Facebook Changes Name to Meta (MVRS), Explains the Metaverse
Video: Meta’s CEO Mark Zuckerberg sharing his vision for the metaverse.
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Microsoft: Net Cash Rich, Free Cash Flow Generating, Dividend Growth Powerhouse
Image: Microsoft remains one of the most attractive technology companies. Its outlook for the second quarter of fiscal 2022 came in better than expected. Image Source: Microsoft By Brian Nelson, CFA Microsoft Corp. (MSFT) reported excellent first-quarter fiscal 2022 results on Tuesday, October 26, that exceeded the consensus estimate on both the top and bottom lines. In the quarter, Microsoft’s revenue jumped an impressive 22% on a year-over-year basis, and the company was able to leverage that strong top-line growth into a year-over-year operating-income advance of 27%. Diluted earnings per share on a GAAP and non-GAAP basis increased 49% and 25%, respectively, from the same quarter a year ago – these are absolutely huge growth numbers for a company as … Read more
Alphabet Launches Higher
Image: Our fair value estimate of Alphabet has continued to lead the stock higher, and shares continued to deliver following the company’s third-quarter report, released October 28. By Brian Nelson, CFA Our long-term thesis and the top weighting of Google parent company, Alphabet (GOOG) (GOOGL) in the Best Ideas Newsletter portfolio is unchanged following the company’s fantastic third-quarter report, released October 28. During the period, revenue advanced 41% on a year-over-year basis as the company’s operating margin swelled ~8 percentage points to drive diluted earnings per share to $27.99, beating consensus by nice margin. We’re reiterating our $3,500 fair value estimate for shares. Here is what Sundar Pichai, CEO of Alphabet and Google had to say in the press release: … Read more
Lockheed Martin Shocks the Market
Image: After years of backlog growth at Lockheed Martin, the third quarter of 2021 revealed a sharp year-over-year decline to the tune of ~8.3%. The company’s outlook also left a lot to be desired. By Brian Nelson, CFA Lockheed Martin (LMT) reported mixed third-quarter 2021 results Tuesday, October 26, but “mixed” might be too gracious of a word. Though it did beat the consensus number for third-quarter non-GAAP earnings per share, revenue didn’t just miss marginally, but by more than a $1 billion, with the top line falling 2.8% on a year-over-year basis. Clearly, Lockheed had promised more than it could deliver, and we had been taken in by the optimism. We expect to lower our fair value estimate. There’s … Read more
Digital Realty Boosts Guidance and Further Extends Growth Runway
Image Source: Digital Realty Trust Inc – Third Quarter of 2021 IR Earnings Presentation By Callum Turcan On October 26, Digital Realty Trust Inc (DLR) posted third quarter 2021 earnings that beat both consensus top- and bottom-line estimates. The data center real estate investment trust (‘REIT’) saw its GAAP operating revenues come in at $1.1 billion (up 11% year-over-year) and its non-GAAP core funds from operations (‘FFO’) per share come in at $1.65 per share (up 7% year-over-year) last quarter. Digital Realty also increased its guidance in conjunction with its latest earnings report, which we appreciate, as that signals the REIT is growing confident that it will exit 2021 on a high note. Digital Realty’s business is steadily recovering after … Read more
I Don’t Know How Lucky I Am, Do You?
Image: The category of large cap growth (SCHG) has outperformed a 60/40 stock/bond rebalanced portfolio (VBIAX) by ~310 percentage points the past 10 years. Image Source: Morningstar. By Brian Nelson, CFA Hi everyone. I hope you all are doing well. It’s been a while since I wrote a personal message, but today, I thought it would be worthwhile to share my ever-evolving opinion on the world of financial markets. First, let me start with Facebook (FB). Hopefully, I set your expectations very low for the social media giant’s third-quarter report because this one is a long-term holding. Shares are dirt cheap, and while sentiment has moved against it, we’re going to “hold” strong in the Best Ideas Newsletter portfolio (1). … Read more
Schlumberger Recovering, Outlook Bright
Image Shown: Shares of Schlumberger NV are on the upswing, though the company’s stock price remains far below levels seen before the COVID-19 pandemic. By Callum Turcan On October 22, the oilfield services giant Schlumberger NV (SLB) reported third-quarter 2021 earnings that missed consensus top-line estimates and matched consensus bottom-line estimates. The company’s business continues to recover as oil & gas investment activity is picking up steam around the globe after getting decimated last year in the face of the coronavirus (‘COVID-19’) pandemic. Looking ahead, Schlumberger expects significant improvement in its mid-cycle financial performance from current levels, aided by major cost structure improvements embarked on last year. Financial Snapshot The firm’s GAAP revenues grew by 11% year-over-year due to growth … Read more
Facebook’s Third-Quarter 2021 Results Better Than Feared
Image: Facebook continues to put up impressive levels of free cash flow generation. We remain huge fans of the stock. Image Source: Facebook By Brian Nelson, CFA Expectations were low for Facebook’s (FB) third-quarter 2021 results, released October 25, following a read-through from news in recent weeks, including Snapchat’s (SNAP) weak third-quarter performance due to Apple’s (AAPL) iOS 14 changes and supply chain issues that may be slowing ad growth. Though Facebook’s third-quarter results still felt an impact from Apple’s iOS 14 changes and perhaps advertisers slowing some spending due to reduced product availability, the social media giant revealed that it remains a net-cash-rich, free cash flow generating powerhouse that continues to benefit from secular ad growth trends, and one … Read more
Supply Chain Issues Won’t Disrupt Honeywell’s Free Cash Flow Trajectory
Image: Honeywell’s third-quarter 2021 results were mighty impressive. We continue to like what we see at this industrial dividend growth giant. Image Source: Honeywell By Brian Nelson, CFA On Friday, October 22, Dividend Growth Newsletter idea Honeywell (HON) reported mixed third-quarter results where revenue growth (+8.7%) fell just short of expectations, while non-GAAP earnings per share bested the consensus mark by a modest margin. GAAP earnings fell just shy of the market’s views heading into the results, but we continue to like Honeywell as an idea in the Dividend Growth Newsletter portfolio. The quarterly headlines were impressive. Organic sales advanced 8% in the quarter, with expansion in all four of its business segments. The company’s operating margin leapt 180 basis … Read more
Intel’s Huge Expected Capital Spending Gives Dividend Growth Investors Pause
Image: Intel has advanced nicely during the past several years, but more recently, its choppy stock behavior is reflective of the market having trouble figuring out the future direction of this tech behemoth, particularly in light of encroaching competition and huge expected capital spending growth. Shares offer investors a healthy 2.8% dividend yield, however, which gives the stock a sturdy foundation for the time being. By Brian Nelson, CFA As we noted in our prior update on Intel (INTC) earlier this year, we removed the tech giant from the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio in late October 2020, almost a year ago to the date. Since that time, shares of Intel, on a price-only basis, have … Read more