Brian Nelson

Wolverine Worldwide Rides Acquisition to Strong Results

by

Tuesday morning, footwear company Wolverine Worldwide (click ticker for report: ) reported strong results thanks largely to the company’s acquisition of Collective Brands’ PLG brands in 2012. Valuentum subscribers may remember Collective Brands from the inception of our Best Ideas Newsletter—a position that returned 38% in less than one year—and featured several strong brands such as Sperry Top-Sider, Keds, and Saucony (dragged down by a weak Payless Shoes). Wolverine now owns those premium brands, which helped revenue increase 88% year-over-year to $588 million, roughly in-line with expectations. Excluding acquisition costs, earnings per share rose 10% year-over-year to $0.46, well above consensus estimates. With a new fleet of higher-margin brands, Wolverine’s gross margin increased 320 basis points year-over-year to 41%. Although … Read more

Alcoa Is Stuck in Neutral

by

Monday afternoon, industrial bellwether Alcoa (click ticker for report: ) announced solid second-quarter results. Revenue was down 2% year-over-year to $5.8 billion, a tad shy of consensus estimates. Excluding the impact of special items, earnings per share were up one cent year-over-year to $0.07, exceeding consensus estimates. Free cash flow declined slightly year-over-year to $228 million, or 4% of revenue. Engineered Products and Solutions (EPS) Image Source: AA Analyst Presentation Q2 2013 Yet again, Alcoa’s Engineered Products and Solutions business, its largest profit driver, was the standout performer for the quarter. After tax operating income (ATOI) hit a record level of $193 million, up 23% year-over-year, on revenue that only increased 3% year-over-year. The segment registered an all-time high in … Read more

Core System Sales Slowed at Intuitive Surgical

by

Shares of da Vinci surgical systems maker Intuitive Surgical (click ticker for report: ) fell in after-hours trading Monday afternoon after the company released weak preliminary results. Fiscal year 2013 second quarter revenue is expected to be 7% higher than the same period a year ago at $575 million—well below the consensus estimate calling for $630 million. Net income is expected to be marginally higher at $160 million compared to $155 million during the same period last year. This net income figure implies earnings per share in the $3.85-$3.87 range, well below consensus estimates calling for $4.29 per share. Management was quick to blame other parties, saying on the press release:  “The slowdown in benign gynecologic procedures reflected a number … Read more

Fourth of July Weekend Highlights the New Norm for Disney

by

The recently passed Fourth of July weekend once again brought moviegoers several new films to watch. Disney (click ticker for report: ) and Comcast’s Universal (click ticker for report: ) went head-to-head with The Lone Ranger and Despicable Me 2, respectively. The results are in, and the clear winner was Comcast’s Despicable Me 2, which earned a record $142 million during its first five days. The Lone Ranger wasn’t even close, grossing $48.9 million over its first five days—a number that wouldn’t look so bad, except that the film cost Disney an estimated $375 million to create and market. An Uneven Track Record Although we like Disney’s future prospects–given its robust pipeline of films related to The Avengers and Star … Read more

Could TV Get Competitive?

by

Compounding worries that internet-based distribution will continue to eat away from traditional cable distributors, Intel (click ticker for report: ), DirecTV (click ticker for report: ), Time Warner Cable (click ticker for report: ), and Charter Communications (CHTR) are seeking deals to over-the-top (OTT) rights from programmers. This matters because OTT rights could give content distributors the ability to deliver TV shows via the internet rather than set-top boxes. If such a dynamic were to take hold, the TV business could become more competitive, as it would allow virtually every participant to offer services everywhere. Thus far, only Best Ideas Newsletter holding Intel has showed that it is serious about offering a broadband TV service, while the previously-mentioned companies are … Read more

The 10-year Treasury Yield Keeps Rallying

by

The 10-year Treasury yield jumped an impressive 22 basis points during trading Friday to end the session at 2.73%. We continue to monitor changes in this important benchmark rate because it impacts the decisions of income investors, the financial performance of equities levered to spread income (and often their book values), and the risk-free rate we use in our discounted cash-flow valuation models. US Generic Govt 10 Year Yield Image Source: Bloomberg The risk free rate we use in our valuation models is a weighted average of the long-term historical average of the 10-year Treasury and the current spot rate of the 10-year Treasury. We update the discount rate systematically across our coverage universe periodically when material changes warrant such … Read more

Just One Dividend Increase During the Shortened Holiday Week Ending July 5

by

Below we provide a list of firms that increased their dividends for the week ending July 5. 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. Dividend Increases for the Week Ending July 5 Bank of the Ozarks (OZRK): now $0.19 per share quarterly dividend, was $0.17. << Last Week’s Dividend Increases Ever wonder why we use the Valuentum Dividend Cushion score as a key component of our dividend analysis? Click here.

Ford Paces US Auto Sales in June

by

With an estimated SAAR of 15.7 million units during June, the US auto market continues to surge back to relevancy. Let’s take a look at the major players and their respective results. Ford Best Ideas Newsletter holding Ford (click ticker for report: ) continues to execute at an exceptionally high level. Unit sales jumped 13% year-over-year to 235,643 units. With the housing recovery in full gear, pickup sales have really accelerated, as F-Series sales surged 24% year-over-year to 68,009 units. Heavy truck sales increased 31% year-over-year, but only accounted for 726 units. Car sales were also fantastic, with sales increasing 13% year-over-year. Sales of the Fiesta more than doubled, while Focus sales jumped 9% and Taurus sales surged 15%. Fusion … Read more

Another Elite Mind Heads to Apple

by

Best Ideas Newsletter holding Apple (click ticker for report: ) is perhaps best known for its relentless focus on design elegance, with a legacy started by Steve Jobs and carried on by Jony Ive. That trend continued this week when the company nabbed high-end fashion brand Yves Saint Laurent CEO Paul Deneve. Devene will join as an executive in charge of “special projects” and will allegedly report directly to Apple CEO Tim Cook. Why does this matter? In our view, it signals that Apple could be branching out into different product lines, and after Apple filed to trademark iWatch in Japan, we think it could mean the company is currently focusing more extensively on wearable technology. At the ‘All Things … Read more

Linn Energy: SEC Sees Smoke…Is There Fire?

by

Controversial independent oil and gas company Linn Energy (click ticker for report: ) announced Tuesday morning that the SEC has launched an informal inquiry into Linn and LinnCo (LNCO). As we previously outlined June 3, we have no interest in adding the company to the portfolio of our Dividend Growth Newsletter given the cloud of questions, poor internally-generated cash flow, and numerous downside risks. We’re retaining the firm on the watch list of our Dividend Growth Newsletter, however, as we continue to monitor developments closely. As always, our best dividend growth ideas are included in our Dividend Growth portfolio. We give credit to Linn’s management team for revealing the explicit details of the inquiry, stating in the press release: “The SEC … Read more