Brian Nelson

Procter & Gamble Raises Core EPS Guidance

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Image Source: P&G Q3 Earnings Presentation By Brian Nelson, CFA On April 19, Procter & Gamble (PG) reported mixed third quarter results for fiscal 2024. Organic sales advanced 3% in the period thanks almost entirely to higher pricing, while diluted net earnings per share increased 11% on a year-over-year basis (up 18% on a currency-neutral basis). The company experienced modest volume growth in its ‘Beauty,’ ‘Grooming,’ and ‘Fabric & Home Care’ divisions, but foreign currency headwinds were stiff. P&G experienced particularly strong pricing performance in its ‘Grooming’ division, where sales in the division were positively impacted by 10% from price, to drive overall net sales growth to 3% in the segment. Management’s commentary in the press release was upbeat: We … Read more

Netflix to Stop Reporting Membership Numbers Starting Next Year

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Image: Netflix still has a lot of room for growth. By Brian Nelson, CFA On April 18, Netflix (NFLX) reported better than expected first quarter 2024 results. In the quarter on a year-over-year basis, the company’s revenue advanced ~15%, its operating income jumped ~54%, and its operating margin registered a roughly seven-percentage point increase, to 28%. Netflix’s top line was driven both by membership growth and pricing, and operating income benefited in part from higher-than-expected revenue performance and the timing of its content spending. Earnings per share came in at $5.28 in the quarter versus management’s $4.49 forecast. Netflix generated free cash flow of ~$2.14 billion in the quarter. Netflix continues to focus on building out its member base, while … Read more

Kinder Morgan Issues Strong Outlook; Adjusts Leverage Target

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Image: Kinder Morgan’s shares have been choppy during the past couple years. By Brian Nelson, CFA On April 17, Kinder Morgan (KMI) reported first-quarter 2024 results. The company’s earnings per share came in at $0.33 per share in the quarter, while distributable cash flow [DCF] per share came in at $0.64 for the period, reflecting a 10% and 5% increase, respectively. Net income attributable to Kinder Morgan in the first quarter was $746 million, up from $679 million in the same period a year ago. DCF also moved in the right direction, coming in at $1.42 billion in the quarter, up from $1.37 billion in last year’s quarter. Kinder Morgan issued the following outlook for 2024: For 2024, including contributions … Read more

Taiwan Semi Puts Up Strong First Quarter, Gives Cautious Outlook

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Image: Taiwan Semiconductor’s shares have rallied considerably since the October 2022 bottom. By Brian Nelson, CFA On April 18, Taiwan Semiconductor (TSM) reported better than expected first-quarter 2024 results. On a year-over-year basis, revenue advanced 16.5%, while both net income and diluted earnings per share increased 8.9%. On a U.S. dollar basis, first-quarter revenue increased 12.9% on a year-over-year basis. Taiwan Semi’s gross margin for the quarter came in at 53.1%, its operating margin was 42.0%, while its net profit margin was 38.0%. During the first quarter, the company noted that shipments of 3-nanometer accounted for 9% of total wafer revenue, while shipments of 5-nanometer and 7-nanometer accounted for 37% and 19%, respectively in the quarter. Management noted that advanced … Read more

ASML Reports First Quarter Results, Reiterates Guidance

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Image: ASML Holding is one of our favorite semiconductor ideas. By Brian Nelson, CFA On April 17, ASML Holding (ASML) reported decent first quarter 2024 results. First quarter net sales came in at €5.29 billion on a gross margin of 51.0%. Net income was €1.22 billion in the quarter. Net bookings in the first quarter of 2024 came in at €3.6 billion, down sequentially from the strong net bookings number delivered in the fourth quarter of 2023. The company continues to be shareholder friendly, paying dividends and buying back €400 million worth of stock during the first quarter. Management had the following to say about the quarterly results and outlook: Our first-quarter total net sales came in at €5.3 billion, … Read more

