KMX

Debt, Debt and More Debt

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Image Source: Michael Fleshman Many readers may be familiar with the rhetoric of the Presidential Election Cycle of 2016 and Democratic hopeful Bernie Sanders’ view on making “college tuition free and debt free.” You can take a read of the 6 steps Bernie will take as president to make college debt-free here. Many may find his last point rather intrusive to the heartbeat of the American economy and the driver behind innovation and standard-of-living improvements, but we’ll leave that conversation for another day. But what’s the shocking statistic, right? Get this – and I hope you are sitting down. According to an article by the Journal, “more than 40% of Americans who borrowed from the government’s main student-loan program aren’t … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

Surveying Results at the Auto Parts Retailers

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Monday was a day auto-parts retailer Pep Boys (PBY) would rather soon forget. The company reported fiscal third-quarter results (ending November 2013) that came up short with consensus expectations. Comparable same-store sales at the automotive retail chain declined 2.8% (well below its targets for low-single-digit expansion), consisting of a 0.5% comparable service revenue increase and a 3.6% comparable merchandise sales decrease. The firm swung to a modest quarterly net profit during the period, but its nine-month diluted earnings per share profit of $0.19 was significantly worse than the $0.51 per share profit recorded in the prior-year period. Same-store sales are decelerating as the quarterly mark (-2.8%) is materially worse than the nine-month tally, which was -1%. Through the first nine-months of … Read more

Used Cars Sales Remain Spectacular at CarMax

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Used and wholesale car dealership CarMax (click ticker for report: ) reported wonderful results for its fiscal year 2013 fourth quarter. Revenue surged 14% year-over-year to $2.8 billion, easily exceeding consensus estimates. Earnings per share rose 12% year-over-year to $0.46, in-line with consensus expectations. With all of the hoopla surrounding new car purchases, CarMax continues to dominate the used car market. Comparable store unit sales increased 6% during the quarter, while total used unit sales jumped 12%. Average sales prices increased 4% year-over-year to $19,287, benefitting from increased market share in the 0-6 year old car market as well as constrained used vehicle supply. The stunning resiliency of used car prices indicates the robust level of demand for car upgrades … Read more

The New Car Effect Hits CarMax

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Used-car dealer CarMax (click ticker for report: ) reported stellar third-quarter results Thursday morning. Revenue surged 15% year-over-year to a better-than-anticipated $2.6 billion. Earnings also grew 15% year-over-year to $0.41 per share, easily exceeding the consensus estimate. Our fair value estimate is unchanged. Given how the new-car recovery continues, it may seem surprising that CarMax would see such strong sales gains. Used-car revenues jumped 17% year to $2.06 billion, with total units jumping 16% and comparable store units jumping 12% compared to the same period last year. However, this shouldn’t be too surprising, in our view, given the aging fleet of cars in the US coupled with the better used-car inventory stimulated by the new car recovery. As consumers purchase … Read more

8 Announcements and Top Research You May Have Missed

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8 Announcements. This article was sent to members via email March 27. By Brian Nelson, CFA Hi everyone, Brian here. Trust you are doing great! Here are eight announcements I want you to be aware of: Everything we do is for our members. We’re very proud of the outperformance of the Best Ideas Newsletter portfolio, that we’ve never had a dividend cut in the Dividend Growth Newsletter portfolio, that our high-yield ideas are holding up very well, and the success rates of the Exclusive capital-appreciation ideas and short-idea considerations are running at approximately 80%. We’re proud to be your research partner. The odds of a Fed rate cut are going up as yield-curve inversion continues to threaten. The risks are more behavioral in … Read more

VIDEO/TRANSCRIPT: 2021 Valuentum Exclusive Call: Inflation Is Good

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Valuentum’s President Brian Michael Nelson, CFA, explains why investors should not fear inflation, why government agencies such as the Fed and Treasury are prioritizing something other than price discovery, why the 10-year Treasury rate is a must-watch metric, and why Valuentum prefers the moaty constituents in large cap growth due to their net cash rich balance sheets, tremendous free cash flow generating potential, and secular growth tailwinds. Transcript: << Valuentum’s Best Ideas On behalf of the Valuentum team, I’d like to present to you our prepared remarks for the Valuentum Exclusive conference call for 2021. It is both an honor and a privilege to share our team’s work with you, and I personally am very grateful for your continued interest … Read more

Nelson: The 16 Most Important Steps To Understand The Stock Market

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A previous version of this article appeared on our website July 21, 2013. Refreshed and updated throughout, as of July 2018. By Brian Nelson, CFA After earning my MBA at the University of Chicago Booth School of Business and training stock and credit analysts from large organizations over the past decade or so, I have heard just about every question (though I admit I am still surprised by many things and remain a very humble student of the markets). I’ve also spent years perfecting the discounted cash flow process for large research organizations such as Morningstar and studied under one of the most famed aggressive growth investors of all time, Richard Driehaus. My knowledge runs the gamut from value through … Read more