Tag: said

Will the Disney-DirecTV Deal Drive New Growth?

Posted on by The INO.com Team

The Walt Disney Company (DIS) and DirecTV recently reached a deal that restores college football and other programming to the satellite TV providers over 11 million subscribers. The agreement offers enhanced choice, value, and flexibility to their mutual customers.

Consequently, Disney’s complete linear suite of networks has been restored for DIRECTV, DIRECTV STREAM, and U-verse subscribers as both companies work toward finalizing a new, multi-year deal. As the entertainment landscape shifts, DIS’ multi-channel approach could unlock new revenue streams and drive future growth.

Expanding Reach Through Traditional and Streaming Platforms

The renewed partnership between Disney and DirecTV comes at a critical time when consumer viewing habits are increasingly split between traditional linear TV and streaming services. As part of the deal, DirecTV will now offer customers more flexibility with multiple genre-specific packages, including those focused on sports, entertainment, and kids & family programming.

For instance, the agreement includes continued carriage of Disney’s entertainment, sports, and news programming from its linear portfolio, comprising the ABC Owned Television Stations, the Disney-branded channels, Freeform, the FX networks, and the National Geographic channels. Certain DirecTV packages will also include Disney’s leading streaming services—Disney+, Hulu, and ESPN+.

In a joint statement, the companies said: “DIRECTV and Disney have a long-standing history of connecting consumers to the best entertainment, and this agreement furthers that commitment by recognizing both the tremendous value of Disney’s content and the evolving preferences of DIRECTV’s customers.”

This strategic agreement bridges the gap between traditional and digital viewing preferences. DirecTV’s subscriber base, which has been slowly declining due to the rise of cord-cutting, now has access to a broader array of content options through Disney’s streaming services. For customers still tethered to satellite TV, this hybrid model offers them a reason to stay while granting Disney access to an audience that may not have subscribed to its streaming services independently.

Bundling linear TV programming with streaming services offers DIS a competitive advantage, especially as the entertainment giant looks to capitalize on both sides of the evolving content landscape. The inclusion of Disney+, Hulu, and ESPN+ in DirecTV’s packages serves multiple purposes. Firstly, it provides a gateway for traditional TV subscribers to explore Disney’s streaming offerings, potentially converting them into long-term streaming customers.

Secondly, this bundling strategy solidifies Disney’s position in the streaming wars, where competition from platforms like Netflix, Inc. (NFLX), Amazon.com, Inc.’s (AMZN) Amazon Prime, and Apple Inc.’s (AAPL) Apple TV+ is fierce.

DIS can leverage its expansive content library to meet different viewer preferences. Families may gravitate toward the kid-friendly programming on Disney+, sports enthusiasts will value the breadth of ESPN+, and fans of original series and award-winning content can indulge in Hulu’s offerings. The diversity of content will allow the company to capture a wider audience, which could drive subscriber growth and retention across its platforms.

Potential Financial Gains and a Case for Disney Stock

For investors, DIS’ multi-channel strategy is an encouraging sign. Disney has long been a dominant player in the entertainment industry, and this renewed partnership with DirecTV further underscores its ability to adapt to changing market conditions. As Disney continues diversifying its revenue streams—balancing traditional TV and the increasingly lucrative streaming business—its future earnings potential looks robust.

The inclusion of Disney+, Hulu, and ESPN+ in DirecTV’s packages provides Disney with a more sustainable and diversified revenue model, which could be particularly important as the company faces intense competition in the digital streaming segment. Disney’s unique blend of original programming, sports content, and lids & family entertainment gives it a distinct edge in attracting and retaining subscribers.

Moreover, DIS’ streaming and linear programming continues to captivate audiences and critics, with the company garnering an impressive 183 nominations at this year’s Primetime Emmy® Awards—a record high for Disney and more than any competitor.

DIS delivered an outstanding financial performance in the third quarter, beating analyst estimates for revenue and earnings as the company’s combined streaming businesses turned a profit earlier than anticipated. For the quarter that ended June 29, 2024, the company reported revenues of $23.16 billion, surpassing analysts’ expectations of $23.09 billion.

