Resultados trimestrales

Domino’s Drops 9% After Weaker Than Expected Earnings

Yesterday, Domino’s (DPZ) reported financial results for the second quarter of 2019. The company’s performance – particularly its comparable store sales – was weaker than expected and shares fell by 9% in yesterday’s trading.

On the top line, global retail sales increased by 5.1% in the second quarter. Excluding the impact of foreign exchange fluctuations, global retail sales would have increased by 8.4%.

As mentioned, it was the company’s same store sales that disappointed investors. In the United States, Domino’s generated company-owned same store sales growth of 2.1%, compared to consensus estimates of 3.4%, while franchised stores generated same store sales growth of 3.1% compared to consensus estimates of 4.7%.

The story in Domino’s international locations was similar. International same store sales growth of 2.4% was lower than the 2.6% consensus estimate.

Still, Domino’s same store sales growth has been consistently positive – remarkably so, in fact. The second quarter of 2019 marked the 102nd consecutive quarter of international same store sales growth and the 33rd consecutive quarter of U.S. same store sales growth .

Domino’s also continues to aggressively open new stores. More specifically, Domino’s opened 200 net new stores in the second quarter, including 42 U.S. stores and 158 international locations.

On the bottom line, results were much, much stronger, as Domino’s generated GAAP diluted earnings-per-share growth of 23.0% and adjusted diluted earnings-per-share growth of 19.0%.

Overall, Domino’s second quarter was worse than expectations but it was not so bad that the company’s long-term thesis has changed. The company is one of the fastest-growing stocks outside of the technology sector. This trend continued in the second quarter as the company reported 20%+ earnings growth. Still, the company’s high valuation prevents it from earning a buy recommendation from Sure Dividend at current prices – instead, we rate Domino’s as a hold.

Cintas Rises ~6% in After-Hours Trading After Reporting Record Revenue and Earnings

Yesterday, Cintas (CTAS) reported financial results for the fourth quarter and fiscal year ending May 31st, 2019. The company’s results were better than expected, causing shares to rise by 6% in after hours trading.

In the quarter, revenue of $1.79 billion increased by 7.4% over last year’s quarter. Organic revenue growth – which adjusts for acquisitions and foreign currency exchange rate fluctuations – was 7.6%. The organic growth rate for the Uniform Rental and Facility Services segment was 6.8%, while First Aid and Safety Services generated organic revenue growth of 10.7%.

Further down the income statement, operating income increased by 18.4% year-on-year due to meaningful margin expansion and partially offset by small expenses related to the continued integration of G&K Services, Inc.

The company’s net income performance was arguably its strongest financial metric. Ne income increased by 19.5% year-on-year, while adjusted earnings-per-share (which excludes G&K integration expenses) increased by 16.9%.

Cintas’ full fiscal year performance was similarly strong. Revenue increased by 6.4% (including an organic revenue growth rate of 6.4%) while adjusted earnings-per-share increased by 27.9%.

Cintas also published some preliminary fiscal 2020 financial guidance with the publication of its fourth quarter earnings release. The company expects to generate revenue growth of 5.4% to 6.5% while earnings-per-share growth is expected to be between 9.2% and 11.2%.

Overall, Cintas’ fourth quarter financial results were very strong. However, the company’s stock is quite overvalued, so the company earns a sell recommendation from Sure Dividend at current prices…

Wells Fargo Beats Expectations Thanks To Smart Capital Allocation

Yesterday, Wells Fargo (WFC) reported results for the second quarter of fiscal 2019. The company beat expectations on both the top and bottom lines, yet the stock fell by about 3% in yesterday’s trading.

We’ll be examining the company’s results in this email to determine why this might be. Before we do, note that since February 2nd, 2018, Wells Fargo has operated under a Federal Reserve-imposed asset cap that prevents the company’s balance sheet than growing any larger than its total asset size at the end of 2017.

This amounts to a balance sheet no larger than $1.94 trillion. Keep this in mind as we discuss the company’s results.

At the top of the income statement, the company’s performance was nothing to celebrate. Wells Fargo generated revenue of $21.6 billion, which was the same as both the previous quarter (1Q2019) and last year’s comparable quarter (2Q2019).

In a sense, this is exactly what one would expect – since Wells Fargo’s business model is to earn a spread on deposits and loans, then its revenues will likely never grow meaningfully until the asset cap is removed.

With that said, other factors allowed the bank’s profitability metrics to perform much better. Wells Fargo generated net income of $6.2 billion, which increased by 19.2% over the $5.2 billion reported in the same period a year ago. Diluted earnings-per-share of $1.30 rose by 32.7% from last year’s $0.98.

Many investors will be wondering how the company’s earnings and earnings-per-share were able to increase so much without any actual revenue growth. Two main factors caused this.

The first was significantly improved asset efficiency, which for banks is typically measured using return on assets (net income divided by average total assets). In the second quarter, Wells Fargo’s return on assets increased to 1.31% from 1.10% last year.

The second factor that contributed applies only to Wells Fargo’s earnings-per-share growth, and can be seen in the following image:

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As the bottom right part of the image shows, Wells Fargo was able to lower its shares outstanding by 9% year-on-year. We are very encouraged by this as it shows that the company’s management team recognizes that it cannot invest in growing its balance sheet, so it is instead returning capital to shareholders.

Separately, Wells Fargo’s 2019 Capital Plan was approved by the Federal Reserve. Under the terms of the plan, the bank will increase its quarterly dividend to $0.51 (from $0.45 previously) and execute up to $23.1 billion of gross common stock repurchases in the period between 3Q2019 and 2Q2020.

This share repurchase authorization amounts to around 11% of the company’s current market capitalization and suggests that Wells Fargo’s impressive pace of share repurchases is likely to continue for the foreseeable future.

Overall, we were impressed with Wells Fargo’s ability to grow its profits despite an externally-imposed asset cap. The company also appears committed to returning capital to shareholders through dividend payments and share repurchases. We believe that Wells Fargo has low double-digit total return potential, so the bank earns a buy recommendation from Sure Dividend today.

United Airlines Announces Highest Second-Quarter Pre-Tax Income In Company History

Yesterday, United Airlines (UAL) announcedfinancial results for the second quarter of fiscal 2019. The company beat expectations and announced its highest second-quarter pre-tax income in company history.

On the top line, United generated total passenger revenue growth of 6.1%, which includes passenger revenue per available seat mile (PRASM) improvement of 2.5% year-on-year. Overall, United’ total operating revenue (which includes a negative impact from shrinking cargo revenues) increased by 5.8% in the second quarter.

Costs were also prudently management. Costs per available seat mile (CASM) decreased by 0.4% over the same period a year ago, resulting in nice margin expansion year-on-year. Indeed, the company’s adjusted pre-tax margin of 12.4% expanded by 2.0 points versus the second quarter of 2018.

On the bottom line, United generated net income of $1,052 million, which increased by a remarkable 54.0% year-on-year. Diluted earnings-per-share of $4.02 increased by 62.1% over the same period a year ago, helped by a 5.1% year-on-year decline in United’s weighted average shares outstanding.

United also updated its financial guidance for the full fiscal year with the publication of its second quarter earnings release. The company now expects adjusted diluted earnings-per-share between $10.50 and $12.00 in the twelve-month reporting period.

For context, United generated adjusted earnings-per-share of $9.13 in fiscal 2018. The midpoint of the airline’s new guidance range implies year-on-year earnings growth of 23.2%.

United Airline’s financial performance has been strong, but the stock is not sufficiently cheap enough to earn a buy recommendation from Sure Dividend today. Instead, the stock earns a hold rating.

Abbott Reports Second Quarter Results, Raises 2020 Financial Outlook

This morning, Abbott Laboratories (ABT) reported financial results for the second quarter of fiscal 2019. In the quarter, the company beat earnings expectations and raised its guidance for the full fiscal year.

