Tuesday, July 22, 2014

Coca Cola Earnings Review & My Two Cents

Hello all! As earning season continues on its way-- Coca Cola announced 2nd quarter earnings today., 7/22/14,
 


Here are some of the highlights from the call:

The Good:
Global Unit case volume grew 3% during the second quarter and 2% year to date. International volume grew 3% while North American volume remained the same. Volume also accelerated in North America, Eurasia and Africa, Europe and Asia Pacific.
The Not so Good:
Reported net revenues were down 1% in the second quarter and 3% year to date.

Reported operating income was down 2% in the second quarter, and year to date.

Earnings per share for the quarter was reported at $0.58, which is down 1%

Cash flow from operations was at $4.5 billion, a significant increase from reported cash in quarter 1 which was at $1.1 billion.

My Two Cents:
Despite the “less than stellar” results for this quarter— Coke is one of those companies in my portfolio which I consider to be part of the “core”. In other words, despite of its “conservative” growth prospects I don’t see myself selling it any time in the near future (if ever). On the contrary, it is one of those in which I would purchase additional shares if we ever face a significant pull back in the price.

What’s not to love about coke? First of all, I don’t drink soda so that may come as a surprise. However, considering I am probably in the minority as a non-soda drinker, whether I like soda or not that has nothing to do with the profitability of this company. I bought coke back in December 2011 for a few main reasons: 1. Strong international brand with only one sole competitor 2. The company pays dividends (currently a nice $1.22 a share) 3. It’s one of Warren Buffet’s favorites. (my virtual investing mentor). 

Sometimes I wished I would have grabbed more shares at that price but I’m very happy with the returns it has provided me with over the years (nearly 47% return since time of purchase) and I am certain it will continue on that path, even if at a conservative level.

Has my original thesis of this company changed at all? Nope. And, with that said, I will remain a happy shareholder.

…and can we close with their oh-so-cool new marketing campaign of personalized bottles:

 
You can make your on at http://www.shareacoke.com/#bottle (How cool is that!!!)
Any questions, concerns, confused about anything on here? Feel free to email me at teachmetoinvest@gmail.com
 
Cheers to profits!
Mabel

Google Earnings Review & My Two Cents

Google had quite the incredible quarter!
 
Earnings were reported this past Thursday, July 17th.

 
 
Before I dive in to earnings, just want to share that my very first shares of stock ever were from Google (back in June of 2008). I am pretty sure I’ve told this story a million times on the blog but is currently one of my favorite companies to own and thus, why I am so excited to share news of another amazing quarter.

*I don’t own many shares of the company and I am not sure I would buy new shares at today’s prices (currently trading at ~$594 a share). However, I am happy to be a shareholder (even with my very minor contribution) and definitely see this company thriving for years to come.

So anyways, here’s a basic overview of the earnings:

·         Consolidated revenue of $15.96B (yes, billion) for the quarter ended June 20, 2014. This represents an increase in revenue of 22% in comparison to the same quarter last year. It comes to no surprise that bulk of that (65% of total revenue) was generated directly from their site (revenue generated from direct advertising on their site). Google makes money in a few different ways but advertisement remains its main source of revenue!

·         Net income for the second quarter came in at $3.42 billion, which is a slight increase from the $3.23 billion generated during second quarter 2013!

·         Reported cash flow from operations (a “fancy” term for money generated by a company’s normal business operations, or cash generated from doing business) came at $5.63 billion for the second quarter 2014, compared to $4.71 billion in the second quarter 2013.

·         Capital expenditures were reported to be $2.65B, the majority of these expenses had to do with the new construction of a data-center, real estate purchases and production equipment.

·         Free Cash Flows-- Company generated $2.98 billion free cash flow for the quarter. For the entire year (12 months ending 06/30/14) Google has a total of ~$3.4 billion. For the entire history of the company, including all the money that has accumulated (+ short term investments), the amount is now at $55.5 billion, as of quarter ending June 30th, 2014. 

*For my beginner investors--- free cash flow is basically all the cash a company is able to generate (or is left over with) after paying all expenses including investments made to maintain or expand operations.  I don’t know about you but if I had 55+ billion worth of cash and short term investments (those that last less than a year) in my bank account I would be pretty happy (that’s actually quite an understatement).