Disney’s total segment operating income grew 19% year-over-year to $4.23 billion, led by solid results for its entertainment unit, especially streaming. The entertainment segment's operating income nearly tripled year-over-year due to better performance in Direct-to-Consumer (DTC) and Content Sales/Licensing and Other.

The company’s combined streaming business, which comprises Disney+, Hulu, and ESPN+, reported an operating profit of $47 million, compared to an operating loss of $512 million in the same period of 2023. Further, the company posted an adjusted EPS of $1.39, up 35% from the previous year’s quarter. That compared to the consensus EPS estimate of $1.19.

Due to robust financial performance in the third quarter and supported by its balanced portfolio of assets, DIS set a new full-year adjusted EPS growth target at 30%. The company added that it remains on track for the profitability of its combined streaming businesses to improve in the fourth quarter, with both Entertainment DTC and ESPN+ expected to be profitable.

Bottom Line

The renewed Disney-DirecTV deal is poised to unlock new growth opportunities by expanding Disney’s reach across both traditional linear TV and streaming platforms. By bundling Disney+, Hulu, and ESPN+ with DirecTV packages, Disney will effectively tap into untapped audiences, diversify its revenue streams, and strengthen its position in the competitive streaming market.

With the company’s robust financial performance, improving profitability in the combined streaming business, and diverse portfolio, this multi-channel strategy positions Disney for continued subscriber and earnings growth, making DIS stock an attractive option for investors.

Palantir Joins the S&P 500: Is It Time to Buy Before the AI Surge?

Posted on by The INO.com Team

Palantir Technologies Inc. (PLTR) is set to join the S&P 500 index on September 23, 2024, alongside Dell Technologies Inc. (DELL) and Erie Indemnity Co. (ERIE), in the latest quarterly rebalancing by S&P Dow Jones Indices. Being included in the S&P 500 will likely enhance Palantir’s visibility and appeal to a broad range of institutional investors.

The inclusion in the S&P 500 will mark a significant milestone for PLTR, a data analytics and artificial intelligence (AI) leader. But the question now arises: is this the right time to buy Palantir stock, especially with the growing momentum around AI technology?

Palantir’s AI Growth Potential

PLTR’s solid position in the AI space makes it a compelling investment opportunity. The company has long been a leader in data analytics, working with government agencies, defense contractors, and large enterprises. With the recent AI boom, Palantir’s capabilities in machine learning (ML), predictive analytics, and AI-driven systems are more relevant than ever.

Recently, PLTR was recognized as a leader in AI/ML software platforms by renowned research and advisory firm Forrester. Palantir AI platform (AIP) offers an end-to-end architecture that powers real-time, AI-driven decision-making. With Palantir Foundry and Palantir Apollo, AIP forms the foundation of the “AI Mesh” architecture, which is becoming the benchmark for enterprises aiming to deliver composable, interoperable, and scalable value through AI.

From public health initiatives to battery production, organizations rely on Palantir to safely, securely, and effectively leverage AI — driving tangible operational outcomes across industries.

Grand View Research report suggests that the global AI market was valued at $196.63 billion in 2023 and is expected to grow at a CAGR of 36.6% from 2024 to 2030. PLTR’s specialized AI software platforms make it a key player in this rapidly expanding market.

Strategic Partnerships and Investments

This month, Palantir and bp p.l.c. (BP) announced an enterprise agreement that will extend their strategic relationship and introduce new AI capabilities with PLTR’s AIP software. The new contract will expand upon a decade of close collaboration, which has established a strong foundation for BP’s oil and gas production operations, utilizing Palantir’s industry-leading software.

Also, on August 8, PLTR and Microsoft Corporation (MSFT) announced a major enhancement to their partnership, aiming to deliver advanced and secure cloud, AI, and analytics capabilities to the U.S. Defense and Intelligence Community.

This first-of-its-kind, integrated suite of technology will enable critical national security missions to leverage Microsoft’s top-tier Large Language Models (LLMs) through Azure OpenAI (AOAI) Service within Palantir’s AI Platform (AIP) within Microsoft’s government and classified cloud environments. Through this collaboration, Palantir will deploy its suite of products – Foundry, Gotham, Apollo, and AIP – in Microsoft Azure Government and the Azure Government Secret (DoD Impact Level 6) and Top Secret clouds.

