Valuentum Exclusive Analysis for the Discerning Investor

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Jul 31, 2020

Dividend Increases/Decreases for the Week Ending July 31
Let's take a look at companies that raised/lowered their dividend this week.

Jul 30, 2020

Visa Remains Resilient in the Face of COVID-19
Image Shown: Visa Inc remained a free cash flow cow last fiscal quarter in the face of the pandemic. Image Source: Visa Inc – Third Quarter of Fiscal 2020 IR Earnings Presentation. On July 29, Visa reported third quarter fiscal 2020 earnings (period ended June 30, 2020) that missed consensus top-line estimates and beat consensus bottom-line estimates. The ongoing coronavirus (‘COVID-19’) pandemic weighed on travel-related purchases across Visa’s cardholder base, a dynamic that held down cross-border transactions which tend to be more lucrative for the payment processor. Keeping pandemic-related headwinds in mind, the company noted its performance was improving in several key markets around the world. We continue to like Visa as a top-weighted holding in the Best Ideas Newsletter portfolio given its high quality cash flow profile, strong balance sheet, and very promising post-pandemic growth outlook. The top end of our fair value estimate range for Visa sits at $214 per share.

Jul 30, 2020

PayPal Posts a Tremendous Quarterly Report, Reinstates Guidance
Image Shown: PayPal Holdings Inc put up tremendous performance during the first half of 2020 as consumers are increasingly shopping online. In the second quarter of 2020, PayPal continued to grow at a decent clip even in the face of the ongoing pandemic. Image Source: PayPal Holdings Inc – Second Quarter of 2020 IR Earnings Presentation. After the market close July 29, PayPal reported second quarter 2020 earnings that beat consensus top- and bottom-line estimates. Shares of PYPL moved sharply higher after the report was published, and we continue to like PayPal as a holding in the Best Ideas Newsletter portfolio. Our fair value estimate sits at $200 per share of PYPL, comfortably above where PayPal is trading at as of this writing. There is room for meaningful capital appreciation upside as the top end of our fair value estimate range sits at $240 per share of PayPal. Even in the face of the ongoing coronavirus (‘COVID-19’) pandemic PayPal continued to grow, and we appreciate the resilience of its business model. The firm’s cash flow profile is of high quality, supporting its ability to generate meaningful free cash flows in any economic environment. Additionally, having a pristine balance sheet provides PayPal with ample financial flexibility to ride out the storm.

Jul 30, 2020

Excerpt from ‘Value Trap’ 2nd Edition: MPT Sounds a Lot Like "Empty"
The second edition of President of Investment Research Brian Nelson's book 'Value Trap' will be released in the coming weeks. Here is a short excerpt to whet your appetite.

Jul 30, 2020

McDonald’s Improving But Serious Hurdles Remain
Image Shown: Shares of McDonald’s Corporation are richly valued as of this writing, especially when considering the headwinds facing its business in the near-term and its hefty net debt load. On July 28, McDonald’s Corp reported second quarter 2020 earnings that beat consensus top-line estimates but fell short of consensus bottom-line estimates. As expected, the ongoing coronavirus (‘COVID-19’) pandemic took a large bite out of its performance last quarter with global comparable sales down 23.9% versus the same period a year-ago. McDonald’s reported that its global comparable store sales trajectory improved throughout the second quarter as the decline shrank from -39.0% (negative 39.0%) in April 2020 to -12.3% (negative 12.3%) by June 2020. Shares of MCD sold off modestly during normal trading hours on July 28, and we caution that McDonald’s still appears to be generously valued as of this writing.

Jul 28, 2020

AT&T Remains Free Cash Flow King, Though Deleveraging Efforts Are Getting Tougher
Image Shown: AT&T Inc continued to be a free cash flow cow last quarter, though the ongoing pandemic created headwinds for its various businesses. Image Source: AT&T Inc – Second Quarter of 2020 IR Earnings Presentation. The ongoing coronavirus (‘COVID-19’) pandemic has created some very serious headwinds for AT&T, but that did not stop the telecommunications and entertainment giant from being incredibly free cash flow positive last quarter. On July 23, AT&T reported its second quarter 2020 earnings report and we remain confident in the firm’s ability to keep making good on its dividend obligations going forward. Shares of T yield ~7.1% as of this writing, and we include shares of AT&T in our High Yield Dividend Newsletter portfolio.

Jul 28, 2020

Earnings Brief: SAM, MAT, TOT, HON, AXP
Image Source: Boston Beer. CEO Dave Burwick noted in Boston Beer’s second-quarter press release: “The growth of the Truly brand, led by Truly Hard Lemonade, has accelerated and continues to grow beyond our expectations. Since early January, Truly has grown its velocity and its market share sequentially while other national, regional and local hard seltzer brands have entered the category. Truly is the only hard seltzer, not introduced earlier this year, to grow its share during 2020.” We’re impressed, but still taking a cautious view on SAM’s shares.

Jul 27, 2020

Lockheed Martin Raises Guidance
Image Shown: Lockheed Martin Corporation posted a strong fiscal second quarter earnings report which saw shares of LMT move higher over the following trading days. Image Source: Lockheed Martin Corporation – Second Quarter Fiscal 2020 IR Earnings Presentation. On July 21, Lockheed Martin Corp reported second quarter fiscal 2020 earnings (period ended June 28, 2020) that beat both consensus top- and bottom-line estimates. Furthermore, Lockheed Martin boosted its guidance for fiscal 2020, even in the face of the ongoing coronavirus (‘COVID-19’) pandemic. Shares of LMT yield ~2.5% and are trading well below their fair value estimate of $432 per share as of this writing. We continue to like Lockheed Martin as a holding in the Dividend Growth Newsletter portfolio.

Jul 27, 2020

Goldman Posts a Blowout Quarter
Image Shown: Goldman Sachs Results Breakdown by Segment. Image Source: Goldman Sachs 2Q2020 Earnings Presentation. While we still do not like the private ($17 billion) and public equity ($3 billion) positions on Goldman’s balance sheet, we acknowledge that the firm is working them lower through sales and that the bank is aiming to increase managed funds instead. This move is overdue and will help reduce the risk profile of the firm. Though the quarter showed the massive revenue potential of Goldman when markets are at fairly high levels and with extreme volatility, it is difficult to value these earnings streams, given the notoriously volatile nature of the key segments of investment banking and markets (trading).

Jul 27, 2020

HCA’s Latest Results Indicate Healthcare Providers Are Holding Up Better Than Expected
Image Source: HCA Healthcare Inc – Second Quarter of 2020 Earnings Press Release. The ongoing coronavirus (‘COVID-19’) pandemic has had a devastating impact on the financial performance of healthcare providers (operators of hospitals and other medical facilities) due to the decline in the number of elective surgeries performed. Please note elective surgeries tend to be more lucrative for healthcare providers than the other services they provide, generally speaking. Elective surgeries in many US states were indefinitely postponed when the pandemic first hit. In late March, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (‘CARES Act’) which included $100 billion in emergency funding for hospitals and healthcare providers to mitigate the financial blow from the pandemic and enable the US healthcare system to continue functioning as best it can under the weight of the pandemic.