VZ

Report Updates — Did You Throw the Baby Out with the Bathwater?

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Hi everyone: Brian here. I hope you are having a nice Labor Day holiday weekend.  We wanted to bring your attention to a number of stock report updates. Both Alibaba (BABA) and Korn/Ferry (KFY) have registered one of the highest ratings (9) on the Valuentum Buying Index. To garner such a high rating, a company would have to be considered undervalued on a discounted cash-flow basis, undervalued on a relative value basis, as well as exhibiting strong technical/momentum indicators. Alibaba looks like it could pop quite a bit from current levels after technically basing for months, and while risks related to the name are tremendously high given rising U.S.-China tensions, shares sure look undervalued to us. Korn/Ferry’s shares also look … Read more

AT&T: A High Yield Dividend Disaster, Now An ESG Nightmare

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Image: AT&T’s shares continue to disappoint. By Brian Nelson, CFA There are sometimes reasonable risks to take with respect to new ideas, and AT&T (T) may have been one of them a few years ago. But not today, in our view. We removed the company from the High Yield Dividend Newsletter portfolio way back in November 2021, and we’re not looking back. The company has been struggling for a long time now, and we don’t think the future is very bright. Another dividend cut cannot be ruled out. AT&T’s dividend story has been a very convoluted one. When the company filed its 2020 Annual Report in February 2021, CEO John Stankey noted that the executive team would support the dividend. … Read more

Subscribe to the Valuentum ESG Newsletter!

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*BONUS* Included in the ESG Newsletter is an ESG-focused simulated newsletter portfolio! Subscribe today. ESG Newsletter $1,000.00 Pay now “The investing landscape has changed dramatically over the past decade and part of that transformation has involved US households placing a much greater emphasis on “ethical” and “sustainable” investing strategies. A decade ago, funds managed with Environmental, Social, and Governance (‘ESG’) standards in mind were a small part of the investing universe at-large, but that is no longer the case. Data from Morningstar notes that US funds considered “sustainable” reported $21.5 billion in net inflows during the first quarter of 2021, up from $20.5 billion in net inflows in the fourth quarter of 2020 and roughly five times greater than the … Read more

Disney’s 5-Year Returns Have Been Pitiful

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Image: Since the beginning of 2018, Disney’s shares have fallen, while the S&P 500 has surged. Though we liked the company more recently, we no longer include shares in the Best Ideas Newsletter portfolio. By Brian Nelson, CFA On May 10, Walt Disney Company (DIS) reported improved second-quarter results for fiscal 2023 that showed solid double-digit consolidated revenue growth and substantial cash flow improvement on a year-over-year basis. Though the market had previously shown some love for shares upon CEO Bob Iger’s return, investors are now having to face reality. The advertising market remains difficult for linear television these days, and subscription growth in the streaming market has become even more challenging. Our fair value estimate for Disney stands at … Read more

Paramount Global Cuts Payout, Dividend Cushion Ratio Caught Another!

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Image Source: Paramount Global By Brian Nelson, CFA The Dividend Cushion ratio is not a perfect predictor of dividend health and the risks of a dividend cut, but it’s a pretty darn good one. On May 4, Paramount Global (PARA) missed expectations for its first-quarter 2023 results on both the top and bottom line and cut its quarterly dividend to $0.05 per quarter (was $0.24). The company’s Dividend Cushion ratio, which considers its balance sheet as well as future expectations of free cash flow relative to future expected cash dividends paid, was -2.5 (negative 2.5). Any ratio below 1 indicates growing risk to the health of the dividend, while any materially negative (below 0) ratio indicates severe risk of a … Read more

Small Cell Deployments a Growth Avenue for Tower Operator Crown Castle

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Image: Crown Castle has grown its dividend payout at a compound annual growth rate of ~9% during the past several years. Image Source: Crown Castle By Brian Nelson, CFA Cell towers and self-storage. That’s the way we like it when it comes to REITs. In the self-storage space, Extra Space Storage (EXR) is expected to tie the knot with Life Storage (LSI), while cell tower operators continue to benefit from robust demand for the increased connectivity and the rollout of 5G. Tower operator Crown Castle (CCI) reported first-quarter 2023 results April 19 that showed site rental revenues advance 3% on a year-over-year basis in the quarter, while adjusted funds from operations per share bumped 2% higher during the period. The … Read more

AT&T Disappoints Again

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Image: AT&T is back in the doghouse, as free cash flow generation came in worse than expected during its first-quarter 2023 results. Image Source: AT&T By Brian Nelson, CFA It’s unbelievable. As soon as we started to warm up to AT&T (T) in October of last year, noting that its free cash flow generation was looking a lot better, the company falls off the tracks again. During the first quarter of 2023, AT&T’s cash flow from operations dropped more than $950 million on a year-over-year basis, while capital spending and cash paid for vendor financing soared. Non-GAAP free cash flow came in at $1.0 billion (missing expectations), while the company shelled out $2 billion in dividends during the period. Excluding … Read more

Legacy of Benjamin Graham

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Legacy of Benjamin Graham: The Original Adjunct Professor. This film, brought to you by the Heilbrunn Center for Graham and Dodd Investing, Columbia Business School, premiered on February 1, 2013 at the 16th Annual Columbia Student Investment Management Association conference. Produced by: Louisa Serene Schneider. Shot & Edited by: Christina Choe. Video Source: HeilburnnCenter Tickerized for companies in the Dow Jones Industrial Average. ———- It’s Here!  The Second Edition of Value Trap! Order today!   —– Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, and RSP. Some of the other securities written about in this article may … Read more

Dividends, Dividends, Dividends

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Valuentum’s President of Equity Research Brian Nelson shares three unique insights on dividends not commonly discussed among investors. The transcript of the video can be found in this article. Brian Nelson, CFA: This is Brian Nelson from Valuentum Securities. I wanted to share with you three insights on dividends that I don’t think are talked about enough in today’s dividend growth investing handbook. The first is the idea that the dividend is a symptom of a company’s strength so the key driver behind a firm’s valuation is its free cash flows, and the dividend is a symptom of the company being able to continue to generate those free cash flows and to pay a portion of those cash flows to … Read more

Our Reports on Stocks in the Telecom Services Industry

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Image Source: Mike Mozart Structure of the Telecommunications Industry The telecom industry is characterized by rapid technological change, intense competition and pricing pressures. The mature wireline segment remains under attack from cable/wireless products. Mobile technology enhancements such as the iPhone continue to attract new wireless subscribers in less saturated markets, but this has not lessened the intensity of competition. Industry constituents continue to pursue acquisitions in order to reduce bloated cost structures and achieve synergies. Average revenue per subscriber and churn rates should be monitored closely. We’re neutral on the structure of the group. Dividend Yield: Estimated on a forward-looking annualized basis. VBI: The Valuentum Buying Index, a timeliness indicator that overlays a price-to-fair-value estimate consideration. Fair Value Estimate: Derived by … Read more