Brian Nelson

Amazon’s Fourth-Quarter Earnings Leave Much to Be Desired

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On Tuesday, Amazon.com (AMZN) reported fourth-quarter results that disappointed most investors. Though traders continue to dabble in the firm’s shares, we would continue to steer clear of the online retailer. Our fair value estimate range for the company remains unchanged. Net sales increased 35% in the fourth quarter, falling below the firm’s full-year growth rate and disappointing even the most conservative forecasts. Operating income declined significantly during the period, while net income also fell by more than half, to $0.38 per share. On a full-year basis, the company earned $1.37 per share, down 45%. Though revenue growth missed consensus expectations and earnings performance was poor, the company still hauled in over $2 billion in free cash flow for the year. … Read more

UPS Posts Solid Adjusted Fourth-Quarter Results; Sees Strong Package Delivery Growth in US

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UPS posted fourth-quarter results Tuesday that reinforce our long-held thesis that the US will avoid a double-dip recession despite problems within the Eurozone. We are maintaining our fair value estimate for the package handler. UPS delivered record fourth-quarter results in volume, revenue and profitability—hardly recessionary signals. Revenue in its fourth quarter jumped 5.6% as the company delivered 1.13 billion packages (up 3.6% from the same period a year ago), while adjusted operating margin expansion of 140 basis points pushed adjusted diluted earnings per share higher nearly 21%, to $1.28. The company saw increases in both US and international daily package volume thanks to robust e-commerce expansion, strong European exports and intra-regional growth in Asia. During 2011, UPS pulled in more … Read more

Pfizer, Eli Lilly Post Fourth-Quarter Results; Both Score High on Our Valuentum Dividend Cushion

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<< About our Valuentum Dividend Cushion ————————————————– << Pfizer’s (PFE) Fourth-Quarter Earnings Press Release << Pfizer’s Pipeline , Dividend Cushion: 2.9 ————————————————– << Eli Lilly’s (LLY) Fourth-Quarter Earnings Press Release << Eli Lilly’s Clinical Development Pipeline , Dividend Cushion: 2

Putting Our Fair Value Estimate of RadioShack Under Review

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RadioShack (RSH) announced after the close today that its fourth-quarter results would come in below our expectations due in large part to the underperformance of its Sprint postpaid wireless business. We plan to re-evaluate RadioShack’s position within the consumer electronics industry and expect to lower our fair value materially. We will publish an updated report shortly. << RadioShack’s press release

Reducing Our Fair Value Estimate on Fusion-iO on Lower Gross Margin Expectations

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Fusion-iO (FIO), one of the more controversial companies in our coverage universe, posted fiscal second quarter results last Tuesday. As we pointed out to investors in this note, the firm could be a revolutionary company with a very bright future. However, due to a weaker gross margin outlook as well as share dilution from the December secondary offering, we have lowered our fair value estimate on Fusion-iO to $15 per share, significantly lower than its mid-$20s price tag currently. Our biggest concern about the firm is deteriorating levels of profitability. For one, Fusion iO’s gross margin in its fiscal second quarter came in very light, at around 51%, while consensus expectations were at least 400 basis points higher. This number was also down 770 basis points from the … Read more

Honeywell Expects Strong 2012 Despite Downturn in Europe During First Half

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Honeywell (HON) posted solid results Friday that showed strong organic growth, impressive cash-flow generation, and margin expansion across all of its business segments. Our above-market fair value estimate remains unchanged. The industrial conglomerate’s fourth-quarter sales advanced 8% (7% organic) reflecting ongoing expansion in most of its end markets, new product introductions, and geographic expansion on key process initiatives. Honeywell experienced particular strength from its aerospace end market thanks to 20% growth in commercial original equipment and aftermarket volumes. Though we are reducing our aerospace exposure in the portfolio of our Best Ideas Newsletter to lock in some of our big gains of the previous few months, we continue to expect strength from this industry as commercial production rates at Boeing … Read more

Altria Posts Decent Fourth-Quarter Results; Dividend Yield Still Attractive

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Altria (MO) posted fourth-quarter results Friday that showed strength in its smokeless product volume and higher pricing in its cigarette segment. We continue to like the firm’s exceptional dividend yield at today’s prices and think Altria remains a key component of both our Best Ideas and Dividend Growth portfolios. Our fair value estimate for Altria remains unchanged. Altria’s total fourth-quarter net revenues advanced 3.4% due to increased performance across all of its reportable segments. The company’s cigarette segment’s net revenue advanced about 3% thanks to higher list prices, offset in part by lower volume. Revenue in the company’s smokeless products’ segment increased 6.6% thanks to both higher volume and pricing. Total combined shipment volume for its Copenhagen and Skoal products … Read more

Best-Idea Ford Hits Profit Snag in Fourth Quarter; 2012 Pre-Tax Operating Profit to Hold Flat

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Ford (F) posted fourth-quarter results that showed excellent top-line performance but weak underlying profitability that disappointed most investors. We continue to believe that Ford has substantial valuation upside and believe the firm to be a long-term holding in the portfolio of our Best Ideas Newsletter. We’re not playing the “quarterly earnings game” with the automaker’s shares and may add to our position in our Best Ideas Newsletter upon significant market weakness. Total revenue of $34.6 billion in the fourth quarter came in better than consensus expectations and represented a 2.1% increase from the same period a year ago. Fourth-quarter pre-tax operating profit came in at $1.1 billion, or $0.20 per share, down from $0.30 in last year’s quarter and below … Read more