Member Articles

FedEx Lowers Fiscal 2025 Guidance Again, Plans to Separate FedEx Freight

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Image: FedEx’s shares have come roaring back since its bottom in the back half of 2022. By Brian Nelson, CFA FedEx (FDX) recently reported mixed fiscal second quarter results with the company missing on the top line, but beating the consensus forecast for non-GAAP earnings per share. Non-GAAP adjusted revenue fell to $22 billion from $22.2 billion in the prior-year quarter, while adjusted operating income dropped to $1.38 billion from $1.42 billion in the same quarter of fiscal 2024. Its adjusted operating margin fell to 6.3% from 6.4%, while adjusted net income fell to $0.99 billion from $1.01 billion previously. Thanks to share buybacks, adjusted diluted earnings per share increased to $4.05 from $3.99 in the prior-year quarter. Here’s more … Read more

Costco’s Business Humming Along Nicely, But Stock Is Not Cheap

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Image Source: Costco By Brian Nelson, CFA Costco Wholesale (COST) recently reported first quarter results for fiscal 2025, with revenue and non-GAAP earnings per share coming in ahead of expectations. Net sales for the first quarter advanced 7.5%, to $60.99 billion from $56.72 billion in the year ago period. Total comparable store sales, after adjusting for the impact of changes in gasoline prices and foreign exchange, increased 7.1% versus the consensus estimate of 6.3%. Comparable traffic rose 5.1%, while comparable ticket edged higher 0.1%. Costco experienced 13.2% adjusted e-commerce expansion in the period. Costco shared some fun facts about growth in its business on the conference call: Our U.S. bakery division has reached new records of 4.2 million pies being … Read more

How Does 37% Sound?

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Image: The Schwab U.S. Large Cap Growth ETF (SCHG) is up more than 37% so far in 2024. By Brian Nelson, CFA How does 37% sound? That was the price-only performance of the Schwab U.S. Large Cap Growth ETF (SCHG) thus far in 2024. Over the preceding 5-year period, the SCHG is up over 140%. For years, I have pounded the table on the theory that there are not value or growth stocks, but rather undervalued, fairly valued, or overvalued stocks. It’s why many growth stocks can be undervalued. It’s the Theory of Universal Valuation found in Value Trap that ties myriad areas of finance to the well-known discounted cash-flow [DCF] model. Growth is a component of value. Hook, line, … Read more

Nike’s Revenue Under Considerable Pressure; Turnaround Will Take Time

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Image: Nike’s shares have been under considerable pressure as sales results disappoint. By Brian Nelson, CFA Nike (NKE) reported second quarter earnings on December 19 that beat on both the top and bottom lines. However, quarterly revenues still fell 8% on a reported basis and were down 9% on a currency-neutral basis. NIKE Brand revenues fell 7% on a reported basis and 8% on a currency-neutral basis. NIKE Direct revenues dropped 13% on a reported basis and 14% on a currency-neutral basis, while wholesale revenues fell 3% on a reported basis and 4% when holding currency neutral. Converse revenues declined across all territories, falling 17% on a reported basis and 18% on a currency-neutral basis. Nike’s gross margin dropped 100 … Read more

Alert: Changes to the Newsletter Portfolios

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Image Source: Mike Cohen cc by 2.0. Summary Best Ideas Newsletter portfolio Pepsi (PEP): 4%-6% à 0% McDonald’s (MCD): 4%-6% à 0% Amazon (AMZN): 0% à 4%-6% Nvidia (NVDA): 0% à 4%-6% Dividend Growth Newsletter portfolio Honeywell (HON): 3%-4% à 0% McDonald’s (MCD): 3%-4% à 0% Meta Platforms (META): 0% à 3%-4% Booking Holdings (BKNG): 0% à 3%-4% By Brian Nelson, CFA 2024 proved to be a great year for stock investors. The Dow Jones Industrial Average ETF Trust (DIA) has advanced nearly 15% year-to-date on a price-only basis, while the SPDR S&P 500 ETF Trust (SPY) is up a whopping 25%+ on a price-only basis. The Invesco QQQ Trust (QQQ) is up even more at a 27% advance in … Read more

