Group 1 - The article emphasizes the importance of investing in companies that demonstrate growth in revenue, earnings, and free cash flow [1] - It highlights the preference for companies with excellent growth prospects and favorable valuations [1] - The focus is on steadily growing companies with high free cash flow margins, dividend stocks, and those with generous share repurchase programs [1]

Core Viewpoint - Costco Wholesale has demonstrated significant stock performance with a 600% increase over the past decade, but future growth may not justify its current high valuation [1][2][8] Business Model - Costco operates a membership warehouse model, selling items in bulk at low margins while generating most profits from membership fees [4] - The company has built strong brand power, allowing it to attract customers without spending on marketing [5] Recent Performance - In the latest quarter, Costco reported an 8% increase in net sales and a 5.8% increase in comparable-store traffic year-over-year [6][7] - Paid memberships rose by 6.8%, indicating a robust customer base despite concerns about consumer spending [7] Valuation Concerns - The stock's price-to-earnings (P/E) ratio has increased from a range of 25-35 pre-pandemic to nearly 60 today, suggesting a disconnect between stock price and earnings growth [8][10] - Analysts project long-term earnings growth of 9% to 10% annually, which may not be sufficient to support the current high valuation [10][11] Future Projections - If Costco's earnings grow at a 10% annualized rate, projected earnings per share for fiscal years 2026 to 2030 would be $19.80, $21.78, $23.96, $26.35, and $28.99 respectively [12][15] - Applying a historical P/E of 30 to the projected earnings could suggest a share price of $870 by 2030, while the current trading price is $1,040, indicating potential overvaluation [13][14]

Entel SA (ENTEL.SN) Trimming Estimates Post-1Q25 27 May 2025 | 5:20PM BRT | ENTEL.SN | | --- | | 12m Price Target: Ch$3,450 | | Price: Ch$2,791 | | Upside: 23.6% | We incorporate 1Q25 earnings as well as updated macro/FX assumptions, lowering estimates particularly in Chile, given i) somewhat more-conservative ARPU assumptions amid continued competitive pressure from AMX and WOM in mobile, though we already assumed some increased competition this year; ii) weaker-than-expected fiber trends, with management ...

Investment Rating - The investment rating for Meiji Holdings is Neutral, with a 12-month target price revised to ¥3,400 from ¥3,500, reflecting a slight decrease in operating profit estimates [1][18][22]. Core Insights - The report indicates that operating profits for FY3/25 are expected to miss guidance, primarily due to anticipated shortfalls in sales across domestic milk, the dairy overseas business, and the vaccines/animal health business [1][17]. - The company has a significant market share in Japan for dairy products, chocolate, and protein products, but its growth prospects are considered to be adequately reflected in the current share price [22]. - The report highlights the importance of monitoring input costs, price hikes, and sales recovery in the food segment, as well as growth in the pharmaceuticals segment, particularly in vaccines and overseas business expansion [19][22]. Financial Estimates - FY3/26 operating profit estimates have been adjusted by -0.1% for the overall company, with specific adjustments of +¥0.7 billion for the food segment and +¥0.2 billion for the pharmaceuticals segment, while adjustments account for a decrease of -¥1.0 billion [1][17]. - Sales estimates for FY3/26 are projected at ¥1,192.2 billion, reflecting a year-on-year growth of 3.3% [3][20]. - The net profit for FY3/26 is estimated at ¥53.9 billion, with an EPS of ¥202.1 [3][20]. Segment Performance - The food segment's operating profit is expected to be ¥70.7 billion for FY3/26, while the pharmaceuticals segment is projected at ¥25.7 billion [20]. - Key areas of focus for the food segment include dairy, chocolate, and nutrition, with specific sales estimates for dairy at ¥273.5 billion and chocolate at ¥177.2 billion for FY3/26 [20]. - The pharmaceuticals segment is anticipated to see growth driven by vaccines and the expansion of the overseas CMO/CDMO business, despite challenges from drug price revisions [19][22].