AI Momentum Lifted Sales and Guidance

PLTR generated $678.13 million in revenue for the second quarter that ended June 30, 2024, up 27.1% from the prior year’s quarter. That is compared to the consensus revenue estimate of $652.42 million. The company’s U.S. commercial revenue grew 55% year-over-year to $159 million, and its U.S. government revenue increased 24% year-over-year to $278 million.

The software company’s adjusted income from operations was $253.57 million, an increase of 87.8% from the prior year’s period. PLTR’s adjusted EBITDA rose 82.4% year-over-year to $261.62 million. Further, its adjusted free cash flow grew 54.8% from the year-ago value to $148.66 million.

Palantir posted a net income of $134 million for the second quarter, the largest quarterly profit in the company’s twenty-year history. Its adjusted EPS came in at $0.09, an increase of 80% year-over-year. That surpassed the consensus EPS estimate of $0.08.

Palantir CEO Alex Karp said the outstanding second-quarter results reflected the “unbridled demand for and understanding of the capabilities of our software.” Karp added, “The growth of our business has been re-accelerating steadily, and we see an unprecedented opportunity ahead to capture and build on that momentum.”

Amid the AI boom, the management raised full-year revenue guidance. For the third quarter of 2024, PLTR expects revenue of between $697-$701 million. The company’s adjusted income from operations is expected to be $233 million to $237 million.

For the full year 2024, the enterprise software company raised its revenue guidance to between $2.742-$2.750 billion. Palantir also increased its U.S. commercial revenue guidance to in excess of $672 million, representing a growth rate of at least 47%. Also, the company raised its guidance for adjusted income from operations to between $966-$974 million.

Bottom Line

PLTR’s inclusion in the S&P 500 index marks a significant milestone for the company, enhancing its visibility and appeal among institutional investors. This move, combined with Palantir’s strong foothold in the rapidly growing AI sector, positions it for further growth. The software giant’s innovative platforms like AIP, Foundry, and Apollo place it at the forefront of AI-driven transformations across industries.

The combination of Palantir’s expanding partnerships, increased revenue guidance, and impressive financial performance makes it an attractive investment. The stock has skyrocketed more than 112% year-to-date and around 128% over the past year, driven by surging demand for its AI-driven software platforms. Further, analysts issued a bullish outlook for Palantir.

BofA Securities analyst Mariana Perez maintained a Buy rating on PLTR and raised the price target on the stock from $30 to $50. Moreover, Daniel Ives from Wedbush maintained an Outperform rating on Palantir, with a price target of $38.

So, if you're looking to capitalize on the current AI boom, PLTR’s sound fundamentals and promising long-term outlook may present a golden opportunity for solid returns.

Taiwan Semiconductor's 10% Dip: Is It Time to Buy?

Posted on by The INO.com Team

With a $897.58 billion market cap, Taiwan Semiconductor Manufacturing Company Limited (TSM) plays a crucial role in the global semiconductor ecosystem by leading in the production of advanced chips used across several industries, including consumer electronics, automotive, telecom, and artificial intelligence (AI).

As one of the world’s largest independent semiconductor foundries, TSM’s expertise in advanced process technologies, such as 3nm and 5nm nodes, has made it a critical supplier for major tech companies, such as NVIDIA Corporation (NVDA), Advanced Micro Devices, Inc. (AMD), and Apple Inc. (AAPL).

Recently, the stock has dipped by around 10% from its all-time highs, making many investors wonder whether this pullback offers a prime buying opportunity. Let's assess whether long-term investors should capitalize on TSMC’s discounted price.

TSMC’s Technological Leadership

Taiwan-based TSMC’s role in advancing manufacturing chip technology has solidified its position as a critical player in the high-tech ecosystem, particularly in industries such as AI, 5G, automotive, and data centers. One of the company’s greatest strengths is its leadership in advanced node technology.

As a global chip leader, TSM provides the most advanced and comprehensive portfolio of dedicated foundry process technologies, including A16, 2nm, 3nm, 5nm, 7nm, and more. The company’s 3nm process is the industry’s leading semiconductor technology, providing the best power, performance, and area (PPA) and represents a full node advance from the 5nm generation.

