HI-Quality Company Updates

Wednesday, May 25, 2022

Baxter-BAX provided new long-range financial guidance for 2022 to 2025. Baxter expects constant currency sales growth of 4% to 5% on a compounded annual basis from 2022 through 2025. The company expects 2025 adjusted operating margin to expand by 350 to 400 basis points as compared to expected year-end 2022. Baxter anticipates free cash flow conversion of more than 80% by 2025. Baxter expects the acquisition of Hillrom to contribute up to $350 million of annual pre-tax cost synergies by 2025. In addition, the company expects to realize up to $200 million in incremental annual revenue synergies by 2025, reflecting the impact of market expansion across the broader portfolio as well as new innovation fueled by Baxter’s expanded capabilities following the acquisition. A strategic approach to capital allocation allows Baxter to continue investing in innovation and growth while returning value to investors.

Thursday, May 19, 2022

Ross Stores-ROST reported sales for the first quarter ended April 30, 2022 declined 4.1% to $4.3 billion with net income falling 29.0% to $338 million and EPS dropping 27.6% to $0.97. Comparable store sales declined 7% over a robust 13% gain in last year’s first quarter as COVID restrictions eased and the government pumped record amount of stimulus into the economy. Traffic trends, which started strong, dropped as the quarter progressed as discretionary spending by Ross Stores’ customer base was squeezed by food and fuel inflation. Merchandise margins declined 170 basis points on higher ocean and domestic freight costs, increased occupancy costs and higher wages. During the quarter, Ross Stores used $416 million in operating cash flow due to the timing of inventory purchases and related accounts payable. Inventory increased 57.5% from last year as easing of supply chains resulted in the early delivery of goods. This resulted in a higher percent of pack away inventory, 43% versus 34% last year. In-store inventory is consistent with management’s sales plan. During the quarter, Ross returned $349 million to shareholders through dividends of $109 million and $240 million of share repurchases at an average cost per share of $96.00. The company remains on pace to repurchase $950 million of its shares during fiscal 2022. Ross Stores ended the quarter with $4.0 billion in cash, $2.5 billion in long-term debt and $4.1 billion in shareholders’ equity on its strong balance sheet. Given the difficult first quarter and today’s increasingly uncertain macro-economic and geopolitical environment, management lowered its guidance for the balance of the year. Second quarter same store sales are projected to decrease 4% to 6% on top of a very strong 15% gain in the prior year period, with earnings per share projected to be $0.99 to $1.07 versus $1.39 in last year’s second quarter. Although the company expects sales and profitability to improve throughout the year, for the full fiscal year ending January 28, 2023, management now expects comparable store sales to decline 2% to 4% versus a 13% gain in fiscal 2021. Earnings per share for fiscal 2022 are projected to be in the $4.34 to $4.58 range, compared to $4.87 last year. Ms. Rentle, Ross Stores CEO, stated, “While the landscape in early 2022 has been tougher than expected and the year may prove to be more difficult than initially anticipated, we remain confident in our ability to successfully navigate through this period. We have shown in the past that our value-focused business model has served us well in both healthy and more uncertain external climates and believe the current challenging conditions will be no different.”


Wednesday, May 18, 2022

TJX-TJX rang up a fancy 13% increase in first quarter sales to $11.4 billion with net income up 10% to $587.5 million and EPS up 11% to $0.49 on fewer shares outstanding. Results include a $.19 charge related to a write-down of TJX’s minority investment in Familia, an off-price Russian retailer. U.S. comp store sales rounded down to flat over a 17% increase last year. By segment, Marmaxx sales increased 3.5% to $6.8 billion on a 3% increase in same store sales over a 12% increase last year, driven by an increase in customer traffic. HomeGoods sales declined 5% to $2.0 billion on a 7% decline in comp store sales over a 40% increase last year. TJX Canada sales increased 41% to $1.08 billion and TJX International sales increased 163% to $1.4 billion as these regions continued rebounding from COVID-related store closures. During the quarter, TJX increased its store count by 26 stores to a total of 4,715. Despite a 220 basis point jump in freight costs and a 70 basis point headwind from wage increases, TJX’s first quarter margins (adjusted for the divestiture of the Russian business) increased 220 basis points to 9.4%, driven by a reduction in COVID-related expenses, the company’s pricing initiatives, expense management and strong markon. Management expects to return to pre-COVID margins of 10.6% within three years. During the quarter, TJX used $634 million of operating cash flow due to the timing of inventory purchases and related accounts payable. In store inventory, which increased 37% from last year, is consistent with TJX’s plan to generate $51.3 billion to $51.8 billion in fiscal 2023 sales. TJX returned a total of $907 million to shareholders during the quarter through share repurchases of $600 million at an average cost per share of $63.16 and dividends of $307 million. TJX increased the dividend by 13% during the quarter, marking the 25th  annual increase over TJX’s 26-year history as a public company. TJX ended the quarter with $4.3 billion in cash, $3.4 billion in long-term debt and $5.6 billion in shareholders' equity on its dressy balance sheet. Looking ahead to the full fiscal year, TJX expects U.S. comp store sales to increase 1% to 2% over a 17% increase in fiscal 2022 with adjusted EPS in the range of $3.13 to $3.20, up 10% to 12% from last year. The company expects to repurchase about $2.25 billion to $2.5 billion of its shares during fiscal 2023.

Cisco Systems-CSCO reported third quarter revenues were relatively flat at $12.8 billion with net income increasing 6% to $3 billion and EPS increasing 7% to $0.73. There was broad-based strength across the business with 8% year-over-year product order growth. Product revenue increased 3% to $9.4 billion and Service revenue decreased 8% to $3.4 billion. Cisco’s business model transformation is progressing well with total Annualized Recurring Revenue (ARR) increasing 11% to $22.4 billion. Free cash flow declined 12% during the first nine months of the year to $9.2 billion with the company paying $4.65 billion in dividends and repurchasing $5.3 billion of its common stock, including 5 million shares repurchased in the third quarter at an average price of $54.20 per share. Cisco maintains a strong balance sheet and ended the quarter with $20.1 billion in cash and investments, $8.4 billion in long-term debt and $40.4 billion in shareholders’ equity. For the fourth quarter of fiscal 2022, management expects revenue to decline 1% to 5.5% with EPS expected in the range of $.60 to $.70. For the full-year Cisco is expecting revenue growth of 2% to 3% and EPS of $2.75 to $2.85. “While Covid lockdowns in China and the war in Ukraine impacted our revenue in the quarter, the fundamental drivers across our business are strong and we remain confident in the long term,” said Chuck Robbins, chair and CEO of Cisco.

Tuesday, May 17, 2022

Berkshire Hathaway-BRKB disclosed trading activity during the first quarter in a regulatory filing as part of its $51 billion buying spree, the most  Berkshire has invested in any three-month period in the company’s history. Buffett abided by his famous saying to be “greedy when others are fearful.” This filing reflected the previously disclosed multi-billion-dollar positions in Chevron, now valued at $27.5 billion; Occidental Petroleum, now valued at $9.7 billion; and HP, Inc. along with the expanded position in Activision Blizzard as part of a merger arbitrage play. New position revealed included purchases of $2.9 billion in Citigroup, $2.61 billion in Paramount, $1.13 billion in Celanese, $895 million in McKesson and $390 million in Ally Financial.  Berkshire also disclosed new stakes in Markel Corp. and expanded positions in Floor and Décor, General Motors, Liberty Formula One Group and Restoration Hardware. Berkshire exited its positions in Wells Fargo, AbbVie and Bristol-Myers Squibb and reduced its Verizon stake by 99%.

Wednesday, May 11, 2022

Global travel platform Agoda, a Booking Holdings-BKNG company, announced its partnership with Visa-V, the world leader in digital payments, to offer interest-free credit card installments across its booking platform. Agoda will be the first global Online Travel Agency to offer this payment option with Visa in the Asia Pacific region.

T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.42 trillionas of April 30, 2022, which is a 16% decline since year end.

Genentech, a member of the Roche Group-RHHBY announced results from its Phase III SKYSCRAPER-01 study, an initial (first-line) treatment for people with PD-L1-high locally advanced or metastatic non-small cell lung cancer did not meet its co-primary endpoint of progression-free survival.

Friday, May 6, 2022

Berkshire Hathaway-BRKB  bought another 5.9 million shares of Occidental Petroleum on May 2-3 for approximately $336 million, boosting its stake in the company to 15.2% worth about $8.8 billion. Berkshire also has warrants to buy an additional $5 billion of Occidental shares.

Thursday, May 5, 2022

Maximus-MMS reported second quarter revenue increased 22.7% to $1.18 billion with net income and EPS declining 38% to $50.1 million and $.80, respectively. Earning results reflected expectations for lower earnings caused primarily by delays in core programs returning to pre-pandemic levels as the COVID-19 response work continues its predicted decline. Year-to-date signed contracts as of 3-31-22 were $1.47 billion with contracts pending (awarded but unsigned) totaling $1.75 billion. The sales pipeline at quarter end was $29.8 billion, comprised of $7.4 billion in proposals pending, $3.6 billion in proposals in preparation and $18.8 billion in opportunities tracking. During the quarter, Maximus generated free cash flow of $98.2 million with the company returning $41.8 million to shareholders through dividend payments of $17.3 million and share repurchases of $24.5 million. The board of directors declared a quarterly cash dividend of $.28 per share payable on May 31, 2022. Maximus is maintaining revenue guidance for fiscal 2022 with revenue expected to range between $4.5 billion and $4.7 billion and expecting free cash flow in the range of $175 million and $250 million. Earnings guidance was lowered and is expected to be in the range of $3.00 to $3.50. The reduction to earnings guidance is comprised of three primary components. First, the Public Health Emergency (PHE) contract has been extended through mid-July, which is approximately a $0.30 EPS estimated impact for the one-quarter delay. The company has further lowered the bottom end of earnings guidance to allow for an additional PHE extension through mid-October, representing an additional $0.30 EPS of estimated impact. Second, further delays on ramping of new work in the U.S. Services and Outside the U.S. segments reduced guidance by an estimated $0.20 EPS. These delays are believed to be temporary and are partly attributable to ongoing COVID-19 disruptions. Third, the revised expectations for the Australia employment services rebid result in an estimated EPS reduction of approximately $0.15; the impact is outsized in fiscal year 2022 compared to subsequent periods and includes severance charges in the third quarter.

Fastenal-FAST reported April sales increased 14.8% to $570.7 million with average daily sales up 20.3% to $27.2 million. Daily sales growth by end market was up 25.7% for manufacturing and 13.4% for non-residential construction. Daily sales growth by product line was 25.5% for fasteners, 16.7% for Safety and 17.8% for Other products. About 90% of the company’s Top 100 national accounts experienced growth during the month. Fastenal’s headcount increased 4.4% to 21,306 as of 4/30/22 compared to the prior year period.

Wednesday, May 4, 2022

Cognizant-CTSH reported first quarter revenues rose 9.7% to $4.8 billion with net income up 11% to $563 million and EPS up 13% to $1.07. By segment, Financial Services revenue grew 4.8% to $1.5 billion, reflecting the demand for digital services, partially offset by client’s continued focus on cost optimization. Healthcare revenue grew 8.1% to $1.4 billion, driven by increased demand for digital services among life sciences clients. Products and Resources revenue grew 13.2% to $1.1 billion, driven by strong demand for digital services and included the benefit from recently completed acquisitions. Communications, Media and Technology revenue grew 18.1% to $776 million, reflecting strong demand for data services among digital native companies. Bookings grew 4% with trailing 12-month bookings of $23.4 billion. Free cash flow during the quarter jumped 100% to $186 million with the company returning $617 million to shareholders through dividend payments of $143 million and share repurchases of $474 million for an average price of $88.22 per share. Cognizant has $1.7 billion remaining authorized for future share repurchases. In addition, Cognizant declared a quarterly cash dividend of $.27 per share, payable on May 31, 2022. The company is expecting second quarter revenue to be in the range of $4.9-$4.94 billion or growth of 6.8%-7.8%. Full-year 2022 revenue is expected to be $19.8 billion to $20.2 billion, representing 7.2%-9.2% growth, with adjusted EPS expected to be in the range of $4.45-$4.55. “Our first quarter performance reflects strong revenue growth in our digital portfolio and a healthy demand environment. We remain focused on investing to support growth opportunities while also executing on pricing to offset the impact of compensation pressure driven by the continued labor supply-demand imbalance,” said Jan Siegmund, Chief Financial Officer.

Booking Holdings-BKNG booked revenues of $2.7 billion, up 136% from last year, and a net loss of $700 million, or $17.10 per share. Excluding net unrealized losses of $987 million on equity securities during the first quarter (compared to unrealized net gains on equity securities of $32 million last year) and other one-time items, adjusted net income was $161 million, or $3.90 per share, compared with last year’s $215 million, or $5.26 per share, loss. First quarter gross travel bookings, representing the total dollar value inclusive of taxes and fees of all travel services booked by its customers, were $27.3 billion, a record, and an increase of 129% year-over-year. Room nights booked in the 1st quarter of 2022 increased 100% year-over-year. Thirty-four percent of total revenues were paid for via Booking’s payments app versus thirteen percent in 2019.  During the quarter, Booking Holdings generated nearly $1.7 billion in operating cash flow and $1.59 billion in free cash flow with the company returning $950 million to shareholders through share repurchases. In April, Booking repurchased an additional $320 million of its shares, which leaves about $9 billion remaining under the current share repurchase authorization that is expected to be completed during the next three years.  Booking Holdings ended the quarter with $12.75 billion in cash and investments, $8.4 billion in long-term debt and $4.37 billion in shareholders’ equity on its sturdy balance sheet. "I am pleased to report a record $27 billion in gross bookings in the first quarter, the highest quarterly amount in our company’s history," said Glenn Fogel, Chief Executive Officer of Booking Holdings. "Despite an uncertain macroeconomic environment, we have seen continued strengthening of global travel trends so far in the second quarter of 2022, and we are preparing for a busy summer travel season ahead. I’m encouraged by how well our teams are executing to capture travel demand in this recovery environment and our progress in expanding our payments platform at Booking.com while we build towards our Connected Trip vision."

NVR, Inc.-NVR announced today that its Board of Directors has authorized the repurchase of $500 million of its outstanding common stock. The purchases will occur from time to time in the open market and/or in privately negotiated transactions as market conditions permit. The Company indicated that the authorization is a continuation of the stock repurchase program that began in 1994 and is consistent with NVR's strategy of maximizing shareholder value.

Tuesday, May 3, 2022

Starbucks-SBUX reported second fiscal quarter sales increased 15% to $7.6 billion with net earnings increasing 2.3% to $674.5 million and EPS increasing 3.6% to $0.58. Global comparable store sales increased 7%, driven by a 4% increase in average ticket, and a 3% increase in comparable transactions. Americas comparable store sales were up 12%, driven by a 7% increase in average ticket and a 5% increase in comparable transactions. International comparable store sales decreased 8%, primarily due to China comparable store sales decreasing 23%, driven by a 20% decline in comparable transactions and a 4% decline in average ticket. The company opened 313 net new stores during the quarter and ended the quarter with 34,630 stores, up 5% from last year. Active Starbucks Rewards Membership in the U.S. was up 17% year-over-year to 26.7 million members. During the first half, Starbucks generated $1.2 billion in free cash flow and returned approximately $5.1 billion to shareholders through dividend payments of $1.1 billion and share repurchases of $4 billion.  Given the uncertainty around further mobility restrictions and lockdowns in China, as well as increasing inflationary headwinds, Starbucks has suspended guidance and share repurchases for the balance of fiscal 2022 with expectations that its financial results will be significantly pressured for the balance of the year. “We are single-mindedly focused on enhancing our core U.S. business through our partner, customer and store experiences. Given record demand and changes in customer behavior we are accelerating our store growth plans, primarily adding high-returning drive-thrus, and accelerating renovation programs so we can better meet demand and serve our customers where they are,” said Howard Schultz, interim chief executive officer.

Baxter International-BAX announced an increase in the company’s quarterly cash dividend to a rate of $0.29 per share of common stock. This represents an approximately 3.5% increase over the previous quarterly dividend rate of $0.28 per share, marking the 7th consecutive year of dividend increases. The indicated annual dividend rate is now $1.16 per share of common stock.

Saturday, April 30, 2022

Berkshire Hathaway-BRKB reported the company’s net worth during the first quarter of 2022 increased slightly by 0.4%, or $1.9 billion, to $508.1 billion with book value equal to about $345,439 per Class A share as of 3/31/22. Berkshire Hathaway reported first quarter revenues increased 10% to $70.8 billion with net income declining 53% to $5.5 billion. Excluding investment and derivative losses of $1.6 billion, operating earnings held relatively steady at $7. 0 billion.

The investment losses approximated $771 million in paper losses from changes in unrealized gains of equity holdings and $612 million in after-tax realized losses during the first quarter.  Berkshire’s four major equity investment holdings which represent about 66% of total equities held, include American Express at $28.4 billion (which charged 15% higher during the quarter or $3.6 billion), Apple at $159.1 billion (which dipped 1% during the quarter or $2.1 billion), Bank of America at $42.6 billion (which dropped 7% during the quarter or $3.4 billion), and Chevron, which surprisingly replaced Coca-Cola as the fourth largest equity holding, at $25.9 billion after Buffett purchased more than $20 billion of Chevron during the first quarter.  Buffett noted during the annual meeting that he also took another bite of Apple by adding to the position during the quarter.

During the first quarter, Berkshire’s insurance businesses generated earnings from underwriting of $47 million, which declined 94% from the prior year period due to ongoing increases in claims severities at GEICO due to significant cost inflation in automobile markets. Insurance investment income declined 3% during the quarter to $1.2 billion, reflecting lower dividend income.  The float of the insurance operations increased $1 billion during the quarter to $148 billion. The average cost of float was negative during the quarter as the underwriting operations generated earnings.

Burlington Northern Santa Fe’s revenues chugged 11% higher during the quarter to $5.8 billion with net earnings rolling 10% higher to $1.4 billion reflecting higher revenue per car/unit partly offset by lower overall freight volumes and higher average fuel costs. The volume decrease was mainly from lower international intermodal shipments resulting from supply chain challenges and lower automotive shipments due to the global microchip shortage.

Berkshire Hathaway Energy reported revenues rose 1% during the first quarter to $6.0 billion with net earnings up 7% to $750 million. The earnings increase reflected higher earnings from the regulated utilities partly offset by lower earnings from the natural gas pipelines and real estate brokerage business.

Berkshire’s Manufacturing businesses reported revenues rose 16% to $18.4 billion with operating earnings up 16% to $2.8 billion for the quarter. The Buildings Products segment led the way for the quarter with revenues rising 19% to $6.7 billion and operating earnings jumping 49% to $1.1 billion thanks to strong demand for residential housing construction. Significant increases in mortgage interest rates will likely slow demand for new housing construction over the balance of the year.

Service and Retailing revenues increased 11% during the quarter to $21.6 billion with pre-tax earnings up 17% to $1.2 billion. The Service group led the way as revenue increased 26%  to $4.5 billion with pre-tax earnings up 23% to $724 million thanks to strong growth from TTI, reflecting accelerating demand across all electronic component markets, and the aviation business services due to higher training hours at FlightSafety and significantly higher customer flight hours at NetJets.

Berkshire’s balance sheet continues to reflect very significant liquidity and a very strong capital base of $508.1 billion as of 3/31/22. Excluding railroad, energy and utility investments, Berkshire ended the quarter with $532.5 billion in investments allocated approximately 73.3% to equities ($390.5 billion), 4.1% to fixed-income investments ($21.7 billion), 3.3% to equity method investments ($17.6 billion), and 19.3% in cash and equivalents ($102.7 billion).

Free cash flow declined 45% during the quarter to $3.7 billion due to lower earnings and higher capital expenditures.  During the quarter, capital expenditures approximated $3.1 billion, which included $2.2 billion for BNSF and BHE, its railroad and utility and energy units. Berkshire expects capital expenditures for the balance of 2022 for BNSF and BHE to approximate $9.4 billion.

During the quarter, Berkshire paid cash of $51.1 billion to acquire equity securities and received proceeds of $9.7 billion from the sale of stocks. These stock purchases included about $21 billion in Chevron, about $7 billion in Occidental Petroleum, about $6 billion in Activision Blizzard as an arbitrage play, $5 billion in German stocks and Japanese stocks, $4 billion in HP, Inc. and about $600 million of Apple.  In addition, Berkshire purchased a net $14.4 billion in Treasury Bills and fixed-income investments.  Berkshire also announced an agreement to acquire Alleghany, a property and casualty reinsurance and insurance business, for $11.6 billion in cash with the deal expected to close in the fourth quarter of 2022.

Berkshire repurchases its shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett and Charlie Munger.  During the quarter, Berkshire repurchased $3.2 billion of its common stock.  These repurchases included 3,582,355 Class B shares acquired at an average price of $322.88 per share and 332 Class A shares purchased at an average price of $485,015 per share during March 2022. No shares were repurchased in April.  

