Earnings Roundup: GameStop, FedEx, Williams-Sonoma, and More

Investors have actually seemed to embrace the first of what will probably be several interest rate hikes by the Federal Reserve this year. In this podcast, Motley Fool analysts Ron Gross and Jason Moser discuss the impact of the Fed's move on the stock market, as well as:

• GameStop's (GME 2.56%) fourth-quarter loss.
• How FedEx (FDX -0.21%) is weathering challenges to get through its latest quarter.
• Williams-Sonoma (WSM -1.34%) closing out the fiscal year with record results.
• Amazon (AMZN -1.65%) and Netflix (NFLX 1.74%) making moves to strengthen their video streaming businesses.
• The latest from Starbucks (SBUX -1.02%), Accenture (ACN -1.45%), and Walmart (WMT 0.57%).

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on March 18, 2022.

Chris Hill: Coming up, we've got a key metric most investors ignore, two tech giants approaching the same challenge with different strategies, and a lot more. Load up on stocks and bring your friends -- Motley Fool Money starts now.

...

Chris Hill: From Fool global headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill and I'm joined by Motley Fool senior analyst Jason Moser and Ron Gross. Good to see as always, gentlemen.

Jason Moser: Hey.

Ron Gross: How you doing, Chris?

Chris Hill: We've got the latest headlines from Wall Street, we will dip into the Fool mailbag, and as always, we've got a couple of stocks on our radar. But we begin with the big macro. On Wednesday, for the first time since 2018, the Federal Reserve raised interest rates and while it was just a quarter-percent, the Fed indicated rate increases will happen six more times this year. Ron, when you look at what happened with stocks in general, the days after the announcement, investors seem OK with all this.

Ron Gross: Well, Chris, this should have been a surprise to literally no one. I think we're seeing a bit of a relief rally. We've been waiting for so long for rates to increase, and now it's finally upon us. That tends to calm people down, interestingly enough. Although everyone probably would like rates to be at zero forever, that's not going to happen, Chris. The Fed signaled they expect to lift the rate to 1.9% by the end of this year. That's slightly higher than the level from before the pandemic, when they cut rates to near zero. Now, interestingly easy for me to say, the median projections of Fed officials showed the rate rising to around 2.75%, not 1.9%, which was the average by the end of 2023. That would be the highest since 2008, so don't be surprised if you see those short-term rates go above 2%. I think 1.9% is probably on the lighter end. The committee also expects to begin reducing their holdings of Treasury securities and other debt securities.

In May, Chairman Powell signaled a concern that higher inflation might persist due to a really hot job market. I think Friday's unemployment report reinforces those sentiments. So far, the market is holding steady, actually up. We've got obviously escalating tensions in Ukraine and Russia, it's a mess. We have higher energy and commodity prices, although we've seen oil come down over the last several days which the market has liked, as well. We've got a lot going on, Chris.

Chris Hill: Let's move on to some of the companies making headlines this week. GameStop reported a loss in its fourth quarter. CEO Matt Furlong cited a number of issues hitting the video game retailer over the holidays. Jason, shares of GameStop are now 50% lower from where they were a year ago.

Jason Moser: Yeah, and that makes sense. The bumpy ride that the stock has taken over the past couple of years has been, obviously, an attention-getter and a point of conversation for many of us. I mean, this is recognized as a meme stock, and that's a sword that can cut both ways. But it is important to remember, as critical as we could be of GameStop, there is an actual business here, and while it's a challenged one, I do feel like CEO Matt Furlong seems very much up for the challenge. That said, cutting a loss in this quarter is a bit of a downer. This is the most important quarter, ultimately, for this business. In fiscal 2020 and 2019, 42% and 34% of their revenue, respectively, came from the fourth quarter. That holiday quarter matters to them, and they are still trying to turn things around. It is important to note how the revenue shift continues to evolve for this business. It's becoming a bit more dependent on hardware, and it's now fully more than half of overall sales. But it is also interesting to note this collectibles business, which I don't think many of us would have really thought a whole heck of a lot about. Back in 2018, it was 8.5% of the business. That collectibles business now is 13.7% of total revenue. As they make this move into this metaverse age and dabble in NFTs and talk about blockchain and crypto, there are going to be some opportunities to really perhaps diversify that revenue stream a little bit for GameStop, which ultimately would be a good thing. Listen, I'm not saying this is a business that you go and buy today, but it is a fascinating one to cover from an analyst perspective, and sometimes, turnarounds do turnaround, so keep an eye on it.

