Brian Nelson

COVID-19 Idea Consideration Chipotle Continues to Deliver

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Image Shown: Shares of Chipotle Mexican Grill Inc have sharply rebounded over the past month as investors started to take into consideration the firm’s pristine balance sheet, ability to meet consumer demand via delivery services, and quality cash flow profile, keeping short-term headwinds in mind. By Callum Turcan On April 21, Chipotle Mexican Grill Inc (CMG) reported earnings for the first quarter of 2020 that beat both consensus top- and bottom-line estimates. Same-store sales rose 3.3% year-over-year almost entirely due to the strength of its digital business where sales were up almost 81% and represented over 26% of Chipotle’s sales last quarter. Chipotle’s GAAP revenues were up almost 8% year-over-year last quarter though its GAAP operating income fell by over … Read more

Intel Is Well-Positioned to Ride Out the Storm

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Image Source: Intel Corporation – January 2020 CES Presentation By Callum Turcan Intel Corporation (INTC) reported first-quarter earnings for fiscal 2020 (period ended March 28, 2020) that beat both consensus top- and bottom-line estimates; however, guidance for the fiscal second quarter was softer than expected and shares of INTC initially sold off on the report. However, there’s a lot to like in the update, and we continue to like shares of Intel as a holding in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Intel is very well-positioned to ride out the storm caused by the ongoing coronavirus (‘COVID-19’) pandemic, and shares of INTC yield ~2.3% as of this writing. Balance Sheet Strength The firm had $20.8 billion … Read more

Coca-Cola’s Debt Load Makes It Difficult to Navigate Rough Market Conditions

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Image Source: The Coca-Cola Company – First Quarter Fiscal 2020 Earnings IR Presentation By Callum Turcan On April 21, The Coca-Cola Company (KO) reported first-quarter fiscal 2020 earnings (period ended March 27, 2020) that beat both consensus top- and bottom-line estimates, and furthermore, flat organic sales beat consensus estimates as well (which analysts expected would decline modestly year-over-year). Coca-Cola’s Asia Pacific business was weakened by the coronavirus (‘COVID-19’) pandemic and organic revenues in the region (an adjusted non-GAAP figure) were down 7% year-over-year last fiscal quarter. Strong growth in North America (organic revenues were up 4% year-over-year) and Latin America (organic revenues were up a whopping 13% year-over-year) due to greater sales volumes and favorable price increases/product mix shifts offset … Read more

Emergency Update on COVID-19

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President of Investment Research at Valuentum, Brian Nelson provides an emergency update on COVID-19. He talks about how policymakers have dropped the ball thus far, and why investors should not let their guards down, despite what has been a nice bounce from the March 23 bottom. As of April 24, the world has now borne witness to the deaths of nearly 182,000 people from Coronavirus disease, or COVID-19, with more than 2.6 million confirmed cases. The United States remains the epicenter of the global pandemic with the country confirming 830,000 cases and more than 42,000 deaths. The sad reality is that, despite the many months that have now passed, medical professionals know little more about the disease than when news … Read more

What To Do Now?

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— Dear members: — It’s Brian here. It seems like I went to bed February 22 after writing the following note to you — Is a Stock Market Crash Coming? — Coronavirus and P/E Ratios — and just woke up now. That’s how crazy the markets have been. It’s been two months of a whirlwind of a ride. For those just joining today, we recapped the events since our warning about the Great Crash of 2020 on February 22 in the following two videos — The Question Is If the Economy Can Be Held Together Without Vast Equity Dilution (April 12) and Will Hasty Policy Facilitate the Next Leg Down, or Do We Have It Coming Anyway? (April 19). — Before going on, I want to pause … Read more

AT&T Has the Potential Resilience to Ride Out the Storm With Its Dividend Intact

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Image Source: AT&T Inc – First Quarter 2020 Earnings IR Presentation By Callum Turcan High Yield Dividend Newsletter portfolio holding AT&T Inc (T) reported first-quarter 2020 earnings on April 22 that missed consensus top- and bottom-line estimates; however, management noted right off the bat that the ongoing coronavirus (‘COVID-19’) pandemic shaved $0.05 in EPS off of AT&T’s performance. The cancellation of the 2020 NCAA Division I Men’s Basketball Tournament and ongoing losses of its premium TV subscribers (a product of structural declines at DirecTV) weighed on AT&T’s results last quarter. Shares of T yield ~7.1% as of this writing. AT&T continued to generate meaningful free cash flows, keeping various headwinds in mind, as $8.9 billion in net operating cash flows … Read more

Lockheed Martin Marches Forward During These Harrowing Times

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Image Source: Lockheed Martin Corporation – First Quarter Fiscal 2020 Earnings IR Presentation By Callum Turcan On April 21, Dividend Growth Newsletter portfolio holding Lockheed Martin Corporation (LMT) reported first-quarter earnings for fiscal 2020 (period ended March 29, 2020) that beat both consensus top- and bottom-line estimates. Even better, management largely kept Lockheed Martin’s fiscal 2020 guidance intact, save for a marginal reduction in the firm’s expected sales which is primarily due to supply chain and production issues that the ongoing coronavirus (‘COVID-19’) pandemic is creating for Lockheed Martin’s ‘Aeronautics’ business. With that in mind, Lockheed Martin is still forecasting ~6% revenue growth this year, highlighting the resilience of defense contractor’s financials even during harrowing times such as these. Shares … Read more

Macy’s Will Find It Difficult to Unlock the (Fair) Value of Its Real Estate

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Image Source: Valuentum The embattled department store Macy’s suspended its dividend and drew down its revolving credit line on March 20 in order to shore up its financial position in the face of the ongoing coronavirus (‘COVID-19’) pandemic. All of Macy’s physical stores were temporarily closed on March 18, though some might shut down for good given the company’s financial woes. The fair value estimate of Macy’s is heavily dependent on factors well outside the control of management, and considering the US economy and global economy at-large are sliding toward a pandemic/leverage induced recession/depression, we aren’t optimistic on Macy’s ability to unlock the (fair) value of its real estate. Any real estate sales done in the foreseeable future will likely … Read more

Proctor & Gamble Pushes Forward

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Image Source: Procter & Gamble Company – Third Quarter Fiscal 2020 Earnings IR Presentation By Callum Turcan On April 17, Procter & Gamble (PG) reported third-quarter fiscal 2020 earnings (period ended March 31, 2020) that beat consensus estimates on the bottom-line but missed consensus top-line estimates. Most importantly, Procter & Gamble showcased strong organic growth (organic volumes were up 6% company-wide year-over-year) as its ‘Health Care’, ‘Fabric & Home Care’, and ‘Baby, Feminine & Family Care’ segments posted 7%, 8%, and 6% net sales growth, respectively, on a year-over-year basis. Strong high-single-digit volume growth was key to offsetting unfavorable foreign currency headwinds at those three segments. Procter & Gamble’s ‘Beauty’ and ‘Grooming’ segments posted mild net sales declines on a … Read more

Morgan Stanley Stands Out Among Peers in First Quarter

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Morgan Stanley posted difficult first-quarter 2020 results, released April 16, missing consensus estimates on both the top line and the bottom line. Return on average tangible common equity was 9.7% in the quarter, well above levels of just a few years back (and again better than large bank peers in the quarter), showing the progress that Morgan Stanley has made in improving its return profile.  By Matthew Warren Morgan Stanley (MS) posted difficult first-quarter 2020 results, released April 16, missing consensus estimates on both the top line (revenue of $9.49 missed by $330 million) and the bottom line (EPS of $1.01 missed by $0.14). With that said, the results held up fairly well as one can see in the graphic … Read more