Member Articles

Lockheed Martin Issues Strong Second Quarter Results, Raises Outlook

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Image: Lockheed Martin’s shares have recovered nicely since their October 2023 bottom. By Brian Nelson, CFA Lockheed Martin reported better-than-expected second quarter results on July 23 and raised its 2024 outlook for sales, segment operating profit and earnings per share. Net sales increased to $18.1 billion in the second quarter from $16.7 billion in the year-ago period, while business segment operating profit came in at $2.04 billion, up from $1.86 billion in last year’s quarter. Diluted earnings per share expanded to $6.85 from $6.63 in the second quarter of 2023. Management’s commentary in the quarterly press release was quite positive: …demand for our defense technology solutions remains robust, with a backlog of nearly $160 billion, greater than two times annual … Read more

Philip Morris Puts Up Excellent Second Quarter Results, Raises 2024 Guidance

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Image: Philip Morris’ stock has done quite well over the past few months. By Brian Nelson, CFA On July 23, Philip Morris (PM) reported excellent second quarter results with both revenue and non-GAAP earnings per share coming in better than expectations. Net revenue advanced 5.6% on a reported basis and 9.6% organically. Adjusted operating income increased 3.5% on a reported basis or 12.5% excluding currency and acquisitions. Its adjusted operating income margin increased 1.1 percentage points excluding currency and acquisitions, while adjusted diluted earnings per share increased 10.6%, excluding currency. Management’s commentary was upbeat: The excellent momentum of our smoke-free business continued with an outstanding second-quarter and first-half performance. The powerful combination of excellent underlying performance and proactive measures across … Read more

Verizon’s First Half 2024 Operating Cash Flow Declines, Adjusted Earnings Fall

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Image Source: Verizon By Brian Nelson, CFA On July 22, Verizon (VZ) reported mixed second-quarter results with revenue missing the consensus expectation but non-GAAP earnings per share coming in line. Total operating revenue was up 0.6% from the same quarter a year ago, but consolidated net income fell to $4.7 billion from $4.8 billion in last year’s quarter. Consolidated adjusted EBITDA was $12.3 billion, up from $12 billion in the second quarter of 2023. Earnings per share, excluding special items, was $1.15 in the quarter, worse than the $1.21 mark in the second quarter a year ago. On the wireless side of its business, total wireless service revenue increased 3.5% on a year-over-year basis, with retail postpaid phone net additions … Read more

Netflix Still Has a Long Runway of Growth Ahead of It

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By Brian Nelson, CFA On July 18, Netflix (NFLX) reported strong second quarter results that showed revenue on a foreign exchange neutral basis increasing 22% thanks to a 16% increase in average paid memberships and a 5% increase in average revenue per member [ARM] on a foreign exchange neutral basis. Global revenue was modestly higher than the company’s beginning-of-quarter guidance thanks to strength in global streaming paid net additions. Netflix’s operating income surged in the quarter, up 42% from the same period a year ago, as its operating margin improved 5 percentage points to 27.2%, both “slightly above (its) guidance forecast due to higher-than-expected revenue.” Second quarter earnings per share came in at $4.88, up 48% on a year-over-year basis, … Read more

Crown Castle’s AFFO In Excess of Cash Dividends Paid

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Image: Crown Castle’s shares look to be bottoming, and the firm’s AFFO is expected to remain well above cash dividends paid during 2024. By Brian Nelson, CFA On July 17, Crown Castle (CCI) reported mixed second quarter results in which adjusted funds from operations (AFFO) beat expectations, while revenue came in a bit light. The headline numbers weren’t great. Site rental revenues fell 9% in the second quarter of 2024, while net income dropped 45%. Adjusted EBITDA fell 15%, while AFFO dropped 21% on a per-share basis, to $1.62. On an organic basis, things looked a bit better. Organic contribution to site rental billings was $63 million, up 4.7% from the same period a year ago after excluding an unfavorable … Read more

