Urban Outfitters: Due For A Big Fall? [View article]
Thanks Pimlico,
All of what is known is in the past and all of what has value is in the future. We care about how URBN's growth will be in the future.
Insider ownership may be important, but only if it acts as a signal (and usually only when buying is occurring). Just because he does not sell doesn't mean the stock won't go down.
Taking A Deep Dive Into Enbridge's Valuation [View article]
We understand the difference between MLPs and corporations. We also understand that cash flow is the most important metric when it comes to investing. Being structured as an MLP is actually more risky than being structured as a corporation. Case in point: if the markets seize up and access to new equity is denied, MLPs could encounter a liquidity crunch because they have paid out all of their cash to shareholders. Cash is cash -- and cash flow analysis is agnostic to business models or corporate structures.
Those firms that generate gobs of operating cash (and are growing) relative to capital and debt obligations are good entities, assuming that cash flow is sustainable. Those that don't generate strong operating cash, regardless of their structure, may not be good companies.
We think that investors that believe entities should be treated differently because of corporate structure should understand that their dividend is paid in cash -- so cash flow analysis remains key. The value of any asset or entity is the present value of its future free cash flows adjusted for its net balance sheet impact. This is also cash-flow based.
Any asset should be assessed on the basis of cash flow. Only when pundits say not to focus on cash flow or not to assess the business based on cash flow because it is "different" that one should emphasize cash flow.
Hope this clarifies why cash flow analysis is agnsotic to business models, etc. When MLPs pay out dividends, they pay out cash not earnings. Earnings are an accounting measure.
Why Kimberly-Clark Will Fall To The Low $70s [View article]
Hi lwitham,
We like to think of valuation as a range of probable outcomes and not a specific point estimate. We strongly believe that anyone that claims to know the exact fair value of a firm is doing a disservice to investors and their readers. Simply put, value is generated in the future (long term) and the future is unpredictable. After all, even the best analysts can't forecast what a firm is going to do in the next quarter or two (that's why there are so many beats or misses).
As such, we use a fair value range, and only when the share price falls outside of this range would we consider the company to be either undervalued or overvalued. Our fair value range of KMB is in the mid-$50s to just under $90. We may tighten this range in coming periods, but in either case, the firm is trading at the high end (this should be the major takeaway of the article). This range is called a margin of safety -- a process employed by Benjamin Graham and Warren Buffett. Our fair value estimate is based on a rigorous discounted cash flow process.
Taking A Deep Look At Target's Dividend Growth Potential [View article]
Interesting note: Our analysis indicated that the selling of its credit card operations was in part necessary to preserve future growth in the dividend.
The forecasts in the article (please view image) indicate that a dividend cut is not going to happen anytime soon, just slowing growth in the dividend to compensate for the relationship between its dividend payment profile versus its capital structure and future free cash flow generation.
In either case, its Dividend Cushion score is worth noting.
Our VBI rating is a 3. For more information on our methodology and how our readership determines the attractiveness of the stocks we cover, please click the following link:
Why Apple's Intrinsic Value Will Be $1000+ In 3 Years [View article]
Intrinsic value increases over time as companies generate cash and pay out dividends. Typically, the annual rate of fair-value increase is the cost of equity less a firm's dividend yield.
Why Apple's Intrinsic Value Will Be $1000+ In 3 Years [View article]
The 5-year revenue outlook cited in this article includes the most recently-reported year (fiscal 2012), where revenue advanced significantly. From fiscal 2013 through fiscal 2016, we're expecting average annual revenue growth of 12%.
Amazon Loses Money, But Shares Still Worth More Than $200 [View article]
Capitalizing operating leases, though a very valid approach, can sometimes act as a source of intrinsic value, particularly in this low interest rate environment.
Please remember that when you capitalize operating leases that one is adding leverage to the balance sheet, not at the cost of equity or even the cost of debt, but at the cost of these operating leases. Though 8 times rent expense may be appropriate rule of thumb to add debt to the balance sheet, it's likely that the cost of leases is substantially lower today. Making this adjustment may actually increase the intrinsic value from our base case assumption due to a lower discount rate assumption, all else equal. In other words, the benefit of a lower discount rate coupled with the greater cash flows since rent expense is broken into non-cash depreciation and interest expense may be significantly greater than the additional leverage on the balance sheet.
