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Recent Articles
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Dick’s Sporting Goods to Acquire Foot Locker
May 15, 2025
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Image: Dick’s Sporting Goods’ shares sold off on its announcement that it would acquire Foot Locker.
On May 15, Dick’s Sporting Goods announced that it would acquire Foot Locker in a transaction that implies an equity value of $2.4 billion and enterprise value of $2.5 billion. Dick’s intends to finance the acquisition through a combination of cash on hand and new debt and is expected to close in the second half of 2025. Dick’s intends to operate Foot Locker as a standalone business unit within its portfolio, while it maintains the Foot Locker brands. Dick’s also released preliminary first quarter results, showcasing comparable store sales growth of 4.5% and non-GAAP earnings per diluted share of $3.37. The ongoing strength in its business positions it well to gobble up Foot Locker. The deal will allow Dick’s to serve consumers in new locations in the U.S., while also expanding internationally for the first time. The combined entity will benefit from learnings from Dick’s House of Sport and Foot Locker’s Reimagined Concept stores and serve as a stronger partner for key brands, offering multiple platforms for both established and emerging partners. Dick’s expects the transaction to be accretive to EPS in the first full fiscal year post-close and to deliver between $100-$125 million in cost synergies. Our $229 per share fair value estimate for Dick’s remains unchanged at this time.
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Cisco Raises Fiscal 2025 Outlook Again
May 15, 2025
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Image: Cisco put up excellent fiscal third quarter results.
Looking to the fourth quarter of fiscal 2025, Cisco’s revenue is expected to be between $14.5-$14.7 billion, with non-GAAP earnings per share targeted in the range of $0.96-$0.98. For all of fiscal 2025, revenue is expected to be in the range of $56.5-$56.7 billion (was $56-$56.5 billion) and non-GAAP earnings per share in the range of $3.77-$3.79 (was $3.68-$3.74). We continue to like Cisco as a holding in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. The high end of our fair value estimate range stands at $74 per share.
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UnitedHealth CEO Steps Down; Company Suspends Guidance
May 13, 2025
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Image Source: TradingView.
UnitedHealth Group announced that its CEO Andrew Witty will step down for personal reasons. Taking his place is Stephen Hemsley, who served as the company CEO from 2006-2017. UnitedHealth also suspended its recently-lowered 2025 outlook “as care activity continued to accelerate while also broadening to more types of benefit offerings than seen in the first quarter, and the medical costs of many Medicare Advantage beneficiaries new to UnitedHealthcare remained higher than expected.” Though the company expects to return to growth in 2026, we’re putting the company under review while we reevaluate our fair value estimate for shares. UnitedHealth remains an idea in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.
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Energy Transfer’s Distributions Covered By Free Cash Flow
May 12, 2025
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Image Source: TradingView.
Energy Transfer’s distributable cash flow attributable to partners, as adjusted, for the three months ended March 31 was $2.31 billion, compared to $2.36 billion in last year’s quarter. Total distributions to be paid to partners was $1.1 billion in the quarter. Free cash flow in the quarter, calculated as cash flow from operations less all capital spending, was $1.69 billion, which covered distributions paid during the period. We continue to like Energy Transfer as an idea in the High Yield Dividend Newsletter portfolio.
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