As earning season for the quarter wraps up, many investors are taking the opportunity to reevaluate companies in their portfolio or considering buying shares of new companies. The three companies below reported not only a solid earnings report but took the time to address several investor concerns.
Boeing (NYSE:BA) took the opportunity to reaffirm prior guidance relating to its massive $25 billion deferred production in 787 costs and other business updates. Many investors had concerns over other parts of the company's business, but management addressed these concerns, which should improve investor sentiment over the near and long term.
Buffalo Wild Wings (NASDAQ:BWLD) made many investors nervous as shares performed poorly since its analyst day presentation on April 2. Thankfully, the company demonstrated that it has several catalysts that should propel shares higher in the future.
Williams-Sonoma (NYSE:WSM) is no different from any other retailer in the sense that the impact of poor weather has been a major concern over the past few months. Not only did the company erase all fears, it demonstrated that steps were taken to drive sales outside of the retail space.
Set to fly high
When Boeing reported its first quarter results on April 23, the company earned $1.76 per share and beat the consensus estimate by $0.20. Revenue of $20.46 billion fell short of the consensus estimate by $100 million, however. Despite the revenue miss, Boeing modestly raised its full-year earnings per share guidance to $7.15 to $7.35 from a previous guidance of $7.00 to $7.20.
Boeing's stock has been grounded for the most part in 2014 after hitting 52-week highs of $144.57 back in January. Investors were concerned over Boeing's 787 program, the company's ability to generate cash, and the pace of share buybacks.
Boeing addressed all of these concerns.
Boeing said during its conference call that 787 deferred production will peak at $25 billion in late 2014 before beginning to decline. The topic was revisited during Boeing's investor day conference where management reiterated the $25 billion figure while noting that there is "stability in this production system."
In terms of operating cash flow, the company generated $1.1 billion while paying $540 million in dividends to shareholders and repurchasing $2.5 billion of shares in the quarter. Additionally, management said that completing the remaining $8.3 billion of share repurchase authorization over the next two to three years is a "top priority."
Chicken wings: what's not to love?
Buffalo Wild Wings reported a very strong first quarter earnings report on April 28 which included a 72.9% growth in net earnings partly due to lower chicken wing costs and menu changes. The company reported an impressive 6.6% same-store sales growth at company-owned stores and 5.1% same-store sales growth at franchise locations.
At a time when many restaurant chains are facing difficulties, Buffalo Wild Wings proved it can stand out. The company raised its full-year earnings guidance to 25% (from 20%) implying an EPS of $4.74.
Buffalo Wild Wings continues to introduce initiatives to differentiate itself such as the ongoing rollout of "guest experience captains" as well as new technology innovations like table-top tablets which include trivia and arcade games. In the third quarter, the company will be testing ordering capabilities from the table tablets.
Longer term, Buffalo Wild Wings is guiding toward 400 international restaurants over the next 10 years. Domestically, the company will open its first PizzaRev location in Minnesota as part of a plan to build a whole portfolio of different brands. Management said that its long-term plan is to have 3,000 restaurants worldwide, up from its current 1,010 locations in the United states, Canada, and Mexico.
Chris O'Cull of Keybac said during the Q&A session of Buffalo Wild Wing's first quarter conference call that his model is projecting "cash really building over the next couple of years." The analyst asked what the company plans to do with the cash. Management responded that it would consider share buybacks or dividends in the future, but in the meantime would use the cash to fund growth in the domestic and international market.
Conservative guidance for this retailer
Williams-Sonoma reported an impressive quarterly result on May 21. Most impressively, Williams-Sonoma posted a double-digit comparable revenue growth of 10%, nearly double the Street's 5.4% estimate.
The company saw an improvement of 17 bps in gross margin to 37.8%. This could serve as an argument that home furnishing companies (or at the very least Williams-Sonoma) are not engaged in fierce price competition like other retailers to battle over market share.
Williams-Sonoma raised the lower end of its fiscal 2014 sales guidance by $15 million to $4.63 billion. The company also boosted the lower end of its EPS guidance higher by $0.02 to $3.07 and raised the upper end of its EPS guidance by $0.02 to $3.17.
When considering the 10% comp seen in the first quarter, along with an increase in investment activities such as improvements to the company's e-commerce site and other strategic growth initiatives, investors could reasonably conclude that management could perhaps be conservative in its guidance.
Williams-Sonoma believes that the key to achieving (or beating) guidance lies in its inventory management. During the company's first quarter conference call, CFO Julie Whalen said
We have very strong disciplines across company; we're always focused on slow movers and also getting back in stock. So, we are aggressively going after the slow movers, while at the same time aggressively going after the best sellers. As you know, there is a [delta] relationship between service levels and inventory and all this inventories are supporting 2014 guidance, so we think it's very strategic.
These three companies reported solid quarterly results, but with the exception of the Dow component Boeing were "less in the spotlight." Investors should always seek out companies such as these that don't receive the same amount of press attention compared to other large-cap companies as potential investments.