Friday, April 29, 2022

Paychex-PAYX announced that its board of directors approved a $.13 increase in the company’s regular quarterly dividend, an increase of 20 percent. The dividend will increase from $.66 per share to $.79 per share and is payable May 26, 2022 to shareholders of record May 12, 2022. "The decision by the board to increase the quarterly dividend reflects the company’s strong year-to-date results, financial strength, and commitment to returning cash to shareholders," said Martin Mucci, Paychex chairman and CEO. "Our strong results this fiscal year have allowed us to make investments in the business to support our long-term growth as well as return capital to our shareholders, consistent with our long-term capital allocation strategy." With this increase, Paychex will return $1 billion in dividends to shareholders in Fiscal 2022.


 Thursday, April 28, 2022

Intel-INTC reported first quarter revenue declined 7% to $18.4 billion with net income and EPS up more than 140% to $8.1 billion and $1.98, respectively. Excluding unrealized gains in equity investments, restructuring charges and other special items, net income and EPS declined 35% to $3.59 billion and $0.87, respectively. By business segment, Client Computing, which accounted for 50% of Intel sales, declined 13% owing to supply chain constraints due to Chinese COVID lockdowns and weak consumer demand for notebooks and PCs compared to last year’s COVID-driven demand surge. Data Center and AI group sales, which accounted for 33% of total sales, jumped 22% on strong demand from hyperscale and enterprise customers. Network and Edge group revenues, 12% of total sales, increased 23% to a quarterly record on strong cloud networking demand and post-COVID transformation of the edge. Emerging Business Segment, which includes Accelerated Computing Systems and Graphics, Mobileye and Intel Foundry Services (IFS) jumped 36% with IFS sales increasing 175% on increased tool deliveries and automotive revenue. Intel filed Mobileye’s draft registration statement with the SEC and expects the IPO to occur before year end. During the quarter, Intel generated $1.3 billion in free cash flow with the company returning $1.5 billion to shareholders through dividend payments. Intel ended the year with $38.7 billion in cash and investments, $32.8 billion in long-term debt and $103.1 billion in shareholder equity. For 2022, Intel expects revenues of about $76.0 billion, adjusted EPS of $3.60 and negative cash flow of $1 billion to $2 billion after an estimated $27 billion in capital expenditures.  Pat Gelsinger, Intel CEO stated, "With a $1 trillion market opportunity ahead of us, we remain laser focused on our IDM 2.0 strategy. We executed well against that strategy in Q1, delivering key product and technology milestones and announcing plans to expand our manufacturing capacity in both the US and Europe to meet the continued demand for semiconductors and drive a more balanced, resilient global supply chain."


T. Rowe Price-TROW reported first quarter revenues increased 2% to $1.86 billion with net earnings and EPS falling 24% to $567.9 million and $2.41, respectively. Net operating income dipped 2% to $877.4 million on a 5.6% increase in operating expenses, mainly due to the inclusion of Oak Hill Advisors’ expenses following the $4 billion acquisition of the alternative investment shop that closed in December 2021 and higher technology costs related to outsourcing of technology development and retirement recordkeeping to FIS. During the quarter, T. Rowe Price reported a $198.5 million non-operating loss compared to income of $102.1 million last year. The firm's consolidated products and the supplemental savings plan hedge portfolio comprised nearly 80% of the net losses recognized during the quarter. Assets under management of $1.55 trillion declined $136.0 billion during the quarter owing to market depreciation of $130.7 billion and net cash outflows of $5.3 billion, including $18.0 billion withdrawn from equity funds. Investment advisory revenues earned from U.S. mutual funds declined 7% to $976.5 million on the heels of a 2% decline in assets under management and a 220 basis point decline in annualized fees to 43.2 basis points. During the quarter, T. Rowe Price generated $1.05 billion in free cash flow, up 12% from last year, with the company returning $599.3 million to shareholders through dividends of $279.2 million and share repurchases of $320.1 million at an average cost per share of $151.97. The company ended the quarter with nearly $4.5 billion in cash and investments, no long-term debt and $9.1 billion in shareholders’ equity on its pristine balance sheet. T. Rowe Price’s strong financial position allowed it to raise the quarterly dividend by 11% during the quarter, marking the 36th consecutive year of dividend increases since the company’s IPO in 1986.


Stryker-SYK reported first quarter net sales increased 8.1% to $4.3 billion with net income increasing 7% to $323 million and EPS up 6.3% to $0.84. By segment, Orthopaedics and Spine net sales of $1.8 billion increased 5.1% in the quarter and MedSurg and Neurotechnology was up 10.6% to $2.4 billion. During the quarter, Stryker generated $84 million in free cash flow with the company returning $262 million to shareholders through dividend payments. Stryker ended the quarter with $1.5 billion in cash and investments, $13.8 billion in long-term debt and $15 billion in shareholders’ equity. Given the dynamic supply chain pressures, COVID-19 pandemic uncertainty, strong orders for capital equipment, and considering the first quarter results, management now expects full year 2022 organic net sales growth towards the high end of guidance in the range of 6% to 8% and adjusted EPS of $9.60 to $10.00. "We delivered solid first quarter results in the face of a challenging macroeconomic environment," said Kevin A. Lobo, Chair and CEO. "We are encouraged by the steady improvement of surgery volumes and the robust demand for our capital products; however, we expect supply chain challenges to persist for much of the year."

FactSet-FDS announced that its Board of Directors approved an 8.5% increase in the regular quarterly cash dividend from $0.82 per share to $0.89 per share. The $0.07 per share increase marks the twenty-third consecutive year the Company has increased dividends on a stock split adjusted basis, demonstrating its ongoing commitment to providing value to shareholders.

Apple-AAPL reported second quarter revenue rose 9% to a record $97.3 billion with net income up 6% to $25.0 billion and EPS up 9% to $1.52. Apple set an all-time revenue record for Services, which jumped 17% to $19.8 billion with more than 825 million paid subscriptions, which increased by 165 million in the last 12 months. The App store, music, cloud and Apple Care services each set all-time records for sales.  March quarter revenue records were set by iPhone with revenues ringing up a 6% gain to $50.6 billion; Mac with a 15% increase in revenues to $10.4 billion; and Wearables, Home and Accessories which had sales tick up 12% to $8.8 billion. iPad sales dipped 2% during the quarter to $7.6 billion as strong customer demand was offset by supply constraints. The Americas was the geographic segment with the strongest growth as revenues jumped 19% to $40.9 billion. European sales rose 5% to $23.2 billion with Greater China sales up 4% to $18.3 billion. Free cash flow increased 23% during the first half of the year to $69.8 billion with the company paying $7.3 billion in dividends and repurchasing $43.1 billion of its common shares. Given the company’s strong financial position with nearly $193 billion in cash and investments as of quarter end, the company announced a 5% increase in its dividend and an increase of $90 billion to its existing share repurchase program. Revenue growth in the third quarter is expected to be impacted by continued supply constraints due to Covid restrictions and silicon shortages in the $4-$8 billon range and foreign exchange headwinds of 3%. Gross margin is expected to be in the 42%-43% range with operating expenses of $12.7 billion to $12.9 billion with a tax rate of 16%.

Mastercard-MA reported first quarter revenues rose 24% to $5.2 billion with net incoming charging 49% higher to $2.6 billion and EPS ringing up a strong 52% gain to $2.68. Despite the challenging geopolitical environment, cross border volume jumped 52%, switched transactions experienced 22% growth and gross dollar volume increased 17% to $1.9 trillion on a local currency basis. Cross-border travel is above 2019 levels for the first time since the pandemic began with continued improvement in travel seen in all geographic regions. With pandemic restrictions lifted, consumers spending is robust with inflation not curtailing spending yet. Higher rent and gas prices may crowd out spending in other areas in the future. As of the end of the quarter, the company’s customers had issued 2.9 billion Mastercard and Maestro-branded cards. Card growth was down 4% as Russian cards were suspended. Excluding Russia, card growth increased 9%. Free cash flow increased 17% during the quarter to $1.6 billion with the company paying $479 million in dividends and repurchasing 6.8 million of its common shares at a cost of $2.4 billion or $352.94 per share with approximately $8.9 billion remaining authorized for future share repurchases. Given the better-than-expected start to the year, Mastercard expects revenues to increase at a high-teen rate for the full year 2022 with operating expenses increasing at a high single-digit rate which should result in profit margin expansion for the year.

Baxter International-BAX reported first quarter revenues rose 26% to $3.7 billion with net income and EPS each declining 76% to $71 million and $.14, respectively. Adjusted for the costs associated with the Hillrom acquisition, net income and EPS both increased 22% to $471 million and $.93, respectively. By segment, Medication Delivery achieved double-digit growth at constant currency rates, driven by improving rates of hospital admissions and increased sales of large and small volume parenteral solutions as well as infusion systems. BioPharma Solutions also achieved double-digit constant-currency growth, reflecting the year-over-year impact of multiple collaborations to help manufacture COVID-19 vaccines on a contract basis. Advanced Surgery delivered high single-digit growth at constant currency rates, driven by an improvement in the rate of surgical procedures compared to the same period last year. Additionally, Renal Care and Clinical Nutrition grew at low single digits year-over-year at constant rates. Growth was partially offset by a decline in Pharmaceuticals, due to generic competition for certain molecules and supply constraints impacting product availability. Acute Therapies declined high single digits at constant currency rates, following last year’s surging demand for continuous renal replacement therapy (CRRT) products in the comparable period to help treat COVID-19. During the quarter, Baxter generated free cash flow of $68 million with the company paying a quarterly dividend of $.28 per share. For the full-year 2022, Baxter now expects EPS in the range of $2.35 to $2.43 and sales growth of 23% to 24%. Baxter’s outlook reflects the impact from higher oil prices, ongoing supply chain challenges causing inflationary pressures as well as the removal of any contribution from the Novum IQ infusion system. For second-quarter 2022, Baxter expects sales growth of approximately 26% and EPS in the range of $.48 to .51. In addition, Baxter expects to moderate repurchases in the near-term to focus on de-levering.

Wednesday, April 27, 2022

Meta Platforms-FB reported first quarter revenue rose 7% to $27.9 billion with net income down 21% to $7.5 billion and EPS down 18% to $2.72. Results reflected a slowdown in e-commerce sales, lower ad demand in Europe due to the war in Ukraine and foreign exchange headwinds. Profits were impacted by higher employee costs as headcount increased 28% year-over-year to 77,805 as the company invests for the future, increased investments in Reality Labs as the company invests in building the metaverse and higher litigation costs. Meta continues to see a shift to time spent on short-form videos, such as Reels, which will take time to monetize. Management is confident that the Family of Apps side of the business can return to better revenue growth rates over time and sustain high operating margins, which will allow the company to grow while significantly investing in building the metaverse which they view as an immense long-term growth opportunity. Facebook daily active users increased 4% for March 2022 to an average of 1.96 billion with monthly active users increasing 3% to 2.94 billion. In the first quarter, ad impressions delivered across the Family of Apps increased by 15% with the average price per ad declining by 8%. Free cash flow increased 9% during the quarter to $8.6 billion with the company repurchasing $9.5 billion of its common stock with $29.4 billion remaining authorized for future share repurchases. Meta ended the quarter with a strong balance sheet with $43.8 billion in cash and investments, no long-term debt and $123.2 billion in shareholders’ equity. Second quarter revenue is expected to be in the range of $28-$30 billion, reflecting a continuation of trends seen in the first quarter including softness in ad spend due to the war in Ukraine and 3% in foreign exchange headwinds. Total expenses in 2022 were lowered to an expected range of $87-92 billion from previous expectations of $90-$95 billion.

ADP-ADP reported third quarter fiscal 2022 revenues increased 10% to $4.5 billion with net earnings increasing 15% to $929 million and EPS up 16% to $2.21. By segment, Employer Services revenues increased 8% to $3 billion with U.S. pays per control increasing 7%. PEO Services revenue increased 14% to $1.5 billion with Average Worksite Employees paid increasing 16% to about 688,000. Interest on funds held for clients increased 10% to $118 million on a 15% increase in Average Client Funds to $38.1 billion and a 10-basis point decline in average interest yield. During the quarter, ADP generated $2.1 billion in free cash flow with the company returning $2.7 billion to shareholders through dividends of $1.2 billion and share repurchases of $1.5 billion. ADP ended the quarter with $1.6 billion in cash, $2.9 billion in long-term debt and $4.1 billion in shareholders’ equity. Given the strong third quarter and the improving U.S. economy, ADP upped its fiscal 2022 guidance with revenue now expected to increase in the 9% to 10% range and EPS growth of 14% to 16%. “Our strong third quarter results reflect an improving demand environment combined with continued execution on our strategic plan to simplify, innovate and grow,” said Carlos Rodriguez, President and Chief Executive Officer, ADP.

Check Point Software Technologies-CHKP reported first quarter revenues increased 7% to $543 million with net income declining 7.4% to $169.4 million and EPS dipping 2.3% to $1.30. By segment, Product & Security subscriptions increased 11% to $317.5 million as the global increase in cyberattacks (up 54% from last year with 1 in every 53 organizations impacted by ransomeware) has prompted organizations to rethink the dated approach of disparate point security solutions and transition to Check Point’s unified approach of securing networks, the cloud and remote users with the company’s consolidated solution, Infinity, which offers real time threat prevention for the entire IT infrastructure. Software updates and maintenance revenues increased 2% to $225.2 million. Bookings increased double digits from last year across all regions, especially in the Americas, an early sign that investments to grow the U.S. business are generating results. Operating expenses increased 17% as Check Point moves toward its targeted 25% salesforce and R&D headcount increase designed to boost growth beginning in 2023. During the quarter, Check Point generated 6% growth in cash flow from operations and free cash flow to $398.0 million and $393.3 million, respectively, with the company repurchasing $325 million of its shares at an average cost per share of $130. The company ended the quarter with $3.8 billion in cash and investments, no long-term debt and $3.15 billion in shareholders’ equity on its super-secure balance sheet. While optimistic about the future, given all the uncertainty surrounding global unrest, supply chain bottlenecks, inflation and higher interest rates, Check Point left its 2022 estimates unchanged, projecting revenue to reach $2.2 to $2.375 billion, up 5.4% at the midpoint, and EPS of  $5.68 to $6.28, down 1.6% from 2021 at the midpoint.


General Dynamics-GD reported first quarter revenues were relatively flat at $9.4 billion with net earnings up 3% to $730 million and EPS up 5% to $2.61. Aerospace backlog grew for the fifth consecutive quarter to the highest backlog in more than a decade, driven by continued strong Gulfstream demand. The Gulfstream book- to-bill ratio was two-to-one reflecting record first quarter aircraft orders.  Aircraft services increased broadly to set a new quarterly record which resulted in the operating margin expanding 110 basis points to 12.8% for this segment. The defense segments also delivered solid performance on key programs with significant awards received for the three defense segments during the quarter. Orders remained strong across the company with a consolidated book-to-bill ratio of one-to-one for the quarter. General Dynamics ended the quarter with a company-wide backlog of $87.2 billion. Free cash flow during the quarter was extremely strong coming in at $1.8 billion, which was 2.5 times net earnings. For the year, General Dynamics expects free cash flow to exceed earnings thanks to strong order activity at Gulfstream and progress payments from Combat Systems. During the quarter, the company invested $141 million in capital expenditures, paid $330 million in dividends, a 6% increase over the prior year, and used $294 million to repurchase 1.3 million shares at an average price of $225 per share.

Tuesday, April 26, 2022

Microsoft-MSFT reported third quarter revenues for fiscal 2022 increased 18% to $49.4 billion with net income up 8% to $16.7 billion and EPS up 9% to $2.22. By segment, Productivity and Business Processes revenue increased 17% to $15.8 billion, boosted by 17% growth in Office 365, a 34% increase in LinkedIn revenue and a 35% increase in Dynamics 365 revenue. Intelligent Cloud revenue increased 26% to $19.1 billion and included 46% growth in Azure revenue. More Personal Computing revenue increased 11% to $14.5 billion on a 14% increase in Windows and Cloud services revenue, a 23% increase in Search and a 13% increase in Surface sales. During the third quarter, Microsoft generated $25.3 billion in operating cash flow, up 14% year-over-year and $20 billion in free cash flow, up 17% from last year. Microsoft returned $12.4 billion to shareholders in the form of share repurchases and dividends in the third quarter, an increase of 25% compared to the third quarter of fiscal year 2021. Microsoft ended the quarter with $104.6 billion in cash and investments, $48 billion in long-term debt and $162.9 billion in shareholders’ equity on its strong balance sheet. Looking ahead to the fourth quarter, leadership expects sales in the range of $52.4 billion to $53.2 billion.

Texas Instruments-TXN reported first quarter revenues rose 14% to $4.9 billion with net income and EPS increasing 26% to $2.2 billion and $2.35, respectively. Sustained demand in the industrial and automotive markets fueled 20% revenue growth in each segment. Demand for the company’s chips outstripped supply which led to strong margin expansion as the company had pricing power.  By segment, Analog revenues increased 16% to $3.8 billion, Embedded Processing revenues were up 2% to $782 million and Other revenues increased 27% to $307 million. During the quarter, TXN generated $1.7 billion in free cash flow, a 10% increase year-over-year, and returned nearly $1.7 billion to shareholders through dividends of $1.1 billion and share repurchases of $589 million. Cash flow from operations was up 27% to $9.1 billion for the trailing 12 months. Free cash flow for the same period was $6.5 billion. Over the past 12 months, Texas Instruments invested $3.2 billion in R&D and SG&A, invested $2.6 billion in capital expenditures and returned $5 billion to shareholders. Management’s second quarter outlook is for revenue in the range of $4.2 billion to $4.8 billion and EPS between $1.84 and $2.26. This outlook reflects reduced demand from China-based customers due to COVID-19 restrictions in China.

Visa-V reported fiscal second quarter revenues charged ahead 25% to $7.2 billion with net income increasing 21% to $3.65 billion and EPS up 23% to $1.70. Key business drivers included a 17% increase in Payments Volume to $2.78 trillion, a 47% increase in Cross-Border Volume (excluding Intra-Europe), a 38% increase in total Cross-Border Volume and 19% growth in processed transactions to 48 billion. Visa ended the quarter with 3.922 billion Visa branded cards, up 9% from last year. By segment, Service Revenues increases 24% over the prior year to $3.5 billion, Data Processing revenues rose 16% to $3.5 billion, International Transaction revenues grew 48% to $2.2 billion while Other revenues increased 21% to $474 million and Client Incentives, a contra-revenue item, were $2.5 billion and represented 25.8% of gross revenues. During the first half of fiscal 2022, Visa generated $7.28 billion in free cash flow, up 11.6% from last year, representing nearly 96% of reported net income. Visa returned $8.66 billion to shareholders during the first half through $7 billion in share repurchases at an average cost of $210.11 per shares and dividend payments of $1.6 billion. Visa ended the quarter with more than $16 billion in cash and investments, $17.5 billion in long-term debt and $36 billion in shareholders’ equity on its solid balance sheet. Looking ahead, despite a 4% hit to revenues due the closure of business in Russia, management expects revenues to grow in the upper-teens to 20% during fiscal 2022. During the conference call, Alfred F. Kelly, Jr., Chairman and Chief Executive Officer, commented, “The Omicron variant impacts were short lived and the global economic recovery that began in the middle of last year continued. We had solid growth in most countries around the globe and across all elements of our business, with revenue growth of over 20% in consumer payments, new flows and value-added services. While the geopolitical environment remains uncertain, we expect continued growth driven by a robust travel recovery and through the enablement of traditional and newer ways to pay globally."

3M-MMM reported first quarter sales dipped slightly from last year to $8.8 billion with net income declining 20% to $1.3 billion and EPS falling 18.4% to $2.26. Excluding PFAS litigation and related remediation expenses, 3M’s EPS declined 10% to $2.65.  By business segment, Safety & Industrial sales dipped 1.5% to $3.05 billion on mid-single digit organic growth in industrial adhesives and tapes, electrical markets, abrasives, and closure and masking systems while disposable respirator sales declined nearly $50 million, or 8% organically. Transportation & Electronics sales declined 2.3% to $2.34 billion on flat automotive sales and declining electronics and transportation safety as global semiconductor supply chain challenges continue impacting auto builds and electronics end-markets. Health Care sales increased 2.7% to $2.1 billion with organic growth across all divisions led by food safety, separation and purification sciences, medical solutions and health information systems. COVID-19 continues to impact U.S. elective procedures that are about 85% to 90% of pre-pandemic levels. Consumer sales increased nearly 2% to $1.3 billion with organic growth across all divisions, led by consumer health and safety and continued demand for home care, stationery and office and home improvement products. Adjusted operating margin declined 270 basis points from last year’s first quarter to 21.4%, pressured by raw material/logistic cost inflation and manufacturing productivity headwinds, partially offset by selling price actions and restructuring benefits.  During the first quarter, 3M generated $587 million in free cash flow, down 57% from last year, due to higher cash compensation, litigation and remediation expenses and a 37% jump in capital expenditures for growth and sustainability investments. During the quarter, 3M returned $1.6 billion to shareholders through share repurchases of $773 million and dividend payments of $852 million. In February, 3M increased its quarterly dividend by 0.7% to $1.49 per share, marking the 64th consecutive year of dividend increases and 100 years of uninterrupted dividend payments. 3M ended the quarter with $3.4 billion in cash, $14.8 billion in long-term debt and $15.0 billion in shareholders’ equity. While the macroeconomic and geopolitical environment remains challenging and fluid, 3M continues to manage and navigate the headwinds facing its businesses.  Given its first quarter PFAS related charges, 3M updated its full-year 2022 earnings outlook. 3M now expects its full-year 2022 earnings per share to be in the range of $9.89 to $10.39 versus a prior expectation of $10.15 to $10.65. The company’s full-year organic sales growth and free cash flow conversion ranges remain unchanged with cash flow conversion in the range of 90% to 100%. Share repurchases are expected in the $2 billion range.


