AGCO

Near-term Optimism at Caterpillar and Deere

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Caterpillar and Deere serve notoriously cyclical end markets, but both companies appear to be quite optimistic with their near-term outlooks, even as trade issues weigh on their international operations. Shares of Cat yield ~2.4%, while shares of Deere yield ~1.9%. By Kris Rosemann Caterpillar Raises Guidance Despite Tariff-Related Costs With trade issues casting a shadow of uncertainty for a number of multinational corporations, stocks such as Caterpillar (CAT) have attracted a notable amount of negative attention. Caterpillar’s operations source material amounts of inputs that are subject to tariffs, and the company serves markets and regions that may be most impacted by global trade tensions. Caterpillar is taking the pressure in stride, however. During in its second quarter report, released July … Read more

Valuentum’s Weighted Average Cost of Capital (WACC) Distribution

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The weighted average cost of capital is one of the most subjective measures in corporate finance, but it is also one of the most important ones. “The most important item over time in valuation is obviously interest rates…If interest rates are destined to be at low levels…It makes any stream of earnings from investments worth more money. The bogey is always what government bonds yield….Any investment is worth all the cash you’re going to get out between now and judgment day discounted back. The discounting back is affected by whether you choose interests rates like those of Japan or interest rates like those we had in 1982…When we had 15 percent short-term rates in 1982, it was silly to pay … Read more

Study: Valuentum’s Best Ideas Newsletter Portfolio

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To read the study, please click on the image to download the pdf document (pdf).

Demand Bouncing Off Multi-Year Bottom at Caterpillar

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Improvement in Caterpillar’s underlying end markets is driving its performance, and management took the opportunity following a solid showing in the first quarter of 2018 to raise its bottom-line guidance for the full year. The market, however, did not look favorably on management’s comments that the first quarter should be expected to be the “high-water mark” for the year in terms of margin performance. We’ve updated our fair value estimate of shares. By Kris Rosemann It may seem like an eternity ago, but as recently as 2016, Caterpillar (CAT) was at the tail end of its only stretch of four years of consecutive annual sales declines in more than 90 years of business. The demand environment for the heavy machinery … Read more

ICYMI: Valuentum’s Improved Stock and ETF Web Pages

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Valuentum has rolled out improved stock and ETF web pages on its website valuentum.com/. Now, subscribers can access key proprietary information on the stock and ETF web pages in addition to the customary stock and ETF reports. Dear reader, We have some exciting news that we can’t wait to share with you! At valuentum.com/, we have rolled out new stock and ETF pages that conveniently include a variety of our proprietary metrics from the Dividend Cushion ratio to the Economic Castle rating and beyond! There’s even mouseover functionality so you can learn about how we define the key metrics across our stock-selection and dividend growth methodologies. You’ll still have access to the stock and dividend reports on the landing pages, … Read more

Trump Targets China with Tariffs

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Image: Shanghai, China (December 2016), Andrey Filippov Stock markets in the US are slowly building in the prospect of retaliation (a “trade war”) from China, as a result of President Trump’s new tariffs. We maintain our view that the stock market has been frothy for some time, and the recent volatility may just be the beginning of a reversion to normalized valuations, with or without concerns about global trade. By Brian Nelson, CFA The market may be using concerns about a “trade war” as a reason to sell overpriced stock. According to Factset, as of March 16, the forward 12-month price-to-earnings ratio for the S&P 500 is still over 17 times, one turn more than the 5-year average and nearly … Read more

The “Luck” and “Randomness” of Index Funds

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Please select the image below to download the document. Image shown, page 1 of 14. Tickerized for Valuentum’s coverage universe.

Trump’s Tariffs Ignite Concerns about Protectionism, Rising Input Costs

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Image Source: Michael Vadon President Trump is making true on his promises to protect the domestic steel and aluminum industries. Input costs may move higher for many global industrials, and the long-term implications of protectionist policy will be tested. We’re not expecting retaliation, but we can’t rule it out either. Rising rates remain our primary concern. Kris Rosemann and Brian Nelson, CFA If rising interest rates aren’t enough to give the market heartburn, President Trump announced March 1 that he will impose tariffs on the importation of steel and aluminum to the tune of 25% and 10%, respectively, citing national security concerns. Steel and aluminum stocks rallied hard on the news, but it left many of its industrial brethren under … Read more

Stocks Stage Comeback, US Government Budget Released

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Image shown: The performance of the Dow Jones Industrial Average since September 2017. The market continues to lick its wounds following the sell-off. We’re watching interest rates and technicals for signs where the market may go next. By Kris Rosemann and Brian Nelson, CFA The US 10-year Treasury yield (TLT, TBT) hit a four-year high before the open February 12, suggesting recent volatility in the equity markets is anything but going away in the near term, despite stocks bouncing back from the rough week that ended February 9. Rising interest rates may not create a financial crisis, but it could challenge the widely-held view that stock prices only increase over long-enough periods of time. After all, the past 40-year bull … Read more

Dividend Increases/Decreases for the Week Ending January 26

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Below we provide a list of firms that raised/lowered their dividends during the week ending January 26. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week 3M (MMM): now $1.36 per share quarterly dividend, was $1.17. AGCO (AGCO): now $0.15 per share quarterly dividend, was $0.14. Air Products and Chemicals (APD): now $1.10 per share quarterly dividend, was $0.95. Alaska Air (ALK): now $0.32 per share quarterly dividend, was $0.30. ALLETE (ALE): now $0.56 per share quarterly dividend, was $0.535. Alliance Data Systems (ADS): now $0.57 per share quarterly dividend, was $0.52. … Read more