TSMC continuously expands its 3nm technology portfolio to cater to diverse customer needs. Last year, the chip giant added new members to its industry-leading 3nm technology family, including the N3X process, designed specifically for high-performance computing (HPC) applications, and N3AE, facilitating an early start for automotive applications on the most advanced silicon technology.

Moreover, TSMC’s 2nm technology employing nanosheet transistors continues to make significant progress in terms of yield and device performance and is expected to commence production in 2025.

Earlier this year, at its 2024 North America Technology Symposium, TSMC introduced its latest semiconductor process, advanced packaging, and 3D IC technologies, showcasing its silicon leadership in driving the next generation of AI innovations.

With TSMC's cutting-edge N3E technology now in production and N2 slated for production in the second half of 2025, the company unveiled A16, the next technology in its roadmap. A16, set for production in 2026, integrates TSMC’s Super Power Rail architecture with nanosheet transistors. It enhances logic density and performance by allocating front-side routing resources to signals, making it well-suited for HPC products.

Also, the chip company introduced its System-on-Wafer (TSMC-SoW™) technology, a groundbreaking solution designed to deliver exceptional performance to the wafer level in addressing the future AI needs of hyperscaler data centers.

TSMC Surpasses Second-Quarter Earnings Expectations Amid AI Chip Boom

TSMC’s revenue and earnings beat analyst expectations in the second quarter of 2024 as demand for advanced chips used in AI applications continues to surge. In the quarter that ended June 30, 2024, the company’s net revenue rose 40.1% year-over-year to $20.82 billion. That surpassed analysts’ revenue estimate of $20.09 billion.

CEO C.C. Wei, in an earnings call, said business during the quarter was supported by robust demand for its industry-leading 3nm and 5nm technologies. TSMC’s shipments of 3-nanometer accounted for 15% of total wafer revenue, 5-nanometer constituted 35%, and 7-nanometer made up 17%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 67% of total wafer revenue.

TSMC’s non-GAAP income from operations rose 41.9% year-over-year to $8.86 billion. Its net income and earnings per ADR were $7.66 billion and $1.48, increases of 36.3% year-over-year, respectively. Its earnings per ADR compared to the consensus estimate of $1.42.

“Moving into third quarter 2024, we expect our business to be supported by strong smartphone and AI-related demand for our leading-edge process technologies,” said Wendell Huang, Chief Financial Officer of TSMC.

Based on the company’s current business outlook, TSMC’s management expects revenue between $22.40 billion and $23.20 billion for the third quarter of 2024. The company’s gross profit margin is projected to be between 53.5% and 55.5%, and its operating profit margin is anticipated to be between 42.5% and 44.5%.

Why TSMC's Stock Dip May Be a Buying Opportunity

TSMC's leadership in advanced chip manufacturing, coupled with the growing demand for advanced chips across AI, 5G, and high-performance computing sectors, positions the company for long-term growth. Management has projected third-quarter revenue to be $22.40-$23.20 billion, compared to $17.30 billion reported in the previous year’s quarter.

Meanwhile, analysts appear highly bullish about the company’s earnings growth. Street expects TSMC’s revenue and EPS for the current quarter (ending September 2024) to grow 38.8% and 37.9% year-over-year to $23.44 billion and $1.78, respectively.

For long-term investors, TSMC's recent 10% decline may present an opportunity to buy into a company at the forefront of technological innovation. While short-term market fluctuations and geopolitical concerns may persist, the company's technological leadership and strong growth outlook make it a compelling choice for those looking to benefit from the continued evolution of AI and semiconductor technology.

Bottom Line

TSMC's recent stock dip presents a potential buying opportunity for long-term investors seeking exposure to a global leader in semiconductor innovation. With its industry-leading 3nm and 5nm process technologies, TSMC is well-positioned to capitalize on the growing demand for advanced chips, particularly in AI, 5G, and high-performance computing (HPC) industries.

While geopolitical risks and market volatility may pose challenges in the near term, TSMC’s strong earnings outlook and continuous innovation in semiconductor manufacturing suggest that this dip could be a strategic entry point.

Why TSMC Is Essential to the AI Ecosystem: An Investor’s Perspective

Posted on by The INO.com Team

Taiwan Semiconductor Manufacturing Company Limited (TSM), valued at $866.70 billion market cap, is a cornerstone of the global semiconductor industry and is increasingly pivotal to the rapidly evolving artificial intelligence (AI) ecosystem. As the world’s largest pure-play semiconductor foundry, TSMC’s role in AI innovation and development is profound and indispensable.

