Brian Nelson

DirecTV’s “Miss” Mostly a Currency Issue

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Best Ideas Newsletter portfolio holding DirecTV (click ticker for report: ) reported strong second quarter results Thursday morning. Revenue increased 7% year-over-year to $7.7 billion, just a bit shy of consensus expectations. The disappointment in the period came from DirecTV Latin America, where revenue still advanced 12% year-over-year on a reported basis (constant currency revenue surged 26% year-over-year). Currency issues can be short-term headwinds, but we think the issues will even out in the long run. Earnings per share increased 8% year-over-year to $1.18, falling well short of consensus estimates. Again, we think this was largely due to currency issues. Free cash flow increased 15% year-over-year to $1.2 billion, equal to 15% of total revenues. In the US, revenue increased 5% … Read more

Teva Boasts a Several Billion Dollar NTE Opportunity

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Leading generic pharma firm and Best Ideas Newsletter portfolio holding Teva Pharmaceuticals (click ticker for report: ) issued mediocre second-quarter results today. Net revenue was roughly flat on a year-over-year basis, as weakness in generic sales in the US and Europe was mostly offset by strength in Treanda, ProAir, and multiple-sclerosis drug Copaxone, the latter accounting for about 20% of revenue and half of profits. Teva continues to address ongoing hurdles associated with Copaxone, as CEO Jeremy Levin outlined on the firm’s second-quarter conference call: “The U.S Federal Court of Appeals confirmed validity of select COPAXONE patents through May 2014, but not others including one patent expiring September 2015. We are disappointed with this part of the Appeals Court decision … Read more

Regulatory Uncertainty Once Again Strikes Visa and MasterCard

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The past few weeks had been very good for network processors Visa (click ticker for report: ) and MasterCard (click ticker for report: ). Visa kicked things off with strong revenue and even stronger earnings growth for its third quarter. MasterCard followed suit, easily beating consensus expectations on 15% revenue growth and a 23% surge in earnings per share. Then another bullet was fired in the war the US is fighting to regulate the amount of profit these firms can make. A US District Judge Richard Leon ruled that the Federal Reserve didn’t have the authority to cap debit card transactions at $0.21 based on the notion that the limit diverged from the original intent of Dodd-Frank’s Durbin amendment.  For … Read more

Digging into Phillips 66’s Results: Earnings Decline Not Tragic

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Dividend Growth Newsletter portfolio holding Phillips 66 (click ticker for report: ) announced slightly weaker than anticipated second quarter earnings Wednesday morning, which isn’t too surprising after the insight we received from peer Valero (click ticker for report: ). Revenue declined 8% year-over-year to $43.9 billion, which was actually above estimates but not materially important for Phillips 66. Earnings per share declined 33% to $1.50 per share, falling well short of consensus expectations. Free cash flow remained relatively strong at $597 million during the quarter, and year-to-date, it stands at $2.4 billion. Image Source: PSX 2Q 2013 Investor Presentation Where did Phillips 66 earnings weakness come from? Without question, it was the firm’s refining margin. Advantaged crude remained flat as … Read more

Pfizer and Merck Show Revenue Declines; Pipelines Remain Strong

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Pfizer’s (click ticker for report: ) and Merck’s (click ticker for report: ) second-quarter performances revealed ongoing revenue weakness due to key patent expirations, but we like the progress they are making in their respective drug pipelines. In Pfizer’s second quarter (results released Tuesday), revenue fell 4% from the same period a year ago, after adjusting for currency. Strength in ‘Oncology’ (up 28%) from Inlyta and Xalkori and a couple key products (namely Lyrica and Celebrex) did little to offset the slide in operational revenues at its ‘Primary Care’ and ‘Established Products’ segments, where revenue dropped 15% and 7%, respectively. We point to the loss of exclusivity of Lipitor and heightened generic competition for the difficult revenue performance. In Merck’s … Read more

