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Fundamental data is updated weekly, as of the prior weekend. Please download the Full Report and Dividend Report for any changes.
Jul 31, 2020
Philip Morris International Posts Solid Guidance, Cuts Costs
Image Shown: Excluding foreign currency headwinds, Philip Morris International Inc’s financials held up relatively well during the first half of 2020, all things considered with an eye towards the pandemic. Image Source: Philip Morris International Inc – Second Quarter of 2020 IR Earnings Presentation. The ongoing coronavirus (‘COVID-19’) pandemic has severely stressed consumer spending in countries all over the globe, and that includes spending on cigarettes and other tobacco products. For a major tobacco company like Philip Morris International, this dynamic weighs negatively on its near-term outlook, though the company is well-positioned to ride out the storm for several reasons. We continue to like Philip Morris International as a holding in the High Yield Dividend Newsletter portfolio, and shares of PM yield ~6.0% as of this writing. Philip Morris International’s dividend coverage on a forward-looking basis is decent and supported by its optimistic guidance (a rebound is expected during the second half of 2020), growing demand for its heated tobacco offerings (such as IQOS, which is not an acronym), high quality cash flow profile, ongoing access to capital markets at attractive rates (particularly debt markets), pricing power at its traditional cigarette brands (such as Marlboro), and its ample liquidity position at the end of June 2020. However, we caution that Philip Morris International’s large net debt load, while manageable, weighs negatively against its dividend coverage strength. We give Philip Morris International a “GOOD” Dividend Safety rating which factors in modest per share payout growth and expected future free cash flows over the next five full fiscal years, along with its large net debt load.
Jul 31, 2020
Dividend Increases/Decreases for the Week Ending July 31
Let's take a look at companies that raised/lowered their dividend this week.
Jul 30, 2020
Visa Remains Resilient in the Face of COVID-19
Image Shown: Visa Inc remained a free cash flow cow last fiscal quarter in the face of the pandemic. Image Source: Visa Inc – Third Quarter of Fiscal 2020 IR Earnings Presentation. On July 29, Visa reported third quarter fiscal 2020 earnings (period ended June 30, 2020) that missed consensus top-line estimates and beat consensus bottom-line estimates. The ongoing coronavirus (‘COVID-19’) pandemic weighed on travel-related purchases across Visa’s cardholder base, a dynamic that held down cross-border transactions which tend to be more lucrative for the payment processor. Keeping pandemic-related headwinds in mind, the company noted its performance was improving in several key markets around the world. We continue to like Visa as a top-weighted holding in the Best Ideas Newsletter portfolio given its high quality cash flow profile, strong balance sheet, and very promising post-pandemic growth outlook. The top end of our fair value estimate range for Visa sits at $214 per share.
Jul 30, 2020
PayPal Posts a Tremendous Quarterly Report, Reinstates Guidance
Image Shown: PayPal Holdings Inc put up tremendous performance during the first half of 2020 as consumers are increasingly shopping online. In the second quarter of 2020, PayPal continued to grow at a decent clip even in the face of the ongoing pandemic. Image Source: PayPal Holdings Inc – Second Quarter of 2020 IR Earnings Presentation. After the market close July 29, PayPal reported second quarter 2020 earnings that beat consensus top- and bottom-line estimates. Shares of PYPL moved sharply higher after the report was published, and we continue to like PayPal as a holding in the Best Ideas Newsletter portfolio. Our fair value estimate sits at $200 per share of PYPL, comfortably above where PayPal is trading at as of this writing. There is room for meaningful capital appreciation upside as the top end of our fair value estimate range sits at $240 per share of PayPal. Even in the face of the ongoing coronavirus (‘COVID-19’) pandemic PayPal continued to grow, and we appreciate the resilience of its business model. The firm’s cash flow profile is of high quality, supporting its ability to generate meaningful free cash flows in any economic environment. Additionally, having a pristine balance sheet provides PayPal with ample financial flexibility to ride out the storm.
