Member Articles

Coach Returns to Growth after a Weak Fourth Quarter

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Aspirational luxury brand Coach (click ticker for report: ) reported strong earnings for its fiscal year 2013 first quarter Tuesday morning. Revenue and earnings were roughly in-line with expectations, with revenue growing 11% year-over-year to $1.16 billion and earnings expanding 5% year-over-year to $0.78 per share. The company also announced a $1.5 billion share buyback program. After a rough fourth quarter, North American same-store sales rebounded, growing 5.5% year-over-year, driving total sales up 8% to $784 million. This compares to the firm’s anemic 1.7% same-store sales growth during its previous quarter. Department store sales in North America were flat, though the stores ordered fewer inventories than a year ago. Coach’s Legacy collection, which CEO Lew Frankfort highlighted in the press … Read more

Honeywell Shows Continued Strong Execution; Revenue Environment Weakens

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Last Friday, Honeywell (click ticker for report: ) reported mixed third-quarter results that showed weakness in Europe (as expected) but strength in commercial aerospace, infrastructure spending, and oil and gas investments. Though revenue was roughly flat from the same period a year ago, organic sales edged up 2% and earnings per share from continuing operations jumped nearly 40%, though the firm benefited from a more-favorable tax rate in the most recently reported quarter. The company lowered its 2012 revenue guidance modestly, but it only narrowed the range of its 2012 proforma earnings per share outlook to $4.45-$4.50 per share (was $4.40-$4.55 per share), still representing a double-digit increase from last year. Free cash flow for the year is expected to … Read more

General Electric Reveals Strong Earnings Expansion in Third Quarter; Backlog Growth Stalls

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General Electric (click ticker for report: ) kicked off third-quarter results for large industrial bellwethers last Friday. The industrial conglomerate saw its industrial revenues advance 6%, excluding currency fluctuations, thanks to industrial segment organic revenue growth of 8% (up 10% year-to-date). Excluding the effects of the preferred stock redemption that occurred in the third quarter of last year, operating earnings per share jumped 13%. The company recorded positive earnings growth in all five of its industrial segments for the first time since the third quarter of 2005. Our fair value estimate remains unchanged. Organically, the firm’s energy infrastructure and transportation segments led the charge, but we were interested to see that its aviation segment did not continue its steady advance … Read more

Yahoo Beats Estimates; We Like Mayer’s Strategy

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Web content firm Yahoo (click ticker for report: ) reported better than expected third quarter results Monday afternoon. Revenue grew 2% year-over-year to $1.09 billion, a touch better than consensus estimates. Operating income per share, which excludes the gain on sale of Alibaba, grew 66% year-over-year to $0.35, which was much better than the consensus expectation. Most of Yahoo’s profitability gains came from shrinking the workforce, which fell by 1,700 employees on a year-over-year basis, to 12,000. Sales and marketing expenses were cut 7% year-over-year to $269 million, while product development costs fell 5%. This focus on cost cutting allowed the company to generate adjusted operating cash flow of $496 million, up 39% compared to the third quarter of 2011. … Read more

Hasbro Reports a Strong Third Quarter

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Toymaker and dividend-growth gem Hasbro (click ticker for report: ) reported better than expected earnings and revenue that was in-line with consensus estimates Monday morning. The firm saw revenue remain roughly flat at $1.35 billion but grow 1%, if adjusted for negative currency impacts. Earnings per share fell 2% to $1.24. We thought results might be a little stronger than reported after Mattel’s (click ticker for report: ) strong earnings, but we still think the quarter was solid. Revenue in the US grew only 1% to $774.5 million, but operating profits surged 20% year-over-year to $154.2 million. The firm’s focus has clearly yielded positive results. Net of currency impacts, international toy revenues were up 1% as well, though down 7% … Read more

McDonald’s Sales Growth Looks Anemic in the Third Quarter

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Fast-food chain McDonald’s (click ticker for report: ) reported mediocre third quarter results Friday morning. Revenue growth was weak, coming in flat year-over-year, though up 4% on a currency-neutral basis, in-line with expectations. Earnings fell 1% year-over-year to $1.43 per share, a few cents lower than consensus estimates. Weakness was broad-based, with aggregate same-store sales growing only 1.9%. The weakest geographic region was surprisingly the US, where same-store sales grew only 1.2% year-over-year. The firm has tried to move away from its value offerings to grab margin dollars as input costs soar, but the change hasn’t been effective. Still, management expects the McRib and the introduction of the Cheddar Bacon Onion to drive incremental growth in the US during the … Read more

Chipotle’s Growth Moderates

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Burrito chain Chipotle (click ticker for report: ) reported solid, but slowing, third quarter results Thursday afternoon. Revenue increased 18.5% year-over-year to $700.5 million, while earnings grew 19.5% year-over-year to $2.27, both slightly below consensus expectations. Though both growth rates are still impressive, the sequential slowdown in same-store sales indicates that the excitement surrounding new food offerings (Doritos tacos, its Cantina Bell menu) at Taco Bell (click ticker for report: ) are stealing the moment. Same-store sales grew 4.8% during the quarter, compared to 8% during the second quarter, and 12% during the first quarter. The firm doesn’t see things getting much better, forecasting mid-single-digit same-store sales growth during the fourth quarter, and flat-to-low single digits expansion during 2013. Management … Read more

A Follow Up on Google’s Third Quarter Results

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Please click here to read our initial thoughts on Google’s premature quarterly release. In spite of a hoarse voice, CEO Larry Page sounded excited about several initiatives going forward, including expanding mobile ad spend by advertisers. The firm continues to make incremental improvements to search, which may save market share, but the changes haven’t been able to slow the shift to mobile search. Google continues to spend hundreds of millions of dollars on research & development on projects like Google Fiber and self-driving cars which may drive growth in the future, but has weighed on near-term profitability. CEO Larry Page hit on some other positive notes, like YouTube’s increase in ad effectiveness relative to traditional TV, as well as the … Read more