Chris Hill: Third-quarter revenue for FedEx was higher than Wall Street was expecting, but shares of the bellwether stock fell a bit on Friday after profits were impacted by worker shortages. Ron, when you think about the rise and fall of omicron over the course of FedEx's quarter, this seems logical.

Ron Gross: Yeah, for sure. It was actually a pretty good report. I would call it solid in most areas, in light of everything going on. It was just a bit shy, I think, of expectations. But as we said, when we talked about macro, there's so many things going on here that companies are doing their best to navigate, and I think FedEx did a pretty good job. If we look at some of the metrics, you had revenue up almost 10%, higher shipping rates made up for fewer shipped packages. Holiday season brought record operating income in December, but omicron led to decreased customer demand in January and February. We started off strong, we got weaker. Results benefited from fuel surcharges that rose at a faster pace than fuel costs. FedEx said it's going to continue to raise its fuel surcharge across all shipping services starting April 4. That shouldn't be a surprise where we're seeing fuel costs rise across the board, impacting everyone. Results also benefited from lower variable comp expense, less severe winter weather.

If we take a quick look at the three main segments, FedEx Express, operating results increased, FedEx Ground operating results declined primarily due to higher transportation and labor costs. FedEx Freight, which is their smallest division, operating income nearly tripled there. Revenue per shipment increased 19%. Overall, operating margins widened by 130 basis points, and adjusted earnings per share were up 32%. You can't argue with the increase in earnings of 32%. I think, that all things being equal, that's pretty good. Struggling to attract workers in recent months. Labor costs are skyrocketing. They're also under pressure from contractors who are saying that their projections were not good enough. They ended up renting trucks and adding staff that they actually didn't need to do. That doesn't make contractors very happy when they have to do things like that. They have some things to work out, but overall, a solid report.

Chris Hill: This week, Starbucks announced that CEO Kevin Johnson is stepping down on April 4. Former CEO Howard Schultz is returning as interim CEO, making it the third time in company history that Schultz has occupied the corner office. The board says they will begin a search for a permanent replacement and expect to have the next CEO in place this fall. Jason, shares of Starbucks rose on this news, and I hope that optimism is warranted, because I kind of feel like there's more to this story than we actually know right now.

Jason Moser: It feels like there probably is. What that is [LAUGHTER] is really anyone's guess. But one concern I have -- honestly, we talk a lot about cord-cutting these days. Everybody wanted to cut the cord. Starbucks needs to cut the Schultz. They really need to depart. They need to get out. They can't keep falling back on him. He's been a wonderful leader for this business, I'm not being critical with him. They really need to get their ducks in a row here. There was an interview with Board [Chairwoman] Mellody Hobson. She said flatly, this was not a surprise to the board, that Kevin Johnson had mentioned something a year ago about this. I'm going to take her at her word for that. Did Kevin Johnson light the world on fire during his time at Starbucks? No, but he managed the business through a very tough stretch here, particularly over the last couple of years. So maybe that five years feels more like 10 for him, and he's ready to kind of go off and do something else. There's some questions is in regard to the union narrative here. Maybe that's ruffled some feathers, some concerns there on the in-store experience, feeling like maybe the operations have suffered a little bit. I don't know, man. They're going to have to really make sure they nail this next CEO down and make the right decision. It feels like Roz Brewer is the obvious candidate, but a lot remains to be seen.

Chris Hill: If the board knew a year ago Ron, why do they let Roz Brewer leave the executive ranks and go become the CEO at Walgreens? [LAUGHTER]

Ron Gross: I think there's some wordsmith going on here. I'm not sure how significant Johnson's notice to them was a year ago. He might have in passing said at some point, "I'm going to look to retire." I think this is more about the unions. A group of investors representing more than $1 billion in Starbucks stock sent a letter saying, "we believe that Starbucks' reputation may be jeopardized due to reporting of aggressive union-busting tactics." They go on to say a lot of other things that are critical of Kevin Johnson, who I'm on record as being a fan of, by the way. I hope that was not misplaced. I think this is more about the union, about the National Labor Relations Board filing a complaint. A lot of things that said it's time for him to go, let's bring Schultz back for a bit, and then we'll regroup.

