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Recent Articles
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Republic Services is Well Prepared
Mar 27, 2020
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Image Source: Republic Services Inc – March 2020 COVID-19 Investor Update Presentation.
Dividend Growth Newsletter portfolio holding Republic Services, which was added to the portfolio back on January 13, 2020, is well positioned to ride out the turbulence created by the ongoing novel coronavirus (‘COVID-19’) pandemic. Before getting into its recent refinancing activity, please note that roughly four-fifths of Republic Services’ revenues comes from long-term contracts, and that fundamentally, waste disposal services are almost always in demand (hard to combat a healthcare crisis if trash is piling up on the streets, sidewalks, and can’t be properly disposed of in landfills). While its financials will face some pressures from the pandemic, Republic Services should be able to emerge on the other side of this crisis with its business and balance sheet relatively intact. As of this writing, shares of RSG yield ~2.1% and its Dividend Cushion ratio of 1.9 provides for a “GOOD” Dividend Safety rating.
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Lululemon’s Pristine Balance Sheet and Digital Sales Channels Provides Support During These Harrowing Times
Mar 27, 2020
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Image Source: Lululemon Athletica Inc – Fourth Quarter of Fiscal 2019 Earnings Infographic.
On March 26, Lululemon Athletica reported fourth quarter and full-year earnings for fiscal 2019 (period ended February 2, 2020) that had some bright spots, though shares of LULU initially traded down on March 27. While the company beat on both the top- and bottom-lines, investors are growing increasingly worried about the performance of discretionary consumer goods companies in the face of the ongoing novel coronavirus (‘COVID-19’) pandemic. In fiscal 2019, Lululemon’s GAAP revenues rose 21% year-over-year and its GAAP gross margin climbed by ~65 basis points, with its financial performance supported by rising direct-to-consumer sales (up 35% year-over-year) which tend to command higher gross margins. Adjusted comparable sales rose by 9% year-over-year in fiscal 2019 (keeping in mind there was an extra week of sales in fiscal 2018), a growth rate that rises to 10% on a constant-currency basis.
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Grocery Outlet Is Firing on All Cylinders
Mar 27, 2020
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Image Shown: Discount grocer Grocery Outlet Holdings Corporation has stores in six states; Washington, Oregon, California, Idaho, Nevada, and Pennsylvania. Image Source: Grocery Outlet – December 2019 IR Presentation.
On March 24, discount grocer Grocery Outlet Holdings Corp reported fourth-quarter and full fiscal year earnings for fiscal 2019 (period ended December 28, 2019), and the firm beat both consensus top- and bottom-line estimates (albeit only marginally on the top-line). In the fiscal fourth quarter, the grocer’s GAAP net sales were up 12% year-over-year while Grocery Outlet went from a GAAP net loss of $5 million in the same quarter last fiscal year to a GAAP net profit of $10 million in the fourth quarter of fiscal 2019. That was partially due to Grocery Outlet utilizing the proceeds from its IPO in June 2019 to pay down its relatively large debt load, which in turn cut its quarterly interest expenses down by more than half year-over-year. From the end of fiscal 2018 to the end of fiscal 2019, Grocery Outlet’s total debt load (inclusive of short-term debt) fell from over $857 million to just below $448 million.
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Our Reports on Stocks in the Independent Oil & Gas Industry
Mar 27, 2020
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Images Source: Anadarko.
Our reports on stocks in the Independent Oil & Gas industry can be found in this article. Reports include APA, CLR, COG, DVN, EOG, MRO, OXY, PXD.
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US Congress Is Getting Ready to Pass a Massive ~$2.2 Trillion Fiscal Stimulus Bill
Mar 26, 2020
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Image Shown: US equities have started to recover some of their lost ground as the likelihood that the US Congress will pass a massive ~$2.2 trillion fiscal stimulus and emergency spending package, dubbed the CARES Act, has increased significantly over the past week as seen through the bounce in the SPDR S&P 500 ETF Trust. President Trump has clearly indicated that he intends to sign such a bill into law as soon as possible, with the US House of Representatives expected to take up the legislation this upcoming Friday morning on March 27.
On March 25, the US Senate worked late into the night to secure a bipartisan compromise on a massive ~$2.2 trillion fiscal stimulus and emergency spending bill to offset the negative impact of the ongoing novel coronavirus (‘COVID-19’) pandemic. The bill passed 96-0 after several senators forced a vote on an amendment on that bill that would have changed the nature of the “beefed up” unemployment benefits (that amendment failed 48-48, and would have needed 60 votes to pass). As of this writing, there are over 65,000 confirmed cases of COVID-19 in the US according to Johns Hopkins University, and we sincerely hope everyone, their families, and their loved ones stay safe during this pandemic. A vote in the US House of Representatives is expected this upcoming Friday morning on March 27. The House is expected to convene at 9AM EST and the goal of each party’s leadership is to secure passage of the bill via a voice vote (please note that this differs from unanimous consent, which requires every member of the House to agree to such a legislative process in order to pass a bill without having the majority of lawmakers return to Washington DC, but this is easier/faster to achieve than a recorded roll call vote that would force every member of the House to return). Assuming the House swiftly passes the bill that was approved in the Senate, President Trump has clearly communicated he would sign the bill into law right away. Please note this bill is formally known as the Coronavirus Aid, Relief, and Economic Security (‘CARES’) Act.
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