Member Articles

Disney Expects Strong Adjusted EPS Growth, Free Cash Flow

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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

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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

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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

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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

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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

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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

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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

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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

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