Chris Hill: Jason, I agree with you. All these questions that we have disappear if they really nail the hiring of the next CEO. Let's end on this note. How attractive do you think this job is? All things being equal, is being the CEO of Starbucks a more attractive job than say, being the CEO of Domino's, which is another global restaurant chain that's about to undergo a CEO change?

Jason Moser: Yeah, I think so. I love coffee and I love pizza, but I do feel like you can eat too much pizza and it's going to have probably some more detrimental effects on your health, as opposed to coffee. From that perspective alone ... listen, you go back to Peter Lynch's sentiment there. You go for a business that any idiot can run, because sooner or later, you're going to have an idiot probably running it. I don't feel like it's the biggest challenge, really, to run a coffee business. Coffee sells itself. But, I mean, this is a business that's going to have to evolve over time. It's going to have to address this in-store experience. We talked about this earlier in the week, too, this idea of getting completely waste-free, eliminating the disposable cups by 2025. I think that's probably impractical, but to hear how they may address that in the coming years will be interesting.

Chris Hill: Coming up after the break -- changes coming to two of the biggest video-streaming companies. Which one holds more potential for investors? Stay right here. You're listening to Motley Fool Money.

...

Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross. Williams Sonoma's fourth-quarter report closed out a record year for the home goods retailer. The company also announced a dividend increase. Shares of Williams Sonoma up nearly 15% this week, Ron.

Ron Gross: Big earnings beat, Chris. Increased dividend, as you said, announced a new share buyback, very solid here. Revenue up 9%, Q4 comps up almost 11%. If you look at their three main divisions, you had West Elm up 18%, Pottery Barn up 16%, Williams Sonoma bringing up the back at 4.5%, but still relatively solid. About 70% of sales now come from e-commerce. That's important because, years ago, this is what they needed to do to get back in the game, and yes, they did it, and they should be applauded for that. Their gross margins expanded 290 basis points, operating margins expanded 310 basis points, earnings per share up 37%, that's pretty solid. So far, they've successfully navigated supply chain disruptions, material and labor shortages, capacity limitations. Those issues are still on the table. There are certainly risks; pricing pressures still remain as well. Guidance is strong, mid-to-high single-digit annual net revenue growth, increasing revenues to $10 billion by fiscal '24, which is 2024. It's at $8.2 billion now, 2% yield now. You can buy the stock, Chris, for only 10 times forward earnings and you get a 2% yield. That's not too shabby.

Chris Hill: Accenture, strong second-quarter results came with an increase in guidance for the full fiscal year. Jason, if you're a shareholder of this consulting firm, you have to be pleased with the way Julie Sweet has performed in the 2.5 years she's been CEO.

Jason Moser: Just a tremendous job, and it looks like that's poised to continue. This is a big business with a lot of resources, and they do a very good job, also, investing in the future through vehicles like Accenture Ventures. They've got the Accenture Extended Reality Services. So it's a bit of a two-for-one there, in that you get the stability of that large business, also with those little investments that they continue to make to give you some growth opportunities as well. So it benefits from consulting services as well as outsourcing -- each representing about half of overall sales. Revenue for the quarter, $15 billion, that was up 24% in U.S. dollars. Earnings per share of $2.54 grew 25%, and that's excluding gains from an investment that they recognized last year. Operating income also up 25%. They saw particular strength in their products segment, as well as communications, media, and technology. Revenue in those two segments was up 30% and 29%, respectively. As you mentioned, raised guidance, which of course the market loves to see. They did mention the Russia-Ukraine situation in the call. It's a bit of a wildcard in the near term, but I wouldn't let that take away from the longer-term view that this is a very well-diversified business, both geographically and by industry.

Chris Hill: Big week for streaming-video services. Amazon closed its $8.5 billion purchase of MGM Studios, a film library which includes the Rocky franchise. Netflix has begun quietly testing a new feature to crack down on password sharing. Ron, I know you are a fan of the Rocky franchise, but which one do you think has more potential to benefit shareholders?

Ron Gross: Netflix, if they get it right, that will accrue right to the bottom line -- boom. I think they'll get a lot of revenue that they probably deserve that people have been taking advantage of. The Amazon deal is much bigger though. It has the potential to really transform that side of their business. I think the most important part of that story is actually that it got through the Justice Department, got through antitrust scrutiny. A lot of the big companies, Facebook, Amazon, Microsoft, Alphabet, all under a bit of heat from the Justice Department to not take part in any anti-competitive acquisitions. This went through. It will give them 4,000 films, 17,000 TV shows. I think that's a pretty good number for what they paid.