This article explores why TSMC is crucial to the AI ecosystem and why investors should closely monitor this semiconductor giant.

Vital Role of TSMC in the AI Revolution

TSM, headquartered in Hsinchu City, Taiwan, is the world’s leading semiconductor foundry. The company nurtures a dynamic ecosystem of global customers and partners by offering the industry’s leading process technologies and a portfolio of design enablement solutions, driving innovation across the global semiconductor sector.

The company’s commitment to research and development (R&D) is a key driver of its success. TSMC invests heavily in developing new process technologies and enhancing its manufacturing capabilities. The continuous innovation enables TSMC to meet the evolving needs of AI applications and maintain its competitive edge. For investors, TSMC’s focus on R&D represents a strong growth driver and a safeguard against technological obsolescence.

TSMC offers the most advanced and extensive range of dedicated foundry process technologies, including 2nm technologies, 3nm technology, 5nm technology, and 7nm technology, among others. This comprehensive portfolio supports several applications, from cutting-edge consumer electronics to high-performance computing and AI-driven innovations.

At its 2024 North America Technology Symposium in April, the chip giant introduced its latest semiconductor process, advanced packaging, and 3D IC technologies, showcasing its silicon leadership for the next wave of AI innovations. It debuted the TSMC A16™ technology, which features cutting-edge nanosheet transistors with an innovative backside power rail solution, set for production in 2026. The new technology promises significant enhancements in logic density and performance.

Meanwhile, expanding the reach of TSMC’s advanced technology to a broader range of applications, the company announced N4C, an extension of the N4P technology with up to an 8.5% reduction in die cost and minimal adoption effort, and is slated for volume production in 2025.

Additionally, TSMC introduced its System-on-Wafer (TSMC-SoW™) technology, a groundbreaking solution designed to deliver revolutionary performance to the wafer level in addressing the future AI needs of hyperscaler data centers. Also, the company is advancing its Compact Universal Photonic Engine (COUPE™) technology to support the rapid increase in data transmission demands driven by the AI boom.

Moreover, major tech companies, includingc, Advanced Micro Devices, Inc. (AMD), and Apple Inc. (AAPL), rely on TSMC for the production of their most advanced processors and GPUs.

Second-Quarter 2024 Revenue and Profit Beat Analyst Expectations

TSM’s revenue and earnings surpassed analyst estimates in the second quarter of 2024 as demand for advanced chips utilized in AI applications continues to rise. For the second quarter that ended June 30, 2024, the company’s net revenue increased 40.1% year-over-year to $20.82 billion. That beat analysts’ revenue estimate of $20.09 billion.

During the second quarter, the company’s shipments of 3-nanometer made up 15% of total wafer revenue, 5-nanometer accounted for 35%, and 7-nanometer constituted 17%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 67% of total wafer revenue.

The company’s gross profit was $11.07 billion, up 37.6% from the previous year’s quarter. TSMC’s non-GAAP income from operations rose 41.9% year-over-year to $8.86 billion. Its net income and earnings per ADR came in at $7.66 billion and $1.48, increases of 36.3% year-over-year, respectively. Its earnings per ADR compared to the consensus estimate of $1.42.

As of June 30, 2024, TSMC’s cash and cash equivalents were $55.38 billion, and its total assets amounted to $184.13 billion.

“Our business in the second quarter was supported by strong demand for our industry-leading 3nm and 5nm technologies, partially offset by continued smartphone seasonality,” said Wendell Huang, Chief Financial Officer of TSMC. “Moving into third quarter 2024, we expect our business to be supported by strong smartphone and AI-related demand for our leading-edge process technologies.”

Furthermore, TSMC expects third-quarter revenue between $22.40 billion and $23.20 billion. That compares to $17.30 billion in revenue reported in the same period of 2024. The company’s gross profit margin is projected to be between 53.5% and 55.5%, and its operating profit margin is expected to be between 42.5% and 44.5%.

Bottom Line

TSMC remains a prominent player in the rapidly expanding AI ecosystem. As the world’s largest pure-play semiconductor foundry, TSMC’s leadership in advanced process technologies and commitment to continuous innovation ensure its pivotal role in powering next-generation AI applications.

