Analysis of Marcus Corp (MCS) and Schneider National Trucking (SNDR)
October 25, 2017
Image Source: Dan Executive Summary – Marcus Corp has done well in establishing itself as a meaningful regional player in the movie theater market, and its ability to outperform the industry in terms of box office results and profitability in its movie theater operations–thanks in part to its solid portfolio of owned real estate–is impressive. However, inconsistent free cash flow generation and a notable debt load give us some reason for pause, as does its weak Dividend Cushion ratio, and we see little valuation opportunity present in shares at this time. Schneider National Trucking operates a broad portfolio of freight transportation and logistics solutions that appear to be positioned well for profitable growth thanks to a diversified customer base, the
Kinder Morgan Versus Enterprise Products Partners?
October 25, 2017
Image Source: Stefan Buddy Question: Valuentum’s latest note on Kinder Morgan (KMI) hinted the company’s situation is improving, even though its ratings are weaker than Enterprise Products Partners’ (EPD). Would you please compare these companies? Is Valuentum saying Kinder Morgan is a better bet than Enterprise Products Partners because Kinder Morgan is a corporation and not an master limited partnership? By Brian Nelson, CFA Answer: Thanks for the note and your question. It’s often difficult for us to compare and contrast two companies that are very net debt heavy as we tend to be very debt averse in the first place. That said, there are a few things that we look at with respect to Kinder Morgan versus Energy Products
Bellwethers Drive Dow Jones Past 23,450 – Cheers!
October 24, 2017
Image: The stock market is partying like it’s 1999 or 1929, or 1987. You pick. Cheers! Creative Commons, Ruth Hartnup. The market is reacting positively to calendar third-quarter earnings reports during the trading session October 24, and the Dow Jones Industrial Average (DIA) has now surpassed 23,450+. The rally in US equities ensues. Stocks mentioned in this note: General Motors (GM), McDonald’s (MCD), and Caterpillar (CAT). By Brian Nelson, CFA General Motors Delivers!!! We couldn’t be more excited for holders of newsletter portfolio idea General Motors. The auto giant released a solid third-quarter report October 24 that has sent shares rallying to ~$46 each. If you remember, GM’s stock was languishing in the mid-$30s when we penned our September piece,
In August, We Cut” Position in Hasbro in Dividend Growth Newsletter Portfolio”
October 23, 2017
We still have a small “position” in the emerging licensing giant in the Dividend Growth Newsletter portfolio, having removed 75% of the “stake” in August. By Brian Nelson, CFA On August 18, 2017, we released the following email notification alert on Hasbro (HAS) to members, “ALERT: Newsletter Notification and Website Changes:” Dividend Growth Newsletter portfolio — page 3 of the September edition here (pdf) We are removing 75% of our position in Hasbro from the Dividend Growth Newsletter portfolio, or 82 shares at $96.54. Hasbro’s cost basis in the newsletter portfolio is ~$32. The company’s performance has been absolutely phenomenal. Stock page: /search-by-symbol/?tag=has Download Dividend Growth Newsletter transaction log here (not updated for notifications in this email). In August, we thought it
Earnings Roundup: Unilever, Procter & Gamble, Kimberly-Clark
October 23, 2017
We love the business models of consumer staples, but recent fundamental performance hasn’t been great, and valuations are a bit stretched. Unilever is blaming natural disasters in the US for its underlying sales growth shortfalls, Procter & Gamble has to deliver now that it defeated Nelson Peltz, and Kimberly-Clark’s meager top-line expansion may not support its valuation. A good business does not always make a good stock. By Brian Nelson, CFA Consumer staples stocks (VDC, FSTA, XLP) are fundamentally-sound entities that sell everyday items that consumers need regardless of the ups and downs of the economic cycle. That makes their business models quite resilient through thick and thin, but it also means that many are household companies that everybody knows
Restasis Patent Protection Weighing on Shares of Allergan
October 23, 2017
We have witnessed numerous examples over the years of biotech/pharma companies selling-off over fears of the length of patent protection on an essential product. The concern is well-founded–if the company relies on the product for a significant portion of sales, it may be challenging to replace, especially if the clinical pipeline is relatively bereft of viable next-generation products. We believe the recent sell-off in the shares of Allergan may now be wholly factoring in the loss of patent protection of one of its core assets in Restasis, and the equity may not be getting enough credit for its highly diversified revenue stream. By Alexander J. Poulos and Kris Rosemann Overview Allergan (AGN) in its current configuration is an amalgamation of
GE Cuts Guidance, All Eyes Turn to November 13
October 20, 2017
Image Source: darkon_turaas On October 20, General Electric slashed its guidance for earnings and cash flow from operating activities after reporting another weak quarter. Could the dividend be next on the chopping block? Management will update investors on company strategy and its 2018 framework Monday, November 13, an event to which we’ll be paying close attention. By Kris Rosemann Our decision to rid the newsletter portfolios of shares of General Electric (GE) in mid-May was driven by expectations for material pressure to build on the industrial giant’s free cash flow generation, “Newsletter Alert: Title Withheld – Members Only.” Such concerns have all but materialized as management has slashed its adjusted EPS and Industrial CFOA targets for full year 2017 following a
The Market Loves PayPal; Shares Now $70+
October 20, 2017
Image Shown: PayPal’s stock has been a huge winner in the Best Ideas Newsletter portfolio. Payments processor PayPal reported fantastic third-quarter results and raised its full-year guidance for the third time in as many quarters. Shares are surging. By Brian Nelson, CFA We thought PayPal’s (PYPL) second-quarter results were fantastic, but its third-quarter results, released October 19, were even better. For a little background, here’s what we said about PayPal in July: PayPal’s revenue advanced 20% in the second quarter, after excluding effects from currency exchange, and the company leveraged that growth into an impressive 27% jump in GAAP and non-GAAP earnings per share, the latter to $0.46, coming in ahead of expectations. PayPal added 6.5 million active customer accounts
Kinder Morgan’s Dividend Growth For Next Year Is Achievable; Here’s Why
October 19, 2017
Image Source: Roy Luck After its infamous dividend cut, Kinder Morgan is getting things back on track. We applaud management for its ability to bounce back from a tumultuous energy-resource pricing environment. By Brian Nelson, CFA We have a lot of good things to say about Kinder Morgan (KMI). Here’s what we wrote following its second-quarter results in July: Kinder Morgan appears to be back on track, something that it set the stage for in early 2016 when Barron’s wrote about Valuentum’s take, “Is Kinder Morgan on the Road to Recovery (January 2016).” The pipeline operator continues to trade near our fair value estimate of $20, so it’s hard to make the case that there is a tremendous valuation opportunity
Reimbursement Uncertainty Weighs on DaVita
October 19, 2017
DaVita has been left out in the cold with its share price losing ground in 2017 due to continued fears over reimbursement of care. By Alexander J. Poulos Overview DaVita (DVA) is an innovative healthcare provider with its primary focus on high-quality dialysis care. DaVita has embarked on a journey to consolidate the highly-fragmented dialysis care market through a series of acquisitions, which have transformed the enterprise into one of the largest providers in the United States. Industry consolidation is inevitable as US government insurance (Medicare) accounts for the bulk of reimbursement. We feel the industry operates as a quasi-oligopoly with few incentives for the individual players to compete on price. Reimbursement Woes We feel Davita remains under a cloud
