DuPont Announces Repurchase Program and Solid Fiscal Year 2013 Guidance
December 13, 2012
Though chemicals will be weak, the rest of DuPont should grow at a strong clip.
Joy Global Sees Mining Weak in 2013
December 12, 2012
Mining equipment manufacturer Joy Global isn’t too bullish about the strength of the mining industry in 2013.
Dollar General Blames the Consumer for Weak Guidance
December 12, 2012
Tuesday morning, value chain Dollar General (click ticker for report: ) reported stronger than expected results for its third quarter. Revenue rose 10% year-over-year to $4 billion, roughly in-line with consensus expectations. Earnings, adjusted for a one-time expense, jumped 26% year-over-year to $0.63 per share. During the third quarter, same-store sales grew 4% year-over-year, down compared to the second quarter, but still a fairly strong growth rate, in our view. The firm’s gross margin fell 10 basis points to 30.9%, though its operating margin increased 50 basis points to 9.1% due to strong cost containment. While the third quarter was relatively strong, management was cautious about the rest of the year. The company narrowed its earnings-per-share range to $2.82-$2.85 from
Delta Buys 49% of Virgin Atlantic Airways
December 11, 2012
As we touched on last week, Delta Airlines (click ticker for report: ) acquired a 49% stake in Virgin Atlantic Airways from Singapore Airlines for approximately $360 million. The deal seems to make sense for both parties, as it gives Virgin better access on US routes and Delta access to London’s Heathrow airport. The valuation, a haircut from what Singapore paid, doesn’t seem unreasonable, in our view. Given Delta’s semi-decent balance sheet, we doubt the deal will materially impact financial standing. One would think the market really likes the deal, given that shares of Delta are up more than 6%. However, we believe the airline market is rallying on reports that the rumored merger between AMR Corp (American Airlines) and US
Opportunity Ripens for Entry Point in EDAC Tech
December 11, 2012
EDAC Tech (EDAC) has been one of our best performing ideas since the inception of our Best Ideas portfolio. We first added the company to our Best Ideas portfolio when it was trading just above $4 per share, and we now peg its fair value north of $20 per share. The stock has been under pressure as of late, and we wanted to bring one of our very best ideas to light on share weakness. Please click the image below to download the firm’s 16-page equity report.
Inside AbbVie: A Look at a New Pharmaceutical Giant
December 11, 2012
On January 1, medical giant Abbott (click ticker for report: ) will start trading as two firms, Abbott and AbbVie. The companies will form two distinct, publicly-traded businesses, allowing the market to value each company separately and uniquely. Pharmaceuticals will be housed in AbbVie, while medical diagnostics, baby food, and generic drugs will remain a part of Abbott. Let’s first dig into AbbVie. We’ll have a follow up article on the new Abbott in coming days. AbbVie Led by Humira Headlining the new pharmaceuticals business is the blockbuster drug Humira, which had over $7.9 billion in sales in 2011 alone. Though originally approved for rheumatoid arthritis in 2003, the drug has been approved to treat Crohn’s disease, plaque psoriasis, ulcerative
Modest Valuation Upside Remains at Phillips 66
December 10, 2012
Dividend Growth Newsletter portfolio holding Phillips 66 (click ticker for report: ) released positive news Friday. The refiner will raise its dividend 25% to $0.3125 per share beginning in the first quarter of 2013, and it also approved an additional $1 billion of share repurchases. Phillips 66 has been a standout performer since being distributed to shareholders of ConocoPhillips (click ticker for report: ) earlier this year, with the stock up nearly 65%. Refining has traditionally been one of the more volatile businesses of the oil and gas segment, and Phillips 66 has capitalized on a favorable cycle by generating strong earnings growth and solid cash flow. Refinery and marketing profits more than doubled during the firm’s most recent quarter,
Nelson Peltz Shakes Up Ingersoll Rand
December 10, 2012
Industrial conglomerate Ingersoll Rand (click ticker for report: ) announced plans to spin off the firm’s security division, buy back $2 billion worth of stock, and raise its dividend 31%, to $0.21 per share. The announcement is a reaction to the activist stake taken by Trian Fund Management, the fund co-founded by Nelson Peltz. Trian owns about 7% of the company. The security division will be a combined unit of the Securities Technology segment and the firm’s residential security business, which is currently housed in the Residential Solutions segment. Annual revenues are expected to be about $2 billion, and the new company will have strong margins and free cash flow, according to management. This creates another security pure play, as
FAQ: How Often Does Valuentum Make Changes To Its Actively-Managed Portfolios?
December 10, 2012
We answer one of the most important questions behind the success of our process.
Is McDonald’s Back on Track?
December 10, 2012
Monday morning, fast food behemoth McDonald’s (click ticker for report: ) announced stronger than anticipated same-store sales growth for the month of November. Same-store sales jumped 2.4% year-over-year at a company-wide level, easily exceeding the consensus estimate of 0.4% growth. We continue to remain on the sidelines for now, though we think the company would make a compelling addition to the portfolio of our Dividend Growth Newsletter at the right price (below the low end of our fair value range). US same-store sales increased 2.5% year-over-year, with the company citing breakfast, new items like the Cheddar Bacon Onion, and value offerings as the main drivers. Given the price point of the new sandwich and products, we believe it was the