Here are what the numbers look like. Abbott generated sales of $8.0 billion in the three-month reporting period, which increased by 2.7% on a reported basis and 7.5% on an organic basis. The stark difference between Abbott’s reported sales growth and its organic sales growth is because organic sales growth excludes both foreign exchange fluctuations and 2018 sales from a non-core business in U.S. Adult Nutrition, which was discontinued in 3Q2018.

Abbott’s sales growth was broad-based, but one segment in particular was responsible for its strong performance. Abbott’s organic sales growth by segment is listed below:

  • Nutrition: 5.1%
  • Diagnostics: 6.2%
  • Established Pharmaceuticals: 6.1%
  • Medical Devices: 10.5%

As you can see, Abbott’s Medical Devices unit was its best performer in the second quarter of fiscal 2019.

On the bottom line, Abbott’s adjusted diluted earnings-per-share of $0.82 increased by 12.3% and was above the company’s previously-announced financial guidance band.

Abbott’s strong financial results were due to broad-based strength across its various product categories. Certain products demonstrated particularly strong growth.

For example, Abbott’s FreeStyle Libre – a continuous glucose monitoring system for patients with diabetes – saw organic sales growth of 72.9% and is now reimbursed for approximately 75% of patients with private pharmacy benefit insurance.

Separately, sales of Abbott’s MitraClip, a mitral vale to treat mitral vale regurgitation for patients who should not have open heart surgery, increased by 30.6% on an organic basis. Abbott’s next-generation MitraClip was granted FDA approval earlier this week.

As mentioned, the company also increased its 2019 financial guidance with the publication of its second quarter earnings release. The company now expects to generate organic sales growth of 7.0% to 8.0%, while adjusted diluted earnings-per-share are expected to fall within the range of $3.21 to $3.27.

For context, Abbott generated adjusted earnings-per-share of $2.88 in fiscal 2018. The midpoint of the company’s new guidance band ($3.24) implies year-over-year earnings-per-share growth of 12.5%.

Abbott’s second quarter financial results were better than expected, but the company remains too overvalued for our liking. Because of this, the company continues to earn a sell recommendation from Sure Dividend today.

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IBM Beats on Earnings, Shares Fall in After-Hours Trading

Last night, IBM (IBM) reported financial results for the second quarter of fiscal 2019. While the company’s revenue fell slightly short of expectations, IBM did manage to beat earnings expectations and yet shares fell modestly in after-hours trading nonetheless.

On the top line, IBM generated revenue of $19.2 billion, which represents a decline of 4.2% on a GAAP basis and a decline of 1.6% on a constant-currency basis.

IBM’s revenue trend in recent years has been very troubling. At one point, the company had reported more than 20 consecutive quarters of shrinking revenue.

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With that said, there were some bright spots in IBM’s earnings release from a revenue perspective. In the Cloud & Cognitive Software segment, IBM’s revenue increased by 3.2%, or 5.4% adjusting for currency. In the Global Business Services segment, revenue increased by 0.5%, or 3.4% adjusting for currency.

IBM’s cloud segment was its best performer from a revenue perspective. The company generated cloud revenue of $19.5 billion in the quarter, which represents growth of 5% (or 8% adjusting for currency).

Further down the income statement, IBM generated GAAP earnings-per-share from continuing operations of $2.81 and adjusted earnings-per-share of $3.17. The GAAP and adjusted profit numbers imply year-on-year growth of 8% and 3%, respectively.

IBM did not provide updated financial guidance with the publication of it second quarter earnings release. Instead, the company said it will update full-year 2019 expectations (including the impact of the Red Hat acquisition) on August 2nd. IBM did note that it expects Red Hat to be accretive to free cash flow in the first year following the acquisition, and to be accretive to adjusted earnings-per-share by the end of the second year after closing.

IBM’s second quarter earnings release was slightly better than our expectations. With low double-digit total return potential, the company earns a buy recommendation from Sure Dividend at current prices. We note that investors should monitor the company’s revenue trends closely if they hold a position in the stock.

UnitedHealth Beats Q2 Consensus Estimates and Raises 2019 Financial Guidance

This morning before the markets opened, UnitedHealth Group (UNH) reported second quarter financial results. The firm beat expectations for both revenues and earnings and also raised its 2019 financial guidance, causing shares to rise in today’s premarket trading.

Revenues of $60.6 billion grew 8.0% year-on-year, including the following contributors:

  • Premiums: $47.2 billion (+6.1%)
  • Products: $8.4 billion (+19.3%)
  • Services: $4.5 billion (+5.3%)
  • Investment and other income: $582 million (+63.9%)

Further down the income statement, UnitedHealth’s earnings from operations increased by 13% to $4.7 billion while earnings-per-share of $3.42 grew 15% year-on-year.

Excluding one-time accounting charges, the company’s profit results were similar. UnitedHealth’s adjusted net earnings of $3.60 per share also increased by 15% over the same period a year ago.

Based on the strength of its second quarter earnings release, UnitedHealth increased its financial guidance for the remainder of the fiscal year. The company now expects to generate GAAP earnings-per-share of $13.95-$14.15 (previous guidance was $13.80-$14.05) and adjusted earnings-per-share of $14.70-$14.90 (previous guidance was $14.50-$14.75).

Overall, it was an excellent quarter from UnitedHealth. Moreover, the company’s valuation is not excessively high today. Using the midpoint of the company’s adjusted earnings-per-share guidance band ($14.625), the company is trading at a current price-to-earnings ratio of 18.2.

This is just a touch above our fair value estimate and, even including some modest valuation contraction, the company still seems capable of delivering low double-digit total returns. Accordingly, UnitedHealth earns a buy recommendation from Sure Dividend today.

Philip Morris Lights Up an Earnings Beat

This morning, tobacco giant Philip Morris International (PM) announced financial results for the second quarter of 2019. The company beat expectations for both revenue and earnings and shares are up nearly 3% in this morning’s premarket trading.

Before digging into Philip Morris’ Q2 results, note that the company’s earnings release included many comparisons on a “like-for-like” basis, which reflects pro forma 2018 results adjusted for the deconsolidation of PM’s Canadian subsidiary Rothmans, Benson & Hedges, Inc. The deconsolidation was effective March 22nd, 2019.

On the top line, Philip Morris’ net revenues declined by 0.3% on a GAAP basis but actually increased by 9.0% on a like-for-like basis, excluding the impact of currency fluctuations.

Operating income increased by 3.0%, or 8.4% excluding currency fluctuations, while adjusted operating income increased by 15.7% on a like-for-like basis, excluding currency.

On the bottom line, Philip Morris generated GAAP diluted earnings-per-share of $1.49, which represents growth of 5.7%. Excluding the impact of foreign exchange fluctuations, GAAP earnings-per-share increased by 10.6%.

Adjusted results were even better. On an adjusted, like-for-like basis, earnings-per-share of $1.46 increased by 15.0% excluding currency.

Results through the first six months of the fiscal year were similarly strong. Net revenues increased by 6.2% on a like-for-like basis while adjusted diluted earnings-per-share (excluding currency) rose 15.0%.

Philip Morris also increased its 2019 financial guidance with the publication of its second quarter earnings release. The company now expects to generate adjusted diluted earnings-per-share (excluding currency) of at least $5.28. For context, the company’s comparable figure in 2018 was $4.84, which implies that Philip Morris expects to generate growth of at least 9% in the currency fiscal year.

Philip Morris’ second quarter earnings release was better than our expectations and likely better than the company’s long-term growth capability. Still, there is a lot to like about this security, including its above-average 5.6% dividend yield. Philip Morris earns a buy recommendation from Sure Dividend at current prices.

