Brian Nelson

McDonald’s Going After the Wing Market

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In a somewhat surprising move, McDonald’s (click ticker for report: ) is following up the chicken McBites with its own iteration of chicken wings. The “Mighty Wings” are currently being rolled out across 500 Chicago area restaurants (one location we visited advertised them, but had yet to receive the raw goods). Although wing prices are high and have been hurting profit expansion at Buffalo Wild Wings (click ticker for report: ), we like the move. Not only does it fulfill the need for the company to diversify its menu offerings, but we also think the new menu item could generate incremental revenue (assuming the wings are differentiated from other McDonald’s chicken offerings). Buffalo Wild Wings, for example, is still experiencing … Read more

Finish Line: A Turnaround?

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Athletic footwear and apparel retailer Finish Line (click ticker for report: ) reported highly disappointing third-quarter results Friday morning. Revenue grew 5.2% year-over-year to $296 million, in-line with consensus estimates. Earnings were incredibly weak, as the company was roughly break-even for the quarter, well below the consensus estimate of $0.10 per share and down from earnings of $0.11 per share in the same period a year ago. We were not expecting such weak quarter, particularly given the company’s increased focus on basketball shoes, as well as the blockbuster lineup of basketball shoe releases from the likes of Nike (click ticker for report: ) and adidas in the third quarter. Basketball wasn’t the problem, as management noted that basketball shoe sales … Read more

Sales Surge at Family Dollar But Margins Miss the Mark

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Dollar store giant Family Dollar (click ticker for report: ) reported a mixed first quarter earlier this week. Revenue jumped 12.7% year-over-year to $2.4 billion, slightly above consensus expectations. However, earnings disappointed, increasing just a penny compared to a year ago, to $0.69 (which was well below consensus expectations). Driving sales traffic wasn’t an issue, as same-store sales jumped 6.6% year-over-year. However, the strength was driven by lower-margin consumables, which grew 18.5% from the same period a year ago. Cigarettes were specifically identified as pressuring margins, but management remains confident that selling cigarettes is an overall positive for the business. President and COO Michael Bloom specifically said on the conference call: “We don’t believe that cigarettes — the fact that … Read more

December Auto Sales Roundup

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December auto sales were reported by the major US auto manufacturers Thursday, and it appears the monthly SAAR was somewhere between 15.4 and 15.6 million units. Let’s dig into the results. Ford Best Idea Newsletter holding Ford (click ticker for report: ) has been on a tear since reporting a record operating margin in North America during its most recent quarter. Shares are up 35% during the past three months, and December’s results were another positive for the automaker. Company-wide unit sales grew 1.9% compared to the same period last year, driven by a 2.5% unit gain at the Ford brand, but hurt by a unit decline of 12% at Lincoln. For the year, unit sales in the US grew … Read more

Dear Valuentum Member

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In such a short time that you’ve known us, you have seen us do so much: from generating more than 25 percentage points of outperformance in our Best Ideas portfolio since inception (May 2011) to delivering on our high-single-digit return goal of our Dividend Growth portfolio during 2012 to the Valuentum Dividend Cushion score predicting the dividend cuts of JC Penney (JCP), SuperValu (SVU), Roundy’s (RNDY), and others. You’ve seen us identify a triple in EDAC Tech (EDAC) and predict the bankruptcy of the parent of American Airlines (AMR). These are tremendous accomplishments. There’s an old saying in the market that if your winners are outperforming your losers, you’re doing a great job. Through November of last year, 87% of … Read more

Hard Not to Like Hormel’s Acquisition of Skippy Peanut Butter

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On Thursday, food producer Hormel (click ticker for report: ) announced it will acquire Unilever’s (click ticker for report: ) Skippy Peanut Butter for $700 million. Skippy is a legendary brand, trailing only Smucker’s (click ticker for report: ) Jif in the US peanut butter market. The deal should add approximately $370 million in annual sales, while being mildly accretive to earnings in fiscal year 2013 and adding $0.13-$0.17 per share in fiscal year 2014. More importantly, Skippy is the market-share leader in China, and the company hopes to expand its international presence via Skippy and its popular Spam brand. Image Source: The Peanut Institute We like the deal for Hormel, especially since the peanut butter market has experienced fantastic … Read more

December Retail Sales Roundup

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Let’s take a look at retailers that still report monthly results. Nordstrom Nordstrom’s (click ticker for report: ) December was strong as usual, with same-store sales jumping 8.6% and total sales increasing 9.4%. We saw some weakness from the full-line Nordstrom store in November, but that trend was reversed by an 8.2% same-store sales gain in December. Nordstrom Rack continued to post fantastic results, with an 8.1% jump in same-store sales for December. All retailers benefitted from a more favorable calendar compared to 2011, but we think Nordstrom’s execution was strong regardless. Nordstrom continues to be among our favorite multi-line retailers, but we think its shares are fairly valued at current levels. Unlike other retailers, we aren’t worried about gross … Read more

Why the Fiscal Cliff Deal Helps Dividend Growth Investors

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After Congress finally approved a deal to thwart the fiscal cliff Tuesday night, investors throughout the US finally have a clear picture on the tax treatment of investments going forward. Assuming no deal was reached, the US income tax code would have reverted to pre-Bush tax cut era rates, which included higher marginal rates at all income levels, higher capital gains taxes, and dividends being treated as ordinary income. Assuming several tried-and-true dividend aristocrats are valued by many on a yield basis, equity prices for high-yielding and overvalued stocks could have suffered a substantial price decline as the after-tax yield would have been meaningfully reduced. We felt the repercussions of uncertainty in the portfolio of our Dividend Growth Newsletter. Shares … Read more