Dick’s Sporting Goods Trades at Less Than 10x Expected Fiscal 2023 Earnings; We Like Shares
May 24, 2023
Image Source: Dick’s Sporting Goods By Brian Nelson, CFA When it comes to retail exposure, Dick’s Sporting Goods (DKS) is one of our top considerations. The company reported strong first-quarter fiscal 2023 results for the period ending April 29, 2023, that showed 3.4% same-store-sales growth and a 19% advance in non-GAAP earnings per diluted share. For fiscal 2023, management is targeting positive same-store sales expansion and earnings per diluted share in the range of $12.90-$13.80, implying that shares are trading at less than 10x expected fiscal 2023 earnings. The company has considerable long-term operating lease liabilities, but it has a net cash position. Dick’s Sporting Goods raised its dividend considerably recently, and we continue to like shares in the Dividend
Earnings Roundup: DE, WMT, CSCO, HD, FL
May 19, 2023
By Brian Nelson, CFA Deere & Company (DE) is a tried-and-true industrial giant. The company’s dealer network offers it a strong competitive advantage, and while the company’s business ebbs and flows with the general economic environment, the firm has been able to drive impressive product pricing increases of late. During the firm’s first-quarter fiscal 2023 results (ending April 29, 2023), released May 19, Deere’s worldwide net sales advanced an impressive 30%, while net income per share leapt to $9.65 per share from $6.81 per share in the same period a year ago. Deere’s pricing power continues to be on display. In its ‘Production & Precision Agriculture’ division, sales jumped more than 50% in the quarter, while operating profit more than
Magellan Midstream Soars on Takeout Deal
May 17, 2023
Image: Magellan Midstream Partners soars on a takeout offer from ONEOK, Inc. By Brian Nelson, CFA We’re as happy as we can be to see a midstream energy master limited partnership (MLP) takeout. On Sunday, May 14, it was publicly announced that Magellan Midstream (MMP) would be bought by ONEOK, Inc. (OKE) in a cash and stock deal worth ~$18.8 billion including assumed debt. According to the deal terms, the transaction would give $25 per share in cash and 0.667 common share of ONEOK for each MMP common unit. Though many are questioning the rationale behind the deal, energy infrastructure rollups continue to reduce the number of energy MLPs trading on public markets, as we predicted years ago. Units of
Our Reports on the Health Care Bellwethers Industry
May 17, 2023
Dividend Yield: Estimated on a forward-looking annualized basis. VBI: The Valuentum Buying Index, a timeliness indicator that overlays a price-to-fair-value estimate consideration. Fair Value Estimate: Derived by Valuentum’s enterprise valuation process. Dividend Cushion ratio: A ratio assessing the health of the dividend (the higher, the better). Data as of the date of this article. Individual company reports may have been updated subsequent to the publishing of this article, so please download a company’s stock and dividend report for its latest information and data. Note: The data in the tables of each of the below companies’ respective stock pages is updated the weekend after the publishing of this update. Please click on a company name below to view the corresponding equity
Disney’s 5-Year Returns Have Been Pitiful
May 14, 2023
Image: Since the beginning of 2018, Disney’s shares have fallen, while the S&P 500 has surged. Though we liked the company more recently, we no longer include shares in the Best Ideas Newsletter portfolio. By Brian Nelson, CFA On May 10, Walt Disney Company (DIS) reported improved second-quarter results for fiscal 2023 that showed solid double-digit consolidated revenue growth and substantial cash flow improvement on a year-over-year basis. Though the market had previously shown some love for shares upon CEO Bob Iger’s return, investors are now having to face reality. The advertising market remains difficult for linear television these days, and subscription growth in the streaming market has become even more challenging. Our fair value estimate for Disney stands at
There Are No Free ‘Income’ Lunches
May 14, 2023
Image Source: Jeffrey Beall By Brian Nelson, CFA We often talk about certain areas of the market such as large cap growth and small cap value. One of the big takeaways of the book Value Trap is that it explains that there are not really growth or value stocks, but rather there are only undervalued, fairly valued, and overvalued stocks determined on the basis of a price-versus-fair value consideration. This will always be true. Each company is different, and no company can be distilled into a simple price-to-earnings (P/E) or price-to-book (P/B) metric to determine the attractiveness of its valuation. For example, a company with a low P/E can be overvalued because the market is missing its huge net debt
We Prefer Visa
May 11, 2023
By Brian Nelson, CFA Visa Inc. (V) has probably the best business model in our coverage universe. The company benefits from a network effect, acts as a toll-road operator collecting fees every time one of its cards is swiped, and the credit card giant puts up huge operating and free cash flow margins. Visa is a top “weighting” in the portfolio of the Best Ideas Newsletter, and we don’t see that changing anytime soon. The high end of our fair value estimate range for Visa stands at ~$259 per share. Image: Our estimate of Visa’s range of fair value estimate outcomes. Image Source: Valuentum Our discounted cash flow process values each company in our coverage on the basis of the
