Valuentum Exclusive Analysis for the Discerning Investor

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Sep 2, 2020

Our Thoughts on Rackspace and Zoom Video Communications
Image Source: Rackspace Technology Inc – Second Quarter of 2020 IR Earnings Presentation. The ongoing coronavirus (‘COVID-19’) pandemic has fundamentally disrupted daily activities for households all over the globe, which has changed the way individuals work and communicate with each other. Now many are working from home, doing schoolwork and attending virtual classes from home, and seeking to stay connected with friends and family while at home. Software-as-a-Service (‘SaaS’) companies that provide solutions to the problems created by COVID-19 are well-positioned to ride out the storm, aided by their asset-light and highly scalable business models.

Sep 1, 2020

Experience and Judgment
"Think of a DCF model like a baseball bat. It's not so much the bat, itself, that matters, but rather it's the hitter that uses the bat that matters. Two hitters can use the same bat and arrive at a completely different outcome. In my near-10 years working at Valuentum, this concept is the most important one I've sought to emphasize. The DCF model is a tool, much like the baseball bat is the instrument by which the slugger hits home runs. That same bat can lead to a triple crown or set the league record in strike outs." -- Valuentum's Brian Nelson, CFA

Sep 1, 2020

Valuentum Website Overview
Overview of the key features of www.valuentum.com (03:55). Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports, dividend reports, and ETF reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area. Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information.

Aug 31, 2020

Alibaba Mirrors the Performance of Its Western Peers
Image Shown: Alibaba Group Holding Limited posted strong results for the fiscal quarter ended June 30, 2020, mirroring the performance of its large-cap tech peers based in Western countries (particularly the US). Image Source: Alibaba Group Holding Limited – June Quarter 2020 Earnings Presentation. At a time when US-China geopolitical tensions are rising and the Trump Administration is pushing the Chinese tech firm ByteDance to divest (at least) the US-based operations of TikTok, many Chinese tech firms are still thriving. The ongoing coronavirus (‘COVID-19’) pandemic has fundamentally altered daily life for most households around the world. Social distancing practices have aggressively driven up e-commerce demand along with demand for cloud computing offerings (as more employees work from home and as households stay indoors for significantly longer periods).

Aug 28, 2020

Dollar General Posts Another Stellar Earnings Report
Image Shown: Best Ideas Newsletter portfolio holding Dollar General Corporation has seen its stock price climb significantly higher year-to-date, as of this writing on August 27. On August 27, Dollar General Corp reported second quarter fiscal 2020 earnings (period ended July 31, 2020) that beat both consensus top- and bottom-line estimates. The retailer’s same-store sales increased by 18.8% year-over-year aided by a series of initiatives that we have covered in the past including DG Pickup (Dollar General had stepped up its digital investments in recent years, with DG Pickup offering customers a way to order via mobile device and pickup those goods in-store), DG Fresh (Dollar General is adding more consumer staples offerings to its stores, namely refrigerated and frozen foods), and by placing a greater emphasis on selling non-consumable products (which carry higher gross margins). Longer term, Dollar General wants to add more fresh produce to its stores.

Aug 28, 2020

Dividend Increases/Decreases for the Week August 28
Let's take a look at companies that raised/lowered their dividend this week.

Aug 27, 2020

Earnings Brief: NTAP, URBN, HPE, SJM, MDT
Image Source: Valuentum. Pantry stuffing was prevalent during the second quarter, and mall-based retail is holding up better than some had expected. Cloud-based services companies continue to experience breakneck growth, and medical procedure volumes are picking up as we learn more and more about COVID-19.

Aug 27, 2020

Dick’s Sporting Goods Finds E-Commerce Success
Image Shown: Shares of Dick’s Sporting Goods Inc rallied by ~16% during normal trading hours on August 26 after reporting stellar same-store sales growth.  On August 26, Dick’s Sporting Goods reported second quarter fiscal 2020 earnings (period ended August 1, 2020) that beat consensus estimates on both the top- and bottom-lines. Driving this outperformance was Dick’s Sporting Goods’ 20.7% year-over-year increase in same-store sales as its e-commerce sales rose by 194%, which includes sales conducted through its curbside contactless pickup option. E-commerce sales represented ~30% of the sporting goods retailer’s total sales last fiscal quarter. Average ticket sizes and the number of transactions both grew last fiscal quarter according to management commentary included in the earnings press release. Shares of DKS shot up by almost 16% after the report was published during normal trading hours on August 26. As of this writing, shares of DKS are trading near the upper bound of our fair value estimate range (which sits at $56 per share). That means shares of Dick’s Sporting Goods appear fairly valued at the moment, and we like its strong e-commerce performance and improving outlook. After reinitiating its quarterly dividend program this past June, shares of DKS yield 2.3% on a forward-looking basis (with an annualized payout of $1.25 per share of its common stock). We will cover its financial strength and dividend policy in greater detail in this note.

Aug 27, 2020

Earnings Brief: BOX, CRM, WMT, TOL, HD/LOW
Image Source: Toll Brothers. Iron Oak at Alamo Creek, Danville, CA. Let's cover some trends that may emerge out of the COVID-19 pandemic, including accelerated e-commerce proliferation and its impact on brick-and-mortar giants, as well as an increased likelihood of suburban sprawl that may propel some names while leaving others behind.

Aug 26, 2020

Papa John’s Posts Stellar Comparable Store Sales Growth
Image Shown: Shares of Papa John’s International Inc have surged upwards year-to date as of this writing. One company that has proven to be very resilient during the ongoing coronavirus (‘COVID-19’) pandemic is Papa John’s International. We significantly raised our fair value estimate for shares of PZZA back in June 2020. As of this writing, Papa John’s is trading right at the top of our fair value estimate range which sits at $99 per share of PZZA. The company has an asset-light business model and a quality cash flow profile, a product of its focus on franchise operations, though Papa John’s does own some of its store locations. As of December 29, 2019, Papa John’s had 5,395 restaurant locations worldwide operating in 49 countries and territories. Out of those locations, ~89% were franchised and the rest were either owned by the company or by a joint-venture the company had an economic stake in. Papa John’s success largely stems from past major investments in its digital presence and a heavy focus on home delivery and carryout offerings. With the pandemic forcing households to stay in and many restaurants to close, Papa John’s rose to the occasion to meet rising consumer demand.