Member Articles

Home Depot Sees Softness in Some Larger Discretionary Projects

by

Image Source: Home Depot continues to experience some softness in sales of big ticket items. By Brian Nelson, CFA On May 14, Home Depot (HD) reported mixed first quarter results that showed revenue and earnings pressure, but the firm’s bottom line continued to hold up well relative to expectations. Total reported sales fell 2.3% in the quarter, while comparable store sales declined 2.8%, with comps declining 3.2% in the U.S. in the period. Net earnings for the first quarter dropped to $3.63 per share compared to $3.82 per share in the same period a year ago. Management noted some softness in its business to start the spring: The team executed at a high level in the quarter, and we continued … Read more

Energy Transfer Ups Adjusted EBITDA Guidance for 2024

by

Image: Energy Transfer’s financials are in much better shape than they were years ago. By Brian Nelson, CFA On May 8, Energy Transfer (ET) reported strong first-quarter 2024 results. Adjusted EBITDA for the three months ended March 31 came in at $3.88 billion, which was nicely higher than the $3.43 billion mark it achieved in the same period last year. Distributable cash flow [DCF] in the quarter came in at $2.36 billion, which was materially better than the $2.01 billion registered during the first quarter of 2023. During the first quarter of 2024, the company’s crude oil transportation volumes increased 44%, which set a new record. Crude oil terminal volumes increased 10%, NGL fractional volumes increased 11%, NGL exports increased … Read more

Disney Expects Strong Adjusted EPS Growth, Free Cash Flow

by

Image: Disney’s shares have struggled, but management is working hard to get back on track. By Brian Nelson, CFA Disney (DIS) reported mixed second quarter results for fiscal 2024 on May 7 that showed revenue coming in a bit lighter than expectations, but non-GAAP earnings per share beating the consensus forecast. The company continues to recover from recent missteps, with the firm generating double-digit percentage growth in adjusted earnings per share in the period. Management had a lot of positive things to say about the quarter: Our strong performance in Q2, with adjusted EPS up 30% compared to the prior year, demonstrates we are delivering on our strategic priorities and building for the future. Our results were driven in large … Read more

Qualcomm’s Dividend Strength Is Undeniable

by

Image: Qualcomm remains a tremendous free cash flow generator. By Brian Nelson, CFA Back on May 1, Qualcomm reported solid second quarter results for fiscal 2024, for the period ending March 24, 2024. Revenue edged up 1% higher, while earnings before taxes on a non-GAAP basis increased 11% year-over-year. Non-GAAP net income jumped 14% from last year’s quarter, while non-GAAP diluted earnings per share advanced 13%. Though its top line performance was rather modest, we liked how the firm was able to leverage that growth into strong earnings momentum. Management was upbeat on its quarter and outlook: We are pleased to report strong quarterly results, with EPS exceeding the high end of our guidance. We are excited about our continued … Read more

Main Street’s Dividend May Be Worth a Look

by

Image: Shares of Main Street have caught a bid recently, and commentary from management remains encouraging. By Brian Nelson, CFA On May 9, Main Street Capital (MAIN) reported first quarter results for 2024. Net investment income came in at $89.8 million, or $1.05 per share, while distributable net investment income was $94.4 million, or $1.11 per share. The business development company generated total investment income of $131.6 million in the quarter and put up “an industry leading position in cost efficiency.” Impressively, Main Street Capital generated a return on equity of 17.2% on an annualized basis for the quarter and 19.3% for the trailing twelve-month period. Main Street Capital’s net asset value was $29.54 at the end of March, and … Read more

Starbucks Surprises Investors with Weak Fiscal Second Quarter Results

by

Image: Starbucks’ shares face some challenges as the firm struggles to right the ship. By Brian Nelson, CFA On April 30, Starbucks (SBUX) surprised investors with very weak second-quarter 2024 results that showed a miss on both the top and bottom lines. During the fiscal second quarter, global comparable store sales fell 4% as comparable transactions dropped 6%. Weakness was prevalent. North America and U.S. comp sales fell 3%, while international comparable store sales dropped 6%. China comps dropped 11% due to a 8% decline in average ticket and a 4% drop in comparable transactions. During the quarter, Starbucks opened 364 net new stores. Management admitted that it dropped the ball in the quarter: In a highly challenged environment, this … Read more

Amazon’s Operating Income Growth Is Solid

by

Image: Amazon’s shares have made a solid run higher since the beginning of 2023. By Brian Nelson, CFA On April 30, Amazon (AMZN) reported better-than-expected first quarter results that showed net sales increasing 13% thanks in part to AWS segment sales growth of 17%. Operating income exploded higher to $15.3 billion in the first quarter compared to $4.8 billion in the same period a year ago thanks to particularly strong performance at its North America segment as well as its AWS segment, where operating income jumped to $9.4 billon from $5.1 billion in the same period a year ago. Amazon’s net income jumped to $10.4 billion from $3.2 billion in the year-ago period. Management was upbeat on the performance: It … Read more

Apple Raises Dividend; Launches $110 Billion More in Buybacks

by

Image: Apple’s fiscal second quarter of 2024 didn’t disappoint. By Brian Nelson, CFA On May 2, Apple (AAPL) reported better-than-expected results for its second quarter of fiscal 2024. Both revenue of $90.8 billion and quarterly earnings per diluted share were modestly above consensus. These days, Apple has become very shareholder-friendly, with the firm upping its dividend payout and launching a massive incremental buyback program. Here’s what management had to say about the quarter: Today Apple is reporting revenue of $90.8 billion for the March quarter, including an all-time revenue record in Services. During the quarter, we were thrilled to launch Apple Vision Pro and to show the world the potential that spatial computing unlocks. We’re also looking forward to an … Read more

Public Storage Puts Up Mixed First Quarter Results

by

Image: Public Storage is working hard to return to levels reached in early 2022. By Brian Nelson, CFA On April 30, Public Storage (PSA) reported mixed first-quarter results that showed a modest beat on the top line and a slight miss when it came to funds from operations [FFO]. For the three months ended March 31, net income came in at $2.60 per diluted share, which compares to $2.65 per share in the year-ago period. Higher depreciation and amortization expense as well as higher interest expense more than offset strength in self-storage net operating income. Management was upbeat in the press release: With first quarter performance in-line with our expectations, the Public Storage team is encouraged as we approach the … Read more

Republic Services Covers Dividends with Free Cash Flow By a Nice Margin

by

Image: Republic Services’ stock has had a fantastic run during the past couple years. By Brian Nelson, CFA On April 30, Republic Services (RSG) reported mixed first quarter with revenue coming in a bit light on the top line, but the trash taker handily beating expectations on the bottom line. During the first quarter, total revenue growth was 7.8% consisting of 4.1% coming from organic means, while 3.7% coming from growth though acquisitions. The company faced some volume pressure in the period, but core price on total revenue advanced an impressive 7%. We are off to a strong start to the year and well-positioned to achieve our full-year goals. Continued pricing in excess of cost inflation generated double-digit growth in … Read more