Macrovue’s Head of Investment Committee Clay Carter runs his ruler over three of Warren Buffets most successful investments over the past 12 months.
Apple (NASDAQ: AAPL)
Apple reported 4Q earnings on 30 January 2019 which were well received by the market.
Apple Q1 EPS of $4.18 beat consensus estimates by $0.01. Revenue of $84.3B (-4.5% Y/Y) exceeded estimates by $330M. The reductions in iPhone sales and Apple’s China business were largely priced into the quarter following Apple's outlook cut on 3 January 2019.
- iPhone, $52B (-15% Y/Y)
- Mac, $7.4B (+9% Y/Y)
- Wearables, Home and Accessories, $7.3B (+33% Y/Y)
- iPad, $6.7B (+17% Y/Y)
- Services, $10.9B (+19% Y/Y).
The Apple Services margin was a healthy 62.8%. Greater China revenue fell from nearly $18B in last year's quarter to $13.2B. CEO Tim Cook attributed the quarter's iPhone weakness to the soft China market.
Operating cash flow was $26.7B and Apple returned $13B to investors during the quarter. The net cash balance was $130B at period's end. Q2 guidance has revenue from $55B to $59B (consensus: $58.97B), gross margin from 37% to 38% (consensus: 38%), and operating expenses of $8.5B to $8.6B.
Apple returned +12.2% in the year to 31 January 2018.
American Express (NYSE: AXP)
American Express Q4 GAAP EPS of $2.32 beat estimates by $0.52. Revenue of $10.47B (+7.9% Y/Y) missed by $110M. While revenue from its consumer services and commercial services groups rose, it stagnated at its merchant and network services unit.
American Express sees 2019 revenue growth of 8%-10%, implying revenue of $43.7B-$44.4B; consensus estimate $43.5B. The company is guiding to EPS of $7.85-$8.35 versus a consensus estimate of $8.14.
- Q4 global consumer services group net income of $702M rose 13% Y/Y and revenue net of interest expense rose 11% to $5.6B, reflecting higher loans, card member spending, and card fees.
- Q4 global commercial services net income increased 15% to $624M Y/Y, and revenue net of interest expense rose 8% to $3.3B, reflecting higher card member spending.
- Q4 global merchant and network services net income increased 9% to $501M, and revenue net of interest expense was $1.6B, unchanged from a year ago; higher card member spending was offset by a decrease in the average discount rate and lower revenue from network partners.
American Express returned +17.26% in the year to 31 January 2018.
Coca Cola (NYSE: KO)
Coca-Cola now has a significant 45.8% volume-based share of the $313 billion carbonated soft-drink market in 2018, according to recent Euromonitor data. The portion has edged higher in recent years, up from 44.7% in 2009, driven by the company's well-recognised brands. PepsiCo is number two with a 19% share, slightly below the 19.2% in 2009.
Coca-Cola's carbonated soft-drink share leads in western Europe (46.5%), as well as in eastern Europe (33.4%), North America (36.2%) and the Asia-Pacific region (56.4%). In fact Coca-Cola owns five of the world's top 10 carbonated soft-drink brands, based on Euromonitor data (2018). These brands accounted for 40.5% of the market in 2018 vs. 40.4% in 2017. PepsiCo owned or distributed the other five top brands, which accounted for 16.3% of the market.
The Coca-Cola brand was the most popular choice, with a 23.8% share, followed by Pepsi's 9.2%. Coca-Cola is still spending heavily on marketing. It spent $3.2 billion on advertising in 2018 through Sept. 30, up 10% from the prior-year period.
Coca Cola returned +16.23% in the year to 31 January 2018.
You can invest in these companies directly through Macrovue’s Warren Buffet Top 10 Vue.
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Past performance is not a reliable indicator of future performance.