Latest news with #earningsGrowth
Yahoo
27-05-2025
- Business
- Yahoo
1 Unstoppable Stock That Can Double Within Five Years to Join the $1 Trillion Club
This company plans to follow the same playbook that got it to $500 billion to reach $1 trillion. Predictable revenue and expenses ensure this business grows earnings almost every year. A $1 trillion valuation isn't out of the realm of possibilities if management executes. 10 stocks we like better than Netflix › The $1 trillion club has invited quite a few new members through its doors since Apple first broke through its threshold in 2018. Ten companies traded on U.S. stock exchanges have qualified for membership since, and that number should continue to grow over time as the world economy expands. But predicting the next member of the club isn't easy. For example, few saw Nvidia growing beyond a $1 trillion valuation by 2023, fueled by the recent breakthroughs in generative artificial intelligence (AI). It's now a $3 trillion company. One company, however, has its sights set on joining, and management thinks it can reach a $1 trillion level by 2030. While management typically shouldn't operate a business with a goal of reaching a certain stock price, this company has a systematic approach to increasing earnings every year, and it should eventually push it to double its stock price and reach a $1 trillion valuation. Here's why Netflix (NASDAQ: NFLX) could be one of the next members of the vaunted club. Netflix already boasts a $500 billion valuation as of this writing. That qualifies it as one of the biggest companies in the world, far larger than any other media company. But Netflix has a big advantage over traditional media -- it's not tied down by declining legacy operations like linear TV networks. That's resulted in relatively consistent revenue growth. As mentioned earlier, Netflix has taken a systematic approach to growing its business. Since it operates a subscription business with a direct line to its customers, its revenue is fairly predictable. It plans content expenses well in advance of when they hit its income statement through long-term licenses and, increasingly, its own productions. As a result, it's able to set a target operating margin each year, and it consistently comes very close to that target. As a result, Netflix has increased its operating margin from 13% in 2019 to 26.7% in 2024. For 2025, management is targeting 29%. Its first-quarter results exceeded that level and management expects even stronger margins in the second quarter, before higher expenses eat into profits in the second half of the year. Consistent expansion in operating margin is key to Netflix's plan to reach a $1 trillion valuation. Management thinks it can double its revenue between 2024 and 2030, but it expects operating income to grow threefold. That implies an operating margin of about 40% by 2030, an expansion of 11 percentage points from its 2025 target. Since Netflix has historically expanded its margin about 2 percentage points in a normal year, that target is reasonable. Further supporting Netflix's growth is its strong free cash flow. After years of borrowing funds to invest in original content, the company turned cash-flow positive again in 2022. Last year, the business generated $6.9 billion in free cash flow and management expects that to grow to $8 billion this year. The cash gives Netflix management more flexibility to invest in content or acquisitions for growth, or return capital to shareholders through share repurchases. But the path ahead won't be easy for Netflix. The company faces a big challenge going forward. Netflix has made a big shift in its strategy over the last few years by introducing an ad-supported tier to its offerings. It's seen a lot of early success with advertising, and it's moved to bring its ad-tech in house to generate better-performing ad units and improve the economics of the ad business. Management thinks advertising revenue can double in 2025 and grow to a $9 billion business by 2030. There are a couple challenges this shift creates. First of all, advertising revenue isn't as predictable as subscription revenue. Ad sales are much more cyclical, so an economic slowdown will negatively impact the new business. The second challenge is balancing the ad-supported tier with the ad-free tiers for subscribers. Netflix expects the ad-free tiers to remain the biggest source of revenue and growth for a long time. That growth will come partially from raising prices to maintain parity between revenue from subscribers with ads and those without ads. However, Netflix isn't the only streaming service in town anymore, and that puts a cap on how much it can charge consumers before they'll look elsewhere for their entertainment. Even if Netflix continues to increase its content budget, the marginal value of another series viewers love on Netflix might not be worth a higher price for many of them. To that end, Netflix may find the advertising tier an even more valuable piece of its business by 2030. Advertising can