Member Articles

Big Pharma 1Q Earnings Roundup, Part II

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Image Source: Paw Paw Companies mentioned: ABBV, AGN, BMY, AMGN, MRK, PFE. AbbVie (ABBV) Riding Humira to the End AbbVie’s performance in the first quarter of 2016 was nothing short of impressive, as the firm grew revenue by more than 18% on an as reported basis from the year-ago period. Humira (arthritis), the company’s headlining drug, sales increased nearly 15% as reported. New drug Imbruvica (leukemia) showed solid momentum in the quarter, and AbbVie received two approvals for the expansion of the Imbruvica as a first line therapy for chronic lymphocytic leukemia. The treatment is expected to play a key role in the future of the company, especially after its patent on Humira expires in December of this year. The … Read more

Mr. Buffett: Apple and the Potential Yahoo-eBay Tie-Up

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Image Source: Fortune Live Media Stocks will be volatile. Remember – they are driven by people, and people act emotionally, irrationally at times. This dynamic has hammered Apple (AAPL) as of late. Though we’ve engaged in risk mitigation in recent months in trimming our position in Apple in both newsletter portfolios, “Valuentum’s Exclusive Weekly Recap (August 2015),” we’ve done all that we can to explain to our membership the tremendous valuation opportunity presented by shares, “Quantifying Apple’s Tremendous Investment Case (September 2015), while acknowledging that market “spirits” could pressure the company in the near term, “Apple Will Go Lower… (January 2016).” The transparency of our writing is enough to make our reader’s heads spin sometimes, perhaps to make them think … Read more

Cord Cutting and the New Age Consumer

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Image Source: Mike Mozart Disney’s Quarterly Performance Reignites Fear On May 10, Disney’s (DIS) shares fell after the company reported lower-than-expected fiscal second-quarter earnings. Investors are concerned with the media and entertainment giant’s weakness in advertising revenue and subscribers in its Media Networks segment, which accounts for more than 60% of the company’s operating income. Was the fiscal second quarter the beginning of a long-term trend for the segment at Disney? As more and more consumers continue to opt away from traditional cable TV, will not only its subscriptions decline, but will demand for advertising space on the networks also fall as fewer consumers are reached through the medium? Investors are fearing the worst. The development is certainly worth following … Read more

Teva Bounces After Strong First Quarter

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Teva remains confident in its combination with Allergan Generics. Image source: Teva quarterly presentation. In July 2015, Best Ideas Newsletter portfolio holding Teva Pharmaceuticals (TEVA) announced it had agreed to acquire the generic drug portfolio of Allergan (AGN). It was expected that the firm would have to divest certain assets in order to clear the increasingly unpredictable US regulatory requirements, as is common with most acquisitions of its size. The deal was originally anticipated to be completed by the end of the first quarter of 2016, but it was announced March 15 that the transaction would be delayed. However, the process continues to take longer than foreseen, and Teva will have to sell more than the $1 billion in assets … Read more

Fundamental Strength To Outweigh Short-Term Volatility

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Image Source: texasfeel Union Pacific Battling Declining Volumes We continue to be fans of Union Pacific (UNP) on a fundamental level, and we fully expect the company to be gearing up for material improvement further down the line as the end-markets it serves stabilize. Union Pacific reported weak quarterly results April 21, as operating revenue fell 14% from the year-ago period. The sharp drop was driven by an 8% decline in volume, as measured by total revenue carloads. Coal volume dropped 34%, industrial products volume decreased 10%, and agricultural and intermodal volumes fell in the low to mid-single digit range. Flat chemicals volume and automotive volume growth of 7% were no match for offsetting the other declines, and average revenue … Read more

Valuentum Applauds SEC’s Move To Evaluate Non-GAAP Reporting

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  Image Source: SEC By Brian Nelson, CFA Too many investors have been hurt. Management teams want to present their results the best way they can within the boundaries of the law, to bolster their holdings. Some analysts want to “pitch” their stocks in the most optimistic light possible, to preserve their jobs. The consumers of such research want the future to always be bright, so they want to believe the “good news.” The result: there are now very few places to find objective, unbiased research and analysis. It therefore has become more important for companies to provide the most accurate and helpful information possible, and non-GAAP earnings presentation isn’t it — in fact, it has gotten way out of whack. … Read more

Big Pharma 1Q Earnings Roundup, Part I

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Image Source: Rodrigo Companies mentioned: AZN, ABT, BIIB, LLY, GSK, VRTX, ZTS AstraZeneca (AZN) Treading Water in 2016 AstraZeneca reported total revenue growth of 1% in the first quarter of 2016 on a year-over-year basis, but this growth rate climbs to 5% when not including the impact of foreign exchange headwinds. Core operating results, which excludes the impact of amortization, impairments, restructuring and other non-operating costs, did not hold up well compared to the first quarter of 2015. Core operating profit and core earnings per share fell 8% and 7%, respectively, on a constant currency basis from the year-ago period. Core R&D spending grew 15% in the quarter as a result of acquisitions and continued focus on the firm’s pipeline, which … Read more

Restaurant Roundup; Valuations Overcooked

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Image source: McDonald’s Investor Relations page By Kris Rosemann McDonald’s Comps Still Expanding McDonald’s (MCD) continues to believe in the turnaround strategy it implemented about a year ago, and the market appears to be on board as well. The company’s biggest appeal remains its brand recognition, and the above screen grab of its ‘Investor Relations’ page on the corporate site hints that it is well aware of this. Nevertheless, the burger giant has had a solid string of quarters as of late. Global comparable sales in the first quarter of 2016 increased more than 6% from the year-ago period, and US comparable sales grew 5.4% thanks to the broad acceptance of its All Day Breakfast strategy. We were skeptical of … Read more

The Monthly Dividend Company Keeps Chugging Along

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Dividend Growth Newsletter portfolio holding Realty Income (O) declared its 550th consecutive monthly dividend April 11. The 549th consecutive dividend was declared in March, and that dividend brought with it the 74th consecutive increase in the payout on a quarterly basis. Cumulative first quarter dividends in 2016 have advanced 4.8% over first quarter dividends in 2015. Perhaps the most impressive aspect of Realty Income’s dividend track record is the performance the company has put up to support it, and the first quarter of 2016, released April 26, was certainly no exception for the Monthly Dividend Company. The firm reported revenue growth of more than 8% in the quarter on a year-over-year basis, driven by same-site rent growth well above 1% … Read more

Priceline Shares Under Pressure… Again

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By Kris Rosemann Priceline (PCLN) reported solid first quarter 2016 results May 4, but the company has since been punished. The past few years have been a roller-coaster ride for shares, but the company has always seemed to bounce back after issuing “disappointing” guidance. Investors will likely never be fans of the conservative guidance issuing style of the company, and that’s okay. Both Priceline’s gross travel bookings, net of cancellations, and gross profit grew 21% from the year-ago period in the quarter, and the firm’s gross profit rate expanded nearly 2 percentage points from the first quarter of 2015. Adjusted EBITDA advanced at an even more impressive rate, jumping 27% on a year-over-year basis, and non-GAAP income per diluted share … Read more