Brian Nelson

Best Idea Visa Blows Past Expectations

by

Wednesday after the market close, Best Ideas Newsletter portfolio holding Visa (click ticker for report: ) reported wonderful results for its fiscal year 2013 third quarter. Revenue surged 17% year-over-year to $3 billion, easily exceeding consensus estimates. Earnings-per-share growth was even better, jumping 20% year-over-year to $1.88, well above consensus expectations. Excluding accrued litigation expenses, free cash flow is running at about $5 billion year-to-date, equivalent to an amazing 57% of revenue. Few companies are able to match Visa in terms of converting revenue into cash for shareholders. Image Source: V 3Q FY2013 Investor Presentation Visa continues to ride the secular trend in credit payments to strong payment volume growth. Total payments processed increased 11% year-over-year to $1.09 trillion, driven … Read more

Best Ideas Newsletter Holding Ford Posts a Fantastic Second Quarter

by

Best Ideas Newsletter portfolio holding Ford (click ticker for report: ) continued to seize upon its positive momentum Wednesday morning, posting terrific second quarter results. Revenue surged 16% year-over-year to $36 billion, easily exceeding consensus estimates. Pre-tax profit surged to a record high level of $2.6 billion, which translates to operating income of $0.45 per share—50% higher than the same period a year ago and well above consensus estimates. Automotive-related operating cash flow registered $3.3 billion compared to $0.8 billion during the second quarter of 2012. Image Source: F 2Q 2013 Investor Slides Ford’s execution was superb across the board, particularly in China, where we’ve seen several new models hit showrooms. Strong results in China led to much stronger results … Read more

Altria Posts Second Quarter Results; Earnings Outlook Raised But Volume Declines Evident

by

On Tuesday, Best Ideas portfolio and Dividend Growth portfolio holding Altria (click ticker for report: ) reported solid second-quarter results. Though Altria’s revenue fell nearly 3% (down 1.2% net of excise taxes), the firm was able to drive operating earnings expansion of 6.6% thanks to a combination of strong pricing and cost-cutting initiatives. The cigarette maker’s second quarter adjusted diluted earnings per share advanced 5.1% to $0.62, as all three of the firms’ divisions drove ‘operating companies income’ and margin expansion during the period. Adjusted ‘operating companies income’ at its ‘Smokeable Products’ division nudged higher, but only because cigarette price increases stuck. Its total retail cigarette share grew during the quarter, but industrywide headwinds were massive as the firm’s domestic … Read more

Broadcom’s Outlook Falls Short

by

Telecom equipment maker Broadcom (click ticker for report: ) announced relatively decent second quarter results Tuesday afternoon, but its outlook left much to be desired. Revenue increased 6% year-over-year to $2.09 billion, slightly below consensus estimates. Earnings, excluding a sizeable impairment attributable to its NetLogic acquisition, grew 8% year-over-year to $0.70 per share, modestly exceeding consensus expectations. Free cash flow was decent at $267 million, or 13% of revenue. Broadcom acquired NetLogic for $3.7 billion in 2012, and as is often the case with acquisitions, it turns out Broadcom paid too much. NetLogic products help improve network performance for 3G and 4G devices, and at the time of the acquisition, Broadcom paid a 57% premium to acquire the firm. After … Read more

Boeing’s and United Technologies’ Second Quarters Reinforce Strength in Aerospace

by

On Wednesday, Boeing (click ticker for report: ) reported better-than-consensus top and bottom line results for its second quarter. Revenue advanced 9% thanks to higher deliveries of the 787 Dreamliner and the workhorse 737 platform, while backlog grew to a record $410 billion (nearly 5 times expected 2013 revenue), including $40 billion of net orders during the quarter. Core earnings per share jumped 13%, as operating cash flow (before pension contributions) more than doubled, to $3.5 billion. Free cash flow generation in the period was just over $3 billion, or nearly 14% of revenue. Management raised its 2013 revenue outlook to the range of $83-$86 billion thanks to improved performance in its ‘Defense, Space, & Security’ segment and upped its … Read more

