Report
Valens Research

Valens Equity Insights and Inflections - D2021 10 12

LPL Financial (LPLA) has created a powerful platform to empower independent and smaller scale wealth advisors to compete with the big players like Merrill Lynch and Morgan Stanley. Uniform Accounting highlights the company's operational improvements that the market is missing, indicating equity upside.

AMD Q2 2021 Embedded Expectations Analysis – Market expectations are for Uniform ROA to expand, but management may have concerns about data center revenue growth, EPYC processors, and operating costs

PYPL Q2 2021 Embedded Expectations Analysis – Market expectations are for Uniform ROA to soar, but management may have concerns about active users, payment volume, and eBay

SJM Q1 2022 Embedded Expectations Analysis – Market expectations are for Uniform ROA compression, but management is confident about their coffee business, supply chain, and growth

CBRL, CF, CSCO, CVX, EEFT, ELY, HD, KFY, LHCG, LLY, MCD, MRVL, NVRO, PWR, UPWK, VRM, WIX
Underlyings
Advanced Micro Devices Inc.

Advanced Micro Devices is a semiconductor company. The company primarily provides x86 microprocessors, as standalone devices or as incorporated into an accelerated processing unit, chipsets, graphics processing units (GPUs), data center and personnel GPUs, and development services; server and embedded processors, semi-custom System-on-Chip products, development services and technology for game consoles. The company also licenses portions of its intellectual property portfolio. The company's segments are: Computing and Graphics, which consists of desktop, notebooks, commercial, and chipsets products; and Enterprise, Embedded and Semi-Custom, which includes server processors, and embedded P\processors products.

Callaway Golf Company

Callaway Golf designs, manufactures and sells golf clubs (drivers, fairway woods, hybrids, irons, wedges and putters), golf balls, golf bags and other golf-related accessories. The company generally sells its golf-related products to golf retailers (including pro shops at golf courses and off-course retailers), sporting goods retailers, Internet retailers and mass merchants, directly and through its subsidiaries, and to third-party distributors in the U.S. and in various countries around the world. The company also sells pre-owned Callaway golf products through its website www.callawaygolfpreowned.com and sells Callaway golf products through its websites www.callawaygolf.com and www.odysseygolf.com.

CF Industries Holdings Inc.

CF Industries Holdings is a global fertilizer and chemical company. The company's principal nitrogen fertilizer products are anhydrous ammonia, granular urea, urea ammonium nitrate solution and ammonium nitrate. The company's other nitrogen products include diesel exhaust fluid, urea liquor, nitric acid and aqua ammonia, which are sold primarily to its industrial customers, and compound fertilizer products, which are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus, and potassium. The company serves its customers in North America through its production, storage, transportation and distribution network.

Chevron Corporation

Chevron is engaged in energy and chemicals operations. Upstream operations consist primarily of, among others, exploring for, developing and producing crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas, storage and marketing of natural gas; and a gas-to-liquids plant. Downstream operations consist primarily of, among others, refining crude oil into petroleum products; marketing of crude oil and refined products; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses and fuel and lubricant additives.

Chubb Limited

Cisco Systems Inc.

Cisco Systems designs and sells a range of technologies that power the Internet. The company's business is organized into the following three geographic segments: Americas; Europe, Middle East, and Africa; and Asia Pacific, Japan, and China. The company's products and technologies are grouped into the following categories: Infrastructure Platforms; Applications; Security and Other Products. In addition to its product offerings, the company provides a range of service offerings, including technical support services and other services. The company delivers its technologies through software and services. The company's customers include businesses of all sizes, public institutions, governments, and service providers.

Eli Lilly and Company

Eli Lilly and Company discovers, develops, manufactures, and markets products in a single business segment: human pharmaceutical products. The company's human pharmaceutical products include: diabetes and other endocrinology products, immunology products, neuroscience products, oncology products, and other products. The company's diabetes and other endocrinology products include: Baqsimi? and Basaglar?. The company's immunology products include: Olumiant? and Taltz?. The company's neuroscience products include: Cymbalta? and Emgality?. The company's oncology products include: Alimta?, Cyramza?, Erbitux? and Verzenio?. The company's other products include: Cialis?.

Euronet Worldwide Inc.

Euronet Worldwide is an electronic payments provider. The company provides payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers. The company operates three segments: Electronic Financial Transaction Processing, which processes transactions for a network of automated teller machines and point-of-sale terminals; epay, which provides distribution and processing of prepaid mobile airtime and other electronic content and payment processing services for various prepaid products, cards and services; and Money Transfer, which provides consumer-to-consumer and global account-to-account money transfer services.

Home Depot Inc.

The Home Depot is a home improvement retailer. The company provides its customers an assortment of building materials, home improvement products, lawn and garden products, and decor products and provides a number of services, including home improvement installation services and tool and equipment rental. The company also maintains a network of distribution and fulfillment centers, as well as a number of e-commerce websites. The company provides a number of programs for its Professional Customers to meet their particular needs, and for its Do-It-Yourself and Do-It-For-Me customers, the company provides a number of installation services. The company also provides tool and equipment rentals for its customers.

