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Ray Merola

 
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  • Update: Still Time To Sell Both AT&T And Verizon As Sprint Steps Up Its Pricing Initiatives [View article]
    AtonRa

    Can you provide your figures / details regarding the effect a 5% price cut would have on T financials? What revenues do you project would be lost from what baseline, and how much is corresponding opex reduced? How did you translate this to -4% EBITDA drain?
    Sep 11 07:56 AM | 2 Likes Like |Link to Comment
  • Intel Developer Forum 2014: Investment Theories Confirmed [View article]
    Very good article Bruce. I learned a lot.

    Do you have an opinion on when Intel will bring to fruition so many of the IoT devices and applications discussed? Looking out at the stock over the next few years, what might Intel look like in 2017? Do you believe the IoT will "move the needle" by then?

    Would some OTM January 2016 Leaps be in order?
    Sep 10 08:17 PM | Likes Like |Link to Comment
  • Eaton: Perfectly Poised To Grow [View article]
    Eaton Corporation has been a long-term favorite of mine. CEO Sandy Cutler is one of the best in the business. The stock price had got a bit ahead of itself; it's now coming in again. Relatively poor 2Q execution and results has lead to the shares taking a hit.

    Does the Procision dual-clutch transmission "move the needle" for the company, or even the Vehicle division? What are prospective incremental sales?
    Sep 10 08:04 PM | Likes Like |Link to Comment
  • Why You Should Look Behind Aflac Headline Earnings Figures [View article]
    toneguru

    In general, the insurance stocks are one of the few industries many of which are at or below fair value. CB is a good choice. However, I recommend taking a close look at MET and PRU. These 2 appear to be trading further below fair value than Chubb.

    Good luck on all your 2014 investments.
    Sep 10 06:23 PM | Likes Like |Link to Comment
  • Why You Should Look Behind Aflac Headline Earnings Figures [View article]
    Glad your have enjoyed the dialogue here, toneguru

    I'll take a shot at your questions, but some others may have more insight:

    1) I don't know.
    2) It does seem like forex pairs may be likened to the Las Vegas slots. Some folks make money, some break even, and lots and lots lose. This is another reason that Aflac management (and some other multi-nationals) suggest investors focus upon the business performance in constant-currency; especially when little moolah floats back and forth across the pond.
    3) Aflac Japan does offer cancer insurance. Therefore, I suspect that the company may have exposure to the Fukoshima tragedy. I do not know the extend Aflac Japan limited new policies post-disaster.
    Sep 10 05:59 PM | Likes Like |Link to Comment
  • Why General Mills' Acqusition Of Annie's Could Be A Double-Edged Sword [View article]
    Good article, Gary. Thank you.

    You've hit the high points clearly. I agree this deal won't "move the needle" overnight, as the Annie's acquisition isn't big enough.

    As an additional plus, General Mills has been driving its "HMM" process. The objective is to leverage the company's size, span and expertise to drive down supply chain costs: and drive up gross margin. This could help out a business like Annie's.

    General Mills management has some great core competencies. One of those is supply chain management. Annie's was not noted as being particularly well-run.
    Sep 9 11:00 PM | 1 Like Like |Link to Comment
  • Why You Should Look Behind Aflac Headline Earnings Figures [View article]
    drm200

    My best guess is a devaluation episode like that could preclude Aflac management taking action. Remember, these guys are in the financial business. So if the USD/JPY pair cratered, I suppose the company would take steps to mitigate it. They would not stand still.

    Since Mr. Gundlach says 3 to 5 years, but hedges his bet to say it could take 10 years for the Yen valuation to fall apart, it's also safe to say that Aflac's underlying business may very well change within that time frame, too. Of course, he's also assuming that the dollar won't also weaken considerably.

    In a vacuum, I suspect a major devaluation to that extent could weigh on the company.

    The difficulty with the exercise is there are many moving parts, yet the attempt is to greatly exaggerate one variable while holding others at some sort of constant run-rate. In other words, the question assumes one major, long-term variable change yet also assumes that management will take no action to counter it.

    What if Aflac Japan business caught fire via Japan Post outlets and new products; so revenues and net doubled in five years, despite the devaluation?

    What if Aflac, in the face of a currency crisis, moved its headquarters to Tokyo, and reissued shares on the Tokyo exchange, thereby changing out U.S. shareholders for new ADRs, while hedging the currency and/or investing in dollars and euros?

    Alternatively, what if the U.S. lowered the corporate tax code to encourage more repatriated cash, might not Aflac actually convert (versus translate) more Yen in order to benefit shareholders?

