Valuentum Exclusive Analysis for the Discerning Investor

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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.

Nov 6, 2020

Dividend Increases/Decreases for the Week November 6
Let's take a look at companies that raised/lowered their dividend this week.

Sep 3, 2020

Update: Frequently Asked Questions About Valuentum Securities, Inc.
Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports and dividend 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. We address a number of questions from both subscribers and visitors to our site.

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 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 16, 2020

Reiterating Our Bullish Long-Term View on Stocks
Image: The NASDAQ 100 Index remains resilient, bouncing off support, after breaking out to new highs recently. Some of our best ideas are included in the NASDAQ 100, and our favorite concentrations include exposure to big cap tech and large cap growth. We continue to be bullish on equities for the long run. In addition to unlimited quantitative easing and "whatever it takes, squared" Fed policy, today, June 16, the Trump administration announced that it is weighing a $1 trillion stimulus bill to help support the economy. While uncertainties remain regarding specifics of the bill (it might include state assistance, extension of unemployment benefits, etc.), the move is consistent with the outsize spending we expect to further bolster the bull case, "ICYMI -- Stay Optimistic. Stay Bullish. I Am." We continue to emphasize that, in light of unlimited QE and runaway fiscal stimulus, the longer-duration components of intrinsic values are expanding considerably, and as a result, fair values, themselves, are actually rising during this recession and pandemic [a good estimate of the value of the S&P 500 today may be between 3,530-3,920, as outlined in the following: "Scribbles and More Newsletter Portfolio Changes.]."

Jun 15, 2020

ICYMI: Survey Coming Later Today, More Market Volatility Expected
Image: The market's levels of volatility so far in 2020 have been among the greatest in history. Expectations for increased volatility in the marketplace as a result of the proliferation of price-agnostic trading (indexing and quantitative trading) is a key theme of Valuentum's text, Value Trap: Theory of Universal Valuation. We continue to emphasize the importance of due diligence, enterprise valuation, behavioral thinking, the information contained in prices, and stock selection across equity portfolios. Page 256. This week is setting up to be yet another volatile week of trading, but nothing too surprising. We've talked extensively about outsize levels of volatility in the book Value Trap, and many of our predictions regarding the magnitude of volatility have come to fruition, as described in this note here. But as we've also noted in Value Trap, we don't think increased volatility is a transient development. The Fed and Treasury have only further emboldened price-agnostic trading (indexing/quant) with recent bailout actions, and volatility and momentum funds, which exacerbate the swings, will only grow as a percentage of trading volumes. The magnitude of market volatility during the COVID-19 crisis has certainly been immense. During March for example, the Dow Jones Industrial Average had 8 consecutive days with a 4% move in either direction (this is the first time in history this happened--not even during the tumultuous times of the Crash of 1929 or Black Monday of 1987 or the Great Financial Crisis did this happen). Intra-day volatility has also been considerable, and it has become commonplace for equity futures to swing wildly before market open. Now, more than ever, investors need a steady hand at the wheel.

Jun 12, 2020

*ALERT* Scribbles and More Newsletter Portfolio Changes
Image: Why are stock prices increasing while the near-term economy and near-term earnings outlook isn't as bright as before...How unlimited quantitative easing, runaway government spending, increased inflation expectations impact equity values...Why this year's earnings expectations or next year's earnings expectations don't matter much...Why Valuentum thinks equity values are rising today, even as the near-term outlook remains unclear. Scribbles on page 76 of Value Trap. "I know it sounds crazy to say so during a global pandemic and during a recession, but the right multiple and the right earnings to use to value this market is an 18-20x multiple on $196 earnings, putting a fair value range on the S&P 500 today of 3,530-3,920. The S&P 500 is trading at about 3,000 today." -- Brian Nelson, CFA