Report
Valens Research

Valens Equity Insights and Inflections - 2020 02 04

POST is currently trading near corporate averages relative to UAFRS-based (Uniform) Earnings, with a 21.8x Uniform P/E. At these levels, the market is pricing in expectations for Uniform ROA to decline from 20% in 2018 to 17% by 2023, accompanied by 8% Uniform Asset growth going forward. However, analysts have bullish expectations, projecting Uniform ROA to improve to 21% in 2020, accompanied by 2% Uniform Asset contraction. Meanwhile, management is confident about their market share growth and recent M&A activity. Current valuations appear to be pricing in overly bearish expectations for POST, and should they just maintain profitability near current levels, as positive management sentiment suggests, upside would be warranted.

EXPE Q3 2019 Embedded Expectations Analysis – Market expectations are for substantial declines in Uniform ROA, but management is excited about Vrbo and confident about their strategies and bundles

CME Q3 2019 Embedded Expectations Analysis – Market expectations are for Uniform ROA to expand to new highs, but management appears concerned about growth, the Fed, and their sales teams

VRTX Q3 2019 Embedded Expectations Analysis – Market expectations are for Uniform ROA expansion, but management may be concerned about growth, Semma Therapeutics, and their pipeline

AMT, BWA, CHRW, CME, EMR, EQIX, EXPE, HCA, KFY, KMB, LKQ, MAR, MTOR, MYL, NLSN, NOW, NWSA, POST, SFM, VRTX
Underlyings
American Tower Corporation

American Tower is a holding company. Through its subsidiaries, the company is a real estate investment trusts and an independent owner, operator and developer of multitenant communications real estate. The company's primary business is the leasing of space on communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities and tenants in a number of other industries. The company also provides tower-related services, including site acquisition, zoning and permitting and structural analysis, which primarily support the company's site leasing business, including the addition of new tenants and equipment on its sites.

BorgWarner Inc.

BorgWarner is a holding company. Through its subsidiaries, the company is a global product provider in technology solutions for combustion, hybrid and electric vehicles. The company manufactures and sells these products worldwide, primarily to original equipment manufacturers of light vehicles (passenger cars, sport-utility vehicles, vans and light trucks). The company's segments are: Engine, which provides turbochargers, eBoosters, timing systems, emissions systems, thermal systems, gasoline ignition technology, cabin heaters, battery heaters and battery charging; and Drivetrain, which provides rotating electrical components, power electronics, clutching systems, control modules and all-wheel drive systems.

C.H. Robinson Worldwide Inc.

Robinson (C.H.) Worldwide is a third party logistics company. The company provides freight transportation services and logistics solutions to companies. The company's segments are: North American Surface Transportation, which provides freight transportation services across North America through a network of offices; and Global Forwarding, which provides global logistics services through an international network of offices and also contracts with independent agents; and All Other and Corporate, which includes Robinson Fresh? that provides sourcing services including the buying, selling, and marketing of fresh fruits, vegetables, and other perishable items, and managed services that provides Managed TMS?.

CME Group Inc. Class A

CME Group is a holding company. Through its subsidiaries, the company exchanges provides a range of global benchmark products across asset classes based on interest rates, equity indexes, foreign exchange (FX), agricultural, energy and metal commodities. The company provides futures and options on futures trading across asset classes through its subsidiary, Chicago Mercantile Exchange Inc. (CME) Globex platform, cash and repo fixed income trading via BrokerTec, and cash and OTC FX trading via EBS. In addition, the company operates central counterparty clearing providers, CME Clearing, a division of CME. The company also provides optimization, reconciliation and processing services through TriOptima, Traiana and Reset.

Emerson Electric Co.

Emerson Electric is a company that brings technology and engineering together to provide solutions for customers in a range of industrial, commercial and consumer markets around the world. The company 's segments are: Automation Solutions, which provides measurement and analytical instrumentation, valves, actuators and regulators, industrial solutions, and process control systems and solutions; Climate Technologies, which provides products and services for residential heating and cooling, commercial air conditioning, commercial and industrial refrigeration, and cold chain management; and Tools and Home Products, which provides tools for personnel and homeowners and appliance solutions.

Equinix Inc.

Equinix provides colocation space and related offerings. The company operates International Business Exchange? (IBX?) data centers across the Americas; Europe, Middle East and Africa and Asia-Pacific geographic regions where customers directly interconnect with a network ecosystem of partners and customers. The company's data center solutions include IBX Data Centers and xScale Data Centers. The company's Interconnection Solution connect businesses within and between its data centers across its global platform. The company's edge services help businesses deploy as-a-service networking, security and hardware across its data center footprint, as an alternative to buying, owning and managing the physical infrastructure.

Expedia Group Inc.

Expedia Group is an online travel company. The company's portfolio of brands includes: Expedia.com?, an online travel brand; Hotels.com?, a global lodging company operating websites with its Hotels.com? Rewards loyalty program; Vrbo?, a global online marketplace with a focus on providing lodging options for families; Egencia?, a corporate travel management company; Hotwire?, an online travel website providing spontaneous travel through its Hot Rate? deals; trivago?, an online hotel metasearch platform; and SilverRail Technologies, Inc., provider of a global rail retail and distribution platform connecting rail carriers and suppliers to both online and offline travel distributors.

