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More Suggested Reading

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More Reading Must read: Understanding the CFA Designation Must watch: Explaining the Valuentum Buying Index Must read: Why Valuentum Buying Index Ratings Matter Must read: The Best Way to Use the Valuentum Process Must read: Evaluation of Simulated Best Ideas Newsletter Portfolio Must read: Focus on a Rules-Based Process Must read: What Causes Fair Value Estimates to Change? Must read: Resetting Your Mental Model Must read: Introducing the Economic Castle Rating Must read: Deriving Forecasts in Valuation and Dividends Must read: Investing’s Odd Couple: Value and Momentum Must read: How Members Use Valuentum’s Investment Services User Menu View Current and Archived Best Ideas Newsletters — access current and archived newsletters View Current and Archived Dividend Growth Newsletters — access current and archived newsletters Getting Started on Valuentum.com — learn about … Read more

Profit Taking in Hasbro’s Shares

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Note: On July 1, we took some profits on Hasbro (HAS) north of $75 per share. Please read the introduction on page 1 of the July edition of the Dividend Growth Newsletter .   Image Source: Hasbro Things are still going great at Hasbro, even as the sharp sell-off following its third-quarter report tries to tell a different story. We think the post-earnings drop in shares is merely profit taking, something we, too, had engaged in a few months ago with its shares in the Dividend Growth Newsletter portfolio. The company’s equity has more than doubled since the beginning of 2012, and investors are taking money of the table in advance of the all-important holiday season, in our view. In … Read more

Investment Banking Round Up: Citigroup’s Equity To Rapidly Converge to Tangible Book?

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Though junior analysts cheating on internal exams at Goldman Sachs (GS) and JP Morgan (JPM) has probably garnered more headlines than the results of the two entities themselves, one thing remains clear: the US financial system remains on very healthy ground. While robust capital ratios speak to this, not all banks are doing great, and volatile economic and market conditions are posing challenges for many, even if such conditions are an inescapable characteristic of the financial system itself. Morgan Stanley’s (MS) third-quarter results, for one, left much to be desired. Reported net revenue dropped to $7.8 billion from $8.9 billion in the year-ago period, while net income fell to $0.48 per share from $0.83 in the September quarter-end last year; … Read more

Dividend Increases/Decreases for the Week Ending October 16

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Below we provide a list of firms that raised/lowered 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 Antero Midstream (AM): now $0.205 per share quarterly dividend, was $0.19. Cantel (CMN): now $0.06 per share semi-annual dividend, was $0.05. Cintas (CTAS): now $1.05 per share annual dividend, was $0.85. Dorchester Minerals (DMLP): now $0.1942 per share quarterly dividend, was $0.1674. Eaton Vance (EV): now $0.265 per share quarterly dividend, was $0.25. Healthcare Services (HCSG): now $0.18 per share quarterly dividend, was $0.1788.  International Paper … Read more

Johnson & Johnson: A Dividend Growth Gem

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In Johnson & Johnson’s (JNJ) third-quarter report, released October 13, reported results weren’t all that rosy for the Dividend Growth Newsletter portfolio holding. Revenue and adjusted earnings per share fell 7.4% and 7.5%, respectively, compared to the third quarter of 2014, as domestic sales decreased 0.6% in the quarter and international sales dropped 15.7% on a comparable basis. It’s not something that we were very pleased to see, but for a variety of reasons, reported results don’t quite tell the whole story. For one, on an operational basis, which excludes foreign exchange and a number of other items, Johnson & Johnson’s quarterly results were much more encouraging. Foreign currency exchange rates had a negative impact of 8.2 percentage points on … Read more

Intel May Have a Breakout Year in 2016

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Intel’s (INTC) third-quarter results, released October 14, didn’t turn many heads, but the company did beat expectations on both the top and bottom lines, performance that was well-received by the market. Revenue generated in the quarter was approximately flat on a year-over-year basis, but the mark did beat the consensus estimate by $250 million. The chip giant’s earnings of $0.64 per share in the quarter exceeded expectations by a nickel per share. It wasn’t a bad showing by any stretch of the imagination, but Intel continues to feel the pain of a shrinking personal computing market, even as optimism flies high with respect to the firm’s 6th Gen Intel Core processors. Revenue from Intel’s Data Center Group, which includes server, … Read more

Bellwether Snapshot: Walmart, Boeing, CSX

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Alcoa (AA) kicked off third-quarter earnings season with a wimper, which had been preceded by Yum! Brands’ (YUM) doozy of a showing. Incremental news impacting the expected performance of Walmart (WMT), Boeing (BA), and CSX (CSX) hasn’t been great either. Investors continue to write off weakness as “normal,” even “macroeconomic” as if it doesn’t matter, pointing to the transient nature of a struggling global economy suffering from a slowdown in the pace of growth in China and weakness in export-dependent countries, not the least of which is Brazil, as somehow a “good thing,” but it may not matter. The trajectory of expectations of future free cash flow generation is being impacted, and so are fair value estimates as a result, … Read more

Altria Receives Augmented Stake in AB-Inbev-SABMiller Combination

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On October 13, SABMiller (SBMRY) and AB-InBev (BUD) announced that they have agreed in principle on the key terms of a possible recommended offer to be made by AB-InBev. The deal consists of an all cash offer of £44 (~$67.90) per share for ~59% of all SABMiller shares, not owned by the company’s two largest shareholders, Altria (MO) and the Columbian Santo Domingo family via BevCo. This represents approximately a 50% premium to SABMiller’s closing price on September 14, the last day before speculation of a takeover reemerged. All calculations have been made using October 12 closing prices. The remaining 41% of SABMiller shares, approximately 27% of which is owned by Altria with the balance being owned by the Columbian … Read more

Video: Are Economic Moats Priced Into Stock Prices? — You Bet They Are

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President of Equity Research Brian Nelson debunks the myth that the economic moat is not included in stock prices. Length: ~8 minutes. Tickerized for firms in the Morningstar Wide Moat ETF (MOAT), as of October 14, 2015. Brian Nelson, CFA: This is Brian Nelson from Valuentum Securities. I wanted to talk about an important concept and answer an important question. Is Warren Buffet’s economic moat priced into stock prices? Before I answer that question, I think we need to define a couple things. Return on invested capital is a measure of a business’ performance. It’s calculated as earnings before interest divided by net new investment, which is a measure of return on new invested capital. So what is the return the … Read more

EMC Will Go Private in Giant Tech Deal

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On Monday, Dell definitively announced that it plans to acquire IT giant EMC (EMC) for ~$67 billion, making it the largest “tech-only” deal in history. EMC shareholders will receive ~$33.15 total for each share of EMC owned, representing $24.05 in cash and 0.111 shares of brand new tracking stock of VMWare (VMW), of which EMC owns ~80% of the company. The transaction includes a “go-shop” provision that allows EMC to find a more desirable deal. The value of the tracking stock, which in some ways represents a synthetic publicly-traded equity component of the deal structure for Dell (it could have paid all cash), could deviate from the market price of VMWare, given the different characteristics and rights of the stocks. … Read more