Member Articles

McDonald’s Continues to Be Impacted By the War in the Middle East

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Image: McDonald’s shares have largely traded sideways the past couple years.  By Brian Nelson, CFA On April 30, McDonald’s (MCD) reported mixed first-quarter results with revenue coming in roughly in-line with consensus and non-GAAP earnings per share missing slightly. During the first quarter, global comparable sales advanced 1.9% led by strength in the U.S. offset in part by weakness in its International Developmental Licensed Markets segment due to the war in the Middle East. Management continues to focus on execution as it outlined in the first-quarter press release: Our global comparable sales growth in the first quarter marks 13 consecutive quarters of positive comparable sales growth with 30% growth over the last 4 years. As consumers are more discriminating with … Read more

Enterprise Products Offers Investors Key Midstream Exposure

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Image: Enterprise Products Partners has come back nicely since the doldrums of the COVID-19 meltdown. By Brian Nelson, CFA On April 30, Enterprise Products Partners (EPD) reported decent first-quarter 2024 results. Net income grew to $0.66 per diluted unit, up 5% compared to the $0.63 per diluted unit it put up during the first quarter of 2023. Distributable cash flow [DCF] came in at $1.9 billion for the first quarter of 2024, about the same as it was in last year’s quarter. The company’s DCF covered its distributions declared in the first quarter by 1.7x. The pipeline giant continues to buy back units, having used roughly half of its authorized $2 billion buyback program. Management had a lot to say … Read more

Domino’s Long-Term Growth Outlook Looks Achievable

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Image Source: Domino’s By Brian Nelson, CFA On April 29, Domino’s Pizza (DPZ) reported first-quarter results that came in better than expected. Global retail sales expansion, excluding foreign currency impacts, came in at 7.3% thanks in part to strong U.S. same-store sales growth of 5.6%. International sales growth, excluding foreign currency impacts, came in at 0.9%, and the firm had global net store growth of 164 units in the quarter. Excluding foreign currency, the pizza giant put up income from operations growth of 19.4% in the quarter, a very nice showing, thanks to higher U.S. franchise royalties and fees and gross margin improvement within its supply chain. Management had a lot to say about the quarter in its press release: … Read more

Alphabet Posts Strong First Quarter, Initiates Dividend, Launches Huge Buyback

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Image: Alphabet’s valuable properties continue to put up nice revenue growth. By Brian Nelson, CFA On April 25, Alphabet reported better-than-expected first quarter results on both the top and bottom lines. Revenue increased 15%, or 16% on a constant currency basis in the period, while the firm’s operating margin surged higher roughly 7 percentage points, to 32%. Net income leapt an impressive 57% in the quarter on a year-over-year basis, while diluted earnings per share came in at $1.89 versus $1.17 in last year’s quarter and well above the consensus forecast. We liked what we saw almost across the board in Alphabet’s quarterly results. Google Search & other revenue increased 14.4% while YouTube ad revenue growth came in at an … Read more

Microsoft’s Balance Sheet and Cash Flow Generation Make It a Strong Consideration

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Image: Microsoft’s cloud business continues to showcase strong growth momentum. By Brian Nelson, CFA On April 25, Microsoft (MSFT) reported fantastic third-quarter results for fiscal 2024 that showed continued fundamental momentum at the tech giant. Revenue increased 17% in the quarter, while operating income surged 23%. Both net income and diluted earnings per share advanced 20% in the quarter on a year-over-year basis. The big standout in the quarter was Azure and other cloud services revenue, which increased a better-than-expected 31% in the period. Management spoke to continued opportunities in artificial intelligence [AI] and cloud revenue: Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry. This quarter … Read more

We Remain Fans of Honeywell’s Shares

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Image: Honeywell’s shares have traded sideways for some time, but we still remain fans of its stock. By Brian Nelson, CFA On April 25, Honeywell (HON) reported better-than-expected first quarter results. The company’s reported and organic sales increased 3% thanks to strength in ‘Aerospace Technologies’ and ‘Energy and Sustainability Solutions,’ while its operating margin advanced 130 basis points, to 20.4%. Its segment margin expanded 20 basis points, to 22.2%, as its ‘Aerospace Technologies’ division performed well. On an adjusted basis, earnings per share in the quarter came in at $2.25, which was above the high end of its previously released guidance. Honeywell ended the quarter with $32 billion in backlog, a tally that is up 6% on a year-over-year basis. … Read more

Altria Reaffirms Full Year 2024 Earnings Outlook

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Image: Shares of Altria have faced pressure during the past couple years, but its dividend yield is too hard to pass up, in our view. By Brian Nelson, CFA On April 25, Altria (MO) reported mixed first-quarter results. Net revenue fell 2.5% as a result of weak performance across its smokeable products segment, which was only partially mitigated by expansion in its oral tobacco products segment. Adjusted diluted earnings per share fell 2.5%, to $1.15 per share, which was in-line with expectations. Shipment volume of NJOY consumables was 10.9 million units, while shipment volume of NJOY devices was 1.0 million units. Management had the following to say in its update in the quarterly release: We made meaningful progress in pursuit … Read more

Chipotle’s Same Restaurant Sales Growth Continues to Shine

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Image Source: Valuentum By Brian Nelson, CFA On April 24, Chipotle (CMG) reported excellent first-quarter 2024 results. Total revenue increased 14.1% thanks to comparable restaurant sales growth of 7%, higher transactions and an increase in the average check. Its operating margin came in at 16.3%, which was a nice bump from the 15.5% from last year’s quarter. Chipotle’s restaurant level operating margin also improved nicely by 190 basis points, to 27.5%. Adjusted diluted earnings per share came in at $13.37, which was an increase from the $10.50 mark it achieved in the same period a year ago. During the quarter, it opened 47 new restaurants with 43 of them including a Chipotlane drive thru. Management had the following to say about … Read more

Visa Benefiting from “Stable Consumer Spending”

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By Brian Nelson, CFA On April 23, Visa (V) reported fantastic second-quarter results for its fiscal 2024. Both net revenue and GAAP net income increased 10%, while GAAP earnings per share advanced 12%. On a non-GAAP basis, net income advanced 17%, while earnings per share leapt 20%. Payments volume increased 8% in its fiscal second quarter, while total cross-border volume increased 16% on a constant-dollar basis and processed transactions advanced 11%. We liked the quarter and commentary from management:  Visa delivered strong results in the second quarter, with net revenue up 10%, GAAP EPS up 12%, and non-GAAP EPS up 20%. Overall payments volume grew 8% and cross-border volume grew 16%, driven by stable consumer spending. As we head into … Read more

Lackluster Electric Vehicle Adoption Rates Impacting Tesla

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Image Source: Tesla By Brian Nelson, CFA On April 23, Tesla (TSLA) reported lower-than-expected first-quarter 2024 results as reduced vehicle prices weighed on performance. Total automotive revenues fell 13% on a year-over-year basis, while total revenues, in aggregate, fell 9%. Its total gross profit fell 18%, while income from operations dropped by more than half. The first quarter was negatively impacted by the Red Sea conflict and an arson attack at Gigafactory Berlin. Management summed up the quarter with the following: Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs. While positive for our regulatory credits business, we prefer the industry to continue pushing EV adoption, which is in-line with our mission. To support … Read more