Brian Nelson

January Auto Sales Roundup

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Auto sales were off to a brisk start in 2013, posting a SAAR for the month of 15.3 million units—maintaining the strong pace we saw near the end of 2012 and up 14% year-over-year. Let’s take a look at how the major US auto OEMs performed. Ford Best Ideas Newsletter holding and standout performer Ford (click ticker for report: ) announced fantastic sales figures for January. Total unit sales jumped 22% year-over-year to 166,501 vehicles, and retail sales jumped 24% year-over-year. Brand strength was pretty broad based, with unit sales of the F-series up 22%, the Fusion up 65%, and the Explorer up 45%. Company-wide car sales jumped 34%, outpacing utility vehicles and trucks, which increased 23% and 11%, respectively. Unfortunately, the … Read more

Sysco’s Second Quarter Stalls

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Food distributor Sysco (click ticker for report: ) reported lackluster second quarter results Monday morning. Revenue grew 5% year-over-year to $10.8 billion, a touch better than consensus forecasts. Earnings, although in line with consensus estimates, were down 7% year-over-year to an adjusted $0.40 per share (Image Source: SYY 2Q Earnings Presentation). Gross margins (shown above) at Sysco were down 26 basis points year-over-year to 17.8%, driven mostly by food cost inflation, which was 2.5% during the quarter. For a retailer that that consistently posts 50%+ gross margins, a 30 basis-point swing is largely immaterial. However, Sysco runs on rather thin net margins, so any cost increases have a disproportionate effect on the bottom line. Although it appears inflation is trending … Read more

Poultry Problems Plague Yum!

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Fast food giant Yum! Brands (click ticker for report: ) announced solid fourth quarter results Monday afternoon, though the company warned investors that problems lie ahead. Revenue during the fourth quarter increased 1% (5% on a comparable basis) to $4.2 billion, in line with consensus estimates. Earnings were slightly better than expected, growing 10% year-over-year on an adjusted basis to $0.83 per share during the period. For the full year, YUM! earned $3.25 per share—better than the firm anticipated. However, these results were completely overshadowed by incredibly negative news coming out of China. Not only did same-store sales fall 6% year-over-year, with operating margins declining 190 basis points to 13.9%, but the company is experiencing a terrible reaction to a … Read more

Could the FCC Hurt Carriers’ Profits?

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Reports have surfaced that the FCC wishes to create a free, nation-wide WiFi network in order to facilitate web and cellular traffic. Though plans are only in the initial stages (and we are not jumping to any conclusions), the government could provide the US with a high-speed network at no cost, helping to put the nation on par with the Internet service achieved in several other countries. The news does not alter our fair value estimates for companies in our coverage universe, pending new details regarding probability and timing of implementation. Understandably, the companies that currently own spectrum and experience fantastic returns on networks are a bit upset about the possibility. The high margins achieved by wireless operators Verizon (click … Read more

Mattel Posts Strong Fourth Quarter; Raises Dividend

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Toymaker Mattel (click ticker for report: ) reported solid fourth quarter results Friday morning that were slightly worse than consensus estimates. Revenue grew 5% year-over-year to $2.3 billion, producing adjusted earnings per share of $1.13, also 5% higher than the year ago period. These results outpaced those of competitor Hasbro (click ticker for report: ), which missed the mark when it preannounced weak fourth quarter results in late January. Both domestic and international markets drove strength at Mattel, as North American sales jumped 5% year-over-year on a reported-basis (4% excluding currency) and International sales increased 8% year-over-year on a reported basis (10% excluding currency). Asia was incredibly strong, with sales jumping 27% year-over-year, and we think the future looks bright … Read more

Refining Profits Help Fuel Supermajors

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Two of the world’s largest oil companies, Exxon Mobil (click ticker for report: ) and Dividend Growth portfolio holding Chevron (click ticker for report: ) announced solid fourth quarter results Friday. Exxon’s fourth quarter earnings rose 12% year-over-year to $2.20 per share, easily exceeding consensus expectations, even though production declined 5.2% year-over-year. Production at Chevron was stronger, increasing 1.1% year-over-year, while earnings were fantastic, surging 43% year-over-year to $3.70 per share (well above consensus estimates). After Phillips 66 (click ticker for report: ), Valero (click ticker for report: ), and the rest of the refining cohort reported stellar results, we were not at all surprised to see downstream earnings surge at both supermajors. Chevron swung from a loss of $61 … Read more

MasterCard Posts Terrific Fourth Quarter Results

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Late last week, payment processor MasterCard (click ticker for report: ) announced terrific fourth quarter results. Revenue jumped 10% year-over-year to $1.9 billion, in line with expectations. Earnings, however, exceeded consensus estimates, growing 21% year-over-year to $4.86 per share. Much like Best Ideas Newsletter holding Visa (click ticker for report: ), MasterCard continues to ride secular tailwinds as the world moves to a cashless society. Though the US is MasterCard’s largest market, its credit card market share substantially lags that of Visa. Still, the company has tremendous global exposure. With credit and debit payments nearing maturity in the US, other markets (shown below) are driving the growth at MasterCard (Image Source: MasterCard Earnings Presentation). Although the company’s exposure to Europe may be … Read more

Problems Persist at Under Armour But Cash Flow Improves

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Athletic apparel giant Under Armour (click ticker for report: ) recently reported strong fourth quarter results. Revenue jumped nearly 26% year-over-year to $506 million, exceeding consensus expectations. Earnings were in line with consensus estimates, growing 52% year-over-year to $0.47 per share. For more than a year, we’ve been cautious about the way the apparel firm has been managing its cash flow. After a warm fourth quarter in 2011, the company was saddled with large amounts of product that strained liquidity through most of the year. However, 2012, and more specifically, the past two quarters, represented a push in the right direction. Under Armour’s inventory declined year-over-year during the third quarter, and we once again saw inventory decline 2% year-over-year during … Read more

What a Month! Valuentum’s February Edition of Its Dividend Growth Newsletter!

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What a Month for Dividend Growth Investors! by Brian Nelson, CFA Not only did the Dow Jones Industrial Average (DJIA) top 14,000 for the first time since October 2007, but performance of constituents in the portfolio of our Dividend Growth Newsletter (see page 5) was even better! ConocoPhillips’ spin-off Phillips 66 (PSX) hit an all-time high and has now nearly doubled since it joined our portfolio. Johnson & Johnson (JNJ) and Procter & Gamble (PG) notched all-time highs, while Altria (MO), Kinder Morgan (KMP), and Emerson Electric (EMR) also had an excellent month! We’ve been more than satisfied with our performance so far this year and since inception. Our Dividend Growth portfolio has now advanced over 16% for an annualized … Read more