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Recent Articles
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TJX Companies Boosts Profit Guidance
Aug 21, 2024
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Image: TJX’s stock has been on a tear over the past couple years.
TJX expects consolidated comparable store sales growth to be between 2%-3% in the third quarter. Pre-tax profit margin is expected in the range of 11.8%-11.9% for the quarter, while diluted earnings per share is targeted in the range of $1.06-$1.08. For the full year fiscal 2025, consolidated comparable store sales are expected to be up ~3% (was 2%-3%), and the company raised its pre-tax profit margin to 11.2% and raised its diluted earnings per share outlook to be in the range of $4.09-$4.13 (was $4.03-$4.09). Though we liked the quarter and raised profit guidance, TJX’s shares are not cheap. We’re sticking with our $106 per share fair value estimate at this time. Shares yield 1.3%.
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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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