·         Long term debt for Google as of June 30th, 2014 is 3.2 billion (*considering the incredible amount of cash Google generates, you’ll probably notice this is not very significant).

I could probably go on and on but I will stop right here. If you would like to take a closer look at the earnings yourself (and would like something to read on the train while on your way to work or during leisure times) feel free to check out the complete earnings release: Here

My Two Cents
Google is Google. Is a leader. Is a verb. Nothing comes close. I can easily see this company growing an excelling as the years go on. Beside advertisement, they are working hard to develop other sources of revenue—from acquisitions to innovative projects like “Google glass” or self-driven cars, I feel Google’s potential is quite exponential and I look forward to seeing how they continue to remain innovative and a leader for years to come.

*If you have any questions in terms of where to find certain numbers in the financial statements or anything in general you aren’t clear about, feel free to email me! Also, feel free to say hello. Always love hearing from my readers.

Happy Investing and cheers to profits!

Mabelle

Catching up on Earning season!-- Johnson & Johnson Earnings Review

Hey everyone! I am alive , well and absolutely loving DC and my internship. Learning so much I can’t even begin to explain how blessed I feel. I’ll write a catch up post soon but  is earnings season!! I’ll be posting earning results for the companies I currently own as they report earnings. Johnson and Johnson was the first company from my portfolio to report earnings, last week on 07/15/14. Here I give you a brief summary of the result, some educational pointers and my two cents...

---

Johnson & Johnson (Ticker: JNJ) is one of my portfolio favorites- by far! If you are looking for a company with diversity where it matters, this one should definitely be on your list. What do I mean by “where it matters”? Well, in a nutshell, J&J likely makes a lot of the products that you, as a consumer, uses on a consistent basis.  As indicated in their Yahoo! Finance “bio”—the company is engaged in the research and development, manufacture, and sale of various products in the health care industry worldwide. So, not only does this company excel at a domestic level but they are also known internationally.

Just to give you an idea—J&J is the “owner” of products such as Aveeno, Clean & Clear, Lubriderm, Neutrogena, Listerine, Band-Aid, Tylenol, Zyrtec, Motrin and even Splenda! (I just found out about Splenda as I did research for this post). And those listed are not even all of the products. The company strives towards innovation and works hard to remain relevant and a competitive leader within their industry. Need I say more? Definitely a stock I would recommend to anyone—from for my beginner investors to seasoned investors alike. If you are looking to buy shares, I would recommend buying when the market is down so you can get a little bit of a discount considering the stock is trading at about $102 per share. With that said-- current price shouldn't really matter to a long term investor whom believes in a company's long term growth potential.

Here are some of the earnings highlights of how they did during the second quarter 2014:

Quick Summary of financials

1.    Company reported sales of $19.5 Billion which represents an increase of 9.1% in comparison to the same quarter in 2013.

2.    Earnings Per Share came in at $1.51 (or $1.66, a whooping increase of 12.2%, excluding specialty items)

3.    Sales domestically (USA) increased 14.9% while international sales increased 4.4%-- for an overall operational growth of 5% (love seeing growth in a company that’s already big as it is).

Great News For New Drug approvals

As previously mentioned, JNJ strives to have a solid and successful R&D team who’s task is to come up with new products and development not only for the profitability of the company but for the sake of health and well-being of the consumer. During the quarter the Food & Drug Administration (FDA) granted approval of SYLVANT- a new drug for the treatment of patients with Castleman disease. Approval was also granted for VOKANAMET, a treatment for type-2 diabetes and OLYSIO for patients with hepatitis C.  Permission was also granted by the FDA to extend its adult indication of schizophrenia to include teenagers 15 and older (which opens up more market for the product).

The CEO showed continuous optimism in the company’s performance going forward and increased full-year 2014 earnings per share estimates to $5.85-$5.92. He indicated: “Our strong second quarter results reflect the continued success of our new product launches and the progress we have made in achieving our near-term priorities…our diversified business model, focus on long-term growth drivers and talented colleague’s position us well in this evolving and dynamic global health care market”. –Alex Gorsky, CEO.

My Two Cents:
Company is great, is well diversified, has strong results and continue to strive for future growth. Company stays in my portfolio.