Valuentum Exclusive Analysis for the Discerning Investor

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May 10, 2020

Valuentum Experiences Unprecedented Demand for Services
Unprecedented Demand for Valuentum’s Services; Unique Visitors Up 207%, Number of Visits Up 164% During 1Q Versus Same Period Last Year Woodstock, May 10, 2020 – Valuentum, a trusted source for independent investment opinion for individuals, advisors and institutions, has provided a business update amid the COVID-19 pandemic.

May 8, 2020

Disney’s Financials Will Eventually Rebound
Image Source: Marc Levin. On May 5, The Walt Disney Company reported second quarter earnings for fiscal 2020 (period ended March 28, 2020) that beat consensus top-line estimates but missed consensus bottom-line estimates. The firm’s financial and operational performance has taken a hit from the ongoing coronavirus (‘COVID-19’) pandemic; however, in our view the firm will bounce back once considerably a COVID-19 vaccine becomes available (which isn’t a certainty, but a lot of companies are actively pushing forward with human clinical trials as we speak including this firm). We continue to like Disney with a modest weighting in the Best Ideas Newsletter portfolio.

May 1, 2020

Dividend Increases/Decreases for the Week Ending May 1
Let's take a look at companies that raised/lowered their dividend this week.

Apr 25, 2020

Emergency Update on COVID-19
President of Investment Research at Valuentum, Brian Nelson provides an emergency update on COVID-19. He talks about how policymakers have dropped the ball thus far, and why investors should not let their guards down, despite what has been a nice bounce from the March 23 bottom.

Apr 21, 2020

Macy’s Will Find It Difficult to Unlock the (Fair) Value of Its Real Estate
Image Source: Valuentum. The embattled department store Macy’s suspended its dividend and drew down its revolving credit line on March 20 in order to shore up its financial position in the face of the ongoing coronavirus (‘COVID-19’) pandemic. All of Macy’s physical stores were temporarily closed on March 18, though some might shut down for good given the company’s financial woes. The fair value estimate of Macy’s is heavily dependent on factors well outside the control of management, and considering the US economy and global economy at-large are sliding toward a pandemic/leverage induced recession/depression, we aren’t optimistic on Macy’s ability to unlock the (fair) value of its real estate. Any real estate sales done in the foreseeable future will likely be at a discount to their fair value. As the firm continues to burn through cash--there’s a very high probability Macy’s will continue to generate negative free cash flows until the “cocooning” of households ends--the clock is working against Macy’s. We are staying away from the name.

Apr 17, 2020

JB Hunt Scales Back
Image Source: JB Hunt Transportation Services Inc – First Quarter 2020 Earnings IR Presentation. JB Hunt Transportation offers trucking freight and other logistics services to customers in North America, including intermodal services (which is the firm’s largest business segment by revenue). On April 14, the company reported first-quarter 2020 results, which showed its top-line beat consensus expectations while its bottom-line missed consensus expectations. Part of the reason why JB Hunt missed bottom-line expectations was due to incentive pay increases related to the ongoing coronavirus (‘COVID-19’) pandemic and the need to compensate frontline workers for the risks they are taking (and we appreciate all the work frontline workers are doing during these challenging times). Shares of JBHT yield ~1.1% as of this writing.

Mar 19, 2020

Extreme Volatility and Crisis Economics
Image: The Dow Jones has now registered 8 consecutive trading days with a 4% move in either direction, from March 9 through March 18. This is the most volatile time in history, a streak that is longer than the 5 consecutive days registered in November 1929 (Great Depression), 4 consecutive days in 1987 (Crash of 1987), and 4 consecutive days in 2008 (Great Financial Crisis). The worst of the declines may still be ahead of us. The S&P 500 still is trading within our fair value estimate range of 2,350-2,750, and we wouldn’t be surprised to see panic/forced selling all the way down to 2,000 on the S&P. Expect more volatility, and please stay safe out there as the world declares all out war on COVID-19. Our best ideas remain in the Best Ideas Newsletter portfolio, Dividend Growth Newsletter portfolio, High Yield Dividend Newsletter portfolio, and Exclusive publication.

Mar 17, 2020

Oracle’s Strategic Shift is Starting to Bear Fruit
Image Source: Oracle Corporation – Third Quarter Fiscal 2020 Earnings Press Release. On March 12, Dividend Growth Newsletter portfolio holding Oracle Corp reported earnings for the third quarter of fiscal 2020 (period ended February 29, 2020) which handily beat consensus expectations on the both the top- and bottom-lines. Growing subscription revenues at its cloud-based businesses were key to generating this outperformance, and most importantly in our view, Oracle showcased that its outlook is improving as it shifts away from old and stale IT infrastructure offerings (i.e. enterprise data application management) and towards the IT infrastructure of the 21st Century (cloud-based services i.e. software-as-a-service and infrastructure-as-a-service). Shares of ORCL yield ~2.1% as of this writing and our fair value estimate stands at $55 per share.

Mar 15, 2020

Panic Buying of Consumer Goods and Its Impact on Discounted Cash Flow Valuation
Image: Sam’s Club (Crystal Lake, IL), March 14. Water and toilet paper continue to be completely sold out at most big box retailers as COVID-19 panic buying of consumer goods continues to spread. Fear-induced purchases in the US have also helped drive up investor sentiment toward consumer staples names with a large domestic presence. We caution, however, that near-term earnings bumps emanating from “stockpiling” have little impact on a company’s intrinsic value, which is derived more from normalized conditions, and in most cases, the panic buying of consumer goods is merely pulling demand forward. “You know what’s disappearing from the supermarket shelves? Toilet paper…There’s an acute shortage of toilet paper in the United States.” – Johnny Carson, in 1973, causing a month-long shortage of toilet paper in the US at the time. The spread of COVID-19 is creating a similar panic as consumers stock up on just about everything from toilet paper to canned goods to hand sanitizer.

Mar 12, 2020

Caterpillar Reports Cratering Demand for its Products Amid COVID-19
Image Shown: Caterpillar Inc is hoping that efficiency improvements at its construction equipment business will help revive retail sales growth at the segment. That’s no easy task given the exogenous headwinds facing the company. Image Source: Caterpillar Inc – CONEXPO March 2020 IR Presentation. The ongoing novel coronavirus (‘COVID-19’) pandemic is beginning to wreak havoc on the global economy. Major agriculture, construction, energy, resource extraction and transportation equipment supplier Caterpillar Inc filed an 8-K report with the SEC on March 12 that highlighted just how rough the start of 2020 has been for the industrial space at-large. Even before the COVID-19 pandemic started spreading, Caterpillar’s retail sales had been coming under fire from slowing global economic growth, but now that decline has started to really pick up pace.