Chris Hill: Jason, we talk all the time about content costs being an ongoing concern for the streaming services. This is a big check to write, but you get all this content, if you're Amazon, in one fell swoop.

Jason Moser: That's the name of the game, of course, and that really I don't think is poised to change. I think it's great to see Netflix testing with this, because ultimately, that's the goal of a business like that, is you need to spread those content costs around as much as you can. I think that in Amazon's case, this shows the benefit of that streaming of that media side being just one aspect, one part of the business. You don't see nearly the same granularity in those content costs and what it takes to run a streaming business, because they've got so many other pieces of the business to talk about as well, so you can certainly see that more so with Netflix. I would suspect that like Ron said, if Netflix can nail this down right, it should really benefit that business immediately.

Chris Hill: Also if they get this right, doesn't every other streaming service do the exact same thing? Aren't they all sitting on the sideline saying, "You go first, Netflix"?

Ron Gross: I would imagine so. We'll have to wait and see there, but most of these guys are pretty bright. Save the Qwikster debacle, every day seems it's done a very good job through the years with this business. I suspect that they will go into this with some very deliberate thought.

Chris Hill: It's not just restaurants that are offering limited menu items. This week, Walmart began selling a limited collection of ice cream flavors in more than 3,500 locations nationwide. The new flavors include wild blueberry shortcake, bourbon cherries jubilee, Kraft Mac and Cheese, and pizza. Ron, I'm not eager to try the pizza. I guess I'm just surprised that they just stopped at pizza. [LAUGHTER] All these other flavors are very specific. Why not go the full nine yards and really take a swing with a topping-type pizza?

Ron Gross: Pepperoni pizza ice cream, no, no, no, no. [LAUGHTER] Now listen, I get that ice cream is made from milk. I get that. But the mac and cheese ice cream that has buttery sweet cheese and the pizza ice cream that has cream cheese and mozzarella -- it doesn't sound appealing to me at all, even though they're all made from milk. It just doesn't do it for me. Some of the other ones I think are intriguing though.

Chris Hill: I was going to say, Jason, a couple of these other flavors -- It might get me into a Walmart this weekend just to see if I can find them.

Jason Moser: [LAUGHTER] It's difficult for me to wrap my head around savory ice cream. I think we all have been conditioned to really expect it as a sweet treat. With that in mind, hey, listen, if I'm throwing some flavor ideas out there, and you know, I'm a big fan of Dizzy Pig barbecue rubs and that Pineapple Head [rub spice] that I always talk about. Hey, let's see a Pineapple Head ice cream. I could see that working out very well. I get a little sweet, a little heat. I'm down for something like that, Chris.

Chris Hill: All right guys, we'll see you later in the show. Up next, a closer look at a key metric for investors that public companies are not required to disclose. Stay right here. This is Motley Fool Money.

...

Welcome back to Motley Fool Money. I'm Chris Hill. One of the most important pieces of information about a public company is something it's not required to report. It's the NPS, the Net Promoter Score. Invented by Fred Reichheld, the Net Promoter Score simply measures how likely a customer is to recommend a business to a friend. In his book, Winning on Purpose, Reichheld shares how finding this piece of information can help long-term investors beat the market. It's something he outlined in a recent conversation with our chief investment officer, Andy Cross.

...

Andy Cross: Maybe you could just highlight a few examples and some learnings, as you've looked at some of these businesses with really positive NPS scores. A little bit of just lessons or examples from the book that our viewers and our listeners can take away.

Fred Reichheld: From the book, in chapter 5, my strategy of investing in NPS leaders consistently over the last decade has more than tripled the stock market, and I use the Vanguard Total Index as my hurdle. We've tripled that, achieved a kind of return that as far as I know, no fund or ETF tracked by Morningstar has matched my Fred Stock Index. You've got to ask: Why is that? Why isn't this insight reflected in market prices more quickly? I think it's because investors have an accountant's mindset. Not intentionally, but all of the numbers that we look at are the ones that accountants have said are important to track progress. Costs and revenues and the things that accountants audit and force people to report accurately. We, thank goodness, don't capture this idea of: Are the customers feeling the love? Are they coming back for more and bringing their friends? Generally accepted accounting does not make you even report the number of customers you have, let alone how many of them are growing their businesses or defecting. And referrals, that's just nowhere. So this whole concept of what drives success is being missed and undervalued.

