Member Articles

Philip Morris Targeting Strong Adjusted Diluted EPS Growth

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Image: Philip Morris’ stock has traded sideways for more than a year now. By Brian Nelson, CFA On April 23, Philip Morris (PM) reported solid first-quarter results that beat expectations on both the top and bottom lines. Net revenues increased 9.7% in the first quarter, while operating income advanced 11.5%. The company’s adjusted operating income increased 11.3% thanks to a 0.9 percentage point increase in its adjusted operating income margin, to 38.2%. Adjusted diluted earnings per share grew to $1.70, up 23.2% excluding currency. The company continues to work toward becoming a smoke-free company, with its smoke-free business now accounting for roughly 39% of its total net revenues. Management had the following to say about the quarter: The strength of … Read more

PepsiCo Has Raised Dividends in Each of the Past 50+ Years

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Image: Pepsi’s shares continue to be choppy, but we like its consecutive annual dividend growth streak. By Brian Nelson, CFA On April 23, PepsiCo (PEP) reported solid first-quarter 2024 results that showed a beat on both the top and bottom lines. On an organic basis, revenue grew 2.7% on a year-over-year basis, while core earnings per share of $1.61 beat the consensus number. Core constant currency earnings per share growth was 7% in the period. Management had a lot to say about the quarter and outlook in the press release: During the first quarter, our businesses remained agile and performed well, with a strong performance from our International business. We delivered a sequential improvement in our volume trends, and year-over-year … Read more

Lockheed Martin’s Robust Backlog Speaks of Sustainable Strength

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Image: Shares of Lockheed have been choppy, but its fundamentals remain strong. By Brian Nelson, CFA On April 23, Lockheed Martin (LMT) reported better-than-expected first quarter 2024 results. Revenue advanced ~13.7% in the quarter on a year-over-year basis, while net earnings in the first quarter came in at $1.5 billion, or $6.39 per share, versus the $1.7 billion mark, or $6.61 per share, it put up in the first quarter of 2023. Cash from operations advanced to ~$1.64 billion, up from $1.56 billion in the year-ago quarter, but higher capital spending drove free cash flow slightly lower in the first period of 2024 than what it achieved in last year’s quarter. Management had a lot to say about the quarterly … Read more

Verizon Is a Cash-Generating Machine But Its Debt Load Is Worth Watching

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Image Source: Verizon By Brian Nelson, CFA On April 22, Verizon (VZ) reported mixed first-quarter results. During the period, total operating revenue grew a modest 0.2% thanks in part to pricing actions, to $33 billion, while consolidated net income fell to $4.7 billion from $5 billion in the year-ago period. Adjusted earnings per share came in at $1.15, which compares to $1.20 in last year’s quarter. However, consolidated adjusted EBITDA came in at $12.1 billion, which was up from the $11.9 billion mark it registered in the year-ago period. Total wireless service revenue increased 3.3% thanks in part to pricing actions and a higher mix of premium pricing plans, while total broadband net additions totaled 389,000, revealing continued momentum in … Read more

Procter & Gamble Raises Core EPS Guidance

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Image Source: P&G Q3 Earnings Presentation By Brian Nelson, CFA On April 19, Procter & Gamble (PG) reported mixed third quarter results for fiscal 2024. Organic sales advanced 3% in the period thanks almost entirely to higher pricing, while diluted net earnings per share increased 11% on a year-over-year basis (up 18% on a currency-neutral basis). The company experienced modest volume growth in its ‘Beauty,’ ‘Grooming,’ and ‘Fabric & Home Care’ divisions, but foreign currency headwinds were stiff. P&G experienced particularly strong pricing performance in its ‘Grooming’ division, where sales in the division were positively impacted by 10% from price, to drive overall net sales growth to 3% in the segment. Management’s commentary in the press release was upbeat: We … Read more

Netflix to Stop Reporting Membership Numbers Starting Next Year

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Image: Netflix still has a lot of room for growth. By Brian Nelson, CFA On April 18, Netflix (NFLX) reported better than expected first quarter 2024 results. In the quarter on a year-over-year basis, the company’s revenue advanced ~15%, its operating income jumped ~54%, and its operating margin registered a roughly seven-percentage point increase, to 28%. Netflix’s top line was driven both by membership growth and pricing, and operating income benefited in part from higher-than-expected revenue performance and the timing of its content spending. Earnings per share came in at $5.28 in the quarter versus management’s $4.49 forecast. Netflix generated free cash flow of ~$2.14 billion in the quarter. Netflix continues to focus on building out its member base, while … Read more

Kinder Morgan Issues Strong Outlook; Adjusts Leverage Target

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Image: Kinder Morgan’s shares have been choppy during the past couple years. By Brian Nelson, CFA On April 17, Kinder Morgan (KMI) reported first-quarter 2024 results. The company’s earnings per share came in at $0.33 per share in the quarter, while distributable cash flow [DCF] per share came in at $0.64 for the period, reflecting a 10% and 5% increase, respectively. Net income attributable to Kinder Morgan in the first quarter was $746 million, up from $679 million in the same period a year ago. DCF also moved in the right direction, coming in at $1.42 billion in the quarter, up from $1.37 billion in last year’s quarter. Kinder Morgan issued the following outlook for 2024: For 2024, including contributions … Read more

Taiwan Semi Puts Up Strong First Quarter, Gives Cautious Outlook

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Image: Taiwan Semiconductor’s shares have rallied considerably since the October 2022 bottom. By Brian Nelson, CFA On April 18, Taiwan Semiconductor (TSM) reported better than expected first-quarter 2024 results. On a year-over-year basis, revenue advanced 16.5%, while both net income and diluted earnings per share increased 8.9%. On a U.S. dollar basis, first-quarter revenue increased 12.9% on a year-over-year basis. Taiwan Semi’s gross margin for the quarter came in at 53.1%, its operating margin was 42.0%, while its net profit margin was 38.0%. During the first quarter, the company noted that shipments of 3-nanometer accounted for 9% of total wafer revenue, while shipments of 5-nanometer and 7-nanometer accounted for 37% and 19%, respectively in the quarter. Management noted that advanced … Read more

ASML Reports First Quarter Results, Reiterates Guidance

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Image: ASML Holding is one of our favorite semiconductor ideas. By Brian Nelson, CFA On April 17, ASML Holding (ASML) reported decent first quarter 2024 results. First quarter net sales came in at €5.29 billion on a gross margin of 51.0%. Net income was €1.22 billion in the quarter. Net bookings in the first quarter of 2024 came in at €3.6 billion, down sequentially from the strong net bookings number delivered in the fourth quarter of 2023. The company continues to be shareholder friendly, paying dividends and buying back €400 million worth of stock during the first quarter. Management had the following to say about the quarterly results and outlook: Our first-quarter total net sales came in at €5.3 billion, … Read more

Johnson & Johnson Narrows 2024 Outlook, Raises Dividend

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Image Source: J&J By Brian Nelson, CFA Johnson & Johnson (JNJ) reported mixed first-quarter 2024 results on April 16 with adjusted operational growth of 4%. Excluding its COVID-19 vaccine sales, revenue growth was 7.7% in the period. First quarter adjusted earnings per share advanced 12.4%, to $2.71, which was slightly better than the consensus forecast. Management was upbeat in the press release: Johnson & Johnson’s solid first quarter performance reflects our sharpened focus and the progress in our portfolio and pipeline. Our impact across the full spectrum of healthcare is unique in our industry, and the milestones achieved this quarter reinforce our position as an innovation powerhouse. J&J’s adjusted operational sales for its Innovative Medicine division increased 2.5%, while adjusted operational sales … Read more