Member Articles

Alphabet’s Cash Flow Soars in Fourth Quarter

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Image Source: TradingView By Brian Nelson, CFA On February 4, Alphabet (GOOG) (GOOGL) reported mixed fourth quarter results with revenue missing the consensus forecast, but GAAP earnings per share outpacing what Wall Street was looking for. Total revenue in the fourth quarter advanced 12%, while operating income leapt 30.7% (thanks to a five percentage point improvement in its operating margin) and net income jumped 28.3%. Diluted earnings per share rose 31.1%, to $2.15 per share, in the quarter. We continue to like Alphabet as a top weighting in the Best Ideas Newsletter portfolio. Management had the following to say about the quarter: Q4 was a strong quarter driven by our leadership in AI and momentum across the business. We are … Read more

Phillips 66 Outlines Strategic Priorities

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Image Source: TradingView By Brian Nelson, CFA Phillips 66 (PSX) reported fourth quarter results on January 31 with non-GAAP earnings per share coming in ahead of the consensus forecast. The company reported fourth-quarter earnings of $8 million, or $0.01 per share, and an adjusted loss of $61 million, or $0.15 per share. Earnings in the quarter were impacted by $230 million pre-tax of accelerated depreciation related to its Los Angeles Refinery. In the fourth quarter, it returned $1.1 billion to shareholders through dividends and share repurchases. Phillips 66 registered record NGL fractionation and LPG export volumes in Midstream and set a record clean product yield in Refining. Management had the following to say about the quarter and outlook: During the … Read more

Tesla Remains a Net Cash Rich, Free Cash Flow Generating Powerhouse

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Image: Tesla continues to attack costs with average cost of goods sold per vehicle reaching an all-time low in the fourth quarter of 2024. Image Source: Tesla By Brian Nelson, CFA Tesla (TSLA) reported disappointing fourth quarter results on January 29 with revenue and non-GAAP earnings per share coming in below the consensus forecasts. Total revenue advanced just 2% in the quarter, and total gross profit fell 6%, while income from operations dropped 23% on a year-over-year basis. Tesla’s profitability faced pressure as the firm navigated reduced S3XY vehicle average selling prices. Adjusted EBITDA, however, increased 25%, and non-GAAP earnings per share came in at $0.73, up 3% on a year-over-year basis. Tesla had the following to say about its … Read more

Altria Expects Modest Earnings Growth in 2025, Shares Yield 7.8%

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Image Source: Altria By Brian Nelson, CFA Altria (MO) reported better than expected fourth quarter results on January 30, with both revenue and non-GAAP earnings per share exceeding the consensus forecasts. Revenue, net of excise taxes advanced 1.6%, while adjusted diluted earnings per share came in at $1.29, up more than 9% on a year-over-year basis. NJOY consumables reported shipment volume advanced 15.3% in the quarter, while NJOY devices reported shipment volume increased 22.2%. In its Smokeable Products segment, net revenues fell 0.2% due to lower shipment volume, partially offset by higher pricing, while adjusted segment operating companies income (OCI) increased 5.5%. In its Oral Tobacco Products segment, net revenue increased 2.7% driven by higher pricing, while segment adjusted OCI … Read more

ASML Holding’s Bookings Soar in Fourth Quarter

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Image Source: TradingView By Brian Nelson, CFA On January 29, ASML Holding (ASML) reported better than expected fourth quarter results with revenue and GAAP earnings per share coming in ahead of the consensus forecasts. Fourth quarter net sales totaled €9.3 billion on a gross margin of 51.7%, with net income coming in at €2.7 billion. Management had previously guided net sales to be between €8.8 billion and €9.2 billion with a gross margin between 49% and 50% in the quarter. Net sales advanced 24.1% on a sequential basis, and net bookings were €7.1 billion, up considerably on a sequential basis when compared to the €2.6 billion it registered during the third quarter of 2024. Management had the following to say … Read more

IBM’s Generative AI Book of Business Doing Well

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Image Source: TradingView By Brian Nelson, CFA IBM (IBM) reported mixed fourth quarter results on January 29, with the company’s revenue coming in line with expectations and the company beating the bottom-line forecast. Revenue advanced 1% (up 2% in constant currency) as strength in software revenue (+10.4%) offset weakness in consulting (-2%) and infrastructure (-7.6%) sales. Gross profit margin increased 40 basis points, to 59.5%, in the quarter. Management was upbeat in the press release: We closed the year with double-digit revenue growth in Software for the quarter, led by further acceleration in Red Hat. Clients globally continue to turn to IBM to transform with AI. Our generative AI book of business now stands at more than $5 billion inception-to-date, … Read more

Apple Reports Best Quarter Ever Despite Declining iPhone, China Sales

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Image Source: TradingView By Brian Nelson, CFA On January 30, Apple (AAPL) reported better than expected fiscal first quarter results, with both revenue and GAAP earnings per share exceeding the consensus forecasts. Quarterly revenue was up 4% year-over-year, while quarterly diluted earnings per share advanced 10% year-over-year. Fiscal first quarter services revenue reached a record high, increasing 13.9% from the same period a year ago. Gross margin came in at 46.9%, up from 45.9% in last year’s quarter, while its operating margin came in at 34.5%, up from 33.8% in the year-ago period. Management was upbeat in the press release: …Apple is reporting our best quarter ever, with revenue of $124.3 billion, up 4 percent from a year ago. We … Read more

Visa’s Free Cash Flow Margins Are Incredible

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Image Source: Visa By Brian Nelson, CFA On January 30, Visa (V) reported strong fiscal first quarter results with revenue and non-GAAP earnings per share coming in ahead of the consensus forecasts. Net revenue increased 10% (up 11% on a constant-dollar basis), while non-GAAP net income increased 11% and non-GAAP earnings per share jumped 14% on a year-over-year basis. During the fiscal first quarter, payments volume increased 9%, total cross-border volume increased 16%, while processed transactions advanced 11%. Management spoke positively in the press release: Visa’s strong first-quarter results reflected healthy spending during the holiday season and improving trends in payments volume, cross-border volume, and processed transactions growth. We delivered 10% net revenue growth, 8% GAAP EPS growth and 14% … Read more

Meta Platforms’ Earnings Surge in Fourth Quarter

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Image Source: Meta Platforms By Brian Nelson, CFA On January 29, Meta Platforms (META) reported better than expected fourth quarter results with revenue and GAAP earnings per share outpacing the consensus forecasts. Revenue increased 21% in the quarter on a year-over-year basis, and the company was able to leverage the higher sales into a 43% increase in income from operations. Its fourth-quarter operating margin expanded 7 percentage points, to 48%. Net income increased 49%, to $20.8 billion, while diluted earnings per share advanced 50%, to $8.02. Its family daily active people (DAP) was 3.35 billion on average for December 2024, an increase of 5% on a year-over-year basis. Ad impressions across its Family of Apps increased 6% in the fourth … Read more

Microsoft Issues Fiscal Second Quarter Results

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Image Source: Microsoft By Brian Nelson, CFA On January 29, Microsoft (MSFT) reported better than expected fiscal second quarter results with revenue and GAAP earnings per share coming in ahead of the consensus forecast. Revenue increased 12% on a year-over-year basis, and Microsoft leveraged that top-line growth into a 17% increase in operating income (up 16% in constant currency). Net income increased 10%, while diluted earnings per share of $3.23 also advanced 10%. Management was upbeat in the press release: We are innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead. Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year. This … Read more