The company’s comprehensive range of dedicated foundry process technologies, including industry-leading 2nm, 3nm, and 5nm technologies, alongside recent breakthroughs such as the TSMC A16™ and System-on-Wafer (TSMC-SoW™) technologies, underscores its strategic importance for shaping the future of AI.

The impressive financial performance in the second quarter of 2024, where revenue and EPS surpassed analyst expectations, highlights TSMC’s strong market position and resilience. As demand for advanced chips continues to surge, particularly in AI and high-performance computing, TSMC’s innovative solutions and robust financial health position it well for sustained growth and profitability.

Susquehanna analyst Mehdi Hosseini maintained Positive on TSM shares, with a price target of $250. Moreover, in July, Needham reaffirmed a Buy rating on shares of TSM with a price target of $210.

Amid this backdrop, investors could consider adding TSMC to their portfolio, particularly if they want to gain exposure to the burgeoning AI sector. However, it is also essential to remain mindful of potential risks, including geopolitical tensions and market fluctuations, which could impact the semiconductor industry.

Top Energy Stocks Amid Hurricane Season & Summer Demand

Posted on by The INO.com Team

Since April, oil has continued to trade at its highest levels, supported by robust energy demand and tight supplies. WTI crude oil futures inched up $82 per barrel yesterday, following the EIA report indicating a larger-than-expected drop in US crude stockpiles. US crude oil inventories decreased by 3.444 million barrels, surpassing the projected decline of 3 million barrels.

Meanwhile, the heightened travel and mobility and increased air conditioning usage during the summer months continue to push oil demand higher. Amid solid seasonal demand and the looming threat of hurricanes and geopolitical instability, investors could take advantage of surging oil prices by watching key energy stocks Shell plc (SHEL), BP p.l.c. (BP), Phillips 66 (PSX), and Valero Energy Corporation (VLO).

Impact of Hurricane Beryl and Potential Future Storms on Oil Production and Prices

Hurricane Beryl battered Southeast Texas with powerful winds and torrential rain, forcing the closure of oil ports, the cancellation of hundreds of flights, and leaving around 2.7 million homes and businesses without power. Beryl shut U.S. refineries and ports along the Gulf of Mexico, raising concerns about oil production and transportation disruptions. Oil output from the Gulf of Mexico is generally about 1.8 million barrels per day.

Historically, hurricanes have significantly resulted in production halts and evacuation of rigs and refineries, leading to supply constraints, which typically push oil prices upward. The impact of these weather events is two-fold: immediate supply disruption and longer-term infrastructure damage, which can keep prices elevated even after the storm has passed.

Increased Travel and Cooling During Summer Driving Higher Oil Prices

The summer season traditionally sees a surge in travel and mobility alongside air conditioning usage, driving up oil demand. This year is no exception, with intense summer demand for gasoline and jet fuel contributing to rising oil prices. OPEC maintained its forecast for robust global oil demand growth in 2024, citing resilient economic growth and a solid rebound in air travel during the summer.

In its latest Monthly Oil Market Report (MOMR), OPEC expects global oil demand to increase by 2.25 million barrels per day this year.

“Expected strong mobility and air travel in the Northern Hemisphere during the summer driving/holiday season is anticipated to bolster demand for transportation fuels and drive growth in the United States,” the agency said in the report.

Robust seasonal demand translates into higher revenues for companies involved in oil exploration, production, refining, and distribution, presenting an opportune time for investors to evaluate their energy sector portfolios.

Key Energy Stock Picks Amid Summer Demand and Tight Supply

Shell plc (SHEL)

Valued at a market cap of $228.02 billion, Shell plc (SHEL) is a prominent energy and petrochemical company. The company operates through Integrated Gas; Upstream; Marketing; Chemicals and Products; and Renewables and Energy Solutions segments.

Tobago Ltd., a subsidiary of SHEL and Shell Trinidad, recently took Final Investment Decision (FID) on the Manatee project, an undeveloped gas field in the East Coast Marine Area (ECMA) in Trinidad and Tobago. Manatee will enable Shell to competitively expand its Integrated Gas business by capitalizing on development efforts in the ECMA, one of the country’s most prolific gas-producing regions.