So some examples. A great example is Discover Card. Discover was a credit card company that I knew out of the corner of my eye, but I'd always seen American Express had been the top of our list of highest NPS.

Then one of my friends at the data business at Bain said, "No, Fred, Discover has actually surpassed American Express." And I went back and studied it -- I covered this extensively in the book. But these guys live the Golden Rule. They don't even sell... They not only were the first one to get rid of annual fees, they got rid of surprise late fees. There's no breakage on the points. Just every customer-friendly thing, including, they will not sell your receivables to a collection agency even if they charge off your [debt] as bad debt. Because the CEO said to me, "Fred, would you do that to a loved one? Is that Golden Rule behavior?" This "love thy neighbor as thyself," the Golden Rule, is at the core of the philosophy, and the guys that actually live that philosophy -- like Discover -- are doing things that their customers love.

Then I asked their employees: How does it feel to be able to treat customers the way you'd treat a loved one? [LAUGHTER] And obviously, it's very inspiring because that's what living a life of meaning and purpose and service to others, and earning standing ovations in the form of 10 on an NPS survey. That's pretty cool. And their total shareholder return has been the best in their industry.

I could tell you a dozen of those stories, but it's the same logic. Investors, at least, don't see that the only way to win in the long-term sense -- sure, you can win in a quarterly bet, or in speculative [stocks]. But if you're a buy-and-hold kind of person, I think the only way to win is to invest in companies who are the NPS leaders, and are loving their customers, and treating them the way they treat loved ones.

Another not a well-known example is First Republic Bank. I'd never heard of them. They came to me and wanted me to give a keynote. And I said, "I'm flattered, but why?" They said, "We think we have the highest NPS in the industry. We've been following your ideas for years and years."

I got to know them, and they are special. In fact, I switched my banking relationship there because they're so good, and I've just loved it. Really excellent customer focus. No late fees. No gotcha. None of the stuff that normal banks do to you. The problem was they are niche. They're a member of the S&P 500, so they are big. They went from $ 8 million in seed capital to worth something like $30 billion or $35 billion today, generating their own cash. But it's hard to measure NPS for them in a Bain rigor, because you can't get a panel of relatively high-net-worth households to talk to you. They have a high score, but it's very hard to prove that it's the best.

I said, "Well, I saw that you report to your investors this number, I call it earn-growth ratio. Of all your growth, how much of it came from your existing book of business and people they referred?" They show this to investors and in their case, 88% of their deposit growth came from their existing book coming back for more and bringing their friends; 90% of their deposit growth. Now we measure earn-growth as carefully as we do Net Promoter Score. When you see a 90% earn-growth rate, invest. Which I did, and I've been a very happy camper that that stock has been just as good as all my NPS leaders.

Andy Cross: Fred, what about the concept...? You're right. Before we hopped on that call, I was knee-deep in spreadsheets, doing my analysis. I can say, I admit, there's no cell for NPS score in my spreadsheets. There should be, but there's no cell. But what is in a lot of our numbers are things like retention levels and that kind of thing. As you mentioned, most companies you talked about -- especially SaaS software companies -- now report net revenue retention rates, and you mentioned referral rates. Is that a proxy for NPS or is that dangerous thinking on my part?

Fred Reichheld: Well, one watch-out is net revenue retention rate is not yet an audited GAAP statistic...

Andy Cross: Correct.

Fred Reichheld: So people are still defining it in a way that they think makes sense...

Andy Cross: Lots of different definitions.

Fred Reichheld: ... so watch out for comparability. I do think that net revenue retention, measured consistently, is an outstanding metric, and it's an even better metric if you add on that referral flow, because referred customers is really the best way to grow. They tend to be higher-quality customers. There's very low acquisition cost with that. But people say, "Oh that's hard to measure, we're going to ignore that and treated it as extra credit." No, it's time to measure that. It's at the core of this whole idea. So when I say earn-growth rate, it's really just taking net revenue retention, which is something already thought about and measured somewhat by businesses, and upgrading it with referral flows, which we did with Warby Parker.

Warby -- tough last few months. Warby was one of the companies that opened their books to us to do some work with earn-growth, and we found what percentage of their new customers said that the reason they were trying out Warby was primarily because of a recommendation from a friend, and it was almost 90%. We don't know as much about earn-growth as we do about NPS because it's a newer metric, but this is in the superstar category.

