Brian Nelson

Earnings Roundup: MO, EPD, SBUX, CLX, HON

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By Brian Nelson, CFA Altria’s (MO) Dividend Growth Outlook Through 2028 Looks Solid On February 1, Altria Group, which is yielding ~9.5% at the time of this writing, reported mixed fourth-quarter results that showed revenue missing on the top line, but the company’s non-GAAP earnings per share coming in-line with the consensus forecast. For the fourth quarter, net revenue dropped 2.2% as a result of lower sales in its smokeable products portfolio, which was only partially offset by strength in its oral tobacco segment. Adjusted diluted earnings per share was roughly flat thanks in part to both a lower share count and lower tax rate, both of which helped offset modest weakness in its operating companies income (OCI). Altria’s fourth-quarter … Read more

Earnings Roundup: ABBV, CVX, NYCB, XOM

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By Brian Nelson, CFA AbbVie (ABBV) Facing Pressure on Humira Sales But Companywide Revenue Outlook Remains Robust On February 2, pharma giant AbbVie reported mixed fourth-quarter results with revenue coming in ahead of expectations, but non-GAAP earnings per share coming in slightly lower than the consensus forecast. In the quarter, worldwide net revenue fell 5.4% as the firm continues to work through biosimilar competition against its blockbuster Humira, where net revenues fell more than 40% in the quarter on an operational basis. Global sales of Skyrizi and Rinvoq, however, still powered ahead, advancing nearly 52% and 63% in the quarter on an operational basis, respectively. Its oncology portfolio faced pressure from declining sales of Imbruvica, while it experienced particular strength … Read more

Big Cap Tech and Large Cap Growth Continue to Lead Market Higher

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Image Source: Marco Pakoeningrat By Brian Nelson, CFA We continue to like the areas of big cap tech and large cap growth as the top firms in these areas have strong cash-based sources of intrinsic value: net cash on the balance sheet and strong expected future free cash flow generation. After the close February 1, the market received the quarterly earnings reports from Meta Platforms (META), Amazon (AMZN), and Apple (AAPL), and we were pleased by the trio’s performance during the calendar fourth quarter. We maintain our long-held view that big cap tech and large cap growth will continue to lead the market higher, and we continue to overweight these areas in the newsletter portfolios. The biggest upside surprise was … Read more

Alphabet, Microsoft Remain Cash-Rich, Secular Growth Powerhouses

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Image Source: Shawn Carpenter By Brian Nelson, CFA All eyes were on Alphabet (GOOG) (GOOGL) and Microsoft (MSFT) after the bell January 30. We include both Alphabet and Microsoft in the newsletter portfolios due to their tremendous cash-based sources of intrinsic value: net cash on the balance sheet and free cash flow generation. It would take a monumental shift in the trajectory of these fantastic businesses for us to ever consider removing them from the newsletter portfolios, and we’re reiterating our favorable long-term view on both following their respective calendar fourth-quarter reports. Let’s first start with Alphabet. Revenue advanced ~13% on a year-over-year basis in the fourth quarter, while the company’s operating margin expanded ~3 percentage points, to 27%. Net … Read more

Energy Transfer Making a Comeback, Shares Yield ~8.7%

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Image: Energy Transfer is working its way back after a long stretch of underperformance. By Brian Nelson, CFA Energy Transfer (ET) is one of the largest midstream, transportation and storage companies for natural gas, crude oil, NGLs (natural gas liquids), and other refined products, and the firm has investments in Sunoco LP (SUN) and USA Compression Partners (USAC). The company is nowhere near the bubble levels of 2015, but the pipeline operator has been staging a comeback backed by traditional free cash flow, and we are warming up to this dividend payer. Shares yield ~8.7% at the time of this writing. In the pipeline space, investors tend to pay attention to a metric called distributable cash flow [DCF], not to … Read more

14%+ Yielding AGNC Investment May Be Worth a Trade

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Image: Mortgage REITs have performed horribly since we warned about them back in May 2013. By Brian Nelson, CFA Mortgage REITs (REM) are popular vehicles because of their deceptively enticing dividend yields, but we’ve never been bullish on the group. We’re reiterating our take today that these instruments are not for the individual investor or even prudent financial advisor and are more complicated vehicles than many investors believe. In May 2013, we first starting warning about the group, and the performance, as shown in the image above, hasn’t been pretty. On a price-only basis, the iShares Mortgage Real Estate ETF is trailing the simpleton S&P 500 index by 250+ percentage points since we first laid out our thesis on the … Read more

Earnings Roundup: V, INTC, HUM, PYPL

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By Brian Nelson, CFA Visa (V) Operating and Free Cash Flow Margins Remain Robust, Consumer Spending Remains Resilient Image: Visa’s operating margins are phenomenal. Image Source: Visa On January 25, top-weighted Best Ideas Newsletter portfolio holding Visa reported excellent first-quarter fiscal 2024 results that beat on the top and bottom lines. Net revenues advanced 9% on a year-over-year basis, while the firm was able to drive non-GAAP net income 8% higher and non-GAAP earnings per share 11% higher. In the quarter, payments volume advanced 8%, cross-border volume advanced 16%, and processed transactions increased 9%, all on a year-over-year basis. The company’s operating margin came in at an impressive 69% in the quarter, and it hauled in ~$3.35 billion in free … Read more

Earnings Roundup: TSLA, NEE, IBM, CMCSA, NOW

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By Brian Nelson, CFA Tesla (TSLA) Misses Fourth-Quarter Expectations as Continued Uncertainty Looms Image: The Model Y was the best-selling vehicle globally in 2023. Image Source: Tesla Tesla missed fourth-quarter expectations on January 24, and the market continues to shy away from the electric-vehicle maker surrounding continued controversy over CEO Elon Musk’s request to have greater voting control over the company. We think Tesla may be past its prime heyday years, and while the firm hauled in a nice chunk of free cash flow during 2023 ($4.4 billion) as it retains a net cash position ($29.1 billion), the company will likely never find its way into the newsletter portfolios, which house our favorite ideas for consideration. In the quarter, Tesla’s … Read more

Earnings Roundup: NFLX, ASML, T, ABT

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By Brian Nelson, CFA Netflix (NFLX) Lands WWE Raw and Puts Up Huge Streaming Paid Member Number Image: Netflix’s substantially improved free cash flow has made it a clear winner in the streaming wars. Image Source: Netflix. On January 23, Netflix reported mixed fourth-quarter results that showed a beat on the top line, but a bottom-line miss. The mixed performance, however, was overshadowed by a huge growth number in new global streaming paid memberships of 13.12 million during the quarter and a landmark $5 billion deal with TKO Group (TKO) to begin streaming WWE Raw exclusively on Netflix beginning in January 2025. 2023 was a banner year for Netflix. The company grew revenue 12% (up from 6% last year), pushed … Read more

Earnings Roundup: LMT, PG, MMM, GE, JNJ, VZ

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By Brian Nelson, CFA Lockheed Martin’s (LMT) Backlog Reaches Record Highs Dividend Growth Newsletter portfolio holding Lockheed Martin reported solid fourth-quarter 2023 results January 23 that showed a beat on both the top and bottom lines, but revenue growth remained challenged in the quarter, declining on a year-over-year basis. The defense contractor continues to be shareholder-friendly, returning a nice chunk of the $6.2 billion in free cash flow it generated during 2023. Lockheed Martin ended the year with a record backlog of $160.6 billion and remains well-positioned to support the U.S. and its allies with myriad defense technologies. The company is targeting 2024 revenue in the range of $68.5-$70 billion, a modest increase from the $67.6 billion it posted in … Read more