Brian Nelson

Total Reports Strong Third Quarter

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On Wednesday, Total (click ticker for report: ) reported strong third-quarter results. Revenue advanced 8%, while adjusted net income surged 20% from the prior-year period, to 3.3 billion euros, thanks to strong performance across all segments. We don’t expect to make a material change to our fair value estimate. In its upstream operations, where adjusted net operating income jumped 21% in the quarter, Total expects the ramp up of recent start-ups (Angola LNG, Sulige in China, and Kashagan in Kazakhstan) and progress of major projects to continue to propel profitable growth. During the third quarter, Total launched the development of the Tempa Rossa field in Italy, and we’re also excited about exploration endeavors in the Gulf of Mexico, Italy, Ivory … Read more

General Motors Reports A Fantastic Third Quarter

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American automaker General Motors (click ticker for report: ) reported fantastic third quarter results Wednesday morning. The firm shrugged off European weakness to grow revenue 2.5% year-over-year to $37.6 billion, nearly $2 billion better than consensus estimates, even though it was negatively impacted by $1 billion of currency fluctuations. Earnings were also much better than expected, falling 9% year-over-year to $0.93—about $0.28 higher than consensus expectations. EBIT (earnings before interest and taxes) actually ticked up $100 million to $2.3 billion, so if it wasn’t for higher tax rates, earnings would have been comparable to last year. Though revenue in North America grew 7% year-over-year to $23.3 billion, EBIT in the region tumbled 17% to $1.7 billion. Operating margins fell substantially, … Read more

Disney Steals Lucasfilms

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Tuesday afternoon, entertainment giant Disney (click ticker for report: ) purchased Lucasfilms and all associated assets from legendary film maker George Lucas for $4.05 billion—half in cash, half in 40 million newly minted shares of Disney stock. We can’t imagine the deal was anything but a steal for Disney, which now owns Lucas’ catalog of films, which includes six Star Wars movies, as well as the Indiana Jones franchise. Disney also acquires all licensing revenue, which amounts to over $200 million in 2012 alone. This doesn’t even account for successful businesses Skywalker Sound, LucasArts (video games), and Industrial Light & Magic. Though video games might not look very strong give the failure of EA’s (click ticker for report: ) Knights … Read more

TRW Rides Auto Recovery to Solid Results

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Auto safety systems manufacturer TRW Automotive (click ticker for report: ) reported solid third quarter earnings Tuesday morning, echoing what we’ve heard from Ford (click ticker for report: ). Revenue increased 1% (9% ex-currency/divestitures) to $4 billion, a bit stronger than consensus estimates. Net earnings decreased 9% year-over-year to $1.24 per share, which was still slightly better than consensus expectations. Gross margins increased about 70 basis points year-over-year to 10.4% as OEMs continue increased investment in safety devices. SG&A also declined about 20 basis points year-over-year to 3.7%, though the figure was roughly flat on an absolute basis. As a result, operating margins increased 50 basis points to 6.6%. Free cash flow remained solid, as the firm generated $31 million … Read more

Ford Smashes Expectations, Operating Margin Expansion Drives Earnings

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American automaker Ford (click ticker for report: ) reported fantastic third quarter earnings Tuesday morning in spite of persistent weakness in Europe. Revenue fell 3% year-over-year to $32.1 billion, which was still much higher than consensus estimates. Operating profit, which excludes special items, surged 18% year-over-year to $0.40 per share, 25% higher than consensus estimates. The real story at work during the third quarter was the undeniable success of One Ford in driving operating margin expansion. While revenue in North America increased 8% year-over-year to $19.5 billion, operating margins expanded a whopping 340 basis points to 12%. As a result, pre-tax operating profit surged 50% year-over-year to $2.3 billion. Our main thesis behind the company is that operating leverage is … Read more

Panera Shrugs Off Uncertainty

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Healthy quick-serve chain Panera Bread (click ticker for report: ) reported fantastic third quarter results Wednesday afternoon. Revenue surged 17% year-over-year to $529 million, roughly in-line with consensus estimates. Earnings growth outpaced revenue, up 28% year-over-year to $1.24 per share, which was stronger than consensus expectations. The firm also raised its fourth quarter earnings outlook to $1.72 to $1.74 per share, which exceeds prior guidance as well as the consensus estimate of $1.70 per share. System-wide same-store sales increased 5.8% during the quarter, driven by 6.2% growth from company owned stores and 5.5% growth from franchise owned stores. Panera’s mix of healthy foods and a diverse menu continue to drive expansion, even while other high-fliers such as Chipotle (click ticker … Read more

Amazon Continues to Lose Money; Market Continues to Not Care

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Online giant Amazon (click ticker for report: ) reported another quarter of solid revenue growth masked by subpar profitability Thursday afternoon. Revenue surged 27% year-over-year to $13.8 billion, just below consensus estimates. Earnings swung to a loss of $0.23 per share compared to a profit of $0.14 last year, on an adjusted basis, which was much worse than expected. On a GAAP-basis, the company lost $0.60 per share thanks to recognizing a large loss on deal site LivingSocial. The tech giant continues to focus on taking market share and damaging its competitors rather than generating large profits. CEO Jeff Bezos announced the Kindle Fire HD, a tablet that sells for approximately breakeven, is the number one selling product on Amazon.com, … Read more

Linn Energy Continues to Capture Cash Flow

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Linn Energy (click ticker for report: ) and newly-formed entity LinnCo (LNCO) reported solid third quarter results Thursday morning. Net of non-cash derivative losses, the firm earned $0.45 per unit during the quarter, up a penny from last year, and significantly higher than consensus estimates. More importantly, the firm achieved $1.01 in distributable cash flow per share, achieving a coverage ratio of 1.40x. Perhaps the most meaningful event during the quarter was the IPO of LinnCo, an entity formed to exclusively own shares of Linn Energy. The one caveat is that LinnCo is a traditional corporation, while Linn Energy receives K-1 tax treatment, which can be a long and convoluted process. As a result, Linn hopes to spur institutional and … Read more

Solid Long-term Fundamentals Remain Intact at Potash

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Near-term headwinds persist at fertilizer giant Potash (click ticker for report: ), which reported a mixed bag in its third quarter results Thursday morning. The Canadian firm saw revenue fall 8% year-over-year to $2.1 billion, slightly better than consensus expectations. Earnings per share slid 22% year-over-year to $0.74, which was worse than consensus estimates. Potash (the product) sales tumbled 10% year-over-year to $887 million, the result of declining prices and slumping orders from India and China. Total tonnage sales in North America increased 25% year-over-year to 1.0 million tonnes, as farmers have continued to invest in fertilizer to compensate for lower yields resulting from poor growing conditions in the US. Sales in Latin America also remained brisk, growing year-over-year driven … Read more