Valuentum Exclusive Analysis for the Discerning Investor

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Dec 21, 2022

Nike’s Weak Earnings Growth, Markdowns, and Lofty Inventory Levels Still Telling of a Struggling Consumer
Image Source: Valuentum. Nike’s second-quarter fiscal 2023 earnings report, released December 20, revealed strong revenue growth, but concerns lurked beneath the surface. Gross margin pressure, markdowns, lofty inventory levels, and a decline in reported sales in China were among the many concerns. Nike’s strong brand and close ties with consumers, however, offer key competitive advantages, and while consumer discretionary spending is facing considerable pressure in the near term, Nike remains a strong long-term global story, in our view. Shares yield ~1.3% and are trading modestly above the high end of our fair value estimate range at the time of this writing.

Oct 27, 2022

VBI Ratings Not as Impressive As We Would Have Liked in 2022
Image: How the VBI rating system has ranked equities so far this year. At Valuentum, we use the Valuentum Buying Index (VBI) to source ideas into diversified simulated newsletter portfolios, and the VBI may be most applicable to the simulated Best Ideas Newsletter portfolio, where we generally like to include ideas when they register a high VBI rating and remove them when they register a low VBI rating. We always use the VBI in a portfolio setting and never by itself. Let's talk more about the VBI rating system in this work.

Oct 24, 2022

Chinese Stocks Bludgeoned!
Image: Large cap Chinese equities are now back to levels first reached more than 15 years ago on a price-only basis, to levels first attained in early 2006. The stakes have never been higher on the world stage as geopolitical uncertainty between the U.S. and China continues to escalate. Shares of Chinese equites have been bludgeoned, now back to levels first reached in early 2006, some 15 years ago. The fallout has taken some of the best investors with it, legends such as Charlie Munger, whose shares in BABA hover near all-time lows. We don’t see Chinese equities as “investable” these days, and we’re steering clear of direct exposure in the simulated newsletter portfolios at this time.

Oct 12, 2022

Over the Long Haul, Domino’s Has a Bright Growth Runway Ahead of It
Image Source: Domino’s Pizza Inc – 2022 ICR Conference IR Presentation. Domino’s is contending with substantial near-term headwinds, but its longer-term growth runway remains firmly intact. There is ample room for Domino’s to grow its international unit store count and domestically, Domino’s views its unit store count growth runway favorably. Recently, its unit store count has grown at a robust pace as franchisees are drawn to the attractive unit economics of the company’s stores. We continue to like exposure to shares of Domino’s in the simulated Best Ideas Newsletter portfolio.

Sep 1, 2022

Best Idea Dollar General Outperforms
Image Shown: Dollar General Corporation outperformed during its latest earnings update. Image Source: Dollar General Corporation – 10-Q SEC filing covering the Second Quarter of Fiscal 2022. On August 25, Dollar General Corp reported second quarter earnings for fiscal 2022 (period ended July 29, 2022) that beat both consensus top- and bottom-line estimates. The discount retailer also raised its full-year guidance for fiscal 2022 in conjunction with its latest earnings update after previously raising its full year guidance during its fiscal first quarter earnings report. We include Dollar General as an idea in the Best Ideas Newsletter portfolio, and the high end of our fair value estimate range sits at $292 per share. Additionally, shares of DG yield a modest ~0.9% as of this writing.

Aug 25, 2022

Dividend Growth Idea Dick’s Sporting Goods Beats Estimates, Raises Guidance
Image Shown: Shares of Dick’s Sporting Goods Inc have been on a nice upward climb of late. The sporting goods retailer raised its full-year guidance for fiscal 2022 during its fiscal second quarter earnings report. On August 23, Dick’s Sporting Goods Inc reported second quarter earnings for fiscal 2022 (period ended July 30, 2022) that beat both consensus top- and bottom-line estimates. The sporting goods retailer also raised its full-year guidance for fiscal 2022 in conjunction with the report, after previously lowering its guidance during its fiscal first quarter earnings update in May 2022. We continue to like Dick’s Sporting Goods as an idea in the Dividend Growth Newsletter portfolio. Shares of DKS yield ~1.8% as of this writing when looking at its regular quarterly payout. The company has also paid out special dividends in the recent past, including a $5.50 per share special dividend in fiscal 2021 along with a $2.00 per share special dividend back in fiscal 2012.