Alphabet-GOOGL reported first quarter revenues rose 23% to $68 billion with operating income up 22% to $20 billion as operating margin held steady at 30%. Net income declined 8% to $16.4 billion with EPS down 6% to $24.62, reflecting changes in equity investment valuations. Revenue growth was driven by 44% growth in Google Cloud revenue to $5.8 billion, thanks to increased deal volume due to the digital transformation of businesses as hybrid work is here to stay, and 24% growth in Google Search revenue to $39.6 billion with strength in retail and travel searches. Time spent on YouTube continues to grow with 700 million hours of YouTube content watched every day. YouTube ad revenue rose 14% during the quarter. Free cash flow increased 15% during the quarter to $15.3 billion with the company repurchasing $13.3 billion of its common stock during the quarter. In the past 12 months, Alphabet has repurchased $52 billion of its common stock with the company announcing a new $70 billion share repurchase program. Alphabet’s fortress balance sheet can easily support this repurchase program with more than $164.5 billion in cash and investments, $14.8 billion in long-term debt and $254 billion in shareholders’ equity. The company will face tough comparisons during the second quarter of 2022 as it laps the strong economic recovery from last year, reflects the suspension of commercial activities in Russia and faces foreign exchange headwinds.

  

Canadian National Railway-CNI reported first quarter revenues chugged ahead 5% to C$3.708 billion with net earnings declining 5.9% to C$918 million and EPS down 4.4% to C$1.31. RTMs (measuring the weight and distance of freight transported) declined by 8% compared to the year-earlier period on a significantly smaller Canadian grain crop, persistent global supply chain disruptions and challenging operating conditions. Freight revenue per RTM increased by 15%, mainly driven by a significant decrease in the average length of haul, higher applicable fuel surcharge rates and freight rate increases. First quarter operating ratio (operating expenses as a percentage of revenues) of 66.9%, increased 4.4-points from last year due to higher fuel prices and costs related to harsher winter weather. During the first quarter, Canadian National generated operating cash flow of C$570 million and free cash flow of C$191 million, down from C$540 million last year, mainly due to working capital needs. The company returned C$1.8 billion to shareholders through its quarterly dividend of $0.7325 per share, up 19% from last year, totaling $509 million and share repurchases of C$1.29 billion at an average cost per share of $158.56. Canadian National ended the quarter with C$1.045 billion in cash, C$11.9 billion in long-term debt and $21.9 billion in shareholders’ equity. Due to challenging operating conditions in the first quarter as well as worldwide economic uncertainty, the company now expects to deliver 15-20% adjusted EPS growth, compared to its January 25, 2022 target of 20%. Canadian National now targets an operating ratio below 60% for 2022, compared to its prior target of 57% as well as about 15% of ROIC.  

UPS-UPS reported first quarter revenues rose 6.4% to $24.4 billion with operating profit up 17.6% to $3.3 billion. Operating margin increased 70 basis points to 13.6% during the quarter as all business units delivered operating growth. Net income and EPS each declined 44% to $2.7 billion and $3.03, respectively, due to a change in pension income from the prior year period. These were solid financial results despite a challenging macro environment in the first quarter which resulted in daily volume coming in less than planned. Omicron hurt sales in January and pressured volumes. Later in the quarter, performance was impacted by record high inflation, a surge in energy prices and COVID-19 lockdowns in Asia. Total average daily volume in the US was down 3%, driven mostly by residential volume as UPS was lapping generous federal stimulus payments last year. UPS has ceased operations in Ukraine, Belarus, and Russia. Revenue from those three countries represented less than 1% of total revenue in 2021, but the war has impacted fuel prices which remains a concern. Free cash flow increased 6% during the quarter to $3.9 billion with UPS delivering $1.3 billion in dividends to shareholders and repurchasing $254 million of its common stock. For 2022, UPS reaffirmed its full-year financial targets with revenue of $102 billion expected with an adjusted operating margin of about 13.7%. UPS expects to generate an adjusted return on invested capital above 30% during the year. Capital expenditures for the year are expected to approximate $5.5 billion. UPS plans to pay about $5.2 billion in dividends and doubled its share repurchases for 2022 to a target of $2 billion given management’s confidence in its financial outlook and position.

Roche Group-RHHBY provided the first quarter sales update as the company reported Group sales increased 11% in constant exchange rates (CER) to CHF 16.4 billion. The 11% sales growth was driven by a 69% jump in Pharmaceutical sales in the Japan region to CHF 1.3 billion and a 24% increase in the Diagnostics Division to CHF 5.2 billion. The Diagnostics Division’s strong growth was due to good momentum in base business and continued high demand for COVID-19 tests. Pharmaceuticals Division sales increased 6% to CHF 11.1 billion. During the quarter, Vabysmo (medication for severe eye diseases) received FDA approval. For fiscal 2022, sales are expected to be stable or grow in the low-single digits and Core EPS is targeted to grow in the low to mid-single digit range (at constant exchange rates). Roche anticipates sales of COVID-19 medicines and diagnostics to decrease by approximately CHF 2 billion to around CHF 5 billion, and sales losses to biosimilars in the current year to be roughly CHF 2.5 billion. In addition, Roche expects to increase its dividend in Swiss francs further.

Raytheon Technologies-RTX reported first quarter revenues rose 3% to $15.7 billion with net income increasing 44% to $1.1 billion and EPS up 46% to $.73, respectively. Earnings include $.41 per share of net significant and/or non-recurring charges and acquisition accounting adjustments. Backlog at the end of the quarter was $154 billion, including $92 billion from commercial aerospace and $62 billion from defense. RTX generated $37 million of free cash flow, an 89% decrease due to inflation, global sanctions, labor availability and supply chain constraints. The company returned nearly $1.5 billion to shareholders through dividends of $745 million and share repurchases of $743 million. Management lowered the sales outlook for 2022, expecting sales of $67.75 billion to $68.75 billion, driven by global sanctions on Russia. RTX still expects adjusted EPS of $4.60-$4.80, free cash flow of approximately $6 billion and share repurchases of at least $2.5 billion.

NVR, Inc.-NVR reported first quarter revenues increased 17% to $2.38 billion with net income increasing 71% to $426 million and EPS jumping 84% to $116.56, respectively. Profitability jumped during the quarter due to higher home prices and lower lumber costs.  New orders decreased by 6% during the quarter to 5,927 units. However, the average sales price of new orders increased by 13% to $465,700. The cancellation rate in the second quarter remained flat at 10%. Settlements increased 3% during the quarter to 5,214 units. The backlog of homes sold but not settled as of March 31, 2022 increased on a unit basis by 5% to 13,443 units and increased on a dollar basis by 20% to $6.23 billion. Mortgage loan closings increased 5% to $1.48 billion during the quarter. The company repurchased 146 million shares during the quarter, for an average price of $5,127 per share and ended the quarter with $2.2 billion in cash, $1.5 billion in long-term debt and $2.7 billion in shareholders’ equity on its sturdy balance sheet.

PepsiCo-PEP reported first quarter revenues rose 9% to $16.2 billion with net income and EPS popping over 100% higher to $4.2 billion and $3.06, respectively.  These strong results reflect PepsiCo’s presence in growing, global categories. During the quarter, PepsiCo gained market share across many of its key global snacks and beverage markets with notable improvements in the U.S. snacks and beverage businesses. On the international front, the developing and emerging markets remained resilient despite the pandemic with double-digit growth in the Latin America, Africa, Middle East and South Asia regions. Despite higher than expected cost input inflation,  PepsiCo  raised its revenue outlook and now expects to deliver 8% organic revenue growth (previously 6%) in 2022 and continues to expect an 8% increase in core constant currency EPS thanks to productivity gains.  In 2022, the company plans to return $7.7 billion to shareholders through $6.2 billion in dividends and $1.5 billion in share repurchases.

Monday, April 25, 2022

Bank of Hawaii Corporation – BOH reported first quarter revenues increased 3.2% to $168.8 million with net income and EPS declining 12% to $52.9 million and $1.32, respectively. Net interest income increased 4% to $125.3 million while net interest margin of 2.34% dipped slightly on loan growth of 3.3% to $12.5 billion. Bank of Hawaii’s deposits grew 6% to a new high of $20.7 billion, providing ample low cost, long duration liquidity to support future loan growth.  Noninterest income of $43.6 million increased 1.4% from last year with noninterest expenses increasing 5.1% to $103.9 million as the company continued its innovation spend. During the quarter, Bank of Hawaii generated a 0.97% return on average assets, down 18 basis points from last year, and a 15.4% return on average common equity, down 221 basis points, on a lower loan loss provision release and seasonal payroll expenses. Bank of Hawaii’s asset quality remains strong, and its fortress capital position significantly exceeds regulatory guidelines for well-capitalized banks. During the quarter, the company repurchased $10.0 million of its shares at an average cost per share of $85.34 with $75.8 million remaining under the current authorization. Hawaii’s economy continues to recover with an unemployment rate of 4.1%, daily arrivals reaching pre-pandemic levels and continued strength in Oahu real estate.  


Friday, April 22, 2022

Gentex-GNTX reported first quarter revenues dipped3% to $468.3 million with net income skidding 23% lower to $87.5 million and EPS sliding 20% lower to $.37. Light vehicle production in the company’s primary markets of North America, Europe and Japan/Korea declined by 11% because of the ongoing auto industry-wide component shortages and global supply chain constraints.  Profits were impacted by raw material cost increases, elevated freight expenses, labor cost increases and ongoing customer order volatility. Despite the challenging first quarter, Gentex expects to see an improving sales environment over the balance of the year. The company is in active discussions with their customers to minimize the impact of inflationary pressures on the businesses while introducing new innovative products. Free cash flow declined during the quarter due to the lower earnings and increased working capital needs. During the quarter, the company repurchased 2.44 million of its common shares for $71.3 million at an average price per share of $29 per share. The company has 22.4 million shares remaining authorized for future share repurchases. Gentex maintains a cash-rich, debt-free balance sheet which provides the company with financial flexibility during difficult times. For 2022, Gentex expects revenue in the range of $1.87 to $2.02 billion with revenue growth of 15%-20% expected in 2023 as the auto industry recovers.  Management expects record sales combined with a consistent and disciplined capital allocation strategy to result in excellent shareholder returns over the next several years.

Thursday, April 21, 2022

Genuine Parts – GPC reported record first sales that motored ahead 18.6% to $5.3 billion with net income increasing 13% to $246.8 million and EPS up 14.7% to $1.72. By segment, Automotive Parts sales increased 11% to $3.3 billion on a 10.3% increase in comparable sales while Industrials Parts sales increased 33.6% to $2.0 billion, reflecting a 17.9% contribution from the KDG acquisition and a 16% increase in comparable sales. Despite much higher than anticipated inflation, segment operating profits increased 50 basis points to 8.6%, boosted by price increases, ongoing expense management and execution of operational initiatives to improve productivity. During the quarter, Genuine Parts generated $398.8 million in operating cash flow and $320.8 million in free cash flow with the company returning $188.8 million to shareholders through dividend payments of $115.9 million and share repurchases of $72.9 million at an average cost per share of $128.07. The company announced a 10% increase in the 2022 dividend to $3.58 per share, marking the 66th consecutive increase in the dividend that has been paid every year since the company’s founding in 1928.  Genuine Parts ended the quarter with $610.8 million in cash and equivalents, $3.4 billion in long-term debt and $3.6 billion in shareholders’ equity. Given the strong first quarter, Genuine Parts raised its 2022 guidance with sales now expected to increase in the 10% to 12% range, up from 9% to 11% previously guided, with EPS in the $7.56 to $7.71 range, up from $7.45 to $7.60 previously guided. Free cash flow remains expected in the $1.2 billion to $1.4 billion range.

Tractor Supply-TSCO reported first quarter revenues grew 8.3% to $3.0 billion with net income up 3.2% to $187.2 million and EPS sprouting 6.5% higher to $1.65. Comparable store sales increased 5.2% in the first quarter driven by ticket growth of 6.7% and a decline in average transaction count of 1.4%. Comparable store sales growth was driven by robust demand for everyday merchandise, including consumable, usable and edible products and strength in winter seasonal goods, partially offset by a slower start to the spring selling season due to colder weather across the nation. The company’s e-commerce sales experienced double-digit growth for the 39th consecutive quarter.  The company’s price management actions helped offset the majority of the impact from significant product cost inflation, wage inflation and higher transportation costs. The company spent $112 million on capital expenditures during the quarter,  paid dividends of $103.5 million and repurchased 1.4 million shares of its common stock for $296.2 million at an average price per share of $211.57. While new store openings were delayed in the first quarter due to the lingering impact of the pandemic and challenges facing the construction industry, the company is still targeting opening about 75-80 new Tractor Supply stores in 2022. While Tractor Supply handily beat first quarter expectations, management is prudently maintaining its full year outlook due to the uncertain inflation outlook with revenues expected in the $13.6 billion to $13.8 billion range, driven by 3% to 4.5% comparable store sales growth and EPS expected in the $9.20-$9.50 range.

Wednesday, April 20, 2022

SEI Investments-SEIC reported first quarter revenues increased 28% to $581.4 million with net income increasing 47% to $190.3 million and EPS up 53% to $1.36. First quarter results include a one-time fee related to the early termination of HSBC’s agreement which added $88 million to revenues and $86 million, or $0.47 per share, to earnings.  Excluding the termination fee, revenues increased 8.3% and EPS were flat. Average assets under administration increased 9% from last year to $893.4 billion and average assets under management increased 5% to $293.6 billion. Operating expenses increased 13.6% from last year due to increased direct costs related to the revenue increase and increased personnel costs in a competitive labor market. During the quarter, SEI Investments generated $260.4 million in operating cash flow, or $1.86 per share, and free cash flow of $244.6 million. The company repurchased 1.7 million shares during the quarter for $100.1 million, or $58.43 per share. The company ended the quarter with $907.8 million in cash and equivalents, $30 million in debt and $1.97 billion in shareholders’ equity on its pristine balance sheet.  During the earnings call, SEI announced that after 41 years since the company went public and 164 quarterly earnings calls, Al West, founder and CEO, is handing over the reins to Ryan Hicke who has worked at SEI for 24 years, including twelve years launching new businesses overseas for the company.


Tuesday, April 19, 2022

Johnson & Johnson-JNJ reported first quarter revenues increased 5% to $23.4 billion with net earnings and EPS each down 17% to $5.1 billion and $1.93, respectively. Net earnings were down primarily due to an increase in cost of goods sold, marketing expenses and research and development. Worldwide Pharmaceutical sales increased 6% to $12.8 billion driven by above-market performance in Oncology, Immunology and Neuroscience. Sales increased 5.9% in Medical Devices to $6.9 billion with growth driven by COVID-19 market recovery, driving market expansion and innovation. Worldwide Consumer Health Sales decreased 1.5% to $3.5 billion due to supply constraints in Skin Health/Beauty and Baby care. These declines were partly offset by a 15% increase in over-the-counter products. During the quarter, the company generated approximately $3.4 billion in free cash flow, invested $3.5 billion in research and development to advance its promising pipeline and paid $2.8 billion in dividends to shareholders. The company is maintaining 2022 full-year guidance for adjusted operational EPS and base business operational sales. Given foreign exchange headwinds, JNJ lowered guidance for estimated reported sales to $94.8 billion to $95.8 billion, representing a 3.8% to 4.8% increase over the prior yea. Adjusted EPS for 2022 is expected in the range of $10.15 to $10.35, a 3.6% to 5.6% increase over the prior year.

Thursday, April 14, 2022

UnitedHealth Group-UNH reported first quarter revenue rose $10 billion, or a healthy 14%, to $80.1 billion with net earnings up 3% to $5.0 billion and EPS increasing 4% to $5.27. The company delivered high-quality and diversified double-digit revenue growth at both Optum and UnitedHealthcare. Earnings growth was led by Optum Health thanks to continued expansion of care services offered with at-home and digital offering complementing and integrating with growing clinic-based and outpatient services, including ambulatory surgical care. Optum Health now expects to serve 600,000 new patients under such arrangements in 2022 compared to its initial outlook of 500,000 patients. Optum Rx experienced robust revenue growth of 11% during the quarter as adjusted scripts grew to 352 million compared to 329 million last year. UnitedHealth Group’s medical care ratio was 82% compared to 80.9% last year due to Covid effects and business mix. The first quarter operating cost ratio decreased to 14.2% from 14.6% in 2021 due to Covid effects and continued productivity advances. Management’s response to inflation is innovation which increases productivity and efficiency in the business. Digital tools, virtual visits and home care reduce costs by 15% which enables the company to lower premiums for patients. Free cash flow declined 12% during the quarter to $4.8 billion with the company paying $1.4 billion in dividends and repurchasing $2.5 billion of its common stock. For the full 2022 year, cash flow from operations is expected to approximate $24 billion. Even after completing two multi-billion dollar expected acquisitions in 2022, UnitedHealth still has ample financial capacity to expand further. Return on equity of 27.8% in the quarter reflected the company’s consistent and diverse earnings profile and efficient capital structure. Given the strong start to the new year, UnitedHealth increased its full year net earnings outlook to $20.30-$20.80 per share.

Wednesday, April 13, 2022

Fastenal-FAST reported first quarter sales rose 20.3% to $1.7 billion with net income and EPS jumping 28% to $269.6 million and $.47, respectively. This strong growth was due to robust demand, healthy pricing and good execution by management. Growth during the quarter was largely due to higher unit sales, most notably of fastener, safety and janitorial products. Underlying demand is improving with fastener daily sales growth increasing to 24.6% in March. During the quarter, Fastenal signed 106 new Onsite locations, with 1,440 active sites as of March 31, 2022, representing a 12.1% increase. Fastenal continues to believe the market will support a long-term rate of 375 to 400 annual Onsite signings which  remains the goal for 2022. Free cash flow decreased 20% in the quarter to $194.5 million, primarily due to an increased need for working capital to support customer’s growth as business activity improves, as well as from inflation in inventory. The company paid $178.4 million in dividends an increase of 11% compared to the first quarter in 2021. Fastenal’s balance sheet remains solid with minimal debt and ample liquidity. Top and bottom-line growth during the past quarter was the strongest in a decade as the firm deployed technologies and strategies to improve efficiency during the pandemic. Supply chains and labor remain tight. However, conditions have stabilized, and customers are better able to plan and navigate around the challenges. This is leading to an improved outlook for future growth especially given favorable manufacturing conditions with 92% of the company’s Top 100 customers growing.

Thursday, April 7, 2022

Berkshire Hathaway-BRKB has accumulated an 11.4% stake worth $4.2 billion in HP, Inc., the computer and printer company. 

Wednesday, April 6, 2022

As we lapped two years since the first Covid lockdowns, March reinforced the ongoing rebalance to pre-pandemic ways of consumer spending. From 45% spending growth at airlines to 46% spending growth on lodging, spending on services is making its comeback, while in-store retail sales are rebounding as consumer mobility increases. According to Mastercard SpendingPulse™, which measures in-store and online retail sales across all forms of payment, total retail sales excluding auto increased 8.4% year-over-year (YOY) and 18.0% compared to pre-pandemic spending (2019), not adjusted for inflation. “Retail sales remain strong but are stabilizing as consumers resume spending on passion areas like travel, live entertainment, indoor dining and other in-person activities,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated. “After nearly two years of cautious optimism around the broader reopening, it’s a healthy sign that consumers are returning to a balanced level of spending across retail sectors and services.”


Starbucks-SBUX
marked the return of founder Howard Schultz as chief executive officer and as a director on the company’s Board. Schultz announced Starbucks will suspend its stock repurchasing program, effectively immediately. “This decision will allow us to invest more into our people and our stores — the only way to create long-term value for all stakeholders.”

