Member Articles

Facebook Reports 2+ Billion Daily Users Across Its Platforms

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Image Source: Book Catalog After a rough stretch for shares, Facebook’s third quarter report has helped breathe some life into the stock as the company continues to grow at a robust double-digit rate and free cash flow generation remains superb. By Kris Rosemann Shares of simulated Best Ideas Newsletter portfolio idea Facebook (FB) have faced significant selling pressure since its second quarter report that indicated it would be taking a number of self-enforced measures that would severely impact its operating margin, but a third-quarter report that included a slight near-term cost and capital spending guidance reduction has breathed some life into shares. We think the company may have given in to political pressures, but we continue to have confidence in … Read more

Upstream Oil Major On the Upswing

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Image Source: Author’s Calculations and SEC Filings ConocoPhillips appears poised to grow its dividend thanks to a materially healthier balance sheet and an improving free cash flow profile. Volatile energy resource pricing will always be a long-term risk to the payout, but the near term looks bright for the upstream oil major. By Callum Turcan ConocoPhillips (COP) may present a strong dividend growth opportunity as it appears set to build upon its current 1.8% dividend yield. First, let’s cover exactly what forced the company to cut its dividend a few years back, and then dig into the potential drivers for dividend growth in the coming years. ConocoPhillips spun-off its downstream division and a large part of its midstream operations from … Read more

GE Slashes Dividend Again; Will Reorganize ‘Power’ Business

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Image Source: rik-shaw Industrial giant General Electric plans to cut its dividend once more in order to accelerate deleveraging, and it also will split its ‘Power’ business into two units. We’ve cut our fair value estimate for shares following the strategic update and earnings report. By Kris Rosemann Prior to its earnings release and strategic update before the open October 30, General Electric’s (GE) Dividend Cushion ratio was 0.1, which brought with it very poor Dividend Safety and Dividend Growth ratings, even after it halved the payout in late 2017, as its industrial operations were not able to generate enough cash flow to sustain a healthy payout. Management now plans to reduce its quarterly payout to $0.01 per share from … Read more

Gilead Sciences Beats Expectations; Raises Product Sales Guidance

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Image Source: Gilead Sciences’ third-quarter earnings presentation Gilead Sciences continues to battle challenges in the HCV market, but its HIV product sales grew nicely in the third quarter. Management remains optimistic regarding the potential of its cell therapy treatment, headlined by Yescarta. By Kris Rosemann Simulated newsletter portfolio idea Gilead Sciences (GILD) turned in a better than expected third-quarter report after the close October 25, though its top line continues to face pressure as its HCV products sales fight rising levels of competition. Total revenues fell to ~$5.6 billion from $6.5 billion in the year-ago period as HCV product sales declined to $902 million in the period from $2.2 billion in the third quarter of 2017. HIV product sales climbed … Read more

Data Center Leads Intel’s Impressive Top-Line Growth; Guidance Raised

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Image Source: Intel third-quarter earnings presentation Intel reported strong third quarter results and subsequently raised its full-year guidance for a number of metrics. The company continues to throw off gobs of free cash flow and boasts a solid combination of a competitive dividend yield and a strong Dividend Cushion ratio. By Kris Rosemann Simulated newsletter portfolio idea Intel (INTC) has found itself out of the market’s favor of late as a result of a delayed chip launch that some expect will allow rivals to take notable market share from the company, but shares gained nicely following its third quarter report, released after hours October 25. Intel’s top-line advanced 19% on a year-over-year basis to an all-time company record of $19.2 … Read more

Pricing Drives Altria’s Top Line Slightly Higher

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Image Source: Melanie Tata Tobacco giant and simulated Dividend Growth Newsletter portfolio idea Altria pushed its top line slightly higher in the third quarter thanks to ongoing pricing power, and its flagship brand Marlboro continues to dominate in terms of retail share.  By Kris Rosemann Simulated Dividend Growth Newsletter portfolio idea and tobacco giant Altria (MO) reported third quarter results October 25, revealing slight year-over-year top-line growth of 1.6% as higher pricing offset volume declines in its ‘Smokeable Products’ segment en route to 1% net revenue growth and pricing strength in its ‘Smokeless Products’ segment drove 6.5% net revenue growth. The company’s total cigarettes retail share declined 50 basis points from the third quarter of 2017 to 50.1%, and Marlboro … Read more

Midstream Energy Pounded, MLP Distribution Cut at Golar LNG Partners

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Image shown: The midstream MLP space continues to suffer. Performance of the group since mid-June 2015. By Kris Rosemann and Brian Nelson, CFA There aren’t many calls that have been as large as Valuentum’s was in midstream energy in mid-June 2015. Midstream energy equities comprised some $500-$600 billion in market capitalization at their peak, and our work was prominently highlighted in Barron’s for all to see. Within the High Yield Dividend Newsletter, we’ve received great praise in continuing to highlight the risks of the space, but we can’t change that high yield, itself, is risky, as almost by definition, it means that companies will have poor Dividend Cushion ratios. This doesn’t mean that you won’t be able to find opportunities … Read more

Microsoft Reports Strong Start to Fiscal Year

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Image Source: Mike Mozart Simulated Dividend Growth Newsletter portfolio idea Microsoft reported impressive results in its fiscal first quarter, and its robust free cash flow generation continues to pave the way for future dividend increases. By Kris Rosemann Shares of simulated Dividend Growth Newsletter portfolio idea Microsoft (MSFT) received a nice boost after its fiscal 2019 first quarter report, released October 24. Revenue in the quarter advanced 19% on a year-over-year basis to $29.1 billion, led by 24% revenue growth in its ‘Intelligent Cloud’ from the year ago period as strength in Azure continues to drive server products and cloud services revenue higher. The company’s ‘Business Processes’ segment turned in 19% year-over-year revenue growth in the quarter thanks to continued … Read more

Earnings Roundup: Bellwethers and Big Name Dividend Payers

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Image Source: Mike Cohen Let’s take a look at some high-profile earnings reports of this week, including those from Boeing, Caterpillar, 3M, AT&T, and Verizon. By Kris Rosemann Boeing Raises Full-Year Guidance Former simulated Dividend Growth Newsletter portfolio idea Boeing (BA) reported third-quarter results October 24, and a strong showing enabled management to increase its guidance for the full year. Revenue in the third quarter advanced 4% on a year-over-year basis thanks to higher defense volume and services growth as the company works to build the latter into a $50 billion business in the next five to ten years from its current $12+ billion run rate. The company’s operating margin faced pressure (GAAP operating margin contracted by two percentage points) as … Read more

Wild Ride in the Markets — Nelson

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Image Source: Spencerville Rodeo By Brian Nelson, CFA Market volatility has picked up quite a bit of late, and frankly you shouldn’t be the bit surprised. I’ve been quite active explaining the impact that the proliferation of index investing and quantitative investing has had and will have on the marketplace. The more people index or invest on backward-looking empirical criteria, as in most quant models, regardless of future expectations, the more people that buy everything at any price and hold no matter what, the more people that aren’t making decisions on the basis of underlying valuations, then the more people that can contribute to severe price-to-fair value dislocations. In many ways, when nobody is paying attention to what is going … Read more