Nelson’s Video Clip on CNBC Asia’s Squawk Box
August 28, 2014
“Brian Nelson, President of Equity Research at Valuentum Securities, says brand recognition is underpinning the growth in sales for iconic U.S. luxury brands like Tiffany.” — CNBC Please select here to view the video.
Tiffany Dazzles in Second Quarter; Coach Now Yielding ~4%
August 27, 2014
Be sure to catch Valuentum’s Brian Nelson discussing Tiffany’s reports on CNBC Asia at 9:30 PM CST today. The video clip will be posted to the website as soon as it is made available. Luxury jewelry maker Tiffany (TIF) reported fantastic second-quarter results Wednesday and raised its bottom-line guidance for the second time this year and in as many quarters. Tiffany has been benefiting from a modernization of its classical jewelry line-up thanks to the ongoing success of its newest ATLAS collection (shown right) and TIFFANY T jewelry collection (shown below). The ATLAS collection is named for the mythic Greek god and showcases Roman numerals in designs symbolic of strength and freedom on pieces ranging from pendants and earrings to
Price Is Almost Always Different Than Value
August 26, 2014
It was January 10, 2000. America Online had just announced that it would acquire Time Warner to create the largest media company. The purchase price amounted to more than $160 billion, and the combined entity was estimated to have a market capitalization of ~$350 billion. The deal was the biggest corporate merger to that date and was expected to launch the next Internet revolution, according to then-CEO of AOL Steve Case. The transaction valued Time Warner at about $108 per share, a huge premium over its price of $64.75 per share the trading session before. AOL’s shares closed at $72 the day of the announcement. Just a couple years later, things were quite different. When it reported full-year 2002 results,
Dividend Increases for the Week Ending August 22
August 24, 2014
Below we provide a list of firms that raised their dividends during the week ending August 22. 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 Altria (MO): now $0.52 per share quarterly dividend, was $0.48. American Financial Group (AFG): now $0.25 per share quarterly dividend, was $0.22. Brinker (EAT): now $0.28 per share quarterly dividend, was $0.24. Chemical Financial (CHFC): now $0.24 per share quarterly dividend, was $0.23. Commercial Bancshares (CMOH): now $0.19 per share quarterly dividend, was $0.165. Evans Bancorp (EVBN): now $0.34 per share semi-annual dividend, was $0.31. G&K Services
Peltz’s Reasons for Breaking up Pepsi Do Not Hold Water
August 24, 2014
Our team took a read of Barron’s cover story over the weekend on Pepsi (PEP) that goes into activist investor Nelson Peltz’s thesis for breaking up the firm into two pieces: a soda group and a snacks group. Nelson Peltz’s Trian Partners holds ~$1.2 billion of Pepsi’s shares, so he has a relatively large voice on the future direction of the company. Barron’s seemed to take the opinion that a break-up makes sense, but after reading the article, we were left with little economic reason to believe that a split should be pursued. For background, the thesis on breaking up Pepsi goes something like this: “a split would allow both beverages and snacks to operate more entrepreneurially. ‘The goal is
Newsletter Portfolios: Altria Ups Dividend; eBay Still Assessing PayPal Spin-off
August 22, 2014
Valuentum makes two actively-managed portfolios available to members: a Best Ideas portfolio (housed in the monthly Best Ideas Newsletter) and a Dividend Growth portfolio (housed in the monthly Dividend Growth Newsletter). Each portfolio has a different goal and a different strategy. The Best Ideas portfolio seeks to find firms that have good value and good momentum characteristics and typically holds each idea from a Valuentum Buying Index rating of a 9 or 10 (consider buying) to a rating of a 1 or 2 (consider selling). The goal of the Best Ideas portfolio is to generate a positive return each year and to exceed the performance of a broad market benchmark. The Dividend Growth portfolio seeks to find underpriced dividend growth
We Could Have Done Better with Hewlett-Packard
August 21, 2014
In investing, there are always trade-offs, and one of the challenges we face as a publisher is being crystal clear about this. For example, within the personal computer (PC) supply chain, we held the view that PC demand stabilization would be a key driver behind price-to-fair value convergence among a number of participants. But while we were pounding the table on Intel (INTC) and Microsoft (MSFT) for much of the past few years, we were less-enthused about the prospects of a turnaround at Hewlett-Packard (HPQ). Since the inception of the Best Ideas portfolio, May 2011, Microsoft’s shares (yellow) have surged 80%+, Intel’s shares (orange) have jumped more than 45%, while Hewlett-Packard’s shares (bottom line) have been roughly flat (bottom line).
Financial Analysis 501: Understanding Cash-Burn Scenarios
August 21, 2014
A version of this article appeared on our website November 20, 2013. This article is for educational purposes only and does not reflect our current opinion on J.C. Penney. Please view the firm’s 16-page report for our updated take on the firm. J.C. Penney’s (JCP) third-quarter 2013 results, released November 20, left much to be desired, despite the market’s positive reaction. In fact, the performance confirmed our greatest fear, and we are maintaining our significantly below-market fair value estimate of the firm. Investors should be cognizant, however, that we don’t expect a path directly to our below-market fair value estimate of J.C. Penney’s stock, but one that has fits and starts before an inevitable decline takes hold over the next couple years.
Walgreen’s and Target Distracted; Dollar General Enters the Fray
August 20, 2014
Walgreen’s (WAG) and Target (TGT) have been in the news quite a bit as of late–Walgreen’s bowing to political pressure from the proposed ban on tax ‘inversion deals’ and Target as a result of its delayed disclosure of the magnitude of its credit card data breach. Both items have been a major distraction to the respective executive suites, and it is starting to show. In the case of Walgreen’s, the CFO and pharmacy chief lost their jobs today, in part as a result of a ~$1 billion forecasting error related to its prescription-drug business. Though the revision is not an act of illegal wrongdoing (companies change forecasts all the time), the revision is still an embarrassment for the company, especially in light
Home Depot’s and Lowe’s Performances Diverge
August 20, 2014
Home Depot (HD) and Lowe’s (LOW) reported calendar second-quarter results this week. Home Depot continues to execute better than its peer, with the company witnessing strong performance in its spring seasonal business and across all geographies during the second quarter. Home Depot’s comparable sales growth of 6.4% in the US was also a full two percentage points better than Lowe’s second-quarter performance. Home Depot also upped its outlook for the remainder of the year, showcasing fantastic double-digit bottom-line expansion: Based on its second quarter performance and its outlook for the year, the company raised its fiscal 2014 diluted earnings-per-share guidance and now expects diluted earnings per share to be up approximately 20.2 percent to $4.52 for the year. This earnings-per-share guidance includes