Dividend Increases/Decreases for the Week of December 27

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Below we provide a list of firms that raised their dividends during the week ending December 27. 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                          Cadiz Inc. 8.875% DEP PFD A (CDZIP): now $0.56 per share quarterly dividend, was $0.55. Centrais Elétricas Brasileiras S.A. – Eletrobrás (EBR): now $0.1414 per share annual dividend, was $0.0789. Crazy Woman Creek Bancorp (CRZY): now $0.32 per share annual dividend, was $0.31. Preferred Bank (PFBC): now $0.75 per share quarterly dividend, was $0.70. United Bancorporation of Alabama (UBAB): now $0.60 per share semi-annual … Read more

Shares of UnitedHealth Group and Vertex Pharma Sour

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Image Source: Rodrigo Senna cc by 2.0. By Brian Nelson, CFA Over the past few weeks, UnitedHealth Group (UNH) has faced a plethora of negativity. First, UnitedHealthcare CEO was shot and killed – not UnitedHealth Group’s CEO Andrew Witty – but the CEO of its health benefits unit. The killing happened right before UnitedHealth’s plans for its annual Investor Day. The event sparked social media outrage against U.S. health insurers. There has also been new legislation introduced to potentially break up pharmacy benefit managers. President-elect Donald Trump has also made statements to the effect of breaking up the middlemen in reference to the pharmacy benefit managers. As of right now, we continue to monitor the situation, but the risks have substantially … Read more

Adobe Issues Cautious Fiscal 2025 Guidance

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Image Source: Adobe By Brian Nelson, CFA Adobe (ADBE) reported better than expected fiscal fourth quarter 2024 results on December 11 that showed outperformance with respect to revenue and non-GAAP earnings per share. Revenue increased 11% in the quarter, while diluted earnings per share came in at $3.79 on a GAAP basis and $4.81 on a non-GAAP basis, exceeding the consensus forecast by $0.14. The company put up record fiscal fourth quarter operating cash flow of $2.92 billion, while it exited the quarter with remaining performance obligations of $19.96 billion. Free cash flow was $2.87 billion for the three months ended November 29. Management was upbeat in the press release: Adobe delivered record FY24 revenue, demonstrating strong demand and the … Read more

Toll Brothers Ends Strongest Year Ever

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By Brian Nelson, CFA On December 9, luxury homebuilder Toll Brothers (TOL) reported better-than-expected fourth-quarter fiscal 2024 results with revenue and non-GAAP earnings per share coming in higher than the consensus forecasts. Home sales revenues increased 10% in the quarter, while delivered homes were 3,431, up 25%. Net signed contract value was up 32% compared to the same quarter a year ago, with contracted homes of 2,658, up 30%. Backlog value, however, fell 7% on a year-over-year basis, with homes in backlog of 5,996, down 9%. Toll Brothers’ adjusted home sales growth margin, which excludes interest and inventory write-downs, came in at 27.9% in the quarter, below the adjusted home sales gross margin of 29.1% in the fiscal fourth quarter … Read more

Oracle’s Remaining Performance Obligations (RPO) Growth Speaks to Accelerated Expansion

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Image Source: Oracle By Brian Nelson, CFA On December 9, Oracle (ORCL) reported lower than expected second quarter fiscal 2025 results with revenue and non-GAAP earnings per share coming in lower than the consensus forecasts. Total revenue was up 9% year-over-year in both USD and constant currency, while GAAP earnings per share increased 24% and non-GAAP earnings per share advanced 10%, to $1.47. Cloud services and license support revenues increased 12% year-over-year in both USD and constant currency, while cloud license and on-premise license revenue nudged up 1% in USD and 3% in constant currency. Management’s commentary was upbeat in the press release: Record level AI demand drove Oracle Cloud Infrastructure revenue up 52% in Q2, a much higher growth … Read more