Update on TAP, kitchen sink earnings report, Double Down!
TAP just had their kitchen sink earnings report. It was a dismal quarter. There are silver linings to this though.
First, they had a 1.9% rise in net sales on a brand-volume basis in the United States. Second, their sales in Europe were badly hurt by the lockdown measures as the UK was in its worst phase at the time; this is only creating a demand glut. Third, they lowered their debt by $1.1 billion dollars. And finally, they realized they spent too much on general administrative expenses and marketing expenses; this is something that is easy to fix when the CFO gets handed the scissors.
All the bad news is out, it should be all downhill from here with improvements and higher margins as they improve the bottom line. Buying stocks when they are fully beaten down but are still institutions that are household names that aren't going anywhere, can be a good entry point after they have their "kitchen sink" quarter. Boeing already had theirs, and Wells Fargo had theirs a while ago as well.
Their fair value estimate based on their current financials is $55 a share so they are fundamentally undervalued. Keep in mind most companies eventually trade up to share prices that are above what would be a considered a fair valuation. A perfect example would be Tesla.
STZ is in purple to compare TAP to a peer. STZ has mostly stayed inline with TAP in terms of performance until recently. STZ has now outperformed TAP and created a gap between the two. I believe TAP is due to play some catch up here.
Last I saw, they closed at $44.50 after-hours. Buy under $50. Hold long and collect a 2.56% dividend yield in the meantime.
TAP
First, they had a 1.9% rise in net sales on a brand-volume basis in the United States. Second, their sales in Europe were badly hurt by the lockdown measures as the UK was in its worst phase at the time; this is only creating a demand glut. Third, they lowered their debt by $1.1 billion dollars. And finally, they realized they spent too much on general administrative expenses and marketing expenses; this is something that is easy to fix when the CFO gets handed the scissors.
All the bad news is out, it should be all downhill from here with improvements and higher margins as they improve the bottom line. Buying stocks when they are fully beaten down but are still institutions that are household names that aren't going anywhere, can be a good entry point after they have their "kitchen sink" quarter. Boeing already had theirs, and Wells Fargo had theirs a while ago as well.
Their fair value estimate based on their current financials is $55 a share so they are fundamentally undervalued. Keep in mind most companies eventually trade up to share prices that are above what would be a considered a fair valuation. A perfect example would be Tesla.
STZ is in purple to compare TAP to a peer. STZ has mostly stayed inline with TAP in terms of performance until recently. STZ has now outperformed TAP and created a gap between the two. I believe TAP is due to play some catch up here.
Last I saw, they closed at $44.50 after-hours. Buy under $50. Hold long and collect a 2.56% dividend yield in the meantime.
TAP