"This project will help meet the increasing demand for natural gas globally while also addressing the energy needs of our customers domestically in Trinidad and Tobago," stated Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director.

Shell aims to expand its LNG business by 20-30% by 2030 compared to 2022. LNG liquefaction volumes are projected to increase by 25-30% relative to 2022, as outlined at the company’s Capital Markets Day in 2023.

During the first quarter that ended March 31, 2024, SHEL reported LNG sales volumes of 16.9 MT in the Integrated Gas segment. Its adjusted earnings increased 5.9% quarter-on-quarter to $7.73 billion, reflecting solid operational performance across its business. Its adjusted earnings per share was $1.20, up 8.1% from the previous quarter.

The company’s adjusted EBITDA was $18.71 billion, up 14.5% from the prior quarter. Its cash flow from operating activities (CFFO) grew 6% sequentially to $13.33 billion. Also, its free cash flow came in at $9.80 billion, an increase of 41.7% from the previous quarter.

In the last earnings release, Shell also announced that it commenced a $3.5 billion share buyback program, anticipated to be completed by the second-quarter 2024 results announcement. Over the past four quarters, total shareholder distributions amounted to 41% of CFFO.

Analysts expect SHEL’s revenue and EPS for the second quarter (ended June 2024) to increase 21.1% and 31.2% year-over-year to $90.27 billion and $1.92, respectively. For the third quarter ending September 2024, the company’s revenue and EPS are expected to grow 24.5% and 14.3% year-over-year to $95.06 billion and $2.13, respectively.

Over the past six months, shares of SHEL have surged more than 15% and approximately 21% over the past year.

BP p.l.c. (BP)

With a $100.95 billion market cap, BP p.l.c. (BP) engages in the production of natural gas, and integrated gas and power; trading of gas; operation of onshore and offshore wind power, as well as hydrogen and carbon capture and storage facilities; and production of crude oil. It operates through Gas & Low Carbon Energy; Oil Production & Operations; and Customers & Products segments.

On June 13, BP’s subsidiary, Archaea Energy, and Republic Services, Inc. (RSG) celebrated the first renewable natural gas (RNG) plant in the companies’ Lightning Renewables joint venture (JV). The Archaea Modular Design (AMD) plant at Republic’s National Serv-All Landfill in Fort Wayne, Indiana, is the first of nearly 40 landfill gas-to-RNG projects targeted by the JV and is expected to come online this summer.

The Lightning Renewables JV portfolio supports Archaea’s goal of increasing production to more than 50 million mmBtu per year by 2030.

Also, in April, BP, as the operator of the Azeri-Chirag-Gunashli (ACG) project, announced the start-up of oil production from the new Azeri Central East (ACE) platform. This platform is part of the ACG field development in the Azerbaijan sector of the Caspian Sea and is the first remotely operated offshore platform in the Caspian.

In the first quarter that ended March 31, 2024, BP’s reported production from the Oil Production & Operations segment was 1,463 mboe/d, up 7.6% from the first quarter of 2023. Its upstream production grew 2.1% year-over-year. Its underlying replacement cost (RC) profit was $2.72 billion, or $16.24 per share, respectively.

Furthermore, the company’s adjusted EBITDA for the quarter was $10.31 billion. Profit for the period attributable to BP shareholders rose significantly quarter-on-quarter to $2.26 billion.

“We’ve delivered another resilient quarter financially and continued to make progress on our strategy. Oil production was up and our ACE platform in the Caspian is now producing. We are simplifying and reducing complexity across bp and plan to deliver at least $2 billion of cash cost savings by the end of 2026 through high grading our portfolio, digital transformation, supply chain efficiencies and global capability hubs,” said BP’s CEO, Murray Auchincloss.

Moreover, the $1.75 billion share buyback program announced for the first quarter of 2024 was completed on May 3, 2024, part of the company’s $3.5 billion commitment for the first half of 2024. A resilient dividend is BP’s top priority within its disciplined financial frame. For the first quarter, the company announced a dividend per ordinary share of 7.27 cents ($0.0727).

Street expects BP’s revenue for the second quarter (ending June 2024) to increase 4.4% year-over-year to $50.65 billion. The consensus EPS estimate of $1.07 for the current year indicates an improvement of 19.7% year-over-year. Additionally, BP’s stock has gained marginally over the past six months.

