PepsiCo Posts Solid Quarterly Report, Targets Powerful Long-Term Growth Trends
October 4, 2019
Image Source: PepsiCo Inc – IR Presentation By Callum Turcan On October 3, PepsiCo (PEP) reported third quarter earnings for fiscal 2019 (12 week period ended September 7) that were positively received by the market as the beverage and snack company beat both consensus top and bottom line estimates. Management reiterated that PepsiCo sees its organic non-GAAP revenues growing by at least 4% annually this fiscal year and that free cash flows would come in at approximately $5.0 billion, enough to cover approximately $5.0 billion in expected dividend payments. While core constant currency (non-GAAP) EPS is still expected to decline by 1% annually this fiscal year, strong apparent underlying demand for PepsiCo’s products creates room for optimism. Shares of PEP
Competition Heats Up in the Medical Robotics Space
October 3, 2019
Image Source: Intuitive Surgical Inc – IR Presentation Competition is heating up in the medical robotics space, an area of the medical device industry Intuitive Surgical (ISRG) is a clear leader in with its Da Vinci system installed in ~5,000 hospitals and other medical centers around the world (approximately 60% of Intuitive Surgical’s installed base is in the US). Intuitive Surgical’s business model is built around charging healthcare providers an upfront fee along with additional charges for single use instruments which creates strong reoccurring revenue streams. The Da Vinci system is a robot-assisted surgical device that has been shown to meaningfully improve patient outcomes, seen through lower levels of blood loss and shorter hospital stays across multiple different types of
Zimmer Biomet’s Near-Term Outlook Is Less Rosy Than Management Would Have You Believe
October 2, 2019
Shares of Zimmer Biomet are trading on lofty expectations and investors may be in for a shock should Zimmer Biomet continue to underperform during the second half of 2019. Foreign currency headwinds continue to grow as seen through the strength of the US Dollar Index during the third quarter of 2019. We like Zimmer Biomet’s deleveraging activities but think its share price has gotten ahead of itself given these rising headwinds, lack of top line growth, and deteriorating net operating cash flows. We are staying away from Zimmer Biomet. By Callum Turcan Zimmer Biomet (ZBH) makes medical devices and shares of ZBH yield 0.7% as of this writing. The company as it stands today was created through Zimmer Holdings acquiring
Carvana Seeks to Disrupt an Enormous Market
October 1, 2019
Image Source: Carvana Co. – IR Presentation By Callum Turcan Carvana Co. (CVNA) seeks to disrupt the used car and used light truck market in the United States as a leading e-commerce platform for used automobile sales. Perhaps best known for its “car vending machines” that are located in key metropolitan areas across the US, Carvana wants to fundamentally transform the way consumers buy, sell, and ultimately ascertain the proper value for used automobiles. Please note that Carvana does not pay out a common dividend at this time and is unlikely to do so in the foreseeable future given its negative free cash flows. Industry Overview The company noted that the US used auto sales market clocked in at $764
Economic Commentary: US-Listed Chinese Names, 60-40 Stock-Bond Allocation and More
September 30, 2019
There’s an interesting saying that I came across recently…that hits at the most important component of any fiduciary approach: capital preservation. The saying was “Friends don’t let friends buy and hold.” We’ve always employed the Valuentum strategy, which we believe is much more promising than a traditional buy and hold strategy. – Brian Nelson, CFA The US-China trade war continues with reports indicating that the White House is considering delisting Chinese (FXI, MCHI, KWEB) companies on US exchanges. Let’s get more of the Valuentum’s team’s thoughts on these developments as well as other topics that have come to the fore. The latest alert to members is a great prompt to get the conversation started. The Valuentum Team: If we had
Our Reports on Stocks in the Medical Devices Industry
September 30, 2019
Image Source: U.S. Embassy Kyiv Ukraine Structure of the Medical Devices Industry The medical devices industry is heavily regulated and characterized by rapid technological change. Firms have been forced to compete on price due to economically-motivated buyers, consolidation among healthcare providers, and declining reimbursement rates. Healthcare reform measures have put additional pressure on procedure rates and market sizes. Still, firms can gain advantages by developing products with differentiated clinical outcomes or by creating patent-protected technology. Since most constituents hold important patents or trade secrets, we tend to like the group. We’ve optimized our health care coverage, the reports of which can be found here.
Our Reports on Stocks in the Energy Equipment & Services Industry
September 29, 2019
Image Source: Sollven Melindo Structure of the Energy Equipment Industry The energy equipment industry is heavily tied to the exploration and production (upstream) expenditures of oil and gas producers across the globe. Many industry constituents participate in a number of different market segments to offer a complete range of products/services to customers. The fortunes of the group are levered to energy prices (crude/natural gas), as higher prices make drilling projects more attractive and increase the demand for oilfield equipment and services. However, falling prices have an opposite effect, creating long boom and bust cycles. We’re neutral on the structure of the group. We’ve reallocated our resources to optimize our energy coverage. See here.
Dividend Increases/Decreases for the Week Ending September 27
September 27, 2019
Below we provide a list of firms that raised their dividends during the week ending September 27. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week American Express (AXP): now $0.43 per share quarterly dividend, was $0.39. American Tower (AMT): now $0.95 per share quarterly dividend, was $0.92. Artesian Resources (ARTNA): now $0.2496 per share quarterly dividend, was $0.2459. BancFirst (BANF): now $0.32 per share quarterly dividend, was $0.30. City Holding (CHCO): now $0.57 per share quarterly dividend, was $0.53. CSB Bancorp (CSBB): now $0.28 per share quarterly dividend, was $0.26. DENTSPLY
Hold ‘em or Fold ‘em?
September 26, 2019
Let’s talk Cardinal Health, Hanesbrands, Ford and Verint in this piece. Our best ideas are ideas in the newsletter portfolios. Unlike other widely followed strategies, the Valuentum strategy likes to capture the entire pricing cycle on an idea. We don’t “operate” in ideas only below the ‘undervalued’ line, but we like to let our winners run to when they are overvalued and showing signs of technical/momentum deterioration. By Brian Nelson, CFA The most important quality of a Valuentum investor is patience. Once we add an idea to the newsletter portfolios, we don’t remove it once it starts to approach the lower bounds of the fair value estimate range. We generally don’t remove it at our fair value estimate either, and