J.M. Smucker Company

Smucker (J.M.) manufactures and markets food and beverage products. The company's principal products are coffee, dog food, pet snacks, cat food, peanut butter, fruit spreads, frozen handheld products, shortening and oils, portion control products, juices and beverages, and flour and baking ingredients. The company has four reportable segments: U.S. Retail Coffee, U.S. Retail Consumer Foods, and U.S. Retail Pet Foods, and International and Away From Home. The U.S. retail market segments represent the sales of food and beverage products to consumers through retail outlets in North America. The International and Away From Home segment represents sales outside of the U.S. retail market segments.

Korn Ferry

Korn Ferry is an organizational consulting firm. The company is engaged in the business of giving client awareness to its range of talent management solutions. The company's segments include: Executive Search, in which the company's services are used to fill executive-level positions, such as board directors, chief executive officers, chief operating officers, chief information officers, chief human resource officers and other senior executive officers; Advisory, which helps clients design their organization and shows them the way to compensate, develop and motivate their people; and RPO and Professional Search, which combines people, process personnel and intellectual property enabled technology.

LHC Group Inc.

LHC Group is a holding company. Through its subsidiaries, the company provides post-acute health care services to its patients. The company's segments include: home health services, which include nursing, medically-oriented social services and physical, occupational, and speech therapy; hospice services, which include pain and symptom management, emotional and spiritual support, inpatient and respite care, homemaker services, dietary counseling, and family bereavement counseling; and home and community-based services, which include assistance with grooming, medication reminders, meal preparation, assistance with feeding, light housekeeping, respite care, transportation, and errand services.

LPL Financial Holdings Inc.

LPL Financial Holdings is a holding company. Through its subsidiaries, the company is engaged in the retail financial advice market and independent broker-dealer. The company's product and solution access includes: Commission-Based Products, which include variable and fixed annuities, mutual funds, equities, and insurance, among others; Fee-Based Advisory Platforms and Support, which include wrap-fee programs, mutual fund asset allocation programs, financial planning services, and retirement plan consulting services; and Cash Sweep Programs, which manage their clients' cash balances through a money market sweep vehicle involving money market fund providers and insured sweep vehicles involving banks.

Marvell Technology Group Ltd.

Marvell Technology Group is a semiconductor provider of application-specific products. The company is focused on the development of System-on-a-Chip devices, utilizing its technology portfolio of intellectual property in the areas of analog, mixed-signal, digital signal processing, and embedded and standalone integrated circuits. The company develops integrated hardware platforms along with software that incorporates digital computing technologies. In storage, the company is engaged in fibre channel products and data storage controller solutions spanning cloud, enterprise, edge and personal computing markets. The company's networking products include ethernet solutions, embedded processors and WiFi connectivity solutions.

McDonald's Corporation

McDonald's franchises and operates McDonald's restaurants. The company's menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, fries, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages and other beverages. The company's restaurants in the United States and various international markets provide a full or limited breakfast menu. Breakfast offerings may include Egg McMuffin, Sausage McMuffin with Egg, McGriddles, biscuit and bagel sandwiches and hotcakes. The restaurants also sells a variety of other products during limited-time promotions

NEVRO CORP

Nevro is a medical device company that has developed and commercialized the Senza? spinal cord stimulation, a neuromodulation platform for the treatment of chronic pain. The Senza system is approved to create electrical impulses from two Hz to 10,000 Hz, including the company's proprietary HF10 therapy, which allows for pain relief without paresthesia. Senza is consisted of leads, a trial stimulator, an implantable pulse generator (IPG), surgical tools, a clinician laptop programmer, a patient remote control and a mobile charger. These components enable physicians to implant the leads and the IPG, and patients to operate the system.

PayPal Holdings Inc

PayPal Holdings is a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. The company's combined payment solutions include its PayPal, PayPal Credit, Braintree, Venmo, Xoom and iZettle products and services. PayPal's payment solutions enable the company's customers to send and receive payments. PayPal helps merchants and consumers connect, transact, and complete payments, whether they are online, on a mobile device, in an app, or in person. The company provides proprietary payment solutions accepted by merchants that enable the completion of payments on the company's Payments Platform on behalf of its customers.

Quanta Services Inc.

Quanta Services is a provider of contracting services, delivering infrastructure solutions for the electric power, energy and communications industries in the United States, Canada, Australia, Latin America and select other international markets. The company has two segments: Electric Power Infrastructure Services, which provides network solutions to customers in the electric power industry and services that support the development of renewable energy generation; and Pipeline and Industrial Infrastructure Services, which provides infrastructure solutions to customers involved in the development, transportation, distribution, storage and processing of natural gas, oil and other products.

Wix.com Ltd.

Wix.com develops and markets an internet service that allows users to create web content. Co. is a global web development platform enabling businesses and organizations to take their businesses, brands and workflow online. Co.'s core product is the Wix Editor, a drag-and-drop visual development and website editing environment complete with high quality templates, graphics, image galleries and fonts. With Co.'s platform, Wix registered users can create and manage a professional quality digital presence tailored to their business and brands' specific look and feel that is accessible across all major browsers and the most widely used desktop, tablet and mobile devices.

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Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
  • Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.

  • Corporate credit ratings remain years behind the fundamental underpinnings of company performance
  • Stock analysts continue to make recommendations with deeply inherent biases
  • Research firms have failed to break down the walls between credit, equity, and macroeconomic research
  • The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming

The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.

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