Member Articles

Dick’s Sporting Goods to Acquire Foot Locker

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Image: Dick’s Sporting Goods’ shares sold off on its announcement that it would acquire Foot Locker. By Brian Nelson, CFA On May 15, Dick’s Sporting Goods (DKS) announced that it would acquire Foot Locker (FL) in a transaction that implies an equity value of $2.4 billion and enterprise value of $2.5 billion. Foot Locker shareholders can elect to receive either $24.00 in cash or 0.1168 shares of Dick’s Sporting Goods common stock for each share of Foot Locker stock they own. Dick’s intends to finance the acquisition through a combination of cash on hand and new debt and is expected to close in the second half of 2025. Dick’s intends to operate Foot Locker as a standalone business unit within … Read more

Cisco Raises Fiscal 2025 Outlook Again

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Image: Cisco put up excellent fiscal third quarter results. By Brian Nelson, CFA On May 14, Cisco Systems (CSCO) reported better than expected third quarter fiscal 2025 results, with both revenue and non-GAAP earnings per share coming in higher than the consensus forecast. Revenue increased 11% year-over-year, while non-GAAP earnings per share increased 9% year-over-year, to $0.96 per share, above the high end of its guidance range ($0.90-$0.92). Product orders expanded 20% from the same period a year ago (9% excluding Splunk), while AI infrastructure orders taken from webscale customers exceeded $600 million. Management had the following to say about the quarter: Cisco once again had strong quarterly results with clear demand for our technologies. The momentum we are seeing … Read more

UnitedHealth CEO Steps Down; Company Suspends Guidance

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Image Source: TradingView By Brian Nelson, CFA On May 13, UnitedHealth Group (UNH) announced that its CEO Andrew Witty will step down for personal reasons. Taking his place is Stephen Hemsley, who served as the company CEO from 2006-2017. Hemsley had the following to say about the change in the executive suite: We are grateful for Andrew’s stewardship of UnitedHealth Group, especially during some of the most challenging times any company has ever faced. The Board and I have greatly valued his leadership and compassion as chief executive and as a director and wish him and his family the best. UnitedHealth Group has tremendous opportunities to grow as we continue to help improve health care and to perform to our … Read more

Energy Transfer’s Distributions Covered By Free Cash Flow

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Image Source: TradingView By Brian Nelson, CFA Energy Transfer (ET) recently reported mixed first quarter results with revenue coming up short of expectations, but GAAP earnings per share coming in line with the consensus forecast. The pipeline giant reported net income for the three months ended March 31 of $1.32 billion, which compares to $1.24 billion in the same three months last year. Adjusted EBITDA for the first quarter was $4.1 billion compared to $3.88 billion in the same period a year ago. On an operational basis, interstate natural gas transportation volumes increased 3%, setting a new partnership record. Crude oil transportation volumes were up 10%, while NGL transportation volumes were up 4% and NGL and refined products terminal volumes … Read more

Albemarle Continues to Navigate a Low Lithium Price Environment

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Image Source: TradingView By Brian Nelson, CFA Albemarle (ALB) recently reported mixed first quarter results, with revenue coming in slightly lower than forecast, but its bottom-line loss was less than feared. Net sales fell 20.9% in the quarter due to lower pricing in Energy Storage, while adjusted EBITDA fell 8.3% as lower net sales were mostly offset by lower average input costs and ongoing cost reduction efforts. Adjusted diluted loss per share swung to a loss of $0.18 from a gain of $0.26 in the same period last year. Management had the following to say about the quarter: Our business continues to perform in line with our outlook considerations, including first-quarter adjusted EBITDA of $267 million with strong year-over-year improvements … Read more

Magnificent 7 Earnings Reports Not Bad Thus Far

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By Brian Nelson, CFA   Shortly after Trump’s Liberation Day, where the President unveiled lofty tariffs on numerous countries, we released our wait-and-see outlook for the equity markets, which thus far has proven to be the right move, with the markets largely recovering from the depths reached in April. The S&P 500 (SPY), for example, is down just 3.3% year-to-date, excluding dividends.   A lot has happened since Liberation Day, including easing of tariffs to a 10% baseline for most, if not all, countries, with the key exception of China, where tariffs remain extremely elevated and prohibitive. Many countries are now reportedly negotiating trade agreements with the White House, and we expect China to be added to that list soon, even if … Read more

Vertex Raises Bottom End of 2025 Revenue Guidance Range

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Image Source: Vertex Pharma By Brian Nelson, CFA Vertex Pharmaceuticals (VRTX) reported mixed first quarter results on May 5, with revenue and non-GAAP earnings per share coming in lower than forecast, but the company raised the low end of its revenue guidance range for 2025. Total revenue increased 3% compared to the first quarter of 2024 thanks to continued performance of TRIKAFTA/KAFTRIO and an early contribution from the U.S. launch of ALYFTREK. U.S. total revenue increased 9%, while non-U.S. revenue fell 5% due in part to a violation of its intellectual property rights in Russia, of which it notes to be a “limited and isolated matter.” Management had the following to say about the quarter: Vertex delivered a strong start … Read more

Booking Holdings’ Free Cash Remains Robust

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Image Source: Booking Holdings By Brian Nelson, CFA On April 29, Best Ideas Newsletter portfolio idea Booking Holdings (BKNG) reported better than expected first quarter results with both revenue and non-GAAP earnings per share coming in higher than expected. Room nights grew 7% year-over-year, while gross bookings advanced 10% on a constant currency basis. Revenue grew 8% compared to the first quarter of 2024 and was up 10% on a currency neutral basis. Adjusted earnings per share increased 22% in the quarter on a year-over-year basis, to $24.81. Management had the following to say about the quarter: I (CEO Glenn Fogel) am pleased to report a good start to 2025 where healthy growth of room nights and gross bookings in … Read more

Amazon Guides to Strong Second Quarter Revenue Growth

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Image: Amazon’s shares are trading near technical support levels. By Brian Nelson, CFA Amazon (AMZN) reported solid first quarter results May 1, with revenue and GAAP earnings per share coming in ahead of consensus expectations. Net sales jumped 9%, to $155.7 billion in the first quarter and advanced 10% after adjusting for currency movements. North America segment sales increased 8% year-over-year, International segment sales increased 5% (8% excluding currency movements), while AWS segment sales increased 17%, the latter a very healthy showing despite trailing the 33% growth rate that Microsoft (MSFT) put up in its quarter with respect to Azure. Amazon’s operating income increased 20.2%, to $18.4 billion in the first quarter, up from $15.3 billion in the same period … Read more

Apple’s Earnings Set March Quarter Record; Services Revenue Hits All-Time High

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Image: Apple’s shares remain resilient despite tariff pressures. By Brian Nelson, CFA On May 1, Apple (AAPL) reported better than expected second quarter results for fiscal 2025 with both revenue and GAAP earnings per share coming in ahead of the consensus forecasts. The iPhone giant reported quarterly revenue of $95.4 billion, up 5% year-over-year, while quarterly diluted earnings per share came in at $1.65, up 8% year-over-year. The board raised its dividend 4% and authorized an additional buyback program to the tune of $100 billion. Management had the following to say about its fiscal second quarter showing: Today Apple is reporting strong quarterly results, including double-digit growth in Services. We were happy to welcome iPhone 16e to our lineup, and … Read more