Brian Nelson

Downstream Profits Alleviate E&P Weakness at Exxon Mobil

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Diversified oil giant Exxon Mobil (click ticker for report: ) reported weak third quarter results Thursday morning. The firm saw revenue decline 7% year-over-year to $115.7 billion, which was slightly better than consensus expectations. Earnings per share fell just 2% year-over-year to $2.09, which also exceeded consensus estimates. Exxon’s third quarter reflected the divergence between E&P (exploration & production) versus downstream refining. However, unlike ConocoPhillips (click ticker for report: ), which spun-off Phillips 66 (click ticker for report: ), Exxon owns both businesses, thus allowing this quarter’s weakness in E&P to be offset by downstream operations. E&P (also known as upstream) earnings fell 29% year-over-year to $5.9 billion due to waning oil and gas production, which fell 7.5%. Chemical earnings … Read more

Priceline Posts Fantastic Third-Quarter Results

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Online travel service and hotel reservations firm Priceline (click ticker for report: ) reported fantastic third-quarter results Thursday that showed solid gross travel bookings expansion and better-than-expected performance in Europe. Our fair value estimate remains unchanged. The company’s revenue advanced 17.4% from the year-ago period thanks to solid performance in its international operations, where sales grew 42% on a local currency basis. Third-quarter travel bookings increased 25.2% and 33.8% on a local currency basis from the same period a year ago. Image Source: Priceline Priceline’s operating income jumped 22.6% and GAAP earnings per share increased over 27% during the period. On a non-GAAP basis, earnings per share increased roughly 25% from last year’s quarter, to $12.40, better than consensus expectations of … Read more

Chevron Reports Difficult Third-Quarter Results But We Like Its Cash Flow Profile

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Chevron (click ticker for report: ) reported lower revenue and earnings in its third quarter Friday. Sales and other operating revenue fell roughly $5 billion, while net income dropped about $2.5 billion (or about 33%) from the same period a year ago. Both its upstream and downstream operations suffered as a result of difficult year-over-year comparisons, scheduled maintenance downtime, and negative foreign currency movements. We don’t expect to make a material change to our fair value estimate, however. The firm’s global net oil-equivalent production was 2.52 million barrels per day in the quarter, down from 2.6 million barrels per day in the year-ago period. Planned maintenance downtime, expected field declines, and shut-ins of the Frade Field in Brazil and in … Read more

Starbucks Posts Solid Fiscal Fourth-Quarter Results on Strong Comparable Store Sales Expansion

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On Thursday, Starbucks (click ticker for report: ) reported solid fiscal fourth-quarter results that showed strong comparable store sales growth and impressive profitability gains. The firm also announced a 24% increase in its dividend, but its projected 1.6% dividend yield is still too minute to consider the company for addition to the portfolio of our Dividend Growth Newsletter. We don’t expect any change to our fair value estimate to be material. The coffee giant’s revenue advanced 11% thanks to global comparable sales growth of 6%, comprising of 5 percentage points of higher traffic and the balance coming from an increase in the average ticket. The firm’s Americas growth was strong on moderately better pricing trends compared to consolidated performance, revealing the resiliency … Read more

Waste Management and Republic Services Post Poor Third-Quarter Results

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Waste Management (click ticker for report: ) and Republic Services (click ticker for report: ) posted weak third-quarter results this week. We’re taking a closer look at our valuation models for both garbage haulers. Waste Management continues to restructure its operations to address its cost structure, while Republic Services just announced a restructuring plan of its own during the third quarter. Both continue to revise down their respective earnings outlooks as a result of weak recycling commodity pricing, which is overwhelming their modest core pricing strength. Volume trends have also been lackluster, though the impact of Hurricane Sandy may provide a moderate boost in coming quarters. Specifically, Waste Management cut its 2012 earnings guidance to the range of $2.08-$2.13 per … Read more

October Auto Sales Were a Tad Light; We’re Not Worried

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After Ford (click ticker for report: ) and General Motors (click ticker for report: ) posted fantastic third quarter results, industry-wide auto sales came in slightly lighter than expected in October, as many cite Hurricane Sandy as hurting industry-wide unit sales by as many as 300,000 units. Let’s take a look at a few companies. Ford Best Ideas Newsletter holding Ford announced an excellent quarter on Tuesday, and shares have rallied since trading resumed Wednesday. The firm’s October results were decent, with sales growing 0.4% year-over-year (retail up 2%), but they came in below consensus estimates of 3.5% expansion. More pressing, Alan Mulally confirmed that he will remain CEO until “at least” 2014, but President Mark Fields was promoted to … Read more

Valuentum’s November Edition of Its Dividend Growth Newsletter!

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Since the previous edition of our Dividend Growth Newsletter, we received some welcome news from a couple constituents in our portfolio (please see page 5). Oil and gas pipeline operator Kinder Morgan Partners (KMP) raised its distribution 9% from the year-ago period, marking the 45th increase since current management took over in 1997. Phillips 66 (PSX), which we received after ConocoPhillips spun off its refining operations earlier this year, upped its dividend by an impressive 25%. Our Valuentum Dividend Cushion™ process continues to identify firms that are poised to raise their payouts significantly, while warning investors in advance of dividend cuts (as in SuperValu’s case). We remain on track to achieve our goal of generating a high-single-digit return for the … Read more

October Retail Roundup

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During October, the US consumer remained resilient while much of corporate America stagnated in anticipation of the presidential election and the looming fiscal cliff. Let’s take a look at retail sales results for the month. Nordstrom Nordstrom (click ticker for report: ) continues to be a standout performer in the luxury retail space, with October same-store sales surging 9.8% year-over-year. Nordstrom Rack continued to outperform the traditional stores, growing 10.5% year-over-year compared to 10.2% for traditional stores. We remain huge supporters of the firm’s expansion plans, and we believe its execution is unbeatable in the retailer industry. Nevertheless, we believe shares are fairly valued. Gap Gap’s (click ticker for report: ) October results weren’t quite as strong as September results, … Read more

Visa Continues to Deliver Top Notch Results

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Wednesday afternoon, payment processing giant Visa (click ticker for report: ) reported strong fourth quarter earnings and provided a bullish outlook for fiscal year 2013. Excluding the impact of one-time litigation charges, the firm earned a better-than-expected $1.54 per share, growth of 21% year-over-year. Total revenue surged 15% during the quarter to $2.7 billion, which also exceeded consensus expectations. New CEO Charlie Scharf takes the helm today while Joseph Saunders transitions to chairman and then eventually to retirement. Saunders leaves Scharf, the former head of retail financial services at JP Morgan Chase (click ticker for report: ), with lofty forward expectations. The firm’s guidance calls for low double digits revenue growth, 60% operating margins, high-teens earnings per share growth, and … Read more

Best Idea EDAC Posts Excellent Third Quarter

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On Wednesday, Best Idea Newsletter portfolio holding EDAC Tech (click ticker for report: ) posted excellent third quarter results that showed impressive sales growth and net income expansion. We continue to believe that shares are worth over $20 each, offering investors substantial upside potential. EDAC’s third-quarter revenue reached $27.5 million, up 26% from the third quarter of last year. Aerospace sales advanced 30%, while industrial segment sales increased 17%.  Operating income jumped nearly 70% thanks to roughly 270 basis points of operating margin expansion, to 10.8% of sales. Both of the company’s divisions had strong profit performance. We continue to believe the market is underestimating the tremendous operating leverage inherent to EDAC’s business model and the pace of earnings expansion … Read more