Summary Paychex reported strong Q3 results on March 26th and earlier in March it announced an acquisition in Germany which will offer PAYX the opportunity to expand its market penetration in Europe. The balance sheet is pristine and it continues to generate strong free cash flow. PAYX’s stock valuation has retraced from recent highs to [...]
Summary NKE reported Q3 results March 22, 2018 which were better than expected when the one-time ~$2B impact from the Tax Cuts and Job Act is excluded. Despite the tax hit, NKE has indicated the TCJ is slightly favorable in terms of its normalized steady state effective tax rate and because it will provide NKE [...]
Summary Ecolab (ECL) has a track record of two decades of double digit EPS growth. It is a very low capital intensive company with highly consumable products/services thereby resulting in a predictable and highly recurring revenue stream. Bill Gates has held a position in ECL for some time and just recently acquired another ~1.3 million [...]
Summary DIS has offered to acquire certain 21st Century Fox, Inc. assets for $52B to help it expand into the direct-to-consumer streaming distribution business. The stock is attractively valued based on forward EPS and free cash flow. Despite the attractive valuation, I have several reasons why I will not initiate a position in DIS at [...]
Summary MKC is a dominant provider of spice and seasoning products to the commercial and industrial markets. It leveraged its balance sheet to acquire Reckitt Benckiser’s Food Division (‘RBFD’) for ~$4.21B in 2017 but management is committed to a significant reduction in debt levels by the end of fiscal 2020. Growth in revenue and margins [...]
Summary MCO is one of 10 statistical rating organizations recognized by the US Securities and Exchange Commission. It is the 2nd largest publicly traded member of this small group behind S&P Global Inc.. The company’s reputation took a hit when it completely failed to warn investors of the risks which led to the Financial Crisis. [...]
Summary On February 22, 2018 HRL released its Q1 2018 results and increased FY2018 EPS guidance. Q1 2018 reported revenue growth in the Grocery Products: $613.87M (+1%), Refrigerated Foods: $1.18B (+5%), International & Other: $150.32M (+19%) segments but Commodity turkey breast markets remain at multi-year lows thus resulting in weak results at Jennie-O Turkey Store: $390.65M [...]
Summary GPC reported strong FY2017 results on February 20, 2018 but the stock price pulled back ~5.2% as the stock was overvalued. The EIS and Motion businesses have been combined into one $6B industrial group as of the beginning of 2018. The rationale for combining these two segments is to provide economies of scale and [...]
Summary WMT reported FY2018 results February 20, 2018 and its stock price dropped ~10%; results were solid but investors had bid up WMT’s stock price to an unreasonable valuation. It continues to generate strong FCF and management is deploying its resources so that WMT can adapt to the evolving retail landscape. WMT announced a ~2% [...]
Summary Coca-Cola is facing declining sales and FCF due to changing consumer preferences. A turnaround plan has been implemented but I suspect positive results will take time to be evidenced. The Tax Cuts and Jobs Act (TCJ) will positively impact KO but there will be no positive net cash impact for several years. The days [...]
