Member Articles

Ralph Lauren’s Dividend Is Quite Healthy

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Image: Ralph Lauren’s shares have done quite well since the beginning of 2022. By Brian Nelson, CFA Ralph Lauren (RL) reported better than expected fiscal first quarter results recently. Net revenue increased 1% in the quarter on a reported basis and was up 3% in constant currency. Foreign currency was a 170 basis-point headwind in the period. Europe revenue increased 6% (7% in constant currency), while Asia revenue increased 4% (9% in constant currency), with China up high-single-digits on a reported basis (up low-double digits in constant currency). North America revenue fell 4% in the quarter as improved direct-to-consumer performance was offset by planned declines in wholesale. Earnings per share in the quarter increased 15%, to $2.70 on an adjusted … Read more

Toll Brothers Expects Demand to Remain Solid Into 2025

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Image: Toll Brothers stock has done quite well during the past couple years. By Brian Nelson, CFA Luxury homebuilder Toll Brothers (TOL) recently reported fiscal third quarter results with revenue and non-GAAP earnings per share coming in better than expectations. Home sales revenues advanced 2% from the same period a year ago, while pre-tax income came in at $503.6 million, down from $553 million in last year’s quarter. Fiscal third quarter earnings per diluted share was $3.60 compared with $3.73 in the same period a year ago, but it exceeded the consensus forecast of $3.31 per share. Net signed contract value was $2.41 billion in the quarter, up 11% from last year’s period, while contracted homes were also up 11% … Read more

Berkshire Hathaway’s Cash Balance Swells, Ownership Stake in Apple Substantially Reduced

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Image: Berkshire Hathaway reduced its equity stake in Apple by a sizable margin. By Brian Nelson, CFA Berkshire Hathaway (BRK.A) (BRK.B) recently reported second quarter results. The insurance and industrial conglomerate’s total revenue nudged up modestly 1.2% during the second quarter, while net earnings attributable to Berkshire Hathaway shareholders dropped to $30.4 billion from $35.9 billion in the same period a year ago, as investment gains weren’t as large as they were in the same period last year. Berkshire Hathaway ended the quarter with $276.9 billion in cash and short-term investments in U.S. Treasury bills, up from $167.6 billion at the end of last year. For the first six months of the year, cash flow from operations came in at … Read more

Chevron Lacks Dividend Coverage with Traditional Free Cash Flow

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Image: Chevron’s shares have been choppy during the past few years. By Brian Nelson, CFA Chevron (CVX) recently reported second quarter results that showed mixed performance, with revenue beating the consensus forecast, but non-GAAP earnings per share coming up short. During the second quarter of 2024, total revenues advanced 4.7%, while adjusted earnings came in at $4.7 billion ($2.55 per share on a diluted basis) compared to adjusted earnings of $5.8 billion ($3.08 per share on a diluted basis) during the second quarter of last year. The earnings weakness was driven by lower margins on refined product sales, less favorable tax items in the most recent quarter, and negative foreign currency impacts. Management had the following to say about the … Read more

Main Street’s Dividend Track Record Is a Sight to See

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Image: Main Street has never lowered its monthly dividend, and it has paid supplemental dividends to bolster its yield. Image Source: Main Street By Brian Nelson, CFA Internally managed business development company Main Street (MAIN) recently reported second quarter results with net interest income and total investment income coming in better than expectations. Net investment income came in at $87.3 million (or $1.01 per share) in the quarter, while distributable net investment income [DNII] was $92.3 million (or $1.07 per share) in the period. Total investment income was $132.2 million in the quarter, up 4% from the same period a year ago. Return on equity was 16.1% on an annualized basis for the second quarter, while it was 18.5% for … Read more

ExxonMobil’s Free Cash Flow Remains Impressive

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Image: ExxonMobil’s shares have done quite well since the beginning of 2022. By Brian Nelson, CFA ExxonMobil (XOM) recently reported better than expected second quarter results with both revenue and non-GAAP earnings per share coming in higher than the consensus forecast. Total revenue and other income increased 12.2% from the prior-year quarter, while non-GAAP earnings per share came in at $2.14 per share, up $0.08 on a sequential basis. Exxon Mobil returned $9.5 billion to shareholders in the quarter, consisting of $4.3 billion in dividends and $5.2 billion in buybacks. Management was upbeat about the performance: We delivered our second-highest 2Q earnings of the past decade as we continue to improve the fundamental earnings power of the company. We achieved … Read more

TJX Companies Boosts Profit Guidance

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Image: TJX’s stock has been on a tear over the past couple years. By Brian Nelson, CFA TJX Companies (TJX) reported better-than-expected second quarter fiscal 2025 results August 21 that showed a revenue beat and non-GAAP earnings per share outpacing the consensus estimate. Net sales increased 6% thanks to consolidated comparable store sales increasing 4% as a result of increased customer transactions, which was above the consensus forecast for comps to experience 2.8% growth. Its second-quarter pre-tax profit margin of 10.9% was 0.5 percentage points ahead of last year’s mark thanks to lower freight costs and stronger sales. Second-quarter diluted earnings per share of $0.96 was up 13% from the same period a year ago. Its comparable store sales growth, … Read more

Target’s Second Quarter Results Better Than Feared

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Image: Target’s shares have been quite volatile since the beginning of 2023. By Brian Nelson, CFA Target (TGT) reported better than expected second quarter results with revenue and non-GAAP earnings per share coming in higher than the consensus forecasts. Sales grew 2.7% thanks to comparable store sales growth of 2%, which came in at the high end of the company’s expectations and above the consensus estimate of 1.1%. The quarter for Target marked a return to top-line growth and positive comparable store sales expansion and showcased meaningful margin expansion. Traffic at Target advanced 3% in the period as all six of its core merchandising categories delivered growth, with Apparel comparable sales growing 3%+ in the quarter. Digital comparable store sales … Read more

Mastercard’s Results Point to Continued Healthy Consumer Spending

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Image: Mastercard’s stock has done quite well since the beginning of 2022. By Brian Nelson, CFA Mastercard (MA) recently reported better than expected second quarter results with the firm’s revenue and non-GAAP earnings per share coming in higher than the consensus forecasts. Second quarter net revenue came in at $7 billion, up 11% year-over-year (13% on a currency-neutral basis) thanks to growth in its payment network and value-added services and solutions. Operating income came in at $4 billion, up from $3.7 billion in the same period a year ago. Its adjusted operating margin was an impressive 59.4% in the quarter. On a currency-neutral basis, non-GAAP net income advanced 24%, while adjusted diluted earnings per share increased 27%, bolstered in part … Read more

Ford Raises Adjusted Free Cash Flow Guidance, Warranty Costs Weigh on Shares

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Image: Ford’s second quarter results weren’t great, but the company’s guidance calls for increased adjusted free cash flow in 2024. By Brian Nelson, CFA Ford Motor (F) reported disappointing second quarter results recently where both automotive revenue and non-GAAP earnings per share came in below expectations. Ford’s second-quarter revenue grew 6% year-over-year thanks to a “persistently fresh lineup of vehicles (including) momentum from the all-new F-150 pickup and record volumes of Transit commercial vans.” However, company net income came in at $1.8 billion, down from $1.9 billion in the same period of 2023, while company adjusted earnings before interest and taxes [EBIT] was $2.8 billion in the quarter, down from $3.8 billion due to an increase in warranty reserves. Its … Read more