VDC

Walmart Raises Its Fiscal 2025 Outlook

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Image Source: Walmart By Brian Nelson, CFA On August 15, Walmart (WMT) reported better than expected second quarter results with both revenue and non-GAAP earnings per share coming in higher than the consensus forecast. Consolidated revenue advanced 4.8% in the quarter led by Walmart U.S. comp sales up 4.2% and Sam’s Club comp sales up 5.2%, both measures excluding fuel. The company’s consolidated gross margin expanded 43 basis points thanks to strength in Walmart U.S. and Walmart International. Walmart’s adjusted operating income increased 7.2% in the quarter “due to higher gross margins and growth in membership income.” Global ecommerce and global advertising advanced 21% and 26%, respectively, in the period. Adjusted earnings per share increased 9.8%, to $0.67 per share, … Read more

Paper: Value and Momentum Within Stocks, Too

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Please select the image below to download, “Value and Momentum Within Stocks, Too:” Abstract: This paper strives to advance the field of finance in four ways: 1) it extends the theory of the “The Arithmetic of Active Management” to the investor level; 2) it addresses certain data problems of factor-based methods, namely with respect to value and book-to-market ratios, while introducing price-to-fair-value ratios in a factor-based approach; 3) it may lay the foundation for academic literature regarding the Valuentum, the value-timing, and ultra-momentum factors; and 4) it walks through the potential relative outperformance that may be harvested at the intersection of relevant, unique and compensated factors within individual stocks. To download the full report, please click here (pdf). ———- Actual results … Read more

Coca Cola’s Pricing Strength Continues to Power Results

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Image: Coca-Cola’s pace of price/mix expansion continues to drive strong performance. By Brian Nelson, CFA On February 13, Coca-Cola (KO) reported strong fourth quarter results that exceeded expectations on both the top and bottom lines. The standout metric in the quarter was organic revenue growth, which advanced an impressive 12% in the quarter thanks to a solid 9 percentage-point increase in price/mix and 3 percentage-point expansion in concentrate sales. The company’s outlook for 2024 was strong as well, with the company targeting organic revenue expansion of 6%-7% for the year, and we like the momentum behind Coca-Cola’s performance. The Dividend King continues to deliver for investors, and while shares are trading above our fair value estimate, investors can do a … Read more

Valuentum: Outlook for Europe, China Is Bleak

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Video: Valuentum’s Associate Director of Research and Co-Portfolio Manager of the simulated newsletter portfolios, Callum Turcan, shares his thoughts about the global economy. Europe is facing considerable pressure from energy prices, while China may face a mortgage meltdown. Join Valuentum for this brief 6 minute video to get up to speed on the goings-on of the global economy and what troubles may be lurking ahead. –——— Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information … Read more

High Yield: Diversified Refiner Phillips 66 A Good Replacement for Broad Consumer Staples Exposure

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Image Source: Phillips 66 Investor Update May 2022 By Valuentum Analysts Phillips 66 (PSX) is a top-notch operator in the downstream space with impressive refining and petrochemical assets supported by various midstream operations. Its investment-grade credit rating (A3/BBB+), with stable outlooks, better enables Phillips 66 to tap capital markets at attractive rates, something that we especially like when considering new ideas in the high yield dividend arena. A growing global middle class and a growing global population supports Phillip 66’s longer term outlook for refined product demand. We like the company as one of our newest high yield dividend considerations. Phillips 66’s near-term outlook is supported by the ongoing recovery in the global thirst for refined petroleum and petrochemical products as … Read more

Consumer Staples Struggling with Higher Inflationary Costs, Group Hits 52-Week Lows

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Image: The Vanguard Consumer Staples ETF (VDC) has notched a new 52-week low, and investors should note that we don’t think consumer staples entities are immune to an environment of higher inflation, where their price increases may not be fully absorbed by the consumer. Due to the commoditization of many of the goods produced in the consumer staples space, we think the consumer may instead trade down to off-brands or white label (“store brand”) products than pay up for branded merchandise. By Brian Nelson, CFA On June 10, the U.S. Bureau of Labor Statistics released its Consumer Price Index Summary for May showing inflation continues at an elevated pace, “with the indexes for shelter, gasoline, and food being the largest … Read more

Prologis Buying Duke Realty as Logistical Real Estate Market Consolidates Further

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Image Shown: Prologis Inc is merging with Duke Realty Corporation through an all-stock acquisition that will see Prologis cement itself as a logistical real estate powerhouse in the US and worldwide. Image Source: Duke Realty Corporation / Prologis Inc – June 2022 IR Presentation announcing the acquisition of Duke Realty by Prologis By Callum Turcan On June 13, Prologis Inc (PLD) announced it was buying Duke Realty Corporation (DRE) through an all-stock transaction worth ~$26 billion when including the assumption of debt. In the wake of severe capital market volatility, some major deals in the real estate investment trust (‘REIT’) space are still getting done. Back in May 2022, Duke Realty rejected Prologis’ previous offer worth ~$24 billion as being … Read more

Best Idea Dollar General Beats Consensus Estimates and Raises Guidance in the Face of Substantial Headwinds

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Image Shown: Dollar General Corporation’s GAAP net sales rose in the first quarter of fiscal 2022 on a year-over-year basis due to growth in its net store count. Image Source: Dollar General Corporation – May 2022 8-K SEC Filing  By Callum Turcan On May 26, Dollar General Corporation (DG) reported first quarter earnings for fiscal 2022 (period ended April 29, 2022) that beat both consensus top- and bottom-line estimates. Even in the face of major supply chain issues and inflationary headwinds, Dollar General modestly increased its net sales and same-store sales growth guidance for fiscal 2022 and maintained its other forecasts. We include Dollar General in our Best Ideas Newsletter portfolio as we are big fans of its resilient business model, strong cash flow … Read more

High-Yielding Philip Morris Adeptly Navigating Exogenous Shocks

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Image Shown: In the face of major exogenous shocks, Philip Morris International Inc was still able to put up solid operational and financial performance in the first quarter of 2022. Image Source: Philip Morris International Inc – First Quarter of 2022 IR Earnings Presentation By Callum Turcan There are a lot of reasons to like Philip Morris International Inc (PM) as a high-yielding income growth opportunity. Its portfolio includes numerous top selling cigarette brands including Marlboro, L&M, Chesterfield, Parliament, and others. After splitting with Altria Group Inc (MO) back in 2008, Philip Morris has the right to sell these cigarette brands in international markets while Altria Group has the right to sell these branded tobacco products in the US market. … Read more

Shares of Newsletter Portfolio Idea Johnson & Johnson Off to the Races!

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Image Shown: Shares of Johnson & Johnson, an idea in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, are shifting higher. By Callum Turcan On April 19, Johnson & Johnson (JNJ) reported first-quarter earnings for 2022 that missed consensus top-line estimates but beat consensus bottom-line estimates. The company lowered its guidance for 2022, but shares of JNJ rallied during regular trading hours that day as its underlying performance remains strong. J&J suspended guidance for its coronavirus (‘COVID-19’) vaccine sales, though we want to stress that these sales were not needle-moving as it concerns our estimate of the company’s fair value. The firm was selling the vaccines on a not-for-profit basis and didn’t intend to change that until the … Read more