    It certainly is an interesting thought experiment. I'll have to spend some more time thinking about that.
    Sep 9 10:51 PM | 1 Like Like |Link to Comment
  • How To Evaluate Express Scripts' Timeliness [View article]
    Interesting article. Revenue growth remains a concern. However, margins and FCF may provide near-term offsets. In the long run, the company must improve top line.

    Shareholder return of capital is another wildcard. Currently, I believe an aggressive share repurchase plan has the potential to lower shares outstanding below Valuentum figures. Any thoughts?

    Separately, CEO Paz has made a few overtures at initiating a cash dividend. This action could be a boost to the stock, too.
    Sep 9 09:26 PM | Likes Like |Link to Comment
  • Coach: Buying Opportunity In A Good Yielding Stock [View article]
    Another fine article, Arie

    My struggles with Coach stock are similar to a previous commentator: I just can't get my head around the sustainability of people buying $500 handbags.

    The financial metrics are good. Company management is making changes. The dividend is strong.

    I continue to wrestle with future sales and earnings. It seems Coach is getting beat out; somehow being considered a "lowbrow" designer brand. However, I cannot prove this nor relate well to the cadence of this business. One metric that bugs me is the 3x PEG ratio. Too high; not enough growth baked in.

    That said, I like to look at the "most hated" stocks and attempt to see these through reversal lens. Indeed, the charts indicate COH shares found a bottom.

    Will follow this board with interest. All the best.

    Sep 9 09:18 PM | Likes Like |Link to Comment
  • Why You Should Look Behind Aflac Headline Earnings Figures [View article]
    I believe, Tucker Kirk, you are on the right track as an investor. Seeing shades of gray, multiple / often conflicting data points, and dealing with incomplete information is part and parcel on the investment journey.

    I trust this comment board has added a few cobblestones along that journey.
    Sep 8 09:58 PM | Likes Like |Link to Comment
  • Why You Should Look Behind Aflac Headline Earnings Figures [View article]
    Most interesting analogy, ipaduser

    I suspect I may just have to utilize zinger that in the future!
    Sep 7 09:13 PM | 1 Like Like |Link to Comment
  • Why You Should Look Behind Aflac Headline Earnings Figures [View article]
    Good link, colin66

    I've been around long enough to listen to the academics and pundits call for the immediate crowning or eternal demise of most of the major economies of the world.
    Sep 7 09:14 AM | Likes Like |Link to Comment
  • Why You Should Look Behind Aflac Headline Earnings Figures [View article]
    positivethoughts

    Thanks for some very clear commentary, though perhaps not so positive.
    Sep 7 09:07 AM | 1 Like Like |Link to Comment
  • Why You Should Look Behind Aflac Headline Earnings Figures [View article]
    Paul

    Well, glad this article has got you thinking. That's a prime mover for this contributor. Appreciate your detailed commentary.

    I'll leave a couple of thoughts to wrap up:

    I see AFLAC following essentially the same prescription as most equities. Over time, what drives share price is earnings and cash flow. Currency conversion can be a relevant factor; currency translation is just a sideshow. AFL is well-managed, has a good balance sheet, generates most of its profits in cash, and has an excellent franchise. AFL stock has experienced post-2008 p/e compression, very similar to many other financial sector stocks. Price and earnings now correlate, but at a lower p/e multiple. I believe this will revert to more historic norms again; it is not a permanent condition.

    I also happen to own share of General Mills. In their recent investor day presentation, the management also advocates evaluating the business on a currency-neutral basis. I concur.
    Sep 7 09:06 AM | 1 Like Like |Link to Comment
  • Why You Should Look Behind Aflac Headline Earnings Figures [View article]
    Positive

    Just for the record, AFLAC management has consistently encouraged investors to evaluate the business on a currency-neutral basis regardless of whether the Yen was appreciating or declining versus the USD.

    Other good investors may not concur that AFLAC stock performance has been tied entirely to currency translation. Management has outlined several near-term headwinds that may have contributed, too.

    We agree that following analysts can be risky. I prefer to do my own research and analysis. I encourage all investors to do likewise, especially paying close attention to earnings, management discussion, presentations, and guidance.

    Interesting commentary on Japan's monetary policy. Some have the same opinion of the U.S. However, countries with reserve currencies are insulated; in addition, Japan's citizens own most of the government debt, unlike the U.S.

    Thanks for reading and contributing.
    Sep 6 02:49 PM | Likes Like |Link to Comment
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