Financial Briefing - Tuesday, January 16th 2024
Boeing: Challenges Continue And Deepen
Boeing is facing a difficult year ahead due to ongoing product quality issues, deadly crashes, and a focus on shareholder value over engineering and product quality. The company has struggled in recent years, with the pandemic, increased competition from Airbus, and high levels of debt. In 2020, Boeing reported a $14 billion adjusted loss and saw its net debt increase to $38 billion. While sales increased to $62 billion in 2021, the company still posted a $4 billion GAAP loss and saw its net debt rise to $42 billion. Despite an increase in sales to $66 billion in 2022, Boeing continued to operate at a loss and has a net debt load of $40 billion. The backlog of orders has increased to $404 billion, but there are concerns about the conversion of these orders and the potential for cancellations. The recent safety concerns and inspection requirements further complicate Boeing's challenges. The company's focus on shareholder value has not translated into profits, and it will likely take many years to reverse the cultural shift away from engineering. Given these issues, Boeing is an easy avoid for investors.
Macy's: Holding For Takeover Bid, Expecting Decent Post-Holiday Sales Results
This podcast episode covers an analysis of Macy's, a major American retailer. Macy's is known for selling apparel and accessories and operates both brick-and-mortar stores and an eCommerce presence. The host examines key metrics such as revenue and earnings growth, equity and dividend growth, and valuations. The revenue growth for Macy's in the quarter ending October 2023 saw a YoY decline of 7.8%. The company expects a net sales of $7.95B to $8.25B in the upcoming Q4, with a YoY improvement in the gross margin rate. Macy's earnings also toppled by 60% on a YoY basis. The analysis notes that the dividend growth for Macy's has seen a decline over the last 10 years. The current quarterly dividend of around 16 cents a share is considered dismal. The share price has risen +23% above its 200-day moving average and has gone up about +63% from its autumn lows, but revenue and earnings have seen YoY declines. The host concludes that Macy's is a hold rather than a buy, considering the seasonal nature of its business model and the potential impact of the takeover bid.
As Margin Improves, JetBlue Airways Looks Like A Rebound Opportunity
JetBlue Airways, a low-cost carrier in the US, has faced significant challenges due to the Covid-19 pandemic. The company's operating margins have dropped, leading to losses per share. JetBlue primarily targeted business travelers and visitors throughout the year to mitigate the seasonal nature of the industry. However, the airline has encountered difficulties such as the aftermath of 9/11 and high fuel costs. Covid-19 has further exacerbated these problems, causing the company to operate at a loss for several years. JetBlue has attempted to expand its operations in the Caribbean and Latin America while also pursuing a merger with Spirit Airlines. However, an antitrust battle surrounding the merger has created uncertainty for investors, resulting in a decrease in the company's stock price. Despite the challenges, JetBlue predicts improving margins and a return to profitability in fiscal year 2023. However, high fuel costs remain a major concern and continue to impact the company's profit margins. The podcast host advises holding onto JetBlue shares with potential for buying opportunities if the stock price further declines.
Cogeco Inc. (CGECF) Q1 2024 Earnings Call Transcript
During the first quarter of fiscal 2024, Cogeco Inc. achieved several significant milestones. The company secured additional wireless spectrum during the government auction, expanding its spectrum coverage to 100% in its wireline footprint and gaining valuable spectrum in major regions. Cogeco is currently in negotiations for MVNO access in Canada, which is crucial for the success of its mobile business. The company is also preparing to enter the US wireless market through commercial MVNO arrangements, as the barriers to entry in the US are lower compared to Canada. Cogeco also bought back shares in both Cogeco Inc. and Cogeco Communications, increasing the net asset value of the company and generating cash flow per share accretion. In terms of financial performance, Cogeco's Canadian operations saw strong internet subscriber growth, but declines in video and phone revenue. In the US, economic and competitive challenges continue to be a headwind for the company's operations. Cogeco Media reported another quarter of year-over-year revenue growth, and the company is focusing on developing innovative digital solutions and adapting to a multiplatform audio content model.
Franklin Covey Q1 Results: Long-Term Thesis Remains Strong
Franklin Covey (NYSE: FC) has reported its quarterly earnings for the first quarter of fiscal year 2024. The company saw a modest decrease in net sales, but its flagship service, All Access Pass (AAP), saw a 13% increase in sales. Deferred revenue also increased, indicating potential future growth. Gross margin improved, although operating margin diminished due to increased SG&A expenses. Cash flow from operating activities experienced a significant boost from the previous year. The company repurchased shares and reduced debt, and customer retention remained high. CEO Paul Walker highlighted promising projects with customers, indicating ongoing demand for Franklin Covey's products. The author believes the company started its fiscal year strong, beating estimates and benefiting shareholders through capital allocation. The author uses an EV/EBITDA method to value Franklin Covey and arrives at an implied price target, suggesting a potential 17% return from the current stock price. The author also notes competition as a significant risk facing the company. Despite the recent underperformance of the stock, the author concludes that the fundamentals and financials of Franklin Covey remain strong.