a disadvantage as consumers trade-up and no longer demand as much value. The … Read more

Molex Shareholders Should Be Pleased with Koch’s Bid

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Monday morning, electronic components maker Molex (click ticker for report: ) announced that it had agreed to be acquired by Koch Industries for $7.2 billion or $38.50 per share in cash. The deal represents a 31% premium to Molex’s Friday closing price. We think Molex shareholders received a fantastic deal. Though the firm sports a solid yield, strong dividend growth potential, and a long history of dividend payments, shares were fairly valued, by our measure. In fact, the price Koch will pay for Molex exceeds the top end of our fair value range—a rare event. Since Koch is a privately-held company with no allegiance to public shareholders, the notion of whether or not Koch made a strong investment matters very … Read more

A Walk-Through of Our DataScreener500

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Can’t view the video walk-through of our DataScreener500 on your mobile device? Download the Puffin Web Browser App from Apple free. Click here. << Order the next edition of our DataScreener500, to be delivered on the first of each calendar quarter Unable to display content. Adobe Flash is required.

Yum! Brands Says the Worst Is Over in China

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Late Friday afternoon, fast food giant Yum! Brands (click ticker for report: ) once again posted weak same-store sales results in China. Same-store sales in August declined 10% year-over-year driven by a 12% decline at KFC and 5% growth at Pizza Hut. For the third quarter, Yum! estimates that total same-store sales fell 11% with KFC down 14% and Pizza Hut’s same-store sales up 4%. This isn’t the first time Yum!’s same-store sales in China have moderated. After falling 19% year-over-year in May, Chinese same-store sales declined 10% in June, and then fell 13% year-over-year in July. Management noted that it believes same-store sales growth will be positive in the fourth quarter, implying Chinese sales may finally have bottomed. Image … Read more

Finisar Sees Margins Surge on Telecom Demand

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After posting a strong end to fiscal year 2013, fiber-optics maker Finisar (click ticker for report: ) registered fantastic results for its fiscal 2014 first quarter Thursday. The firm set an all-time quarterly revenue record of $266 million, up 9.3% sequentially and exceeding consensus estimates. Earnings per share on a non-GAAP basis soared 55% year-over-year to $0.31 per share, in-line with consensus expectations. The boom in telecom carriers like AT&T (click ticker for report: ), Sprint (click ticker for report: ), and T-Mobile (TMUS) investing in 4G LTE technology helped lift demand during the first quarter. Telecom had been an area of weakness during the firm’s fourth quarter. CEO Eitan Gertel added some commentary on the products driving first-quarter strength … Read more

LinkedIn Acknowledges Its Stock Is Overpriced

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Business social networking site LinkedIn (click ticker for report: ) announced Wednesday afternoon that it would execute a secondary public offering expected to close on September 10. LinkedIn will offer 5,381,166 shares of its Class A common stock at a price of $223 per share for proceeds of $1.2 billion. When a well-capitalized company like LinkedIn offers stock, it can often signal that the company believes its shares are overvalued. As of its most recent quarter, LinkedIn had over $800 million in cash and short-term investments against no long-term debt. The company was also free cash flow positive (albeit free cash flow wasn’t robust) in fiscal year 2012. LinkedIn isn’t in dire need of cash, so we think the company … Read more

Is the New PayPal App a Game-Changer for eBay?

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Thursday afternoon, eBay’s PayPal (click ticker for report: ) released its updated version of its iOS and Android mobile application. This release marks the latest attempt for a digital wallet to usurp the importance of the credit/debit card and “simplify” payments. By no means is this the first attempt for a company to push a digital wallet. Google Wallet (click ticker for report: ) has failed to gain much traction, not because it is exclusive to Android, but mostly because it isn’t a very intuitive program and awareness isn’t high. Apple’s Passbook (click ticker for report: ) has sneaked into the marketplace to become the fourth most popular mobile commerce app. Passbook differs from Google Wallet in the sense that … Read more