Member Articles

Home Improvement Remains Strong

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The story for home improvement retail giants has remained largely unchanged in recent quarters. Demand for home improvement goods has been high, as has general housing demand. This has driven traffic increases for the likes of Home Depot (HD) and Lowe’s (LOW) thus far in 2015. Home Depot reported sales growing 6.4% from the year-ago period to $21.8 billion in its fiscal third quarter of 2015, and comparable store sales increased 5.1% in the quarter. The firm’s number of customer transactions advanced by 4.4% in the period, while its average ticket price grew nearly 1%. The company’s sales per square foot grew by more than 5% in the quarter on a year-over-year basis. Home Depot’s impressive top-line trends were mostly … Read more

Mixed Bag at Department Stores

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Where will consumers keep spending their money? This is a question that investors will always be trying to answer, no matter where we are in the economic cycle (during good times and bad). It is not always easy to predict the spending patterns of any demographic with any sort of precision, but let’s see how things shook out with some of the best-known department stores in the US during the third quarter of 2015. During the latter part of last decade, department store equities had been strong performers; shares of companies such as Macy’s (M), Kohl’s (KSS), and Nordstrom (JWC), for example, more than tripled from their respective bottoms during the Great Recession, but all three have witnessed their share … Read more

Cisco Reports Solid Quarter; Shares Still Cheap With Nice Dividend

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In its first quarter of fiscal 2016, ended October 24, Cisco (CSCO) reported healthy financial performance. The firm grew total revenue 4% to $12.7 billion from the year-ago period, and non-GAAP earnings per share advanced more than 9% to $0.59. Top-line growth was led by emerging markets revenue growth of 11%, driven primarily by Mexico and India. The strong US dollar has impacted performance in countries such as Brazil and Russia to a degree, and we don’t expect this headwind to subside in the near term. Cisco continues to transform its revenue model to a greater recurring mix thanks to a 10% increase in deferred revenue in the fiscal first quarter. Software and subscriptions led the deferred revenue growth, jumping … Read more

Financial Statement Analysis Seminar

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Interested in learning more about financial statements? Please contact us at info@valuentum.com for more details. In this seminar, Valuentum’s President of Investment Research Brian Nelson walks through the in’s and out’s of financial statement analysis.  What We Learn: How to assess the operating strength and earnings power of a company (income statement) How to assess the financial health and leverage of a company (balance sheet) How to assess the cash flow generating capacity and capital intensity of a company (cash flow statement) How the Valuentum team predicts dividend cuts and assesses long-term dividend safety The myriad risks of master limited partnerships (MLP) and real estate investment trusts (REITs) How to assess earnings quality and common financial warning signs And more!!! About … Read more

Developments in the Iron Ore Market

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BHP Billiton (BHP) shares have reached their lowest levels since 2008 after reports surfaced November 5 of a mining dam the company owns via a joint venture with Vale (VALE) broke. The dam failure has decimated a rural community, killed at least 8 people, left at least 20 people missing, and potentially contaminated the water source of hundreds of thousands of Brazilians.  Samarco, the limited liability company set up to operate the joint venture between BHP and Vale, has been said to be fully responsible for the failure, but the two-year old company may do little to protect its parent companies from hefty fines and cleanup and legal costs. According to an environmental lawyer, if Samarco cannot cover the cleanup … Read more

Railroad Merger Talks

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Canadian Pacific (CP) is back on the hunt for consolidation. After regulators shot down a proposed deal for CSX (CSX) last year, the firm is reportedly in preliminary talks with Norfolk Southern (NSC) concerning a merger that could be worth more than $24 billion. The fact that there are so few railroad operators in the US suggests that a deal will be very difficult to get past regulators, and if a deal does in fact get done, it will likely be the last of its size in the industry. The two companies have complimentary cargo markets and little geographical overlap, in our birds’ eye view of their respective route networks. Norfolk Southern generates 22% of its revenue in intermodal shipments, … Read more

Dividend Increases/Decreases for the Week Ending November 13

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Below we provide a list of firms that raised/lowered their dividends during the week ending November 13. 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 Aaron’s (AAN): now $0.025 per share quarterly dividend, was $0.023. Acadia Realty Trust (AKR): now $0.25 per share quarterly dividend, was $0.24. Automatic Data Processing (ADP): now $0.53 per share quarterly dividend, was $0.49. ClearOne (CLRO): now $0.05 per share quarterly dividend, was $0.035. D.R. Horton, Inc. (DHI): now $0.08 per share quarterly dividend, was $0.0625. DCT Industrial Trust (DCT): now $0.29 per share quarterly dividend, … Read more

Beginning of BlackBerry Turnaround?

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Last January, we were puzzled by the situation surrounding BlackBerry (BBRY), and judging by the volatility in shares, many other investors were as well. The firm denied rumors that it would be purchased for a substantial premium by competitor Samsung (SSNLF) in hopes to continue its efforts to create a larger, more diverse portfolio to compete with Apple (AAPL); BlackBerry continues to bet on its ability to use its own patent portfolio to facilitate a turnaround, even if tying the knot may still be the easy way out. In any case, the possibility that such a turnaround has finally begun has increased…maybe. In early November, BlackBerry completed the acquisition of secure mobile communications leader Good Technology for $425 million in … Read more

Alibaba Crushes Singles’ Day Records

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In 2009, Chinese e-commerce giant Alibaba (BABA) turned a local holiday for singles into a 24-hour online shopping spree through deep discounts and other promotions. Singles’ Day, as it is called, has since gained significant traction in China and is now a bigger online shopping day than Black Friday and Cyber Monday combined. For 2015 Singles’ Day, Alibaba reported total gross merchandise volume (GMV) of $14.3 billion for the day, an increase of over 53% compared to Singles’ Day in 2014. This handily beat consensus expectations of ~$13 billion in GMV, and vastly outpaced GMV growth of 28% in the third quarter of 2015. Alibaba continues to be at the forefront of the shift of Internet shopping to mobile platforms, … Read more

Investors Punish Priceline for Conservative Guidance

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This isn’t the first time this year Best Ideas Newsletter portfolio holding Priceline (PCLN) has been punished by investors for issuing weak guidance after a strong quarter (see our first-quarter piece). The strength of the US dollar played an important role in the weakness of the firm’s performance, but we didn’t see any material fundamental deterioration in its operations in the company’s third-quarter results, reported November 9. Gross travel bookings at Priceline grew ~22% in constant currency and 7% as reported to $14.8 billion in the third quarter on a year-over-year basis. The strength was driven by its international operations, where gross travel bookings grew 25% in constant currency. The company’s global accommodation business booked a record 116 million room … Read more