Valuentum Exclusive Analysis for the Discerning Investor

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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.

Jun 14, 2022

Prologis Buying Duke Realty as Logistical Real Estate Market Consolidates Further
Image Shown: Prologis Inc is merging with Duke Realty Corporation through an all-stock acquisition that will see Prologis cement itself as a logistical real estate powerhouse in the US and worldwide. Image Source: Duke Realty Corporation / Prologis Inc – June 2022 IR Presentation announcing the acquisition of Duke Realty by Prologis. On June 13, Prologis Inc announced it was buying Duke Realty Corporation through an all-stock transaction worth ~$26 billion when including the assumption of debt. In the wake of severe capital market volatility, some major deals in the real estate investment trust (‘REIT’) space are still getting done. Back in May 2022, Duke Realty rejected Prologis’ previous offer worth ~$24 billion as being “insufficient” which prompted Prologis to sweeten the pot to get a deal done.

Jun 9, 2022

Best Idea Dollar General Beats Consensus Estimates and Raises Guidance in the Face of Substantial Headwinds
Image Shown: Dollar General Corporation’s GAAP net sales rose in the first quarter of fiscal 2022 on a year-over-year basis due to growth in its net store count. Image Source: Dollar General Corporation – May 2022 8-K SEC Filing. As a discount retailer, Dollar General is contending with myriad headwinds though its underlying business is holding up quite well. We continue to view its capital appreciation upside potential quite favorably, and its dividend program offers incremental upside potential. Shares of DG yield ~1.0% as of this writing.

May 19, 2022

Dividend Growth Idea Home Depot Beats Estimates and Boosts Guidance
Image Shown: Dividend growth idea Home Depot Inc is a tremendous generator of shareholder value due to its stellar return on invested capital performance. Image Source: Home Depot Inc – First Quarter of Fiscal 2022 Non-GAAP Reconciliation Financial Package. On May 17, Home Depot reported first quarter earnings for fiscal 2022 (period ended May 1, 2022) that beat both consensus top- and bottom-line estimates. Demand from professionals remains robust, offsetting waning demand from do-it-yourself (‘DIY’) customers. In the wake of its strong fiscal first quarter performance, Home Depot boosted its fiscal 2022 guidance in conjunction with its latest earnings report. We are big fans of Home Depot’s income growth potential and include shares of HD as an idea in the Dividend Growth Newsletter portfolio. Shares of HD yield ~2.6% as of this writing.

May 11, 2022

Domino’s Longer Term Growth Runway Intact, Chipotle's Free Cash Flow Remains Robust
Image Source: Domino’s Pizza Inc – 2022 ICR Conference Presentation. Domino’s Pizza is contending with serious inflationary pressures and headwinds from changing consumer spending habits as the worst of the coronavirus (‘COVID-19’) pandemic fades. We continue to view the firm’s longer term outlook quite favorably and appreciate its franchise-heavy business model (~98% of its stores are franchised), which enables Domino’s to generate substantial free cash flows in almost any operating environment. Our fair value estimate for Domino’s sits at $517 per share, and we include shares of DPZ as an idea in the Best Ideas Newsletter portfolio. Shares of DPZ yield ~1.3% as of this writing, offering incremental income generation upside potential to its favorable capital appreciation risk-reward scenario, in our view. Another one of our favorite restaurants, Chipotle Mexican Grill posted 9.0% year-over-year comparable restaurant sales growth in the first quarter of 2022. During Chipotle’s latest earnings call, management noted that in-store sales surged 33% due to the economy opening back up and consumers resuming “normal” dining activities. The firm’s digital sales held up relatively well and represented 42% of Chipotle’s total sales last quarter. During the period, Chipotle reported 16% year-over-year GAAP revenue growth and 18% year-over-year GAAP operating income growth as the firm effectively took advantage of its pricing power to get ahead of inflationary pressures. As with Domino's, we continue to like Chipotle as an idea in the Best Ideas Newsletter portfolio.