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Microsoft Cloud Powers Record Fourth Quarter Results

Yesterday after the markets closed, Microsoft (MSFT) reported financial results for the fourth quarter and full year of fiscal 2019 (the company operates under an unusual financial calendar that ends on June 30th). Microsoft beat expectations for both revenue and earnings, and shares rose by as much as 3% in after-hours trading.

Microsoft’s strength began with its robust top-line figure. In the quarter, the technology giant generated revenue of $33.7 billion, which increased by 12% year-on-year and beat consensus analyst estimates by $920 million.

A few lines down on the income statement, Microsoft’s operating income was $12.4 billion and increased by 20% year-on-year.

GAAP net income of $13.2 billion increased by 49% while adjusted net income increased by 21%. Similarly, diluted earnings-per-share of $1.71 increased by 50% year-on-year while adjusted earnings-per-share rose by 21%.

Microsoft’s results for the full fiscal year were also extremely strong. For the twelve-month reporting period, revenue of $125.8 billion increased by 14% while operating income of $43.0 billion increased by 23%. Adjusted net income and adjusted earnings-per-share both increased by 22%.

Here’s what Microsoft’s Chief Executive Officer, Satya Nadella, said about the company’s performance in the quarter:

“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry. Every day we work alongside our customers to help them build their own digital capability - innovating with them, creating new businesses with them, and earning their trust. This commitment to our customers’ success is resulting in larger, multi-year commercial cloud agreements and growing momentum across every layer of our technology stack.”

For Microsoft, one metric that the investment community tends to watch closely is the company’s Azure franchise, which is a cloud computing service similar to Amazon Web Services or Google Cloud Platform that allows users to build, test, deploy, and manage applications and services through Microsoft-managed data centers.

Microsoft did not state exact Azure revenue in its earnings releases, but it did state the segment’s revenue growth . Microsoft Azure’s revenue growth last quarter was 64%, or 68% on a constant-currency basis – a quarter-on-quarter deceleration. In the prior quarter (the third quarter of fiscal 2019), Microsoft Azure’s year-on-year revenue growth was 73%, which was also a deceleration (four percentage points, to be precise).

Many members of the investment community believed that further Azure deceleration could weigh on the company’s shares, yet the firm’s stock increased in price in after-hours trading.

It seems as though strong guidance is responsible for this. Microsoft’s first quarter financial guidance (which was released on its earnings call, not in its earnings press release) included the following revenue estimates:

  • Productivity and Business Processes: $10.7 billion to $10.9 billion
  • Intelligent Cloud: $10.3 billion to $10.5 billion
  • More Personal Computing: $10.7 billion to $11 billion

Consensus revenue estimates for the Intelligent Cloud segment (which houses Azure as well as other subsidiaries such as Github) were $10.11 billion – below the low point of Microsoft’s guidance band. Similarly, the breakdown implies revenue of about $31.8 billion to $32.4 billion, while consensus estimates are for $31.99 billion.

Overall, it was an excellent quarter from Microsoft. The company is one of the highest-quality in our investment universe. However, it is trading at a very high price-to-earnings multiple – around 29. Valuation contraction has the potential to significantly impair the stock’s future returns. Accordingly, Microsoft earns a sell recommendation from Sure Dividend at current prices. With that said, Microsoft could be a hold for long-term investors who believe in the company’s future growth, especially if shares are held in a taxable account with a low cost basis.

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Si no recuerdo mal Alvaro Musach le hacía un “marcaje férreo” a Cal-Maine años atrás. Para comprarla ahora hay que echarle huevos :wink:

Cal-Maine Lays An Egg With 4th Quarter 2019 Results

Cal-Maine (CALM) reported its 4th quarter and full fiscal 2019 results this morning. The company’s results in the quarter left much to be desired:

  • Q4 revenue down 36.7% year-over-year
  • Q4 EPS of negative $0.41, versus a gain of $1.48 the previous year

Cal-Maine CEO Dolph Baker had the following to say about the poor results:

"Our disappointing results for the fourth quarter reflect more challenging market conditions. The average market price in the Southeast for conventional eggs dropped 52.0 percent for the fourth quarter of 2019 compared to the fourth quarter of 2018 and was down 17.1 percent for the year…
We are proud of our ability to respond to changing market conditions, as we continued to execute our growth strategy in fiscal 2019. Going forward, we will focus on what we can control and manage our business for the long term in spite of the current challenges facing our industry. As always, we will strive to operate in an efficient and responsible manner, provide a favorable product mix, including cage-free and other specialty eggs, continue to invest in our operations and identify acquisition or other growth opportunities that enhance our production. Above all, we are focused on meeting the needs of our customers and providing outstanding service. We have a strong balance sheet that provides the financial flexibility to support our growth strategy, and we look forward to the opportunities ahead for Cal-Maine Foods in fiscal 2020."

Cal-Maine’s poor results were due to the company being a commodity producer in an industry that is bereft of significant brand-based competitive advantages. The company must take whatever price the market dictates for its eggs.

Cal-Maine pays a variable dividend equal to 1/3 of quarterly EPS. With negative EPS in its most recent quarter, Cal-Maine has cut its dividend for now.

Cal-Maine is not currently in our Sure Analysis Research Database. In general, we prefer to invest in high quality businesses that are able to better maintain and control the pricing of their goods/services.

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Coca-Cola Beats Q2 Earnings Expectations; Shares +2% Premarket

This morning before the markets opened, Coca-Cola (KO) reported financial results for the second quarter of fiscal 2019. The company exceeded expectations for both earnings and revenues and shares have risen by nearly 2% in this morning’s premarket trading as a result.

Coca-Cola’s strength in the second quarter began with its top-line sales results. Both GAAP and organic revenues increased by 6% in the quarter. Revenue growth was driven by concentrate sales growth of 4% and price/mix expansion of 2%. In total, Coca-Cola generated revenue of $10.0 billion, which beat expectations by $140 million.

Further down the income statement, operating income grew 8% while constant-currency adjusted operating income increased by 14%. On the bottom line, Coca-Cola’s earnings-per-share grew by 12% while adjusted earnings-per-share grew by 4%, despite a 9% headwind from foreign exchange fluctuations. Earnings-per-share totaled $0.63, beating expectations by $0.02.

Coca-Cola also updated its 2019 financial outlook with the publication of its second quarter earnings release. The company has the following expectations:

  • 5% growth in organic revenues

  • 12% growth in comparable currency neutral net revenues, including a 7% tailwind from acquisitions, divestitures, and structural items

  • 11% to 12% growth in comparable currency neutral operating income

  • -1% to 1% growth in adjusted earnings-per-share

Overall, it was an excellent quarter from Coca-Cola. The firm is one of the most high-quality businesses in our investment universe yet trades well above our fair value estimate. Accordingly, Coca-Cola earns a sell recommendation from Sure Dividend at current prices.

Sherwin-Williams Misses on Revenue but Beats on EPS; Shares +2%

Sherwin-Williams (SHW) joined fellow Dividend Aristocrat Coca-Cola (KO) in reporting its second quarter financial results this morning. The company’s revenue fell just below consensus expectations, but he company significantly exceeded its earnings expectations, causing shares to rise by over 2% in this morning’s premarket trading.

On the top line, Sherwin-Williams’ consolidated net sales increased by 2.2% year-on-year, totaling $4.88 billion. What is more important for Sherwin-Williams is the company’s comparable store sales, which measures the sales performance of the company’s individual stores that have been open for more than twelve calendar months.

Importantly, Sherwin-Williams comparable store sales increased by more than the company’s consolidated net sales. The company’s comparable store sales growth came in at 4.3% in the second quarter.

Further down the income statement, adjusted EBITDA increased by 8.5% in the quarter, while adjusted earnings-per-share of $6.57 increased by 14.7% over the same period a year ago.

