Member Articles

Our Thoughts on Philip Morris International’s Latest Earnings Report

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Image Shown: Philip Morris International Inc has been able to maintain its global market share in the tobacco industry while pushing through price increases as indicated by its relatively strong ‘Combustible Tobacco Pricing’ performance seen through the first nine months of 2020. Image Source: Philip Morris International Inc – Third Quarter of 2020 IR Earnings Presentation By Callum Turcan Tobacco giant Philip Morris International Inc (PM) reported third quarter 2020 earnings on October 20 which saw the company beat both consensus top- and bottom-line estimates. Philip Morris International also raised its full-year guidance for 2020 in part due to industry volumes holding up better than expected in Indonesia, which raised the minimum selling price for cigarettes while also increasing cigarette … Read more

News Brief: Stay at Home Stocks, REITs, Housing, Oracle, and AT&T

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Image: Number of COVID-19 cases reported weekly by WHO Region, and global deaths, 30 December 2019 through 18 October 2020. Source: WHO. The COVID-19 pandemic continues to rage on, though the healthcare community has become more adept at reducing the incidence of death given the many treatments now available to battle the disease. We continue to stay the course with the newsletter portfolios. Many of our favorites include Apple, Microsoft, Facebook, Alphabet, and PayPal, among other moaty, net-cash-rich, free-cash-flow generating powerhouses tied to secular growth trends. Our focus remains on the long haul. The business models of many stay-at-home stocks are solid as they continue to reap the rewards of the accelerated trends of home office use and e-commerce proliferation. … Read more

Our Thoughts on Netflix’s Latest Earnings

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Image Shown: An overview of Netflix Inc’s historical financial and operational performance and a snapshot of its outlook for the fourth quarter of 2020. Image Source: Netflix Inc – Letter to shareholders covering the third quarter of 2020.  By Callum Turcan On October 20, the video streaming giant Netflix Inc (NFLX) reported third quarter 2020 earnings after the market close that underwhelmed lofty investor expectations and saw shares of NFLX move lower the next day. We recently updated our cash flow models for the Discretionary Spending industry, and our current fair value estimate for NFLX sits at $488 per share, near where Netflix is trading as of this writing (Netflix’s latest 16-page Stock Report can be viewed here). The recent … Read more

Our Thoughts on Intel’s Big Divestiture Ahead of Its Earnings Report

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Image Source: Intel Corporation – Second Quarter of Fiscal 2020 IR Earnings Presentation By Callum Turcan On October 20, Intel Corporation (INTC) and South Korean-based SK Hynix announced a major transaction that will reshape the global NAND flash memory market. For reference, NAND flash memory is used in smartphones, personal computers, and other digital devices. Intel will receive $9.0 billion in cash that will be paid out in two phases, assuming everything goes as planned. In return, SK Hynix is receiving “Intel NAND memory and storage business, which includes the NAND SSD business, the NAND component and wafer business, and the Dalian NAND memory manufacturing facility in China” though Intel will retain its Intel Optane business, which caters to both … Read more

Lockheed Martin Beats Expectations and Raises Guidance Yet Again

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Image Shown: Lockheed Martin continued to grow its revenues and segment operating profit in the third quarter of fiscal 2020. Image Source: Lockheed Martin Corporation – Third Quarter of Fiscal 2020 IR Earnings Presentation By Callum Turcan On October 20, Lockheed Martin Corporation (LMT) reported third quarter earnings for fiscal 2020 (period ended September 27, 2020) that beat consensus top- and bottom-line estimates. Lockheed Martin’s GAAP sales rose by 9% year-over-year, hitting $16.5 billion, in part due to the company increasing its F-35 aircraft deliveries to 31 in the fiscal third quarter from 28 in the same quarter last fiscal year. Additionally, all four of Lockheed Martin’s core business segments (‘Aeronautics,’ ‘Missiles and Fire Control,’ ‘Rotary and Mission Systems’ and … Read more

ConocoPhillips Is Buying Concho Resources

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Image Shown: An overview of the pro forma asset base of ConocoPhillips and Concho Resources Inc. Please note that Concho Resources’ main operations are in the Permian Basin in West Texas and Southeastern New Mexico, a region that ConocoPhillips seeks to grow its exposure to. ConocoPhillips has an expansive upstream portfolio with operations worldwide, though its North American position is set to become a much larger part of its company-wide profile. Image Source: ConocoPhillips – ConocoPhillips & Concho Resources Transaction Announcement IR Presentation By Callum Turcan On October 19, ConocoPhillips (COP) announced it was acquiring Concho Resources Inc (CXO) through an all-stock deal. If the deal goes through as planned, each share of CXO will be exchanged for 1.46 shares … Read more

Global Net Lease’s Yield Is Flashing Signs of Trouble

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Image Shown: An overview of Global Net Lease’s asset base. Image Source: Global Net Lease – Second Quarter of 2020 IR Earnings Presentation By Callum Turcan Global Net Lease (GNL) is a real estate investment trust (‘REIT’) focused on single tenant net-leased commercial properties in the US, Canada, and Europe. Sale and leaseback transactions are a common way the REIT grows its business. At the end of June 2020, a little less than two thirds of its annualized rental income came from properties in the US and Canada. Global Net Lease generated a little less than half of its annualized rental income from both office properties and industrial/distribution properties, with the remainder coming from retail properties. Shares of GNL yield … Read more

PepsiCo Earnings Update

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Image Shown: PepsiCo Inc’s expansive snacks and beverage portfolio is home to 23 brands that generated $1+ billion in annual retail sales in 2019. We are big fans of PepsiCo’s business model but caution that the firm’s net debt load needs to be closely monitored going forward, especially given management’s generous approach to dividends and share repurchases. Image Source: PepsiCo Inc – CAGNY 2020 IR Presentation By Callum Turcan Dividend aristocrat PepsiCo Inc (PEP) reported third-quarter fiscal 2020 earnings (period ended September 5, 2020) that beat both top- and bottom-line consensus estimates. PepsiCo’s organic revenue growth, a non-GAAP metric, stood out. During the fiscal third quarter and the first three quarters of fiscal 2020, PepsiCo’s organic revenue growth clocked in … Read more

Dividend Increases/Decreases for the Week October 16

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Below we provide a list of firms that raised their dividends during the week ending October 16. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week A.O. Smith (AOS): now $0.26 per share quarterly dividend, was $0.24. Albertsons Companies (ACI): now $0.10 per share quarterly dividend. Avient (AVNT): now $0.2125 per share quarterly dividend, was $0.2025. Century Bancorp (CNBKA): now $0.16 per share quarterly dividend, was $0.14. Century Bancorp, Inc.B (CNBKB): now $0.07 per share quarterly dividend, was $0.06. Cummins (CMI): now $1.35 per share quarterly dividend, was $1.311. IDACORP (IDA): now … Read more

Our Thoughts on the Potential Acquisition of Concho Resources by ConocoPhillips

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Image Source: ConocoPhillips – November 2019 Annual & Investor Meeting Presentation By Callum Turcan According to Bloomberg, the super-independent ConocoPhillips (COP) is currently talking with Concho Resources Inc (CXO) about acquiring the company. We do not expect that such a deal will come with a significant premium, and furthermore, and we expect that such a deal will likely be funded with equity. Our reasoning is underpinned by recent M&A activity in the oil patch, such as the all-stock acquisition of Noble Energy by Chevron Corporation (CVX) through a ~$5 billion deal that was completed in early-October. That deal involved Chevron paying a ~12% premium (based on ten-day average closing stock prices) at the time of the announcement, though please note … Read more