Valuentum Exclusive Analysis for the Discerning Investor

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Aug 28, 2024

Foot Locker Burns Through Cash During First Half of Full Year 2024
Image: Foot Locker’s shares have been quite volatile the past couple years. Foot Locker reaffirmed its full-year 2024 non-GAAP earnings per share outlook of $1.50-$1.70 per share. For full year 2024, it also reiterated its sales guidance of -1% to 1% growth and comparable sales growth in the range of 1%-3%. For the twenty-six weeks ended August 3, 2024, cash flow from operations was $126 million, while capital spending was $132 million, resulting in a cash burn. Though Foot Locker has returned to top line growth, we’re not at all interested in shares given its cash-flow performance.

Aug 9, 2024

Paper: Value and Momentum Within Stocks, Too
Abstract: This paper strives to advance the field of finance in four ways: 1) it extends the theory of the “The Arithmetic of Active Management” to the investor level; 2) it addresses certain data problems of factor-based methods, namely with respect to value and book-to-market ratios, while introducing price-to-fair-value ratios in a factor-based approach; 3) it may lay the foundation for academic literature regarding the Valuentum, the value-timing, and ultra-momentum factors; and 4) it walks through the potential relative outperformance that may be harvested at the intersection of relevant, unique and compensated factors within individual stocks.

Jun 28, 2024

Nike’s Revenue Under Pressure
Image: Nike’s shares have languished of late, and a comeback will take some time. Nike retains one of the strongest brand names across our coverage universe, and customer loyalty remains a key attribute to a bull case for shares. However, the company’s fiscal 2025 will be challenging, with considerable weakness during the first quarter of fiscal 2025. We like Nike’s business model, but we remain on the sidelines as we adjust our valuation model to reflect the lower-than-expected fiscal 2025 performance.

Jun 10, 2024

Update: Frequently Asked Questions About Valuentum Securities, Inc.
Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports and dividend reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area. Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information. We address a number of questions from both subscribers and visitors to our site.

May 30, 2024

In the News: CRM, FL, DG, BBY
Image Source: Mike Mozart. Salesforce issued a weaker-than-expected outlook for its fiscal second quarter 2025, and shares have been punished following the report. Foot Locker's bottom-line guidance for its full year pleased the Street, while Dollar General continues to benefit from increased store traffic. Best Buy's comparable store sales remain under considerable pressure, but the big box retailer is managing expenses well.

Mar 22, 2024

Nike’s Revenue to Face Pressure During First Half of Fiscal 2025
Image: Nike’s shares have faced considerable pressure from the beginning of 2022, and its outlook for the first half of fiscal 2025 wasn’t great. We’re huge fans of Nike’s consecutive dividend growth track record, but uncertainty regarding the future pace of sales growth in China, growing competition from the likes of Lululemon and Vuori, and macro-driven weakness expected in the first half of fiscal 2025 leave us on the sidelines for now. Shares yield ~1.5% at the time of this writing.

Mar 14, 2024

Dick’s Sporting Goods Soars, Raises Dividend 10%
Image: Dick’s Sporting Goods’ shares have soared since the doldrums of the COVID-19 meltdown. On March 14, Dividend Growth Newsletter portfolio holding Dick’s Sporting Goods reported better-than-expected top and bottom-line performance for the fourth quarter and issued a solid outlook for fiscal 2024. Shares of Dick’s Sporting Goods have done fantastic since the worst of the COVID-19 meltdown years ago, and the momentum behind its business remains strong, as evidenced by a nice 10% increase in its quarterly dividend. We expect to raise our fair value estimate of Dick’s Sporting Goods upon our next valuation model update, and the company remains a key idea in the Dividend Growth Newsletter portfolio.

Mar 10, 2024

Abercrombie & Fitch’s Mighty Comeback!
Image Source: Abercrombie & Fitch. Abercrombie & Fitch is experiencing a resurgence as the company reconnects with its target market, and the traction it has regained with its customers is quite something. The firm noted that it continues to experience strong momentum across its brand portfolio, and its long-term target is to achieve $5 billion in global sales (its sales were $4.3 billion in its most recent fiscal year). For 2024, it expects net sales to expand 4%-6%, and for its operating margin to be ~12%, up 60 basis points from the mark it reached last year. Abercrombie swung to being significantly free cash flow positive in its most recently completed fiscal year, and it ended the period with a net cash position. The company’s comeback has been nothing short of remarkable. Fickle fashion trends make the stock difficult to consider for long-term investors, however.

Nov 20, 2023

Dick’s Sporting Goods Still Looks Really Cheap
Image Source: Dick’s Sporting Goods. On November 21, Dick’s Sporting Goods reported solid third-quarter results with sales up 2.8% on a year-over-year basis thanks to comparable store sales growth of 1.7% that lapped an impressive 6.5% increase in the same period a year ago. Non-GAAP earnings per share came in at $2.85 in the quarter, up from $2.60 in last year’s period. The company also raised its 2023 comparable store sales growth guidance range to 0.5%-2% from flat to 2% previously, and it raised its 2023 non-GAAP earnings per share outlook to $12.00-$12.60 from its previous range of $11.50-$12.30. We liked the news and continue to believe that shares are mispriced. Our fair value estimate stands at $160 per share, well above where shares are trading at the moment.

Aug 22, 2023

Dick’s Sporting Goods Down ~7% Year-to-Date; Sticking with It Long Term
Image Source: Mike Mozart. Some of our favorite dividend growth ideas in the Dividend Growth Newsletter portfolio include Cisco, Microsoft, Oracle, Apple, and Republic Services. Cisco is up more than 15% year-to-date, Microsoft is up more than 34% year-to-date, Oracle is up more than 38% year-to-date, Apple is up over 40% year-to-date, and Republic Services is up more than 14% year-to-date. These dividend growth ideas are trouncing the basket of high-yielding Dividend Aristocrats. With big cap tech and large cap growth powering the market higher during 2023, it’s been great having this type of exposure within the Dividend Growth Newsletter portfolio, and we hope you have enjoyed it, too...Unlike big dividend growth winners such as Cisco, Microsoft, and Oracle, which are higher weightings (5%-7%) in the Dividend Growth Newsletter portfolio, Dick’s Sporting Goods has a smaller 3-5% weighting and fills a more diversifying role with respect to retail. That said, the sporting goods retailer’s second-quarter results (ending July 29, 2023) missed top-line consensus expectations by a small margin, but the miss on the bottom line was a bit more pronounced due to concerns over shrink. Dick’s Sporting Goods, however, still delivered 3.6% sales expansion in the period while quarterly comparable store sales increased 1.8% (an improvement from the 5.1% decline in last year’s quarter), as it reiterated its 2023 comparable store sales target of “flat to positive 2%.” The company’s full-year 2023 outlook for diluted earnings per share now stands at $11.33-$12.13 (was $12.90-$13.80), implying shares are trading at about 10x current-year earnings.