this is bad ! really baaad ! don't know if I should bail or gut through it.
Sentiment: Strong Sell
all those "many stocks" you have that declare, have the date of declaration stated weeks, even months ahead. Here we are learning that KRFT has a board meeting today and might declare the dividend today, we don't even know. How does that compare to the rest of your many stocks. Do they keep you in the dark like KRFT?
Well their last div was declared in June which is Q2 so now that Q3 has passed and no div declared, they have eliminated a quarter. Not good. When I picked up a few shares it was because "superior dividend payout" (this is still on their company fact sheet !).
Sentiment: Strong Sell
I like GIS and pretty much agree with your price target, but I think it is a "sell in May and go away" at this time. A cliché, yes, but I think they are ahead of themselves and more likely to see 45 before heading to 54.
Thanks for the affirmation. The dividend plus growth that betters inflation is what I am looking for, and I like balance sheets with minimal debt and intangibles. That same store sales report looked a little worse than expected, but seems to be built in to the price for now. I was thinking the 20% dividend increase might have indicated a better report, but more likely they just figured paying .05 of it is easily doable due to the dividend already prepaid in Dec.
Agree. I sold KMB at 87 in Q4 and bought GIS and HCLP the same week. Both have done well but I am thinking GIS and CLX are ahead of themselves. CLX is a LTCG so I don't mind selling, but I don't what I'd exchange it for.
No fault in holding long term, but GIS is at an all time high based on all valuation metrics (PE, Yield) and certainly future growth prospects. It's a stable 10% annual grower (incl div). It's up 17% since I bought 7 months ago, likely to gravitate back to the mean when the dust settles (just my opinion).
Nice that HNZ's buyout offer is raising the tide on food stocks, but I doubt there will be a rush of other bidders to buy GIS, KRFT, etc. Good time to sell GIS here based on valuation? Perhaps buy puts or sell calls? Thoughts?
Lofty PE ratio and lowest yield in recent history (since the deep recession), should be in the mid- $60's, should there be a return to the mean.
After my first glance at the results I'm trying to figure why the jump today. The poor Q1 guidance and the lowered full year outlook should have sent the price down imo.
Down today on a market up day. What dividend increase are we looking at? Another pittiful 1/2c? Should be at least 1.5c based on their improved outlook. That's just 7%.
What big debt? their LT debt is down by 2/3 yoy and total debt down 20% for the same period and this is while they are growing sales and opening stores which usually burdens the balance sheet. Also, inventories are unchanged yoy while growing sales and with a much better cash position. All the usual ratios are excellent and not the problem.
I bought ahead of earnings (I never learn) because of their strong, pure (no GW or intangibles) balance sheet.
I don't know how the shorts will play out, but I hope they can get their margins back by eoq and that should fix alot.
I recently bought at $23.50 in my IRA:
Revenues & earnings growing nicely, margins improved in past three years, strong balance sheet with minimal debt & outstanding ratios with no funny biz (intangibles, etc). Forward PE of only 13. Many untapped markets. I could go on and on.
I'd like to see a dividend announced, even 1% yield is affordable and would send a positive message.
I have a feeling earnings tommorrow will swing the stock a good amount one way or the other.
You are asking a good question. I typically look at the Balance Sheet first to see the strength of a company, then I look at the Income Statement. It is harder for a company to manipulate the Balance Sheet.
In the case of KFT, "Goodwill" and "Intangible Assets" are the intangibles. Goodwill includes the cost over NAV of the purchase of Cadbury, Nabisco, etc. Intangible Assets are valuable trademarks, copyrights, etc and associated legal costs. I think the almost $40B of Goodwill on the books is valid because KFT has clearly made some sizeable purchases over the years that have paid off. The $25B of net Intangible Assets would probably take some digging to see what they really are, but are likely also justified. On the liability side of the #$%$ I will note that KFT has a growing pension liability, increasing at the rate of about $1B/year that will need to be resolved some day.
Steve -Thanks for your view. I look for companies I can buy to hold for a LT cap gain, pays a divy that is likely to grow 5-10% and not likely to get cut (I live off my dividends and rents) so our style is quite different. DNKN balance sheet looks worse each time I look at it: $2.5B of assets are "intangible+goodwill" (the worst kind) carry over from when private, and the $2B debt at 6% will cost $120MM/year which is quite material enough to impede growth (especially overseas). 6% is expensive debt btw. SBUX, my favorite post recession investment, has a stellar balance sheet by comparison.
I lightly understand your strategy to pursue shorts, but not enough for me to be successful at it. I'll roll puts and calls, but I don't short.
Oh, also the 20% I noted was the premium the 15MM shares were sold for over the IPO price (I think the IPO was $25?), so the PE qroup really made out . . . . again!
We're on the same page. I originally bought in believing in their expansion and dividend growth for the long term. If they can even maintain the current dividend, I can't see more than token growth in the future.
"What makes you so sure those shares are going to stay more expensive/down and not go up 20% or more?"
I can't claim to be sure, but a big chunk of shares just got sold to DNKN by the PE group, they are getting out and it is not in DNKN best interests to buy the stock. For the short run, it will look like earnings increased because there are less shares outstanding, but the added debt is a bad deal.
"How much do they need when the franchisees lay it out?"
They still need quite a bit. Initial marketing costs (TV, etc) is high. This is why they are seeking multi-store franchisees (small Corps or LLC's & 10 or more locations) to secure a large market quickly. SBUX might spend $150k min to open a new co store, but they then spend zero add'l on marketing. I believe TX is being marketed to now, but not many stores there yet.
I orig bought in because I believe they can best expand in the US, but I sold after learning more about their diminished future prospects and inability to grow their dividend. The current board best serves the private equity group and not you or I. I'm a CPA (not bragg'n, just say'n) and the balance sheet, especially after recent events, is not prime for growth. I can be right about this and the stock can still take off to 40, that is what the market does, but from my chair not likely and will be off my radar in a month. I'll make a comment on the dividend post too.