TSN

Earnings Roundup: Unilever, Procter & Gamble, Kimberly-Clark

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We love the business models of consumer staples, but recent fundamental performance hasn’t been great, and valuations are a bit stretched. Unilever is blaming natural disasters in the US for its underlying sales growth shortfalls, Procter & Gamble has to deliver now that it defeated Nelson Peltz, and Kimberly-Clark’s meager top-line expansion may not support its valuation. A good business does not always make a good stock. By Brian Nelson, CFA Consumer staples stocks (VDC, FSTA, XLP) are fundamentally-sound entities that sell everyday items that consumers need regardless of the ups and downs of the economic cycle. That makes their business models quite resilient through thick and thin, but it also means that many are household companies that everybody knows … Read more

Amazon To Buy Whole Foods: Not Creative Destruction, Just Destruction

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Image Source: Mike Mozart Amazon announced plans to buy Whole Foods. We’re viewing the news as affirmation of our decision to stay largely away from retail exposure in the newsletter portfolios. We think a bidding war for Whole Foods is possible, mostly to keep it and its real estate out of the hands of Amazon, potentially setting up for a true “winner’s curse” scenario. The winner will overpay. By Brian Nelson, CFA We’re not pleased, but then again, it’s okay. Amazon (AMZN) announced June 16 that it will buy high-end grocer Whole Foods (WFM) for $42 per share in cash. Though we mentioned that Amazon was expanding into the grocery store market anecdotally, we must say that it still is … Read more

Valuentum’s 3 Breakthroughs in the Field of Finance and More

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Valuentum’s President Brian Nelson pauses for a picture before speaking at the CFA Society of Houston in March 2017. By Valuentum Editorial Staff Let’s cover Valuentum’s 3 major breakthroughs in the field of finance. The first one is big and may challenge you to rethink everything you think you know about investing. 1. On a logical framework, Valuentum has debunked John C. Bogle’s landmark syllogism that has paved the way for the concept of index investing. Index investing has been built on a logical shortcoming, whether supported by evidence or not. We think it is important that the investment community know of this. Read (pdf): The “Luck” and “Randomness” of Index Funds (2018), Brian Nelson, CFA See video documentation: /FALLACY_of_Index_Funds To … Read more

The Under-reported Story: The Presence of Avian Influenza May Be the “New Norm”

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Source: Cal-Maine, Valuentum estimates; Urner-Barry Southeastern Regional Large Egg Market Price (per dozen eggs) Egg prices are soaring as the avian flu has run rampant across farms in Midwestern states. According to some studies, the outbreak has reduced the national flock by more than 10%, and it is the largest outbreak on record in US history. Egg prices are the highest they’ve been in some time, and investors may not be fully aware of the implications. A state of emergency has been declared in Iowa, where the impact may be the worst. Scientists believe the virus may recede as temperatures in the Midwest increase, but every company in the food products industry, big or small, is being impacted at the … 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

The M&A Environment Remains Robust

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Let’s take a look at a few deals that hit the wires recently – some proposed, some speculated. Analog Devices (ADI) Scoops Up Hittite Microwave (HITT) Norwood, MA (06/09/2014) – Analog Devices, a global leader in high-performance semiconductors for signal processing applications, and Hittite Microwave Corporation, an innovative designer and manufacturer of high performance integrated circuits, modules, subsystems and instrumentation for RF, microwave and millimeter wave applications, announced that the two companies have entered into a definitive agreement whereby ADI will acquire Hittite for $78 per share in cash. The closing price of Hittite’s common stock on June 6, 2014 was $60.56 per share. This agreement reflects a total enterprise value for Hittite of approximately $2 billion. ADI expects to … Read more

Hormel’s Guidance Cut Isn’t Drastic

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Pork producer Hormel (click ticker for report: ) announced early Tuesday morning that the company has lowered its fiscal year 2013 earnings outlook to $1.88-$1.96 per share from $1.93-$2.03 per share. Shares are responding negatively to the news, but remain up 26% year-to-date. A 5-cent per share reduction in the annual earnings outlook will not have a material impact on our fair value estimate. While shares sold off aggressively Tuesday morning, we think it had less to do with a change in underlying fundamentals, and more to do with some profit taking. In fact, shares of the pork producer have traded at or above the high end of our fair value range for the past few months. The acquisition of … Read more

Special Dividends: A Fantastic Idea…Fiscal Cliff Has Started a Trend

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Throughout 2012, we’ve seen a huge surge in special dividends, with 59 companies in the Russell 3000 declaring special dividends from September to November compared to just 15 during the same period last year. The impetus is obvious: the impending fiscal cliff has left both companies and investors wondering what to do with the mountains of cash sitting on pristine balance sheets and low return prospects. As a result, companies across different sectors are declaring special one-time dividends. Costco (click ticker for report: ) will pay a one-time special dividend of $7 per share (amounting to $3 billion) as a reward to shareholders, while Tyson Foods (click ticker for report: ) declared a special one-time payment of $0.20 per share. … Read more