Six Mature Companies with Earnings Momentum into 2015

Earnings Momentum into 2015Large-cap earnings were pretty good this quarter, just like they were in the second quarter of this year.

The Walt Disney Company (DIS) was one of them. Notable in the company’s solid fiscal fourth-quarter and year-end results was its huge jump in profitability.

While total fiscal 2014 sales grew eight percent to a record $48.8 billion, earnings grew a whopping 22% to a record $7.5 billion on the back of strong growth in parks and resorts revenues and studio entertainment. Parks and resorts, in particular, produced a solid increase due to domestic demand.

Disney’s share price has done incredibly well, too, over the last two years. While future capital gains look incremental, fiscal 2015 should be another record year for the company.


In fiscal 2014 (ended September 27, 2014), Disney paid out approximately $1.5 billion in dividends, but spent $6.5 billion buying back its own shares. This compares to $1.3 billion and $4.1 billion in fiscal 2013, respectively.

Disney has solid growth prospects for its upcoming fiscal year and even if top-line growth is single-digit, earnings should once again grow by the double-digits on the recurring trend of greater spending at domestic parks and resorts. Studio entertainment is always volatile in its performance.

Large-cap results held up well in the most recent quarter and plenty of the market’s existing winners are well poised going into 2015.

NIKE, Inc. (NKE) had a great quarter, with double-digit growth on both the top and bottom lines. (See “Mature Company Serving Up Grand Slam Results.”)

For such a mature brand, NIKE is off to a very strong start in its fiscal year. The stock’s been on a tear since the stock market breakout at the beginning of 2013. While the position is due for a break, the company should produce another record year.

Adding to this group of large-caps reporting strong numbers, Microsoft Corporation (MSFT) produced excellent top-line growth in its latest quarter.

While Microsoft’s comparative earnings per share were down due to integration and restructuring expenses, total sales grew 25% to a record $23.2 billion in the most recent quarter.

Microsoft could be a solid dividend play for those looking for income in this market. The company currently has good operating momentum, and earnings estimates for this fiscal year and next have been going up across the board.

Stock market momentum this year is likely to remain with large-caps, and institutional investors are buying dividend income in a slow-growth environment.

Corporate profitability is well positioned for further gains in 2015, and rising prices for goods and services are not deterring demand so far, according to a lot of corporate earnings results.

If stocks were flat from current levels for the rest of this year, it would still be a solid performance after such tremendous capital gains in 2013.

I continue to like existing large-cap, dividend-paying winners for those investors looking to buy this market. It’s what institutional investors are buying. Along with the above mentioned companies, Johnson & Johnson (JNJ), Union Pacific Corporation (UNP), and 3M Company (MMM) have earnings momentum that may be attractive to investors on a risk-adjusted basis with other equities.