Importantly, we use a margin of safety in our process, and we do not approach valuation as a precise science (a valuation assessment will always be a range of probable outcomes). We think shares are worth over $200 at this time, but given an appropriate margin of safety, we won't be adding them to the portfolio of our Best Ideas Newsletter.
Amazon Loses Money, But Shares Still Worth More Than $200 [View article]
For investors seeking a more collegial and professional environments where comments such as the one above simply do not happen, please check out Valuentum:
Dividend Investors Should Take Note Of ConocoPhillips' Cash Flow Trends [View article]
Hi oldokie,
Please view the graphic above -- you'll see the company's cash balance fell from $6 billion at the beginning of the quarter to $3.7 billion at the end of the quarter.
AT&T Continues To Be A Cash Machine But Dividend Cushion Still Not Robust [View article]
In the spirit of transparency, the calculation of AT&T's Valuentum Dividend Cushion and that of Verizon is provided below. The Dividend Cushion has proven to be a reliable indicator in predicting dividend cuts and assessing a company's dividend growth prospects.
AT&T: [(3185-61,300)+78,839]... = 0.4
Verizon: [(13,954-50,303)+96,84... = 2
[(Total Cash - Total Debt)+Sum 5 years FCF]/(Sum of 5 years Dividends Paid) = Valuentum Dividend Cushion
AT&T Continues To Be A Cash Machine But Dividend Cushion Still Not Robust [View article]
Hi oskar96,
There are no advertisements in the article. We thought it would be helpful to offer up a pathway of more information to investors in the comment section.
We'll try to do a better job of conveying that the article is but a slice of the content and analysis we do on our website. In either case, thanks for your comment.
Combat Dividend Tax Rate Changes With A Dual Focus On Value And Yield [View article]
Combat Dividend Tax Rate Changes With A Dual Focus On Value And Yield [View article]
Kind regards,
The Valuentum Team
Urban Outfitters: Due For A Big Fall? [View article]
All of what is known is in the past and all of what has value is in the future. We care about how URBN's growth will be in the future.
Insider ownership may be important, but only if it acts as a signal (and usually only when buying is occurring). Just because he does not sell doesn't mean the stock won't go down.
Thank you for noticing the spelling error.
And lastly, thank you for sharing your opinion.
Kind regards,
The Valuentum Team
info@valuentum.com
Taking A Deep Dive Into Enbridge's Valuation [View article]
Those firms that generate gobs of operating cash (and are growing) relative to capital and debt obligations are good entities, assuming that cash flow is sustainable. Those that don't generate strong operating cash, regardless of their structure, may not be good companies.
We think that investors that believe entities should be treated differently because of corporate structure should understand that their dividend is paid in cash -- so cash flow analysis remains key. The value of any asset or entity is the present value of its future free cash flows adjusted for its net balance sheet impact. This is also cash-flow based.
Any asset should be assessed on the basis of cash flow. Only when pundits say not to focus on cash flow or not to assess the business based on cash flow because it is "different" that one should emphasize cash flow.
Hope this clarifies why cash flow analysis is agnsotic to business models, etc. When MLPs pay out dividends, they pay out cash not earnings. Earnings are an accounting measure.
Kind regards,
The Valuentum Team
http://www.valuentum.com
Why Kimberly-Clark Will Fall To The Low $70s [View article]
We like to think of valuation as a range of probable outcomes and not a specific point estimate. We strongly believe that anyone that claims to know the exact fair value of a firm is doing a disservice to investors and their readers. Simply put, value is generated in the future (long term) and the future is unpredictable. After all, even the best analysts can't forecast what a firm is going to do in the next quarter or two (that's why there are so many beats or misses).
