Brian Nelson

A Name for Your Radar: Collector’s Universe (CLCT)

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At Valuentum, we continue to search for undervalued, technically-attractive companies with safe and growing dividend yields. We use the Valuentum Dividend Cushion as a way to determine how safe a firm’s dividend is, using forward-looking forecasts rather than backward looking metrics, and we employ our Valuentum Buying Index to pinpoint the best entry and exit points on a stock. We stumbled across Collector’s Universe (CLCT) in the past and decided to revisit the name today due to its compelling dividend yield. The stock currently trades at roughly $15 per share, with a dividend yield of nearly 9%. When you consider the relatively mediocre performance of most markets across the globe, a 9% yield seems tempting. However tempting the yield seems, … Read more

Sears Converges to Our $36 Fair Value Estimate; Shares Off Nearly 25% Today

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Sears announced Tuesday that it would close between 100 and 200 stores (both of the Sears and Kmart variety) in an effort to shore up its finances as it struggles to compete with big-box retailers like Lowes (LOW), Home Depot (HD), Wal-Mart (WMT), and Target (TGT). The troubled retailer also said that comparable same-store-sales continue to fall and that its earnings for the fourth-quarter would come in at less than half of last-year’s levels. Valuentum subscribers were well aware of Sears’ overvaluation as the firm now trades in-line with our $36 fair value estimate, after falling by roughly half since we initiated coverage of the retailer in early October. Please click on the link below to view our initiation equity report on Sears Holdings (SHLD): << Our 16-page Report … Read more

Yahoo Mulls Asian Asset Swap; Risk Remains to the Downside

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Yahoo (YHOO), beleaguered with poor performance from its domestic operations, is reportedly looking to shed some of its Asian assets in order to help prop up its stock in the midst of a massive price slide in the past few years (the firm had been trading north of $30 per share in 2007 and now is in the mid-teens). Though the news of an Asian-asset sale/spin-off continues to make headlines, we remain unimpressed by Yahoo’s core competitive position relative to Google (GOOG) and Facebook and think the proposed complex transaction related to its Asian assets is but a temporary, short-term cash boost and not a permanent fix to the firm’s structural problems. We are sticking with our long-term fair value … Read more

Oracle Issues Poor Fiscal Second-Quarter Results; Customers Delay Purchases

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Oracle (ORCL) posted disappointing fiscal second-quarter results that sent the shares tumbling today. The news follows Red Hat’s (RHT) lower-than-expected outlook earlier this week and casts a shadow over the strength of the software space during the calendar fourth quarter and into next year. Though we will be revisiting our $38 per share fair value estimate for Oracle based on management’s poor outlook, we don’t expect a material change it. Oracle’s revenue jumped 2% as growth in software license sales and software license updates/product support revenues offset nearly a 14% decline in hardware systems products revenues, the latter caused by a transition to T4 processor-based products. The company noted that new software license revenue was impacted by “additional approvals required … Read more

Nike’s Second Quarter Results Were a Mixed Bag; Valuation Unchanged

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Nike (NKE) posted fiscal second-quarter results, which, by most measures, was in line with our expectations. Top line revenue grew 18%, thanks to both slightly higher prices and impressive unit growth. North America, easily Nike’s biggest market, saw footwear soar 22% and apparel rise by 23%, both positive upside surprises, in our view. We also saw strength in China (up 35%) and Emerging Markets (up 27%). Though sales in Europe have languished over the past several quarters, Western Europe didn’t experience a large downturn. However, management stated its business isn’t a great gauge of the European consumer due to Euro 2012 and the London Olympics scheduled for the next year. We are maintaining our fair value estimate for Nike at … Read more

General Mills Posts Poor Fiscal Second-Quarter Results; Input Costs Represent Major Headwind

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General Mills posted fiscal second-quarter results Tuesday that showed solid sales expansion thanks primarily to its acquisition of Yoplait but modest segment operating profit growth due to higher input costs and marketing expenses. Diluted EPS, excluding non-recurring items, came in at $0.76, reflecting no growth from the same period a year ago. We are maintaining our $38 per share fair value estimate. The firm’s net sales jumped 14% thanks to higher pricing and significant volume growth from its recent acquisition of Yoplait. Revenue in General Mills’ US retail operations during the period grew a meager 3% as demand for flour, dessert mixes, canned and frozen vegetables, and yogurt waned, though higher pricing more than offset the volume declines. International sales grew … Read more

Under Armour Performing Well But Still Significantly Overvalued

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Over the last several weeks, we’ve seen stronger than expected sales in athletic apparel at Dick’s Sportin Goods (DKS), Footlocker (FL), and The Sports Authority. Additionally, we’ve noticed strength at Under Armour (UA) in both indirect and direct retailing channels. Furthermore, we think some of the footwear, particularly the bright colored running and training is resonating slightly better than expected with consumers.  As a result, we are raising our fair value of Under Armour to just under $50 per share. This price implies a 2011 price to earnings ratio of 26 times our forecast and remains significantly below where it is currently trading.  Footwear isn’t good, but it’s getting better Some of the recent footwear releases in Under Armour’s running have … Read more

Red Hat Reports Fiscal Third-Quarter Results; Best Billings Growth in Years

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Linux software maker Red Hat (RHT) reported strong fiscal third-quarter results that showed excellent growth across the board, but the company’s deferred revenue growth and revenue outlook failed to impress some of the most bullish investors. Sales advanced 23% from last year’s quarter led by subscription revenue, while non-GAAP operating income and non-GAAP EPS increased 36% and 40%, respectively, from the same period a year ago. Non-GAAP EPS came in at $0.28 per share in the quarter (topping consensus estimates of $0.26), thanks to non-GAAP operating margin improvement of 260 basis points. Third-quarter operating cash flow also had a nice showing in the period, up an impressive 36%. Deferred revenue, however, advanced 20% from last year’s quarter, signaling the potential … Read more