Member Articles

Fastenal’s Revenue Beat a Positive Read Through to the Broader Economy

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Image: Fastenal’s second quarter results were a positive read through to the broader economy. By Brian Nelson, CFA On July 12, Fastenal Company (FAST) reported mixed second quarter results where revenue modestly exceeded the consensus forecast, while the company’s GAAP earnings per share was in-line. For the first six months of 2024, net sales advanced 1.8%, while operating income fell 1.4% and net income dropped 0.5%. Diluted earnings per share of $1.03 for the first six months of the year was 0.7% lower than the mark achieved over the same period a year ago. During the second quarter, the company “experienced higher unit sales…primarily due to growth with larger customers and Onsite locations opened in the last two years.” Fastenal … Read more

JPMorgan Chase’s Return on Capital Shines in Second Quarter

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Image Source: Hakan Dahlstrom By Brian Nelson, CFA On July 12, JPMorgan Chase (JPM) reported second quarter results that beat expectations on the top line, but came up a bit short on the bottom line. Managed net revenue came in at $51.0 billion, up 20%, while the company’s provision for credit losses swelled to $3.05 billion. Net income was $18.15 billion in the quarter, resulting in earnings per share of $6.12. Net income excluding significant items of $13.1 billion was $4.40 per share. Return on common equity was 23% in the quarter, while return on common equity was 28%. CEO Jamie Dimon’s commentary on the quarter is found below: The Firm performed well in the second quarter, generating net income of … Read more

Dividend Increases/Decreases for the Week of July 12

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Below we provide a list of firms that raised their dividends during the week ending July 12. 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                          Almacenes Exito S.A. American Depositary Share (EXTO): now $0.0113 per share quarterly dividend, was $0.0112. América Móvil (AMX): now $0.2608 per share annual dividend, was $0.2560. Ameren Illinois Company PFD 4.92% (AILLM): now $1.232 per share quarterly dividend, was $1.175. Amerigo Resources Ltd. (ARREF): now CAD 0.04 per share quarterly dividend, was CAD 0.03. AptarGroup (ATR): now $0.45 per share quarterly dividend, was $0.41. … Read more

Delta Air Lines Speaks of Industry Fare Pressures

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Image Source: Colin Brown By Brian Nelson, CFA Delta Air Lines (DAL) reported disappointing second-quarter results on July 11 with both revenue and non-GAAP earnings per share coming in lower than expected. The company put up record June quarter revenue, which reached $15.4 billion on an adjusted operating basis, up 5.4% from the same period a year ago, but the Street was looking for more. Earnings per share of $2.36 also missed the consensus forecast. Though airlines have largely rationalized capacity in recent years, fare pressures are starting to weigh on performance. We maintain our view that airlines are not long-term investments given their leverage to a cyclical economy and volatile jet fuel prices. Management had the following to say about … Read more

PepsiCo Adjusts Organic Revenue Growth Guidance

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Image: PepsiCo’s shares have been choppy since the beginning of 2022. By Brian Nelson, CFA On July 11, PepsiCo (PEP) reported mixed second quarter results with the firm missing estimates slightly on the top line, but exceeding the consensus forecast on the bottom line. Net revenue growth in the second quarter came in at 0.8%, while organic revenue expansion was 1.9%, below the 3% the Street had been expecting. Core earnings per share was $2.28 versus the consensus estimate of $2.16, while core constant currency earnings per share leapt 10% on a year-over-year basis. PepsiCo’s volume was down 2% in the Convenient Foods segment, while it was flat in its Beverages division. Volume fell 4% in Frito-Lay North America, while … Read more

3 High Dividend Yielders for Consideration

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Image: Energy Transfer, Philip Morris, and Altria have outperformed the SPDR S&P 500 Dividend ETF (SDY) since the beginning of 2024. By Brian Nelson, CFA The market remains laser-focused on inflation readings and employment trends – two of the main dynamics that influence policy at the Federal Reserve. Since the beginning of 2024, the market has ratcheted down expectations of rate cuts from as many as 5 or 6 to just 1 or 2 in 2024. With yields on risk-free instruments poised to go lower soon, a focus on high yielding equities may be appropriate for the income investor. Here are three high dividend yielders that we like for consideration. Energy Transfer (ET) Midstream pipeline operator Energy Transfer has come … Read more

Constellation Brands’ Beer Business Continues to Propel Results

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Image Source: Constellation Brands By Brian Nelson, CFA On July 3, alcoholic beverages giant Constellation Brands (STZ) reported mixed first quarter fiscal 2025 results, where revenue came in a bit light relative to expectations, but non-GAAP earnings per share was better than the consensus forecast. Comparable net sales increased 6%, while comparable operating income jumped 12%. Comparable earnings per share advanced 17%, to $3.57. Shares yield ~1.6% at the time of this writing. Constellation’s Beer Business experienced an 8% increase in net sales thanks to a 7.6% advance in shipment volumes. Strength was prevalent across its Modelo Especial, Pacifico, and Modelo Chelada brands. Constellation’s Beer Business continues to gain share, with its “dollar sales and volume growth outpace(ing) the total … Read more

Tesla’s Deliveries Bounce Back in Second Quarter

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Source: Tesla By Brian Nelson, CFA On July 2, Tesla (TSLA) released its production and delivery numbers for the second quarter of 2024. Production of Model 3/Y and other models totaled 410,831, while total deliveries came in at 443,956 units, consisting of 422,405 Model 3/Y and the balance coming from other models. The results were better than expected and helped to propel shares of the electric-vehicle maker higher. Tesla’s equity has shot up past the high end of our fair value estimate range, and while we liked the better-than-feared news regarding its deliveries, we continue to be on the sidelines with respect to Tesla’s shares. The next big catalysts for Tesla’s shares are its earnings release on July 23 and … Read more

Dividend Increases/Decreases for the Week of July 5

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Below we provide a list of firms that raised their dividends during the week ending July 5. 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                          Bank OZK (OZK): now $0.40 per share quarterly dividend, was $0.39. DouYu International (DOYU): now $9.76 per share special dividend. Lorne Park Capital Partners (LPC:CA): now $0.008 per share quarterly dividend, was $0.007. Medalist Diversified REIT (MDRR): now $0.05 per share quarterly dividend, was $0.02. MV Oil Trust (MVO): now $0.41 per share quarterly dividend, was $0.33. PNC Financial (PNC): now $1.60 per share … Read more

High Yield Dividend Income Investing Is Not as Easy as Chasing the Highest Yield

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Dear members: — The skills to successfully invest for long-term capital gains or long-term dividend growth are much different than those required for generating high yield dividend income. Income investing is a much different proposition. However, the skills do center on a similar equity evaluation process, but one that requires an acknowledgement and heightened awareness of considerably greater downside risks. Income investing, or high yield dividend income investing, should at times be considered among the riskiest forms of investing, as many high dividend-yielding securities tend to trade closer to the characteristics of junk-rated bonds than they do most net cash rich and free cash flow generating powerhouses that we like so much in the Best Ideas Newsletter portfolio (1) and Dividend Growth … Read more