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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.
Nov 11, 2020
Realty Income Remains Resilient and Its Outlook is Improving
Image Shown: An overview of Realty Income Corporation’s asset base and historical financial performance. Image Source: Realty Income Corporation – Third Quarter of 2020 IR Earnings Presentation. On November 2, Realty Income Corp posted third quarter earnings for 2020 that saw the real estate investment trust’s (‘REIT’) funds from operations (‘FFO’) come in flat year-over-year at $0.82 per share, while its adjusted funds from operations (‘AFFO’) declined by 2% year-over-year, hitting $0.81 per share. Realty Income invests in single-tenant commercial properties, and its business has faced headwinds from the ongoing coronavirus (‘COVID-19’) pandemic. However, things are starting to improve, though there is ample room for additional improvement. We like the relative resilience of Realty Income’s financials and continue to include shares of O at a modest weighting in our Dividend Growth Newsletter portfolio. As of this writing, shares of Realty Income yield ~4.4% and for reference, the REIT pays out a monthly dividend.
Nov 10, 2020
McDonald’s: Holding Up Well During the Pandemic
McDonald’s is without a doubt a fantastic enterprise with a storied history and moaty characteristics. The firm is holding up quite well and has managed to drive innovation to overcome almost every obstacle it has faced in the past. Though there are long-term risks to the dividend payout based on the Dividend Cushion ratio, the company’s credit marks and free cash flow generation are enough for us to be confident in a growing payout for the foreseeable future. Shares are fairly valued at the moment, but dividend growth investors might want to take a hard look at this fast-food behemoth for their portfolios.
Oct 22, 2020
Our Thoughts on Netflix’s Latest Earnings
Image Shown: An overview of Netflix Inc’s historical financial and operational performance and a snapshot of its outlook for the fourth quarter of 2020. Image Source: Netflix Inc – Letter to shareholders covering the third quarter of 2020. On October 20, the video streaming giant Netflix reported third-quarter 2020 earnings after the market close that underwhelmed lofty investor expectations and saw shares of NFLX move lower the next day. We recently updated our cash flow models for the Discretionary Spending industry, and our current fair value estimate for NFLX sits at $488 per share, near where Netflix is trading as of this writing. The recent selloff in Netflix’s stock price is largely about investors scaling back their expectations for Netflix’s net paid subscriber growth figures, in our view, and is not a sign of underlying weakness in the company’s business model.
Oct 13, 2020
Disney Moves Higher
Image Shown: Shares of Walt Disney Company, a holding with a modest weighting in our Best Ideas Newsletter portfolio, are recovering. The ongoing pandemic created significant headwinds for Disney, though stellar paid subscriber growth at its Hulu, ESPN+, and Disney+ video streaming services are helping offset some of those headwinds. On October 12, Walt Disney Company announced a major restructuring that fundamentally places a greater focus on its direct-to-consumer (‘DTC’) strategy, which rests on its video streaming services. We have written about Disney’s impressive video streaming performance in the past. Please note beyond Disney+ and EPSN+, Disney owns 67% of Hulu with Comcast Corp owning the remaining 33% stake.
Oct 2, 2020
Dividend Increases/Decreases for the Week October 2
Let's take a look at companies that raised/lowered their dividend this week.
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.
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.
Jun 26, 2020
Darden Restaurants Adapts to Survive
Image Source: Darden Restaurants Inc – Fourth Quarter Fiscal 2020 IR Earnings Presentation. On June 25, the owner of the Olive Garden, LongHorn Steakhouse, and Cheddar’s Scratch Kitchen restaurant chain brands Darden Restaurants reported fourth quarter fiscal 2020 earnings (period ended May 31, 2020) that matched consensus top-lines estimates and beat consensus bottom-line estimates. Please note the fourth quarter of fiscal 2020 included an extra week versus the same period the previous fiscal year. Darden Restaurants saw its GAAP revenues drop by 43% year-over-year which led to the firm generating a large GAAP net loss of $0.5 billion last fiscal quarter as the ongoing coronavirus (‘COVID-19’) took its toll on the company’s operations.
Jun 11, 2020
Data from Visa Indicates the Economic Outlook is Improving
Image Shown: Visa Inc reports that US processed transactions volumes across its payment processing network improved materially on a year-over-year basis in May, relatively speaking, versus the downturn seen in the second half of March and the first half of April. Image Source: Visa Inc – 8-K SEC Filing. One of our favorite secular growth industry tailwinds is happening the payment processing, payment solutions, and financial technology space. The world is shifting toward a “cashless” society and that has accelerated due to the ongoing coronavirus (‘COVID-19’) pandemic, in part due to the rise of e-commerce and in part due to the preference of many consumers to use contactless payment options when in physical stores. Visa has been a top-weighted holding in the Best Ideas Newsletter portfolio for some time, and shares of V are up 5% year-to-date while the S&P 500 is down 1% year-to-date as of this writing. The top end of our fair value estimate range for Visa sits at $214 per share indicating there is plenty of room for shares of V to climb higher; please note we like to let our winners run. Additionally, shares of V yield a modest ~0.6% as of this writing, offering incremental upside to its capital appreciation potential.
Jun 3, 2020
Encouraging Trends at Cracker Barrel, Consumers Coming Out to Spend
Image Source: Cracker Barrel. Cracker Barrel has one of the best dining experiences around, and we expect it to make a strong recovery thanks in part to a differentiated brand, loyal guests, and menu pricing power. Despite the dividend cut, we didn’t remove the company from the Dividend Growth Newsletter portfolio as we were expecting a huge bounce in the share price, which has happened. While it may take some time for Cracker Barrel to reinstate its dividend, we think it will happen sooner than later, and we are leaving the company in the Dividend Growth Newsletter portfolio for the foreseeable future as its share price continues on the path to pre-COVID-19 levels. The high end of our fair value estimate range stands at $119, but there may be meaningful upside in the event consumer willingness to revisit full-service restaurants (coupled with a return to economic “normalcy”) go better than expected.



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