Wednesday, March 30, 2022

Paychex-PAYX reported third quarter revenue increased 15% to $1.2 billion with net income and EPS each up 23% to $430.7 million and $1.19, respectively. Double-digit growth in both revenue and earnings is a result of progress against key initiatives. Paychex’s strong calendar year end and selling season led to record new sales and maintaining high levels of client retention. By segment, Management Solutions revenue increased 13% to $959.9 million, driven by increases in client base, high levels of retention and improved revenue per client, PEO and Insurance Solutions revenue increased 21% to $301.7 million due to an increase in the number of average worksite employees and growth in average wages per employee. Free cash flow increased 36% year-to-date to $1.1 billion with the company paying $714.9 million in dividends. The company’s financial position remained strong with cash and investments of $1.3 billion, net debt of $797 million and shareholders’ equity of $3.2 billion as of quarter end. With better than expected third quarter results, management raised their outlook for the full fiscal 2022 year with revenue growth in the range of 12% to 13% and adjusted EPS growth expected in the range of 22.5% to 23%.

Tuesday, March 29. 2022

The TJX Companies, Inc.-TJX announced that its Board of Directors has raised the amount of its quarterly dividend by 13% from the last dividend paid. The Board declared a regular quarterly dividend in the amount of $.295 per share, payable June 2, 2022, to shareholders of record on May 12, 2022. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc., stated, "I am pleased to report that our Board of Directors has approved a 13% increase in our quarterly dividend. This marks our 25th dividend increase over the last 26 years. Over this period, the Company’s dividend has grown at a compound annual rate of 21%. In addition, we plan to continue our significant share buyback program, with approximately $2.25 to $2.50 billion of repurchases planned for Fiscal 2023. These actions underscore our confidence in our ability to continue delivering profitable sales and strong cash flow, which enables us to simultaneously reinvest in the growth of the business and return significant value to our shareholders."

Optum, a unit of UnitedHeatlh-UNH, and LHC Group, a national patient-focused provider of high-quality in-home health care services, have agreed to combine to further strengthen their shared ability to advance value-based care, especially in the comfort of a patient’s own home. UnitedHealth agreed to acquire LHC Group’s outstanding common stock for $170 per share or $5.4 billion in cash and is expected to close in the second half of 2022. The acquisition is expected to be neutral to UnitedHealth Group’s outlook for adjusted net earnings per share in 2022, modestly accretive in 2023, and advancing strongly in subsequent years.

 

Thursday, March 24, 2022

FactSet-FDS reported second quarter revenues rose 10% to $431.1 million with net income and EPS each up 14% to $109.9 million and $2.84, respectively. Organic Annual Subscription Value (ASV) increased 9.4% in the second quarter to $1.7 billion thanks to higher sales of research and advisory and analytic solutions. FactSet completed its acquisition of CUSIP Global Services during the quarter for $1.925 billion, financed in part by $1 billion in senior notes. Client count increased by 413 clients during the quarter to 7,172 clients as of quarter end, primarily driven by an increase in corporate clients. User count increased by 9,180 to 171,341 in the past three months, primarily driven by an increase in research and advisory users. Client retention was a high 92%. Free cash flow declined 13% during the first half of the year to $174.4 million primarily due to higher estimated tax payments. During the first half, the company paid $61.4 million in dividends and repurchased $18.6 million of its common stock. FactSet did not repurchase any shares in the second quarter and is suspending its share repurchase program until at least the second half of fiscal 2023 to prioritize the repayment of debt. FactSet updated its outlook for fiscal 2022 with full year revenue increased to a range of $1.8 billion to $1.83 billion with EPS expected in a range of $9.75-$10.15.

Monday, March 21, 2022

Nike-NKE reported third quarter revenues increased 5%, or 8% on a currency-neutral basis, to $10.9 billion, led by NIKE Direct growth of 17%. Net earnings were down 4% to $1.4 billion, and EPS decreased 3% to $0.87. NIKE Brand Digital business fueled growth, increasing by 22%. This growth was driven by double-digit growth in North America, APLA and EMEA, partially offset by declines in Greater China. Further contributing to NIKE Direct growth was the steady normalization of traffic in NIKE owned physical retail stores with sales growth up 14%. By geography, North America sales increased 9% to $3.9 billion, EMEA sales increased 7% to $2.8 billion, Greater China revenues decreased 5% to $2.2 billion and Asia Pacific & Latin America sales were up 11% to $1.5 billion. Inventories increased 15% to $7.7 billion, driven by elevated in-transit inventories due to extended lead times from ongoing supply chain disruptions. Nike ended the quarter with cash and short-term investments of $13.5 billion, up approximately $939 million from last year, driven by strong free cash flow, partially offset by share repurchases and cash dividends. NIKE continues a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 20 consecutive years of increasing dividend payouts. In the third quarter, Nike returned approximately $1.7 billion to shareholders through dividends of $484 million, up 12% from last year, and share repurchases of $1.2 billion. As of February 28, 2022, a total of 68.9 million shares have been repurchased under the most recent four year $15 billion share repurchase program for a total of approximately $7.6 billion.

Berkshire Hathaway-BRKB announced they have entered into a definitive agreement to acquire all outstanding Alleghany shares for $848.02 per share in cash. Alleghany owns operating subsidiaries and manages investments anchored by a core position in property and casualty insurance and reinsurance.  The transaction, which was unanimously approved by both Boards of Directors, represents a total equity value of approximately $11.6 billion. The acquisition price represents a multiple of 1.26 times Alleghany’s book value at December 31, 2021. The transaction is expected to close in the fourth quarter of 2022. Alleghany will operate as an independent subsidiary of Berkshire Hathaway after closing. Mr. Kirby, who controls 2.5% of Alleghany common shares, intends to vote his shares for the transaction. Under the terms of the definitive merger agreement, Alleghany may actively solicit and consider alternative acquisition proposals during a 25-day “go-shop” period. Alleghany has the right to terminate the merger agreement to accept a superior proposal during the go-shop period, subject to the terms and conditions of the merger agreement.

Friday, March 18, 2022

General Dynamics Information Technology (GDIT), a business unit of General Dynamics-GD, announced it has been awarded the User Facing and Data Center Services (UDS) contract by the National Geospatial-Intelligence Agency (NGA). UDS is a single-award indefinite delivery, indefinite quantity contract with a $4.5 billion ceiling and 10-year ordering period.

Berkshire Hathaway-BRKB purchased an additional 18.1 million shares of Occidental Petroleum for almost $1 billion during the past week at a  weighted average cost of $54.41 per share, or a total of $985 million for the new shares. In total, Berkshire now reports owning 136.4 million common shares of the oil giant, currently valued at $7.7 billion. That represents more than 13% of OXY’s outstanding shares. Berkshire also holds warrants to buy nearly 84 million more shares at an exercise price just under $60 per share. They were obtained as part of the company’s 2019 deal that helped finance Occidental’s purchase of Anadarko. When they are included, Berkshire’s stake is almost 22%.

Thursday, March 17, 2022

Accenture-ACN reported second quarter revenues increased 24% to $15 billion with net income increasing 13% to $1.6 billion and EPS up 14% to $2.54.  Excluding a gain on investments during the prior year quarter, adjusted EPS was up 25%. Operating income increased 25% to $2.06 billion with operating margin of 13.7%. New bookings increased 22% to a record $19.6 billion with record bookings in both consulting and outsourcing of $10.9 billion and $8.7 billion, respectively.  Free cash flow decreased 41% during the first half of fiscal 2022 to $2.3 billion with the company paying $1.2 billion in dividends, an increase of 10%, and repurchasing $2.5 billion of its common shares. The company has $4.6 billion remaining authorized for future share repurchases. Accenture expects revenues for the third quarter to be in the range of $15.7 billion to $16.15 billion, an increase of 22% to 26%. The company raised its business outlook for the full fiscal 2022 year. Management now expects full year local currency revenue growth of 24% to 26% with double-digit earnings growth with EPS in the range of $10.61 to $10.81. Free cash flow for the full year is expected in the range of $8 billion to $8.5 billion with the company returning at least $6.5 billion to shareholders through dividends and share repurchases.

Tuesday, March 15, 2022

Intel-INTC announced the first phase of its plans to invest as much as 80 billion euros in the European Union over the next decade along the entire semiconductor value chain – from research and development (R&D) to manufacturing to state-of-the art packaging technologies. The announcement included plans to invest an initial 17 billion euros into a leading-edge semiconductor fab mega-site in Germany, to create a new R&D and design hub in France, and to invest in R&D, manufacturing and foundry services in Ireland, Italy, Poland and Spain. With this landmark investment, Intel plans to bring its most advanced technology to Europe, creating a next-generation European chip ecosystem and addressing the need for a more balanced and resilient supply chain.

Thursday, March 10, 2022

Oracle-ORCL reported fiscal 2022 third quarter revenues increased 4% to $10.5 billion with net earnings declining 54% to $2.3 billion and EPS declining 50% to $0.84 on fewer shares outstanding.  Overall revenue growth was driven by Oracle’s rapidly growing Cloud Infrastructure, up 47%, and Cloud Applications business, including a 35% jump in Fusion ERP and a 29% jump in NetSuite ERP. Total Cloud revenue, which includes Cloud Infrastructure and Cloud Applications, is now running over $11 billion annually. Operating income dipped 1% to $3.8 billion on a 23% jump in Cloud services and license support expenses and a 12% increase in R&D as the company continues its transition to high-margin cloud offerings. Third quarter EPS include a 5 cent hit from a decline in the share price of gene-sequencing company, Oxford Nanopore, and an operating loss at server chip maker, Ampere. During the first nine months of fiscal 2022, Oracle generated $2.5 billion in free cash flow, down 75% from last year, on lower operating cash flow and a 2-fold plus increase in capital expenditures to $3.1 billion as the company continues to build out data centers worldwide. During the quarter, Oracle repurchased $600 million of its shares for an average cost per share of $85.71 and paid its 32 cent per share quarterly dividend. Oracle ended the quarter with $23 billion in cash and investments, $72 billion in long-term debt and a shareholders’ deficit of $8.2 billion. Looking ahead to the fourth quarter, Oracle expects revenue growth in the 3% to 5% range with EPS between $1.35 and $1.39. Capital expenditures are expected to be $1.1 billion, bringing the total for fiscal 2022 to $4 billion.


Ulta Beauty-ULTA reported fourth quarter revenues increased 24.1% to $2.7 billion with net income increasing 69% to $289.4 million and EPS up 79% to $5.41. These record fourth quarter results were due to the favorable impact from stronger consumer confidence and fewer Covid-19 restrictions. Comparable store sales were up 21.4%, driven by a 10.4% increase in transactions and a 9.9% increase in average ticket. During the fourth quarter, the company opened six new stores and ended the year with 1,308 stores. For the full year, revenues increased 40.3% to $8.6 billion with net income and EPS jumping over 400% to $985.8 million and $17.98 as the company was adversely impacted by the pandemic in fiscal 2020. Return on shareholders’ equity was an impressive 64% for the year. Free cash flow increased 35% to $887.1 million with the company repurchasing $1.5 billion of its common stock, including 1.9 million shares repurchased in the fourth quarter for $759.8 million at an average cost of $399.89 per share. On March 7, 2022, the company’s board of directors approved a new share repurchase program of $2 billion, which replaces the prior authorization implemented in March 2020. Since 2014, Ulta has purchased 14 million shares of its common stock for $3.9 billion. The company ended the year with $431.6 million in cash, $1.5 billion in operating lease liabilities and $1.5 billion in shareholders’ equity. For fiscal 2022, the company plans to open 50 net new stores with revenues expected in the range of $9.05 billion to $9.15 billion on comparable store sales growth of 3% to 4%. The company expects operating margin in the range of 13.7% to 14% with EPS in the range of $18.20-$18.70. In addition, Ulta expects to repurchase $900 million of its stock in fiscal 2022 with capital expenditures expected in the range of $375 million to $425 million.

T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.54 trillionas of February 28, 2022, which is 8.8% lower than year end assets under management reflecting the stock market’s pullback.

U.S. consumer spending maintained positive momentum in February, according to Mastercard SpendingPulseTM, which measures in-store and online retail sales across all forms of payment. Overall retail sales, excluding auto, increased 8.7% year-over-year and were up 17.3% compared to pre-pandemic spending (2019). “Despite inflation, consumers are putting their record savings to work and expressing themselves through fashion again—much to the benefit of the Apparel, Department Store, Luxury and Jewelry verticals, according to Mastercard SpendingPulse,” said Steve Sadove, senior advisor for Mastercard. Incorporated.

Tuesday, March 8, 2022

Alphabet’s-GOOGL Google unit announced that it has signed a definitive agreement to acquire Mandiant, Inc., a leader in dynamic cyber defense and response, for $23.00 per share, in an all-cash transaction valued at approximately $5.4 billion, inclusive of Mandiant’s net cash. Upon the close of the acquisition later this year, Mandiant will join Google Cloud.


Booking Holdings’-BKNG
exposure to Eastern Europe on a booker basis, including Russia and Ukraine, represents a high single digit percentage of its total gross bookings. During the fourth quarter 2021 earnings conference call, the company disclosed that room nights for the first half of February were about in line with 2019 levels. For the full month of February, room nights were also about in line with 2019 levels. Over the last week, through Sunday March 6, room nights were down about 10% versus 2019 levels. The recent softening of room night trends was driven by Eastern Europe, primarily Russia, and to a lesser extent by Western Europe, which remains modestly above 2019 levels. The company is maintaining the forward-looking commentary provided on the earnings call for the first quarter and full year 2022.

Friday, March 4, 2022

Fastenal-FAST reported strong February net sales which increased 21% to $530.9 million with average daily sales also up 21% to $26.5 million. On a geographic basis, North American sales topped 20% and on an end market basis, manufacturing sales were up 26% and non-residential construction sales were up 20%. By product line, fastener sales were up 28%, safety sales were up 19% and other sales were up 17%.

Thursday, March 3, 2022

Brown-Forman-BFB reported third quarter revenues rose 14% to $1 billion with net income increasing 18% to $259 million and EPS up 19% to $.54. Year-to-date, underlying sales grew 11% driven by strong double-digit reported net sales growth led by emerging and developed international markets, with solid growth in the United States and a rebound in the Travel Retail channel. The company’s premium bourbons, led by Woodford Reserve and Old Forrester, grew reported net sales 10%. The tequila portfolio reported net sales were up 19%, driven by double-digit growth from Herradura and el Jimador. Year-to-date, free cash flow increased 17% to $621 million with the company paying $253 million in dividends. Brown-Forman has paid cash dividends for 78 consecutive years with the dividend increased each year for the last 38 years. With the company’s strong year-to-date performance and consumer demand along with supply chain constraints continuing to ease enabling some rebuild of inventory, Brown-Forman expects organic net sales growth of 11% to 13% and organic income growth of 12% to 16% for the full year. In addition, the company expects gross margin to be flat or slightly down with the costs associated with supply chain disruptions and inflationary cost headwinds being largely offset by a modest positive impact from the removal of tariffs in the EU.

Tuesday, March 1, 2022

Ross Stores-ROST rang up an 18% increase in fourth quarter sales to $5.0 billion with net income and EPS up more than 50% to $366 million and $1.04, respectively. Same store sales increased 9% from fourth quarter of 2019, driven by growth in the average basket size, partially offset by a decline in transactions due to the surge in Omicron cases. For the full fiscal year, sales increased more than 50% to $18.9 billion on a 13% jump in same store sales with net earnings of $1.7 billion, or $4.87 per share, compared to $85,000, or $0.24 per share, last year. During the year ended January 29, 2022, Ross Stores generated a fancy 42.3% return on shareholders’ equity and $1.2 billion in free cash flow, down 36% from last year, on a 50% jump in merchandise inventories, mainly due to an increase in in-transit merchandise due to longer lead times from industry-wide supply chain bottlenecks.  Ross Stores returned over $1.0 billion to shareholders during the year through dividends of $405 million and share repurchases of $650 million. The company recently authorized a new two-year program to repurchase up to $1.9 billion of common stock through fiscal 2023, replacing the $850 million remaining under the prior May 2021 buyback authorization. The board also increased the quarterly cash dividend by 9% to $0.31 per share.  Looking ahead, Barbara Rentler, CEO, commented, “Fiscal 2022 is extremely difficult to predict, especially early in the year. In addition to the ongoing Omicron surge that began just before Christmas, we are up against last year’s record government stimulus and the lifting of COVID restrictions that led to unprecedented consumer demand which fueled extraordinary sales gains in the spring of 2021.” With that said, sales are expected to increase 2% to 6% on flat to up 3% same store sales with EPS in the range of $4.71 to $5.12, compared to $4.87 in fiscal 2021.


Hormel Foods-HRL reported first quarter sales rose 24% to a record $3 billion, the fifth consecutive quarter of record net sales. Brands such as SPAM, Hormel Gatherings, Applegate, Columbus, WHOLLY Guacamole and Planters delivered exceptional growth during the quarter. Net earnings increased 8% to $239.5 million, and EPS increased 7% to $.44. By segment, Grocery Products revenue increased 48% to $855.5 million, Refrigerated Foods revenue increased 19% to $1.6 billion, with Jennie-O Turkey Store revenues up 15% to $384.4 million and International and Other revenues down 3.5% to $176.7 million. Free cash flow jumped over 100% during the quarter to $334 million with the company paying $132.9 million in dividends. Management is increasingly optimistic about generating sales and earnings growth in fiscal 2022. “We expect the demand environment to remain favorable, pricing actions to combat inflationary pressures and continued growth from products such as Columbus charcuterie, Applegate natural and organic meats, Planters snack nuts, and foodservice prepared proteins and pizza toppings. Additionally, we anticipate the operating environment to remain volatile, but our supply chain will continue to show improvement as labor pressures ease and new capacity comes online to support key growth platforms, such as dry sausage, pizza toppings and bacon,” said Jim Snee, president and CEO. For fiscal 2022, Hormel expects sales in the range of $11.7 billion-$12.5 billion with EPS expected in the range of $1.87-$2.03.

Berkshire Hathaway-BRKB reported the company’s net worth during 2021 increased 14.2%, or $63 billion, to $506.2 billion with book value equal to about $342,622 per Class A share as of 12/31/21. Berkshire Hathaway reported 2021 revenues increased 12% to $276 billion with net income more than doubling to $89.8 billion. Excluding significant investment gains of $62.3 billion, operating earnings jumped a strong 25% during the year to $27.5 billion.


The investment gains came primarily from Berkshire’s four major equity investment holdings which represent about 73% of total equities held, including American Express at $24.8 billion (which charged 36% higher during the year or $6.5 billion), Apple at $161.2 billion (which gained 34% during the year or $40.8 billion), Bank of America at $46.0 billion (which deposited a 47% gain in value through 12/31/21 or $14.7 billion), and Coca-Cola at $23.7 billion (popping 8% higher during the year or $1.8 billion).


In the annual report, Buffett noted Berkshire owns dozens of businesses but that the operations of the “Big Four” companies (the giants) account for a very large chunk of Berkshire’s value. The first giant is the cluster of insurance operations. During 2021, Berkshire’s insurance businesses generated earnings from underwriting of $728 million. This included underwriting earnings from primary insurance and underlying losses from reinsurance, which included after-tax losses from significant catastrophe losses, including Hurricane Ida and floods in Europe, which approximated $2.3 billion. Underwriting results in 2021 also reflected the effects of the premium reductions from the GEICO Giveback program, higher private passenger automobile claims frequencies as people began to drive more following the pandemic and higher losses in the life reinsurance business due to the pandemic. Insurance investment income declined 5% during the year to $4.8 billion, reflecting declines in interest rates on the company’s substantial holdings of cash and U.S. Treasury Bills. The float of the insurance operations has grown from $19 million when Berkshire entered the insurance business to approximate $147 billion as of 12/31/21, an increase of $9 billion during the year. The average cost of float was negative during 2021 as the underwriting operations generated earnings. Buffett believes that it is likely, but not assured, that Berkshire’s float can be maintained without incurring a long-term underwriting loss. Buffett further noted, “The insurance business is made to order for Berkshire. The product will never be obsolete, and sales volume will generally increase with both economic growth and inflation.”


Berkshire owns 5.55% of Apple, which makes it the second largest giant, after insurance, in terms of accounting for Berkshire’s value. Apple paid Berkshire $785 million in dividends last year, while Berkshire’s “share” of Apple’s earnings amounted to a “staggering” $5.6 billion. In the annual report, Buffett applauded Tim Cook, Apple’s “brilliant” CEO.


The third giant is Burlington Northern Santa Fe, with the railroad continuing to be “the number one artery of American commerce which makes it an indispensable asset for America as well as Berkshire.” BNSF trains traveled 143 million miles last year and carried 535 million tons of cargo, far exceeding any other American carrier. BNSF’s revenues chugged 12% higher during the year to $22.5 billion with net earnings rolling 16% higher to $6.0 billion reflecting overall higher freight volumes and lower costs due to improved productivity, partly offset by higher average fuel costs. Broad-based volume growth was up 7% during the year, led by 8% growth in consumer products driven by increased retail sales, inventory replenishment by retailers and increased e-commerce activity and 9% growth in coal attributable to increased electricity generation, higher natural gas prices and improved export demand.