Core Viewpoint - Dollar Tree, Inc. is expected to report a decline in both revenue and earnings for the first quarter of fiscal 2025, with significant pressures from reduced consumer spending and inflationary challenges [1][5][7]. Financial Performance - The Zacks Consensus Estimate for revenues is $4.5 billion, reflecting a 40.5% decrease from the same quarter last year [1]. - The consensus estimate for earnings is $1.20 per share, indicating a 16.1% decline year-over-year [1]. - The company has a trailing four-quarter negative earnings surprise of 8.4% on average, with the last quarter's earnings missing the estimate by 3.2% [4]. Market Trends - Continued soft demand for discretionary items is anticipated due to reduced spending among low-income consumers [5]. - Inflationary pressures and increased interest rates are contributing to the company's challenges [5]. - Adverse foreign currency translations are also negatively impacting performance [5]. Operational Adjustments - The company is diversifying its supplier base and exploring alternative manufacturing locations to mitigate risks from additional tariffs [6]. - Adjustments to sourcing strategies may lead to transitional inefficiencies and increased short-term costs, affecting first-quarter results [6]. Cost Structure - Higher selling, general and administrative (SG&A) expenses are expected to negatively impact the top and bottom lines due to elevated operating costs [7]. - Earnings are projected to be negatively impacted by 30-35 cents per share due to shared service costs related to the Family Dollar sale [9]. Strategic Initiatives - Dollar Tree is making progress on restructuring and expansion initiatives, including steady store openings and improvements in distribution centers [10]. - Management predicts comparable store sales growth of 3-5%, with a model forecasting a 4.7% year-over-year increase for the Dollar Tree banner [11]. Valuation Insights - Dollar Tree shares are trading at a forward 12-month price-to-earnings ratio of 16.47X, below the five-year median of 17.86X and the industry average of 33.28X, indicating attractive valuation [13]. - The stock has gained 230.7% in the past three months, contrasting with a 1.3% decline in the industry [16].

Core Viewpoint - Elevance Health, Inc. is trading at a discount with a forward 12-month P/E ratio of 10.35X, below its five-year median of 13.46X and the industry average of 13.86X, indicating attractive valuation compared to peers [1][2] Group 1: Growth Drivers - Elevance is positioned for sustained growth through strategic initiatives in its commercial and government segments, with commercial memberships growing 4.6% and 1% year-over-year in 2024, and a notable 14.2% increase in its Individual Commercial business in Q1 2025 [4][5] - The company has streamlined its government business by exiting underperforming markets, enhancing efficiency and potential for growth in Medicare Advantage in underpenetrated states [5] - Elevance's Return on Invested Capital stands at 9.94%, significantly above the industry average of 5.79%, showcasing superior capital deployment capabilities [6] Group 2: Shareholder Returns - The company is committed to returning capital to shareholders, having repurchased $880 million worth of shares in Q1 2025, with $8.4 billion remaining under its buyback authorization, and a dividend yield of 1.82%, exceeding the industry average of 1.40% [7] Group 3: Market Performance - Despite broader market challenges, Elevance shares have gained 1.9% year-to-date, outperforming both the industry and the S&P 500, while peers UnitedHealth and Humana have experienced declines [8] Group 4: Financial Estimates - The Zacks Consensus Estimate for Elevance's EPS indicates a 4.2% increase for 2025 and a 13.8% increase for 2026, with revenue estimates suggesting an 11.2% increase for 2025 and a 7.1% increase for 2026 [11] Group 5: Challenges and Risks - Elevance faces challenges including a decline in Medicaid and Medicare Supplement membership, which could lead to overall membership losses and reduced revenues [12] - Rising medical costs are a significant concern, with the benefit expense ratio increasing from 87% in 2023 to an estimated 88.7% in 2025, indicating pressure on earnings [13] - Regulatory uncertainties, particularly related to the Pharmacy Benefit Management industry, pose additional risks for Elevance [14]

Group 1 - Moretus Research provides high-quality equity research focused on U.S. public markets, aiming to deliver clarity, conviction, and alpha for serious investors [1] - The research framework identifies companies with durable business models, mispriced cash flow potential, and intelligent capital allocation, emphasizing a structured and repeatable approach [1] - Valuation methods are based on sector-relevant multiples tailored to each company's business model and capital structure, prioritizing comparability, simplicity, and relevance [1] Group 2 - Research coverage focuses on underappreciated companies experiencing structural changes or temporary dislocations, where disciplined analysis can yield asymmetric returns [1] - Moretus Research aims to elevate the standard for independent investment research by providing professional-grade insights and actionable valuation [1]

