Brian Nelson

Sprint: A Bet on Clearwire and Lightsquared as Much as the Actual Company

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Sprint (S) shareholders have been on an absolute rollercoaster this year. For a brief period of time, a strong first quarter propelled shares to over $6, but the broader market sell-off and a lack of profitability brought shares down to the $3 range where they hover now. There was a small pop when the rumor broke that they would begin carrying Apple’s (AAPL) i-Phone 5 in mid-October, but shares came tumbling back down. Ultimately, Sprint is the smallest of the three major national carriers, both by number of customers and actual service coverage. With the ATT (T) – T-Mobile deal still in limbo, Sprint could end up being the only low-cost provider of nationwide service. Or, they won’t be. Either way, … Read more

Walgreens’ Strong Fourth-Quarter Report Overshadowed By Fall Out with Express Scripts

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Walgreens (WAG) reported strong fiscal fourth-quarter results Tuesday that showed solid revenue and earnings expansion. However, the lack of progress on key contract negotiations with pharmacy benefit manager, Express Scripts (ESRX) left us a bit disappointed overall, to say the least. Nonetheless, our $34 fair value estimate for Walgreens remains unchanged at this time. Walgreens’ fourth-quarter sales advanced 6.5% thanks to a 4.4% increase in comps (stores open for more than a year), while earnings per share increased over 16%, excluding an after-tax gain associated with the sale of its pharmacy benefits management business (adjusted net earnings increased 10.1% during the period). Prescription sales (nearly two thirds of revenue) jumped 5.7% during the quarter, as the number of prescriptions filled … Read more

We Stand By Our Call on Ancestry.com

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This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/295916-in-defense-of-ancestry-coms-stock-price-slide Over the past few weeks, Ancestry.com has continued to take some major hits as short sellers look for confirming evidence of their thesis. We noted the bias of the investment community against the online geneological research provider in one of our previous posts here. Frankly, short sellers often take at face value a small portion of the company’s business metrics, in this case churn, and build up a case against the entire firm. We don’t think this is justified and maintain the firm is worth north of $60 per share. For starters, we outlined our discussion regarding the short thesis in a previous note here, and welcome interested readers to take … Read more

The 5 Levels of Leadership: Proven Steps to Maximize Your Potential

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Valuentum’s subscriber base enjoys reading the latest and greatest investing books. As a result, Valuentum requests and receives business and investing books before they are officially released. Our editorial staff took a look at the following book, and here’s what we thought after reading it: The 5 Levels of Leadership: Proven Steps to Maximize Your Potential By John C. Maxwell. Center Street, 2011. 304 p. ISBN 978-1-5999-5365-6. Book Release Date: October 4, 2011   Maxwell (leadership expert and New York Times bestselling author) further explores his leadership principles in this latest book. Maxwell’s belief is that leadership is about influence, and that “if people can increase their influence with others, they can lead more effectively.” Taking this into consideration, Maxwell … Read more

Nike Just Does It Again, Raising Our Fair Value

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Nike (NKE) reported an absolutely spectacular first quarter that beat what we thought were aggressive estimates. Due to increased expectations, we’ve upped our fair value estimate to $97 per share (was $95 previously). North American results: a huge upside surprise Considering many pundits seem to think the United States is in/heading into/might head into a recession, Nike posted wonderful North American results. Apparel was up 23%, reinforcing our thesis that sports apparel is a tailwind industry. This “mature” industry was up 15% currency neutral, which was even greater than 9% currency neutral growth in China. As CEO Mark Parker said at Nike’s Analyst Day, “Nike is a growth company.” Though commentary was limited, Nike also seems very excited about its upcoming NFL license. With … Read more

Is First Solar Really That Bad?

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After the failure of the federally-supported company, Solyndra, shares of First Solar (FSLR) have been beaten down harshly. By now, you’ve probably heard that Solyndra received over half a billion dollars in federal loans, and thereafter went bankrupt. It looks possible that First Solar, which is scheduled to possibly receive government loan assistance for its next major projects, could have their funding stripped away by a reactionary Congress. Management has noted this would “materially affect earnings.” So why is the market so negative on the solar industry? It hasn’t been a sudden change, but only recently has the trend come to like. There are a few things to like about the solar industry. For one, it’s growing rapidly. According to … Read more

Oracle’s Fiscal First-Quarter Results Reveal Strength in Software Sales, Europe

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Oracle (ORCL) posted strong fiscal first-quarter results Tuesday that showed significant growth in new software licenses and product support (about two thirds of revenue) and some weakness in hardware systems products revenues (about 20% of its top line). Services revenue, accounting for the balance, increased nicely and remained steady at about 14% of sales. We are maintaining our $38 fair value estimate and make available our 16-page report here. Oracle’s top-line advanced at a low double-digit pace, while the firm’s GAAP operating income increased an impressive 40%, translating to a 36% increase in net income and a 46% jump in operating cash flow. The significant profitability expansion was driven by a refocus on its high-end server business – Exadata, Exalogic, … Read more

Adobe’s Fourth-Quarter Outlook Reassures Investors; Firm Continues to Generate Significant Cash Flow

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Adobe (ADBE) reported weak third-quarter results Tuesday, but provided a range for its fiscal fourth-quarter results that topped consensus estimates, representing revenue growth of 10% and earnings growth of 20% at the high end of its guided range. We’re maintaining our fair value estimate of $35 per share and make available our 16-page equity research report here. The firm’s total revenue advanced a modest 2% in the period, as expansion from subscription and services and support sales offset declines in product revenue. The company noted record educational revenue, strong growth in its digital video products, and solid performance with Acrobat. Services and support revenue grew a whopping 39% during the period, and we expect continued rapid expansion from this revenue … Read more

Why We’re Still Bullish on Collective Brands

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As followers of Valuentum know, Collective Brands (PSS) was one of the first positions in our best ideas portfolio. Unfortunately, the timing could not have been worse, as the market collapsed upon itself, sending down Collective shares by over 30%. Since bottoming out at around $9, Collective has rallied nearly 50%, with the shares trading between $13 and $14. Given the announcement of “strategic initiatives” and its tremendous short-term out performance, we revisited our position and think that with or without a buyout, Collective remains one of our top picks. DCF Valuation: $24 At Valuentum, we ultimately think a crucial part of the investment process is applying a discounted cash flow model to arrive at a fair value estimate. This gives … Read more