Brian Nelson

First Solar Misses Yet Again; We Expect Further Valuation Downside

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After the market closed Tuesday, First Solar (FSLR) reported poor results yet again. The company posted a surprise loss of $4.78 per share in the fourth quarter due to a $393 million non-cash impairment charge, $164 million in excess warranty costs, and $60 million labeled as restructuring expenses. We think that all three of these items are red flags for long-term holders of the firm. Specifically, the first of these events signals that the firm overpaid for previous acquisitions and the third represents the possible need for a new strategy. We continue to expect the firm’s shares to trade lower. The second item, the $164 million worth of warranty charges, bothers us the most. We think such charges translate into the view that … Read more

Collective Brands Surprises in Fourth Quarter

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Though much of the recent rise in the share price of Collective Brands (PSS) can be attributed to takeover speculation, shares jumped over 4% in after-hours trading Tuesday thanks to a better-than-expected quarterly report. The company’s fourth-quarter loss came in at a steep $0.69 per share, but that result was materially better than consensus expectations. We are sticking with our above-market fair value estimate for Collective Brands at this time. Consolidated revenue grew 5.4% thanks to strong PLG Wholesale results (up 21%) and PLG retail lapping a difficult fourth quarter in the year-ago period, with sales increasing 13.5%. PLG Wholesale continues to shine through as the crown jewel of the business, and we suspect that most potential buyers of the firm … Read more

AutoZone Puts Up Solid Fiscal Second-Quarter 2011 Results; We Prefer Ford

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AutoZone (AZO) reported strong fiscal second-quarter 2012 results Tuesday that showed solid same-store-sales increases and bottom-line expansion. We’ll be tuning in to the firm’s conference call, but we don’t expect to make a change to our fair value estimate for the auto-parts retailer at this time. AutoZone’s fourth-quarter revenue advanced 8.6% during the period thanks to nearly a 6% increase in same-store-sales. Gross margin increased 40 basis points, to 51.3%, in the quarter, but such improved profitability was more than offset by higher self-insurance costs. The company’s net income jumped nearly 13% in the quarter, while diluted earnings per share of $4.15 increased over 24% from the same period a year ago thanks to share buybacks. Consensus was at $4.04 … Read more

Priceline.com Reports Strong Fourth-Quarter Results

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Priceline.com (PCLN) reported strong fourth-quarter results that showed continued momentum with respect to bookings growth. Though we will be revisiting our valuation on the online travel provider, we don’t expect to make a material change to it. The company’s revenue advanced 35.5% during the period, as international operations increased nearly 63% from last year’s quarter. During the period, fourth-quarter gross travel bookings, increased nearly 52%. Gross profit performed even better than firmwide top-line expansion, jumping over 50% in the quarter. Further, Priceline.com was able to leverage its cost structure such that operating income expansion exceeded both revenue and gross profit increases at a nearly 61% jump. The firm’s GAAP net income for the fourth quarter came in at $4.41 per … Read more

Key Takeaways From Berkshire’s 2011 Annual Report

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Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) posted its 2011 annual report to shareholders on its website over the weekend. Investors near and far wait all year to read the latest musings of the Oracle of Omaha. This year’s letter to shareholders was filled with Buffett’s candor, as usual, where he outlined much of where he went wrong during the year.   Though the return on Berkshire’s book value still outpaced the return achieved on the S&P 500 in 2011, it advanced less than 5% during the year, a feeble showing given the collection of its businesses. Over the past 47 years, however, book value has grown from $19 to $99,860, a rate of roughly 20% compounded annually – an incredible … Read more

Salesforce.com Expects a GAAP Loss in Fiscal 2013; Cash Flow Generation Remains Robust

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Salesforce.com (CRM), the enterprise cloud-computing company, reported strong fiscal fourth-quarter 2012 results Thursday that showed tremendous cash-flow generation. Quarterly revenue jumped 38%, and deferred revenue (a gauge of future sales growth potential) advanced almost 50%. Though we were impressed with the pace of deferred revenue growth in the period, we caution investors that such a pace was driven more by changes in invoice practices than internal expansion. Salesforce.com’s fourth-quarter GAAP net loss was $0.03, but after excluding stock-based compensation and certain other items, non-GAAP earnings per share was $0.43. For the full-year, Salesforce.com’s GAAP net loss per share was $0.09. Nonetheless, the company’s quarterly operating cash flow came in at $240 million, up 45% year-over-year, and free cash flow (cash flow from operations … Read more