provide an additional boost in revenue for each extra minute Netflix viewers spend with the service, and that might not be true with the ad-free tiers. But that comes with the downside of less predictable revenue, making it more difficult for Netflix to hit its operating margin targets. Still, Netflix's goals seem reasonable, even if it won't be as easy for management to grow like it has in the past. If management continues to focus on its core financial goals of double-digit revenue growth and incrementally expanding its operating margin each year, it will be only a matter of time until reaches a $1 trillion valuation. Successfully tripling operating income means Netflix will also need a valuation of about 32 times its operating income in 2030. That's well below its historic average, so it's not out of the realm of possibility. That said, management should focus on the financial goals and let the market valuation figure itself out on its own. Before you buy stock in Netflix, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Netflix wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,688!* Now, it's worth noting Stock Advisor's total average return is 957% — a market-crushing outperformance compared to 167% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Adam Levy has positions in Apple and Netflix. The Motley Fool has positions in and recommends Apple, Netflix, and Nvidia. The Motley Fool has a disclosure policy. 1 Unstoppable Stock That Can Double Within Five Years to Join the $1 Trillion Club was originally published by The Motley Fool
Entrepreneur
27-05-2025
- Business
- Entrepreneur
Korn Ferry (KFY): Strong Buy Stock with NO Tariff Risk
There is a lot to like about Korn Ferry (KFY) as a prime investment in the year ahead. Best of which may be how it completely avoids all the current... This story originally appeared on WallStreetZen Korn Ferry (KFY) concentrates in two business areas that carry no tariff risk. Gladly there are 115 other reasons to like this stock (spoiler: I am talking about the 115 factor analysis of the Zen Ratings that points to this stock as being an A rated Stong Buy). Beyond their core consulting business, the real strength of the firm is their focus on executive recruiting. The best part of that story is that executive recruiting is a great counter cyclical industry. Meaning that there is often heavier executive turnover during the rough times than during the good times. This helps alleviate some concerns for owning KFY if indeed we are devolving into a recession as many worry about given recent economic weakness. On the other hand, they are having no problem at all finding growth during the good times like the expected 15% earnings growth this year which is about twice the pace of the average US company. Plus, as mentioned above, this is a business model that pretty well escapes tariffs which gives greater clarity into their future earnings prospects. Our Zen Ratings quant model has placed KFY in the top 5% of all stocks earning the coveted A rating which equates to a Strong Buy. Historically that has pointed to stocks that have more than tripled the return of the overall market. In particular what jumps off the page is the top 2% reading for Safety which is a great quality to have during these volatile times. Also good to note that it's in the top 8% for Value and top 14% for Financials. Strong Financials is one of the best predictors of future earnings beats as shared in this recent article: Boring Financials Point Way to Excited Stock Gains! This top 14% Financial reading means KFY is a very well run company which shows up in a string of 10 straight earnings beats…and increases the odds of more beats on the way. Indeed the Wall Street analyst community also smiles on shares with an average target price of $80 and a street high of $83. That upside value squares up well with that top 8% reading for Zen Rating Value score. This feels like exactly the kind of stock to buy given the mixed economic outlook thanks to the uncertainty of tariffs. Plus the unique focus of the company (executive recruiting) that should help shares outperform in the good days or the bad. What To Do Next? Korn Ferry (KFY) is just one of the stellar 18 stocks found in my Zen Investor portfolio. I pick these stocks based upon their attractiveness in our proven Zen Ratings model. Plus keying in on lessons learned over my 45 year investing career. Over that time I have seen 7 bear markets, 8 bull markets, and just about everything between. This has helped me pick some stellar stocks in 2025 even in the face of this volatile market. Plus I will soon be adding 2 new stocks on Wednesday June 4th. The only way to see these top picks is to become a Zen Investor member. Gladly that is a very simple process. And right now comes with the ability to save up to 50% on your membership. Discover the Zen Investor & My Top Stocks Now > Wishing you a world of investment success! Steve Reitmeister…but everyone calls me Reity (pronounced 'Righty') Editor of the Zen Investor What to Do Next?
