Though I generally only do a full analysis at the end of every fiscal year, I always keep up to date on the quarterly reports of all the companies I own, and any that I am seriously watching.
As the end of October nears, Q3 results are being released, and I wanted to highlight some of the key results. Hopefully this will apply to many of you, since currently my holdings are pretty solid blue chips that are held in many dividend portfolios. As I continue to build this base, I will eventually branch out into smaller cap, faster growing stocks, as well as more exotic investments, such as MLPs, Oil Trusts, etc.
KO had a strong third quarter, with 5% worldwide volume growth in Q3, and 6% volume growth YTD. Net revenues are up 45% from the last years Q3, jumping from 8.4 billion to 12.2 billion. YTD revenues are up 44%. This is a combination of growth in concentrate sales, currency benefits, and the acquisition of Coca Cola Enterprises in Q4 of 2010.
Operating income is up 17% from Q3 2010, and 13% YTD. Net income is up 8% for the quarter and 15% for the year.
Though overall the income statement looks good, KO has lost some ground on margins, as the acquisition of CCE has added to SG&A, in addition to currency impact and higher commodity costs.
EPS grew 8% in the quarter, from $0.88 to $0.95, and 15% YTD, from $2.59 to $2.79.
Current ratio is 1.1, and debt to total capital is 47%, a bit higher than last year, but the interest coverage ratio is very manageable at 26.
So far this year KO has had $2.09 of free cash flow per share, for a cash payout ratio of 67%. This is higher than last years 55%, so I’ll keep an eye on that.
The fast food giant reported strong comparable sales growth, up 5% globally. Revenue grew 14% to $7.1 billion in the quarter, and 8% to $20.2 billion YTD.
Operating income is also up 14% in Q3, and 14% YTD. Net income rose 9% to $1.5 billion in the quarter, and YTD is up 11%. Growth is attributable to Mcdonald’s offerings and positive currency exchange rates.
EPS was $1.45 for Q3, up 12%, and $3.94 YTD, up 15%. The company raised their dividend in September by 15% to $0.70 per quarter, or $2.80 annually. For the YTD, they have paid out $2.44 in dividends on earnings of $3.94, for a payout ratio of 62%.
Healthcare giant J&J reported a quarter to quarter increase in sales of 6.8% to $16 billion, mostly on the back of a 16.4% increase in international sales – domestic sales are down 3.7%. YTD, worldwide sales are up 6.2% to $48 billion, and US sales are down 1.3%.
Diluted net EPS are down 6.5% for the third quarter, from $1.23 last year to $1.15 this year. YTD earnings are down 16.7%, from $4.08 to $3.40. Full year 2011, JNJ expects earnings to be in the $4.95 – $5.00 range, although this excludes special items.
Thus far the company has paid $1.68 in dividends, on earnings of $3.40, for a payout ratio of 49%. Full year dividend should be $2.25, an increase of 6.6%.
There should be a few more earnings releases coming up in the next couple of weeks, so check back for the rest of my holdings.
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Full Disclosure: I am long KO, MCD, JNJ. My Current Portfolio Holdings can be seen here