Andy Cross: The eyeglass retailer Warby.

Fred Reichheld: Yeah, pure digital player to start. But then, I think they've opened 160 stores or something.

Andy Cross: The big part of their strategy going forward.

Fred Reichheld: Every company runs into bumps in the road that surprise accountants, surprise themselves. The thing that lets them recover and prosper and get back to the top of the charts is this core of happy customers who trust that you're going to treat them right, and employees who are part of a culture that is committed to treating customers with love and care. So I'm going to take a risk on a company that's hitting the bumps, that's maybe a great bargain, only time will tell. But Warby is one of those companies I think very highly off.

Andy Cross: Fred, a few more questions here before we wrap up. Is the trend in NPS important? Is that more important than the number?

Fred Reichheld: I think the most important thing is your score versus your key competitors, measured correctly. And if your competitors are closing the gap versus you, watch out. If you're stretching your lead, invest. Intuit (NASDAQ: INTU), another early adopter of Net Promoter. This is a software company, now worth $130 billion.

Andy Cross: TurboTax.

Fred Reichheld: Created by an old friend of mine. TurboTax, QuickBooks. Now they own Mailchimp.

Andy Cross: Yeah.

Fred Reichheld: But Scott Cook the founder started at Bain & Co. about the same time I did. When he left to start this business, he had this philosophy of "we don't deserve any profit until the customer's happy." That's so different than the caveat emptor, buyer beware, maximize shareholder value mentality of the typical business school graduate. But that's what does it, and the reason he adopted NPS is because it helps them put that philosophy in place. He reports NPS measured carefully every year in Investor Day versus his competitors measured the same way. So when you ask about trends, that's the data I would want to see.

Andy Cross: So that's the trend. Second of all, you've mentioned, you've used this historically as a great way to invest. Two questions around the investors and takeaways for people who are watching this scene today. One is, how can they best embrace NPS and use it as part of their own investment strategy? But also tied to that, Fred, do they balance this -- well, this company has a high NPS score, but as you mentioned, the stock may be rocky or they have some other things, the growth may be slowing. So how do you balance out NPS with other metrics? A little bit of guidance around how we may be able to use that great research you found?

Fred Reichheld: Yeah. I love your business. I've been interested in investing since I was in college, and I came to the conclusion that the stock market really does a pretty good job of incorporating public financials into pricing models, and if it's not a perfect market, it's just so close, it's hard to win.

Andy Cross: It's pretty efficient.

Fred Reichheld: It's very efficient. There were guys like Peter Lynch and Warren Buffett, but man, they were needles in a haystack. Then I said, "Wait a minute. If you have new information that the market doesn't understand how important it is or even how to gather it, you really could beat the market." And I think with NPS, it's data that no one else has. What's one place you can get it on a number of companies, is look inside my book, Winning on Purpose, you'll find what I've been investing on. But then, how do you go forward and know those numbers? Part of it is going to be the investor days by companies like Intuit. If you see a company that has got a trusted third-party measuring NPS for multiple competitors, and shares that with you, that's deep insight, and the market does not understand it yet. It is not priced into shares. The reason I say that is, I would not have tripled the stock market over 10 years by looking at only one non-financial metric, as I have. The net promoter, it's the only non-financial metric [LAUGHTER] I had and I've used it. Market is going to take a long time before it understands, because I think it is a different mentality. When you're an accountant, you're solving for profits. When you are a "love customers is the purpose of my business, enrich the lives of customers is what animates both my economics and inspires my employees," that's a whole different mindset. Listen to what the leaders say. Do they say customers are the primary purpose here? Of course, we treat all stakeholders reasonably, but customers come first -- if they say that, if they act it, and then if you see NPS evidence or earn-growth evidence that they're special, go for it. And by the way, you'll not only make more money, you'll make the world a better place.

...

Chris Hill: To hear the full conversation with Fred Reichheld, Motley Fool members can find it online at live.fool.com. Up next, Ron Gross, and Jason Moser return with a couple of stocks on their radar. Stay right here, you're listening to Motley Fool Money.

...

As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here once again with Jason Moser and Ron Gross. We've got a question from Richard Market who writes, "Should we expect Berkshire Hathaway to start paying a dividend? Warren Buffett has previously said they generate better shareholder returns through buybacks or by reinvesting retained earnings, but with such a large cash pile, and no recent acquisitions, maybe now is the time Berkshire should start paying out a decent dividend, particularly when Mr. Buffett so often highlights this as a key component of a well-run company." Great question, Richard. Thank you for that.