Jul 30, 2020
Excerpt from ‘Value Trap’ 2nd Edition: MPT Sounds a Lot Like "Empty"
The second edition of President of Investment Research Brian Nelson's book 'Value Trap' will be released in the coming weeks. Here is a short excerpt to whet your appetite.
Jul 30, 2020
McDonald’s Improving But Serious Hurdles Remain
Image Shown: Shares of McDonald’s Corporation are richly valued as of this writing, especially when considering the headwinds facing its business in the near-term and its hefty net debt load. On July 28, McDonald’s Corp reported second quarter 2020 earnings that beat consensus top-line estimates but fell short of consensus bottom-line estimates. As expected, the ongoing coronavirus (‘COVID-19’) pandemic took a large bite out of its performance last quarter with global comparable sales down 23.9% versus the same period a year-ago. McDonald’s reported that its global comparable store sales trajectory improved throughout the second quarter as the decline shrank from -39.0% (negative 39.0%) in April 2020 to -12.3% (negative 12.3%) by June 2020. Shares of MCD sold off modestly during normal trading hours on July 28, and we caution that McDonald’s still appears to be generously valued as of this writing.
Jul 28, 2020
AT&T Remains Free Cash Flow King, Though Deleveraging Efforts Are Getting Tougher
Image Shown: AT&T Inc continued to be a free cash flow cow last quarter, though the ongoing pandemic created headwinds for its various businesses. Image Source: AT&T Inc – Second Quarter of 2020 IR Earnings Presentation. The ongoing coronavirus (‘COVID-19’) pandemic has created some very serious headwinds for AT&T, but that did not stop the telecommunications and entertainment giant from being incredibly free cash flow positive last quarter. On July 23, AT&T reported its second quarter 2020 earnings report and we remain confident in the firm’s ability to keep making good on its dividend obligations going forward. Shares of T yield ~7.1% as of this writing, and we include shares of AT&T in our High Yield Dividend Newsletter portfolio.
Jul 28, 2020
Earnings Brief: SAM, MAT, TOT, HON, AXP
Image Source: Boston Beer. CEO Dave Burwick noted in Boston Beer’s second-quarter press release: “The growth of the Truly brand, led by Truly Hard Lemonade, has accelerated and continues to grow beyond our expectations. Since early January, Truly has grown its velocity and its market share sequentially while other national, regional and local hard seltzer brands have entered the category. Truly is the only hard seltzer, not introduced earlier this year, to grow its share during 2020.” We’re impressed, but still taking a cautious view on SAM’s shares.
Jul 27, 2020
Lockheed Martin Raises Guidance
Image Shown: Lockheed Martin Corporation posted a strong fiscal second quarter earnings report which saw shares of LMT move higher over the following trading days. Image Source: Lockheed Martin Corporation – Second Quarter Fiscal 2020 IR Earnings Presentation. On July 21, Lockheed Martin Corp reported second quarter fiscal 2020 earnings (period ended June 28, 2020) that beat both consensus top- and bottom-line estimates. Furthermore, Lockheed Martin boosted its guidance for fiscal 2020, even in the face of the ongoing coronavirus (‘COVID-19’) pandemic. Shares of LMT yield ~2.5% and are trading well below their fair value estimate of $432 per share as of this writing. We continue to like Lockheed Martin as a holding in the Dividend Growth Newsletter portfolio.
Jul 27, 2020
Goldman Posts a Blowout Quarter
Image Shown: Goldman Sachs Results Breakdown by Segment. Image Source: Goldman Sachs 2Q2020 Earnings Presentation. While we still do not like the private ($17 billion) and public equity ($3 billion) positions on Goldman’s balance sheet, we acknowledge that the firm is working them lower through sales and that the bank is aiming to increase managed funds instead. This move is overdue and will help reduce the risk profile of the firm. Though the quarter showed the massive revenue potential of Goldman when markets are at fairly high levels and with extreme volatility, it is difficult to value these earnings streams, given the notoriously volatile nature of the key segments of investment banking and markets (trading).



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