Valuentum Exclusive Analysis for the Discerning Investor

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Sep 6, 2024

Dividend Increases/Decreases for the Week of September 6
Let's take a look at firms raising/lowering their dividends this week.

Jul 22, 2024

Verizon’s First Half 2024 Operating Cash Flow Declines, Adjusted Earnings Fall
Image Source: Verizon. On July 22, Verizon reported mixed second-quarter results with revenue missing the consensus expectation but non-GAAP earnings per share coming in line. Earnings per share, excluding special items, was $1.15 in the quarter, worse than the $1.21 mark in the second quarter a year ago. Cash flow from operations during the first half of 2024 was $16.6 billion, down from $18 billion in the same period a year ago. Free cash flow did improve to $8.5 billion in the first half of 2024 versus $8 billion in the first half of last year, but the improvement came in the form of lower capital expenditures, which were $8.1 billion in the first half versus $10.1 billion in the same period a year ago. Dividends paid for the first half of 2024 totaled $5.6 billion, so Verizon is doing a good job covering dividends with free cash flow, despite pressure on operating cash flow. Verizon ended the quarter with total debt of $149.3 billion and an unsecured debt to consolidated adjusted EBITDA ratio of 2.5x. Shares of Verizon yield ~6.4% at the time of this writing.

Apr 22, 2024

Verizon Is a Cash-Generating Machine But Its Debt Load Is Worth Watching
Image Source: Verizon. We like the progress that Verizon is making, but the company’s large net debt position is something that we’re not particularly fond of. Shares yield ~6.6% at the time of this writing.

Mar 25, 2024

Fedex Bolstered By Cost Savings from Its DRIVE Program
Image: FedEx continues to extract cost savings from its DRIVE initiatives. FedEx is doing a lot of things right as it drives cost savings from its DRIVE program in the face of a challenging revenue environment. Shares of FedEx bounced nicely following the release of its fiscal third quarter report, and while they aren’t trading at bargain basement prices on the basis of our fair value estimate, we think shares could have upside to north of $300 based on the high end of our fair value estimate range. Shares yield ~1.8% at the time of this writing.

Mar 11, 2024

Oracle Hits Optimistic Note in Fiscal Third Quarter
Image Source: Peter Kaminski. Oracle posted solid third-quarter fiscal 2024 results, drove nice growth across its cloud business, set an all-time record with respect to Remaining Performance Obligations, and spoke very positively (“hypergrowth”) about its Gen2 Cloud Infrastructure business. Oracle has a large net debt position due in part to its purchase of Cerner, but free cash flow of ~$8.52 billion for the first nine months of its fiscal year showcased robustness and a nice improvement on a year-over-year basis, as both operating cash flow advanced while capital spending fell. We continue to like Oracle as an 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.

Feb 21, 2024

Walmart’s Free Cash Flow Remains Robust, Buys Vizio to Boost Advertising Business
Image: Walmart’s free cash flow generation during fiscal 2024 was superb and comfortably covers its cash dividends paid. Walmart is doing a fantastic job executing on its value proposition, and the company is in a sweet spot with respect to consumer trends given the step change in prices the past few years that is causing consumers to trade down to value offerings. The firm’s comp sales are coming in better than expected, and its free cash flow generation remains well in excess of its cash dividends paid, providing ample support for further dividend hikes. Walmart will execute a 3-for-1 stock split on February 23 and will begin trading on a post-split basis February 26. Though Walmart retains a massive net debt position, perhaps its only drawback from a financial standpoint, the company is a fantastic dividend grower and perhaps one of the best considerations within the retail space these days. Shares yield ~1.4% at the time of this writing.

Jan 24, 2024

Earnings Roundup: NFLX, ASML, T, ABT
Image: Netflix’s substantially improved free cash flow has made it a clear winner in the streaming wars. Image Source: Netflix. Netflix has won the streaming wars and continues to throw off material free cash flow as it lands incremental deals, the latest for WWE Raw. ASML is one of the most prolific innovators in the semiconductor industry, and its quarterly net bookings in the fourth quarter reveal an exciting future, even as revenue is forecast to be flat in 2024. AT&T's earnings outlook for 2024 disappointed, and rising capital spending will pressure free cash flow in 2024. Dividend King Abbott Labs continues to drive strong organic growth rates, exclusive of COVID-19 related weakness, and we expect years of future dividend growth at the company.

Jan 23, 2024

Earnings Roundup: LMT, PG, MMM, GE, JNJ, VZ
Lockheed Martin's backlog hits a new high. Procter & Gamble's gross margin surprises to the upside. 3M's bottom-line outlook for 2024 came in lower than expectations. We're excited about GE's split into two companies this year and are positive on GE Aerospace. Johnson & Johnson reaffirmed its outlook for 2024, while Verizon's free cash flow continues to improve.

Dec 11, 2023

Oracle’s “Business Is Good and Getting Better”
Image Source: Peter Kaminski. On December 11, Oracle reported mixed second-quarter results for its fiscal 2024 that showed total revenue advancing 5% on a year-over-year basis (4% in constant currency), slightly lower than expectations, and non-GAAP earnings per share of $1.34 that came in slightly ahead of what the market was looking for. The company’s non-GAAP operating margin of 43% in the quarter helped to drive non-GAAP net income 14% higher than the same period a year ago (11% in constant currency). We’re not letting the slight miss on the top line sway us from our constructive stance on shares. Our fair value estimate stands at $108 per share, about in-line with where shares are currently trading.