Ron, should Buffett start walking the walk on the dividend?

Ron Gross: I think Richard makes some very good points, however, I don't expect to see a dividend anytime soon. He's clearly laid out that he has three priorities for using cash that are ahead of any dividend. Reinvesting in the businesses, he wants to improve efficiency, expand their reach, create new products, improve existing products. The second thing is he wants to make new acquisitions. He's got that elephant gun at the ready that he talks about. Hasn't made anything too significant anytime recently, but they're looking. And then buying back stock when they feel it's selling at a good price. $51 billion in stock buybacks over the last two years, 9% of outstanding shares, still has cash of $147 billion, to Richard's point. Stock is at an all-time high. Let Buffett be Buffett, he knows what he's doing.

Chris Hill: Richard, thanks again for the question. We want to hear from more of you out there. Post a review of the show on Apple, and pitch us a stock, you want us to talk about. Hit us with a question, pitch us a topic for the show, and if we like it, we will use your idea on Motley Fool Money. Just post the review on Apple, and give us your pitch.

Let's get to the stocks on our radar, our man behind the glass, Steve Broido, is going to hit you with a question. Jason Moser, you're up first, what are you looking at this week?

Jason Moser: You find a lot of these boxes on my front porch, Chris. I'm talking Chewy this week, ticker is CHWY. Earnings for Chewy will come out on March 29 -- a little bit out of that earningspalooza cycle, I'll be looking forward to seeing what they have to say there. They ended the last quarter with 20.4 million customers, that was growth of 15% over a year ago. But more importantly -- and I'm one of these -- is, Autoship customer sales as a percentage of net sales increased 140 basis points to 70.6% of overall revenue. That's a new high. Average order value continues to grow. This is really a good one, I think, to think about from an inflationary perspective. Pets, I think we almost just spend blindly on them -- at least, I know that's how it works in our household, and I think a lot of listeners feel the same way. They've got this neat dynamic, too, with the health investments that they're making now -- partnership with Trupanion. This is the stock Santa gave my daughters for Christmas this year, it's one that tugs up my heartstrings a little bit.

Chris Hill: Steve, question about Chewy?

Steve Broido: Sure, can Chewy do what it's been doing, and leave it at that, and be a successful business, or does it need to grow and expand into all these other spaces as well?

Jason Moser: Yeah, that's a good question. I think they could just leave it where it is and be successful, but I think that as we see this evolution of this digital economy, we see the opportunities out there, not only to help consumers, but to help veterinary practices and overall, the opportunity in the animal health space. I definitely think those are wise investments to make, but yeah, good point you make there, Steve.

Chris Hill: Ron Gross, what are you looking at?

Ron Gross: A stock I recently included in our new instant income portfolio in Total Income is Taiwan Semiconductor, TSM. They're a pure-play semiconductor foundry or manufacturer. It doesn't design or manufacture chips under its own brand. It partners with Nvidia, Apple, folks like that to produce their chips for them. According to industry experts, more than 90% of the world's most sophisticated chips are made by TSM. Rollout of 5G, autonomous transportation, virtual augmented reality, artificial intelligence -- the need for chips is growing, growing, growing. Taiwan Semi is perfectly positioned to take advantage of the future.

Chris Hill: Steve, question about Taiwan Semiconductor?

Steve Broido: Why is it taking everyone so long to get us these chips? These are small chips, these can fit on the tip of your finger. [LAUGHTER] What is the deal? It's not shipping cargo ships, what's going on? Someone, please help me.

Ron Gross: Supply disruption, Steve, that's all I could say, supply disruptions. We'll get through it [LAUGHTER].

Steve Broido: You've got a stamp and an envelope, come on.

Ron Gross: We'll get through it, sit tight.

Chris Hill: What do you want to add to your watch list, Steve?

Steve Broido: Well, I own both of them, I love both of them, and I think I would be adding more to Taiwan Semiconductor right now.

Chris Hill: All right, Ron Gross, Jason Moser, guys, thanks for being here.

Jason Moser: Thank you.

Ron Gross: Thanks, Chris.

Chris Hill: That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Steve Broido. I'm Chris Hill. Thanks for listening, we'll see you next time.