Newmont Suffers from Weak Gold Prices; Underscores Industry Troubles

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Last Friday morning, gold miner Newmont Mining (click ticker for report: ) reported mediocre second quarter results. Revenue declined 11% year-over-year to $2 billion, slightly below consensus estimates. Earnings per share, adjusted for an impairment charge related to lower gold prices, swung to a loss of $0.10 compared to a profit of $0.59 during the same period a year ago. The company generated negative free cash flow of $317 million as capital expenditures remained too high relative to operating cash flow. Newmont also cut its dividend to $0.25 per share, down 29% sequentially. Newmont’s second quarter highlighted the challenges we continue to witness in the gold-mining industry, especially with respect to the weak price of gold. Over the past several … Read more

Amgen’s Second Quarter Doesn’t Disappoint

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Pharmaceutical firm Amgen (click ticker for report: ) announced strong second quarter results Tuesday afternoon. Revenue increased 5% year-over-year to $4.7 billion, modestly exceeding consensus estimates. Adjusted for certain items, earnings-per-share climbed 3% year-over-year to $1.89, a figure well above consensus expectations. Free cash flow was terrific at $1.4 billion, equal to 30% of total revenue. Amgen’s white-blood-cell-growth drugs designed to prevent infections during chemotherapy, Neulasta and Neupogen, saw combined sales growth of 7% year-over-year to $1.4 billion as Neulasta becomes the drug of choice. Amgen’s other billion-dollar treatment Enbrel, a rheumatoid arthritis and plaque psoriasis drug similar to AbbVie’s Humira (click ticker for report: ) and Johnson & Johnson’s Remicade (click ticker for report: ), posted 9% revenue growth. … Read more

Utilization Drives Record Profit at TAL International

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Intermodal container lessor TAL International (click ticker for report: ) posted strong second quarter results last week thanks to high utilization rates and favorable container scrapping revenues. Revenue jumped 15% year-over-year to $172 million, easily exceeding consensus estimates. Earnings per share increased 7% year-over-year to $1.07 per share, roughly in-line with consensus expectations. TAL International greatly benefitted from strong utilization rates in the second quarter, which averaged 97.5%. Though this figure was down slightly compared to the first quarter figure of 97.7%, TAL’s long-term leasing strategy has minimized downside risk in the currently difficult intermodal environment. CEO Brian Sondey detailed the strategy on the second quarter conference call, saying: “…we’ve always had a leasing strategy of really seeking long duration … Read more

Buffalo Wild Wings’ Second Quarter Was Fantastic

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Best Ideas Newsletter portfolio holding Buffalo Wild Wings (click ticker for report: ) announced solid second quarter results Tuesday afternoon. Revenue jumped 28% year-over-year to $305 million, a touch better than consensus estimates. Earnings per share surged 42% year-over-year to $0.88, far better than consensus expectations. Free cash flow year-to-date totals $13 million, equal to just 2% of total revenue. Free cash flow is temporarily depressed as the firm continues to expand its domestic and global footprints. Eleven franchise-owned restaurants were opened during the quarter, as well as 10 owned by Buffalo Wild Wings. Same-store sales during the quarter grew 3.8% year-over-year at company-owned restaurants and 4.1% year-over-year at franchise-owned restaurant. Relative to most of the restaurant space, these numbers … Read more

With North America Saturated, Coach Needs International Growth

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As has become the norm for Coach (click ticker for report: ), shares of the handbag and fashion accessory maker experienced heightened volatility after it reported lackluster results for its fiscal year 2013 fourth quarter Tuesday. Revenue increased 6% year-over-year to $1.2 billion, slightly below consensus estimates. Earnings per share advanced just 3% compared to the same period last year, coming in at $0.89 (after adjusting for one-off items). Free cash flow for the fiscal year was strong at $1.2 billion, an increase of 20% compared to the prior year and equal to 24% of total revenue. One thing is certain at Coach—the core North American business likely won’t be the same growth driver it has been in years past.  … Read more