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Recent Articles
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Apple Doesn’t Disappoint in Fourth Quarter Fiscal 2023 Earnings
Nov 2, 2023
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On November 2, Apple put up solid results in its fourth quarter of fiscal 2023 for the period ending September 30, 2023. The company’s iPhone sales ($43.8 billion) came in in-line with Street expectations, squashing concerns about demand for its new iPhone 15. Its high-margin Services business put up a nice growth rate (+16.3%) in the period, reaching a new all-time high. Though the firm’s Mac sales didn’t impress and accounted for most of the weakness in the quarter, Apple is optimistic that the holiday season will make for a strong comeback. We don’t expect to make any changes to our fair value estimate in light of the report, which was about as expected. For the three months ended September 30, Apple’s operating income expanded to ~$27 billion from ~$24.9 billion, while net income leapt to ~$23 billion from ~$20.7 billion, translating into diluted earnings per share of $1.46 in the period, nice growth from the $1.29 per share it put up during the same quarter last year. Total cash and marketable securities stood at ~$162.1 billion versus ~$15.8 billion in short-term debt and commercial paper and ~$95.3 billion in long-term debt. Apple has a robust net cash position at the moment, and its free cash flow generation remains sound coming in at ~$99.6 billion for fiscal 2023. Very few other firms can compare with Apple’s financial wherewithal, and the company remains a top dividend growth idea to boot.
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Ferrari's Results Speak to Resilience in Ultra-Luxury Markets
Nov 2, 2023
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Image: Ferrari raised its guidance for 2023.
Ferrari raised its year-end guidance thanks in part to a strong product mix and improved revenue from racing activities, and the firm noted that its “order book remains at highest levels reflecting strong demand across all geographies, covering the entire 2025.” We couldn’t be happier with the performance at Ferrari, and the momentum speaks to continued strength across the ultra-luxury landscape. We like Ferrari as one of our favorite automakers, a name that we prefer much more than any of the Big 3 in Detroit.
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AMD Continues to Enhance Artificial Intelligence Capabilities
Nov 2, 2023
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On October 31, Advanced Micro Devices reported solid third-quarter results with revenue advancing 4% on a year-over-year basis and non-GAAP earnings per share coming in slightly better than expectations, with net income up more than four-fold, to $299 million. Management expressed excitement about demand for its Ryzen 7000 series PC processors and noted that its data center business is progressing well thanks to its 4th Gen EPYC CPU portfolio and Instinct MI300 accelerator shipments across various markets, including artificial intelligence [AI].
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Caterpillar's Pricing Power Remains Phenomenal
Nov 1, 2023
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Image: Price realization remains a key driver behind Caterpillar’s strong performance.
On October 31, Caterpillar reported better-than-expected third-quarter results, with revenue advancing 12% and non-GAAP diluted earnings per share handily beating the consensus forecast. Caterpillar continues to benefit from significant pricing power, but the firm is also experiencing volume increases. The firm's adjusted operating profit margin expanded to 20.8% in the third quarter compared to 16.5% for the third quarter of 2022. Caterpillar ended the third quarter with $6.5 billion in cash and cash equivalents, short-term borrowings of ~$4.2 billion, and long-term debt of ~$1 billion and ~$7.6 billion in its ‘Machinery, Energy & Transportation’ and ‘Financial Products’ divisions, respectively. Its balance sheet, while not showcasing a net cash position, remains very healthy, in our view, especially in the context of its free cash flow generation. Through the first nine months of 2023, the maker of mining and construction equipment’s cash flow from operations soared to ~$8.9 billion, as it shelled out just ~$1.06 billion in capital expenditures, a number that excludes equipment leased to others (~$1.2 billion). Free cash flow generation at the firm remains excellent, and we like that it continues to focus on dividend growth. We continue to like the pricing power witnessed within Caterpillar’s operations of late, and we’re sticking with our above-market $262 fair value estimate for now.
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