Here is what Sherwin-Williams’ Chairman and Chief Executive Officer, John G. Morikis, said about the company’s second quarter performance in the press release:

“Sherwin-Williams delivered record results in net sales, EBITDA, profit before taxes and net operating cash in the second quarter, overcoming uneven demand in end markets outside the U.S. and persistently challenging selling conditions in North American architectural paint markets. Gallon growth in our North American paint stores and continued progress on our pricing initiatives in all segments combined to drive consolidated adjusted gross margin to 44.9% and support our continued investments in solutions for our customers. We also continued to effectively manage costs, which combined with the gross margin improvement, drove a 15% year-over-year increase in adjusted earnings per share. We expect gross margins to continue to improve in the second half of the year, driven by continued volume growth and lower projected year-over-year raw material pricing.”

Sherwin-Williams reaffirmed its fiscal 2019 financial guidance with the publication of its second quarter earnings release. The company continues to expect adjusted earnings-per-share between $20.40 and $21.40. Using the midpoint ($20.90) of this earnings estimate, the company is trading at a price-to-earnings ratio of 21.8 today.

This is above our fair value estimate, but Sherwin-Williams’ expected returns are not sufficiently low to merit selling the stock. Accordingly, the paint and coatings conglomerate earns a hold recommendation from Sure Dividend at current prices.

Kimberly-Clark Meets Revenue Expectations, Beats Earnings Estimates, and Significantly Increases Guidance; Shares +0.5% Premarket

In a trend that matches the other Dividend Aristocrats that reported earnings this morning, Kimberly-Clark Corporation (KMB) beat earnings expectations in its second quarter financial results this morning. Note that while some news outlets are currently reporting that the company “missed revenue estimates”, consolidated revenues of $4.59 billion were only $10 million (or less than one percent) below consensus estimates – so in reality, revenues were essentially even with what the sell side expected.

Here are what the numbers look like. On the top line, Kimberly-Clark’s $4.6 billion in revenue was unchanged year-on-year as 5% organic revenue growth was offset by a 5% headwind from foreign exchange fluctuations.

On the bottom line, diluted earnings-per-share of $1.40 increased by 7.7% from last year’s $1.30 while adjusted earnings-per-share of $1.67 increased by 5.0% from last year’s $1.59.

Kimberly-Clark significantly increased its GAAP guidance band for the remainder of fiscal 2019. The company now expects to generate diluted earnings-per-share between $5.50 and $5.90 (midpoint of $5.70), compared to its previous guidance for $4.85 to $5.35 (midpoint $5.10). At the midpoint, this new guidance band represents an increase of 11.8%.

However, that significant increase applies only to the company’s GAAP results, which may suggest that the revision is due to changes in estimated non-recurring expenses. On an adjusted basis, the company’s guidance is still hiked, but not by as much.

More specifically, Kimberly-Clark now expects to generate adjusted earnings-per-share between $6.65 and $6.80 (midpoint of $6.725) compared to its previous guidance for $6.50 to $6.70 (midpoint of $6.60) for an increase of 1.9% at the midpoint. The firm also increased its guidance for full-year organic sales growth to 3% from 2% previously.

Here is what Kimberly-Clark’s Chief Executive Officer, Mike Hsu, said about the company’s updated financial guidance for fiscal 2019:

“For the full year, we are raising our top- and bottom-line outlook, reflecting strong execution and an improving commodity environment. We’re also increasing our growth investments behind our brands and in capabilities that will position us for longer-term success. We continue to be optimistic about our opportunities to deliver balanced and sustainable growth and create shareholder value through execution of K-C Strategy 2022.”

Using the midpoint of Kimberly-Clark’s new adjusted earnings-per-share guidance ($6.725), the company is trading at a current price-to-earnings ratio of 20.0. This is above our fair value valuation target for the company and we believe that valuation contraction is likely to have a negative impact on Kimberly-Clark’s returns moving forward.

Accordingly, the company fails to earn a buy rating today, although its safety and dividend history allow it to earn a hold recommendation from Sure Dividend at current prices.

Stanley Black & Decker Beats Q2 Earnings Expectations; Shares +0.35%

Stanley Black & Decker (SWK) was yet another company that reported second quarter financial results this morning. Continuing the trend set by the other companies in today’s Morning Dividend, the company beat consensus expectations and shares have risen slightly in this morning’s trading.

On the top line, Stanley Black & Decker’s revenue increased by 3%, driven by positive contributions from acquisitions (3%), price (2%), and volume (1%), and partially offset by the negative impact of foreign exchange (-3%).

Further down the income statement, Stanley Black & Decker’s adjusted operating margin expanded by 60 basis points. The company stated that this margin expansion occurred “as price actions and cost controls more than offset $110 million of tariff, commodity, and currency headwinds” .

Stanley Black & Decker generated adjusted diluted earnings-per-share of $2.66, which increased by 3.5% year-on-year. Through the first six months of the fiscal year, the company generated adjusted diluted earnings-per-share growth of 3.5%, in-line with its growth rate in the quarter.

Stanley Black & Decker also reiterated its 2019 financial guidance with the publication of its second quarter earnings release. The company expects to generated adjusted earnings-per-share between $8.50 and $8.70 for the twelve-month reporting period.

Using the midpoint of this guidance band, Stanley Black & Decker is currently trading at a price-to-earnings ratio of 16.5. This is slightly above the company’s long-term average price-to-earnings ratio, so Stanley Black & Decker earns a hold recommendation from Sure Dividend at current prices.

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KO subiendo un 5,5%

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curiosamente, y en vista de aluvión, este fin de semana pasado me hice una pequeña tabla con las fechas para los próximos resultados de las empresas que llevo en cartera hasta final de mes, os lo dejo por si queréis echarle un vistazo

REPSOL 24-jul.-19
SANTANDER 24-jul.-19
NATURGY 24-jul.-19
AT&T 24-jul.-19
COVESTRO 24-jul.-19
3M 25-jul.-19
DOW 25-jul.-19
DIAGEO 25-jul.-19
BE SEMICONDUCTOR 25-jul.-19
SILTRONIC 25-jul.-19
ILLINOIS TOOL WORKS 26-jul.-19
NESTLE 26-jul.-19
ENAGAS 30-jul.-19
WADDEL AND REED 30-jul.-19
PROCTER AND GAMBLE 30-jul.-19
ALTRIA 30-jul.-19
APTS 30-jul.-19
BP 30-jul.-19
RECKITT BENCKISER 30-jul.-19
BAYER 30-jul.-19
BOLSAS Y MERCADOS 31-jul.-19
RED ELECTRICA 31-jul.-19
DIRECT LINE 31-jul.-19
UNIBAIL RODAMCO 31-jul.-19
EUTELSAT 31-jul.-19
SMURFIT KAPPA 31-jul.-19
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Texas Instruments Reports a Down Quarter But Beats Expectations; Shares +7%

Yesterday after the markets closed, Texas Instruments Incorporated (TXN) reported financial results for the second quarter of fiscal 2019. The company’s results exceeded expectations for both revenues and earnings and shares rose by as much as 7% in yesterday’s after-hours trading.

On the top line, results were weak on the surface. Revenue decreased by 9% over the same period a year ago due to “broad-based weakness”. The revenue breakdown by segment was as follows:

  1. Analog revenue declined by 6%
  2. Embedded Processing revenue declined by 16%

Further down the income statement, operating profit declined by 12% while net income declined by 7% and earnings-per-share declined by 3%.

One bright spot from the company’s earnings release is the company’s cash generation. In the trailing twelve-month period ending June 30th, Texas Instrument’s cash flow from operations increased by 9% and its free cash flow (which is defined as cash flow from operations minus capital expenditures) increased by 3%.

For Texas Instruments, the company’s free cash flow generation is especially important because it is the driver of the company’s ambitious capital return program. Recall that the company has committed to returning all of its free cash flow to shareholders through either dividend payments or share repurchases.

