Member Articles

Microsoft’s Cloud Business Performing Better Than Expected

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Image: Microsoft’s shares have held up well in this volatile market environment. By Brian Nelson, CFA On April 30, Microsoft (MSFT) reported solid third quarter fiscal 2025 results with revenue and GAAP earnings per share coming in higher than what the Street was looking for. Revenue increased 13% (15% in constant currency), and the cloud computing giant leveraged that increase in the top line to a 16% increase in operating income (19% in constant currency). In the quarter, net income increased 18% (19% in constant currency), while diluted earnings per share also increased 18% (19% in constant currency). Management had the following to say about the results: Cloud and AI are the essential inputs for every business to expand output, … Read more

Meta Platforms Posts Excellent First Quarter Results

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Image: Meta’s free cash flow remains robust. By Brian Nelson, CFA On April 30, Meta Platforms (META) reported excellent first quarter results with revenue and GAAP earnings per share coming in ahead of consensus estimates. Revenue increased 16% in the quarter, while income from operations advanced 27%. Meta’s operating margin expanded 3 percentage points in the quarter, to 41%, beating estimates. Net income leapt 35%, while diluted earnings per share increased 37% from last year’s quarter. CEO Mark Zuckerberg had the following to say about the quarter: We’ve had a strong start to an important year, our community continues to grow and our business is performing very well. We’re making good progress on AI glasses and Meta AI, which now … Read more

Enterprise Products Partners DCF Coverage of Its Distribution Remains Solid

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Image: Enterprise Products Partners’ units have done well of late. By Brian Nelson, CFA On April 29, Enterprise Products Partners (EPD) reported financial results for the three months ended March 31, 2025. The pipeline giant reported net income of $1.4 billion, or $0.64 per common unit on a diluted basis. Distributable cash flow (DCF) was $2 billion for the first quarter of 2025, a 5% increase compared to $1.9 billion in the first quarter of last year. DCF covered distributions declared for the first quarter by 1.7 times, with Enterprise retaining $842 million of DCF. Management had the following to say in the press release: During the first quarter of 2025, Enterprise continued to benefit from Permian driven volume growth … Read more

Altria Continues to Expect Adjusted Earnings Per Share Expansion

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Image: Altria’s shares have recovered nicely since the beginning of 2024. By Brian Nelson, CFA On April 29, tobacco giant Altria (MO) reported mixed first quarter results with non-GAAP earnings per share exceeding the consensus forecast, but revenue coming in a bit light relative to the Street forecast. Net revenues fell 5.7% in the quarter due to weaker performance in its smokeable products segment. However, adjusted diluted earnings per share increased 6% from last year’s quarter, to $1.23. The bottom line was bolstered by fewer shares outstanding, higher adjusted operating companies income (OCI), and a lower adjusted tax rate. Management had the following to say about the quarter: Our highly profitable traditional tobacco businesses performed well in a challenging environment … Read more

Visa’s Free Cash Flow Generation Remains Phenomenal

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Image: Visa continues to translate a high percentage of revenue into free cash flow generation. By Brian Nelson, CFA On April 29, Visa (V) reported better than expected second quarter fiscal 2025 results with non-GAAP earnings per share and revenue coming in higher than expected. Net revenue increased 9% in the quarter, or 11% on a constant dollar basis, while non-GAAP net income came in at $5.4 billion or $2.76 per share, the latter up 10% from the same quarter a year ago. The board of directors authorized a new $30 billion multi-year share repurchase program. Management had the following to say about the quarter: Visa’s strong 9% fiscal second quarter net revenue growth was driven by healthy trends in … Read more

Republic Services Continues to Price Ahead of Inflation

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Image: Republic Services’ shares have done quite well the past few years. By Brian Nelson, CFA On April 24, trash taker Republic Services (RSG) reported mixed first quarter results with non-GAAP earnings per share outpacing the consensus forecast, but revenue coming in a bit light compared to what the Street was looking for. Total revenue growth was 3.8%, including 2.9 percentage points of organic growth and the balance coming from acquisitions. Revenue growth from average yield increased 4.5%, above the rate of cost inflation, while volume decreased revenue by 1.2%. Management had the following to say about the quarter: We are off to a solid start to the year, and our business continues to perform well even with increased volatility … Read more

What Causes Fair Value Estimates to Change?

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Image: A screenshot of the discounted cash-flow model learning tool for individual investors. By Brian Nelson, CFA If you’ve been a member of Valuentum for a while, you’ll notice that when we update a stock report, our estimate of a company’s fair value and the firm’s Valuentum Buying Index ratings can change. This is completely normal and should be expected (over time, companies generate cash and stock prices change). But sometimes the changes can be confusing, particularly if they are material (i.e. 10%, 20%, or more). In this article, let’s talk about why changes are standard operating procedure for investment research publishers. First, some background. Our estimate of a company’s fair value is driven by myriad factors. To derive a … Read more

Alphabet Remains a Top Consideration for Long Term Capital Appreciation

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Image Source: TradingView By Brian Nelson, CFA On April 24, Alphabet (GOOG) (GOOGL) reported blockbuster results for the first quarter, with both GAAP earnings per share and revenue exceeding the consensus forecast. Consolidated Alphabet revenues increased 12%, or 14% in constant currency. Google Services revenue increased 10%, while Google Cloud revenues advanced 28%. Total operating income increased 20%, while its operating margin expanded 2 percentage points to 34% in the quarter. Net income increased 46%, while GAAP earnings per share increased 49%, to $2.81. Management had the following to say about the quarter: We’re pleased with our strong Q1 results, which reflect healthy growth and momentum across the business. Underpinning this growth is our unique full stack approach to AI. … Read more

Domino’s Pizza Misses First Quarter U.S. Same Store Sales Consensus Estimate

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Image Source: Domino’s By Brian Nelson, CFA On April 28, Domino’s Pizza (DPZ) reported mixed first quarter results with GAAP earnings per share exceeding the consensus estimate, but revenue falling short of what the Street was looking for. Excluding foreign currency impacts, global retail sales growth came in at 4.7%, but U.S. same store sales declined 0.5% in the period, missing the consensus estimate. International same store sales growth was 3.7%, excluding foreign currency impacts, beating the consensus estimate. Domino’s experienced a global net store decline of 8 in the quarter, consisting of 17 net store openings in the U.S and 25 net store closings internationally.   Management had the following to say about the quarter: Domino’s Q1 results demonstrate … Read more

Chipotle’s Comparable Restaurant Sales Fall in First Quarter

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Image Source: Valuentum By Brian Nelson, CFA  On April 23, Chipotle (CMG) reported mixed first quarter results with non-GAAP earnings per share exceeding the consensus forecast, but revenue coming up a bit short relative to expectations. Total revenue increased 6.4%, to $2.9 billion, but comparable restaurant sales fell 0.4%, a disappointment. Chipotle’s operating margin came in at 16.7% in the quarter, an increase from 16.3% in the prior year period. Restaurant level operating margins fell, but the company still grew diluted earnings per share 7.7%, to $0.28, in the quarter. Adjusted diluted earnings per share increased 7.4% year-over-year.  Management spoke of concerning consumer spending trends in the press release:  While our first quarter results were impacted by several headwinds including weather … Read more