The final giant is Berkshire Hathaway Energy whose earnings have increased 30-fold from the $122 million earned in 2000, the year Berkshire first purchased a stake in BHE. BHE has become a utility powerhouse and a leading force in wind, solar and transmission throughout most of the United States. BHE reported revenues charged ahead 19% during 2021 to $25.0 billion. Net earnings rose 13% during the year to $3.5 billion reflecting increased earnings from most of the energy business units and the real estate brokerage business. Earnings growth was led by 47% growth in natural gas pipelines, reflecting an acquisition; 23% growth in Northern Powergrid; and 20% growth at PacifiCorp.


Berkshire’s Manufacturing businesses reported revenues rose 16% to $68.7 billion with operating earnings up 23% to $9.8 billion for the year. The Consumer Products segment led the way for the year with revenues rising 28% to $15.6 billion and operating earnings gaining 42% to $2.0 billion, driven by strong results at Forest River due to robust demand for recreational vehicles, along with strong rebounds in the apparel, footwear, Richline and Larson-Juhl businesses. The Industrial and Buildings products segments also both generated double-digit sales and earnings growth during the year with strong results from Marmon, IMC and Clayton Homes.


Service and Retailing revenues increased 12% during the year to $84.3 billion with pre-tax earnings up 64% to $4.7 billion. Service group revenue increased 29% with pre-tax earnings up 67% thanks to strong growth from TTI, reflecting accelerating demand across all electronic component markets, and the aviation business services due to higher training hours at FlightSafety and significantly higher customer flight hours at NetJets. Retailing group revenues rose 20% during the year to $19 billion with pre-tax earnings up 76% to $1.8 billion thanks to strong demand for home furnishings from the home retailers and new and pre-owned vehicle sales at Berkshire Hathaway Automotive, although the second half saw new vehicle unit sales decline 18% reflecting the shortages in the industry attributable to the global computer chip shortages and other supply disruptions. McLane’s revenues increased 6% during the year to $49.5 billion with pre-tax earnings down 8% to $230 million. McLane’s operations have been adversely impacted by supply chain disruptions, including shortages of truck drivers, which is affecting inventory and customer deliveries along with higher fuel costs. This difficult operating environment is expected to continue in 2022.


Berkshire’s balance sheet continues to reflect very significant liquidity and a very strong capital base of $506.2 billion as of 12/31/21. Excluding railroad, energy and utility investments, Berkshire ended the year with $528.4 billion in investments allocated approximately 66.4% to equities ($350.7 billion), 3.1% to fixed-income investments ($16.4 billion), 3.3% to equity method investments ($17.4 billion), and 27.2% in cash and equivalents ($143.9 billion).


Free cash flow dipped 2% during the year to $26.1 billion. During the year, capital expenditures approximated $13.3 billion, which included $9.5 billion for BNSF and BHE, its railroad and utility and energy units. Berkshire expects capital expenditures in 2022 for BNSF and BHE to jump to $11.1 billion. Buffett noted in the annual report that Berkshire owns and operates more U.S.-based infrastructure assets--property, plant and equipment—than any other American corporation, topping $158 billion as of 12-31-21.


During the year, Berkshire sold or redeemed a net $35 billion in Treasury Bills and fixed-income investments and sold a net $7.4 billion of equity securities.


Berkshire repurchases its shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett and Charlie Munger. During the year, Berkshire repurchased $27 billion of its common stock including $6.9 billion in the fourth quarter. These repurchases included 6,259,164 Class B shares acquired at an average price of $287.62 per share and 1,828 Class A shares purchased at an average price of $439,626 per share during December 2021. After quarter end, Berkshire has acquired about $1.2 billion in additional shares of its common stock. During the past two years, Berkshire has repurchased 9% of the shares that were outstanding at year-end 2019 for $51.7 billion. This has enabled continuing shareholders to own about 10% more of all Berkshire Hathaway’s great businesses, including GEICO, Burlington Northern and Berkshire Hathaway Energy.


In the annual report, Warren Buffett discussed the three ways Berkshire Hathaway increases shareholder value. The primary way is to increase the long-term earnings power of Berkshire’s controlled businesses through internal growth or by making acquisitions. The second way is to buy stakes in publicly traded great businesses, like Berkshire’s 5.55% stake in Apple. The final path to value creation is to repurchase Berkshire shares when the price/value equation is right, which is the path Berkshire followed in 2021 given the dearth of attractive opportunities among the first two routes.

Wednesday, Feb. 23, 2022

The TJX Companies-TJX reported fourth quarter sales increased 27% to $13.9 billion with net income and EPS both up over 100% to $940.2 million and $.78, respectively. Overall, open-only comp store sales increased 10%, compared to fiscal 2020. HomeGoods and Marmaxx both had double-digit fourth quarter comp store sales in the U.S. compared to Fiscal 2020. TJX Canada and TJX international’s fourth quarter net sales and open-only comp store sales were both negatively impacted by government-mandated shopping restrictions throughout the quarter. For the full year, revenues increased 16% to $48.5 billion with net income and EPS each relatively flat at $3.3 billion and $2.70, compared to 2020. TJX generated a solid 55% return on shareholders’ equity for the year. Stores were closed for approximately 4% of Fiscal 2022 and 24% of Fiscal 2021 due to the pandemic. The company estimates that these closures may have resulted in approximately $1.45 to $1.61 billion in lost sales. During the year, TJX’s free cash flow decreased 50% to $2 billion as the company curtailed store openings in Fiscal 2021, due to the pandemic. However, the company still returned an impressive $3.4 billion to shareholders through share repurchases and dividends. The company ended the year with $6.2 billion in cash and announced a 13% increase to the quarterly dividend at a rate of $.295 per share. In addition, TJX announced that they plan to repurchase approximately $2.25 to $2.50 billion of its common stock during Fiscal 2023. For the first quarter of 2023, the company expects comparable store sales to be up 1% to 3% with EPS to be in the range of $.58 to $.61. For the full year, TJX expects comparable store sales to be up 3% to 4% and is not providing EPS guidance given the current uncertainty around how long elevated expense pressures may persist.

Booking Holdings-BKNG booked a 141% increase in fourth quarter revenues to $3.0 billion with net income of $618 million, or $14.94 per share, compared to a net loss of $165 million, or $4.02 per share, last year. Travel bookings surged 160% to $19.0 billion and room nights booked in the fourth quarter increased 100% from last year as higher vaccination rates and easing of travel restriction spurred travel prior to the spread of Omicron. For the year, Booking Holdings reported revenues of $11.0 billion, up 61% from last year, with net earnings of $1.2 billion, or $28.17 per share, compared to $59 million, or $1.44 per share, reported last year. Despite COVID-related challenges, Booking Holdings generated an impressive 18.9% return on shareholder equity during 2021 and $2.5 billion in free cash flow with the company returning $163 million to shareholders via share repurchases during the year. Leadership expects to complete its current share repurchase authorization during the next three years. Booking ended the year with $11.0 billion in cash, $8.9 billion in long-term debt and $6.2 billion in shareholders’ equity on its solid balance sheet. During the fourth quarter, Booking Holdings completed its $1.2 billion Getaroom acquisition and will roll it into the Priceline brand to improve B2B distribution for hotel partners while offering a robust technology stack for affiliate partners. Booking also announced the €1.63 billion acquisition of the Etraveli Group to build a frictionless global flights app as part of its Connected Trip vision. Glenn Fogel, Chief Executive Officer of Booking Holdings stated, "I am encouraged by the meaningful improvement in bookings we have seen so far in the first quarter of 2022. I believe we are well positioned as travel demand recovers, however, we do expect there will still be periods where COVID negatively impacts travel trends as we move through the year. As we look ahead to 2022, we remain focused on driving benefits to our traveler customers and to our supply partners alike while executing against our strategic priorities including building towards our Connected Trip vision."

Friday, Feb. 18, 2022

For 2022, Intel-INTC expects revenue of $76 billion, EPS of $3.55 and net capital expenditures of approximately $27 billion. Adjusted free cash flow is expected to be negative $1 billion to $2 billion as the company ramps its investments to accelerate long-term growth. Longer term, Intel expects year-over-year revenue growth moving to the mid- to high-single digits in 2023 and 2024, with year-over-year growth ramping to 10%-12% by 2026. As Intel’s investments begin to deliver faster growth, gross margins are expected to expand from the 51%-53% range over the next three years to 54%-58% in 2025 and 2026.

Thursday, Feb. 17, 2022

Genuine Parts-GPC reported fourth quarter sales increased 13% to $4.8 billion with net income from continuing operations increasing 49% to $255.9 million and EPS jumping 52% to $1.79. On an adjusted basis, EPS was up 17.8% in the fourth quarter. For the full year 2021, revenues increased 14% to $18.8 billion with net income from continuing operations and EPS both up more than 450% to $898.7 million and $6.27, due to prior year results being negatively impacted by the pandemic. Return on shareholders’ equity was an impressive 26% for the year. Automotive sales represented 66% of total sales in 2021 with industrial sales accounting for 34% of sales. Free cash flow was down 46% during the year to $992 million, primarily due to a benefit of the sale of accounts receivables and lower capital expenditures in the prior year. During the year, the company paid $465.6 million in dividends and repurchased $333.6 million of its common stock. Genuine Parts ended the year with $714.7 million in cash and cash equivalents, $2.4 billion in long-term debt and $3.5 billion in shareholders’ equity on its strong balance sheet. Genuine Parts announced a 10% increase in its dividend for 2022 to an annual rate of $3.58 per share, marking the 66th consecutive year of increased dividends. The company has paid a dividend every year since going public in 1948 with the dividend currently yielding a solid 2.3%. Genuine Parts expects 2022 sales growth of 9% to 11% with EPS in the range of $7.45 to $7.60. Cash flow from operations is expected in the range of $1.5 billion to $1.7 billion with free cash flow expected to be in the range of $1.2 billion to $1.4 billion for the year.


Baxter International-BAX reported fourth quarter revenues rose 10% to $3.5 billion with net income and EPS each up a healthy 42% to $238 million and $.47, respectively. For the full 2021 year, revenues increased 10% to $12.8 billion with net income up 17% to $1.3 billion and EPS up 19% to $2.53. These results included 19 days of contributions from the Hillrom acquisition. Amid the pandemic and global supply disruptions, these were solid financial results and reflect the sustained and strong demand for the company’s medically essential products. Free cash flow increased 27% during the year to $1.5 billion with the company returning $1.1 billion to shareholders through dividends of $500 million and share repurchases of about $600 million. In 2022, Baxter expects to moderate its share repurchases as it focuses on repaying debt related to the Hillrom acquisition. In 2022, Baxter expects sales growth of 24% to 25%, including the Hillrom acquisition. Operational sales growth is expected to approximate 4% with EPS expected in the range of $2.91-$3.01, representing 15% -19% growth.

 

NVR, Inc.-NVR announced that its Board of Directors has authorized the repurchase of $500 million of its outstanding common stock. The company indicated that the authorization is a continuation of the stock repurchase program that began in 1994 and is consistent with NVR's strategy of maximizing shareholder value. 

Wednesday, Feb. 16, 2022

Cisco Systems-CSCO reported fiscal second quarter revenues rose 6% to $12.7 billion with the company routing up strong earnings with net income up 17% to $3.0 billion and EPS up 18% to $.71. Continued robust demand for Cisco’s products and services resulted in the third consecutive quarter of more than 30% total product order growth. This strong growth is driven by the digital transformation for customers with the move to hybrid work and hybrid cloud environments. Cisco ended the quarter with a record backlog that doubled from last year to $14 billion. The company also posted double-digit growth in annualized recurring revenue of $21.9 billion. Free cash flow declined 16% during the first half to $5.9 billion in part due to a tax payment that had been deferred. During the first half, Cisco paid $3.1 billion in dividends and repurchased $5.1 billion of its stock, including 82 million shares in the second quarter at an average cost of $58.36 per share. Cisco announced a 3% increase in its dividend and a new $15 billion share buyback authorization, bringing its total buyback authorization to $18 billion. The dividend increase and additional share buyback program reflects management’s commitment to returning excess cash to shareholders and confidence in the company’s ongoing strong cash flows. For fiscal 2022, Cisco expects revenue growth of 5.5%-6.5% with EPS expected in the range of $2.83-$2.92, representing 13%-17% growth over last year.

Tuesday, Feb. 15, 2022

Intel Corporation-INTC and Tower Semiconductor, a leading foundry for analog semiconductor solutions, announced a definitive agreement under which Intel will acquire Tower for $53 per share in cash, representing a total enterprise value of approximately $5.4 billion. The acquisition significantly advances Intel’s IDM 2.0 strategy as the company further expands its manufacturing capacity, global footprint and technology portfolio to address unprecedented industry demand. The transaction is expected to be immediately accretive to Intel’s non-GAAP EPS and close in approximately 12 months. Intel intends to fund the acquisition with cash from the balance sheet.

Monday, Feb. 14, 2022

Genuine Parts Company-GPC announced a 10% increase in its dividend for 2022 to an annual rate of $3.58 per share. GPC has paid a cash dividend every year since going public in 1948, and 2022 marks the 66th consecutive year of increased dividends paid to shareholders.

3M-MMM announced its 2022 guidance and highlighted its plan for sustainable long-term growth and shareholder value creation. 3M is expecting total sales growth of 1% to 4%, which includes organic sales growth of 2% to 5%, earnings per share (EPS) of $10.15 to $10.65, and robust cash flow. Included in this guidance is an anticipated decline in COVID-19-related disposable respirator demand in 2022, resulting in a headwind to organic growth of 2 percentage points and earnings per share of 45 cents. The company also said it expects $7.3 billion to $7.9 billion in operating cash flow in 2022, contributing to 90% to 100% free cash flow conversion. In 2022, 3M plans to invest approximately $4 billion in the combination of research and development and capital expenditures.

 Benteler EV Systems, Beep Inc., and Mobileye, an Intel-INTC Company,  announced a strategic collaboration to develop and deploy automotive-grade, fully electric, autonomous movers in public and private communities across North America. Aimed at first- and last-mile use cases in urban areas, the shuttles are due to begin production deployments in the United States in 2024.

Thursday, Feb. 10, 2022

Mastercard-MA SpendingPulse, which measures in-store and online retail sales across all forms of payment, jumped 7.2 percent year-over-year — and was buttressed by a 10.4 percent gain in online sales. “Despite the shadow of Omicron and elevated inflation, consumer spending was buoyed by pent-up savings, wage growth and the continued reopening of the ‘experience economy,'” Mastercard said in a statement. “Beneficiaries included department stores, apparel and luxury, which all saw double-digit growth.” January apparel sales rose 37.6 percent — which the company said was “the strongest growth rate for January in SpendingPulse history.”

 

PepsiCo-PEP reported fourth quarter revenues rose 12% to $25.2 billion with operating profit down 9% to $2.5 billion, reflecting higher commodity, transportation and labor costs. Fourth quarter net income and EPS each dropped 28% to $1.3 billion and $.95, respectively. For the full 2021-year, revenue rose 13% to $79.4 billion with operating profit up 11% to $11.1 billion. Full year 2021 net income and EPS each increased 7% to $7.6 billion and $5.49, respectively. Organic revenue growth accelerated to 9.5% for the full year with revenue growth broad-based across business segments and geographies as the company increased its brand support, strengthened operational execution and built a more sustainable food system. Return on shareholders’ equity during 2021 was a tasty 48%. Free cash flow increased 10% during the year to $6.9 billion, with the company returning $5.9 billion to shareholders through dividend payments of $5.8 billion and share repurchases of $106 million. For fiscal 2022, the company expects a 6% increase in organic revenue, an 8% increase in constant currency EPS growth and total cash paid to shareholders of approximately $7.7 billion through dividend payments of $6.2 billion and share repurchases of $1.5 billion. PepsiCo announced a 7% increase in its annualized dividend to $4.60, representing the 50th consecutive year of dividend increases. In addition, PepsiCo announced a new share repurchase program providing for the repurchase of up to $10 billion of PepsiCo common stock through February 28, 2026. In the first quarter of 2022, PepsiCo completed its previously announced divestiture of Tropicana, Naked and other select juice brands and expects to record a non-core pre-tax gain of approximately $3 billion as a result of this transaction.

Tuesday, Feb. 8, 2022

The 3M-MMM Board of Directors increased its quarterly dividend 1% to $1.49 per share for the first quarter of 2022. 3M has paid dividends to its shareholders without interruption for more than 100 years. 3M has returned over $14 billion to shareholders through dividends and share repurchase over the last three years. Returning value to shareholders remains a priority for the company as it moves forward.

T.Rowe Price Group-TROW announced that its Board of Directors has declared a quarterly dividend of $1.20per share payable March 30, 2022, to stockholders of record as of the close of business on March 15, 2022. The quarterly dividend rate represents an 11.1% increase over the previous quarterly dividend rate of $1.08per share. This will mark the 36th consecutive year since the firm's initial public offering that the company will have increased its regular annual dividend. 

In other news,  T, Rowe Price reported preliminary month-end assets under management of $1.58 trillion as of January 31, 2022, which was 6.5% decline from year end.

 

Friday, Feb. 4, 2022

Roche Holdings-RHHBY reported 2021 sales increased 8% to CHF 62.8 billion with net income dipping 1% CHF 14.9 billion and EPS declining 2% to CHF 16.20. Excluding one-time items, core EPS increased 3% to CHF 19.81. By business segment, Pharmaceutical Division sales increased 3% to CHF 45.0 billion as rapid growth in prescriptions for new drugs, such as Hemlibra to treat haemophilia and cancer immunotherapy Tecentriq, offset a CHF 4.5 billion sales headwind from biosimilars. Exposure to biosimilar headwinds is decreasing sharply with CHF 2.5 billion expected for 2022. Diagnostic Division sales jumped a healthy 29% to CHF 17.8 billion on continued strong demand for rapid antigen tests as well as lab-processed PCR tests. Roche has benefited from the tight labor market for qualified lab personnel as its platforms are much more automated than competing platforms. During 2021, Roche generated a stellar 56.9% return on shareholders’ equity and CHF 17.3 billion in free cash flow with the company paying dividends of CHF 8.1 billion. The company announced a 2% increase in the dividend to CHF 9.30 per share, marking the 35th year of consecutive dividend increases. Further, in December, Roche repurchased CHF 19 billion of its voting shares owned by Novartis. Roche ended the year with CHF 13.0 billion in cash and marketable securities, CHF 16.0 billion in long-term debt and CHF 24.5 billion in shareholders’ equity on its healthy balance sheet. Looking ahead to the full year 2022, Roche expects sales to be flat to up low-single digits, core EPS up low-to mid-single digits (including accretion of 4.4% from the share repurchase) and another dividend increase. Roche's pipeline remains robust with a record number of phase III study readouts expected in 2022. 


Regeneron-REGN reported fourth quarter sales more than doubled to $5 billion with net income and EPS each up more than 90% to $2.2 billion and $19.69, respectively. These results included $2.3 billion in revenue attributable to REGEN-COV, the company’s antibody cocktail for COVID-19. Excluding those sales, revenues increased 17% for the quarter. For the full year 2021, revenues increased 89% to $16.1 billion with net income and EPS each up more than 130% to $8.1 billion and $71.97, respectively. Excluding REGEN-COV sales, revenues were still up a healthy 19% for the year thanks to impressive growth from core products, EYLEA and Dupixent. Regeneron generated a strong 43% return on shareholders’ equity in 2021. Free cash flow more than tripled to $6.5 billion during the year primarily due to the company’s collection of amounts due from the U.S. government in connection with REGN-COV sales. The company repurchased $1.5 billion of its common stock during the year and authorized a new $3 billion share repurchase program during the fourth quarter. Given the lack of efficacy of REGEN-COV against the Omicron variant, REGEN-COV is no longer authorized for use in the United States. Regeneron is working to develop next generation antibodies that will be active against Omicron and all other variants of concern. In addition, Regeneron has over 30 product candidates in clinical development. The company’s R&D engine is supported by the company’s strong balance sheet with more than $12.5 billion in cash as of year end to position the company for sustainable long-term growth.

Fastenal-FAST reported January net sales increased 21% to $540.5 million with daily sales up 15% to $25.7 million. Double-digit growth was seen in all geographies, end markets and product lines. Daily sales growth by end market was 21% for manufacturing and 13% for non-residential construction. Daily sales growth by product line was 21% for fasteners, 13% for safety and 11% for other products.

Thursday, Feb. 3, 2022

Maximus-MMS reported first fiscal quarter revenue rose 22% to $1.2 billion, driven by acquisitions and growth from start up operations outside of the U.S., with net income and EPS each down 17% to $53.3 million and $.85, respectively. The company expected lower earnings in the first half of fiscal 2022 due to delays in core programs returning to pre-pandemic levels while COVID-19 response work declined. In addition, upfront losses for the start up of operations outside of the U.S. will continue to ramp in the second quarter and reach breakeven at the midpoint of fiscal 2022. During the first quarter, Maximus used free cash flow of $9.2 million as anticipated to meet working capital requirements. Year-to-date signed contract awards at Dec. 31, 2021, totaled $454 million and contracts pending (awarded but unsigned) totaled $1.16 billion. The sales pipeline as of 12/31/21 was $33.2 billion comprised of approximately $8.9 billion in proposals pending, $2.4 billion in proposals in preparation and $21.8 billion in opportunities tracking. Maximus increased its revenue guidance for fiscal year 2022 with revenue now expected to range between $4.5 billion and $4.7 billion with EPS expected in the range of $4.00-$4.30 and free cash flow expected in the range of $225 million to $275 million, representing a 5%-6% free cash flow yield.