This was evident in the second quarter. Total dividends paid increased by 20% in the trailing twelve-month period while stock repurchases increased by 61%. Overall, the total level of capital returned to shareholders was 44% in the quarter.

In total, Texas Instruments’ actual numbers were not particularly impressive. With that said, this was expected to be a down quarter for the company, and it actually beat consensus expectations. The company is shareholder-friendly, has strong growth prospects, and an appealing low-risk business model, but trades above our fair value estimate today. Accordingly, Texas Instruments earns a hold recommendation from Sure Dividend at current prices.

Canadian National Railway Reports Record Q2 Results; Shares +3%

Canadian National Railway (CNI) reported financial results for the second quarter of fiscal 2019 yesterday. The company delivered record second-quarter results while also beating analyst expectations, causing shares to rise 3% in after-hours trading.

Here are what the numbers look like (note that all of the company’s financial results are reported in Canadian Dollars). Revenues increased by 9% to $4.0 billion. The increase in revenue was mainly “ due to the inclusion of TransX in the intermodal commodity group, the positive translation impact of a weaker Canadian dollar, freight rate increases, and higher volumes primarily from petroleum crude and Canadian and U.S. grain, which were partly offset by lower volumes of frac sand, lumber, and potash.” Further down the income statement, operating income increased by 11% to $1.7 billion.

For railways, a key metric of consideration is the operating ratio, which is defined as operating expenses divided by revenue. It is a measure of expense management and shows how much of each customer’s dollar is spent on actually operating the railroad.

Canadian National’s operating ratio of 57.5% decreased by 0.7 points in the quarter, which is a modest but welcome improvement.

On the bottom line, Canadian National’s adjusted diluted earnings-per-share of $1.73 increased by 15% year-on-year. The company also reaffirmed its 2019 financial outlook, aiming to deliver adjusted diluted earnings-per-share growth in the low double-digit range this year while assuming mid-single digit volume growth as measured by revenue ton-miles.

Overall, it was an excellent operating period for Canadian National Railway. Unfortunately, the security trades significantly above our fair value estimate, so the stock earns a sell recommendation from Sure Dividend today.

Visa Sees Revenue Up 11% and Adjusted EPS Up 14% in Q3

Yesterday afternoon, Visa (V) joined a large group of other companies that reported earnings after the bell. The firm’s third quarter earnings results (its financial calendar does not align with the calendar year) beat expectations on both revenue and earnings, but some lower-than-expected financial guidance prevented the stock from rising in afterhours trading.

As a large company in the growing payments processing industry, Visa has rarely had any difficulty growing its revenue – and the third quarter was no exception. In the quarter, Visa’s net revenues increased by over 11%, or more than 13% on a constant-currency basis. Visa’s revenue growth was driven primarily by increased volumes. A few of Visa’s key volume metric and business drivers are listed below:

  • Payments Volume: +9%
  • Cross-Border Volume: +7%
  • Processed Transactions: +12%

Further down the income statement, results were even better. Visa’s net income and GAAP earnings-per-share increased by 33% and 36%, respectively, but these numbers are not truly indicative of the company’s underlying financial performance because the comparable period last year included a $600 million provision associated with an interchange multi district litigation case.

Excluding that non-recurring accounting charge, Visa’s adjusted net income and adjusted earnings-per-share increased by 11% and 14%, respectively. The spread is due to a 3% tailwind from Visa’s continuing share repurchase program.

As mentioned, Visa’s earnings release was marred by some worse-than-expected financial guidance for the remainder of the year. The company expects revenue growth to be “ low double-digits on a nominal basis, with approximately 1.5 percentage points of negative foreign currency impact and over 1.0 percentage point of positive impact from the new accounting standard.”

Visa’s updated financial guidance also included operating expense growth of ~10% (including adjustments for special items in 2018) while diluted earnings-per-share growth is expected to be in the low twenties on a GAAP basis and mid-to-high teens on an adjusted basis. Earlier in the year, Visa had provided guidance for “the high end” of the mid-teen earnings guidance.

In any case, the slight guidance change is likely immaterial to Visa’s long-term investment thesis. The company continues to have excellent long-term growth prospects, but trades significantly above our fair value estimate. Accordingly, Visa earns a hold recommendation today.

AT&T’s Q2 Sees Adjusted EPS Drop 2.2% on 15.3% Revenue Growth, Increases Free Cash Flow Guidance

This morning before the markets opened, AT&T (T) reported financial results for the second quarter of fiscal 2019. The company met expectations for both earnings and revenue. Shares are unchanged in price in premarket trading.

Here are what the numbers look like. On the top line, AT&T generated consolidated revenues of $45.0 billion, which increased by 15.3% year-on-year. This was primarily due to the Time Warner acquisition, which closed on June 14th, 2018.

Separately, declines in legacy wireline services, Vrio, domestic video and wireless equipment were more than offset by the addition of WarnerMedia and growth in domestic wireless services, strategic and managed business services, IP broadband and Xandr.

Further down the income statement, operating expenses increased to $37.5 billion from $32.5 billion last year – an increase of approximately $4.9 billion due to the TimeWarner acquisition, partially offset by cost efficiencies and lower Entertainment Group and wireless equipment costs. Operating income increased to $7.5 billion from $6.5 billion last year, with operating margin expanding 10 basis points to 16.7%.

On the bottom line, adjusted earnings-per-share of $0.89 declined by 2.2% from the $0.91 reported in last year’s comparable period.

Here is what AT&T’s Chairman and Chief Executive Officer, Randall Stephenson, had to say about the company’s performance in the quarter:

“We’re halfway through the year and on track to deliver on all our 2019 priorities. We continue to pay down debt and are more confident than ever that we’ll meet our yearend deleveraging goal, and we’ll take a look at buying back stock. Our FirstNet build is not only running ahead of schedule – it’s become a driver of our wireless network leadership in speed, reliability and network performance. It also sets us up to have nationwide commercially available 5G coverage in the first half of 2020.”

AT&T also increased its free cash flow guidance to the $28 billion range (up from the $26 billion range previously). The rest of the company’s financial guidance remained unchanged, including:

  • Low single-digit adjusted earnings-per-share growth
  • Dividend payout ratio under 60%
  • End-of-year net debt to adjusted EBITDA in the 2.5x range
  • Gross capital investment in the $23 billion range

Overall, it was a solid quarter from AT&T. The company’s high dividend yield, sustainable payout ratio, and cheap valuation cause it to be one of the most attractive securities in our investment universe. AT&T earns a strong buy recommendation from Sure Dividend at current prices.

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Creo que nadie ha puesto los resultados de Iberdrola. Aqui solo van los numeros grandes. Yo no tengo ni idea de saber si unos resultados son buenos o no, pero cuando en un resumen me dicen que todos los mercados suben, las inversiones tambien, la deuda baja, el crecimiento de resultados se acelera, pues a groso modo a mi me gustan.

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Gracias FernandoSerrano, yo lo voy mirando en Investing.com pero no suelen ir muy finos con las fechas (ya han fallado un par de veces)
Un saludo

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3M’s Q2 2019 Earnings Results Show Sales & EPS Declines

3M (MMM) reported its 2nd quarter results for fiscal 2019 this morning. The company’s revenue declined by 2.6% versus the same quarter a year ago.

On the bottom line, 3M performed worse. GAAP EPS declined 37.5%, while adjusted EPS fell 28.3%. The GAAP results were significantly worse than adjusted results due to 3M deconsolidating its Venezuelan operations.

Despite poor results, 3M actually managed to beat analyst expectations. The analysis consensus for quarterly adjusted EPS was $2.07, while 3M delivered quarterly adjusted EPS of $2.20. As a result, shares were up 1.8% premarket.

