Lowe’s (LOW)
Lowe's (LOW) was founded in 1946 and is the world’s second largest home improvement retailer. The company operates over 2,100 home improvement and hardware stores (almost all in the U.S.) and helps homeowners, renters, and other customers complete a wide array of projects. The company’s stores are famous for being a one-stop shop for both do-it-yourself (DIY) customers, as well as professional contractors. A typical Lowe's store stocks more than 35,000 products across virtually every home improvement product category (lumber, paint, appliances, flooring, tools, cabinets, etc.). Less than 5% of Lowe’s sales are made online today, but the company’s strategy is focused on omni-channels sales to capitalize more of the e-commerce trend. Source: Lowe’s Investor Presentation Business Analysis [...]
WEC Energy Group (WEC)
Originally founded in 1896 as The Milwaukee Electric Railway and Light Company, WEC Energy Group (WEC) has grown through six major acquisitions over the past 120 years to become one of the nation’s largest electric and natural gas utilities. The company's last and largest merger, its $9.1 billion purchase of Integrys Energy in 2015, created the largest electric and natural gas utility in the Midwest. Source: WEC Energy Group Investor Presentation Today WEC provides service to 2.9 million natural gas customers and 1.6 million electric customers located throughout Wisconsin, Minnesota, Michigan, and parts of Illinois. The company also owns 60% of American Transmission Company, an electric transmission company, and has a nonregulated renewable energy business. However, over 99% [...]
Thoughts on Omega Healthcare’s Earnings Release Last Month
Omega Healthcare announced disappointing fourth quarter results on February 13. Most notably, after more than 20 consecutive increases to its quarterly dividend, management stated that the company's payout would remain at its current level (66 cents per share) in 2018 rather than move higher. Here were some comments made by Omega's CEO: “As a result of our strategic repositioning activities, 2018 will not be a growth year, and therefore, we do not expect to increase the dividend during 2018. However, I want to be very clear that we are confident in the payout percentage coverage and sustainability of our current quarterly dividend.” Regarding dividend coverage, Omega's 2018 guidance for adjusted funds from operations (AFFO) per share calls for a [...]
Apple (AAPL)
Apple (AAPL) was one of the pioneers in personal computing but has since grown to become one of the world's most dominant forces in consumer electronics with more than $225 billion in annual revenue. Today the company produces numerous consumer devices, including smartphones, desktop and laptop computers, tablets, smartwatches, voice-controlled smart speakers, TV boxes, and various phone accessories. Apple also offers an increasingly wide array of software services integrated into its hardware products, including the App Store, Apple Music, iCloud, FaceTime, Apple Pay, and Apple CarPlay. Today Apple's business continues to be dominated by the iPhone, which accounted for 62% of revenue in fiscal 2017, with over 215 million units sold. Mac computers (11%), iPad tablets (8%), and [...]
International Business Machines (IBM)
Founded in 1911, International Business Machines (IBM) is one of the world's oldest tech companies. Today IBM is the largest IT provider (5.5% global market share) for businesses around the world. It operates in five main business segments. Technology Services & Cloud Platforms (43% of revenue, 29% of operating income; declined 3% in 2017): provides cloud and project-based outsourcing services to help improve clients' IT infrastructure. This segment also offers technical support for integrated software solution products the company sells. Cognitive Solutions (23% of revenue, 46% of operating income; grew 2% in 2017): includes Watson, the cognitive computing (artificial intelligence) platform that uses natural language, processes big data, and learns from interactions with people and other computers. This segment offers [...]
CVS Health (CVS)
CVS Health (CVS) is one of America’s most dominant healthcare players. The company operates the nation’s second largest pharmacy chain with over 9,800 retail locations. CVS is also one of the nation’s largest pharmacy benefits managers (PBMs), with over 94 million plan members who used CVS to file 1.3 billion medical care claims in 2017. CVS acquired Caremark RX for $21 billion in 2006 to become the second biggest PBM. The pharmacy benefits business provides vital services to employers and insurance companies by determining which drugs are covered for patients and negotiating price discounts with drugmakers. In 2017, the majority of CVS’s sales came from its PBM segment, which, thanks to a faster growth rate than its retail [...]
Abbott Laboratories (ABT)
Founded in 1888, Abbott Laboratories (ABT) is one of the world’s largest medical companies, with a portfolio of leading, science-based offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals. Abbott spun off its research-based pharmaceuticals business AbbVie (ABBV) in January 2013 and has four main business units today: Medical Devices (38% of sales): devices to treat structural heart issues, such as stents, pacemakers, and implantable defibrillators, as well as products to monitor blood glucose levels. Nutritional Products (26%): pediatric and adult nutritional formula such as Similac, Ensure, and Pedialyte. Diagnostic Products (21%): chemical systems to diagnose cancer, drug abuse, cardiac diseases, fertility issues, and infectious diseases, as well as therapeutic drug monitoring and instruments to automate and test DNA [...]
Wells Fargo (WFC)
Wells Fargo (WFC) was founded in 1852 and is the third-largest bank in the country as measured by assets. The bank ended 2017 with about $1.3 trillion in total deposits, and its 90 different business lines collectively generated over $84 billion in revenue from a diversified mix of banking, insurance, investment, mortgage, and consumer and commercial finance services. Unlike many big banks, Wells Fargo has little exposure to investment banking and trading operations. Instead, the firm focuses on simple lending businesses (e.g. mortgages, auto loans, commercial financing) and fee income. The company has three operating segments: Community banking (57% of net income): diversified financial products and services for consumers and small businesses including checking and savings accounts, credit [...]
Dominion Energy (D)
Dominion Energy surprised many investors when it announced plans to acquire SCANA (SCG) in a $14.6 billion all-stock deal on January 3. SCANA’s stock rallied more than 20% on the news, but Dominion’s stock declined around 4%. The deal is expected to close during the third quarter of 2018. SCANA ran into trouble in 2017 when regulators decided to consider suspending over $440 million per year in rates that the company charges customers for its failed nuclear reactor units. SCANA and its partner Santee Cooper spent the past decade building these reactors for roughly $10 billion, but the project isn’t even half-finished today. Worse, $9-16 billion was estimated to be needed to finish the work. As a result, [...]
General Motors (GM)
General Motors was founded in 1897 in Detroit, Michigan, and is one of the largest car makers in the world. The company sells more than 7.5 million vehicles around the world each year primarily through its approximately 19,000 dealerships. GM's global market share is close to 17%, including an industry-leading position in its most profitable region, the U.S. General Motors has embarked on a multi-year strategy to redesign and expand its truck and crossover portfolio, which is more profitable and growing faster than passenger cars. On a retail basis, close to 80% of GM sales are now trucks and crossovers. The company markets its cars and trucks under the following brands: Chevrolet Buick GMC Cadillac Wuling (China) Baojun [...]