As such, we use a fair value range, and only when the share price falls outside of this range would we consider the company to be either undervalued or overvalued. Our fair value range of KMB is in the mid-$50s to just under $90. We may tighten this range in coming periods, but in either case, the firm is trading at the high end (this should be the major takeaway of the article). This range is called a margin of safety -- a process employed by Benjamin Graham and Warren Buffett. Our fair value estimate is based on a rigorous discounted cash flow process.
Hope this helps.
Kind regards,
The Valuentum Team
http://www.valuentum.com
Taking A Deep Look At Target's Dividend Growth Potential [View article]
The forecasts in the article (please view image) indicate that a dividend cut is not going to happen anytime soon, just slowing growth in the dividend to compensate for the relationship between its dividend payment profile versus its capital structure and future free cash flow generation.
In either case, its Dividend Cushion score is worth noting.
Kind regards,
The Valuentum Team
http://www.valuentum.com
Why Hewlett-Packard Remains Cheap [View article]
Our VBI rating is a 3. For more information on our methodology and how our readership determines the attractiveness of the stocks we cover, please click the following link:
http://bit.ly/viu9MH
Thank you for reading.
Kind regards,
The Valuentum Team
http://www.valuentum.com
Why Apple's Intrinsic Value Will Be $1000+ In 3 Years [View article]
Thanks for your comment,
The Valuentum Team
http://www.valuentum.com
Why Apple's Intrinsic Value Will Be $1000+ In 3 Years [View article]
Thanks for your comment.
Kind regards,
The Valuentum Team
http://www.valuentum.com
Amazon Loses Money, But Shares Still Worth More Than $200 [View article]
Please remember that when you capitalize operating leases that one is adding leverage to the balance sheet, not at the cost of equity or even the cost of debt, but at the cost of these operating leases. Though 8 times rent expense may be appropriate rule of thumb to add debt to the balance sheet, it's likely that the cost of leases is substantially lower today. Making this adjustment may actually increase the intrinsic value from our base case assumption due to a lower discount rate assumption, all else equal. In other words, the benefit of a lower discount rate coupled with the greater cash flows since rent expense is broken into non-cash depreciation and interest expense may be significantly greater than the additional leverage on the balance sheet.
Importantly, we use a margin of safety in our process, and we do not approach valuation as a precise science (a valuation assessment will always be a range of probable outcomes). We think shares are worth over $200 at this time, but given an appropriate margin of safety, we won't be adding them to the portfolio of our Best Ideas Newsletter.
Hope this helps.
Kind regards,
The Valuentum Team
http://www.valuentum.com
Amazon Loses Money, But Shares Still Worth More Than $200 [View article]
We use free cash flow to better address the GAAP versus non-GAAP issue. Earnings per share in any form is inherently flawed.
Kind regards,
The Valuentum Team
http://www.valuentum.com
Amazon Loses Money, But Shares Still Worth More Than $200 [View article]
http://www.valuentum.com
Kind regards,
The Valuentum Team
http://www.valuentum.com
Dividend Investors Should Take Note Of ConocoPhillips' Cash Flow Trends [View article]
Please view the graphic above -- you'll see the company's cash balance fell from $6 billion at the beginning of the quarter to $3.7 billion at the end of the quarter.
Hope this helps,
The Valuentum Team
http://www.valuentum.com
AT&T Continues To Be A Cash Machine But Dividend Cushion Still Not Robust [View article]
AT&T: [(3185-61,300)+78,839]... = 0.4
Verizon: [(13,954-50,303)+96,84... = 2
[(Total Cash - Total Debt)+Sum 5 years FCF]/(Sum of 5 years Dividends Paid) = Valuentum Dividend Cushion
More information on the Dividend Cushion:
http://bit.ly/uFXpFr
Thanks again for reading!
Kind regards,
The Valuentum Team
http://www.valuentum.com
AT&T Continues To Be A Cash Machine But Dividend Cushion Still Not Robust [View article]
There are no advertisements in the article. We thought it would be helpful to offer up a pathway of more information to investors in the comment section.
We'll try to do a better job of conveying that the article is but a slice of the content and analysis we do on our website. In either case, thanks for your comment.
Kind regards,
The Valuentum Team
http://www.valuentum.com