DKS

Stock Report Updates

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In our 16-page equity research reports, we offer a fair value estimate for each company based on a rigorous and transparent discounted cash flow process, assess the attractiveness of a stock based on a firm-specific margin of safety, and provide a relative valuation comparison in the context of the company’s industry and peers. Each report includes detailed pro forma financial statements, explicit fundamental forecasts, and scenario analysis. A cross section of the ValueCreation and ValueRisk ratings provides a financial assessment of a company’s business quality (competitive position), while the ValueTrend and Economic Castle ratings offer insight into the trajectory of a firm’s economic profit creation (ROIC versus WACC). Included in each 16-page report is a company’s rating on the Valuentum Buying Index (VBI), a methodology that combines rigorous financial and valuation analysis with … Read more

Nike’s Fourth-Quarter Fiscal 2023 Earnings Miss Not Tragic But Better Opportunities Elsewhere

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Image: Valuentum By Brian Nelson, CFA On June 29, Nike (NKE) reported fourth-quarter fiscal 2023 results for the period ending May 31, 2023. During the quarter, revenue advanced 5% and 8% on a currency-neutral basis, but investors mostly focused on Nike’s bottom line, where diluted earnings per share fell 27%, to $0.66, missing the consensus estimate by a couple pennies. The firm expects material improvement in fiscal 2024, but we’re skeptical of just how much. Nike continues to face increased product input costs as well as elevated freight and logistics expenses while consumers continue to take advantage of marked-down merchandise, pressuring margins. Though higher prices in some categories have helped mitigate Nike’s weak overall earnings performance, the firm’s gross margin … Read more

ALERT: Big Yield Additions to Dividend Growth Newsletter Portfolio and High Yield Dividend Newsletter Portfolio

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  Image Source: Mike Cohen By Brian Nelson, CFA  With the federal funds rate standing at 5%-5.25%, the hurdle rate for yield in the Dividend Growth Newsletter portfolio and High Yield Dividend Newsletter portfolio is much higher these days. We’re not at all worried about a recession as that was largely priced in during 2022, and we’re looking ahead to strong nominal GDP and huge opportunities within artificial intelligence [AI].  Though we may add a dividend grower that is yielding below the 5% yield threshold to the Dividend Growth Newsletter portfolio with expectations for breakneck dividend-per-share expansion in the future, these days we’re looking for a couple incremental ideas that have yields already much higher than the 5% mark to … Read more

Dick’s Sporting Goods Trades at Less Than 10x Expected Fiscal 2023 Earnings; We Like Shares

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Image Source: Dick’s Sporting Goods By Brian Nelson, CFA When it comes to retail exposure, Dick’s Sporting Goods (DKS) is one of our top considerations. The company reported strong first-quarter fiscal 2023 results for the period ending April 29, 2023, that showed 3.4% same-store-sales growth and a 19% advance in non-GAAP earnings per diluted share. For fiscal 2023, management is targeting positive same-store sales expansion and earnings per diluted share in the range of $12.90-$13.80, implying that shares are trading at less than 10x expected fiscal 2023 earnings. The company has considerable long-term operating lease liabilities, but it has a net cash position. Dick’s Sporting Goods raised its dividend considerably recently, and we continue to like shares in the Dividend … Read more

Earnings Roundup: DE, WMT, CSCO, HD, FL

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By Brian Nelson, CFA Deere & Company (DE) is a tried-and-true industrial giant. The company’s dealer network offers it a strong competitive advantage, and while the company’s business ebbs and flows with the general economic environment, the firm has been able to drive impressive product pricing increases of late. During the firm’s first-quarter fiscal 2023 results (ending April 29, 2023), released May 19, Deere’s worldwide net sales advanced an impressive 30%, while net income per share leapt to $9.65 per share from $6.81 per share in the same period a year ago. Deere’s pricing power continues to be on display. In its ‘Production & Precision Agriculture’ division, sales jumped more than 50% in the quarter, while operating profit more than … Read more

Dividend Growth Newsletter Portfolio Holding Dick’s Sporting Goods Doubles Dividend, Shares Soar!

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Image Source: Dick’s Sporting Goods’ shares are breaking out of a very nice technical cup-and-handle pattern, and we continue to like shares as an idea in the Dividend Growth Newsletter portfolio. Image: TradingView By Brian Nelson, CFA We include Dick’s Sporting Goods (DKS) as an idea in the Dividend Growth Newsletter portfolio. On March 7, the company reported its fourth-quarter results for the three months ended January 28, 2023. Comparable store sales growth in the quarter came in at 5.3%, which was more than double that which consensus was looking for. The executive team also more than doubled its dividend (105%+), to $4.00 per share on an annualized basis, resulting in a ~2.8% forward estimated dividend yield on the basis … Read more

Walmart Warns: “Prices Are Still High and There Is Considerable Pressure on the Consumer”

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  Image Source: Mike Mozart By Brian Nelson, CFA As we wrote in “The Fed ‘Can’t Stop, Won’t Stop” in early January, the trade-down trends that we’re seeing in big box retail and with groceries, more generally, are interesting. Inflation started to accelerate with food-at-home prices moving aggressively higher in early 2022, and consumers have been trading down to better value. It probably wasn’t until egg prices soared, however — driven in part by a shortage of egg laying chickens (not just inflationary pressures) – that tipped everyday consumers to budget more cautiously, and the largest big box retailer in Walmart (WMT) is seeing this impact first-hand. Here’s what’s happening on the ground, per Walmart’s CEO Doug McMillon on the … Read more

The Dividend Cushion Ratio Warned of Risk to V.F. Corp’s Dividend

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Image: The Dividend Cushion ratio is one of the most powerful financial tools an income or dividend growth investor can use in conjunction with qualitative dividend analysis. The ratio is one-of-a-kind in that it is both free-cash-flow based and forward looking. Since its creation in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90%. By Brian Nelson, CFA V.F. Corp (VFC) cut its quarterly dividend by more than 40% on February 7, to a quarterly rate of $0.30 per share from $0.51 per share previously. The cut is yet further evidence of the importance of paying attention to the cash-based sources of intrinsic value–net cash on the balance sheet and … Read more

Our Reports on Stocks in the Discretionary Spending Industry

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Dividend Yield: Estimated on a forward-looking annualized basis. VBI: The Valuentum Buying Index, a timeliness indicator that overlays a price-to-fair-value estimate consideration. Fair Value Estimate: Derived by Valuentum’s enterprise valuation process. Dividend Cushion ratio: A ratio assessing the health of the dividend (the higher, the better). Data as of the date of this article. Individual company reports may have been updated subsequent to the publishing of this article, so please download a company’s stock and dividend report for its latest information and data. Note: The data in the tables of each of the below companies’ respective stock pages is updated the weekend after the publishing of this update. Please click on a company name below to view the corresponding equity … Read more

Nike’s Weak Earnings Growth, Markdowns, and Lofty Inventory Levels Still Telling of a Struggling Consumer

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  Image Source: Valuentum By Brian Nelson, CFA The health of the consumer continues to be one of the biggest questions heading into 2023. Many consumers are working through the excess savings garnered via COVID-19 stimulus (and many market observers expect this savings to run out by mid-2023) and credit card debt is on the rise. Inflation is taking a bite out of consumer discretionary spending as more and more of consumer financial capacity is being allocated to necessities including food and grocery items. Food at home costs have soared, and many have had to cut back in other areas. Nike’s (NKE) second-quarter fiscal 2023 results, released December 20, showed a very discerning consumer that is looking to drive a … Read more