ARKQ

Some Questions Answered: The Fair Value Estimate Range and ROIC

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Q: In the 16-page stock reports, why doesn’t the ‘percentage undervalued / overvalued’ match up to the actual discount/premium to Valuentum’s fair value estimate of the company? A: We view the intrinsic value of a company as a Fair Value Range, not necessarily a single point estimate, so the undervalued and overvalued calculations match up to either the low fair value estimate or high fair value estimate, respectively. Within the context of a margin of safety, we wouldn’t necessarily view a company to be worth precisely $55 per share, for example; instead we’d view the company as worth between $50 (low end fair value estimate) and $60 per share (high end fair value estimate), with the low and high fair … Read more

Cat or Deere or Neither?

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Image: Deere equipment. Deere’s stock has been a high-flyer during the past several months. By Brian Nelson, CFA The SPDR S&P Metals and Mining ETF (XME) measures a broad swath of entities tied to the metals and mining sector, weighting names such as Cleveland Cliffs (CLF), United States Steel (X), Arconic Corp (ARNC), Worthington Industries (WOR), and Freeport-McMoran Inc. (FCX) near the top. It also includes one of our favorite miners, Newmont Corp (NEM), but we generally don’t like the metals and mining space, more generally. Year-to-date, the sector is down ~17% and ~11% during the past 12 months; meanwhile, the S&P 500 is up ~7% year-to-date as it has advanced ~12% during the past 12 months. Metals and mining … Read more