LOW

Toll Brothers Ends Strongest Year Ever

by

By Brian Nelson, CFA On December 9, luxury homebuilder Toll Brothers (TOL) reported better-than-expected fourth-quarter fiscal 2024 results with revenue and non-GAAP earnings per share coming in higher than the consensus forecasts. Home sales revenues increased 10% in the quarter, while delivered homes were 3,431, up 25%. Net signed contract value was up 32% compared to the same quarter a year ago, with contracted homes of 2,658, up 30%. Backlog value, however, fell 7% on a year-over-year basis, with homes in backlog of 5,996, down 9%. Toll Brothers’ adjusted home sales growth margin, which excludes interest and inventory write-downs, came in at 27.9% in the quarter, below the adjusted home sales gross margin of 29.1% in the fiscal fourth quarter … Read more

Home Depot Navigating Macroeconomic Uncertainty Well

by

Image: Home Depot’s shares are flirting with all-time highs. By Brian Nelson, CFA On November 12, Home Depot (HD) reported better than feared third quarter results with both revenue and non-GAAP earnings per share coming ahead of the consensus forecast. Total sales increased 6.6% from the third quarter of fiscal 2023, while comparable store sales in the third quarter of fiscal 2024 fell 1.3% (consensus was at -3.27%), while comparable store sales in the U.S. fell 1.2% (consensus was at -3.3%). Customer comp transactions fell 0.6%, while comp average ticket dropped 0.8% in the third quarter versus last year. Home Depot’s adjusted operating income for the third quarter of fiscal 2024 was $5.6 billion on an adjusted operating margin of … Read more

An Important Measure of Leverage for Dividend-Growth and Income-Oriented Shareholders, One That Is Dividend-Adjusted

by

As more and more investors rely on company dividends for income, dividends, in our view, have become more debt-like commitments in nature, especially from the perspective of dividend-growth or income-oriented shareholders. Years ago, we rolled out a measure of financial leverage that considers both the company’s debt and the present value of its future expected cash dividend obligations, which, in the eyes of die-hard dividend-growth or income-oriented shareholders, may be implicitly assumed to be debt-like commitments in substance. We think this leverage ratio can be used in conjunction with the Dividend Cushion ratio to gain additional insight into the dividend-paying financial health of an entity. Note: There is often great confusion with respect to published measures of financial leverage, and … Read more

Toll Brothers Expects Demand to Remain Solid Into 2025

by

Image: Toll Brothers stock has done quite well during the past couple years. By Brian Nelson, CFA Luxury homebuilder Toll Brothers (TOL) recently reported fiscal third quarter results with revenue and non-GAAP earnings per share coming in better than expectations. Home sales revenues advanced 2% from the same period a year ago, while pre-tax income came in at $503.6 million, down from $553 million in last year’s quarter. Fiscal third quarter earnings per diluted share was $3.60 compared with $3.73 in the same period a year ago, but it exceeded the consensus forecast of $3.31 per share. Net signed contract value was $2.41 billion in the quarter, up 11% from last year’s period, while contracted homes were also up 11% … Read more

Lowe’s Lowers Full Year 2024 Outlook on Weak DIY Sales

by

Image: Lowe’s shares have traded sideways since the beginning of 2022. By Brian Nelson, CFA On August 20, Lowe’s (LOW) reported mixed second quarter results with revenue coming in below expectations and the firm’s non-GAAP earnings per share exceeding the consensus forecast. Total sales during the quarter fell 5.5%, while comparable sales for the quarter fell 5.1% “driven by continued pressure in DIY (do-it-yourself) bigger ticket discretionary spending and unfavorable weather adversely impacting sales in seasonal and other outdoor categories.” Adjusted diluted earnings per share fell to $4.10 per share in the second quarter from $4.56 per share in the second quarter of 2023. During the second quarter, Lowe’s bought back roughly 4.4 million shares of stock for $1 billion, … Read more

Paper: Value and Momentum Within Stocks, Too

by

Please select the image below to download, “Value and Momentum Within Stocks, Too:” Abstract: This paper strives to advance the field of finance in four ways: 1) it extends the theory of the “The Arithmetic of Active Management” to the investor level; 2) it addresses certain data problems of factor-based methods, namely with respect to value and book-to-market ratios, while introducing price-to-fair-value ratios in a factor-based approach; 3) it may lay the foundation for academic literature regarding the Valuentum, the value-timing, and ultra-momentum factors; and 4) it walks through the potential relative outperformance that may be harvested at the intersection of relevant, unique and compensated factors within individual stocks. To download the full report, please click here (pdf). ———- Actual results … Read more

Lennar Navigating Fluctuating Interest Rate Environment Well

by

Image: Lennar has been a strong performer since the beginning of 2023. By Brian Nelson, CFA On June 17, homebuilder Lennar (LEN) reported better than expected second quarter results for fiscal 2024. Total revenues increased 9%, while diluted earnings per share leapt to $3.45 in the quarter from $3.01 in the same period a year ago. New orders jumped 19%, to 21,293 homes, while the firm’s backlog stood at 17,873 homes with a dollar value of $8.2 billion. Deliveries in the quarter increased 15%, to 19,690 homes. Its average sales price, net of incentives, per home delivered came in at $426,000 in the second quarter, while its homebuilding gross margin was up 10 basis points from last year, to 22.6%. … Read more

Dividend Increases/Decreases for the Week of May 31

by

Below we provide a list of firms that raised their dividends during the week ending May 31. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                          BMO Financial (BMO): now CAD 1.55 per share quarterly dividend, was CAD 1.51. BW LPG (BWLP): now $1.00 per share dividend. Donaldson (DCI): now $0.27 per share quarterly dividend, was $0.25. Euro Tech Holdings (CLWT): now $0.08 per share special dividend, was $0.06. Flanigan’s (BDL): now $0.50 per share dividend, was $0.45. Lowe’s Companies, Inc. (LOW): now $1.15 per share quarterly dividend, was $1.10. … Read more

Lowe’s First Quarter Results Come in Better Than Feared

by

By Brian Nelson, CFA On May 21, Lowe’s (LOW) reported better-than-expected first quarter results for the period ended May 3, 2024, that showed a revenue decline of ~4.4%, but not one that was as great as feared. Comparable store sales fell 4.1% in the quarter, but this performance also came in better than the consensus forecast that expected a ~5.6% decline. Diluted earnings per share came in at $3.06 in the quarter versus adjusted diluted earnings per share of $3.67 last year. Management commentary was upbeat in the press release: We are pleased with our start to spring, driven by strong execution and enhanced customer service. This quarter we rolled out our new DIY loyalty program nationally, expanded same-day delivery … Read more

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