Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Apr 27, 2020

COVID-19 Idea Consideration Chipotle Continues to Deliver
Image Shown: Shares of Chipotle Mexican Grill Inc have sharply rebounded over the past month as investors started to take into consideration the firm’s pristine balance sheet, ability to meet consumer demand via delivery services, and quality cash flow profile, keeping short-term headwinds in mind. On April 21, Chipotle Mexican Grill reported earnings for the first quarter of 2020 that beat both consensus top- and bottom-line estimates. Same-store sales rose 3.3% year-over-year almost entirely due to the strength of its digital business where sales were up almost 81% and represented over 26% of Chipotle’s sales last quarter. Chipotle’s GAAP revenues were up almost 8% year-over-year last quarter though its GAAP operating income fell by over 35% due to elevated operating costs as the firm coped with the emerging (at the time) coronavirus (‘COVID-19’) pandemic. In particular, ‘food, beverage and packaging’ and wage expenses were elevated as Chipotle adjusted its business.

Apr 27, 2020

Intel Is Well-Positioned to Ride Out the Storm
Image Source: Intel Corporation – January 2020 CES Presentation. Intel Corp reported first-quarter earnings for fiscal 2020 (period ended March 28, 2020) that beat both consensus top- and bottom-line estimates; however, guidance for the fiscal second quarter was softer than expected and shares of INTC initially sold off on the report. However, there’s a lot to like in the update, and we continue to like shares of Intel as a holding in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Intel is very well-positioned to ride out the storm caused by the ongoing coronavirus (‘COVID-19’) pandemic, and shares of INTC yield ~2.3% as of this writing.

Apr 27, 2020

Coca-Cola’s Debt Load Makes It Difficult to Navigate Rough Market Conditions
Image Source: The Coca-Cola Company – First Quarter Fiscal 2020 Earnings IR Presentation. On April 21, Coca-Cola reported first-quarter fiscal 2020 earnings (period ended March 27, 2020) that beat both consensus top- and bottom-line estimates, and furthermore, flat organic sales beat consensus estimates as well (which analysts expected would decline modestly year-over-year). Coca-Cola’s Asia Pacific business was weakened by the coronavirus (‘COVID-19’) pandemic and organic revenues in the region (an adjusted non-GAAP figure) were down 7% year-over-year last fiscal quarter. Strong growth in North America (organic revenues were up 4% year-over-year) and Latin America (organic revenues were up a whopping 13% year-over-year) due to greater sales volumes and favorable price increases/product mix shifts offset weakness in the Asia Pacific region in the fiscal first quarter. However, please note that this picture will likely change in the second fiscal quarter due to the spread of the pandemic worldwide.

Apr 25, 2020

Emergency Update on COVID-19
President of Investment Research at Valuentum, Brian Nelson provides an emergency update on COVID-19. He talks about how policymakers have dropped the ball thus far, and why investors should not let their guards down, despite what has been a nice bounce from the March 23 bottom.

Apr 24, 2020

Dividend Increases/Decreases for the Week Ending April 24
Let's take a look at companies that raised/lowered their dividend this week.

Apr 23, 2020

Jernigan Capital Fundamentally Transforms Its Business Model
Image Source: Jernigan Capital Inc – March 2020 IR Presentation. Jernigan Capital is now an internally managed real estate investment trust (‘REIT’) that invests in self-storage properties, either directly or by providing funding for developers that build such properties. Shares of JCAP currently yield ~7.8% (as of this writing) in the wake of Jernigan Capital’s stock price selling off aggressively this year, as investor concerns mounted due to the ongoing coronavirus (‘COVID-19’) pandemic. Jernigan Capital is in the midst of a major shift in its business model and overall corporate strategy, and we like the changes management is in the process of making. While these are still early days, plenty is already known about this seismic shift and more information will become available in the coming weeks.

Apr 22, 2020

What To Do Now?
Let's get President of Investment Research Brian Nelson's thoughts...

Apr 22, 2020

AT&T Has the Potential Resilience to Ride Out the Storm With Its Dividend Intact
Image Source: Image Source: AT&T Inc – First Quarter 2020 Earnings IR Presentation. High Yield Dividend Newsletter portfolio holding AT&T reported first-quarter 2020 earnings on April 22 that missed consensus top- and bottom-line estimates; however, management noted right off the bat that the ongoing coronavirus (‘COVID-19’) pandemic shaved $0.05 in EPS off of AT&T’s performance. The cancellation of the 2020 NCAA Division I Men's Basketball Tournament and ongoing losses of its premium TV subscribers (a product of structural declines at DirecTV) weighed on AT&T’s results last quarter. Shares of T yield ~7.1% as of this writing. AT&T continued to generate meaningful free cash flows, keeping various headwinds in mind, as $8.9 billion in net operating cash flows fully covered $5.0 billion in capital expenditures (defined as ‘purchase of property and equipment’ plus ‘interest during construction’), allowing for $3.9 billion in free cash flow which fully covered $3.7 billion in dividend payouts last quarter.

Apr 22, 2020

Lockheed Martin Marches Forward During These Harrowing Times
Image Source: Lockheed Martin Corporation – First Quarter Fiscal 2020 Earnings IR Presentation. On April 21, Dividend Growth Newsletter portfolio holding Lockheed Martin Corp reported first-quarter earnings for fiscal 2020 (period ended March 29, 2020) that beat both consensus top- and bottom-line estimates. Even better, management largely kept Lockheed Martin’s fiscal 2020 guidance intact, save for a marginal reduction in the firm’s expected sales which is primarily due to supply chain and production issues the ongoing coronavirus (‘COVID-19’) pandemic is creating for Lockheed Martin’s ‘Aeronautics’ business. With that in mind, Lockheed Martin is still forecasting for ~6% revenue growth this year, highlighting the resilience of defense contractor’s financials even during harrowing times such as these. Shares of LMT yield ~2.6% as of this writing.

Apr 21, 2020

Macy’s Will Find It Difficult to Unlock the (Fair) Value of Its Real Estate
Image Source: Valuentum. The embattled department store Macy’s suspended its dividend and drew down its revolving credit line on March 20 in order to shore up its financial position in the face of the ongoing coronavirus (‘COVID-19’) pandemic. All of Macy’s physical stores were temporarily closed on March 18, though some might shut down for good given the company’s financial woes. The fair value estimate of Macy’s is heavily dependent on factors well outside the control of management, and considering the US economy and global economy at-large are sliding toward a pandemic/leverage induced recession/depression, we aren’t optimistic on Macy’s ability to unlock the (fair) value of its real estate. Any real estate sales done in the foreseeable future will likely be at a discount to their fair value. As the firm continues to burn through cash--there’s a very high probability Macy’s will continue to generate negative free cash flows until the “cocooning” of households ends--the clock is working against Macy’s. We are staying away from the name.