Brian Nelson

Best Buy’s Holiday Sales Were Solid; Margins Are the Issue

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This morning, the maligned big box electronics retailer Best Buy (click ticker for report: ) provided updates on its holiday sales results, which were relatively strong, in our view. Breaking the downward spiral, same-store sales in the US were flat compared to last year, but continued to decline internationally, down 6.4% year-over-year. However, overall sales declined to $12.8 billion for the 9-week holiday season compared to $12.9 billion for the same period last year, suggesting overall business was fairly solid. Consistent with trends throughout 2012, consumer electronics were weak, while ‘Computing and Mobile Phones’ revenues surged. Source: Best Buy Holiday Sales Report, Valuentum Consumer electronics, largely comprised of TVs, has been weak and probably will continue to be until we see … Read more

Is Tiffany Still Sparkling?

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Luxury retailer Tiffany (click ticker for report: ) reported challenging holiday sales Thursday. Global sales growth came in at 4% ($992 million)–the low end of the firm’s previous guidance range–after sales really slumped in North America. Same-store sales at the Tiffany 5th Avenue flagship store in New York and stores throughout North America declined 2% during the holiday period. Internet and catalog sales in the region did increase 4%, leading total sales in the Americas region to increase 2% on a constant currency basis (and 3% on a reported basis to $516 million). This could be a negative for other stores such as Saks (click ticker for report: ) that are so heavily tied to New York flagships, but we … Read more

Ford Doubles Its Dividend; Another Catalyst Driving the Firm’s Shares Toward Our Fair Value Estimate

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This morning, automaker and Best Ideas Newsletter holding Ford (click ticker for report: ) announced that it will increase its quarterly dividend by 100%, to $0.10 per share. We predicted Ford would resume its dividend, and the raise comes as little surprise to us, given Ford’s improved capital structure and eagerness to return cash to shareholders. We expect to update our dividend report on Ford soon. At its current price, the annual dividend yield is now approximately 2.9%, while the yield on cost of those who invested alongside Valuentum is substantially higher at approximately 3.7%. Not only does the yield provide investors with a stronger income stream, but the increased dividend reflects management’s confidence in the business going into 2013, … Read more

Is a Cheaper iPhone in the Works?

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On the iPhone’s (click ticker for report: ) 6th birthday, rumors are swirling that Apple is working on a cheaper iPhone to compete with the dozens of smartphones its competitors release every year. Since shares have fallen nearly $200 from the mid-September peak, investors and other market participants seem worried that Apple is losing its luster, and that consumers prefer the Galaxy SIII and the Note. Plus, market share data out of both Europe and China has been relatively bearish. Our confidence in Apple hasn’t been shaken, as we focus on what’s far more important for a company than market share: profits. We think investors are reaching to explain the recent share price decline instead of acknowledging that the company’s … Read more

Can Eddie Lampert Turn Around Sears?

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Earlier this week, Sears (click ticker for report: ) CEO Lou D’Ambrosio announced that he’ll resign from his position in February due to an illness in the family. Not so surprisingly, Sears chairman and hedge fund titan Eddie Lampert will be taking the reigns as CEO. Lampert, who merged Sears and Kmart several years ago, will be the chief executive for the first time, and as far as we can tell, he seems confident in his ability to turnaround the failing retailer. In an interview with the Chicago Tribune, Lampert cites Jeff Bezos’ success as a finance guy turned retailer leading Amazon (click ticker for report: ) as evidence that he can turn the dying company around. Although he hasn’t … Read more

Alcoa’s Guidance Bodes Well for Aerospace

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Industrial stalwart Alcoa (click ticker for report: ) reported solid fourth quarter results and relatively optimistic 2013 guidance. Revenue exceeded expectations, falling 2% year-over-year to $5.9 billion. Earnings, after excluding several one-off items, were $0.06, roughly in-line with consensus estimates and favorable compared to the same period a year ago. Upstream products continue to feel the pressure of weaker commodity pricing, which has obviously negatively impacted earnings. However, the company has been able to lower its position on the cost curve, leaving it with considerable leverage to the upside in the event of price appreciation. Though upstream revenue remains mostly weak (even with favorable supply/demand dynamics), Alcoa continues to drive strong earnings from its midstream and downstream products, particularly in … Read more

Monsanto Crushes the Quarter on Strong Seed Demand

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Following the weak North American farm yields in 2012, demand for Monsanto’s (click ticker for report: ) enhanced seed products drove fantastic fiscal year 2013 first quarter results. Revenue increased 21% compared to the same period a year ago to $2.9 billion, well above consensus estimates. Earnings grew 169% year-over-year to $0.62 per share, well in excess of consensus expectations. The results came as a bit of a surprise, even after seed competitor DuPont (click ticker for report: ) announced that it expected agricultural sales to accelerate in 2013, as the firm did a fantastic job increasing profitability. Sales of corn seed and traits surged 27% year-over-year to $1.1 billion, driving the 14% revenue increase in Monsanto’s seed and genomics … Read more

2013 International CES Trade Show Bodes Well for Intel

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After bottoming in mid-December, shares of Intel (click ticker for report: ) have recovered and are exhibiting some near-term technical strength. Fears of margin compression and a lack of a mobile offering have been putting heavy downward pressure on the share price over the past year. But we don’t think this is justified. The fundamental outlook, which we have always found sound, has improved following announcements at CES. Intel will work on improving its mobile offerings, which is easily the best news, in our view. Though Intel hasn’t yet achieved much market share in the premium smartphone or tablet markets, the company announced a new generation known as Bay Trail that will power Android and Windows-based tablets with far better efficiency than … Read more