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Recent Articles
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Ralph Lauren’s Dividend Is Quite Healthy
Aug 27, 2024
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Image: Ralph Lauren’s shares have done quite well since the beginning of 2022.
For fiscal 2025, Ralph Lauren expects revenues to increase in the low-single digits on a constant currency basis, while it continues to expect its operating margin to increase 100-120 basis points in constant currency thanks to gross margin improvement and operating expense leverage. All told, we liked Ralph Lauren’s fiscal first quarter results and we’re particularly fans of its ability to drive strong free cash flow in excess of cash dividends paid. Our fair value estimate stands at $184 per share with the firm sporting a lofty Dividend Cushion ratio of 4.4.
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Toll Brothers Expects Demand to Remain Solid Into 2025
Aug 27, 2024
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Image: Toll Brothers stock has done quite well during the past couple years.
For its fiscal year 2024 guidance, Toll Brothers expects deliveries of 10,650-10,750 units (was 10,400-10,800) with an average delivered price per home of $975,000. Its adjusted home sales gross margin is targeted at 28.3% for fiscal 2024 (was 28%), while SG&A as a percentage of home sales revenue is expected at 9.4% for the year. Toll Brothers ended its fiscal third quarter with $893.4 million of cash and cash equivalents and $2.8 billion in total debt. Its net debt-to-capital ratio stood at 19.6% at the end of the fiscal third quarter. Though Toll Brothers’ backlog faced declines in its fiscal third quarter, we liked the increased guidance across its key homebuilding metrics.
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Berkshire Hathaway’s Cash Balance Swells, Ownership Stake in Apple Substantially Reduced
Aug 26, 2024
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Image: Berkshire Hathaway reduced its equity stake in Apple by a sizable margin.
Berkshire Hathaway continues to execute well across its business portfolio, free cash flow continues to move in the right direction, while Buffett remains prudent with his portfolio management decisions. Shareholders’ equity at the end of June was $608 billion, implying that shares are trading at a 1.6x book value, not cheap. Still, we like shares as a key holding in the Best Ideas Newsletter portfolio.
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Chevron Lacks Dividend Coverage with Traditional Free Cash Flow
Aug 26, 2024
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Image: Chevron’s shares have been choppy during the past few years.
During the second quarter, Chevron returned $6 billion in cash to shareholders, including $3 billion for each of dividends and share repurchases, and more than $50 billion during the past two years. The second quarter marked the ninth straight quarter of over $5 billion cash returned to shareholders. Chevron ended June with $4 billion in cash and cash equivalents and total debt of $23.2 billion. Through the first six months of the year, traditional free cash flow, as measured by cash flow from operations less all capex, was $5 billion, shy of the $6 billion it paid as dividends over the same time period. We prefer ExxonMobil, which has much better dividend coverage than Chevron.
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