FIZZ

Owens-Illinois’ Debt Load Is Daunting, We Are Staying Away From This Value Trap

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Image Source: Owens-Illinois Inc – IR Presentation By Callum Turcan Owens-Illinois Inc (OI) is a global manufacturer of glass packaging products, and we see the firm as a major beneficiary of the shift in consumer preferences towards non-plastic packaging options for health and environmental reasons. As of this writing, shares of OI yield 1.9% on a forward-looking basis after management initiated a new dividend policy that saw common quarterly payouts commence in 2019. While Owens-Illinois’ share price below $11/share, as it is at the time of this writing, appears cheap at first glance because shares are trading at a steep discount to our $17 per share fair value estimate, we caution that its technicals are telling another story. Investors were … Read more

Coca-Cola’s Valuation Is Stretched

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Image Source: Broderick By Callum Turcan Coca-Cola Company (KO) posted a great second quarter report for 2019 on July 23, sending shares up 6% on the day. Management surprised the market by upgrading their forecast for Coca-Cola’s full-year performance with guidance for organic revenue, constant currency operating income, net operating cash flow, and capital expenditures for 2019 all getting a boost. We still think shares of KO are overvalued as the market has gotten ahead of itself. Consumer staples companies trading at premium valuations late in the business cycle are prime examples of how irrational exuberance can seep into every corner of the market. Furthermore, the IMF just downgraded global GDP growth projections for both 2019 and 2020, and while … Read more

Reviewing PepsiCo’s Latest Earnings

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Image Source: PepsiCo Inc – IR Presentation By Callum Turcan Maker of snacks and sugary beverages, PepsiCo Inc (PEP) posted second-quarter earnings for fiscal 2019 on July 9 that were positively received by the market. PepsiCo reaffirmed 2019 guidance calling for 4% annual organic revenue growth, a 1% decline in core constant EPS (3% decline when including an expected 200 basis point headwind from foreign currency movements) versus 2018 levels, and ~$4.5 billion in free cash flow generation. Shares of PEP yield 2.9% as of this writing and we like PepsiCo’s dividend coverage. However, please note that the company expects to spend $5.0 billion on dividends and $3.0 billion on share buybacks this year. Forecasted free cash flows will only … Read more

PepsiCo Fights off Forex Headwinds as it Gets Ready to Take on Amazon

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Image Source: PepsiCo Inc – IR Presentation By Callum Turcan While foreign currency headwinds are proving quite troublesome, PepsiCo continues to post strong organic growth that helped drive its outperformance during the first quarter of 2019. That strong performance will be needed as Amazon gets ready to enter the energy beverage arena. PepsiCo Inc’s (PEP) shares shot up to record highs on April 17 after posting first quarter results that clearly impressed the market. With shares now trading around $127 as of this writing, the beverage and snack giant yields 2.9% with decent dividend coverage going forward. The company beat consensus top and bottom-line estimates while reaffirming 2019E guidance, which signals to the market that management is confident in PepsiCo’s … Read more

FB/FIZZ Methodologically Speaking and CMG, AAPL, BA!

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By Brian Nelson, CFA Hi everyone, Hope you are doing great. There a few things I wanted to put on your radar this evening. We’re going to talk the importance of having CFA charterholder research at your advisory practice. We’ll discuss Facebook (FB) and National Beverage (FIZZ) in the context of our methodology, and we’re going to touch on a couple things at Chipotle (CMG), Apple (AAPL) and Boeing (BA). Did you hear about the 737 MAX 8? Not good. I also wanted to remind you of the new 40/40 Goal (click here), of which we are already making progress (the book reviews keep coming in). Thank you! First, just a quick reminder on the 40/40 Goal. We now have 15 reviews … Read more

Cola Giants Fourth Quarter Earnings and Valuation Distributions

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Image Source: Sean Loyless Coca-Cola and PepsiCo expect mid-single-digit organic revenue growth to continue in 2019, but currency headwinds are impacting reported figures. We’re less than enthused about the near-term free cash flow expectations of both companies, and tepid macroeconomic growth expectations and potentially elevated costs, such as freight, are weighing on near-term outlooks. By Kris Rosemann Coca-Cola’s Cautious 2019 Guidance Disappoints Image Shown: shares of Coca-Cola are trading in the ~$46 range as of this writing, which is just below the upper bound of our fair value range for shares. Shares of Coca-Cola (KO) tumbled following its fourth quarter 2018 earnings report, results released February 14, as it issued cautious guidance for 2019 due to, in the words of … Read more

Valuentum Stock Screeners

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This article was sent to members via email December 29. That email can be accessed at the link that follows this article. By Brian Nelson, CFA Hi everyone, I wanted to provide an update with respect to Valuentum’s stock screeners. We believe our stock screeners are among the most robust when it comes to providing forward-looking data, or data that is important with respect to the investment decision-making process. We publish screens in each of the monthly newsletters, but we also provide a basic weekly screener for download on the left column of the website, “Download Weekly Stock Screener (xls) — login required.”   We also have other products. The more robust DataScreener, for example, is part of the quarterly Financial … Read more

Market Mayhem — Alerts for Members

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During these extremely volatile times, it’s important to stay focused. On December 15, we informed all of our members to “Pay Attention.” Shortly thereafter, we notified members of the potential for a stock market technical breakdown. This morning, we offered a pre-market briefing about the importance of thinking about portfolio protection. For Best Ideas Newsletter and Dividend Growth Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=e2406cd6-c113-4344-8731-493f33fc44a4&id=preview For High Yield Dividend Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=b3ba530f-38b3-489a-ac96-2961dca89c6b&id=preview For Exclusive members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=ba6d90c0-4433-48b2-9b8a-aac4ddf9006e&id=preview We’re here for any questions. Please just let us know how we can help! Kind regards, Brian Nelson, CFA  brian@valuentum.com

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).