RUTH

Darden Restaurants Adapts to Survive

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Image Source: Darden Restaurants Inc – Fourth Quarter Fiscal 2020 IR Earnings Presentation By Callum Turcan On June 25, the owner of the Olive Garden, LongHorn Steakhouse, and Cheddar’s Scratch Kitchen restaurant chain brands Darden Restaurants Inc (DRI) reported fourth quarter fiscal 2020 earnings (period ended May 31, 2020) that matched consensus top-lines estimates and beat consensus bottom-line estimates. Please note the fourth quarter of fiscal 2020 included an extra week versus the same period the previous fiscal year. Darden Restaurants saw its GAAP revenues drop by 43% year-over-year which led to the firm generating a large GAAP net loss of $0.5 billion last fiscal quarter as the ongoing coronavirus (‘COVID-19’) took its toll on the company’s operations. Background As … Read more

Reiterating Our Bullish Long-Term View on Stocks

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Reiterating Our Bullish Long-Term View on Stocks Image: The NASDAQ 100 Index remains resilient, bouncing off support, after breaking out to new highs recently. Some of our best ideas are included in the NASDAQ 100, and our favorite concentrations include exposure to big cap tech and large cap growth. We continue to be bullish on equities for the long run. — By Brian Nelson, CFA — Hi everyone, — Hope you are doing great! First, I wanted to let you know that we’re still working to get the second release of the survey out to you. Your participation in the survey will determine whether we launch a new business, so please do fill it out and keep a watchful eye out for … Read more

ICYMI: Survey Coming Later Today, More Market Volatility Expected

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ICYMI: Survey Coming Later Today, More Market Volatility Expected Image: The market’s levels of volatility so far in 2020 have been among the greatest in history. Expectations for increased volatility in the marketplace as a result of the proliferation of price-agnostic trading (indexing and quantitative trading) is a key theme of Valuentum’s text, Value Trap: Theory of Universal Valuation. We continue to emphasize the importance of due diligence, enterprise valuation, behavioral thinking, the information contained in prices, and stock selection across equity portfolios. Page 256. — Hi everyone, — Hope you all are doing great!  — Many of you have already filled out the survey, and I can’t thank you enough for that. For those that may have missed the email housing … Read more

*ALERT* Scribbles and More Newsletter Portfolio Changes

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*ALERT* Scribbles and More Newsletter Portfolio Changes Image: Why are stock prices increasing while the near-term economy and near-term earnings outlook isn’t as bright as before…How unlimited quantitative easing, runaway government spending, increased inflation expectations impact equity values…Why this year’s earnings expectations or next year’s earnings expectations don’t matter much…Why Valuentum thinks equity values are rising today, even as the near-term outlook remains unclear. Scribbles on page 76 of Value Trap. — “I know it sounds crazy to say so during a global pandemic and during a recession, but the right multiple and the right earnings to use to value this market is an 18-20x multiple on $196 earnings, putting a fair value range on the S&P 500 today of 3,530-3,920. The … Read more

Data from Visa Indicates the Economic Outlook is Improving

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Image Shown: Visa Inc reports that US processed transactions volumes across its payment processing network improved materially on a year-over-year basis in May, relatively speaking, versus the downturn seen in the second half of March and the first half of April. Image Source: Visa Inc – 8-K SEC Filing By Callum Turcan One of our favorite secular growth industry tailwinds is happening in the payment processing, payment solutions, and financial technology space. The world is shifting toward a “cashless” society, and that has accelerated due to the ongoing coronavirus (‘COVID-19’) pandemic, in part due to the rise of e-commerce and in part due to the preference of many consumers to use contactless payment options when in physical stores. Visa Inc … Read more

Valuentum Research Update

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— Valuentum Research Update — Hi everyone! — Hope you all are doing great! I must say I couldn’t be more pleased with the research we’ve been putting out, and thank you very much for your continued interest. In this piece, I wanted to get some of our latest work to you.  — First, please note that we’ve done a great job holding the line on many of our fair value estimates (ranges) on our website. Many stocks have been bouncing back, and we’re glad we didn’t rush through any updates. Updating fair value estimates (ranges) too frequently doesn’t make much sense to us. We’re after the right answer, not any answer.  — Second, our team has been busy writing up some very … Read more

ICYMI — Stay Optimistic. Stay Bullish. I Am.

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  Image: My great-grandfather (second from left) and his buddies in the 88th Division of the United States Army during World War I, at the time of the Spanish Flu pandemic of 1918-1919. He would serve under Major General William Weigel, become proficient in the 37mm gun, and take part in the largest offensive in U.S. military history, the Meuse-Argonne Campaign. As a corporal, he would survive the Great War and the Spanish flu pandemic, returning to the U.S. in May 1919 from the port of Saint-Nazaire, France on his way to Omaha, Nebraska.  This article was published May 15, 2020. — New (updated June 4): We continue to encourage members to study the ‘Duration of (Stock) Value Composition’ in Value Trap: Theory of … Read more

Dow Jones Surges Past 27,000; Bull Market Continues!

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Dow Jones Surges Past 27,000; Bull Market Continues! — By Brian Nelson, CFA — Hi everyone! — What a bull market off the lows we are having. I don’t think we’re finished, as I have pounded the table time and time and time again about how bullish I am. In the words of Frank Sinatra, “The Best Is Yet to Come,” and I truly believe that. Yesterday, I explained to readers why we’re seeing this huge rally, “Stay Optimistic. Stay Bullish. I Am.”  — If you understand the duration and composition of equity value (page 74-83 in Value Trap), you can start focusing on what drives share prices and returns. How else could a market rally this much with 13% unemployment, right? How wonderful it … Read more

Encouraging Trends at Cracker Barrel, Consumers Coming Out to Spend

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Image Source: Cracker Barrel By Brian Nelson, CFA Cracker Barrel (CBRL) reported fiscal third-quarter results June 2. While we can go into the numbers, there isn’t really much to read into the reported quarterly performance, as the market continues to look forward to better times. Many readers are aware of the dividend cut at Cracker Barrel, “Jobless Claims Spike; Restaurants, REITs in Trouble,” and that it suspended its fiscal 2020 guidance (not unlike many other firms), but what we found to be most encouraging was the company commentary on the conference call. Cracker Barrel is encouraged by recent top line trends, noting that it has “seen sequential improvements in weekly comparable store sales since (it) began reopening dining rooms,” and … Read more

ALERT: Important Recap of Valuentum’s Research and Market Events

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ALERT: Important Recap of Valuentum’s Research and Market Events: Unequivocally Bullish, S&P Target Range Was Withdrawn Last Month, Continued Focus on Individual Stock Selection with “Moaty” Operations, Huge Net Cash Positions, Strong Expected Future Free Cash Flows, Established Recurring Business Models, and Otherwise Attractive Economic Castles. Big Cap Tech and Large Cap “Growth” Remain Our Favorite Allocations. — Image: Breaking out to new highs, Facebook (FB) is a top weighting in the Best Ideas Newsletter portfolio (which includes our favorite capital appreciation ideas in a portfolio setting). The social media giant is surging on news of a new Shops feature, something we’ve been expecting and raving about with respect to its potential for years–as we maintain our view that, anti-trust considerations aside, Facebook … Read more