3M’s CEO Mike Roman had the following to say about the company’s quarterly results:

"I am encouraged by our company’s progress and performance in the second quarter. Our execution was strong in the face of continued slow growth conditions in key end markets, as we effectively managed costs and improved cash flow. Moving ahead we remain focused on continuing to drive operational improvements, investing for the future and delivering for our customers and shareholders."

While 3M’s CEO is optimistic, the company’s recent results do not live up to its historical performance. With that said, the company is being proactive in returning to growth. On a related note, 3M announced the acquisition of privately held medical device company Acelity as well.

Despite recent stock price weakness, 3M still appears to be somewhat overvalued in our view. We rate it as a hold for long-term dividend growth investors at current prices. The company’s 3.2% dividend yield and status as a Dividend King gives it appeal as a hold.

Southwest Airlines Reports Record Q2 Revenues & EPS

This morning before the markets opened, Southwest Airlines (LUV) reported record second quarter results when measured by both revenues and earnings. With that said, the company’s revenue figure missed analyst expectations and shares have declined by more than 5% in today’s premarket trading as a result.

Here are what the numbers look like. Southwest Airlines’ operating revenues increased by 2.9% year-on-year to an all-time quarterly record of $5.9 billion.

Operating revenue per available seat mile (or RASM) increased by 6.8% year, driven by a passenger revenue yield increase of 4.2% and a load factor increase of 1.7%. The airline’s load factor in the quarter was an all-time high of 86.4%.

For those unfamiliar with load factor, it is an important transportation industry-specific measure that asses how efficiently an airline fill its seats. It is a distance-weighted measure of how many passengers fill a given number of available seats. This page has an example calculation if you would like to learn more.

Moving further down the income statement, Southwest Airline’s operating expenses increase by 3.6% to $4.9 billion, while total operating expenses per available seat mile (or CASM) increased by 7.5%.

Southwest’s bottom line results were even stronger. The airline generated quarterly net income of $741 million, or a second quarter record of $1.37 per diluted shares. Net income and earnings-per-share increased by 1.1% and 7.9%, respectively, over the same period a year ago.

The stark difference between Southwest’s total profit growth and its earnings-per-share growth is due to the company’s aggressive buyback program. The company repurchased $450 million of common stock in the second quarter while also paying $98 million in dividends.

In May, Southwest’s Board of Directors also increased the company’s dividend by 12.5% and authorized a new $2.0 billion share repurchase program, which amounts to nearly 7% of the company’s current market capitalization. The company appears committed to returning plenty of cash to shareholders for the foreseeable future.

Southwest’s Chairman and Chief Executive Officer, Gary C. Kelly, also provided some comments on the impact of the 737 MAX groundings on Southwest Airlines’ financial results:

“We are pleased to report second quarter 2019 net income of $741 million, and a second quarter record earnings per diluted share of $1.37. Our financial and operational performance was remarkably strong considering the impact of the grounding of the Boeing 737 MAX 8 aircraft (MAX), which reduced operating income an estimated $175 million in second quarter, alone. We generated record revenues, strong margins and cash flows, a healthy profitsharing accrual for our Employees, and significant returns for our Shareholders—all notable achievements. Our Employees did a heroic job managing approximately 20,000 flight cancellations under operationally difficult circumstances, while delivering excellent Customer Service. I applaud their hard work and resilience through an unprecedented challenge for our Company.

Boeing reported last week a $4.9 billion after-tax charge for ‘potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding.’ We have had preliminary discussions with Boeing regarding compensation for damages due to the MAX groundings. We have not reached any conclusions regarding these matters, and no amounts from Boeing have been included in our second quarter results.”

Overall, it was a solid quarter from Southwest Airlines, although the market seems to be punishing the stock today in response to a slight miss on revenue expectations. With that said, the security seems somewhat undervalued, has great growth prospects, and is managed by a shareholder-friendly team of executives. The company continues to earn a buy recommendation from Sure Dividend at current prices.

Ameriprise Financial Delivers a Double Earnings Beat

Yesterday after the markets closed, Ameriprise Financial (AMP) reported financial results for the second quarter of fiscal 2019. The company beat expectations on both earnings and revenues thanks to strong performance across all of its major business segments.

On the top line, Ameriprise Financial delivered net revenues of $1,653 million, which increased by 7% year-on-year. Total expenses rose at the same 7% rate, reaching $1,277 million in the quarter.

Further down the income statement, GAAP net income and adjusted operating earnings both rose 6% from the same period a year ago. GAAP earnings-per-share and adjusted diluted earnings-per-share rose by 15% and 14%, thanks to both company-wide earnings growth and a strong tailwind from Ameriprise’s continued share repurchase efforts.

Indeed, the power of Ameriprise Financial’s share repurchase program is hard to overstate. The company’s diluted share count decrease from 149.0 last year to 138.0 this year for a net share repurchase yield of 7.4%.

From an operational standpoint, another highlight was Ameriprise’s assets under management and administration, which reached $916 billion. In the Advice & Wealth Management segment, total client assets reached $608 billion. Both totals represent record highs for the company.

Overall, Ameriprise Financial’s second quarter was in-line with our long-term expectations for the company. It continues to deliver solid overall business growth while simultaneously boosting shareholder returns through a persistent buyback program. With double-digit expected returns forecasted by Sure Dividend, the company earns a buy recommendation at current prices.

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Starbucks’ Comparable Store Sales Dazzle; Stock Rises 6.5%

Yesterday after the markets closed, Starbucks Corporation (SBUX) reported financial results for the third quarter of fiscal 2019. The company’s results – particularly its comparable store sales – were much better than the market anticipated, causing shares to rise 6.5% in after-hours trading.

To begin, let’s discuss Starbucks’ strong revenue number. The company generated consolidated net revenues of $6.8 billion, which grew 8% over the same period a year ago.

A number of factors contributed to Starbucks’ robust revenue growth. First and foremost, the company’s global comparable store sales – which measures sales growth at locations that have been open for longer than 12 months – increased by 6%, comprised of a 3% increase in average ticket and a 3% increase in comparable transactions.

Importantly, Starbucks’ domestic segment (which has historically had weaker comps growth) saw above-average comparable store sales growth in the quarter . More specifically, Americas comparable store sales increased by 7%, including a 4% increase in average ticket and a 3% increase in transactions.

Starbucks’ other most important segment also performed well. The China/Asia Pacific segment saw comparable store sales increase 5%, comprised of a 3% increase in average ticket and a 2% increase in average transactions.

To summarize, Starbucks’ comparable store sales performance was strong. Importantly, though, it was not the only contributor to the company’s revenue growth. Starbucks opened 442 net new stores in the third quarter, yielding a new store count of 30,626 at the end of the reporting period. Starbucks’ store count grew 7% year-on-year.

The geographic breakdown of Starbucks’ new store opening is important. Nearly one-third of net new stores openings were in China, and a full 48% of them were in international markets. In other words, Starbucks’ international expansion continues at a rapid rate.

Let’s now look at Starbucks’ performance further down the income statement. The company’s operating margin of 18.3% contracted by 20 basis points over the same period a year ago, driven entirely by a 70 basis point unfavorable impact from the company’s Streamline cost-cutting efforts. Excluding this impact, Starbucks’ operating margin would have expanded approximately 50 basis points over the last twelve months.

On the bottom line, Starbucks generated adjusted earnings-per-share of $0.78, which increased by 26% over the same period a year ago.

Starbucks also continued to allocate capital in an extraordinarily shareholder-friendly manner. The company returned $581 million to shareholders in Q3 through a combination of dividend payments and share repurchases.

Lastly, Starbucks’ loyalty program – called Starbucks Rewards – continues to grain traction at an impressive rate. The loyalty program grew to 17.2 million active members in the United States, up 14% year-on-year.

