Brian Nelson

Main Street’s Solid Run Continues

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Business development company Main Street (click ticker for report: MAIN) reported solid first quarter results Thursday afternoon, marked by a strong increase in net investment income and book value. Net investment income per share rose 35% year-over-year to $0.50 per share, easily eclipsing consensus estimates. Book value per share rose 2% sequentially to $18.55. During the first quarter, investment income rose 25% year-over-year to $25.6 million, driven largely by an increase in interest income as the company put more capital to work in debt investments. Dividends received from equity investments also increased $1 million. Although Main Street’s cash position isn’t very strong, sitting at $26.2 million, the firm recently expanded its credit facility by $65 million to $352.5 million, giving … Read more

Best Ideas Newsletter Portfolio Holding Precision Castparts Posts Blockbuster Fourth Quarter Results; Shares Soar

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Best Ideas Newsletter holding Precision Castparts (click ticker report: ) leveraged powerful top-line expansion into terrific earnings growth during its fiscal fourth quarter. Revenue surged 25% year-over-year to $2.4 billion, which was roughly in-line with consensus estimates. Earnings followed suit, increasing 22% year-over-year to $2.82 per share, which was stronger than consensus expectations. While the company took on some debt in order to acquire Titanium Metals (Timet), total cash generation for fiscal year 2013 totaled $437 million (ex-acquisitions). On a segment basis, Investment Cast Products increased 5% year-over-year to $635 million during the fourth quarter. Yet, more impressive was the strong increase in operating margins, which advanced 110 basis points to 33.7%, driving income growth of 9%. Incremental margins on … Read more

Wendy’s Slow Turnaround Plugs Along

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Fast food retailer Wendy’s (click ticker for report: ) has had a tough path during the past several years, but we believe conditions are slowly getting better. Revenue in its first quarter grew just 2% year-over-year to $603 million, falling a bit short of consensus estimates. Earnings per share weren’t robust, but were still in-line with consensus expectations at $0.03 compared to $0.01 in the same period a year ago. Adjusted EBITDA, a metric Wendy’s has been using over the past few years, grew 21% year-over-year to $77.3 million. Since the Great Recession, we’ve seen Wendy’s mostly underperform its peers, but the firm is taking steps in the right direction to narrow the gap. North American same-store sales grew 1% … Read more

Lack of Cost Control and Demand Risk: The Story of Monster Beverage

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Earlier this week, energy drink producer Monster Beverage (click ticker for report: ) reported lackluster first quarter results due to lower sales growth and a lack of cost containment. Revenue was well below consensus expectations, growing just 7% year-over-year to $484 million compared to the last several quarters of double-digit revenue growth. Earnings fell 10% year-over-year to $0.37 per share, which failed to come close to the consensus estimate. According to Monster’s management, the entire energy drink industry experienced weak sales growth during the first quarter relative to the powerful double digit growth rates the industry has become accustomed to. What’s driving the weakness? It appears to be largely related to health issues. The FDA provides a report describing the negative … Read more

Tesla’s Growth Is Exciting

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Electric vehicle maker Tesla (click ticker for report: ) continues to be one of the more interesting stories in the broader stock market. Without spending a dime on marketing, the firm posted record revenue of $562 million, smashing consensus estimates. Earnings per share turned positive at $0.12, which was also far better than consensus expectations. To top it off, Tesla posted positive free cash flow of $6.3 million—not much, but certainly a step in the right direction. During the first quarter, the company produced over 5,000 cars and recognized revenue on 4,900 units, easily exceeding the company’s initial guidance of 4,500 units. Demand remains brisk, and CEO Elon Musk noted in his letter to investors that current order demand is … Read more

Whole Foods’ Stellar Growth Continues

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Health-focused grocery store chain Whole Foods (click ticker for report: ) posted a strong second quarter. Sales growth remained robust, as the firm grew sales 13% year-over-year to $3 billion, roughly in-line with consensus expectations. Earnings per share rose 19% year-over-year to $0.76 per share, modestly exceeding consensus estimates. Free cash flow remained relatively strong at $326 million year-to-date, marginally higher than the $303 million the firm generated during the same time period in the prior year. New store growth remains solid, as Whole Foods added 6 new locations during the year. With just 349 stores in the US, we think the firm remains a long way from its market potential of well over 1,000 domestically. In fact, same-store sales … Read more

Results Up Marginally at Emerson Electric

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Dividend Growth Newsletter holding Emerson Electric (click ticker for report: ) posted lackluster second quarter results reflecting mixed industrial demand. Underlying revenue increased 2% year-over-year to $6 billion, modestly lower than consensus estimates. Earnings were a penny below consensus expectations, growing 4% year-over-year to $0.77 per share. However, thanks to higher net income and more favorable changes in working capital, free cash flow was 51% higher year-to-date at $916 million. Emerson has various segments, but second quarter results were driven largely by a strong performance from Process Management. Segment sales jumped 8% year-over-year from robust international demand. US revenues in the segment were actually down 1%, but oil and gas industry demand from Asia (up 14%), Latin America (up 13%), … Read more

DirecTV Posts Solid Growth Across Geographies

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Best Ideas Newsletter holding DirecTV (click ticker for report: ) posted solid first quarter results this week as higher ARPU in the US and strong subscriber additions in Latin America drove solid revenue growth. Revenues increased 8% year-over-year to $7.6 billion, which modestly exceeded consensus estimates. Adjusted earnings surged 34% year-over-year to $1.43 per share, smashing consensus expectations as the company continued to lower its share count. Over the past year, DirecTV has shrunk its float by 15%. Free cash flow dipped to $710 million from $952 million during the same period ago, but management noted that was mostly attributable to unfavorable working capital timing in the US. On a geographic basis, we were incredibly pleased with the performance of … Read more

First Solar’s Volatile Performance Continues

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Solar manufacturer First Solar (click ticker for report: ) saw its shares tumble after the firm posted terrible gross margins during its first quarter. Revenue jumped 52% year-over-year, but fell 30% sequentially to $755 million, which was slightly ahead of consensus estimates. Earnings were several cents short of consensus expectations at $0.66, but the measure was still much better than the same period a year ago in which First Solar took a restructuring charge. Cash flow generation was relatively weak as the company posted $19.7 million in free cash flow, down from $253.3 million in the prior quarter. The big issue for First Solar came from the cost side of the equation. CFO Mark Widmar spoke to the issue of … Read more