Brian Nelson

Honeywell Shows Continued Strong Execution; Revenue Environment Weakens

by

Last Friday, Honeywell (click ticker for report: ) reported mixed third-quarter results that showed weakness in Europe (as expected) but strength in commercial aerospace, infrastructure spending, and oil and gas investments. Though revenue was roughly flat from the same period a year ago, organic sales edged up 2% and earnings per share from continuing operations jumped nearly 40%, though the firm benefited from a more-favorable tax rate in the most recently reported quarter. The company lowered its 2012 revenue guidance modestly, but it only narrowed the range of its 2012 proforma earnings per share outlook to $4.45-$4.50 per share (was $4.40-$4.55 per share), still representing a double-digit increase from last year. Free cash flow for the year is expected to … Read more

General Electric Reveals Strong Earnings Expansion in Third Quarter; Backlog Growth Stalls

by

General Electric (click ticker for report: ) kicked off third-quarter results for large industrial bellwethers last Friday. The industrial conglomerate saw its industrial revenues advance 6%, excluding currency fluctuations, thanks to industrial segment organic revenue growth of 8% (up 10% year-to-date). Excluding the effects of the preferred stock redemption that occurred in the third quarter of last year, operating earnings per share jumped 13%. The company recorded positive earnings growth in all five of its industrial segments for the first time since the third quarter of 2005. Our fair value estimate remains unchanged. Organically, the firm’s energy infrastructure and transportation segments led the charge, but we were interested to see that its aviation segment did not continue its steady advance … Read more

Yahoo Beats Estimates; We Like Mayer’s Strategy

by

Web content firm Yahoo (click ticker for report: ) reported better than expected third quarter results Monday afternoon. Revenue grew 2% year-over-year to $1.09 billion, a touch better than consensus estimates. Operating income per share, which excludes the gain on sale of Alibaba, grew 66% year-over-year to $0.35, which was much better than the consensus expectation. Most of Yahoo’s profitability gains came from shrinking the workforce, which fell by 1,700 employees on a year-over-year basis, to 12,000. Sales and marketing expenses were cut 7% year-over-year to $269 million, while product development costs fell 5%. This focus on cost cutting allowed the company to generate adjusted operating cash flow of $496 million, up 39% compared to the third quarter of 2011. … Read more

Hasbro Reports a Strong Third Quarter

by

Toymaker and dividend-growth gem Hasbro (click ticker for report: ) reported better than expected earnings and revenue that was in-line with consensus estimates Monday morning. The firm saw revenue remain roughly flat at $1.35 billion but grow 1%, if adjusted for negative currency impacts. Earnings per share fell 2% to $1.24. We thought results might be a little stronger than reported after Mattel’s (click ticker for report: ) strong earnings, but we still think the quarter was solid. Revenue in the US grew only 1% to $774.5 million, but operating profits surged 20% year-over-year to $154.2 million. The firm’s focus has clearly yielded positive results. Net of currency impacts, international toy revenues were up 1% as well, though down 7% … Read more

McDonald’s Sales Growth Looks Anemic in the Third Quarter

by

Fast-food chain McDonald’s (click ticker for report: ) reported mediocre third quarter results Friday morning. Revenue growth was weak, coming in flat year-over-year, though up 4% on a currency-neutral basis, in-line with expectations. Earnings fell 1% year-over-year to $1.43 per share, a few cents lower than consensus estimates. Weakness was broad-based, with aggregate same-store sales growing only 1.9%. The weakest geographic region was surprisingly the US, where same-store sales grew only 1.2% year-over-year. The firm has tried to move away from its value offerings to grab margin dollars as input costs soar, but the change hasn’t been effective. Still, management expects the McRib and the introduction of the Cheddar Bacon Onion to drive incremental growth in the US during the … Read more

Chipotle’s Growth Moderates

by

Burrito chain Chipotle (click ticker for report: ) reported solid, but slowing, third quarter results Thursday afternoon. Revenue increased 18.5% year-over-year to $700.5 million, while earnings grew 19.5% year-over-year to $2.27, both slightly below consensus expectations. Though both growth rates are still impressive, the sequential slowdown in same-store sales indicates that the excitement surrounding new food offerings (Doritos tacos, its Cantina Bell menu) at Taco Bell (click ticker for report: ) are stealing the moment. Same-store sales grew 4.8% during the quarter, compared to 8% during the second quarter, and 12% during the first quarter. The firm doesn’t see things getting much better, forecasting mid-single-digit same-store sales growth during the fourth quarter, and flat-to-low single digits expansion during 2013. Management … Read more

A Follow Up on Google’s Third Quarter Results

by

Please click here to read our initial thoughts on Google’s premature quarterly release. In spite of a hoarse voice, CEO Larry Page sounded excited about several initiatives going forward, including expanding mobile ad spend by advertisers. The firm continues to make incremental improvements to search, which may save market share, but the changes haven’t been able to slow the shift to mobile search. Google continues to spend hundreds of millions of dollars on research & development on projects like Google Fiber and self-driving cars which may drive growth in the future, but has weighed on near-term profitability. CEO Larry Page hit on some other positive notes, like YouTube’s increase in ad effectiveness relative to traditional TV, as well as the … Read more

Google Accidentally Reports Weaker Than Anticipated Third Quarter Earnings

by

Tech giant Google (click ticker for report: GOOG) accidentally reported weaker than expected third quarter earnings today. Printing firm RR Donnelly (click ticker for report: RRD) mistakenly filed Google’s third quarter earnings just after noon eastern time, leading to some erratic trading in shares of the search giant. Regardless, the report revealed that revenue surged 45% year-over-year to $14.1 billion, boosted by the firm’s acquisition of Motorola Mobility (a bit lighter than anticipated). Earnings per share fell 7% year-over-year to $9.03, much worse than consensus expectations. Paid clicks surged 33% year-over-year and 6% sequentially, driven by increasing mobile ad share, in our view. However, cost-per-click fell significantly, down 15% year-over-year, while traffic acquisition costs grew to 26% of revenue from … Read more