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Recent Articles
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NextEra Energy Reaffirms Outlook
Oct 23, 2024
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Image: NextEra Energy’s shares have bounced back nicely from their October 2023 lows.
NextEra Energy reaffirmed its outlook, which we like quite a bit. This year, NextEra Energy continues to expect adjusted earnings per share in the range of $3.23-$3.43. For 2025, 2026, and 2027, the company expects adjusted earnings per share in the ranges of $3.45-$3.70, $3.63-$4.00 and $3.85-$4.32, respectively. NextEra Energy also continues to expect to grow its dividends per share at roughly a 10% rate per year through at least 2026, off a 2024 base. We like NextEra Energy as a core holding in the ESG Newsletter portfolio.
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Boeing Burning Through Cash
Oct 23, 2024
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Image: Boeing’s shares have seen better days.
The big red flag with Boeing is its cash flow performance. The aerospace giant burned through $1.3 billion in operating cash flow in the third quarter due to lower commercial widebody deliveries and unfavorable working capital timing, and after factoring in capital spending of $611 million in the period, cash burn in terms of negative free cash flow was roughly $2 billion in the quarter. Through the first nine months of the year, Boeing has burned through over $10.2 billion in free cash flow. Boeing’s balance sheet isn’t as strong as it once was either, with $10.5 billion in cash and marketable securities versus consolidated debt of $57.7 billion. Inventories swelled to $83.3 billion at the end of its September quarter versus $79.7 billion at the end of last year. The company does have $20 billion undrawn on its credit facilities, however. We don’t think Boeing is a top idea for investors, but we do like its total company backlog of $510.5 billion, which includes over 5,400 commercial airplanes. We prefer Honeywell as our top aerospace idea and Lockheed Martin as our top defense play.
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Starbucks Posts Lower Than Expected Performance, Turnaround “Will Take Time”
Oct 23, 2024
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Image: Starbucks’ shares have been volatile the past couple years.
Starbucks suspended its guidance for the full year 2025, given new CEO Brian Niccol and “the current state of the business.” That said, the company increased its quarterly cash dividend to $0.61 per share from $0.57 per share, which equates to a 2.5% forward estimated dividend yield, pointing to optimism regarding the long term. We’re cautious on Starbucks’ shares, as even the executive team noted that a turnaround “will take time.” Our fair value estimate stands at $85 per share, below where shares are trading at the time of this writing.
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Lockheed Martin Raises 2024 Guidance, F-35 Program in Focus
Oct 23, 2024
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Image: Lockheed Martin’s shares have done well of late.
We liked Lockheed Martin’s guidance revisions for 2024, but we’re keeping a watchful eye on its F-35 program revenues, which experienced lower sales in the quarter due to delays in receiving additional contractual authorization and funding under its Lots 18-19 contract. The company’s Missiles and Fire Control (MFC) segment and Rotary and Mission Systems (RMS) segment experienced sales increases of 8% and 6%, respectively, in the quarter. Operating profit growth was most pronounced in its MFC division. The high end of our fair value estimate range stands at $649 per share, and we continue to like shares as an idea in the Dividend Growth Newsletter portfolio.
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