To round out an excellent earnings release, Starbucks also published an upwards revision to its 2019 financial guidance. The company now has the following expectations for the twelve-month reporting period:

  • Global comparable store sales growth of 4% (previously 3%-4%)

  • Revenue growth of 7% (previously 5%-7%)

  • Approximately 2,000 net new stores globally (previously 2,100 stores), comprised of Americas over 600, China and Asia Pacific ~1,100, and Europe, the Middle East, and Africa of ~300 (previously ~400). Note that the reduction of Starbucks’ net new store guidance comes entirely from the EMEA segment, which is arguably its least important division.

  • GAAP earnings-per-share between $2.86 and $2.88 (previously $2.40 to $2.44)

  • Adjusted earnings-per-share between $2.80 and $2.82 (previously $2.75 and $2.79)

Overall, it was an excellent quarter from Starbucks. Unfortunately, the company’s valuation is excessive today. The company is trading at a price-to-earnings ratio of 32.3 using the midpoint of its revised adjusted earnings-per-share guidance. Accordingly, the company earns a sell recommendation from Sure Dividend at current prices.

ABBV Beats Revenue & Earnings Expectations, Raises Guidance; Shares +2%

This morning before the markets opened, AbbVie reported financial results for the second quarter of fiscal 2019. The company’s performance beat analyst expectations on both revenue and earnings

On the top line, AbbVie generated net revenues of $8.255 billion, which decreased by 0.7% on a GAAP basis. Adjusted net revenues were flat on a reported basis and increased 1.5% operationally (which excludes the impact of foreign exchange fluctuations).

The most important revenue figure for AbbVie is the sales generated by its flagship drug Humira , which is responsible for more than half of the company’s revenue and is the highest-grossing drug in the world.

In the second quarter, U.S. Humira revenue increased by 7.7% to $3.793 billion while international Humira revenue decreased by 35.2% (or 31.0% operationally) due to enhanced biosimilar competition in international markets.

Importantly, Humira’s international weakness was broadly expected and was offset by strength in other parts of AbbVie’s portfolio. The company’s Hematologic Oncology portfolio generated $1.268 billion of revenue in the second quarter, which represents an increase of 38.7% on a reported basis and 39.1% on an operational basis.

The most important drug within the Hematologic Oncology portfolio is Imbruvica , which generated net revenues of $1.099 billion, an increase of 29.3%.

Moving down the income statement, AbbVie’s adjusted gross margin ratio was 82.7% while its adjusted operating margin was 48.2% - both well above many of its peers in the publicly-traded universe.

On the bottom line, AbbVie’s adjusted diluted earnings-per-share figure came in at $2.26, which represents an increase of 13% over the $2.00 generated last year. Much of this gain was due to the company’s actual business growth, but a tailwind from share repurchases also helped. AbbVie’s diluted shares outstanding decreased from 1,572 last year to 1,484 this year for a decline of 5.6%.

AbbVie’s Chairman and Chief Executive Officer, Richard A. Gonzalez, made the following statement about AbbVie’s performance in the quarter:

“We continue to see strong momentum in our business, as we delivered revenue and adjusted EPS ahead of our expectations for the quarter and announced plans to acquire Allergan, a transformative transaction that will provide scale and diversity to our business and position AbbVie for top-tier performance over the long term. Based on our strong performance year-to-date and our confidence in the outlook for the second half, we are raising our revenue and adjusted EPS guidance for 2019.”

As the above quote implies, AbbVie increased its financial guidance for fiscal 2019 with the publication of its second quarter earnings release. The company now expects to generate adjusted earnings-per-share between $8.82 and $8.92 (previous guidance was between $8.73 and $8.83). At the midpoint, the company’s new guidance band represents year-on-year growth of 12.1%.

Overall, it was an excellent quarter from AbbVie. The company continues to perform well, yet the market fails to reward it with a reasonable valuation. AbbVie is trading at $68.00 in this morning’s premarket trading right now, which implies a price-to-earnings ratio of 7.7 using the midpoint of its new guidance band. Fortunately, the company is aggressively repurchasing stock at these discounted valuations, which will boost its per-share intrinsic value over time.

Given all of this, AbbVie continues to earn a strong buy from Sure Dividend at current prices.

McDonald’s Beats Comparable Sales Estimates, Surges to New All-Time High

This morning before the markets opened, McDonald’s Corporation (MCD) reported financial results for the second quarter of fiscal 2019. The company met expectations for both revenue and earnings and surged to a new all-time high in premarket trading after announcing better-than-expected comparable store sales.

Let’s begin by discussing McDonald’s top line results. The company’s consolidated revenues were flat from the previous year (they increased by 3% in constant-currencies) due to a combination of strong comparable store sales and fully offset by the impact of McDonald’s continued refranchising efforts.

While McDonald’s consolidated revenue growth was not too impressive, the company’s operational results were better. The company generated global comparable store sales growth of 6.5% and systemwide sales growth of 8% in constant currencies. Remarkably, McDonald’s has now achieved 16 consecutive quarters of positive global comparable sales growth.

Further down the income statement, McDonald’s operating income increased by 1% (4% in constant currencies) while diluted earnings-per-share increased by 4% (or 7% in constant currencies).

Excluding one-time accounting charges – which primarily includes the strategic restructuring charge of $0.05 in the prior year – McDonald’s adjusted earnings-per-share increased by 3%, or 7% in constant currencies.

Overall, it was a solid quarter from McDonald’s, and the company’s fundamental financial results continue to impress us. However, McDonald’s is trading at a fairly unreasonable valuation – around 26.6 times earnings, to be precise. Because of its excessive earnings multiple, McDonald’s earns a sell recommendation from Sure Dividend at current prices.

Aflac Beats Earnings & Revenue Expectations; Reaffirms 2019 Financial Guidance

Yesterday after the markets closed, Aflac reported financial results for the second quarter of fiscal 2019. The company’s results beat expectations on both revenue and earnings, and Aflac reaffirmed its financial guidance for the remainder of the fiscal year.

Here are what the numbers look like. Aflac’s total revenues of $5.5 billion decreased slightly from the $5.6 billion in the same period a year ago. While Aflac’s sales contracted year-on-year, this was broadly expected – the consensus analyst estimate for the company’s Q2 sales was $5.46 billion.

Aflac’s bottom line results were stronger than its revenue trend would suggest. The company generated net earnings of $817 million, or $1.09 per common share, compared with $832 million, or $1.07 per common share, last year.

Aflac’s results through the first six months of the year were similar. Total revenues increased 1.0% to $11.2 billion, while net earnings of $1.7 billion ,or $2.32 per diluted share, increased over the $1.6 billion, or $1.98 per diluted share, generated through the first six months of fiscal 2018.

Aflac’s Chairman and Chief Executive Officer, Daniel P. Amos, also made the following comments related to Aflac’s financial guidance with the publication of its earnings release:

“I want to reiterate our 2019 earnings guidance. Our consistent, solid results in the first half of the year benefited from timing of expenses and a modestly favorable effective tax rate in the period, which puts us on track to produce adjusted earnings per diluted share toward the higher end of the range of $4.10 to $4.30, assuming the 2018 weighted-average exchange rate of 110.39 yen to the dollar. As always, we are working very hard to achieve our earnings-per-share objective while also ensuring we deliver on our promise to policyholders.”

Overall, it was an excellent quarter from Aflac. With that said, the security trades significantly above our fair value estimate, so its forward-looking return prospects are poor. Aflac earns a sell recommendation from Sure Dividend at current prices.

Alphabet Beats Earnings Expectations, Announces $25 Billion Share Repurchase Program; Shares +8%

Last night after the markets closed, Alphabet Inc. (GOOG) (GOOGL) – the parent company of Google – reported financial results for the second quarter of fiscal 2019. The company beat expectations on both the top and bottom lines while also announcing a significant $25 billion share repurchase program, causing shares to rise by more than 8% in this morning’s premarket trading.

