Valuentum Exclusive Analysis for the Discerning Investor

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Apr 22, 2020

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

Apr 19, 2020

ICYMI -- Video: Will Hasty Policy Facilitate the Next Leg Down, or Do We Have It Coming Anyway?
President of Investment Research and award-winning author of Value Trap: Theory of Universal Valuation Brian Nelson explains how US policymakers are stuck between a rock and a hard place, and how the market may be factoring in too high of a probability of a return to normalcy before 2021. This and more in the latest video report.

Apr 12, 2020

ICYMI -- Video: The Question Is If the Economy Can Be Held Together Without Vast Equity Dilution
President of Investment Research at Valuentum and award-winning author of "Value Trap: Theory of Universal Valuation" explains how the range of probable fair value outcomes of S&P 500 companies has increased as a result of COVID-19 and possible equity dilution on the downside to long-run inflationary pressures on stocks driven by runaway Fed and Treasury stimulus on the upside.

Apr 3, 2020

Repub from July 2019 -- The Valuentum Economic Roundtable
We sat down with the Valuentum team to get their thoughts on the global economy and key issues that may threaten this near 10-year bull market.

Mar 30, 2020

Bullets: Recapping the Crash, Where Are We Now?
Image: The S&P 500 has only retraced a small part of its decline since the top in February 2020. We established an S&P 500 target of ~2,550 in late February and more formally established a target range of 2,350-2,750 in the March edition of the Dividend Growth Newsletter, prior to the crash. As predicted, the S&P 500 crashed to the mid-point of our S&P 500 target range of 2,350-2,750, now trading at ~2,590 at this moment. We continue to emphasize that panic selling during this crisis may continue to 2,000 on the S&P, while we emphasize that the range of fair value outcomes for equities has increased, both to the upside and to the downside. Let's recap the crash in bullet-point fashion, and explain what investors can expect next.

Mar 28, 2020

Attack COVID-19 With Forward-Looking, Expected Data
President of Investment Research at Valuentum Brian Nelson shares his financial wisdom in detailing how the world must attack COVID-19 with forward-looking expected data (not backward-looking, empirical data) as the global economy faces what could become the worst business environment since the Great Depression, irrespective of government fiscal stimulus.

Mar 27, 2020

Grocery Outlet Is Firing on All Cylinders
Image Shown: Discount grocer Grocery Outlet Holdings Corporation has stores in six states; Washington, Oregon, California, Idaho, Nevada, and Pennsylvania. Image Source: Grocery Outlet – December 2019 IR Presentation. On March 24, discount grocer Grocery Outlet Holdings Corp reported fourth-quarter and full fiscal year earnings for fiscal 2019 (period ended December 28, 2019), and the firm beat both consensus top- and bottom-line estimates (albeit only marginally on the top-line). In the fiscal fourth quarter, the grocer’s GAAP net sales were up 12% year-over-year while Grocery Outlet went from a GAAP net loss of $5 million in the same quarter last fiscal year to a GAAP net profit of $10 million in the fourth quarter of fiscal 2019. That was partially due to Grocery Outlet utilizing the proceeds from its IPO in June 2019 to pay down its relatively large debt load, which in turn cut its quarterly interest expenses down by more than half year-over-year. From the end of fiscal 2018 to the end of fiscal 2019, Grocery Outlet’s total debt load (inclusive of short-term debt) fell from over $857 million to just below $448 million.

Mar 26, 2020

US Congress Is Getting Ready to Pass a Massive ~$2.2 Trillion Fiscal Stimulus Bill
Image Shown: US equities have started to recover some of their lost ground as the likelihood that the US Congress will pass a massive ~$2.2 trillion fiscal stimulus and emergency spending package, dubbed the CARES Act, has increased significantly over the past week as seen through the bounce in the SPDR S&P 500 ETF Trust. President Trump has clearly indicated that he intends to sign such a bill into law as soon as possible, with the US House of Representatives expected to take up the legislation this upcoming Friday morning on March 27. On March 25, the US Senate worked late into the night to secure a bipartisan compromise on a massive ~$2.2 trillion fiscal stimulus and emergency spending bill to offset the negative impact of the ongoing novel coronavirus (‘COVID-19’) pandemic. The bill passed 96-0 after several senators forced a vote on an amendment on that bill that would have changed the nature of the “beefed up” unemployment benefits (that amendment failed 48-48, and would have needed 60 votes to pass). As of this writing, there are over 65,000 confirmed cases of COVID-19 in the US according to Johns Hopkins University, and we sincerely hope everyone, their families, and their loved ones stay safe during this pandemic. A vote in the US House of Representatives is expected this upcoming Friday morning on March 27. The House is expected to convene at 9AM EST and the goal of each party’s leadership is to secure passage of the bill via a voice vote (please note that this differs from unanimous consent, which requires every member of the House to agree to such a legislative process in order to pass a bill without having the majority of lawmakers return to Washington DC, but this is easier/faster to achieve than a recorded roll call vote that would force every member of the House to return). Assuming the House swiftly passes the bill that was approved in the Senate, President Trump has clearly communicated he would sign the bill into law right away. Please note this bill is formally known as the Coronavirus Aid, Relief, and Economic Security (‘CARES’) Act.

Mar 19, 2020

General Mills’ Pet Segment Continues to Deliver
Image Source: General Mills Inc – Third Quarter Fiscal 2020 Earnings IR Presentation. On March 18, General Mills reported third quarter fiscal 2020 (period ended February 23, 2020) earnings that provided the market with an idea of how major consumer staples brands were performing before the ongoing novel coronavirus (‘COVID-19’) pandemic started spreading around the world. In the fiscal third quarter, General Mills GAAP net sales were broadly flat year-over-year as was its GAAP operating income. The firm’s GAAP gross margin took a hit (from higher supply chain costs and input cost inflation) but that was offset by reduced restructuring costs and the lack of a major loss on divestment, allowing for its GAAP operating margin to stay broadly flat year-over-year. All-in-all, a fairly uneventful and uninspiring quarter, but General Mills’ forward guidance caught our eye.

Mar 15, 2020

Panic Buying of Consumer Goods and Its Impact on Discounted Cash Flow Valuation
Image: Sam’s Club (Crystal Lake, IL), March 14. Water and toilet paper continue to be completely sold out at most big box retailers as COVID-19 panic buying of consumer goods continues to spread. Fear-induced purchases in the US have also helped drive up investor sentiment toward consumer staples names with a large domestic presence. We caution, however, that near-term earnings bumps emanating from “stockpiling” have little impact on a company’s intrinsic value, which is derived more from normalized conditions, and in most cases, the panic buying of consumer goods is merely pulling demand forward. “You know what’s disappearing from the supermarket shelves? Toilet paper…There’s an acute shortage of toilet paper in the United States.” – Johnny Carson, in 1973, causing a month-long shortage of toilet paper in the US at the time. The spread of COVID-19 is creating a similar panic as consumers stock up on just about everything from toilet paper to canned goods to hand sanitizer.