Valuentum Exclusive Analysis for the Discerning Investor

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Alphabet Remains a Net-Cash-Rich, Free-Cash-Flow Generating Powerhouse
Image: Alphabet’s revenues eclipsed $100 billion in the quarter. In the quarter, Alphabet generated $48.41 billion in cash from operations and spent $23.95 billion in property and equipment, resulting in free cash flow of $24.46 billion. Year-to-date, cash from operations was $112.3 billion, while the company spent $63.6 billion in property and equipment, resulting in free cash flow of $48.7 billion. Total cash, cash equivalents, and marketable securities was $98.5 billion at the end of the quarter, versus $21.6 billion in long-term debt. The company pays a quarterly cash dividend of $0.21 per share. Looking to all of 2025, Alphabet expects capital expenditures in the range of $91-$93 billion. Even in the face of higher capital spending, Alphabet remains a net-cash-rich, free-cash-flow generating powerhouse. We continue to like shares in the Best Ideas Newsletter portfolio.

Your Role as a Choice Architect
Image: Impact Hub Global Network. Richard Thaler in his groundbreaking book Nudge, co-written with Cass Sunstein, talked about the role of the choice architect. A choice architect is basically someone or some organization that has the responsibility for organizing the context and content in which people make decisions. At Valuentum, we can never provide personalized buy/sell advice, but in providing publishing services, we've opted for the healthy option for members, and that sometimes means you won't find a large selection of dessert options. This isn't a shortcoming of our service (i.e. we know desserts are tempting), but rather a key positive attribute. As we've shown time and time again, you don't need to look far to beat the market return (or, by comparison, to have a healthy diet). If something is not on the menu at Valuentum, it means the chef has something better cooking in the kitchen. Here's to your long-term financial health!

IBM Raises Full-Year Revenue Growth and Free Cash Flow Outlook
Image Source: TradingView. Looking to full-year 2025 expectations, IBM now expects constant currency revenue growth of more than 5%, with free cash flow now expected to be about $14 billion. IBM ended the third quarter with $14.9 billion of cash and marketable securities, up $0.1 billion from year-end 2024. Debt, including IBM Financing debt of $11.3 billion, totaled $63.1 billion, up $8.1 billion year-to-date. IBM continues to pay a regularly quarterly dividend of $1.68 per common share and has paid consecutive quarterly dividends every year since 1916. IBM is one that we’re watching closely for the Dividend Growth Newsletter portfolio, but we remain on the sidelines at this time. Shares yield 2.3% at the time of this writing.

Tesla Faces Earnings and Margin Pressure But Free Cash Flow Soars
Image Source: Tesla. Tesla’s cash flow from operations was roughly flat year-over-year at $6.24 billion and the company slowed capital spending to $2.25 billion, resulting in free cash flow of nearly $4 billion in the quarter. Cash and cash equivalents totaled $41.65 billion at the end of the quarter versus $7.7 billion in debt and finance leases, resulting in a net cash position of nearly $34 billion. Tesla delivered 497,099 vehicles in the quarter, up 7%, buoyed by a pull-forward in demand from the expiration of the $7,500 government tax credit. Though fourth quarter results may be pressured, the company remains a net cash rich, free cash flow generating powerhouse. The high end of our fair value estimate range stands at $345 per share, however, well below where shares are currently trading.

Philip Morris’ Smoke-Free Portfolio Continues to Outperform
Image Source: Philip Morris. Philip Morris’ work to continue to grow its smoke-free business (SFB) is bearing fruit. Its SFB now accounts for 41% of total net revenues, up 2.9 percentage points from last year’s quarter. In the quarter, the company’s SFB experienced net revenue growth of 17.7% (13.9% organically) with gross profit increasing 19.5% (14.8% organically). We continue to like Philip Morris’ oral SFB, which increased 16.9% in pouch or pouch equivalents (20.2% in cans), fueled by nicotine pouches. In the U.S., for example, its nicotine pouch product line-up ZYN accelerated growth to 39% in the third quarter. Philip Morris recently increased its regular quarterly dividend by 8.9%, to $1.47 per share, or annualized $5.88 per share. Looking to 2025, net revenue is expected to grow 6%-8% on an organic basis and adjusted diluted earnings per share, excluding currency, is targeted in the range of $7.36-$7.46, up from $6.57 in 2024, up 12.8% year-over-year at the midpoint. Shares yield 3.7% at the time of this writing.

Dividend Increases/Decreases for the Week of October 17
Let's take a look at firms raising/lowering their dividends this week.

Key Comments from the Banks This Earnings Season
Image: The banks continue to perform well. Let's read through key comments from banking executives this earnings season.

Nike Has Posted 23 Consecutive Years of Increasing Dividend Payouts
Image Source: TradingView. During the first quarter of fiscal 2026, Nike returned $714 million to shareholders, consisting of dividends of $591 million, up 6% from the prior year, and share repurchases of $123 million. Nike has repurchased 124.4 million shares under its $18 billion program approved by the board in June 2022 for a total of approximately $12.1 billion. At the end of the quarter, inventories at Nike were $8.1 billion, down 2% compared to the prior year, while cash and short-term investments were $8.6 billion, down approximately $1.7 billion from last year. Nike continues to face pressure in its footwear division, though apparel sales were strong in the quarter. Footwear revenue fell 12% on a constant currency basis in China. Looking to the fiscal second quarter, revenues are expected to be down low single digits, while gross margins are expected to fall 300-375 basis points, including a net headwind of 175 basis points from tariffs.

Starbucks’ Turnaround Continues
Image Source: TradingView. During the fiscal third quarter, Starbucks opened 308 net new stores, ending the period with 41,097 stores. The company ended the quarter with 17,230 stores in the U.S. and 7,828 in China. Consolidated net revenues beat expectations in the quarter, increasing 4%, to $9.5 billion, or a 3% increase on a constant currency basis. Its non-GAAP operating margin, however, contracted 660 basis points, to 10.1%. Non-GAAP earnings per share of $0.50 declined 46% over the prior year and missed expectations. The coffee giant ended the quarter with $17.3 billion in short- and long-term debt and $4.7 billion in cash and investments. Starbucks’ global same store sales have now fallen for six consecutive quarters, but we expect improvement as the company heads into fiscal 2026. Shares yield 2.9% at the time of this writing.

Realty Income’s Dividend Remains on Solid Ground
Image Source: Realty Income. In June 2025, Realty Income announced its 111th consecutive quarterly dividend increase and its 131st increase since it was listed on the NYSE. The amount of monthly dividends paid per share increased 3.7% in the quarter, to $0.806, representing roughly 76.8% of its adjusted diluted AFFO. As of June 30, Realty Income had $5.1 billion of liquidity, including cash and cash equivalents of $800.4 million, while net debt stood at $28.5 billion. Looking to 2025, the company lowered its guidance for net income per share, but it increased the low end of AFFO per share to the range of $4.24-$4.28 from $4.22-$4.28 previously. Investment volume was increased to approximately $5 billion, up from $4 billion previously. Realty Income’s dividend remains on solid ground, and the REIT yields 5.5% at the time of this writing.