Brian Nelson

Caterpillar’s 2013 Doesn’t Look Great

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Global equipment manufacturer Caterpillar (click ticker for report: ) posted weak first-quarter results on the back of a decline in global mining capital expenditures. Revenue dropped 17% year-over-year to $13.2 billion, which was slightly below consensus expectations. Earnings tumbled 45% year-over-year to $1.31 per share, which was also worse than consensus estimates. The decline during the first quarter wasn’t much of a surprise as the outlook for mining capital expenditures fell precipitously as commodity prices tumbled. In fact, Cat’s revised outlook implies a 50% year-over-year decline in sales of the firm’s traditional mining equipment and a 15% decline in sales of the equipment sold by recently-acquired Bucyrus. Sales fell 23% in the resource segment for the quarter, and with most of the global mining … Read more

Strong Headline Results From Apple

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Best Ideas Newsletter holding Apple (click ticker for report: ) posted solid results Tuesday afternoon.  Apple exceeded consensus earnings expectations earning $10.09 per share versus an expectation of $10.07. Revenue grew 11% year-over-year to $43.6 billion, exceeding consensus estimates by over $1 billion. Free cash flow totaled $31.6 billion during the first 6 months of the fiscal year, an increase of 10% compared to the same period a year ago. Importantly, the company also announced expanded intentions to repurchase shares and boosted its dividend 15%. The firm’s buyback was raised to $60 billion (from $10 billion), and it will also use $1 billion annually to offset restricted stock grant dilution. We’ll provide full analysis after the conference call.

Netflix’s Subscriber Growth Remains Fantastic

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Content distributor Netflix (click ticker for report: ) kicked off 2013 with strong growth in revenue, subscribers, and earnings per share. Revenue jumped 18% year-over-year to $1 billion, roughly in-line with consensus estimates. On the other hand, earnings per share generously exceeded estimates, moving from break-even to $0.31 per share. Further, the company added 3.05 million new streaming subscribers while losing only 3% of domestic DVD subscribers. Both domestic streaming and international streaming posted strong improvements in profitability and revenue. Domestic streaming revenue increased 26% year-over-year, with lower content costs driving a 630 basis point increase in operating margins to 20.6%. This resulted in an 82% increase in operating profit. In his candid letter to investors, CEO Reed Hastings cited strong … Read more

GE Posts Another Record Backlog, But Organic Growth Falters

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Industrial conglomerate General Electric (click ticker for report: ) reported solid first-quarter results marked by a record backlog of $216 billion. Revenue was flat year-over-year at $35 billion, which modestly exceeded consensus expectations. Earnings, excluding the positive impact of the sale of NBCUniversal, grew 17% year-over-year to $0.35 per share, slightly better than consensus estimates. In spite of decent backlog growth, weakness in its Power and Water division and lackluster results in Oil & Gas weighed on performance. The Power and Water segment was particularly challenged, as revenue dropped 26% year-over-year to $4.8 billion driven by a 42% decline in equipment revenue. The firm focused on cost-cutting efforts in order to preserve margins, but segment profitability still fell 39% to … Read more

McDonald’s Struggles In The First Quarter

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Fast-food goliath McDonald’s (click ticker for report: ) posted first-quarter results that revealed a great deal of weakness in its core business. Revenue rose 1% year-over-year to $6.6 billion, a tad higher than consensus expectations. Earnings per share were roughly in-line with consensus estimates, rising only 2% year-over-year to $1.26 per share. More worrisome, McDonald’s same-store sales declined 1% year-over-year driven by a 1.2% decrease in same-store sales in the United States. Operating income in the region declined 3%. The firm released a few new items like Fish McBites and premium wraps, but new products were unable to push the needle in terms of sales. McDonald’s emphasized its continued focus on value and the dollar menu, which, in our view, … Read more

Firms Raising Their Dividends In The Week Ending April 19

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Quite a few firms raised their dividends during the week ending April 19. Firms Raising Their Dividends This Week: Allison Transmission Holdings (ALSN): now $0.12 per share quarterly dividend, was $0.06. A.O. Smith (AOS): now $0.24 per share quarterly dividend, was $0.20. Cardinal Financial (CFNL): now $0.06 per share quarterly dividend, was $0.05. CSX (CSX): now $0.15 per share quarterly dividend, was $0.14. Discover Financial Services (DFS): now $0.20 per share quarterly dividend, was $0.14. Donegal Group (DGICA): now $0.1275 per share quarterly dividend, was $0.1225. El Paso Pipeline Partners (EPB): now $0.62 per share quarterly dividend, was $0.61. First Republic Bank (FRC): now $0.12 per share quarterly dividend, was $0.10. Kinder Morgan (KMI): now $0.38 per share quarterly dividend, … Read more

Yahoo: The Turnaround

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Internet search and content provider Yahoo (click ticker for report: ) reported first-quarter results that were mediocre. Revenue ex-TAC (excluding traffic acquisition costs) was flat year-over-year, falling short of consensus estimates. Earnings per share easily exceeded consensus expectations, rising 52% year-over-year to $0.35. Yahoo provided non-GAAP earnings per share of $0.38 that excluded stock-based compensation expense. Unfortunately for shareholders, the EPS increase was mostly the result of a 10% reduction in share count, a reversal of one-time charges, and a significantly lower tax rate. Non-GAAP operating income fell $7 million year-over-year to $224 million. Operating cash flow also declined to the magnitude of 26%, while free cash flow also declined 20%. In our view, the quarter was not nearly as strong … Read more

Intel Struggles With The PC Market Slumping

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Best Ideas and Dividend Growth Newsletter holding Intel (click ticker for report: ) reported lackluster results Tuesday afternoon. For the first quarter, the firm posted a revenue decline of 3% year-over-year, which was slightly worse than consensus expectations. Earnings were a penny shy of consensus estimates, falling 17% year-over-year to $0.40 per share. Gross margins fell 800 basis points year-over-year to 56%, but the firm maintained its full-year outlook for gross margins of 60%. Ultimately, the market knew not to expect a blowout quarter, as PC sales languish. For the quarter, PC client revenue declined 6% year-over-year to $7.99 billion, but the segment’s operating income decline was steeper, falling 28% year-over-year to $2.5 billion as the firm took large inventory … Read more