Keep Calm and Carry On?
June 27, 2016
Image Source: War History Online, June 22 Brexit may or may not be a big problem. Time will tell. But what matters and eventually becomes its own catalyst, however, is valuation. The forward price-to-earnings multiple on S&P 500 companies (SPY) is currently ~16.5 times, above its 5-year (14.6) and 10-year averages (14.3). This is the real story. Assuming a reversion to the 10-year average multiple, for example, the S&P 500 can be considered “fairly valued” at $1,811, a drop of another 10% from ~2,000 levels. You don’t need us to tell you that the markets have practically gone straight up the past seven years from the March 2009 panic bottom through today, with the S&P 500 effectively tripling since that
Dividend Increases/Decreases for the Week Ending June 24
June 27, 2016
Below we provide a list of firms that raised/lowered their dividends during the week ending June 24. 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 8point3 Energy Partners (CAFD): now $0.2325 per share quarterly dividend, was $0.2246. Canadian Banc Corp. (CNDCF): now $0.08783 per share monthly dividend, was $0.08642. Cross Timbers Royalty Trust (CRT): now $0.060865 per share monthly dividend, was $0.047302. DTE Energy (DTE): now $0.77 per share quarterly dividend, was $0.73. Enduro Royalty Trust (NDRO): now $0.013353 per share monthly dividend, was $0.001016. Farmers Bankshares Inc. (FBVA): now $0.07
Yum!: Does One Plus One Equal More Than Two?
June 26, 2016
Image Source: Dave Proffer Yum! Brands (YUM) has a fantastic portfolio of restaurants including KFC, Taco Bell, and Pizza Hut. It operates in more than 140 countries with nearly 43,000 restaurants, and despite the maturity of its three core concepts in the US, Yum! Brands continues to expand its store base at an incredible rate, particularly in Asia (in 2015 alone, it opened almost 2,400 new restaurants companywide, averaging ~6 new restaurants daily). Yum! Brands will be pursuing major changes in the near term, however, and is set to split into two publicly-traded, independent companies by the end of 2016: ‘Yum! China’ and ‘Yum! Brands.’ Though management says the split is “a classic example of ‘one plus one equaling more
Updating Our Reports on Firms in the Wholesale Drug Providers Industry
June 26, 2016
Structure of the Wholesale Drug Providers Industry The wholesale drug providers industry includes firms that distribute pharmaceuticals, medical products/services, and other healthcare technologies. The space is competitive and is littered with national, regional, and local full-line, short-line and specialty wholesalers as well as manufacturers engaged in direct distribution. Because of competition, participants face pricing pressure from both customers and suppliers. Many boast CVS, Walgreens, Rite Aid, and Wal-Mart as their largest customers, and collectively, these chains can generate more than half of a constituent’s revenue. We’re not fans of the group. Please click on a company name below to view the corresponding equity report: << Our Dividends Reports
Brexit: Secession Bells Are Ringing!
June 24, 2016
First Baptist Church in Columbia, S.C., where the first secession convention in the United States opened on Dec. 17, 1860. Source: Library of Congress, Washington, DC. Photo. Encyclopædia Britannica Online. Web. 24 Jun. 2016. Global markets are plunging, and the implosion may still be in the early innings. Market valuations remain stretched among stagnant global economic growth, and “Brexit” may be the catalyst for a correction. In the paraphrased words of the well-known The Day of the Jackal author, Frederick Forsyth: the peasants have spoken. On June 23, the UK (EWU) held a referendum, in which anyone of voting age could take part, to decide whether the country should leave the European Union. The turnout was incredible at nearly 72%, and
Walmart Forms Alliance with Leading Chinese E-commerce Firm
June 23, 2016
Image Source: Bill L By Kris Rosemann As some US corporations are finding the Chinese market an increasingly difficult one in which to operate, “China (May 2016),” Walmart (WMT) is taking moves to strengthen its presence in the world’s second largest economy. On June 20, the retailing behemoth announced that it has entered into a partnership with JD.com (JD), one of China’s largest e-commerce companies, a move that will enhance offerings to consumers throughout China via a combination of JD.com’s e-commerce prowess and Walmart’s traditional retail operations. While Walmart continues to expand internationally, Target (TGT) continues to retreat from non-US markets, even having abandoning efforts in Canada recently. In the deal with JD.com, Walmart has agreed to sell its grocery-focused,
Quick Update: Starbucks — What a Company
June 22, 2016
Image Source: Starbuck’s 2016 Annual Meeting of Shareholders By Jessica Bishop With coffee being an integral part of so many people’s daily routine, Starbucks (SBUX) has captured the hearts of coffee drinkers everywhere and has become the face of upscale, high-end coffee with its tremendous brand recognition. Along with its brand comes its unmatched loyalty program, as people just can’t seem to get enough of Starbucks. It has taken great strides toward mobile advancements such as My Starbucks Rewards (MSR) that has gained more than 10 million active members (grew 28% in fiscal 2015 from fiscal 2014) in the US with card loads in North America alone at $5+ billion in fiscal 2015. The strength of its loyal customer base
Quick Take: Update on Sprint’s Leverage
June 21, 2016
Image Source: Mike Mozart By Jessica Bishop Sprint (S) is not in good financial shape, and we view the company’s equity as a mere lotto ticket that likely won’t pay off. It’s probable that shares of Sprint may continue to converge toward $0 as the economic cycle matures. After all, these are good times, and the company is a mere penny stock. Investors have to be thinking: What’s going to happen when economic activity truly heads south? Our fair value estimate remains unchanged at $4 per share as of the latest update, however, and our relatively large fair value range reflects the tremendous risks of this overleveraged, capital-intensive business model that has only just begun to turn the corner with respect
Dividend Increases/Decreases for the Week Ending June 17
June 20, 2016
Below we provide a list of firms that raised/lowered their dividends during the week ending June 17. 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 Ashford Hospitality Prime (AHP): now $0.12 per share quarterly dividend, was $0.10. Farmers & Merchants Bancorp (FMAO): now $0.23 per share quarterly dividend, was $0.22. Fidelity Nasdaq Composite Index Tracking ETF (ONEQ): now $0.54 per share quarterly dividend, was $0.49. Investar (ISTR): now $0.01 per share quarterly dividend, was $0.009. Mesa Royalty Trust (MTR): now $0.0358 per share monthly dividend, was $0.0221. Realty Income (O): now
Updating Our Reports on the Hospitals Industry
June 16, 2016
We’ve updated our reports on firms in the Hospitals industry. Reports include CYH, HMA, LPNT, THC, UHS.
