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Recent Articles
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Target’s Second Quarter Results Better Than Feared
Aug 21, 2024
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Image: Target’s shares have been quite volatile since the beginning of 2023.
Target expects a 0%-2% increase in comparable store sales and adjusted earnings per share in the range of $2.10-$2.40 in the third quarter (consensus was $2.24). For the full year, management thinks that comparable store sales growth will be in the 0%-2% range, with an increased likelihood that the increase will be in the lower half of the range. Target, however, now expects full-year GAAP and adjusted earnings per share in the range of $9.00-$9.70, which is up from previous expectations in the range of $8.60-$9.60 and the midpoint higher than the consensus forecast of $9.22 per share. Our fair value estimate of $155 per share remains unchanged at this time. Shares yield 3.1%.
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Mastercard’s Results Point to Continued Healthy Consumer Spending
Aug 20, 2024
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Image: Mastercard’s stock has done quite well since the beginning of 2022.
Mastercard operates a fantastic business model with huge operating and free cash flow margins. As with Visa, we’re huge fans of Mastercard’s network effect--as more consumers use Mastercard, more merchants accept their cards, which drives more consumers to use Mastercard and so on and so forth. Our fair value estimate of Mastercard is north of $480 per share.
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Ford Raises Adjusted Free Cash Flow Guidance, Warranty Costs Weigh on Shares
Aug 20, 2024
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Image: Ford’s second quarter results weren’t great, but the company’s guidance calls for increased adjusted free cash flow in 2024.
Ford is facing issues due to rising warranty costs in its Ford Blue [ICE] division, while losses continue to mount in its electric vehicle division, Ford Model e, where it anticipates a full-year loss of $5-$5.5 billion due in part to continued pricing pressures. However, it was reassuring that management maintained its 2024 company adjusted EBIT guidance, while raising its adjusted free cash flow guidance for the year. Based on Ford’s quarterly dividend of $0.15 per share, the company yields 5.6% at the time of this writing. Our $15 per share fair value estimate remains unchanged.
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Lowe’s Lowers Full Year 2024 Outlook on Weak DIY Sales
Aug 20, 2024
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Image: Lowe’s shares have traded sideways since the beginning of 2022.
Lowe’s updated its outlook for full year 2024 to account for “lower than expected DIY sales and a pressured macroeconomic environment.” Total 2024 sales are now expected in the range of $82.7-$83.2 billion (was $84-$85 billion), with comparable store sales expected to be down 3.5%-4% (was -2% to -3%). Adjusted operating income as a percentage of sales is targeted in the range of 12.4%-12.5% (was 12.6%-12.7%). Adjusted diluted earnings per share is expected in the range of $11.70-$11.90 (was $12.00-$12.30). Our $230 fair value estimate of Lowe’s remains unchanged at this time. Shares yield 1.9%.
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