Check Point Software-CHKP reported fourth quarter revenue rose 6% to $599 million with net income decreasing 4% to $260 million and EPS up 2% at $1.98. Subscription revenue increased 14% to $204 million. Check Point began 2022 with multiple new initiatives to help drive growth and continue to improve their security. Check Point expanded their CloudGuard offering with the acquisition of Spectral, the fifth cloud acquisition for the company. In addition, they expanded their Salesforce, new record-breaking appliance series for the datacenter- Quantum Lightspeed and introduced a new logo and branding. For the full 2021 year, revenues rose 5% to $2.16 billion with net income down 4% to $816 million and EPS up 2% to $6.08. Return on shareholders’ equity for the year was a strong 25%. Free cash flow increased 3% to $1.16 billion during the year with the company repurchasing 10.9 million shares of its common stock during the year for $1.3 billion or an average price of about $119 per share.  Check Point announced a $2 billion expansion to the share repurchase program with an authorization to repurchase up to $325 million each quarter. Check Point ended the year with an outstanding balance sheet with nearly $3.8 billion of cash and investments, no long-term debt and shareholders’ equity of $3.2 billion. For fiscal 2022, revenues are expected to increase to a range of $2.2 billion to $2.3 billion with EPS expected in a range of $6.90 to $7.50.

 

Wednesday, Feb. 2, 2022

Meta Platforms-FB (formerly Facebook)  reported fourth quarter revenues increased 20% to $33.7 billion with net income declining 8% to $10.3 billion and EPS off 5% to $3.57. In the fourth quarter, ad impressions delivered across the Meta’s Family of Apps increased 13% and the average price per ad increased by 6%.  Fourth quarter results were negatively impacted by increased litigation expenses. For the full year, Meta reported revenues increased 37% to a record $117.9 billion with net income jumping 35% to $39.4 billion and EPS increasing 36% to $13.77.  These results include a $10.1 billion loss from the company’s Reality Labs, which includes augmented and virtual related consumer hardware, software and content, as the company invests in the metaverse, the immersive Internet. Return on shareholders’ equity was a likable 31.5% for the year. For the full year, impressions increased by 10% and the average price per ad increased 24%.  Facebook daily active users increased 5% during the year to 1.93 billion while monthly active users increased 4% to 2.91 billion. Free cash flow increased 66% during the year to $39 billion after spending $19.2 billion on capital expenditures. Meta repurchased $44.5 billion of its stock during the year and has $38.8 billion authorized for future share repurchases. Meta ended the year with $48 billion in cash and investments, no long-term debt and $124.9 billion in shareholders’ equity on its fortress balance sheet. Headcount increased 23% during the year to 71,970. Meta expects first quarter revenue to be in the range of $27-$29 billion, representing 3%-11% growth. Growth is expected to be impacted by both impression and price growth. On the impression side, Meta expects continued headwinds from increased competition, such as TikTok, and a shift of engagement within the company’s apps towards video surfaces like Reels, which currently is monetizing at lower rates than Feed and Stories. On the pricing side, Meta will be lapping Apple’s iOS changes related to privacy which make it harder for the company to target and measure advertising for customers especially small businesses. Meta expects this to be a $10 billion headwind in e-commerce and gaming. In addition, customers are facing macroeconomic challenges due to inflationary pressures which are impacting their advertising budgets. Finally, foreign exchange headwinds will also impact growth. In 2022, Meta expects total expenses to increase to the $90-$95 billion range with capital expenditures expected in the range of $29-$34 billion, driven by investments in data centers, servers, network infrastructure and office facilities. Meta will change its stock ticker symbol from FB to META in the first half of 2022.

Cognizant Technology Solutions-CTSH reported fourth quarter revenues increased 14% to $4.8 billion with net income and EPS increasing more than 80% to $576 million and $1.10, respectively. Excluding one-time items, EPS increased 64%. Digital revenue increased 20% and now represents 45% of total revenue. By business segment, Financial Resources increased 19% to $1.55 billion driven by improving demand in both banking and insurance, Healthcare increased 8% to $1.4 billion led by life sciences, Products & Resources increased 18% to $1.1 billion on strong demand from manufacturing, logistics, energy and utilities and Communications, Media and Technology increased 13% to $744 million on continued strong demand from technology. Bookings grew 22% year-over-year, resulting in full-year bookings of $23.1 billion, representing a book-to-bill of about 1.2x. During the fourth quarter, Cognizant generated $825 million in operating cash flow and $760 million in free cash flow. Cognizant also announced a 12% increase in its quarterly dividend to $0.27 per share. For 2021, Cognizant reported revenues of $18.5 billion, up 11% from 2020, with net income and EPS increasing more than 50% to $2.1 billion and $4.05, respectively. During 2021 Cognizant generated a solid 17.8% return on shareholders’ equity and $2.2 billion in free cash flow with the company returning $1.3 billion to shareholders through dividends of $509 billion and share repurchases of $771 million. Cognizant ended the year with $2.7 billion in cash, $626 million in long-term debt and $12 billion in shareholders’ equity on its pristine balance sheet. Looking ahead to 2022, management expects revenues in the range of $20.0 billion to $20.5 billion, up 8% to 11% from last year, with adjusted EPS in the range of $4.46 to $4.60, up 10% at the midpoint.


Tuesday, Feb. 1, 2022

Starbucks-SBUX reported first fiscal quarter sales increased 19% to $8.1 billion with net earnings increasing 31% to $815.9 million and EPS up 30% to $0.69. Global comparable store sales increased 13%, driven by a 10% increase in comparable transactions and a 3% increase in average ticket. Americas comparable store sales increased 18%, primarily driven by a 12% increase in comparable transactions and a 6% increase in average ticket. International comparable store sales decreased 3%, driven by a 5% decline in average ticket, partially offset by a 2% increase in comparable transactions. The company opened 484 net new stores during the quarter and ended the quarter with a record 34,317 stores, of which 51% and 49% were company operated and licensed, respectively. Operating margins increased from 13.5% to 14.6% year-over-year, primarily driven by sales leverage from business recovery and the lapping of COVID-19 related costs in the prior year. During the quarter, Starbucks generated $1.45 billion in free cash flow and returned approximately $4.1 billion to shareholders through dividend payments of $576 million and share repurchases of $3.5 billion. Starbucks ended the quarter with over $4 billion in cash and short-term investments and $13.5 billion in long-term debt. Starbucks is providing fiscal year 2022 guidance, expecting EPS to decline 4% to 6%, revenue in the range of $32.5 billion to $33 billion, global comparable store sales growth in the high single-digits and expects to open approximately 2,000 new stores. “Although demand was strong, this pandemic has not been linear, and the macro environment remains dynamic as we experienced higher-than-expected inflationary pressures, increased costs due to Omicron and a tight labor market. We remain focused on actions that drive both top and bottom line growth, including industry-leading investments to attract, train and retain the best talent for our stores as customer occasions increase,” said Kevin Johnson, President and CEO.

NVR, Inc.-NVR reported fourth quarter revenues decreased 5% to $2.2 billion with net income increasing 10% to $334.5 million and EPS up 16% to $89.09. New orders increased by 4% during the quarter to 5,685 units. The average sales price of new orders increased by 14% to $454,900. The cancellation rate in the fourth quarter was 10% compared to 12% in the prior year period. Settlements decreased 16% during the quarter to 5,100 units. The backlog of homes sold but not settled as of December 31, 2021 increased on a unit basis by 10% to 12,730 units and increased on a dollar basis by 26% to $5.78 billion year-over-year. Mortgage loan closings decreased 11% to $1.48 billion during the quarter. For the full year, revenues rose 19% to $8.97 billion, with net income increasing 37% to $1.24 billion and EPS up 39% to $320.48. Return on shareholders’ equity was a strong 41% in fiscal 2021. During the year, the company repurchased 322 million shares for an average price of $4,776 per share and ended the year with $2.5 billion in cash, $1.5 billion in long-term debt and $3 billion in shareholders’ equity on its sturdy balance sheet.

Alphabet-GOOGL reported fourth quarter revenues clicked ahead 32% to $75.3 billion with net income up 37% to $20.6 billion and EPS up 38% to $30.69.  Google advertising revenues increased 33% to $61.2 billion, propelled by a 36% increase in Google Search to $43.3 billion, a 25% increase in YouTube ads to $8.6 billion and a 26% increase in Google Network to $9.3 billion. Total TAC (traffic acquisition costs) increased 28% to $13.4 billion and represented 21.9% of advertising revenue, down 80 basis points from last year. Google Services operating income increased 36% to $26 billion, representing nearly 38% Google Services revenue. Google Cloud revenue increased 45% to $5.5 billion and generated a $890 million loss as the company continues to invest heavily in people and its cloud infrastructure.  For the year Alphabet reported revenues of $257.6 billion, up 41% from 2020, with net income of $76.0 billion, up 89%, and EPS of $112.20, up 91%. During 2021, Alphabet generated operating cash flow of $91.7 billion and free cash flow of $67.0 billion with the company returning $50 billion to shareholders through share repurchases. Alphabet ended the quarter with nearly $140 billion in cash, $14.8 billion in long-term debt and $251.6 billion in shareholders’ equity on its pristine balance sheet. The company announced a 20 for 1 stock split in the form of a one-time special stock dividend. If approved by shareholders, the shares will be distributed on July 15, 2022.


UPS-UPS delivered excellent fourth quarter results with revenues increasing 11.5% to $27.8 billion and adjusted net income and EPS increasing more than 35% to $3.2 billion and $3.59, respectively. Fourth quarter revenues were fueled by an 11% increase in average revenue per piece, driven by the company’s shift to its “better not bigger” strategy focusing on serving its more profitable small-to-medium business (SMBs) customers, who now account for 26.8% of total U.S. volume, just shy of the 30% 2023 target. UPS maintains a “great relationship” with Amazon which accounted for 11.7% of total 2021 revenue compared with 11.6% in 2019. For the year, UPS reported a 15% increase in revenues to $97.3 billion with adjusted net income and EPS increasing more than 47% to $10.7 billion and $12.13, respectively. Operating margin increased 320 basis points to 13.5%, the highest in 14 years, while return on invested capital expanded 910 basis points to 30.8%. During 2021, UPS generated $15.0 billion in operating cash flow and $10.8 billion in free cash flow with the company returning $3.9 billion to shareholders through dividend payments of $3.4 billion and share repurchases of $500 million. After paying down $2.8 billion if its long-term debt, UPS ended the year with $10.6 billion in cash, $19.8 billion in long-term debt and $14.3 billion in shareholders’ equity. UPS announced a historic 49% increase in the quarterly dividend to $1.52, moving toward its goal of returning 50% of adjusted EPS to shareholders through dividend payments. Despite continued challenges from inflation, labor shortages, supply chain constraints and COVID, UPS expects to meet its 2023 targets in 2022. UPS expects to deliver $102 billion in 2022 revenues with operating margins of 13.7% and return on invested capital exceeding 30%. The company will invest about 5.4% of revenue in capital expenditures with 60% targeted for growth projects and 40% for maintenance of its existing infrastructure. UPS expects to return $5.2 billion to shareholders through dividend payments in 2022 and at least $1 billion through share repurchases.


Friday, Jan. 28, 2022

Gentex-GNTX reported fourth quarter net sales decreased 21% to $419.8 million, with net income and EPS falling 40% to $84.1 million and $0.35, respectively. The Company's revenue during the quarter was impacted by a 20% quarter over quarter reduction in light vehicle production in the Company's primary markets of North America, Europe, Japan and Korea. During the quarter, the electronics component shortages primarily impacted the Company's ability to meet customer demand for Full Display Mirror® (FDM), Integrated Toll Module (ITM), and other advanced feature unit shipments. For the full year, Gentex reported sales increased 3% to $1.73 billion with net income increasing 4% to $360.8 million and EPS up 6% to $1.50. Gentex shipped 1.123 million units of its Full Display Mirror® during 2021, a 7% increase compared to 2020, despite a 3% decline in global light vehicle production. In 2021, Gentex generated an 18.6% return on shareholders’ equity. During 2021, Gentex returned $439.9 million to shareholders through dividend payments of $115.3 million and share repurchases of $324.6 million at an average price of $33.81 per share. The company ended 2021 with $475 million in cash and investments, no long-term debt and $1.9 billion in shareholders’ equity on its shiny balance sheet. In 2022, Gentex expects revenue in the range of $1.87 billion to $2.02 billion with 2023 revenue growth of approximately 15% to 20% above the 2022 revenue guidance. “The fourth quarter of 2021 brought the perfect storm of lower revenue, significantly higher material costs, higher shipping costs, and higher labor costs and inefficiencies that negatively impacted gross margins more than we originally forecasted,” said Steve Downing, President and CEO. "While many of these headwinds will continue into the first half of 2022, we believe we have the ability to offset some of the impacts to gross margin as we move throughout the year," said Downing.

Thursday, Jan. 27, 2022

Apple-AAPL reported strong first fiscal quarter results with revenues up 11.2% to a record $123.9 billion and net income jumping a shiny 19.5% to $34.6 billion with EPS up 25% to $2.10.  Gross margin expanded 160 basis points to 43.8% thanks to volume leverage and favorable product mix. Apple racked up record sales across geographies, led by 21% growth in China, and record product and service revenues, led by 25% growth in Mac and 24% growth in Services. iPhone sales rose 9% to $71.6 billion thanks to strong demand for the new iPhone 13.  The exceptions to these superb results were a decline in sales during the quarter in Japan and in the iPad, which was severely supply constrained.   Supply constraints are easing and should be less in the March quarter. Apple’s active installed base of devices increased to a record 1.8 billion. Paid subscriptions to Apple’s many services increased to 785 million, an increase of 165 million in the last 12 months. Free cash flow during the quarter increased 25% to a record $44.2 billion with the company paying $3.7 billion in dividends and repurchasing $20.5 billion of its common stock during the quarter. Apple ended the quarter with a fortress balance sheet with more than $202 billion in cash and investments, $106.6 billion in long-term debt and $71.9 billion in shareholders’ equity. Apple expects a solid second quarter with record revenues as Services are expected to grow at a double-digit rate. Gross margin is expected in the 42.5%-43.5% range with operating expenses of $12.5 billion to $12.7 billion and a tax rate of 16%.

Stryker Corporation-SYK reported fourth quarter sales increased 10.3% to $4.7 billion with reported earnings and EPS increasing 16% to $662 million and $1.73, respectively. For 2021, Stryker’s sales increased 19% to $17.1 billion with net earnings and EPS jumping 24% to $1.9 billion and $5.21, respectively. By segment, MedSurg and Neurotechnology increased 8.7% to $2.6 billion, and Orthopedics and Spine increased 12.5% to $2.1 billion. During 2021, Stryker generated a 13.4% return on shareholders’ equity and over $2.7 billion in free cash flow. The company returned $950 million in cash to shareholders in 2021 through dividend payments. Stryker ended the year with $3 billion in cash and investments, $12.4 billion in long-term debt and $14.8 billion in shareholders’ equity on its sturdy balance sheet. In 2022, management expects organic net sales growth of 6% to 8% and adjusted EPS of $9.60 to $10.00. Management believes the short-term outlook remains volatile. However, Stryker is going to continue to monitor and evaluate the impact the global response to the COVID-19 pandemic has had, and will continue to have, on their operations and financial results. "We delivered a strong year of financial results, despite the ongoing challenges of the pandemic," said Kevin Lobo, Chair & Chief Executive Officer. "Organic sales growth of over 7% versus 2019, coupled with double-digit adjusted EPS growth and excellent cash flow performance were all noteworthy achievements, as was the excellent integration of Wright Medical. We continue to be well-positioned for future growth."

 

Visa-V reported first quarter revenues rose 24% to $7.1 billion with net earnings charging ahead 27% to $4.0 billion and EPS up 29%. The strength of Visa’s network, growth in e-commerce, better than expected progress in the return of cross-border travel and a continuation of the recovery all contributed to the terrific results. Key business drivers during the quarter included a 20% increase in payments volume, a 40% jump in cross-border volume thanks to the loosening of border restrictions and a 21% increase in processed transactions. During the quarter, Visa generated $4.2 billion in operating cash flow and $4.1 billion in free cash flow with the company returning $4.9 billion to shareholders through dividend payments of $809 million and share repurchases of $4.1 billion at an average cost per share of $210.05. During the quarter, Visa announced a 17% increase in the quarterly dividend to $0.375 per share and added $12 billion to the company’s share repurchase program, bringing the current authorization to $12.6 billion. Visa ended the quarter with $18.0 billion in cash and investments, $17.7 billion in long-term debt and $36.2 billion in shareholders’ equity on its sturdy balance sheet. Looking ahead, management does not believe the current surge in the pandemic will curtail the recovery. It sees economies around the world continuing to improve and, as restrictions are lifted, continued recovery in cross-border travel. Net, net Visa benefits from inflation as ticket prices increase, Visa’s fees increase. Wage inflation appears reasonable from the company’s perspective. Leadership remains confident the company is well-positioned, via its multi-pronged growth strategy, to deliver strong, sustainable growth well into the future. For the full 2022 fiscal year, management expects revenue growth at the high end of the mid-teens range and for the pace to continue through fiscal 2023.

T. Rowe Price-TROW reported fourth quarter revenues increased 13.2% to $1.96 billion with net earnings declining 5.5% to $740.6 million and EPS down 4.5% to $3.18. Excluding non-recurring items in 2021 and 2020, net earnings increased 8.3% to $736 million and EPS increased 9.7% to $3.17. T. Rowe ended the quarter with $1.69 trillion assets under management, up nearly 15% from the third quarter, reflecting $46.9 billion in AUM from the Oak Hill Advisors (OHA) acquisition, $57.3 billion in market appreciation, partially offset by $22.7 billion in net outflows due to redemptions in U.S. equity growth portfolios as investors rebalanced after a period of robust returns. The annualized effective fee was 43.4 basis points during the quarter, down 5% from last year, squeezed by the July target date fund fee reductions, client transfers to lower fee vehicles and lower performance fees. For 2021, T. Rowe reported net revenues of $7.7 billion, up 24% from last year, with net income up 30% to $3.1 billion and EPS up 32% to $13.12. In 2021, T. Rowe generated a superb 33.3% return on shareholders’ equity. Operating cash flow of $3.4 billion represented a robust 1.14% of 2021 net income and free cash flow was $3.2 billion. During 2021, T. Rowe Price returned $2.8 billion to shareholders through the regular dividend, a special dividend and share buybacks of $1.1 billion to repurchase 2.6% of shares outstanding at an average cost of $191.20 per share. In addition, the company used $2.5 billion in cash to fund a portion of the OHA acquisition. T. Rowe’s balance sheet remains strong with over $2 billion in cash and discretionary investments at year end. While management expects investment flows to improve from the fourth quarter, it expects net flows for 2022 will be below the long-term target of 1% to 3% growth.


Tractor Supply–TSCO reported fourth quarter sales increased 15% to $3.3 billion with net income plowing ahead 63% to $221 million and EPS up 68% to $1.93. Comparable store sales increased 12.7%, driven by comparable average ticket growth and comparable average transaction growth of 10.3% and 2.4%, respectively. All geographic regions had comparable store sales growth. In addition, the company’s e-commerce sales experienced strong double-digit growth for the 38th consecutive quarter. The company opened 36 new Tractor Supply stores and one new Petsense store during the quarter, ending the year with 2,003 Tractor Supply Stores and 178 Petsense stores. For the full year, sales increased 19.9% to $12.73 billion with net income up 33% to $997 million and EPS up 35% to $8.61. Comparable store sales increased 16.9% for the full year. During 2021, Tractor Supply delivered a bountiful 49.7% return on shareholders’ equity and generated $510 million in free cash flow, down 54% from last year due to higher capital expenditures. The company returned $1 billion to shareholders through shares repurchases of $798.9 million at an average cost of $181.56 per share and $239 million in dividends. The board authorized a $2 billion increase to its existing share repurchase program, bringing the total amount authorized to date under the program to $6.5 billion. Tractor Supply ended the year with more than $878 million in cash, $986 million in long-term debt and $2 billion of shareholders’ equity on its fertile balance sheet. Reflecting confidence in the business and its bumper crop of cash flows, Tractor Supply increased the quarterly dividend in 2022 by a hefty 77% to $0.92 per share. In 2022, management expects net sales in the range of $13.6 billion to $13.8 billion, on a 3% to 4.5% increase in comparable store sales, and EPS in the range of $9.20 to $9.50.  The company plans to repurchase $700 million to $800 million of its shares.  In addition, management is expecting capital expenditures of $625 million to $675 million, anticipating opening approximately 75 to 80 new Tractor Supply stores, remodeling more than 150 stores and transforming the side lots in approximately 100 locations, along with opening 10 new Petsense stores. The company also anticipates the opening of its ninth distribution center in the fall of 2022. Tractor Supply provided long-term growth rate targets for fiscal 2022 to fiscal 2026, expecting annual sales growth of 6% to 7+%, comparable store sales growth of 4% to 5+% and EPS growth  of 8% to 11+%.

