HWM

Lockheed Martin On the Road to Recovery, Improved Free Cash Flow Visibility

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  Image: Heath Cajandig By Brian Nelson, CFA It was late October 2021 when Lockheed Martin (LMT) took a “big bath” of a third quarter. Back then, Lockheed Martin said it expected 2022 net sales to fall from 2021 levels, to ~$66 billion. At the time, we had been expecting revenue to advance to north of $70 billion during 2022, so the change in trajectory was quite pronounced. Its backlog fell to $134.8 billion from $147.1 billion on a year-over-year basis in the quarter, too. To say that the market was surprised in October would be an understatement because LMT’s stock fell double-digits following the news. Fast forward a few months, and Lockheed Martin is working to get things back … Read more

Don’t Throw the Baby Out with the Bathwater

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Image: Erica Nicol Takeaways: Junk tech should continue to collapse, but the stylistic area of large cap growth and big cap tech should remain resilient. Moderately elevated levels of inflation coupled with interest rates hovering at all-time lows isn’t a terrible combination. In fact, it’s not bad at all. The markets are digesting the huge gains of the past few years so far in 2022, and the excesses in ARKK funds, crypto, SPACs, and meme stocks are being rid from the system. Our best ideas are “outperforming” the very benchmarks that are outperforming everyone else. The BIN portfolio is down 6.4% and the DGN portfolio is down 3.2% year to date. The SPY is down 7.8%, while the average investor … Read more

Hard Work and the Trust That Binds

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Image Source: Terry Johnson By Brian Nelson, CFA We’ll have our traditional Valuentum Weekly email coming out on Sunday, and I’m excited to say our team is putting the finishing touches on our technology industry update, so we’ll have a whole bunch of fresh reports for you to look at Sunday evening/Monday morning. It’s easy to forget how much we’ve been through the past two years. Often, we forget how helpful the warning that markets were going to crash was the weekend before they did on February 22, 2020, “Is a Stock Market Crash Coming? – Coronavirus Update and P/E Ratios,” how we thought dollar-cost-averaging made sense at the bottom in March 2020, and how we went “all-in” in April … Read more

Lockheed Martin Shocks the Market

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Image: After years of backlog growth at Lockheed Martin, the third quarter of 2021 revealed a sharp year-over-year decline to the tune of ~8.3%. The company’s outlook also left a lot to be desired. By Brian Nelson, CFA Lockheed Martin (LMT) reported mixed third-quarter 2021 results Tuesday, October 26, but “mixed” might be too gracious of a word. Though it did beat the consensus number for third-quarter non-GAAP earnings per share, revenue didn’t just miss marginally, but by more than a $1 billion, with the top line falling 2.8% on a year-over-year basis. Clearly, Lockheed had promised more than it could deliver, and we had been taken in by the optimism. We expect to lower our fair value estimate. There’s … Read more

Supply Chain Issues Won’t Disrupt Honeywell’s Free Cash Flow Trajectory

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Image: Honeywell’s third-quarter 2021 results were mighty impressive. We continue to like what we see at this industrial dividend growth giant. Image Source: Honeywell By Brian Nelson, CFA On Friday, October 22, Dividend Growth Newsletter idea Honeywell (HON) reported mixed third-quarter results where revenue growth (+8.7%) fell just short of expectations, while non-GAAP earnings per share bested the consensus mark by a modest margin. GAAP earnings fell just shy of the market’s views heading into the results, but we continue to like Honeywell as an idea in the Dividend Growth Newsletter portfolio. The quarterly headlines were impressive. Organic sales advanced 8% in the quarter, with expansion in all four of its business segments. The company’s operating margin leapt 180 basis … Read more

Fastenal’s Latest Earnings Update Indicates US Economic Recovery Continues

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Image Source: Fastenal Company – Third Quarter of 2021 IR Earnings Presentation By Callum Turcan On October 12, Fastenal Company (FAST) reported third quarter 2021 earnings that beat top-line consensus estimates and matched bottom-line consensus estimates. The company’s latest earnings report reinforces our thesis that the US economy is continuing to recover from the worst of the coronavirus (‘COVID-19’) pandemic. In 2020, Fastenal generated over 85% of its total sales in the US. Fastenal provides products and services in the decentralized maintenance, repair & operation (‘MRO’) industry, a space where the company attempts to gain an advantage over distribution by locating its operations as close as possible to the economic point of contract with its customers. Earnings Update Within its … Read more

Dividend Increases/Decreases for the Week July 23

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Below we provide a list of firms that raised their dividends during the week ending July 23. 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 1st Source (SRCE): now $0.31 per share quarterly dividend, was $0.30. Applied UV Inc – 10.50% PRF PERPETUAL – Ser A (AUVIP): now $0.2188 per share quarterly dividend. Aquesta Financial (AQFH): now $0.14 per share annual dividend, was $0.12. Bank of Marin Bancorp (BMRC): now $0.24 per share quarterly dividend, was $0.23. BCB Bancorp (BCBP): now $0.16 per share quarterly dividend, was $0.14. Bryn Mawr Bank … Read more

Lockheed Martin Boosts Guidance

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Image Source: Lockheed Martin Corporation – First Quarter of Fiscal 2021 IR Earnings Presentation By Callum Turcan Geopolitical tensions are on the rise worldwide. In recent weeks, Russian forces started massing on the border with Ukraine (though reportedly, those forces are beginning to pull back) as acrimony between Western governments and Russia continues to grow while the situation in Ukraine (i.e., Russia’s annexation of Crimea and involvement in eastern regions of Ukraine) remains in paralysis. Tensions between the US and China are building as well with an eye towards trading relations, espionage of all kinds, and cyber-attacks. The geopolitical backdrop indicates that the trajectory of defense spending is likely to continue growing in key developed and developing nations worldwide going … Read more

General Electric Provides Upbeat Outlook for 2021

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Image Shown: An overview of GE’s cash flow forecasts on a divisional basis for 2021. Image Source: General Electric – Fourth Quarter of 2020 IR Earnings Presentation By Callum Turcan The ongoing coronavirus (‘COVID-19’) has weighed negatively on the industrial sector for most of 2020, before the space started to recover during the latter part of the year. On January 26, industrial conglomerate General Electric Company (GE) reported fourth quarter earnings for 2020 that beat consensus top-line estimates but missed consensus bottom-line estimates. The company’s business operating segments are broken down into its various GE Industrial divisions (‘Power,’ ‘Renewable Energy,’ ‘Aviation’ and ‘Healthcare’) and GE Capital. What really impressed us was that GE Industrial’s free cash flow came in at … Read more

ALERT: Raising Cash in the Newsletter Portfolios

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January 27, 2021 ALERT: Raising Cash in the Newsletter Portfolios We are raising the cash position in the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio to 10%-20%. — By Brian Nelson, CFA — Our research has been absolutely fantastic for a long time, but 2020 may have been our best year yet. You can read the 2020 recap here. With the S&P 500 trading within our fair value estimate range of 3,530-3,920 (and the markets rolling over while showing signs of abnormal behavior), we’re raising the cash position in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to 10%-20%. — For more conservative investors, the high end of this range may even be larger, especially … Read more