Johnson & Johnson Narrows 2024 Outlook, Raises Dividend

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Image Source: J&J By Brian Nelson, CFA Johnson & Johnson (JNJ) reported mixed first-quarter 2024 results on April 16 with adjusted operational growth of 4%. Excluding its COVID-19 vaccine sales, revenue growth was 7.7% in the period. First quarter adjusted earnings per share advanced 12.4%, to $2.71, which was slightly better than the consensus forecast. Management was upbeat in the press release: Johnson & Johnson’s solid first quarter performance reflects our sharpened focus and the progress in our portfolio and pipeline. Our impact across the full spectrum of healthcare is unique in our industry, and the milestones achieved this quarter reinforce our position as an innovation powerhouse. J&J’s adjusted operational sales for its Innovative Medicine division increased 2.5%, while adjusted operational sales … Read more

UnitedHealth Group Reiterates 2024 Adjusted Net Earnings Outlook

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Image: UnitedHealth Group’s shares have been choppy during the past couple years. By Brian Nelson, CFA On April 16, UnitedHealth Group (UNH) reported better-than-expected first quarter 2024 results. Revenue advanced nearly $8 billion on a year-over-year basis, to $99.8 billion, while adjusted earnings per share came in at $6.91. The company’s results were quite messy given the impact of the recent cyberattack on its business as well as the sale of its Brazil operations. UnitedHealth Group noted that the cyberattack impact in the first quarter was $0.74 per share, and the firm expects the full year 2024 impact to be $1.15-$1.35 per share. The company also recorded a largely non-cash $7 billion charge in the quarter due to the sale … Read more

Goldman Sachs Delivers in First Quarter

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Image Source: Goldman Sachs By Brian Nelson, CFA On April 15, Goldman Sachs (GS) reported better-than-expected first quarter 2024 results that showed a nice beat on both the top and bottom lines. Net revenue came in at $14.21 billion (consensus was at $12.9 billion) for the first quarter of 2024, roughly 16% higher than the mark achieved in the first quarter of last year. Goldman Sachs experienced higher net revenues across all of its segments. On an annualized basis, its annualized ROE came in at 14.8% in the quarter and its annualized ROTE came in at 15.9%. Goldman Sachs’ diluted earnings per common share was $11.58 (consensus was $8.68 per share) during the first quarter of the year compared with … Read more

Vertex Pharma to Acquire Alpine Immune Services

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Image: Vertex Pharma’s shares have had a nice run the past couple years. By Brian Nelson, CFA On April 10, Vertex Pharma (VRTX) announced that it had entered into an agreement where Vertex will acquire Alpine Immune Services (ALPN) for $65 per share or ~$4.9 billion in cash. Alpine’s focus is on developing protein-based immunotherapies, and the company’s lead product, povetacicept, holds great promise in patients with IgA nephropathy, a life-threatening chronic kidney disease. Here’s what Vertex management had to say about the proposed transaction: Alpine is a compelling strategic fit for Vertex and furthers our ambition of using scientific innovation to create transformative medicines targeting serious diseases with high unmet need in specialty markets. We look forward to welcoming … Read more

JPMorgan Cautious on Geopolitical Tensions and Inflationary Pressures

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Image Source: Hakan Dahlstrom By Brian Nelson, CFA On April 12, JPMorgan (JPM) reported mixed first-quarter 2024 results. The company reported revenue of $41.9 billion and adjusted net income of $14 billion, or $4.63 per share, which compared to the consensus forecast of $4.13 at the time. For the first quarter, JPMorgan registered a ROE of 17% and a ROTCE of 21%. Credit costs totaled $1.9 billion and included $2.0 billion of net charge-offs and a $72 million net reserve release. Average loans were up 16%, including First Republic, while average deposits were up 2%, including First Republic. It ended the quarter with a CET1 capital ratio of 15.0% and tangible book value per share of $88.43, implying a price-to-tangible … Read more