Brian Nelson

Best Buy’s Comparable Sales Decline Moderates

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Electronics retailer Best Buy (click ticker for report: ) posted better-than-anticipated second quarter results Tuesday morning. Revenue was basically flat year-over-year at $9.3 billion, exceeding consensus estimates. Adjusted earnings-per-share was 23% higher year-over-year at $0.32, well above consensus expectations. Year-to-date, free cash flow was negative at $282 million, but we’re not worried considering this figure is much improved compared to the prior-year period. Source: Valuentum, Company Filings In our view, the most encouraging news in the quarter was the firm’s domestic same-store sales, which were down just 0.4% year-over-year. In fact, we can see from the above chart that the two-year trend at the important domestic store base is improving, while online sales continue to grow at a solid rate. … Read more

Mixed Second Quarter Results Across Retail

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Tuesday morning, a variety of retailers reported calendar second quarter results that were decidedly mixed. Let’s take a deeper look. TJX Companies TJX Companies (click ticker for report: ) posted second quarter results marked by top and bottom line expansion. Revenue increased 8% year-over-year to $6.4 billion with same-store sales growth of 4% while earnings per share improved 18% year-over-year to $0.66 per share. Both metrics exceeded consensus expectations. Year-to-date, the firm has generated free cash flow of $314 million, equal to 2% of total revenue. Though the company has 3,119 locations worldwide, the company continues to experience stable comparable same-store sales (“comp”) growth. TJX’s 2-year stacked comp has consistently hovered around 10-11% during the past four quarters. Source: Valuentum, … Read more

Urban Outfitters’ Margin Story Continues

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Monday afternoon, retailer Urban Outfitters (click ticker for report: ) posted solid second quarter results as sales gains helped lift gross margins. Revenue jumped 12% year-over-year to $759 million, a touch below expectations, but solid in what has turned into a lackluster second quarter for retailers. Earnings per share increased 21% year-over-year to $0.51 per share, easily exceeding consensus estimates. Performance at Urban Outfitters was strong across all stores, with same-store sales growth of 38% at Free People, 9% at Anthropologie, and 5% at Urban Outfitters. As we can see from the above chart, the two-year trend at Free People continues to outpace the rest of the company. Sales accelerated at the women’s clothing store, even as the company faced … Read more

Icahn Reignites Apple

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Shares of Best Ideas portfolio and Dividend Growth portfolio holding Apple (click ticker for report: ) showed considerable relative strength following solid third quarter results July 24. Pricing momentum was augmented when legendary money manager Carl Icahn (or iCahn) sent out a series of tweets about the tech giant on August 13. iCahn Moves the Market Icahn needs no introduction, as he boasts a rumored net worth in excess of $20 billion, has engaged in numerous high-profile corporate battles (US Steel, Dell, TWA), and without question is considered one of the greatest money managers of his era. When Icahn speaks (or tweets), markets listen. While Icahn’s presence as an Apple shareholder has little, if any, fundamental change on the company, his … Read more

Why Valuation (Still) Matters: The Homebuilders

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At Valuentum, our stock-selection methodology blends two long-time investing foes—value and momentum (click for why this combination is so powerful). For an idea to fit the profile of a ‘Valuentum stock’, it simply cannot just be undervalued, nor can it exclusively possess fantastic momentum and technical measures. The firm must have both characteristics and pass the qualitative muster of our analyst team to make the cut for addition to our actively-managed portfolios. We credit the Valuentum discipline as the major driver behind the significant outperformance in our portfolios. In addition to highlighting one of the biggest industry collapses during the year (the mREITs—click here) and perhaps the biggest alpha trade (stock up, market down) of the year (Apple recently), the Valuentum process … Read more

The Big Burger Trade-up

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Casual dining chain Red Robin (click ticker for report: ) reported strong second quarter results last week. Revenue jumped 6.5% year-over-year to $238 million, just a touch shy of consensus estimates. Conversely, earnings per share surged 48% year-over-year to $0.77, easily exceeding consensus expectations. Image Source: RRGB 2Q FY2013 Slides The most positive news from Red Robin, in our view, was the robust same-store sales growth rate of 4.3%. While the firm was lapping just a 0.8% increase in the year prior period, the increase was a nice jump sequentially, underscoring the effectiveness of the company’s brand transformation. Traffic declined 0.7% year-over-year, but that was far better than the 3.1% decline experienced by the average industry competitor. The combination of … Read more

Which Department Store Looks Attractive?

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Our fundamental view on the department store industry hasn’t changed much after the second quarter. Kohl’s sales gains were surprising, but if we look at the two-year trend of stacked comps (last year’s quarter plus this year’s quarter), Nordstrom continues to easily outperform its peers. Source: Valuentum Ultimately, we believe improving margins in the department store industry will be difficult. Even if a firm is able to gain some additional gross margin, investments in technology will likely increase capital spending. Overall, we view the cohort as fairly valued. Fundamentally, we think Macy’s will continue to outperform Kohl’s due to its superior online shopping experience, but Nordstrom appears to have the most growth opportunities as it looks to expand on the … Read more

Dividend Increases for the Week Ending August 16 Included Weyerhaeuser and Cinemark

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Below we provide a list of firms that upped their dividends for the week ending August 16. 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 Atrion Corp (ATRI): now $0.64 per share quarterly dividend, was $0.56. Avnet (AVT): first-ever quarterly dividend of $0.15 per share. Bolt Technology Corp (BOLT): now $0.09 per share quarterly dividend, was $0.07. Cinemark Holdings (CNK): now $0.25 per share quarterly dividend, was $0.21. Cincinnati Financial Corp (CINF): now $0.42 per share quarterly dividend, was $0.4075. Connecticut Water Service (CTWS): now $0.2475 per share quarterly … Read more

Beam and Boston Beer Post Solid Results

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Leading spirits company Beam (click ticker for report: ) posted fantastic second quarter results led by strong performance from its established brands. Revenue increased 7% year-over-year (5% on a comparable basis) to $638 million, roughly in-line with expectations. Earnings per share increased 8% compared to the year prior to $0.64, also in-line with consensus estimates. Free cash flow was only $1 million for the quarter, but management continues to predict the free cash flow for the full-year of $300-$350 million. Beam has experienced comparable sales growth of 4% year-to-date, with premium brands such as Maker’s Mark (+18%) and Jim Beam (+4%) leading the way. Basil Hayden’s has performed exceptionally well so far this year as consumers show a willingness to … Read more

As the Battle Continues, Dell Still Exists

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Over the past several months, the battle for control of Dell (click ticker for report: ) between founder Michael Dell and activist billionaire Carl Icahn has carried on. While it’s easy to get caught up in the details of the battle, predictions of who will win and the like, at the end of the day, there is a struggling operating company underneath it all. The firm posted second-quarter results earlier this week, with revenue flat year-over-year at $14.5 billion, in-line with consensus estimates. Earnings-per-share was $0.25 on a non-GAAP basis, down 50% from a year ago, but still slightly better than consensus expectations. The big metric that matters in this situation—free cash flow—totaled $1.5 billion, equal to 10% of revenue. Image … Read more