The Dividend Cushion, ConocoPhillips Cuts!
February 4, 2016
By Brian Nelson, CFA I believe one of the strongest areas at Valuentum is our quantitative work, not only with respect to enterprise free cash flow valuation, but also with respect to assessing dividend health. For those that have not had a chance to evaluate the efficacy of the Dividend Cushion ratio, “,” it is well worth a quick read. For example, if you are a financial advisor or individual investor and you were holding ConocoPhillips (COP) for income purposes, then you are not taking advantage of the depth of our forward-looking quantitative research. Today, February 4, ConocoPhillips cut its dividend payout ~66%, to $0.25 on a quarterly basis, now implying a forward yield of ~2.5%. ConocoPhillips registered a -1
Chipotle and Buffalo Wild Wings…Yikes!
February 3, 2016
It’s a perfect storm in fast-casual… We wrote about all of the troubles at Chipotle (CMG), “Chipotle Fourth Quarter Comps Suffer Greatly; Could Qdoba Be the One to Eat Chipotle’s Lunch,” and the fast-casual burrito-maker’s fourth-quarter performance, released February 2, was a doozy. Revenue fell ~7% as comparable restaurant sales dropped almost 15% in the quarter (it still opened up 79 new restaurants, however). Chipotle’s restaurant level operating margin cratered 700 basis points, while net income fell 44%, driving earnings per share down by a similar margin during the period. All of this may have been expected, but it is still quite shocking to witness these “terrible” numbers by the fast-casual giant. Management indicated that January comparable store sales were
Why Portfolio Holdings Can Sometimes Have Low VBI Ratings
February 3, 2016
Q: Most of the stocks in the Best Ideas Newsletter portfolio carry a Valuentum Buying Index rating of 6 or lower. Why? A: This is a great question because it gives us the opportunity to explain the robustness and multi-faceted dynamics of the Valuentum Buying Index methodology. First, the Valuentum Buying Index, or the VBI, breaks down into three in-depth, standalone processes: a discounted cash-flow process, a relative value process, and a technical/momentum assessment. Each of these three pillars of the Valuentum Buying Index contain analytical insight contributing to the overall investment consideration beyond a one integer system. The combination of these three criteria results in each firm’s Valuentum Buying Index rating (from 1 through 10, with 10 being the
Early Read: Gilead Guides Revenue to Decline in 2016, Below Consensus
February 2, 2016
Gilead’s (GILD) fourth-quarter report came and went, and it was just fine. Strong revenue and earnings growth and phenomenal free cash flow generation were all the rage in the quarterly press release. It even announced a new $12 billion share buyback program and upped its dividend 10% starting in the second quarter. We love the company that cured hepatitis C (“hep C”), but we no longer include it in the Best Ideas Newsletter portfolio. No quarterly report could ever cure our biggest concerns. To put it straight, Gilead’s outlook for 2016 is nothing to write home about, and the probability of intense pricing competition in its blockbuster hep-C franchise taking its toll in 2017 and beyond is something even
Best Idea Michael Kors Up 20%+ — Yawn?
February 2, 2016
“A significantly “undervalued stock” that is dropping like a rock is a huge red flag, and the Valuentum system offers a methodological overlay to incorporate the very valuable information contained in share prices.” – Brian Nelson, CFA What a day for Michael Kors (KORS)! At the time of this writing February 2, shares of the aspirational brand are soaring 20%+. Yes, it is a holding in the Best Ideas Newsletter portfolio, “Valuentum’s Best Ideas Portfolio,” and yes, we added to the position in Michael Kors November 5, 2015, “Email Transaction Alerts.” The email transaction alert, which included some profit-taking in Altria and additions to the positions in Buffalo Wild Wings and Michael Kors, can be downloaded here. Prior to the
Google…Ahem…Alphabet!
February 1, 2016
“A falling stock price doesn’t mean the stock is cheaper; it doesn’t mean that the stock will go back up; and it certainly doesn’t mean that the stock can’t fall further. In some cases, a falling stock can become more expensive as it drops, if its value falls by a greater amount.” – Brian Nelson, CFA The company formerly known as Google, Alphabet (GOOG, GOOGL), is surging in after-hours trading February 1. As a result of Google’s stock split in 2014, we include both share classes (non-voting Class C, GOOG, and Class A, GOOGL) in the Best Ideas Newsletter portfolio, collectively one of its largest holdings (5%+). Alphabet, then known as Google, first registered a 10 on the Valuentum Buying
Alerts: A Long-Time Favorite from the Bullpen and An Interest Rate Risk Hedge
February 1, 2016
We’ve long appreciated the stand-out dividend strength characteristics of Cracker Barrel (CBRL) among the full-service restaurant space, and we see an opportunity to add the company to the Dividend Growth Newsletter portfolio today (see page 5). We’ve outlined our case for Cracker Barrel in the past, “Free Cash Flow Feeds Cracker Barrel’s Dividend Growth,” and while we haven’t quite gotten our price just yet, we’re going to inch forward a bit with a small 1.5% position in the Dividend Growth Newsletter portfolio at this time. The company yields a very nice ~3.4%, and its Dividend Cushion is solid for that high of a payout. One of the areas we’re expecting Cracker Barrel to surprise to the upside is the positive
Dividend Growth ‘Bubble’ To Continue But For How Long?
February 1, 2016
You’ve heard about low interest rates. You may have even heard about a ZIRP, zero interest-rate policy, as had been the case in the US for years, but have you heard of NIRP, negative interest-rate policy? Well, that’s the latest with respect to Japan (EWJ), which is home to the third-largest national economy in the world after the US and China. On January 29, the Bank of Japan (BOJ) introduced a negative benchmark interest rate of -0.1%, meaning that instead of paying interest on deposits, it will charge commercial banks to hold their money. This may make Japanese exports cheaper to stimulate growth, but my goodness, talk about a move to push “parked” assets out of the country. The US
Valuentum Releases Updated Valuation Model on Kinder Morgan
January 31, 2016
Valuentum’s discounted cash-flow model on Kinder Morgan is available for download. To download Excel model: To download 16-page valuation report: To dowload supplemental dividend report: To access the latest quarterly reading on Kinder Morgan (KMI): Time to Load Up on Kinder Morgan? To access Kinder Morgan’s stock landing page on Valuentum’s website: /search-by-symbol/?tag=kmi ——————– Valuentum provides full coverage on more than 1,000+ stocks and dividends, including providing fully-populated models, per request. Please contact us if we can be of any assistance.