Here are what the numbers look like. On the top line, Alphabet generated revenues of $38.9 billion, which increased by 19% versus the same period a year ago, or 22% on a constant-currency basis.

Importantly, this actually represents revenue growth acceleration for Alphabet, which has seen its revenue growth decline in recent years. You can see Alphabet’s year-on-year revenue growth broken down by quarter in the following image:

Further down the income statement, Alphabet generated operating income of $9.2 billion, which represents an operating margin of 24%, and operating income growth of 13.1% year-on-year.

The company’s bottom line results were even stronger. Alphabet generated adjusted net income of $9.9 billion, which grew 20.3%, while diluted earnings-per-share of $14.21 increased by 20.9% over the same period a year ago.

Google’s operational results announced in the quarterly press release were staggering. For one, the company’s headcount now sits at 107,646, which represents an immense 20.9% increase over last year’s 89,058.

The company’s Cloud and YouTube segments are its fastest-growing units at this time. With respect to Google Cloud, the company’s CEO Sundar Pichai said on the company’s earnings call that “ We continue to build our world-class cloud team to help support our customers and expand the business and are looking to triple our salesforce over the next few years.

Separately, the CEO also said:

“Q2 was another strong quarter for Google Cloud, which reached an annual revenue run rate of over $8 billion and continues to grow at a significant pace. Customers are choosing Google Cloud for a variety of reasons. Reliability and uptime are critical. Retailers like Lowe’s are leveraging the Cloud as one of the important tools to transform their customer experience and supply chain.”

The company also singled out YouTube as “ the second largest driver of revenue growth across Alphabet” in the second quarter.

Within its press release, Alphabet also announced that its Board of Directors has authorized the repurchase of up to an additional $25 billion of its Class C capital stock. This amounts to approximately 3% of Alphabet’s current market capitalization. The repurchase authorization has no expiration date.

Overall, it was an excellent quarter from Alphabet. The company has great growth prospects and is trading near our fair value estimate, so it earns a buy recommendation from Sure Dividend at current prices.

Colgate-Palmolive’s Adjusted EPS Decline 6% In Q2 2019 Earnings Release

Colgate-Palmolive (CL) reported underwhelming results for its second quarter of fiscal 2019 this morning.

Revenue declined 0.5% versus the same quarter a year ago. Excluding the effects of foreign exchange, organic sales increased 4.0%.

The bottom line showed worse performance. Adjusted earnings-per-share declined 6%. The company’s gross margin actually increased slightly versus the same quarter a year ago, but higher overhead and advertising expenses reduced operating margin. The company’s adjusted operating margin declined from 25.8% in Q2 2018 to 24.0% in Q2 2019.

The company’s CEO Noel Wallace had the following to say about the company’s results:

“We have achieved another quarter of sequential improvement in organic sales growth with the strong 4.0% increase driven by both positive volume and higher pricing. In particular, it was terrific to see positive pricing across every operating division…

Excluding charges resulting from the Global Growth and Efficiency Program in both 2018 and 2019, the charge related to U.S. tax reform in 2018 and the benefit from a foreign tax matter in 2018, based on current spot rates, we continue to plan for a year of gross margin expansion, increased advertising investment and a mid-single-digit decline in earnings per share.”

While Colgate-Palmolive’s Q2 2019 results were very close to in line with analyst estimates, we do not believe these results are driving shareholder value growth.

The company was able to grow constant-currency adjusted sales, but actual sales declined slightly despite 3.0% higher advertising expenses . This shows that the company is having to spend more to retain its current sales volume. Said another way, Colgate-Palmolive is less efficient today than it was a year ago.

For an established company like Colgate-Palmolive, bottom line results (earnings-per-share) are of critical importance. The company’s focus on growing the top line has resulted in a decline in earnings-per-share. This means investors can expect the dividend payout ratio to rise and the company’s dividend to increase only modestly. As a Dividend King, we do expect continued dividend growth at Colgate-Palmolive.

We see Colgate-Palmolive as significantly overvalued today. The company trades with a valuation that would be more suitable for a quickly growing stock – and that’s not Colgate-Palmolive today. Due to the company’s weak growth prospects and high valuation, we rate Colgate-Palmolive as a sell at current prices.

Illinois Tool Works Sees EPS & Revenue Decline In Q2 2019 Earnings Release; Shares Down 5.5%

Illinois Tool Works (ITW) released its second quarter 2019 results this morning.

The company generated earnings-per-share of $1.91 in the quarter versus $1.97 in the same quarter a year ago for a 3.0% decline.

The top line showed even worse performance. Illinois Tool Works’ revenue declined 5.8% versus the same quarter a year ago. On a constant-currency basis, the revenue decline was 2.8%.

The company’s CEO said the following about recent results:

“In this more challenging demand environment, the ITW team executed well on the elements within our own control and delivered solid financial results. Operating margin improved year-over-year to 24.4 percent, excluding higher restructuring impact of 30 basis points, as enterprise initiatives contributed 110 basis points. The combination of unfavorable foreign currency translation, higher restructuring expenses and a small loss on two divestitures reduced EPS by $0.09 year-over-year. Excluding these three items, EPS would have increased two percent to $2.00. Free cash flow increased 14 percent year-on-year.”

Adjusted EPS was $2.00, a 1.5% improvement versus EPS in the same quarter a year ago. And strong free cash flow growth is certainly a positive for investors.

Illinois Tool Works’ guidance calls for the following for full fiscal 2019:

  • Revenue decline of between 1% and 3%
  • EPS of between $7.55 and $7.85
  • Free cash flow greater than 100% of net income
  • Share repurchases of ~$1.5 billion

The company’s updated guidance shows a reduction in expected EPS for fiscal 2019. The previous guidance was $8.05 at the midpoint, versus the new guidance of $7.70 at the midpoint, for a decline of 4.3%.

The company’s free cash flow generation being more than 100% of net income is impressive. This shows that Illinois Tool Works’ earnings are translating into real cash that can be used on dividends and share repurchases. The company’s expected $1.5 billion in share repurchases in fiscal 2019 is equivalent to 2.9% of the company’s market cap at current prices.

With a reduced guidance and negative EPS growth on a GAAP basis, this was a poor quarter for Illinois Tool Works. Despite today’s price decline, we view Illinois Tool Works as somewhat overvalued. The company’s long-term growth prospects and long dividend history partially make up for its valuation. We rate Illinois Tool Works as a hold

Other Dividend News

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Esta se me escapó en su día, todavía me estoy dando cabezazos contra las paredes.

¿Alguna moza del pueblo? :wink:

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Jaja, nooo… Starbucks. Y Gijón no es un pueblo, es una villa :stuck_out_tongue_winking_eye:

Yo entré con una posición fuerte en sbux y con casi un 100% de rentabilidad en 1 año y estando a un per 35 no se muy bien que hacer. Es fácil escribir que es una compra para toda la vida pero luego el mercado te pone siempre en una tesitura. Espero aguantar y mantener sbux

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Ejem ejem…

:joy::joy::joy::joy::joy::joy::joy:
Puxa Asturies!

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Partiendo de que es meterme donde no me han llamado, yo en tu caso las mantendría.
Una plusvalía así puede ser tentadora y es cierto que poca gente considera Sbux como una empresa “Core” intocable, pero yo creo que no hay motivos para una venta. Tiene margen de crecimiento en muchos mercados.

En honor a la verdad también me gustaría decir que por lo general yo soy muy poco propenso a vender en general

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En cualquier caso, bendito problema tener esa disyuntiva. Te compadecemos :yum:

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A esa vaca aún le queda mucho “Caffe Latte” que dar

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