Recent Dividend News Across our Coverage Universe
February 21, 2019
Let’s take a look at some of the most recent dividend-related news among companies within our coverage universe. By Kris Rosemann Valuentum members are familiar with our forward-looking, cash-flow based dividend analysis, which culminates in the Dividend Cushion ratio, and the measure has built an impressive track record of highlighting risks in dividend health across a large number of equities. We would be remiss if we did not once again highlight the efficacy of the Dividend Cushion ratio as the metric caught both of Owens & Minor’s (OMI) recent dividend cuts. The company’s Dividend Cushion ratio was firmly in negative territory prior to the announcement of both reductions in the payout. Investors seeking more background reading on the Dividend Cushion
Walmart’s US Comps Impress; Robust E-Commerce Growth Continues
February 19, 2019
Image Source: Mike Mozart Walmart’s US operations turned in its best two-year comp sales stack in nine years, and e-commerce sales continue to advance at an impressive double-digit rate. Solid top-line growth is expected to continue in fiscal 2020. By Kris Rosemann Retail giant Walmart (WMT) finished fiscal 2019 (ended January 2019) on a strong note thanks to a solid economic environment and progress on its growth-accelerating initiatives in its fiscal fourth quarter, results released February 19. Total revenue advanced 1.9% as reported and 3.1% in constant currency on a year-over-year basis. Walmart US comp sales grew 4.2% from the year-ago period, driven by a 0.9% rise in comp traffic and 3.3% growth in comp ticket, and US e-commerce sales
Our Reports on Stocks in the Specialty Retail (Shoes) Industry
February 19, 2019
Structure of the Specialty Retail (Shoes) Industry The specialty retail (shoes) industry includes footwear makers and retailers that sell fashion and athletic footwear. Manufacturers focus on developing partnerships with retailers to achieve product distribution. Depending on brand strength, margin dollars can go to either side of the partnership. Location for retailers is critical, as many consumers still purchase from local brick-and-mortar stores, though online sales continue to expand. The industry is highly fragmented, and small regional players continue to be displaced by larger firms with better scale and purchasing power. We’re neutral on the industry. We no longer publish reports on the Specialty Retail (Shoes) industry. << Our Dividend Reports
Hasbro’s Tough 2018 Comes to an End
February 18, 2019
Image Source: Mike Mozart Hasbro battled a number of challenges in 2018, but it anticipates a return to profitable growth in 2019. By Kris Rosemann 2018 brought a number of challenges for simulated Dividend Growth Newsletter portfolio idea Hasbro (HAS), not the least of which was the bankruptcy and liquidation of Toys ‘R’ Us and the shifting retail and consumer landscape. The impact of the Toys ‘R’ Us’ struggles were greater than Hasbro expected during the year, and it was not able to recapture as much of the lost business during the holiday period as anticipated due to the impact of the retailer’s liquidated inventory being available. Prior to the bankruptcy filing, Toys ‘R’ Us was Hasbro’s third largest customer
S&P Global: “Enterprise’s shift on cash flow reflects ‘metamorphosis’ of US pipeline firms”
February 17, 2019
S&P Global: “While several major U.S. energy pipeline companies spent 2018 shedding cash-leaking habits and forging a more conventional financial structure as stocks languished, adopting reporting practices that are more accessible to the investing public could be a gradual process for the industry, if it takes flight at all.” S&P Global: “Enterprise’s shift on cash flow reflects ‘metamorphosis’ of US pipeline firms” Click here to read the article. Tickerized for holdings in the Alerian MLP ETF (AMLP). Pipelines – Oil & Gas: BPL, DCP, ENB, EPD, ET, GMLP, HEP, KMI, MMP, NS, PAA, WES —– Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not
Cola Giants Fourth Quarter Earnings and Valuation Distributions
February 15, 2019
Image Source: Sean Loyless Coca-Cola and PepsiCo expect mid-single-digit organic revenue growth to continue in 2019, but currency headwinds are impacting reported figures. We’re less than enthused about the near-term free cash flow expectations of both companies, and tepid macroeconomic growth expectations and potentially elevated costs, such as freight, are weighing on near-term outlooks. By Kris Rosemann Coca-Cola’s Cautious 2019 Guidance Disappoints Image Shown: shares of Coca-Cola are trading in the ~$46 range as of this writing, which is just below the upper bound of our fair value range for shares. Shares of Coca-Cola (KO) tumbled following its fourth quarter 2018 earnings report, results released February 14, as it issued cautious guidance for 2019 due to, in the words of
Our Reports on Stocks in the Paper Products Industry
February 14, 2019
Image Source: Kate Brady Structure of the Paper Products Industry The paper, packaging and pulp industry remains fragmented, and constituents compete with forest-products firms and companies that provide substitutes for wood and wood-fiber products. The industry relies heavily on raw materials and energy sources, which can pressure margins. Industry participants deal with pricing fluctuations that are driven by swings in capacity utlization and general economic conditions. Growth will largely be driven by emerging-market expansion, as organic paper consumption per person continues to fall due to a secular decline in newsprint. We’re not that excited about the group. We’ve dropped coverage of the Paper Products industry. IP and WY are now included in the Containers & Packaging Industry: /20111028_2
Major Improvements in 2018 But Tough Times Ahead for Halliburton
February 14, 2019
Image Source: Halliburton 2016 Annual Report Halliburton’s 2018 performance was boosted by higher oil prices driving upstream capital spending, but tough times may very well lay ahead for the oilfield services provider. By Callum Turcan While Halliburton’s (HAL) financial performance improved materially last year as upstream capital expenditures perked up on the back of higher global oil prices, tough times lay ahead for this oilfield services provider given the current near-term outlook for oil prices. A large part of Halliburton’s business caters to unconventional upstream operators in North America, which are quick to react to any changes in oil prices when it comes to setting capital expenditure budgets. 60% of Halliburton’s revenue last year was generated in North America. Pricing
Changes to the Newsletter Portfolios (Best Ideas & Dividend Growth)
February 14, 2019
Image shown: In our December 26 note to members, we moved the simulated Best Ideas Newsletter and simulated Dividend Growth Newsletter portfolio to “fully invested” from a cash “allocation” of 30% and 20%, respectively at the high end of the range. It has worked out wonderfully as we keep our finger on the put option trigger in case price-agnostic trading and heightened volatility rears its ugly ahead again, as it did in December 2018. Summary of Changes to Newsletter Portfolios Best Ideas Newsletter: Remove Gilead Sciences (GILD) Add Financial Select Sector SPDR ETF (XLF) at 2.5%-4% weighting Dividend Growth Newsletter: Remove Xilinx (XLNX) Remove Gilead Sciences Add Financial Select Sector SPDR ETF at 2.5%-3.5% weighting Add Health Care Select Sector SPDR ETF (XLV) at 2.5%-3.5% weighting By Kris
Cisco’s Momentum and Shareholder Friendliness Continue
February 14, 2019
Image Source: Ecole polytechnique Networking giant is executing effectively in its ongoing shift to an emphasis on software subscription revenue, and deft execution appears to be helping insulate it from macroeconomic and geopolitical headwinds. Shares are trading in the lower half of our fair value range and offer solid income generation potential. By Kris Rosemann Simulated newsletter portfolio idea Cisco (CSCO) continues to execute on its transformation to a greater focus on software subscription revenue, and management noted another quarter of demand that was not impacted materially by ongoing macroeconomic and geopolitical uncertainty. The company conveyed a sense of confidence in its ability to continue delivering a growing stream of free cash flow via its announcement of a 6% increase in