HCA Healthcare Inc

HCA Healthcare is a holding company. Through its subsidiaries, partnerships and joint ventures, the company owns and operates hospitals and related health care entities. Most of the company's general, acute care hospitals provide medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic services and emergency services. The general, acute care hospitals also provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy. The company's psychiatric hospitals provide therapeutic programs including child, adolescent and adult psychiatric care, adolescent and adult alcohol and drug abuse treatment and counseling.

Kimberly-Clark Corporation

Kimberly-Clark is principally engaged in the manufacturing and marketing of a range of products primarily made from natural or synthetic fibers using technologies in fibers, nonwovens and absorbency. The company is organized into three operating segments: Personal Care, which provides solutions and products such as disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other related products; Consumer Tissue, which provides facial and bathroom tissue, paper towels, napkins and related products; and K-C Professional, which provides a range of solutions and supporting products such as wipers, tissue, towels, apparel, soaps and sanitizers.

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.

LKQ Corporation

LKQ is a holding company. Through its subsidiaries, the company provides alternative vehicle collision replacement products and alternative vehicle mechanical replacement products. The company is also a provider of alternative vehicle replacement and maintenance products in the United Kingdom, Germany, the Benelux region (Belgium, Netherlands, and Luxembourg), Italy, Czech Republic, Poland, Slovakia, Austria, and other European countries. In addition to its wholesale operations, the company operates self service retail facilities across the United States that sell recycled automotive products from end-of-life-vehicles. The company is also a distributor of specialty vehicle aftermarket equipment and accessories.

Marriott International Inc. Class A

Marriott International is a worldwide operator, franchisor, and licensor of hotel, residential and timeshare properties under various brand names at different price and service points. The company has operations in the following reportable business segments: North American Full-Service, which includes the company's Luxury and Premium properties located in United States and Canada; North American Limited-Service, which includes the company's Select properties located in United States and Canada; and Asia Pacific, which includes all properties in the company's Asia Pacific region.

Meritor Inc.

Meritor is a global supplier of a range of integrated systems, modules and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation and industrial sectors. The company serves commercial truck, trailer, military, bus and coach, construction, and other industrial OEMs and certain aftermarkets. The company's segments are: Commercial Truck, which supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems; and Aftermarket, Industrial and Trailer, which supplies axles, brakes, drivelines, suspension parts and other replacement parts to commercial vehicle and industrial aftermarket customers.

News Corporation Class A

News is a media and information services company. The company comprises businesses across a range of media, including news and information services, subscription video services in Australia, book publishing and digital real estate services, that are distributed under brands, including The Wall Street Journal, Dow Jones, The Australian, Herald Sun, The Sun, The Times, HarperCollins Publishers, Foxtel, FOX SPORTS Australia, realestate.com.au, realtor.com?, talkSPORT and others. The company distributes its content to consumers across platforms consisting of print and television, as well as digital platforms including websites, applications for mobile devices and tablets, social media and e-book devices.

Nielsen Holdings Plc

Post Holdings Inc.

Post Holdings is a consumer packaged goods holding company. The company's segments are: Post Consumer Brands, which manufactures, markets and sells branded and private label ready-to-eat (RTE) cereal and hot cereal products; Weetabix, which markets and distributes branded and private label RTE cereal products; Foodservice, which produces and distributes egg and potato products; Refrigerated Retail, which produces and distributes side dishes, eggs and egg, cheese, sausage and other refrigerated products; and BellRing Brands, which markets and distributes ready-to-drink protein shakes, other RTD beverages, powders, nutrition bars and supplements in the nutrition category.

ServiceNow Inc.

ServiceNow provides enterprise cloud computing services that define, structure, manage and automate digital workflows for global enterprises. The company markets its services to enterprises in a variety of industries, including consumer products, education, financial services, government, health care, information technology (IT) services and technology. The company sells its subscription services through direct sales and, to a lesser extent, through indirect channel sales. The company also provides a portfolio of personnel and other services, both directly and through its network of partners. The company's products include IT service management, IT operations management, IT business management, and security operations.

Sprouts Farmers Markets Inc.

Sprouts Farmers Market operates as a healthy grocery store. The company categorizes the varieties of products it sells as perishable and non-perishable. Perishable product categories include produce, meat, seafood, deli, bakery, floral and dairy and dairy alternatives. Non-perishable product categories include grocery, vitamins and supplements, bulk items, frozen foods, beer and wine, and natural health and body care. The company's stores include the following departments: packaged groceries, meat and seafood, deli, vitamins and supplements, dairy and dairy alternatives, bulk items, baked goods, frozen foods, natural health and body care, and beer and wine.

Vertex Pharmaceuticals Incorporated

Vertex Pharmaceuticals is focused on developing and commercializing therapies for the treatment of cystic fibrosis (CF) and developing research and development programs in other indications. The company's marketed products are TRIKAFTA (elexacaftor/tezacaftor/ivacaftor and ivacaftor), SYMDEKO/SYMKEVI (tezacaftor in combination with ivacaftor), ORKAMBI (lumacaftor in combination with ivacaftor) and KALYDECO (ivacaftor), which are approved to treat patients with CF who have specific mutations in their cystic fibrosis transmembrane conductance regulator gene. The company is evaluating CTX001, a genetic therapy as a potential treatment for sickle cell disease and beta-thalassemia.

Viatris Inc.

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