Mastercard-MA reported fourth quarter revenues rose 27% to $5.2 billion with net income charging 33% higher to $2.4 billion and EPS up 35% to $2.41.  Spending trends continue to improve with fourth quarter cross-border spending now above pre-pandemic levels. During the fourth quarter, gross dollar volume growth increased 23% to $2.1 trillion on a local currency basis. Cross-border volume jumped 53%. Switched transactions grew 27%. Other revenues increased 30%, including 9% growth from acquisitions with the remaining growth driven by the company’s Cyber & Intelligence and Data and Services solutions. As of 12-31-21, the company’s customers had issued 3 billion Mastercard and Maestro-branded cards. For the full year, 2021, revenues increased 23% to $18.9 billion with net income jumping 35% to $8.7 billion and EPS up 38% to $8.76. Return on shareholders’ equity topped 100% for the year. Free cash flow increased 32% to $9.1 billion with the company paying $1.7 billion in dividends and repurchasing 16.5 million shares of its common stock for $5.9 billion at an average price of about $357.58 per share. Since year end, the company has repurchased an additional $528 million of its stock which leaves $11.4 billion remaining authorized for future share repurchase. Mastercard is optimistic that the pandemic is moving towards an endemic with spending moving in the right direction especially in the travel sector. The company reaffirmed its growth objectives for 2022-2024 with revenues expected to compound at a high teens rate and EPS at a rate in the low 20% range. Operating margins should top 50% during the period.

Wednesday, Jan. 26, 2022

Intel-INTC reported fourth quarter revenues rose 3% to $20.5 billion with net income down 21% to $4.6 billion and EPS down 21% to $1.13. Fourth quarter revenue was led by an all-time record for the Data Center Group with strong server recovery in enterprise and government. The Internet of Things Group had a record quarter, reflecting strong demand on recovery from COVID-19 impacts. The Client Computing Group delivered another $10 billion quarter proving that PCs are more essential than ever. For the full 2021 year, revenues rose 1.5% to a record $79 billion with net income down 4.9% to $19.9 billion and EPS down 1.6% to $4.86. Intel generated a strong 20.8% return on shareholders’ equity for the year. Free cash flow declined 47% during they year to $11.3 billion due to lower earnings and working capital fluctuations. During the year, the company repurchased $2.4 billion of its common stock and paid $5.6 billion in dividends. Intel announced a 5% increase in its dividend for 2022 to $1.46 per share. For the first quarter of 2022, Intel is forecasting $18.3 billion in revenues and EPS of $.70. For the full year, the company sees strong demand across all its businesses tempered by supply constraints.  Intel plans to take Mobileye public in mid-2022. Mobileye’s revenues increased 43% in 2021 to $1.4 billion.

SEI Investments Company-SEIC reported fourth quarter revenue increased 13% to $501.7 million with net income increasing 15% to $145 million and EPS up 20% to $1.03 on fewer shares outstanding.  Average assets under administration increased 13% from last year to $884.3 billion and assets under management excluding LSV increased 16% to $301.0 billion. During the fourth quarter, SEI generated $149.2 million in operating cash flow, or $1.06 per share, and free cash flow of $138.7 million with the company repurchasing $95.5 million of its shares at an average cost of $62.44 per share. In December, SEI announced an 8% increase in the semi-annual dividend to $0.40 per share and a $200 million increase in the share repurchase authorization bringing the total to $261 million. For 2021, SEI reported sales increased 14% to $1.9 billion with net income up 22% to $546.6 million and EPS jumping 27% to $3.81. SEI generated an impressive 29.4% return in shareholder equity during 2021. SEI ended the year with $825.2 million in cash, $40 million in long-term debt and $1.86 billion in shareholders’ equity on its secure balance sheet. Reflecting on future growth prospects, Alfred West, SEI Chairman and CEO said, “As we continue to connect our markets to their future potential through our technology and investment solutions, we are well-positioned to continue seizing growth opportunities that will lead to increased shareholder value.”


General Dynamics-GD reported fourth quarter revenue dipped 2% during the fourth quarter to $10.3 billion with net earnings down 5% to $952 million and EPS off 1% to $3.39. For the full 2021 year, revenues increased 1.4% to $38.5 billion with net income up 2.8% to $3.3 billion and EPS marching 5% higher to $11.55. The defense segments collectively delivered record revenue and operating earnings for the year that were the highest in the company’s history. Return on shareholders’ equity for the year was a solid 18.4%. Free cash flow increased 17% to $3.4 billion with the company paying $1.3 billion in dividends and repurchasing approximately 10 million shares during the year for $1.8 billion at an average cost of $179 per share. Strong cash performance in all four business segments led to 104% cash conversion of earnings during the year with the company expecting to convert 100% of earnings to cash in 2022, a sign of a high-quality company. General Dynamics reduced debt by $1.5 billion in 2021 and spent $887 million on capital expenditures. Orders remained strong across the company with a consolidated book-to-bill ratio, defined as orders divided by revenue, of 1-to-1. Gulfstream had the highest orders in more than a decade due to “red-hot” demand for the planes with its backlog up 40% to $16.3 billion and a book-to-bill of 1.6-to-1 for the year. General Dynamics is expanding its facilities to help meet the strong demand for its Gulfstream planes. The company plans to deliver 123 planes in 2022, 148 planes in 2023 and 170 in 2024 with operating margins expected to expand by 300 basis points over 2022 levels. Company-wide backlog ended the year at $87.6 billion. For fiscal 2022, General Dynamics expects revenues in the range of $39.2 billion to $39.45 billion with EPS in the range of $12.00-$12.15.

ADP-ADP reported fiscal second quarter revenues increased 9% to $4 billion with net income increasing 7% to $694 million and EPS increasing 9% to $1.65. By business segment, Employer Services revenues increased 6% to $2.7 billion and PEO Services increased 15% to $1.3 billion. Interest on funds held for clients increased 1% to $106 million, average client funds balances increased 28% to $32.2 billion and the average interest yield on client funds decreased 40 basis points to 1.3%. During the first six months of fiscal 2021, ADP generated $1.13 billion in free cash flow, up 3% from last year with the company returning $1.77 billion to shareholders through dividend payments of $787 million and share repurchases of $990 million. ADP ended the quarter with $1.7 billion in cash and cash equivalents, $2.9 billion in long-term debt and $5 billion in shareholders’ equity on its strong balance sheet. Given the better-than-expected year-to-date performance, ADP increased its fiscal 2022 outlook with revenues expected to increase 8% to 9% and EPS expected to  grow 11% to 13% as profit margins expand.

F5 Networks – FFIV reported fiscal first quarter revenues increased 10% to $687 million with net income and EPS increasing 7% to $94 million and $1.51, respectively. F5 Networks has delivered five consecutive quarters of double-digit revenue growth. First quarter revenue growth was driven by 19% product revenue growth, which accounted for 50% of total revenues. Services sales increased 2% to $343 million.  During the quarter, F5 generated $79.8 million in free cash flow, returning $125 million to shareholders through share repurchases. The company ended the quarter with $859 million in cash and investments, $345 million in long-term debt and $2.4 billion in shareholders’ equity on its weather-resistant balance sheet. While demand for F5 Networks solutions remains robust, the company expects that its ability to meet customers’ continued strong demand for systems will be restricted by supply chain constraints for the remainder of fiscal year 2022. As a result, it expects fiscal second quarter revenue in a range of $610 to $650 million. It further expects fiscal year 2022 revenue growth in the range of 4.5% to 8%, down from its prior expectation of 8% to 9% growth. In addition, the company expects fiscal year 2022 software revenue growth near the top end of its previously provided 35% to 40% guidance range and global services revenue growth of 1% to 2%.


Tuesday, Jan. 25, 2022

Canadian National Railway-CNI reported fourth quarter revenue rose 3% to C$3.7 billion with net income and EPS each chugging more than 17% higher to C$1.2 billion and C$1.69, respectively. During the quarter, CNI had record operating income of C$1.5 billion, an 11% increase year over year. For the full year, revenue increased 5% to C$14.5 billion with net income and EPS up 37% to C$4.9 billion and C$6.89, respectively. Return on shareholders’ equity for the year was a solid 21.5%. Free cash flow increased 2% during the year to a record C$3.3 billion as capital expenditures were curtailed. With management increasingly optimistic about 2022, the company announced plans to invest 17% of revenues in its capital program. For fiscal 2022, Canadian National Railway is targeting to deliver approximately 20% EPS growth and free cash flow of C$4.0 billion. Demonstrating confidence in the long-term financial health of the company, the Board of Directors announced a 19% increase in the dividend, which marks the 26th consecutive year of dividend increases. In addition, the Company’s Board of Directors also approved a new C$5 billion share repurchase program over the next 12 months. CNI has appointed Tracy Robinson as President and CEO, effective February 28, 2022. Tracy brings more than 35 years of operational management, strategy development and project execution experience to help drive growth and profitability at CNI.

Microsoft-MSFT reported strong second quarter results with revenues rising 20% to $51.7 billion with net income growing 21% to $18.8 billion and EPS up 22% to $2.48. Revenue in Business Processes increased 19% to $15.9 billion driven by Office 365 and 37% growth at LinkedIn. Revenue in Intelligent Cloud jumped 26% to $18.3 billion driven by Azure and other cloud services revenue growth of 46%. Revenue in More Personal Computing increased 15% to $17.5 billion with search and news advertising revenue increasing 32%. Commercial bookings grew 32% during the quarter driven by an increase in the number of larger, long-term Azure contracts. Free cash flow during the first half of the year increased 20% to $27.4 billion with the company paying $8.9 billion in dividends and repurchasing $15.1 billion of its common stock. For the third quarter, Microsoft expects revenues in the range of $48.5 billion to $49.3 billion with cost of goods in the range of $15.5 billion and $15.7 billion and operating expenses in the range of $13.1 billion to $13.5 billion. For the full 2022 year, operating margin is expected to expand thanks to good execution in a strong demand environment across the business segments. Digital technology is essential to businesses and consumers. Microsoft is well positioned with innovative and high value products to drive long-term revenue and profit growth.

3M- MMM posted fourth quarter sales that were relatively flat at $8.6 billion due to supply chain challenges with net income and EPS decreasing 4% to $1.3 billion and $2.31, respectively. Total sales declined 2.2% in Safety and Industrial due to a decrease in roofing granules and personal safety. Consumer segment sales increased 4.1%, Health Care sales slightly increased and Transportation and Electronics sales decreased 1.5%. For the full year, 3M reported a 10% increase in sales to $35.4 billion with net income and EPS increasing 8% to $5.9 billion and $10.12, respectively. During 2021, 3M generated a superb 39% return on shareholders’ equity, a healthy 19.5% return on invested capital and robust free cash flow of $5.9 billion.  This strong free cash flow enabled the company to reduce net debt by $1.2 billion, pay $3.4 billion in dividends and repurchase $2.2 billion of its own shares during 2021. As previously announced, 3M plans to divest its Food Safety business in 2022. 3M was able to partially offset inflation pressure during the year with pricing actions. The company is seeing the rate of increase in inflation slowing as they enter 2022. Management will provide full-year 2022 guidance on February 14th.  

Raytheon Technologies-RTX reported fourth quarter revenues rose 4% to $17 billion with net income and EPS flying over 400% to $686 million and $.46, which included $929 million of acquisition accounting adjustments and net significant and/or non-recurring charges. For the full year 2021, revenues increased 14% to $64.4 billion with net income of $3.9 billion or $2.58 per share compared to a loss in the prior year resulting from the pandemic. Free cash flow increased 97% during the year to $5 billion with the company paying $2.9 billion in dividends and repurchasing $2.3 billion of its common stock. Backlog at the end of the year was $156 billion, including $93 billion from commercial aerospace and $63 billion from defense. Management’s outlook for 2022 is for sales of $68.5 billion to $69.5 billion with adjusted EPS of $4.60-$4.80. In addition, free cash flow in 2022 is expected to be approximately $6 billion and the company expects to repurchase at least $2.5 billion of RTX shares. “Raytheon Technologies is entering 2022 with continued momentum and resilience. The long-term outlook for our commercial aerospace and defense markets remains strong. Our focused A&D portfolio and intense focus on program execution position us well to deliver sales, earnings and free cash flow growth, as well as margin expansion across all businesses in 2022,” said Raytheon Technologies Chairman and CEO Greg Hayes.

Johnson & Johnson-JNJ reported healthy fourth quarter and full year 2021 results with double-digit growth in sales and earnings and strength across all business segments. In the fourth quarter, revenues rose 10% to $24.8 billion with net earnings and EPS more than doubling to $4.7 billion and $1.77, respectively. For the full year, revenues rose 14% to $93.8 billion with net income and EPS each up 42% to $20.9 billion and $7.81, respectively. Worldwide Pharmaceutical sales increased 14% during the year to $52.1 billion; Medical Devices sales increased 18% to $27.1 billion; and Consumer Health sales rose 4% to $14.6 billion. The Consumer Health business will not likely be spun off to shareholders until 2023. During 2021, Johnson & Johnson generated approximately $20 billion in free cash flow and ended the year in a net debt position of $2 billion. The company invested a record $14.7 billion in research and development to advance its promising product pipeline and paid $11 billion in dividends during the year. The dividend currently yields a healthy 2.6%. With continued strong cash flows, JNJ expects to be in a net cash position in 2022. The company plans to continue to increase its dividend in 2022 as it has for 59 consecutive years, make strategic acquisitions to drive future growth and resume modest share repurchases. For fiscal 2022, JNJ expects to report sales in the range of $98.9 billion to $100.4 billion, representing 5.5% to 7.0% growth, with adjusted EPS expected in the range of $10.40 to $10.60, representing 6.1% to 8.2% growth, as operating margins are expected to increase 50 basis points in 2022.

Monday, Jan. 24, 2022

Bank of Hawaii-BOH finished 2021 with solid financial performance despite the continued impacts of the pandemic. Fourth quarter revenue increased slightly to $168.9 million with net income up 1.3% to $61.9 million and EPS up 2% to $1.55. For the full 2021 year, revenue dipped 1.8% to $668.6 million with net income jumping 62.8% to a record $250.4 million and EPS up 61.9% to $6.25. Return on average assets for the full year increased to 1.14% compared with 0.79% in 2020. Return on shareholders’ equity increased to 16.9%. Core loan balances grew 6.2% in 2021 and deposits surpassed $20 billion, growing 11.8% in 2021. Overall asset quality remained good, and capital and liquidity remained strong. The bank paid out 44% of its earnings in 2021 in a dividend totaling $2.74 per share. During the fourth quarter, the bank repurchased 87,500 shares for $7.3 million at an average cost of $83.83 per share with $85.7 million remaining approved for future share repurchases. The Hawaii unemployment rate has been steadily improving since the start of the pandemic and stood at 6% in November 2021. The Hawaii real estate market is very good finishing with a record year. Total closed sales increased 18% with the median sales price of $990,000 for single family homes. The median days a home stayed on the market was 9 days and inventory remains tight. The condo market is also strong with closed sales up 53% in 2021. Visitor daily arrivals to Hawaii recovered strongly during the summer and reached 2019 levels, prior to the pandemic, which was remarkable without international travelers. Despite the recent downturn in visitors due to the Omicron variant, visitor counts should hopefully return to more normal levels in 2022. Domestic travelers are eager to visit Hawaii and international travelers should return.

Friday, Jan. 21, 2022

Intel-INTC announced plans for an initial investment of more than $20 billion in the construction of two new leading-edge chip factories in Ohio. The investment will help boost production to meet the surging demand for advanced semiconductors, powering a new generation of innovative products from Intel and serving the needs of foundry customers. To support the development of the new site, Intel pledged an additional $100 million toward partnerships with educational institutions to build a pipeline of talent and bolster research programs in the region.

Thursday, Jan. 20, 2022

MidAmerican Energy, a business unit of Berkshire Hathaway-BRKB, announced plans for a $3.9 billion renewable energy project in Iowa, including wind and solar generation, and the exploration of new technologies to advance the company’s transition to net-zero greenhouse gas emissions.

Wednesday, Jan. 19, 2022

UnitedHealth Group-UNH reported strong fourth quarter results with revenues increasing a healthy 13% to $73.7 billion and net income jumping 84% to $4.1 billion with EPS up 85% to $4.48. For the full year, revenues increased 12% to $287.6 billion with net income rising 12% to $17.3 billion and EPS up 13% to $18.08. Growth was broad-based across the Optum and UnitedHealthcare businesses with both units generating double-digit revenue growth for the year. The Optum business comprised over half of operating earnings for the year. The full year medical care ratio of 82.6% compared to 79.1% in the previous year with the increase due to higher COVID-19 costs. Return on shareholders’ equity for the year was a robust 23% reflecting strong overall performance and the efficient capital structure of the firm. Free cash flow dipped 1% to $19.9 billion for the year.  In 2021, the company paid $5.3 billion in dividends, an increase of 15% over the prior year, and repurchased 12.8 million of its common shares for $5 billion at an average cost of approximately $390.63 per share. In 2022, UnitedHealth Group expects revenues in the range of $317 billion to $320 billion with EPS expected in the $20.20 to $20.70 range. Cash flow from operations is expected to increase to the $23 billion to $24 billion range approximating a healthy 1.2 times net income. With the strong cash flow, the company expects to accelerate investments in the business, continue to increase its dividend and repurchase between $5 billion to $6 billion of its shares in 2022. Management reaffirmed its long-term annual growth goal of 13%-16%  thanks to accelerating innovation and expanding capabilities. While management noted labor pressures across the industry, the company believes it remains in a good position with strong recruiting and incentives, decent retention, technology investments to offset higher labor costs and the ability to price for inflation.

Fastenal-FAST reported fourth quarter revenues rose 13% to $1.53 billion with net income and EPS each fastening on 18% gains to $231.2 million and $.40, respectively. The fourth quarter of 2021 continued to experience strong, economically-driven growth in underlying demand for manufacturing and construction equipment and supplies, which drove higher unit sales that contributed to the increase in net sales in the period. Sales through Fastenal’s Digital Footprint accounted for 46.4% of sales in the fourth quarter. Management’s goal is to hit 55% in 2022, and they believe it can ultimately grow to approximately 85% of sales. For the full 2021 year, revenue rose 6% to $6 billion with net income up 8% to $925 million and EPS up 7% to $1.60. Return on shareholders’ equity for the year was an impressive 30.4%. Free cash flow decreased 34% during the year to $613.5 million due to meaningful increases in working capital to support growth and account for inflation. During the year, Fastenal returned $643.7 million to shareholders in the form of dividends. Fastenal announced an 11% increase in its dividend for 2022. The company ended the year with $236 million in cash, $330 million in long-term debt and $3 billion in shareholders’ equity on its strong balance sheet. The company plans to spend $180 million to $200 million on capital spending in 2022. Fastenal noted that the labor market and supply chains remain tight, thought product availability did improve in the fourth quarter. Material costs stabilized in the fourth quarter although at high levels. The company is addressing inflation through pricing and mix changes.

Tuesday, Jan. 18, 2022

Microsoft-MSFT announced plans to acquire Activision Blizzard Inc., a leader in game development and interactive entertainment content publisher, for $95 per share in an all-cash transaction valued at $68.7 billion, inclusive of Activision’s net cash. With three billion people actively playing games today, gaming is now the largest and fastest-growing form of entertainment. This acquisition will accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse. With three billion people actively playing games today, gaming is now the largest and fastest-growing form of entertainment. When the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony. The planned acquisition includes iconic franchises from the Activision, Blizzard and King studios like “Warcraft,” “Diablo,” “Overwatch,” “Call of Duty” and “Candy Crush,” in addition to global eSports activities through Major League Gaming. The company has studios around the word with nearly 10,000 employees. Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile. Through great teams and great technology, Microsoft and Activision Blizzard will empower players to enjoy the most-immersive franchises, like “Halo” and “Warcraft,” virtually anywhere they want. And with games like “Candy Crush,” Activision Blizzard´s mobile business represents a significant presence and opportunity for Microsoft in this fast-growing segment. The acquisition also bolsters Microsoft’s Game Pass portfolio with plans to launch Activision Blizzard games into Game Pass, which has reached a new milestone of over 25 million subscribers. With Activision Blizzard’s nearly 400 million monthly active players in 190 countries and three billion-dollar franchises, this acquisition will make Game Pass one of the most compelling and diverse lineups of gaming content in the industry. Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities. The deal is expected to close in fiscal year 2023 and will be accretive to non-GAAP earnings per share upon close.

