Report
Valens Research

Valens Equity Insights and Inflections - 2022 03 22

HTLF (HTLF) has been expanding its scale, helping to improve ROE and drive significant
equity growth. Uniform Accounting highlights the company's operational improvements
that the market is missing, indicating equity upside.

HTLF has been acquiring banks to expand away from the Midwest and into the American
West and Southwest. These banks are positioned in higher growth parts of the country, and
the company's larger scale has helped improve profitability that the market is not pricing in.
As HTLF continues growing, it should be able to expand ROE and grow equity faster than the market realizes.

HTLF's management is aligned to focus on profitable growth and proper risk management,
which should help focus them on their current expansion strategy, driving substantial equity
growth and ROE expansion.

ASGN (ASGN) is being removed from the Conviction Long List. The company is trading near historic highs, so we are closing up 37%.

MPWR Q4 2021 Embedded Expectations Analysis – Market expectations are for Uniform ROA to expand to new highs, but management may have concerns about capacity and growth

PAYC Q4 2021 Embedded Expectations Analysis – Market expectations are for Uniform ROA to expand, but management may have concerns about growth opportunities, client retention, and productivity

VMW Q4 2022 Embedded Expectations Analysis – Market expectations are for Uniform ROA to fade, but management is confident about product leadership, stakeholder initiatives, and profitability

HTLF, MPWR, PAYC, VMW, ADI, BKNG, FLT, FOXA, HLT, ORLY, REGN
Underlyings
Analog Devices Inc.

Analog Devices is an analog technology company. The company designs, manufactures, and markets a portfolio of solutions, including integrated circuits, algorithms, software, and subsystems. The company's analog products include data converter that translate real-world analog signals into digital data and also translate digital data into analog signals, amplifiers that condition analog signals, and power management and reference products that include functions such as power conversion, driver monitoring, sequencing and energy management. The company's digital signal processing products are designed to execute software programs, or algorithms, associated with processing digitized real-time, real-world data.

Booking Holdings Inc.

Booking Holdings provides travel and restaurant online reservation and related services. The company's brands include: Booking.com and Rentalcars.com, in which Booking.com provides booking online accommodation reservations, based on room nights booked, and Rentalcars.com provides online rental car reservation services; KAYAK, which provides an online price comparison service; Priceline, which provides consumers hotel, rental car and airline ticket reservation services, and vacation packages and cruises; Agoda, which is an online accommodation reservation service; and OpenTable, which provides online restaurant reservation services to consumers and reservation management services to restaurants.

FLEETCOR Technologies Inc.

FleetCor Technologies is provider of commercial payment solutions. The company's five primary product lines are Fuel, which provides fuel payment solutions to businesses and government entities who operate vehicle fleets, as well as to main oil companies;Lodging, which provides lodging payment solutions to employees who travel overnight for work purposes; Tolls, which provides an electronic toll and parking payments product; Corporate Payments, which include virtual cards, purchasing cards, travel and entertainment cards; and Gift, which provides gift card product management and processing services. Additionally, the company provides other payment products including fleet maintenance and employee benefits.

Fox Corporation Class A

Fox is a news, sports and entertainment company. The company has three segments: Cable Network Programming, which consists of the production and licensing of news and sports content distributed primarily through cable television systems, direct broadcast satellite operators and telecommunication companies and online multi-channel video programming distributors; Television, which consists of the acquisition, marketing and distribution of broadcast network programming nationally under the FOX brand and the operation of several broadcast television stations; and Other, Corporate and Eliminations, which consists of corporate overhead costs, intracompany eliminations and the FOX Studios lot.

Heartland Financial USA Inc.

Heartland Financial USA is a multi-bank holding company. The company conducts a community banking business through community banks (collectively, the Banks). The principal business of the company's Banks consists of making loans to and accepting deposits from businesses and individuals. The company's Banks provide commercial and retail banking in their communities. The company's lending and investment activities are funded primarily by core deposits. Deposit products include checking and other demand deposit accounts, Negotiable Order of Withdrawal accounts, savings accounts, money market accounts, certificates of deposit, individual retirement accounts, health savings accounts and other time deposits.

Hilton Worldwide Holdings Inc

Hilton Worldwide Holdings is a holding company. Through its subsidiaries, the company is engaged in hospitality with operations organized in two operating segments: management and franchise, which includes all of the hotels the company manages for third-party owners, as well as all franchised hotels operated or managed by someone other than the company; and Ownership, which includes hotels that the company owned or leased or that are owned or leased by entities in which the company owns a noncontrolling financial interest. Hilton Honors is the company's guest loyalty program that rewards guests with points for each stay at nearly all of its properties, which are then redeemable for free nights and other goods and services.

Monolithic Power Systems Inc.

Monolithic Power Systems is a fabless semiconductor company. The company designs, develops and markets power solutions for systems found in consumer, computing and storage, automotive, industrial, communications and consumer applications. The company's primary product families include the following: Direct Current (DC) to DC products, which are used to convert and control voltages within a range of electronic systems such as portable electronic devices, wireless Local Area Network access points, computers, and monitors, automobiles and medical equipment; and Lighting Control Products, which include lighting control integrated circuits that are used in backlighting and general illumination products.

O'Reilly Automotive Inc.

O'Reilly Automotive is a retailer of automotive aftermarket parts, tools, supplies, equipment and accessories, selling its products to both do-it-yourself and service provider customers. The company's stores carry a product line, including: new and remanufactured automotive hard parts and maintenance items, such as alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts, fuel pumps, hoses, starters, temperature control, water pumps, antifreeze, appearance products, engine additives, filters, fluids, lighting, oil and wiper blades; and accessories, such as floor mats, seat covers and truck accessories.

Paycom Software Inc.

Paycom Software is a provider of cloud-based human capital management (HCM) solution delivered as Software-as- a-Service. The company provides functionality and data analytics that businesses need to manage the complete employment lifecycle, from recruitment to retirement. The company's solution requires virtually no customization and is based on a core system of record maintained in a single database for various HCM functions, including talent acquisition, time and labor management, payroll, talent management and human resources management applications. The company's solution was developed in-house and is based on a single platform, there is no need to integrate, update or access various databases.

Regeneron Pharmaceuticals Inc.

Regeneron Pharmaceuticals is a biotechnology company that discovers, invents, develops, manufactures, and commercializes medicines for the treatment of diseases. The company's commercialized medicines and product candidates in development are designed to assist patients with eye disease, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, neuromuscular diseases, infectious diseases, and rare diseases. The company's products include: EYLEA (aflibercept) injection, which is used for the treatment of neovascular age-related macular degeneration, diabetic macular edema; and Dupixent (dupilumab) injection, which is used for the treatment of adult patients with atopic dermatitis.

VMware Inc. Class A

VMware is engaged in the development and application of technologies with x86 server-based computing, separating application software from the underlying hardware. The company's product and service solutions are organized into three main product groups: Software-Defined Data Center, which is designed to transform the data center into an on-demand service that addresses application requirements; Hybrid Cloud Computing, which is comprised of VMware Cloud Provider Program and VMware Cloud Services; and End-User Computing solution, which consists of VMware Workspace ONE, its digital workspace platform, that includes Unified Endpoint Management and VMware Horizon application and desktop virtualization.

Provider
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.

Analysts
Valens Research

Other Reports on these Companies
Other Reports from Valens Research

ResearchPool Subscriptions

Get the most out of your insights

Get in touch