Member Articles

Lowe’s Posts a Solid Fourth Quarter…Thanks Sandy

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Home improvement retailer Lowe’s (click ticker for report: ) reported modestly better than anticipated fourth quarter results Monday morning. Revenue fell 5% year-over-year to $11 billion, which was a touch better than expected. Earnings were flat compared to the year-ago quarter, coming in at $0.26 per share, but that figure also exceeded the consensus expectation. Though Lowe’s benefited from an extra selling week in fiscal year 2012 (ended January 2013), the results were solid. Hurricane Sandy rebuilding efforts helped stores remain productive after a decent third quarter, with same-store sales rising 1.9%. In total, management believes hurricane-related purchases added 70 basis points to same-store sales growth, and the firm anticipates Sandy will have a positive influence on fiscal year 2013 … Read more

With M&A Popping, We Think More Deals Lie Ahead

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Monday morning, Barnes and Noble’s (BKS) Chairman Leonard Riggio announced that he will finance a bid to take the company’s retail operations private. This comes after the announcement of several other major deals, including the OfficeMax/Office Depot Merger, Berkshire (BRK.A) and 3G Capital’s acquisition of Heinz (HNZ), and Michael Dell’s bid for Dell (click ticker for report: ). Let’s take a look at some potential targets. Apollo Group Results in the for-profit education space have experienced significant downward pressure during the past few years. Apollo Group (click ticker for report: ), owner of the University of Phoenix, has seen its share price cut by 64% during the past year, after being a cash-generating darling just a few years ago. The … Read more

Changes Flow at Abercrombie & Fitch

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Friday morning, teen clothing retailer Abercrombie & Fitch (click ticker for report: ) announced fourth quarter results, a dividend hike, and a change in method of accounting for inventory. Revenue increased 11% year-over-year to $1.5 billion, falling slightly below consensus expectations. Earnings per share easily exceeded expectations under the retail method, growing 97% year-over-year to $2.21 per share. Under the cost method, which Abercrombie will use going forward, they grew nearly 10 fold year-over-year to $2.15 per share. Abercrombie’s new accounting method is designed to more accurately reflect gross margins and provide greater consistency with respect to inventory. Although the move will cause us to adjust our financial model, we think it will more accurately reflect the company’s operating performance. … Read more

Nordstrom Is the Best Omni-Channel Retailer

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Thursday afternoon, department store and discounter Nordstrom (click ticker for report: ) reported strong fourth-quarter results. Revenue jumped 14% year-over-year to $3.6 billion, roughly in line with consensus figures. Earnings were better than anticipated but boosted by the extra week, growing 26% year-over-year to $1.40 per share. Aggregate same-store sales jumped 6.3% during the quarter, driven mostly by strength at Nordstrom Rack. As we’ve mentioned before with regards to TJX (click ticker for report: ) and Ross Stores (click ticker for report: ), Nordstrom Rack is a wonderful business that delivers designer names at a discount to consumers. More importantly, its experience cannot be replicated nearly as easily online. eBay (click ticker for report: ) and Amazon (click ticker for … Read more

HP’s Turnaround Plugs Along

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After its fourth quarter revealed the Autonomy scandal, Hewlett-Packard (click ticker for report: ) announced decent first-quarter results for its 2013 fiscal year. Revenue fell 6% year-over-year to $28.4 billion, which was actually far better than consensus estimates. Earnings also fell, down 11% year-over-year to $0.82 per share. However, the number beat consensus, and it also exceeded HP’s internal guidance (Image Source: HPQ). On a geographic basis, we were pleased to see the pace of HP’s revenue declines moderate across the board, except for Europe (only Asia-Pacific posted growth—of 1%). The enterprise technology space is tempered, and we believe demand will improve once economic conditions cooperate (Image Source: HPQ). The firm’s Personal Systems segment continued to experience profit deterioration, with margins falling 250 basis … Read more

Dividend Increases for the Week Ending February 22

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This week was jam-packed with companies raising their quarterly cash dividends. Below we provide a list of firms that upped their dividends for the week ending February 22. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here. Firms Raising Their Dividends This Week Abercrombie & Fitch (ANF): now $0.20 per share quarterly dividend, was $0.175. Analog Devices (ADI): now $0.34 per share quarterly dividend, was $0.30. Chemung Financial (CHMG): now $0.26 per share quarterly dividend, was $0.25. Chesapeake Lodging Trust (CHSP): now $0.24 per share quarterly dividend, was $0.22. Cheviot Financial Corp. (CHEV): now $0.09 per share quarterly dividend, was $0.08 Corrections Corp of America … Read more

Wal-Mart Posts a Solid Fourth Quarter; Boosts Dividend

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Retailing goliath Wal-Mart (click ticker for report: ) announced decent fourth quarter results yesterday. Revenue increased 3.9% during the quarter to $127.1 billion, just a touch below consensus expectations. Earnings were better than expected, but boosted by a favorable tax rate, growing 11% year-over-year to $1.67 per share. Although the quarter was by no means a blockbuster one, we thought results were acceptable. Wal-Mart’s core US namesake business experienced 2.6% sales growth thanks to same-store sales that increased 1% (1.8% ex-fuel). Traffic declined marginally, down 0.1%, but average tickets were 1.1% higher than the year prior, and NPD indicated that the firm grew market share over the holiday season. Let’s not forget that Wal-Mart registered sales of nearly $75 billion during … Read more

Demand for the Model S Looks Solid But Will Tesla Live Up to the Hype?

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Electric vehicle maker Tesla (click ticker for report: ) announced fourth quarter results Wednesday afternoon that showed progress toward achieving breakeven. Revenue surged nearly 700% year-over-year to $306 million, exceeding consensus estimates. Tesla’s non-GAAP loss of $0.65 per share was worse than expected, and that loss balloons to $0.79 per share on a GAAP basis. The firm also burned through $101 million of cash, which was better than the prior quarter by about $60 million (but worse than the year-ago quarter by $20 million). Though it isn’t abnormal for a fast-growing company like Tesla to have a cash burn, we’d like to see the company at least breakeven with respect to operating cash flow, which it believes it can do … Read more

Cheesecake Factory and BJ’s Restaurants Buck the Earlier Trend

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We’ve received fairly consistent guidance from the casual dining space recently, with chains generally anticipating 1.5% to 3% same-store sales growth, countered with higher input costs. This is by no means incredibly bullish for the US economy, but we are happy to see firms looking for growth (even though the broader signals point to mediocre expansion). We aren’t fans of the space in particular, but if we see results accelerate (or slow) materially, it could be a sign of broader strength (or weakness). Earlier this week we examined the solid results and guidance from casual diners Texas Roadhouse (click ticker for report: ) and Red Robin (click ticker for report: ). The results from the Cheesecake Factory (click ticker for … Read more

Clash of the Titans: Team Icahn Wins This Round

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Since sparring on CNBC last month, hedge-fund legends Carl Icahn and Bill Ackman have stolen headlines, and the battle has moved on to Herbalife (HLF). With claims of a Ponzi scheme on one side of the battle countered by claims on the other side of selling the American dream and enabling entrepreneurs, the battle between Ackman and Icahn has resulted in a wild ride in shares of Herbalife. Still, with all the noise, we’re sticking to the fundamentals. On Tuesday, Herbalife reported that fourth quarter revenue rose 20% year-over-year to $1.1 billion, significantly higher than consensus estimates. Earnings jumped 22% year-over-year to $1.05 per share, easily exceeding consensus expectations. For the full year, the company grew sales 18% to $4.1 … Read more