Brian Nelson

RR Donnelley’s Dividend Isn’t Safe

by

Every month in our Dividend Growth Newsletter, we identify firms that may need to cut dividend payments in the future. Timing the dividend cut is difficult (and somewhat arbitrary) as companies can do a number of things to prop up dividends until cash flow situation becomes dire, as we’ve seen at firms like SuperValu (click ticker for report: ) and Roundy’s (click ticker for report: ). However, our forward-looking Valuentum Dividend Cushion has caught a number of dividend cuts during the past year, including JC Penney’s (click ticker for report: ), CenturyLink (click ticker for report: ), and Exelon (click ticker for report: ). We’re not sure RR Donnelley’s (click ticker for report: ) dividend will be the next to go, but … Read more

Casey’s General Is Almost Cheap

by

Convenience store chain Casey’s General (click ticker for report: ) has seen its share price take a small haircut after reporting third quarter results earlier this week. Revenue rose 5% year-over-year to $1.7 billion, falling a tad shy of consensus estimates. Earnings fell 7% year-over-year to $0.40 per share, falling well below consensus expectations. Because of its large amount of retail fuel sales, revenue itself isn’t the best metric to measure Casey’s performance, but the firm provides plenty of other useful data points. Same-store gasoline volumes rose 0.6% at an average margin 13.8 cents—just short of the firm’s targets of 1% and 14 cents, respectively. The margin was slightly ahead of last year’s pace. The price of gas went up … Read more

Best Idea Buffalo Wild Wings Making 2013 Highs

by

Although the company had its fourth quarter earnings squeezed due to higher chicken wing prices, Best Ideas Newsletter holding Buffalo Wild Wings (click ticker for report: ) is approaching new highs for 2013, trading north of $85 per share. Hedge fund Citadel recently upped its stake in the company to 5.15%, and we think the firm has a strong quarter ahead with March Madness, the NHL playoffs, and the NBA playoffs all quickly approaching. We think shares have some additional upside from current levels, so we’re holding steady in the portfolio of our Best Ideas Newsletter.

FAA Clears the Boeing Battery Solution; Supply-Chain Value Still Evident

by

Late yesterday afternoon, airplane manufacturer and designer Boeing (click ticker for report: ) received approval for the company’s plan to test and certify batteries for its 787 Dreamliner jet. Boeing’s lithium ion battery issues plagued several of its new jets, including many in Japan, which caused substantial weakness in shares even though orders remained strong, and several industry insiders indicated the problem wasn’t anything out of the ordinary. On January 17th, we called for the bottom in sentiment regarding the Boeing 787, and shares of the company have rallied 13% since. Although we did not believe the lithium ion battery would be a long-term headwind for Boeing, several market participants wondered if the company could develop a satisfactory solution, weighing … Read more

Costco Outperforms Wal-Mart and Target

by

Even as Wal-Mart (click ticker for report: ) remains challenged, wholesaler Costco (click ticker for report: ) continues to report strong results. Revenue increased 8% year-over-year to $24.8 billion, falling slightly short of consensus estimates. Earnings jumped 37% year-over-year to $1.24 per share, roughly in-line with consensus expectations. Earnings included a one-time $0.14 per share benefit, net of which earnings still grew 22% year-over-year. Although revenue growth was only 8%, membership revenue jumped 15% year-over-year to $528 million. Membership revenues are driven by fantastic renewal rates, which in the US and Canada totaled 93.9% for business memberships and 88.8% for Gold Star memberships. With renewals so strong, the company has been able to easily pass on price increases, saying: “Continued … Read more

Yum!’s China Recovery Begins

by

After warning that same-store sales could decline as much as 25% during the first quarter in the wake of a poultry supplier scandal that shook consumer confidence in China, Yum! (click ticker for report: ) reported a same-store sales decline of 20% in its China division. Same-store sales at KFC dropped 24%, while Pizza Hut’s sales fell just 2%. We gathered that after McDonald’s (click ticker for report: ) results in China were “strong,” KFC might show some signs of stabilization, and that appears to be the case. More importantly, Yum!’s China division reported same-store sales growth in February. Although aggregate same-store sales grew just 2%, same-store sales at Pizza Hut jumped 13%, and same-store sales were flat at KFC … Read more

Gross Margins Recovering But Still Down At Urban Outfitters

by

Apparel retailer Urban Outfitters (click ticker for report: ) reported strong sales for its fiscal year 2013 fourth quarter. Revenue jumped 17% year-over-year to $856 million, exceeding consensus estimates. Earnings per share fell a penny shy of consensus estimates, but were more than twice as high as the year prior at $0.56 per share. A quick look at metrics might suggest that the business is improving—it is—but the performance is still lagging what Urban achieved in fiscal year 2011. Gross margins improved 650 basis points year-over-year to 36.6% due to lower markdowns and an increase of 18% in regular priced comp sales. Still, the 36.6% gross margin remains 310 basis points lower than the fourth quarter of fiscal year 2011, … Read more

Lance Armstrong Ruins Dick’s Sporting Goods’ Fourth Quarter

by

Monday morning, sporting goods retailer Dick’s Sporting Goods (click ticker for report: ) announced results for its fourth quarter. Revenue fell short of consensus expectations, growing 12% year-over-year to $1.8 billion, even though the firm had an extra selling week. Earnings per share fell well short of expectations, growing 17% year-over-year to $1.03 per share, even though the company had $0.03 added by the extra week of retailing. Dick’s Sporting Goods had been on a roll throughout most of 2011 and 2012, but same-store sales growth totaled just 1.2% year-over-year growth during the fourth quarter. Same-store sales at Dick’s Sporting Goods locations actually dipped 2.2%, though Golf Galaxy’s same-store sales increased 1.3%, and e-commerce sales soared 54%. Management identified hunting … Read more

House of Cards – A Sign That Netflix Can Become a Content Creator

by

Since activist investor Carl Icahn took a public stake, shares of Netflix (click ticker for report: ) have been on a tear. Shares really took off after the firm reported strong earnings for its fourth quarter and a bullish outlook for the first quarter of 2013. Shares have nearly doubled in 2013 alone, and it seems the market is getting even more bullish on Netflix. In our view, this has less to do with recent earnings trends, but rather, we believe the success of House of Cards has been a positive catalyst for the stock. The show has received fantastic reviews with an aggregate score of 9 on IMDB.com, and it has been mentioned in the same breaths as blockbuster … Read more

Pandora’s Market Share is Improving…But Profitability Continues to Flounder

by

Internet radio company Pandora (click ticker for report: ) announced the results for its fiscal year 2013 fourth quarter late last week. Results were mostly better than expected, with revenue surging 54% year-over-year to $125 million. Earnings were a penny higher than consensus forecasts, as the company lost just $0.04 per share, significantly better than the year prior. Pandora’s service continues to surge in popularity thanks to the convenience of mobile and continued market share gains. Hours listened jumped 53% year-over-year during the quarter to 4.05 billion hours, while hours listened for the year grew 70% year-over-year to 14.01 billion hours. Perhaps even more telling, the company’s share of the US radio market in February jumped to a whopping 8.48%, … Read more