Home Depot – Share Price and Dividends Boosted Through Significant Use of Debt

Summary

  • This Home Depot Stock Analysis is based on Q3 results reported November 14, 2017 which includes increased diluted EPS guidance to $7.36 which is growth of approximately ~14% from fiscal 2016.
  • It is one of a handful of companies with monster share buyback programs. A $15B share buyback program was authorized in early 2017.
  • HD has reduced the number of outstanding shares by ~490 Million since early 2008 and long-term debt has increased by ~$11B.
  • Strong free cash flow should enable HD to service/retire its debt obligations when due but HD can’t continue in perpetuity to boost its dividend and share price through the use of debt.

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Paychex Stock Analysis – Looking for a Re-Entry Price in the Low $50s

Summary

  • This Paychex stock analysis is based on Q1 2018 result as at August 31, 2017.
  • Paychex is a leading provider of payroll processing, human resources and benefits services.
  • It is expensive at current the current price of ~$64.50.
  • A price in the low $50s or below is more reasonable and is not totally out of the realm of possibility.

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Praxair and Air Products Stock Analysis – Buy Both When Fairly Valued

Summary

  • Praxair reported strong Q3 2017 results on October 26, 2017 and provided an update on its proposed merger with Linde.
  • The successful completion of the Praxair Linde merger in the 2nd half of 2018 will make the combined entity the largest player in the industry.
  • Air Products reported strong Q4 and FY2017 results from continuing operations. With its strong balance sheet management expects to invest over $8B over the next three years.
  • In FY2017, Air Products divested non-core assets through the spin-off of Versum Materials and the sale of Performance Materials.
  • Both companies are expensive at current levels. I will monitor both companies with the intent of eventually acquiring shares in both companies when they are more attractively valued.

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Cintas Corporation Stock Analysis – I’m Interested But Not At Current Price

Summary

  • This Cintas Corporation stock analysis is based on Q1 2018 results released September 26, 2017.
  • Cintas completed the transformative acquisition of one of its largest competitors (G&K Services, Inc.) earlier this year and integration is proceeding as planned.
  • Valuation is stretched with a forward PE of ~27 versus the historical ~20 – 21 level.
  • The dividend is paid annually. Unless you are a shareholder of record as at November 10, 2017, you should not expect to receive a dividend until December 2018.

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Emerson Electric Stock Analysis – Wait For A Dip To Low/Mid $50s

Summary

  • This Emerson Electric stock analysis is based on Q4 and FY2017 results released November 7, 2017.
  • FY2017 marks the 3rd year of EMR’s multi-year transformation.
  • EMR has continuously increased its annual dividend for ~60 consecutive years. A $0.02 annual dividend increase announced November 7th marks the 3rd consecutive year with a ~1% increase.
  • A recent proposal to Rockwell Automation to combine with EMR was rebuffed. I expect EMR to continue to hunt for potential acquisitions.
  • EMR appears to be somewhat expensive at ~$63. In my opinion, a~$51 – $54 price range is more appropriate.

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Church & Dwight Stock Analysis – Attractive After 20% Pullback From July 2017 High

Summary

  • This Church & Dwight analysis is based on Q3 results released Nov 2nd and its September 7th Barclays Back to School Conference presentation.
  • CHD’s ability to be a serial acquirer is the result of its strong free cash flow. It has tripled its free cash flow to ~$0.6B in a span of 10 years.
  • In FY2016, 82% of CHD’s sales were in the US. CHD is now making a concerted effort to expand its international sales from the $0.525B reported in FY2016.
  • CHD was richly valued a few months ago. The stock price has pulled back ~20% from its high set in July 2017.
  • CHD is now attractively valued and I would acquire additional CHD shares at current levels but we already have a full position.

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MasterCard Stock Analysis – One Of My Strongest Conviction Holdings

Summary

  • This MasterCard stock analysis is based on Q3 2017 results released October 31, 2017 and the September 7, 2017 Investor Day presentation.
  • MA and V are the two highest convictions stocks amongst the ~50 companies in which my wife/I own shares.
  • MA likely gets overlooked by many investors because of its sub 1% dividend yield and short dividend history.
  • MA has a robust suite of products/services and new offerings are continually being developed/acquired. I foresee continued growth over the long-term.

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