Dividend.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
Walt Disney has taken the first position in the list this week, as the company continues to suffer from losses from its streaming service. Second in the list is chipmaker Broadcom, whose stock has recently reached a record high. Third is pharmaceutical giant Pfizer, which has seen its performance drop dramatically as sales of Covid-19 booster shots and treatments fell. Last in the list is Costco Wholesale, which has seen its stock reach a record high after record sales.
Don’t forget to read our previous edition of trends here.
Walt Disney Stock Hit by Falling Profitability
Entertainment company Walt Disney (DIS) has placed first in the list with a strong rise in viewership of 120%. Walt Disney shares have continued to decline in recent months, now trading just above the pandemic low reached in 2020. Walt Disney has been suffering from weak revenue growth and lower profitability.
In fiscal 2023 ended September, revenue rose 7.7%, while net income declined 25% to $2.35 billion, at a time when stock market investors are valuing profits more than growth.
Walt Disney launched its money-losing streaming service in 2019 in a bid to compete with incumbents like Netflix, Amazon Prime and others. The move received positive reactions from the market, as investors were happy to overlook losses as long as subscriber growth was strong. Rising interest rates have changed investor focus from growth at all costs to profitability. For instance, Walt Disney reported $11 billion in net profits in 2019, when it launched the streaming service, and just $2.35 billion in 2023.
Shares have followed suit. Walt Disney stock has lost 52% since reaching a high in March 2021.
Source: Barchart.com
Broadcom Shares Reach Record High
Semiconductor and software company Broadcom (AVGO) has grabbed the second position with an advance in viewership of 94%. Broadcom shares are trading at record highs, with the company reaching the status of a nearly half-trillion dollar market capitalization company.
Its acquisition of VMWare for $69 billion has certainly boosted the company as it seeks to diversify into software and the cloud. Meanwhile, insatiable demand for chips amid a gold rush triggered by artificial intelligence has led to higher revenues and improved profitability.
In fiscal 2023, revenues surged 8% year-over-year, while net income was up 23%, to $14.1 billion. Shares are up 110% year-to-date, with a quarter of the rise occurring in the past two weeks. Of course, P/E expansion is responsible for a good chunk of the rise, as investors expect demand for cloud software and semiconductors to continue to rise.
Source: Barchart.com
Pfizer Fortunes Continue to Drop
Pharma giant Pfizer (PFE) is third in the list with an increase in traffic of 90%, not far behind Broadcom. However, Pfizer has made headlines for all the wrong reasons: Pfizer shares are down 47% since the start of the year and 53% since it reached a record in late 2022.
Pfizer must find a new revenue generator drug, after sales of COVID-19 vaccines and therapies have been declining, thanks to rising competition and lower takeup.
Pfizer has cut its revenue guidance, with the company now expecting 2024 revenues between $58.5 billion and $61.5 billion, versus analysts’ expectations of $63.17 billion. Meanwhile, management expects earnings per share of $2.05 to $2.25 compared with more than $3 expected by analysts.
Source: Barchart.com
Costco Wholesale
Costco Wholesale (COST) placed last with an advance in viewership of 80%. Costco shares are trading at record highs, as the company reported strong sales and profits. The stock is up more than 50% so far this year.
Costco’s revenue jumped more than 6% in the November quarter to $57.9 billion, while net income advanced 16.5% to $1.6 billion. Costco’s focus on value and quality is attracting an increased number of customers amid a decelerating economy.
In addition to strong stock performance, Costco offers a dividend that currently yields just about 0.6%. However, with continued strong performance, it can raise its dividend next year.
Source: Barchart.com
The Bottom Line
Walt Disney is facing growing profitability concerns as its streaming service continues to bleed money. Broadcom shares have reached a record high amid strong demand for semiconductors and cloud software. Pfizer fortunes continued to drop due to falling sales of Covid-19 vaccines. Finally, Costco shares are trading at record highs as sales and profitability continue to grow.
Be sure to check out Dividend.com’s News section for the most trending news around income investing.
