Member Articles

KB Home’s Outlook for 2025 Better Than Expected

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Image: KB Home’s shares have done well since the beginning of 2023. By Brian Nelson, CFA KB Home (KBH) reported fourth quarter results on January 13 that beat expectations on both the top and bottom lines. Year-over-year, revenues were up 19%, to $2 billion, above consensus of $1.98 billion, while homes delivered increased 17% and average selling price advanced 3%, to $501,000. Homebuilding operating income increased 27% in the quarter thanks in part to a 60 basis-point improvement in its homebuilding operating income margin. KB Home’s housing gross profit margin increased to 20.9% from 20.7% in the same period last year. Financial services pretax income grew 8% in the quarter. Net income rose 27%, while diluted earnings per share increased … Read more

Walgreens Reports Better Than Feared Results, Shares Yield 8.5%

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Image Source: Walgreens By Brian Nelson, CFA On January 10, Walgreens (WBA) reported better than feared first quarter results of fiscal 2025 with revenue and non-GAAP earnings per share coming in higher than the consensus forecast. Fiscal first quarter sales increased 7.5% from the year-ago quarter and 6.9% on a constant currency basis. Adjusted operating income was $593 million in the quarter compared to adjusted operating income of $687 million in the year-ago period. Adjusted earnings per share came in at $0.51 versus adjusted earnings per share of $0.66 in the year-ago quarter. Management had the following to say about the quarterly results: Our first quarter results reflect our disciplined execution against our 2025 priorities: stabilizing the retail pharmacy by … Read more

Delta Delivers Most Profitable December Quarter in Its History

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Image Source: Colin Brown By Brian Nelson, CFA On January 10, Delta Air Lines (DAL) posted fourth quarter 2024 results that beat on both the top and bottom lines. Adjusted operating revenue increased 5.7% in the fourth quarter, and the firm leveraged the top line growth into 30.4% expansion in adjusted operating income. Its adjusted operating margin in the quarter hit 12% compared with 9.7% in the same period a year ago. Adjusted pre-tax income was 47% higher on a year over year basis, while its adjusted pre-tax margin reached 10.8% versus 7.8% in last year’s quarter. Adjusted net income increased 45.6%, while adjusted diluted earnings per share expanded to $1.85 in the quarter versus $1.74 consensus and $1.28 in last … Read more

Dividend Increases/Decreases for the Week of January 10

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Below we provide a list of firms that raised their dividends during the week ending January 10. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                          Albertsons Companies (ACI): now $0.15 per share quarterly dividend, was $0.12. Alpine Banks of Colorado (ALPIB): now $0.21 per share quarterly dividend, was $0.20. Apogee (APOG): now $0.26 per share quarterly dividend, was $0.25. ATCO (ACO.X:CA): now CAD 0.5045 per share quarterly dividend, was CAD 0.4898. ATCO Ltd. (ACO.Y:CA): now CAD 0.5045 per share quarterly dividend, was CAD 0.4898. Barry Callebaut AG (BRRLY): now … Read more

Dividend Aristocrat Caterpillar’s Dividend on Solid Ground

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Image Source: Caterpillar By Brian Nelson, CFA Caterpillar (CAT) recently reported third quarter results that missed on both the top and bottom lines. Performance declined across the board. Sales and revenues dropped 4% to $16.1 billion from $16.8 billion in the year-ago quarter (lower than what management had been anticipating), profit per share fell to $5.06 from $5.45 in the third quarter of 2023, while adjusted profit per share dropped to $5.17 from $5.52 in the same period a year ago. Weakness was driven by lower sales volume of $759 million, driven by lower sales equipment to end users. Changes in dealer inventories also negatively impacted sales. Caterpillar’s adjusted operating margin came in at 20.0% for the third quarter of … Read more

Lowe’s Experiences Softness in Bigger Ticket Discretionary Demand

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Image: Lowe’s shares have rallied nicely since the beginning of 2023. By Brian Nelson, CFA Home improvement retailer Lowe’s (LOW) recently reported third quarter results that showed a beat on both the top and bottom lines. Net sales fell 1.5% in the quarter as comparable sales fell 1.1%, which beat the consensus estimate expecting a fall of 3.3% in comparable sales. Management attributed the weakness to “continued softness in Do-It-Yourself [DIY] bigger-ticket discretionary demand” that was only “partly offset by storm-related sales and positive comparable sales in Pro and online.” Diluted earnings per share of $2.99 in the quarter, inclusive of a pre-tax gain associated with the 2022 sale of its Canadian retail business, compared to $3.06 in the same … Read more

Target Expects Ho Hum Holiday Results

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Image Source: Target By Brian Nelson, CFA Target (TGT) recently reported third quarter 2024 results that missed on both the top and bottom lines, and the retailer issued ho-hum guidance for the holiday fourth quarter. Third quarter comparable sales advanced 0.3% in the third quarter (versus consensus expectations of 1.5%) as strong traffic and digital performance were offset by a comparable store sales decline of 1.9%. Guest traffic grew 2.4% in the quarter, however, while digital comparable sales increased 10.8% thanks to growth in same-day delivery and drive up. Beauty comparable sales grew more than 6% in the quarter, while Food & Beverage and Essentials categories grew low-single digits compared to the same period last year. Its gross margin rate … Read more

HP Inc. Sets Q1’25 Expectations Below Consensus, Dividend Looks Healthy

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Image Source: HP Inc. By Brian Nelson, CFA HP Inc. (HPQ) recently reported fourth quarter results for its fiscal 2024. Fourth quarter net revenue was up 1.7% (2.3% in constant currency) from the prior-year period, while fourth quarter non-GAAP diluted earnings per share of $0.93 was roughly in-line with the company’s previously provided outlook between $0.89-$0.99. Net cash provided by operating activities was $1.6 billion, while free cash flow totaled $1.5 billion in the quarter. The company returned $1.2 billion to shareholders in the form of share purchases and dividends in the quarter, while it raised its dividend 5%. Management had the following to say about the quarterly results: We are pleased with our Q4 performance where we saw revenue … Read more

Keeping the Horse Before the Cart: Valuentum’s Economic Castle Rating

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Image Source: Ian By Brian Nelson, CFA “In business, I look for economic castles protected by unbreachable moats.” – Warren Buffett In the world of investing, no other saying may be more widespread. The teachings of Berkshire Hathaway’s (BRK.A, BRK.B) Warren Buffett have become a favorite among individual investors, having been adopted by money-management firms and sell-side firms alike in order to better connect with their clients and readers who have been ‘under siege’ by the topic in recent years. The phrase ‘economic moat’ – or sustainable competitive advantage – has simply become ubiquitous in the investment world and perhaps has lost much of its significance and meaning along the way. Most management teams across the globe are now eager … Read more

Dividend Increases/Decreases for the Week of January 3

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Below we provide a list of firms that raised their dividends during the week ending January 3. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                          Agricultural Bank of China (ACGBY): now $0.4001 per share semi-annual dividend, was $0.3101. Alamo (ALG): now $0.30 per share quarterly dividend, was $0.26. B3 S.A. – Brasil, Bolsa, Balcão (BOLSY): now $0.0282 per share quarterly dividend, was $0.0183. Bank OZK (OZK): now $0.42 per share quarterly dividend, was $0.41. Barloworld Limited (BRRAY): now $0.1718 per share semi-annual dividend, was $0.0684. Benchmark Bankshares, Inc. (BMBN): … Read more