Aug 19, 2022

Dividend Growth Idea Home Depot Beats Estimates, Maintains Guidance
Image Shown: Dividend growth idea Home Depot is a stellar free cash flow generator in almost any operating environment. Historically, the home improvement retailer’s free cash flows have fully covered its dividend obligations, and we forecast that will continue to be the case going forward. However, we caution that its sizable share repurchases are being funded in part by its balance sheet. The firm has a large net debt load on the books. Image Source: Home Depot Inc – Second Quarter of Fiscal 2022 IR Earnings Presentation. On August 16, Home Depot reported second-quarter earnings for fiscal 2022 (period ended July 31, 2022) that beat both consensus top- and bottom-line estimates. The home improvement retailer also reaffirmed its guidance for fiscal 2022 in conjunction with its latest earnings update. We like Home Depot as an idea in the Dividend Growth Newsletter portfolio. Shares of HD yield ~2.4% as of this writing, and our fair value estimate sits at $345 per share of Home Depot, well above where the company’s shares are trading at as of this writing. Home Depot’s free cash flow generating abilities and pricing power are impressive, and its growth runway remains largely intact, even in the face of sizable exogenous shocks.

Aug 17, 2022

Disney’s Theme Parks and Resorts Benefiting from Pent-Up Demand
Image Shown: The Walt Disney Company posted a rock-solid earnings report for the period ended July 3 as its business benefited from pent up demand for its theme parks and resorts offerings. Image Source: The Walt Disney Company – Third Quarter of Fiscal 2022 Earnings Press Release. On August 10, The Walt Disney Company reported third quarter earnings for fiscal 2022 (period ended July 3, 2022) that beat both consensus top- and bottom-line expectations. Its theme parks and reports business came roaring back from the worst of the COVID-19 pandemic while its video streaming services continued to add millions of paid subscribers to their customer bases. Shares of DIS have surged higher in recent weeks, and we continue to like Disney as an idea in the Best Ideas Newsletter portfolio. Our fair value estimate sits at $156 per share of Disney, well above where shares are trading at as of this writing indicating the company has ample capital appreciation upside potential.

Jul 19, 2022

Dick’s Sporting Goods Facing Revenue “Normalization,” Long-Term Story In Tact
Image Source: Dick’s Sporting Goods Inc – First Quarter of Fiscal 2022 Infographic. Inflationary pressures, labor shortages, and supply chain hurdles are all weighing negatively on Dick’s Sporting Goods’ near term outlook. The retailer’s net cash position and strong cash flow generating abilities should help see it through this period of revenue “normalization,” and its longer term growth runway remains robust (underpinned by new store concepts, the potential for meaningful unit store count growth, ongoing customer loyalty and digital initiatives, and various in-store product layout optimization efforts). We continue to like Dick’s Sporting Goods as an idea in the Dividend Growth Newsletter portfolio. Shares of DKS yield ~2.2% as of this writing, and we see ample room for the retailer to push through substantial dividend increases over the long haul.

Jun 17, 2022

Qurate Retail Faces Difficult Turnaround Process
Image Source: Qurate Retail Inc – First Quarter of 2022 IR Earnings Presentation. Executive Summary: Qurate Retail Inc is home to several well-known retail brands including QVC and HSN that operate television networks and online marketplaces that sell curated products. The company is contending with several exogenous shocks such as inflationary pressures and supply chain hurdles, while customer engagement levels are on the decline after growing during the initial phases of the COVID-19 pandemic. Qurate Retail has a massive net debt load and sizable annual financing obligations, and its margins have deteriorated substantially of late. Due to its complex share structure and management organization, weak financial position, and lackluster outlook, we are not interested in Qurate Retail’s common or preferred shares at this time. Qurate Retail is too risky for our taste.