- Carbon Finance
- Posts
- 💰This Company Makes $1B Doing Nothing
💰This Company Makes $1B Doing Nothing
Hi! In today's newsletter: 1) Costco's Earnings Visualized, 2) Companies Ranked By Net Interest Income, 3) Nike's Earnings Visualized, and more!
Carbon Finance
September 29, 2023
Happy Friday!
Every minute, the likelihood of a Government shutdown is increasing. Congress faces a potential shutdown by 12:01 a.m. ET Sunday, with the Senate and House disagreeing on funding solutions and some House Republicans opposing short-term measures.
In today’s newsletter:
📈 Costco’s Earnings Visualized
💸 Companies Ranked By Net Interest Income
✔️ Nike’s Earnings Visualized
Let’s dive right in!
Not subscribed yet? Sign up today!
📈 Costco’s Earnings Visualized
Costco reported better than expected quarterly earnings, driven by grocery sales, though big-ticket item sales declined. Traffic to stores increased by 5.2% globally, but the average transaction amount dropped by nearly 4%. The company's earnings per share stood at $4.86, surpassing the expected $4.79.
Membership growth continued, with 71M paid household members, an 8% increase from the previous year. U.S. sales trends have slowed, and while a membership fee increase is anticipated, CFO Richard Galanti confirmed it's only a matter of timing.
Younger individuals are increasingly purchasing Costco memberships, but their spending is lower than older generations, with the company adapting its offerings to attract various age groups.
Costco also recently introduced one-ounce gold bars for sale on its website, which sell out rapidly, often within hours. Limited to two bars per member, they are priced at $1,949.99 from South Africa's Rand Refinery and $1,979.99 from Swiss supplier PAMP Suisse.
💸 Companies Ranked By Net Interest Income
Rising interest rates, traditionally seen as detrimental for businesses, have surprisingly benefited many large companies. As the Fed tightened monetary policy, these corporations locked in low interest costs during the pandemic through fixed-rate, long-dated bonds. As a result, their net interest expenses have decreased, and earnings from cash deposits have surged, providing them with more funds for investments, bill payments, or shareholder returns.
This phenomenon has contributed to the resilience of the US economy. It’s no wonder Warren Buffett has a cash pile of $147B and isn’t keen on deploying it anytime soon. Buffett will collect risk-free interest on his cash while waiting for the right opportunity to buy something he loves.
✔️ Nike’s Earnings Visualized
Nike's fiscal Q1 results showed a slight miss in revenue expectations but boasted stronger-than-expected earnings. The company reported a 2% increase in revenue to $12.9B, just shy of the projected $13B. However, its earnings of $0.94 surpassed the anticipated $0.76.
CFO Matthew Friend emphasized the company's strategic approach over the past year, resulting in a solid marketplace and consistent brand momentum. A 10% inventory drop from the previous year positively influenced investor sentiment. While sales in China, a crucial market for Nike, grew by 5%, North American sales saw a 2% decline, hinting at broader consumer spending concerns.
A big concern for Nike also lies around the shifting dynamics in Nike’s Air Jordan performance. Recent data suggests a decline in the resale value of some Jordan shoes, with the premium for new releases of Nike's Air Jordan 1 Retro High dropping from 61% in 2020 to just 4% in 2023 on StockX. The resale market, while not directly impacting Nike's revenues, can be also a barometer for consumer sentiment. Although Nike remains a top-selling brand on StockX, other brands are experiencing faster growth.
🎯 Target Closures. Target $TGT announced the closure of 9 stores across 4 states due to concerns over theft and organized retail crime impacting the safety of its employees and customers. [AP]
🚀 OpenAI Moons. OpenAI is considering a share sale that could value it at $90B, allowing employees to sell shares and aiming for $1B in 2023 revenue. [WSJ]
🧐 Amazon Sued. The FTC and 17 states have sued Amazon $AMZN for antitrust violations, accusing the company of monopolistic practices that result in higher prices and reduced competition in the online retail space. [NYT]
🎉 New Meta Products. Meta's $META Connect conference showcased the new Quest 3, introduced Xbox Cloud Gaming, revealed Emu for AI image generation, launched Ray-Ban smart glasses, and announced AI-powered bots and tools across its platforms. [TC]
📈 7% Rates. JPMorgan $JPM CEO Jamie Dimon warns clients to prepare for potential interest rates of 7% and stagflation. [BB]
❤️ Fitness Partnership. Lululemon $LULU and Peloton $PTON are forming a partnership, with Lululemon directing customers to Peloton's classes and Peloton selling co-branded Lululemon apparel. [WSJ]
Notable Companies Reporting Earnings Next Week:
Tuesday:
McCormick & Company ($MKC)
Wednesday:
RPM International ($RPM), Tilray Brands ($TLRY)
Thursday:
Constellation Brands ($STZ), Levi Strauss ($LEVI)
All of the companies that are reporting earnings this week can be viewed here.
Major Trades Published 9/25 - 9/28
Buys
Sells
MongoDB ($MDB)
Insider: Dev Ittycheria (CEO)
# of Shares Sold: 134,000
$ Amount: $43,845,181
SEC Forms: [1]
Williams Sonoma ($WSM)
Insider: Laura Alber (CEO)
# of Shares Sold: 100,000
$ Amount: $15,000,000
SEC Forms: [1]
Alphabet ($GOOG/$GOOGL)
Insider: John Kent Walker (President, Global Affairs, CLO)
# of Shares Sold: 71,598
$ Amount: $9,346,260
SEC Forms: [1]
Salesforce ($CRM)
How was today's newsletter?We value all of feedback we receive. Let us know how we did so we can continue to make this the best investing newsletter available! |
Disclaimer: The publisher does not guarantee the accuracy or completeness of the information provided in this page. All statements and expressions herein are the sole opinion of the author.
Carbon Finance is a publisher of financial information, not an investment or financial advisor. We do not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient.
The information contained on this website/newsletter has been crafted with the assistance of an AI language model to enhance the content of this newsletter. We have made efforts to ensure the quality and reliability of the information presented, but we cannot guarantee its absolute accuracy. Therefore, readers are advised to exercise their own judgment and seek additional sources if necessary.
THE INFORMATION CONTAINED ON THIS WEBSITE/NEWSLETTER IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME. THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN.
No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.
Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable. They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein. The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and the publisher undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.
The publisher, its affiliates, and clients of the publisher or its affiliates may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.
Neither the publisher nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.
By using the Site or any affiliated social media account, you are indicating your consent and agreement to this disclaimer Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.