Friday, Jan. 14, 2022

Roche-RHHBY Diagnostic was awarded a $340,000,000 firm-fixed-price contract for COVID-19 rapid antigen tests. Work will be performed in Indianapolis with an estimated completion date of March 14, 2022.

Booking Holdings-BKNG announced that KAYAK for Business, KAYAK's free corporate travel solution has integrated Southwest Airlines® into its platform making the process of booking a business trip and earning Southwest Rapid Rewards points easier. Through the integration, travelers and travel decision makers will be able to compare all available travel options in one place, making KAYAK for Business a one-stop-shop designed for small and medium sized businesses.


The Boeing Company has selected Collins Aerospace, a Raytheon Technologies-RTX business, to be the long-term provider of next-generation lavatories for the 737 family of aircraft.


Waymo Via, a unit of Alphabet-GOOGL, and J.B. Hunt Transport Services announced a long-term, strategic alliance that will advance innovative efforts to integrate commercial autonomous driving technology in transportation and logistics, with ultimate plans to complete fully autonomous transport in Texas in the next few years. Waymo has over a decade of experience in building autonomous driving technology, having driven over 20 million miles on public roads across 13+ U.S. states and 20 billion miles in simulation.

Wednesday, Jan. 12, 2022

T. Rowe Price-TROW reported its assets under management as of 12/31/21 were $1.69 trillion, representing a 14.8% increase for the year. This balance included $47 billion in fee-basis assets from the acquisition of Oak Hill Advisors completed on 12/29/21.

Monday, Dec. 27, 2021

According to Mastercard-MA SpendingPulseTM, holiday retail sales excluding automotive increased 8.5% year-over-year this holiday season, running from November 1 through December 24. This was the highest holiday spending in 17 years. Notably, online sales grew 11.0% compared to the same period last year, the preliminary insights show. Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment.

FactSet-FDS announced that it has entered into a definitive agreement to acquire CUSIP Global Services (CGS) from S&P Global for $1.925 billion in cash. FactSet also expects to receive an estimated tax benefit of approximately $200 million as part of the transaction. The acquisition will significantly expand FactSet’s critical role in the global capital markets, advancing its open data strategy. CGS generates annual revenues of approximately $175 million with consistent revenue growth rates in the mid- to high-single digit range. It is expected to deliver robust margins and be immediately accretive to FactSet’s adjusted operating margins. The transaction is also expected to be accretive to FactSet’s adjusted diluted EPS in the first year of ownership, excluding purchase price amortization and one-time integration costs. FactSet will fund the transaction through a combination of cash-on-hand and committed financing and is expected to close during the first calendar quarter of 2022.

 Roche-RHHBY announced that the U.S. Food and Drug Administration (FDA) has granted Emergency Use Authorization (EUA) for its COVID-19 At-Home Test. The test uses a simple anterior nasal swab sample that can be conveniently self-collected and self-tested by individuals aged 14 years and older, and by an adult for children aged 2-13 years old. The test is able to produce accurate, reliable and quick results in as few as 20 minutes for SARS-CoV-2 and all known variants of concern, including Omicron.



Wednesday, Dec. 22, 2021

Paychex-PAYX reported second quarter revenues rose 13% to $1.1 billion with net income up 22% to $332.1 million and EPS up 21% to $.21. These strong financial results were driven by growth in employees within the client base and continued strong sales growth and record client retention. Higher checks per payroll reflected the tight labor market’s impact on wages. Free cash flow in the first half of the fiscal year increased 30% to $490 million with Paychex paying $476 million in dividends. The company’s cash flow generation and financial position remain strong with the company ending the quarter with $1.1 billion in cash and investments, $798 million in long-term debt and $3.1 billion in stockholders’ equity. On a rolling 12 months, Paychex generated an impressive 43% return on equity. Paychex raised its outlook for sales and earnings for fiscal 2022 with revenue now anticipated to grow in the range of 10% to 11% and adjusted EPS expected to increase 18% to 20%. In the small business segment, restaurants continue to struggle the most. However, Paychex expects people to come back to the workforce in the next six months especially as rent and student loan payment deferrals abate.

Tuesday, Dec. 21, 2021

FactSet-FDS reported fiscal first quarter revenues rose 9.4% to $424.7 million with net income up 6.4% to $107.6 million and EPS up 6.5% to $2.79. The revenue increase was primarily due to higher sales of analytics and research and advisory solutions. Annual Subscription Value plus professional services was $1.7 billion at quarter end. The operating margin declined to 28.9% during the quarter compared to 31.2% in the prior year period due to increased infrastructure expenses and data costs. Client count increased by a net 306 during the quarter to 6,759 primarily driven by an increase in corporate clients. User count increased by 1,229 to 162,161 in the past quarter primarily driven by an increase in research and advisory users. Annual client retention was 92%. Free cash flow declined 9% to $64.3 million due to the timing of tax payments and higher employee bonuses. During the quarter, the company paid $30.7 million in dividends and repurchased 46,200 of its shares for $18.6 million at an average price of $403.44 per share. FactSet has $181.3 million remaining authorized for future share repurchases. For the full year fiscal 2022, FactSet expects revenues in the range of $1,705 to $1,720 million with EPS in the range of $11.60-$11.90.

According to Starbucks-SBUX, the company estimates Dec. 23 will be the busiest day for gift card purchases, as holiday shoppers scramble to find the final items on their lists for friends, family and co-workers. Starbucks said that nearly $3 billion dollars will be loaded onto Starbucks cards from October to December.

 

Monday, Dec. 20, 2021

NIKE-NKE reported fiscal 2022 second quarter revenues increased 1% to $11.4 billion with net earnings increasing 7% to $1.3 billion and EPS increasing 6% to $0.83. By geography, North America sales increased 12% to $4.5 billion, Europe, Middle East & Africa sales increased 6% to $3.1 billion, Greater China sales decreased 20% to $1.8 billion and Asia Pacific & Latin America sales declined 8% to $1.3 billion. Gross margin increased 280 basis points to 45.9%, led by margin expansion in the NIKE Direct business driven by lower markdowns, a higher mix of full-price sales and changes in foreign currency exchange rates, partially offset by lower full-price product margins largely due to increased freight and logistics costs. Despite inventory constraints and supply chain challenges, NIKE Direct sales were up 9% to $4.7 billion and Nike Brand digital sales increased 12%, led by 40% growth in North America. During the second quarter, NIKE paid dividends of $437 million to shareholders, up 14% from the prior year. The company repurchased $968 million of its common stock, reflecting 6 million shares retired as part of the four-year, $15 billion program approved by the Board of Directors in June 2018. As of November 30, 2021, a total of 60.8 million shares have been repurchased under the program for a total of approximately $6.4 billion. Nike ended the quarter with approximately $15.1 billion in cash and short-term investments, up approximately $3.3 billion from last year and $9.4 billion in long-term debt. Nike expects fiscal 2022 revenue to rise mid-single digits , which reflects the ongoing impact from lost production from COVID-related disruptions in Vietnam.

 

Oracle-ORCL plans to acquire Cerner through an all-cash tender offer for $95.00 per share, or approximately $28.3 billion. Cerner is a leading provider of digital information systems used within hospitals and health systems to enable medical professionals to deliver better healthcare to individual patients and communities. The acquisition is expected to be immediately accretive to Oracle's earnings on a non-GAAP basis in the first full fiscal year after closing—and contribute substantially more to earnings in the second fiscal year and thereafter. Oracle's revenue growth rate has already been increasing this year and Cerner will be a huge additional revenue growth engine for years to come as Oracle expands its business into many more countries throughout the world.

Thursday, Dec. 16, 2021

Genuine Parts-GPC entered into an agreement to acquire Kaman Distribution Group ("KDG").  The acquisition is valued at a total purchase price of approximately $1.3 billion in cash. Established in 1971, KDG is a power transmission, automation and fluid power industrial distributor and solutions provider with operations throughout the U.S., providing electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components to  customers.  KDG is expected to generate approximately $1.1 billion of revenue in 2022. Additionally, GPC expects the acquisition to be accretive to its adjusted earnings in the first year after closing. The transaction is expected to close in the first quarter of 2022.

Accenture-ACN reported strong fiscal first quarter results with revenues up 27% to $15 billion and net income up 19% to $1.8 billion and EPS up 20% to $2.78.  Revenues grew at double-digit rates in all geographic markets and industry groups for the quarter. Operating margin expanded 20 basis points during the quarter to 16.3%. New bookings increased 30% to a record $16.8 billion with consulting bookings of $9.4 billion and outsourcing bookings of $7.4 billion. Free cash flow decreased 77% to $349 million mainly due to changes in receivables. The company paid $613 million in dividends (a 9% increase over last year) and repurchased 2.4 million of its common shares for $845 million at an average price of $352.08 per share. Accenture has $5.6 billion remaining authorized for future share repurchases. Given the strong start to the new fiscal year, Accenture increased its financial outlook for the full fiscal 2022 year. The company now expects revenue growth in the range of 19% to 22% in local currency with operating margin expected to expand 10 to 30 basis points to a range of 15.2% to 15.4%. GAAP EPS is expected in the range of $10.32 to $10.60 compared to previous guidance of $9.90 to $10.18. Free cash flow is expected in the range of $7.7 billion to $8.2 billion with the company planning to return at least $6.3 billion of the cash to shareholders in the form of dividends and share repurchases. Accenture has declared another quarterly cash dividend of $.97 per share, which is payable on Feb. 15, 2022 and represents a 10% increase over the quarterly dividend rate of $.88 per share in fiscal 2021.

Wednesday, Dec. 15, 2021

Visa-V announced its board has authorized a new $12 billion share repurchase program. Combined with funds left over from a previous authorization, funds available for future share repurchases total $13.2 billion.

Tuesday, Dec. 14, 2021

UPS-UPS announced that it surpassed the one billion COVID-19 vaccine doses delivered mark with near-perfect on-time accuracy, including nearly 50 million doses in Canada. Just one year after the first vaccine was delivered by UPS, this milestone was made possible through UPS’s innovative approaches, one-of-a-kind UPS Premier tracking technologies, industry-leading cold chain solutions, and an expansive, sophisticated, global network supporting UPS Healthcare customers and communities around the world.

 

3M-MMM plans to spin off its Food Safety business and simultaneously combine it with NEOGEN, which provides solutions dedicated to food and animal safety, in a transaction that is intended to be tax-efficient to 3M and its shareholders.  The combination will create an innovative leader in the food safety sector with a comprehensive product range and a strategic focus on the category's long-term growth opportunities. 3M will receive approximately $1 billion in consideration. NEOGEN shareholders will continue to own approximately 49.9% of the combined company, and 3M shareholders will receive approximately 50.1% of the combined company. The transaction is expected to close by the end of the third quarter of 2022.

Monday, Dec. 13, 2021

The Board of Directors of SEI Investments-SEIC approved an increase in its stock repurchase program by an additional $200 million, increasing the available authorization under the program to approximately $261 million.

Friday, Dec. 10, 2021

T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.63 trillion as of November 30, 2021, representing a 10.7% increase since year end.

Thursday, Dec. 9, 2021

Oracle-ORCL reported second quarter revenue increased 6% to $10.4 billion, powered by sales of Fusion ERP and NetSuite ERP which grew 35% and 29%, respectively. Oracle’s total infrastructure and applications cloud revenue, now approaching $11 billion in annualized revenue, increased 22% to $2.7 billion. With cloud bookings growing faster than revenue, management expects acceleration in future cloud growth.  A payment of a judgment related to a ten-year-old dispute surrounding former CEO Mark Hurd's employment, resulted in a third quarter loss of $1.2 million, or $0.46 per share, compared to a net income of $2.4 billion, or $0.80 per share, last year. Adjusted net income and EPS increased, 4% and 14%, respectively. Year-to-date, Oracle generated negative free cash flow of $278 million, compared to positive free cash flow of $6.3 billion last year, squeezed by the judgement. During the first half of fiscal 2022, Oracle returned nearly $17 billion to shareholders through dividend payments of $1.8 billion and share repurchases of $15 billion. The board expanded the share buyback authorization by an additional $10 billion.  During the past 10 years, Oracle has reduced its share count by 47% at an average price per share that is about ½ the current stock price. Oracle ended the quarter with $23 billion in cash and investments and $73 billion in long-term debt. Given the strong first-half performance, Oracle expects full fiscal year 2022 revenues to grow in the mid-single digits range with operating margins of 44%, higher than pre-pandemic levels.

Hormel Foods-HRL reported record fourth quarter sales and earnings with double-digit sales growth from every business segment and channel. Fourth quarter sales rose 43% to $3.5 billion with organic sales up 32% and organic volume up 8%. Net earnings increased 20% in the fourth quarter to $281.7 million with EPS up 19% to $.51. This impressive growth was led by the strength of the company’s global brands including Applegate, Columbus, Fontanini, Hormel Bacon, Jennie-O, Planters and SPAM. Hormel continues to gain market share in the Hormel party trays, pepperoni, chili and SPAM categories. SPAM has enjoyed seven consecutive years of record growth.  To support this growth, Hormel plans to expand capacity for its SPAM family of products and pepperoni operations with capital expenditures targeted at $310 million in fiscal 2022 compared to $232 million in 2021. For the full fiscal 2021 year, revenue rose 19% to $11.4 billion with earnings and EPS relatively flat at $908.8 million and $1.66, respectively. Return on equity for the year was 12.5%. Free cash flow increased 1% during the year to $771.7 million with the company repurchasing $20 million of its common stock and paying $523 million in dividends. Hormel recently increased its dividend 6% to an annual dividend of $1.04, representing the 56th consecutive year of dividend increases. While the operating environment remains complex, Hormel expects continued strong demand across all its business segment with improved production and pricing actions driving growth in all segments. In fiscal 2022, Hormel expects net sales in the range of $11.7 billion to $12.5 billion, representing 3% to 10% growth, with EPS expected in the range of $1.87 to $2.03, representing 13% to 22% growth.

 

Stryker-SYK announced that its Board of Directors has declared a quarterly dividend of $0.695 per share payable January 31, 2022 to shareholders of record at the close of business on December 31, 2021, representing an increase of 10.3% versus the prior year and previous quarter.

Wednesday, Dec. 8, 2021

Brown-Forman-BFB reported second quarter net sales increased 1% (+7% on an underlying basis) to $994 million with net income and EPS both down 2% to $236 million and $0.49, respectively. The United States and developed international markets grew underlying sales 6% and 12%, respectively, while underlying sales in emerging markets jumped 25%. Jack Daniel’s family of brands grew underlying net sales 11% powered by 15% underlying net sales from Jack Daniel’s Tennessee Whiskey. Premium bourbons grew underlying sales 18% driven by sustained double-digit growth across Woodford Reserve and Old Forester. The tequila portfolio grew underlying sales 16% led by double-digit growth from Herradura and el Jimador. During the first half of the year, free cash flow increased 19% to $302 million with the company paying $167 million in dividends during the same period. The company continues to face volatility and global supply chain disruptions in a rapidly evolving environment due to COVID-19. However, the company remains confident in their growth momentum and have revised their full-year underlying net sales outlook from mid-single digit to high-single digit growth. The company expects supply chain disruptions will become less significant in the second half of the year, but management is still expecting reported gross margin to be flat or slightly down for the full year due to the supply chain disruptions. The company continues to anticipate quarterly results will be volatile for the remainder of fiscal 2022, particularly underlying advertising expense and underlying operating income, as a result of the unusual comparisons to last year. Brown‑Forman’s Board of Directors approved a 5% increase in the regular quarterly cash dividend to $0.1885 per share on the Class A and Class B common stock. This marked the company’s 78th year of paying consecutive dividends and the 38th year of increases in its regular quarterly dividend.  Brown‑Forman’s Board of Directors also declared a special dividend of approximately $480 million, or $1.00 per share, on its Class A and Class B common stock. This special cash dividend is payable on December 29, 2021 to stockholders of record on December 9, 2021.

Raytheon Technologies'-RTX Board of Directors authorized the repurchase of up to $6 billion of the company's outstanding common stock, which represents a 4.7% buyback yield based on the current market capitalization. 

Tuesday, Dec. 7, 2021

Intel-INTC announced its intention to take Mobileye public in the United States in mid-2022 via an initial public offering (IPO) of newly issued Mobileye stock. Mobileye is a market leader in driver-assistance and autonomous driving solutions. It expects to deliver over 40% more revenue in 2021 compared with 2020, along with a record 41 new program wins with more than 30 leading automakers worldwide. Mobileye recently shipped its 100 millionth EyeQ® system-on-chip, unveiled its production robotaxi, and scaled its autonomous vehicle testing across multiple cities around the world covering the U.S., Europe and Asia. Intel will maintain majority ownership of Mobileye and will continue to fully consolidate Mobileye. The two companies will continue as strategic partners, collaborating on projects as they pursue the growth of computing in the automotive sector. The share of semiconductors is expected to be 20% of a premium vehicle’s total bill-of-materials by 2030. The Mobileye executive team will remain, with Prof. Amnon Shashua continuing as the company’s CEO. Recently acquired Moovit as well as Intel teams working on lidar and radar development and other Mobileye projects will be aligned as part of Mobileye.

Fastenal-FAST reported November sales jumped 18.9% to $524.2 million with average daily sales up 13.2% to $25 million. The company experienced double-digit growth in all regions of the world. By end market, manufacturing average daily sales increased 22.6% with non-residential construction up 16.6%. By product line, sales of fasteners increased 23.7% with other products up 11.7% as safety sales remained relatively unchanged. About 78% of the company’s top 100 national accounts experienced growth during the month with 71% of Fastenal’s branches also growing. Total personnel increased 0.8% to 20,523.

Thursday, Dec. 2, 2021

Ulta Beauty-ULTA reported record third quarter results with sales jumping 29% to $2.0 billion and net earnings and EPS up nearly three-fold to $215.3 million and $3.94, respectively.  Comparable sales (sales for stores open at least 14 months, including stores temporarily closed due to COVID-19 and e-commerce sales) increased 25.8% compared to a decrease of 8.9% in the third quarter of fiscal 2020, driven by a 16.8% increase in transactions and a 7.7% increase in average ticket. Compared to the third quarter of fiscal 2019, comparable sales increased 14.3%. Ulta Beauty opened seven new stores during the quarter, ending the quarter with 1,302 stores totaling 13.7 million square feet. During the quarter, the company expanded its Ultamate Rewards loyalty program to nearly 36 million, up 13% from 2020 and 6% from 2019. During the quarter, Ulta repurchased common stock at a cost of $126.4 million, or $371.04 per share, with $759.8 million remaining under the $1.6 billion share repurchase program announced in March 2020. Free cash flow during the first nine months more than doubled from 2020 to $306 million and the company ended the quarter with $605 million in cash on its glamorous, debt-free balance sheet. Given the outstanding year-to-date results, management updated its guidance for the full fiscal year with sales now expected in the $8.5 billion to $8.6 billion range on 36% to 37% comp store growth. EPS are expected in the $16.70 to $17.10 range, up from previous guidance of $14.50 to $14.70. Longer term, management expects sales growth in the 5% to 7% range with EPS growing low-single-digits on operating margins of 13% to 14%.

Tuesday, Nov. 30, 2021

Mastercard-MA announced that its Board of Directors has declared a quarterly cash dividend of 49 cents per share, an 11 percent increase over the previous dividend of 44 cents per share. The Board of Directors also approved a new share repurchase program, authorizing the company to repurchase up to $8 billion of its Class A common stock. The new share repurchase program will become effective at the completion of the company’s previously announced $6 billion program. The company has approximately $4.4 billion remaining under the current program authorization.

UnitedHealth Group-UNH announced it expects revenues for 2021 to be approximately $287 billion with net earnings of $17.80 to $17.95 per share.  In 2022, UnitedHealth Group expects revenues in the range of $317 billion to $320 billion, net earnings of $20.20 to $20.70 per share and cash flows from operations in the range of $23 billion to $24 billion.

 

Tuesday, Nov. 23, 2021

Booking Holdings-BKNG announced that it has entered into an agreement with funds managed by CVC Capital Partners ("CVC") to acquire global flight booking provider, Etraveli Group, for approximately $1.8 billion. "As international air travel rebounds from the impact of the pandemic, we look forward to building upon our existing relationship with Etraveli Group to make the travel booking experience easier and more seamless to support our partners and customers," said Booking Holdings' Chief Executive Officer, Glenn Fogel. Etraveli Group will remain headquartered in Sweden and operate as an independent business under Booking Holdings, led by their current management team.

Monday, Nov. 22, 2021

The Board of Directors of Hormel Foods Corporation-HRL announced a 6 percent increase to the annual dividend to shareholders, marking the 56th consecutive annual dividend increase. The Feb. 15 payment will be the 374th consecutive quarterly dividend paid by the company. Since becoming a public company in 1928, Hormel Foods Corporation has paid a regular quarterly dividend without interruption.