AT&T Fends Off Intensified Competition in the Second Quarter

by

Tuesday afternoon, telecom giant AT&T (click ticker for report: ) reported solid second quarter results, fending off intensified competition from T-Mobile (TMUS). Revenue grew 1.6% year-over-year to $32.1 billion, slightly ahead of consensus estimates. Earnings per share excluding one-time items rose 2% year-over-year to $0.67, falling a penny shy of consensus estimates. Free cash flow was relatively strong at $4 billion, equal to 12% of revenue. Image Source: T 2Q2013 Investor Presentation Mobile data growth remained robust during the second quarter, surging 20% year-over-year to $5.4 billion. AT&T activated 6.8 million smartphones posting a record quarter for Android (click ticker for report: ) devices and LTE (35% of all smartphones). While we didn’t get specific commentary on Apple iPhone (click … Read more

Apple Proves It Isn’t Dead

by

On Tuesday, Best Ideas Newsletter portfolio holding Apple (click ticker for report: ) posted strong third quarter results and solidified our view that the iPhone is far from dead. Revenue increased 1% year-over-year to $35.3 billion, exceeding consensus estimates. Earnings per share were also better than the consensus had anticipated, falling 20% year-over-year to $7.47 per share. Year-to-date, free cash flow remains terrific at $37.5 billion or roughly 28% of total revenue. Image Source: AAPL 3Q FY13 Earnings Report Apple’s most important product, the iPhone, did phenomenally well as the firm sold 31.2 million units compared to the consensus estimate of 26.2 million. Remember how media pundits have claimed repeatedly that people only want Samsung Galaxies? We’ve made the argument … Read more

DuPont’s Second Quarter Results Secondary to Performance Chemicals Announcement

by

Chemical and agricultural conglomerate DuPont (click ticker for report: ) announced uneventful second quarter results Tuesday morning which were overshadowed by the firm announcing it will explore “strategic alternatives” for its performance chemicals business. The firm believes spinning of its highly-cyclical titanium dioxide business will allow it to focus on higher-growth segments and reduce performance volatility. We’ll address this issue later. During the second quarter, DuPont’s revenue declined 1% year-over-year to $9.8 billion—slightly below consensus estimates. Earnings per share declined 15% year-over-year to $1.28 per share, a touch better than consensus expectations. Image Source: DD 2Q 2013 Investor Presentation The bigger story is that the firm is exploring strategic alternatives for its ‘Performance Chemicals’ business. DuPont believes spinning off its … Read more

Netflix’s Second Quarter Was Fine; The Stock Is Just Expensive

by

Content streaming service Netflix (click ticker for report: ) posted solid second quarter results Monday afternoon. Revenue increased 20% year-over-year to $1.02 billion, roughly in-line with consensus expectations. Earnings per share quadrupled year-over-year to $0.49, well above consensus estimates. The firm also generated positive free cash flow of $12.9 million, or about 2% of revenue. The format for the earnings call stole the show from the actual results. Eschewing the traditional call with analysts, Netflix instead had CEO Reed Hastings, CFO David Wells, and Chief Content Officer Ted Sarandos sit down with CNBC’s Julia Boorstin and Rich Greenfield of BTIG to discuss the results. While some may be upset with the exclusive choices, we do not have any problem with … Read more

Kimberly-Clark Posts Solid Second Quarter Results

by

Wisconsin-based consumer products company Kimberly-Clark (click ticker for report: ) posted solid second quarter results Monday morning. Revenue was flat year-over-year at $5.7 billion, just a touch below consensus estimates. Adjusted earnings per share increased 8% year-over-year to $1.41, slightly above consensus expectations. Even though headline numbers were strong, free cash flow totaled $356 million, equal to just under 7% of revenue (not as strong as we would have liked, but still good). Kimberly-Clark’s ‘Personal Care’ segment, the firm’s largest division, underperformed the rest of the company, with revenue declining 1% year-over-year to $2.4 billion. European operations are being pared back, and it now no longer sells its legendary Huggies brand in any European market except for Italy. North American … Read more