Yahoo
25-05-2025
- Business
- Yahoo
Needham Initiates Coverage of Philip Morris (PM) With Buy Rating
On Thursday, Needham initiated coverage of Philip Morris International Inc. (NYSE:PM) with a Buy rating and a price target of $195. The firm commended Philip Morris for its progress in transitioning towards a smoke-free business model and noted its established market leadership in both heated tobacco and nicotine pouches. Copyright: jetcityimage / 123RF Stock Photo Needham anticipates that this leadership, combined with ongoing innovation and untapped geographical markets, will drive a sustainable high-single to low-double digit earnings growth for the company. Philip Morris has invested over $14 billion in science-based innovation since 2008 to develop smoke-free alternatives, which, while not risk-free, are considered a much better choice than smoking cigarettes. The company's vision is for these products to eventually replace cigarettes entirely. This pivot is driven by the understanding that millions of adult smokers are seeking less harmful, yet satisfying, alternatives. Currently, Philip Morris International Inc.'s (NYSE:PM) smoke-free products are available in 95 markets globally, and 38.6 million adults have already switched from cigarettes to these alternatives. The company's ambition is to generate more than two-thirds of its net revenue from smoke-free business by 2030, up from 42% as of Q1 2025. While we acknowledge the potential of PM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PM and that has 100x upside potential, check out our report about the cheapest AI stock. READ NEXT: and . Disclosure: None.
Yahoo
25-05-2025
- Business
- Yahoo
Calgro M3 Holdings (JSE:CGR) Will Pay A Smaller Dividend Than Last Year
The board of Calgro M3 Holdings Limited (JSE:CGR) has announced that the dividend on 2nd of June will be reduced by 9.0% from last year's ZAR0.0949 to ZAR0.0864. This means that the annual payment is 1.8% of the current stock price, which is lower than what the rest of the industry is paying. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. If it is predictable over a long period, even low dividend yields can be attractive. However, Calgro M3 Holdings' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business. Over the next year, EPS could expand by 113.9% if recent trends continue. If the dividend continues on this path, the payout ratio could be 2.1% by next year, which we think can be pretty sustainable going forward. Check out our latest analysis for Calgro M3 Holdings It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself. Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Calgro M3 Holdings has been growing its earnings per share at 114% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future. Overall, we think that Calgro M3 Holdings could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All in all, this checks a lot of the boxes we look for when choosing an income stock. Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Calgro M3 Holdings has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-05-2025
- Business
- Yahoo
Raymond James Financial (NYSE:RJF) Declares Dividends on Preferred and Common Shares
Raymond James Financial announced a quarterly cash dividend of $0.50 per share on common stock, set for July, which potentially bolstered investor sentiment, contributing to a 13% increase in share price over the last month. Alongside, the company's solid second-quarter earnings report indicating improved revenue and net income over the previous year further supported the upward trajectory. This investor confidence in RJF was seen despite broader market fluctuations influenced by federal deficit concerns and fluctuating bond yields. While the Dow Jones showed a slight rebound, RJF's strategies and financial performance may have provided additional support for the positive price movement. Buy, Hold or Sell Raymond James Financial? View our complete analysis and fair value estimate and you decide. We've found 17 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. The recent announcement of a US$0.50 quarterly dividend from Raymond James Financial potentially uplifted investor sentiment, aligning with the company's advantageous short-term share price increase. Over a five-year timeframe ending in May 2025, RJF shares delivered a total return of 229.14%, reflecting long-term resilience and growth. This return includes both share price appreciation and dividend payouts, suggesting a robust investment over that period. Comparatively, the 23.3% earnings growth over the past year surpassed the Capital Markets industry average of 17.8%, highlighting RJF's competitive position. The company's strategic recruitment of high-net-worth advisors and investment in AI are anticipated to enhance future revenue and efficiency. With analysts forecasting a revenue growth rate of 5.5% annually and a projected earnings expansion to US$2.5 billion by 2028, these initiatives could support long-term growth despite uncertainties from market volatility and tech investment risks. However, interest rate and economic fluctuations present potential challenges to achieving these targets. As of today's date, RJF's current share price of US$141.12 sits close to the consensus price target of US$152.50, reflecting a modest 7.5% upside potential, indicative of the market's perception that the company is relatively fairly valued at present. The slight discount to price target underscores the importance of these growth forecasts being realized to justify the anticipated valuations. Investors should consider these forecasts and their assumptions against personal insights when evaluating RJF's future prospects. Navigate through the intricacies of Raymond James Financial with our comprehensive balance sheet health report here. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NYSE:RJF. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@
