Brian Nelson

Icahn Reignites Apple

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Shares of Best Ideas portfolio and Dividend Growth portfolio holding Apple (click ticker for report: ) showed considerable relative strength following solid third quarter results July 24. Pricing momentum was augmented when legendary money manager Carl Icahn (or iCahn) sent out a series of tweets about the tech giant on August 13. iCahn Moves the Market Icahn needs no introduction, as he boasts a rumored net worth in excess of $20 billion, has engaged in numerous high-profile corporate battles (US Steel, Dell, TWA), and without question is considered one of the greatest money managers of his era. When Icahn speaks (or tweets), markets listen. While Icahn’s presence as an Apple shareholder has little, if any, fundamental change on the company, his … Read more

Why Valuation (Still) Matters: The Homebuilders

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At Valuentum, our stock-selection methodology blends two long-time investing foes—value and momentum (click for why this combination is so powerful). For an idea to fit the profile of a ‘Valuentum stock’, it simply cannot just be undervalued, nor can it exclusively possess fantastic momentum and technical measures. The firm must have both characteristics and pass the qualitative muster of our analyst team to make the cut for addition to our actively-managed portfolios. We credit the Valuentum discipline as the major driver behind the significant outperformance in our portfolios. In addition to highlighting one of the biggest industry collapses during the year (the mREITs—click here) and perhaps the biggest alpha trade (stock up, market down) of the year (Apple recently), the Valuentum process … Read more

The Big Burger Trade-up

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Casual dining chain Red Robin (click ticker for report: ) reported strong second quarter results last week. Revenue jumped 6.5% year-over-year to $238 million, just a touch shy of consensus estimates. Conversely, earnings per share surged 48% year-over-year to $0.77, easily exceeding consensus expectations. Image Source: RRGB 2Q FY2013 Slides The most positive news from Red Robin, in our view, was the robust same-store sales growth rate of 4.3%. While the firm was lapping just a 0.8% increase in the year prior period, the increase was a nice jump sequentially, underscoring the effectiveness of the company’s brand transformation. Traffic declined 0.7% year-over-year, but that was far better than the 3.1% decline experienced by the average industry competitor. The combination of … Read more

Which Department Store Looks Attractive?

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Our fundamental view on the department store industry hasn’t changed much after the second quarter. Kohl’s sales gains were surprising, but if we look at the two-year trend of stacked comps (last year’s quarter plus this year’s quarter), Nordstrom continues to easily outperform its peers. Source: Valuentum Ultimately, we believe improving margins in the department store industry will be difficult. Even if a firm is able to gain some additional gross margin, investments in technology will likely increase capital spending. Overall, we view the cohort as fairly valued. Fundamentally, we think Macy’s will continue to outperform Kohl’s due to its superior online shopping experience, but Nordstrom appears to have the most growth opportunities as it looks to expand on the … Read more

Dividend Increases for the Week Ending August 16 Included Weyerhaeuser and Cinemark

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Below we provide a list of firms that upped their dividends for the week ending August 16. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here (or use our ‘Symbol’ search box in our website header). Firms Raising Their Dividends This Week Atrion Corp (ATRI): now $0.64 per share quarterly dividend, was $0.56. Avnet (AVT): first-ever quarterly dividend of $0.15 per share. Bolt Technology Corp (BOLT): now $0.09 per share quarterly dividend, was $0.07. Cinemark Holdings (CNK): now $0.25 per share quarterly dividend, was $0.21. Cincinnati Financial Corp (CINF): now $0.42 per share quarterly dividend, was $0.4075. Connecticut Water Service (CTWS): now $0.2475 per share quarterly … Read more

Beam and Boston Beer Post Solid Results

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Leading spirits company Beam (click ticker for report: ) posted fantastic second quarter results led by strong performance from its established brands. Revenue increased 7% year-over-year (5% on a comparable basis) to $638 million, roughly in-line with expectations. Earnings per share increased 8% compared to the year prior to $0.64, also in-line with consensus estimates. Free cash flow was only $1 million for the quarter, but management continues to predict the free cash flow for the full-year of $300-$350 million. Beam has experienced comparable sales growth of 4% year-to-date, with premium brands such as Maker’s Mark (+18%) and Jim Beam (+4%) leading the way. Basil Hayden’s has performed exceptionally well so far this year as consumers show a willingness to … Read more

As the Battle Continues, Dell Still Exists

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Over the past several months, the battle for control of Dell (click ticker for report: ) between founder Michael Dell and activist billionaire Carl Icahn has carried on. While it’s easy to get caught up in the details of the battle, predictions of who will win and the like, at the end of the day, there is a struggling operating company underneath it all. The firm posted second-quarter results earlier this week, with revenue flat year-over-year at $14.5 billion, in-line with consensus estimates. Earnings-per-share was $0.25 on a non-GAAP basis, down 50% from a year ago, but still slightly better than consensus expectations. The big metric that matters in this situation—free cash flow—totaled $1.5 billion, equal to 10% of revenue. Image … Read more

Deere’s Third Quarter Highlights Inherent Operating Leverage

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On Wednesday morning, agricultural equipment giant Deere (click ticker for report: ) posted fantastic third quarter results. Revenue jumped 4% year-over-year to $10 billion, topping consensus expectations by a comfortable margin. Consequently, earnings per share surged 29% year-over-year to $2.56, crushing consensus estimates. Because of its financing business Deere’s cash flows aren’t that easy to follow, but management noted that operating cash flow from equipment operations should total $3.8 billion during fiscal year 2013—a solid figure, in our view. Deere’s third quarter results really demonstrate the tremendous operating leverage inherent in the firm’s business model. Sales in the Agricultural & Turf segment grew 8% year-over-year to $7.8 billion, but operating profit surged 32% year-over-year to $1.3 billion. Incremental margins for … Read more

Wal-Mart’s Weakness Persists in the Second Quarter

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Global retailing powerhouse Wal-Mart (click ticker for report: ) reported soft results for its fiscal year 2014 second quarter Thursday morning. Total sales increased 2.4% year-over-year to $116 billion, slightly below consensus expectations. Earnings-per-share was in-line with consensus estimates, increasing 5.1% year-over-year to $1.24. Year-to-date, Wal-Mart has generated $5.2 billion in free cash flow, equal to 2% of total revenue. Though headline results could have been worse, we were disappointed to see performance in the US remain negative, as same-store sales declined 0.3% year-over-year. Management noted on its second-quarter prepared remarks that traffic improved sequentially and that some softness was due to the firm’s investment in price. Operating margins actually increased 20 basis points year-over-year to 8% of sales, suggesting … Read more

Was Cisco’s Fiscal Year 2014 Guidance a Red Flag?

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Technology heavyweight Cisco (click ticker for report: ) reported solid results for its fiscal year 2013 fourth quarter Wednesday afternoon. Revenue increased 6.2% year-over-year to $12.4 billion, a touch above consensus estimates. Earnings-per-share was also strong, increasing 11% year-over-year to $0.52, also a few cents above consensus expectations. Free cash flow for the fourth quarter tallied $3.7 billion, equal to an impressive 30% of total revenue. For the full-year, free cash flow was $11.7 billion, or 24% of revenue. Cisco has been one of our better calls in the land of technology. Below, please find our rating track record of the firm (listed most recent to least recent). Our rating history for each firm in our coverage universe can always be found … Read more