Brian Nelson

Best Idea Visa Posts Another Strong Quarter

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Best-idea Visa (V) posted another strong quarter Wednesday, exceeding even some of the bullish estimates. The company earned $1.49 per share for the quarter, and raised its full-year earnings-per-share growth guidance to the high-teens. Revenue increased 14%, to $2.5 billion during the period, with strong growth in service fees (up nearly 15%) and in international processing fees (up about 19%). As a result of lower future marketing expenses, a shrinking share count and a strong outlook, we continue to believe that Visa should fetch a price in the high $120s. CEO Joe Saunders reassured investors that the company has fully accounted for the impact of the Durbin Amendment, which has further strengthened our conviction in the stock. Furthermore, the company expects to generate over $4 … Read more

Cisco’s Fiscal Second-Quarter Results Show Turnaround Gaining Traction

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Networking-giant Cisco (CSCO) reported decent fiscal second-quarter earnings Wednesday that showed its turnaround efforts are bearing fruit. Though we will be revisiting our valuation on the company, we don’t expect to make a material change to our fair value estimate. Fourth-quarter net sales advanced 11% from the same period a year ago, while earnings per share came in at $0.47 on a non-GAAP basis, ahead of expectations. The company’s widely-watched adjusted gross margin expanded modestly to 62.4% during the quarter from 62.35% in the same period a year-ago. Non-GAAP net income advanced by over 23% from last year’s quarter, while cash from operations was $3.1 billion—better than levels achieved on both a sequential and year-over-year quarterly basis. The company continues … Read more

Disney Posts Mixed Fiscal First-Quarter Results; Consumers Still Spending at Parks and Resorts

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Disney’s fiscal first-quarter results, issued Tuesday, were mixed. Revenues missed expectations, advancing modestly from the same period last year, while diluted earnings per share grew 18% to $0.80, beating consensus forecasts of $0.75 per share. The top-line growth and operating-income expansion in the period was led by its Media Networks and Parks and Resorts segments. Revenue in its Studio Entertainment segment fell 16%, though operating income in the division still advanced 10% despite having fewer Disney branded titles in wide theatrical release during the quarter. Consumer Products revenue jumped 3%, and segment operating income held essentially flat. The company noted particular strength at ESPN, generally lower political advertising revenues, and increased guest spending (higher ticket prices and food and beverage … Read more

Best Ideas Alert: Collective Brands (PSS) To Narrow Potential Suitors to 10; Bidding Likely to Start at $20 Per Share

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From Bloomberg: “The company (Collective Brands) began yesterday notifying the 20 bidders from the first round whether they would move on to the next, which will comprise about 10 parties, said the people, who declined to be identified as talks are private. Based on bids so far, Collective Brands could get at least $20 a share if the entire business is sold, said one of the people. That would value the Topeka, Kansas-based retailer at about $1.2 billion. Collective Brands got initial offers from buyout firms TPG Capital and Leonard Green & Partners LP, as well as from rivals such as Wolverine World Wide Inc., Columbia Sportswear Co. (COLM) and Deckers Outdoor Corp. (DECK), the people said. The retailer is keeping … Read more

Coca-Cola Posts Fourth-Quarter Results; Focus Remains on Controlling Costs

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On Tuesday, Coca-Cola (KO) reported solid fourth-quarter results that showed strength across all of its major geographic operating groups. We will be revisiting our valuation model for the concentrate maker, but we don’t expect to make a material change to our $65 fair value estimate. Fourth-quarter net revenues jumped 5% (6% excluding currency), as global volume advanced 3% in the quarter driven by solid international volume expansion of 4% (North America volume grew 1%). Coca-Cola noted that it grew value share in NARTD (non-alcoholic ready-to-drink) beverages across most of its beverage categories. Brand Coca-Cola’s volume increased 3%, with expansion coming from around the world – 33% growth in Thailand, 15% growth in India, 13% growth in China, etc. Worldwide still … Read more

Yum! Brands’ Fourth-Quarter Results Show Chinese Demand Remains Strong; Shares Still Expensive

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Yum! Brands’ (YUM) fourth-quarter results, issued after the close Monday, revealed strong performance, particularly in China. Though the firm will likely get a bid tomorrow, we believe the shares to be a bit rich and remain on the sidelines. Our fair value estimate for the world’s largest restaurant company is unchanged. Worldwide system sales grew 11% in the fourth quarter thanks to 33% growth in China. Same-store sales grew an impressive 21% in China during the fourth quarter and managed to stay positive in the US during the period. We think such performance speaks clearly about the strength of the Chinese economy/consumer, and the positive US same-store-sales growth represents an improvement over the full-year measure (and anniversaries a very strong … Read more

Best Idea Astronics Up Nearly 8% Today on Strong Fourth-Quarter Results

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Best idea Astronics (ATRO) reported strong fourth-quarter results Monday and offered an outlook for 2012 that pleased most investors. The stock is surging roughly 8% today, and we continue to believe the company belongs in the portfolio of our Best Ideas Newsletter.   We were impressed with Astronics’ performance pretty much across the board. Fourth-quarter revenue jumped 18% led by a 24.5% increase in aerospace sales, while gross profit surged nearly 40% on the heels of 4.4 percentage points of gross-margin expansion. Astronics continues to reap the benefits of higher demand for both aircraft cabin electronics products and aircraft lighting products. The company’s operating margin was roughly flat in the period, but after excluding a goodwill impairment loss related to … Read more