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What Causes Fair Value Estimates to Change?

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Image: A screenshot of the discounted cash-flow model learning tool for individual investors. By Brian Nelson, CFA If you’ve been a member of Valuentum for a while, you’ll notice that when we update a stock report, our estimate of a company’s fair value and the firm’s Valuentum Buying Index ratings can change. This is completely normal and should be expected (over time, companies generate cash and stock prices change). But sometimes the changes can be confusing, particularly if they are material (i.e. 10%, 20%, or more). In this article, let’s talk about why changes are standard operating procedure for investment research publishers. First, some background. Our estimate of a company’s fair value is driven by myriad factors. To derive a … Read more

We’ve Suspended Coverage of Stocks in the Disruptive Innovation Industry

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Order the Exclusive publication here to gain access to idea generation that covers some of the most innovative stocks. As a member to the Exclusive publication, you’ll receive one income idea, one capital appreciation idea, and one short idea consideration each month! Order today >> — We’ve suspended coverage of stocks in the ‘Disruptive Innovation’ industry. The ‘Disruptive Innovation’ industry is unique in almost every way. The companies included don’t necessarily share a similar traditional industry or sector make-up, but they do share one big thing in common: They continue to disrupt the traditional way of doing things. Carvana is changing how consumers buy used cars, Roku is leading the streaming charge against linear TV, Teradyne’s industrial robotics technology is … Read more

Oracle Buys Cerner

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Image Source: Oracle Corporation – September 2019 Financial Analyst Meeting Presentation By Callum Turcan Oracle Corporation (ORCL) is one of our favorite dividend growth ideas that also earns high marks as it concerns ESG (environmental, social, and governance) investing standards. We use our proprietary ESG scoring matrix, which scores firms on a 1-100 scale (100 being the best), to gauge their adherence to ESG practices. Oracle scores a nice 96 ESG rating with a strong showing across all three categories. We include shares of ORCL as an idea in both the Dividend Growth Newsletter and our ESG Newsletter portfolios. The high end of our fair value estimate range sits at $101 per share of Oracle, comfortably above where shares are … Read more

Oracle Shares Surge!

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Image Source: Oracle Corporation – November 2019 IR Presentation By Callum Turcan Shares of Oracle Corporation (ORCL) surged in the wake of the tech giant reporting its second-quarter fiscal 2022 earnings (period ended November 30, 2021) on December 9, which beat both consensus top- and bottom-line estimates. We include Oracle as an idea in both the Dividend Growth Newsletter and ESG Newsletter portfolios (more on that here), and we couldn’t be more pleased with the company’s performance of late. Its pivot towards cloud-oriented offerings is playing out quite favorably as Oracle’s growth outlook is now quite bright. Earnings Update and Outlook Oracle’s GAAP revenues were up 6% year-over-year last fiscal quarter, hitting $10.4 billion. This was made possible via strong … Read more

Dividend Growth Idea Oracle Stepping Up Cloud Investments to Build on Recent Momentum

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Image Shown: Oracle Corporation’s pivot towards cloud computing offerings continues. We include Oracle as an idea in our Dividend Growth Newsletter portfolio and continue to view its payout growth trajectory quite favorably. Image Source: Oracle Corporation – September 2019 IR Presentation By Callum Turcan On June 15, Oracle Corporation (ORCL) reported fourth quarter fiscal 2021 earnings (period ended May 31, 2021) that beat both consensus top- and bottom-line estimates. The company’s GAAP revenues climbed higher 8% year-over-year and its GAAP operating income grew 5% year-over-year in the fiscal fourth quarter. Oracle cited growth at its Fusion and NetSuite cloud applications businesses along with growth at its Gen2 Cloud Infrastructure business as driving its financial performance in the fiscal fourth quarter. … Read more

Video: Apple’s Cash Based Sources of Intrinsic Value and Dividend Health

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Image Shown: Inside an Apple store. Source: Valuentum By Brian Nelson, CFA The core of stock valuation centers on two cash-based drivers: the net cash a company has on its balance sheet and the enterprise free cash flows that it will generate in the future, discounted back to today at a reasonable discount rate. After subtracting the value of other components of the capital structure such as preferred stock or debt from the sum of net cash and the present value of future enterprise free cash flows and dividing by total diluted shares outstanding, the result is called a fair value estimate. The fair value estimate is then compared to the stock price to determine if shares are undervalued or … Read more

Oracle Beats Consensus Estimates and Raises Its Dividend By 33%

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Image Source: Oracle Corporation – September 2019 Financial Analyst Meeting Presentation By Callum Turcan On March 10, Oracle Corporation (ORCL) reported third quarter earnings for fiscal 2021 (period ended February 28, 2021) that beat both consensus top- and bottom-line estimates. We include Oracle as an idea in the Dividend Growth Newsletter portfolio, and we are big fans of its impressive free cash flow generating abilities. The company’s Dividend Cushion ratio of 3.0 (a stellar ratio) earns Oracle an “EXCELLENT” Dividend Safety rating, and please note that these metrics incorporate our expectations that Oracle will push through meaningful payout increases over the coming fiscal years. We give Oracle an “EXCELLENT” Dividend Growth rating. In conjunction with its latest earnings report, Oracle … Read more

IBM Is Still A Disappointment

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We’ve never liked IBM. The company has all the attributes of a stock that we’d prefer to stay as far away from as possible. By Brian Nelson, CFA We received a few questions regarding IBM (IBM) from members, and we wanted to make this brief post. Prior to the company’s fourth-quarter 2020 results, released January 22, shares had a price-to-fair value (P/FV) ratio of 0.96 (1=fairly valued), and they were not included in either the Best Ideas Newsletter portfolio, or the Dividend Growth Newsletter portfolio, or the High Yield Dividend Newsletter portfolio. This means that we have very little interest in the company, and our interest continues to be minimal. You can read our take on the firm’s track record in Value … Read more

Oracle Posts Solid Earnings and Provides Favorable Near-Term Guidance

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Image Source: Oracle Corporation – September 2019 IR Presentation By Callum Turcan On December 10, Oracle Corp (ORCL) reported second-quarter earnings for fiscal 2021 (period ended November 30, 2020) that beat both consensus top- and bottom-line estimates. In the fiscal second quarter, Oracle’s GAAP revenues advanced 2% year-over-year on the back of its ‘Cloud services and license support’ segment posting 4% sales growth. The company’s GAAP operating income rose 13% year-over-year last fiscal quarter, as operating expenses shifted lower 3% thanks to the efforts of Oracle’s management team to make cost containment efforts a priority. The firm’s diluted GAAP EPS came in at $0.80 during the second quarter of fiscal 2021, up 16% year-over-year thanks in part to its weighted-average outstanding … Read more

Salesforce’s Growth Story Continues

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Image Shown: Salesforce Inc expects its impressive revenue growth story will continue at a brisk pace going forward. Image Source: Salesforce Inc – Company IR Presentation By Callum Turcan On December 1, Salesforce Inc (CRM) reported third quarter earnings for fiscal 2021 (period ended October 31, 2020) that saw the Software-as-a-Service (‘SaaS’) giant beat both consensus top- and bottom-line estimates. While Salesforce has historically focused on growing its core customer relationship management (‘CRM’) offerings, the firm more recently has been expanding into new and adjacent areas to extend its impressive growth runway. Acquisitions For instance, Salesforce announced it was acquiring Slack Technologies Inc (WORK) at the start of December for ~$27.7 billion in a cash-and-stock deal. This acquisition will significantly … Read more