Core Viewpoint - American Eagle Outfitters, Inc. (AEO) is expected to report disappointing first-quarter fiscal 2025 results, with significant declines in both revenue and earnings compared to the previous year [2][5][7]. Financial Performance - The Zacks Consensus Estimate for AEO's fiscal first-quarter revenues is $1.1 billion, indicating a 4.6% decline from the same quarter last year [2]. - The consensus estimate for earnings per share is a loss of 25 cents, representing a 174% decline from earnings of 34 cents reported in the year-ago quarter [2]. - Comparable sales are projected to decline nearly 3%, with American Eagle decreasing 2% and Aerie falling 4% [7]. Operational Challenges - The company has faced persistent macroeconomic pressures affecting consumer discretionary spending, including elevated household debt and inflation, which have dampened consumer confidence among younger shoppers [5]. - Management expressed disappointment with the execution of merchandising strategies, leading to increased promotions and excess inventory, resulting in an inventory charge write-down of approximately $75 million [6][8]. - AEO has withdrawn its earlier guidance for fiscal 2025 due to macro volatility [7]. Future Outlook - Despite near-term challenges, AEO is focused on long-term value creation through its Powering Profitable Growth plan, which emphasizes brand amplification and operational optimization [9]. - The company is taking steps to stabilize margins and enhance profitability by streamlining expenses and improving efficiency [9]. Valuation Perspective - AEO's shares are trading at a forward 12-month price-to-earnings ratio of 9.4X, below the five-year median of 12.25X and the industry average of 17.68X, suggesting an attractive investment opportunity [11]. - Over the past six months, AEO's shares have declined by 42.4%, compared to a 10.7% decline in the industry [12].

Valuation Analysis - Innovation-based strategies are trading at near record low valuations relative to their history [1] - Innovation strategies are selling at a very low premium to the S&P 500, as measured by enterprise value to adjusted EBITA [1] - The average valuation premium over ARK's life is roughly 90%, or 75% excluding the COVID distortion [2] Methodology - S&P 500 and various innovation strategies were adjusted for stock-based compensation and R&D [2]

Investment Rating - Industry View for Media & Entertainment, Telecom & Cable Services, and Communications Infrastructure is rated as In-Line [3][5]. Core Insights - The report provides a comprehensive analysis of trading multiples across various segments, including Diversified Media & Streaming, Mid-Cap Entertainment & Sport, Mid-Cap Advertising & Film, Telecom & Cable Services, and Communications Infrastructure [6][20]. - Historical performance metrics are included for sub-industries over different time frames, such as 1 Week, 1 Month, 3 Months, 12 Months, and 3 Years Year-to-Date [2][6]. Summary by Industry Segment Diversified Media & Streaming - Price to Earnings (P/E) for 2025E is 42.2x, decreasing to 27.3x by 2027E - Adjusted Price/FCF for 2025E is 49.1x, decreasing to 30.9x by 2027E - EV/EBITDA for 2025E is 46.1x, decreasing to 29.1x by 2027E - Dividend Yield is projected at 0.2% for 2025E, increasing to 0.3% by 2027E [6]. Mid-Cap Entertainment & Sport - P/E for 2025E is 57.3x, decreasing to 27.5x by 2027E - Adjusted Price/FCF for 2025E is 40.6x, decreasing to 22.3x by 2027E - EV/EBITDA for 2025E is 56.1x, decreasing to 33.4x by 2027E - Dividend Yield is projected at 1.2% for 2025E, increasing to 1.4% by 2027E [6]. Mid-Cap Advertising & Film - P/E for 2025E is 13.7x, decreasing to 11.7x by 2027E - Adjusted Price/FCF for 2025E is 12.3x, decreasing to 10.7x by 2027E - EV/EBITDA for 2025E is 14.1x, decreasing to 12.5x by 2027E - Dividend Yield is projected at 4.3% for 2025E, increasing to 4.8% by 2027E [6]. Telecom & Cable Services - P/E for 2025E is 14.7x, decreasing to 13.5x by 2027E - Adjusted Price/FCF for 2025E is 14.3x, decreasing to 10.9x by 2027E - EV/EBITDA for 2025E is 15.0x, increasing to 14.1x by 2027E - Dividend Yield is projected at 2.2% for 2025E, increasing to 2.4% by 2027E [6]. Communications Infrastructure - P/E for 2025E is 24.4x, decreasing to 29.0x by 2027E - Adjusted Price/FCF for 2025E is 27.8x, decreasing to 24.2x by 2027E - EV/EBITDA for 2025E is 28.4x, decreasing to 26.0x by 2027E - Dividend Yield is projected at 3.4% for 2025E, increasing to 3.6% by 2027E [6].