Domino’s Suspends Long-term Global Net Store Growth Guidance

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Image: Domino’s shares have done well since the beginning of 2023, but visibility into its long-term global net store growth has become murky given problems at one of its master franchisees. By Brian Nelson, CFA On July 18, Domino’s Pizza (DPZ) reported mixed second-quarter results that showed a slight miss on the top line, but a solid beat on the bottom line. Excluding foreign currency impacts, global retail sales increased 7.2% thanks to “higher supply chain, U.S. franchise advertising and U.S. franchise royalties and fees revenues,” while U.S. same store sales growth expanded 4.8% and international same store sales growth, excluding foreign currency, advanced 2.1%. Global net store growth was 175 in the quarter. The company’s U.S. company-owned gross margin … Read more

Taiwan Semiconductor Impresses in Second Quarter, Gives Strong Outlook

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Image: Taiwan Semiconductor reported better-than-expected second quarter results. By Brian Nelson, CFA Taiwan Semiconductor (TSM) reported strong second quarter results on July 18. On a year-over-year basis, second-quarter revenue advanced more than 40%, while net income and diluted earnings per share increased more than 36%. Taiwan Semiconductor is experiencing strong momentum behind its operations as second-quarter revenue and net income showed a 13.6% and 9.9% sequential increase, respectively. Its revenue growth in the quarter was also better than guidance. The company’s gross margin, operating margin, and net profit margin were 53.2%, 42.5%, and 36.8% in the quarter, respectively. Its gross margin and operating margin came in ahead of guidance. During the second quarter, shipments of 3-nanometer accounted for 15% of … Read more

Johnson & Johnson Finetunes 2024 Bottom Line Guidance

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Image: J&J’s shares have faced pressure since the beginning of 2023. By Brian Nelson, CFA Johnson & Johnson (JNJ) reported better-than-expected second quarter results on July 17. The company put up adjusted operational growth excluding the COVID-19 vaccine of 7.1%, while adjusted earnings per share was $2.82, up 10.2% on a year-over-year basis. The company’s Innovative Medicine division experienced an 8.8% worldwide operational revenue increase, excluding the COVID-19 vaccine, thanks to strength in DARZALEX, ERLEADA, TREMFYA, STELARA, SPRAVATO, and its Other Oncology segment. Its MedTech worldwide operational revenue advanced 4.4% thanks to strength in electrophysiology products and Abiomed in its Cardiovascular segment. Management had the following to say about the quarter: Johnson & Johnson’s second quarter performance reflects our relentless … Read more

ASML Holding Reports Strong Bookings in Second Quarter

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Image: ASML Holding has been a strong stock performer since the beginning of 2023. By Brian Nelson, CFA On July 17, ASML Holding (ASML) reported disappointing second quarter 2024 results where revenue fell 10% and operating income dropped 18.9% from the same period a year ago. Net income fell 18.7% in the quarter on a year-over-year basis, with diluted net income per share falling to €4.01 from €4.93 in the same period a year ago. Though the firm’s second quarter performance left a lot to be desired, its bookings number of €5.6 billion (€2.5 billion were EUV) in the quarter was strong, coming in better than the €4.5 billion in bookings won in the same period last year. Management had … Read more

UnitedHealth Group Reports Messy Second Quarter Results

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Image: UnitedHealth Group’s shares have been choppy since the beginning of 2023. By Brian Nelson, CFA UnitedHealth Group (UNH) reported messy second quarter results on July 16 that showed a beat on the bottom line, but in-line performance on the top line. The healthcare giant reported revenue of $98.9 billion, up $6 billion from the same period a year ago thanks to “strong expansion in people served domestically at its Optum and UnitedHealthcare” divisions. Second quarter earnings from operations came in at $7.9 billion, which included a $1.1 billion headwind from “unfavorable cyberattack effects.” Adjusted earnings from operations, which include business disruption impacts but exclude cyberattack direct response costs and the reclassification of its remaining South American operations as held … Read more