Phillips 66 (PSX)

With a market cap of $56.54 billion, Phillips 66 (PSX) is a leading energy manufacturing and logistics company. It operates in four segments: Midstream; Chemicals; Refining; and Marketing and Specialties (M&S).

In May, Phillips 66 agreed to acquire Pinnacle Midland Parent LLC from Energy Spectrum Capital to expand its natural gas gathering and processing footprint in the Midland Basin. Pinnacle’s assets consist of the newly built Dos Picos natural gas gathering and processing system: a 220 MMcf/d gas processing plant, 80 miles of gathering pipeline, and 50,000 dedicated acres through high-quality producers in one of PSX’s focus basins. 

Pinnacle is a bolt-on asset that enhances PSX’s wellhead-to-market strategy and complements its diverse and integrated asset portfolio. Moreover, this acquisition aligns with its long-term goals of expanding its natural gas liquids value chain, maintaining disciplined capital allocation, and creating sustainable value for its shareholders.

On April 3, the Board of Directors of Phillips 66 declared a quarterly dividend of $1.15 per share, representing an increase of 10%. The dividend was paid on June 3, 2024, to shareholders of record as of the business close on May 20, 2024. The dividend increase demonstrates the company’s confidence in its growing mid-cycle cash flow generation and disciplined capital allocation strategy.

Since its formation in 2012, PSX has consistently raised its dividend, resulting in a CAGR of 16%. Moreover, the company is well-poised to continue delivering substantial shareholder value by executing its strategic priorities, including returning $13-$15 billion to shareholders via dividends and share repurchases from July 2022 to the year-end 2024.

During the first quarter that ended March 31, 2024, PSX posted revenue of $36.44 billion, exceeding analysts’ expectations of $33.56 billion. Its adjusted earnings were $822 million, or $1.90 per share, respectively. During the quarter, refining operated at 92% crude utilization. As of March 31, 2024, the company had cash and cash equivalents of $1.60 billion and $3.50 billion of committed capacity under its credit facility.

In addition, Phillips 66, through the successful execution of its strategic priorities, remains committed to increasing mid-cycle adjusted EBITDA to $14 billion by 2025 and returning more than 50% of operating cash flow to shareholders.

Shares of PSX have surged around 3% over the past six months and more than 33% over the past year.

Valero Energy Corporation (VLO)

Valued at a market cap of $47.65 billion, Valero Energy Corporation (VLO) manufactures, markets, and sells petroleum-based and low-carbon liquid transportation fuels and petrochemical products internationally. The company operates through Refining; Renewable Diesel; and Ethanol segments.

VLO owns 15 petroleum refineries in the U.S., Canada, and the United Kingdom, with a total throughput capacity of about 3.2 million barrels per day. Additionally, Valero is a joint venture partner in Diamond Green Diesel Holdings LLC, which owns two renewable diesel plants in the Gulf Coast region with a combined production capacity of nearly 1.2 billion gallons per year.

Valero also owns 12 ethanol plants in the Mid-Continent region, with a combined production capacity of around 1.6 billion gallons per year.

In the last earnings report, the company provided a strategic update on the Sustainable Aviation Fuel (SAF) project at the DGP Port Arthur plant. The project is progressing ahead of schedule and will likely be operational in the fourth quarter of 2024. It is anticipated that this will give the plant the flexibility to upgrade about 50% of its current 470 million gallons annual renewable diesel production capacity to SAF. Once completed, DGD is expected to become one of the world’s largest SAF manufacturers.

VLO reported revenues of $31.76 billion for the first quarter that ended March 31, 2024. The company’s net income and earnings per common share were $1.33 billion and $3.75, respectively. Net cash provided by operating activities was $1.80 billion for the quarter.

During the quarter, Valero returned $1.4 billion to stockholders, including $356 million paid as dividends and $1 billion as the purchase of about 6.6 million shares of common stock, resulting in a payout ratio of 74% of adjusted net cash provided by operating activities. The company paid a regular quarterly cash dividend of $1.07 per share on June 28, 2024.

VLO’s stock has soared over 16% over the past six months and is up approximately 28% over the past year.