Valens Equity Insights and Inflections - 2022 01 11
Generac (GNRC) has a dominant and growing market position for backup power generation and storage, a trend that is likely to grow for years. Uniform Accounting highlights that the market is pricing in some of these tailwinds, but Generac's potential to grow and expand returns faster signal the potential for equity upside.Generac owns 75% market share for household backup generators, a market with low penetration and accelerating demand. With households and businesses relying on more “essential” equipment like cell towers, temperature control, and IoT components, backup power itself is becoming an essential service.
That's why Generac has been able to expand its Uniform ROA for five consecutive years and grow above 10% in 11 of the last 12 years. With the market pricing in lower growth and just modest ROA expansion, Generac should be able to outperform the market's expectations.
GNRC's management is closely aligned to focus on margin expansion and overall growth, two critical factors for driving equity upside.
Management confidence in the Q3 earnings call about the company's M&A, distribution network, and momentum suggest management is executing on the company's ongoing strategy.
PG Q1 2022 Embedded Expectations Analysis – Markets expectations are for Uniform ROA to expand, but management may have concerns about growth, supply chain disruptions, and productivity
ETN Q3 2021 Embedded Expectations Analysis – Market expectations are for Uniform ROA to expand to new peaks, but management may have concerns about growth, supply chain, and restructuring
VMW Q3 2022 Embedded Expectations Analysis – Market expectations are for Uniform ROA to compress, but management is confident about product leadership and demand
ATKR, CMCS.A, CPNG, HD, JNJ, MA, XOM
Atkore International Group is a holding company. Through its subsidiaries, the company is engaged as a manufacturer of Electrical Raceway products primarily for the non-residential construction and renovation markets and Mechanical Products and Solutions (MP&S) for the construction and industrial markets. The company's segments are: Electrical Raceway, which ufactures products that deploy, isolate and protect a structure's electrical circuitry from the original power source to the final outlet; and MP&S, which provides products and services that frame, support and secure component parts in a range of structures, equipment and systems in electrical, industrial and construction applications.
Comcast is a media and technology company. The company's segments are: Cable Communications, which provides internet, video, voice, and security and automation services in the United States individually and as bundled services at a discounted rate over its cable distribution system to residential and business customers; NBCUniversal, which includes a portfolio of national cable networks that provide a variety of entertainment, news and information, and sports content, regional sports and news networks, international cable networks, and cable television studio production operations; and Sky, which owns a portfolio of pay television channels that provide entertainment, news, sports and movies.
Exxon Mobil operates or markets products in United States and other countries through its divisions and affiliated companies. The company's business involves exploration for, and production of, crude oil and natural gas and manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and other products. In United States, the company's development activities are focused on the onshore United States, in the Permian Basin of West Texas and New Mexico and the Bakken oil play in North Dakota. Gas development activities are also focused on the Marcellus Shale of Pennsylvania and West Virginia, the Utica Shale of Ohio and the Haynesville Shale of East Texas and Louisiana.
Generac Holdings is a designer and manufacturer of a range of power generation equipment and other power products serving the residential, light commercial and industrial markets. The company's products include residential, commercial and industrial standby generators, as well as portable and mobile generators used in a range of applications. Other engine powered products that the company designs and manufactures include light towers which provide temporary lighting for various end markets; commercial and industrial mobile heaters and pumps used in the oil and gas, construction and other industrial markets; and a product line of outdoor power equipment for residential and commercial use.
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.
Johnson & Johnson is a holding company engaged in the research and development, manufacture and sale of a range of products in the health care field. The company has three business segments: Consumer, which includes a range of products focused on personal healthcare used in the beauty, over-the-counter pharmaceutical, baby care, oral care, women's health and wound care markets; Pharmaceutical, which is focused on six therapeutic areas: immunology, infectious diseases, neuroscience, oncology, cardiovascular and metabolism and pulmonary hypertension; and Medical Devices, which includes products used in the orthopaedic, surgery, interventional solutions, and eye health fields.
Mastercard is a technology company in the global payments industry. The company's solutions enabling consumers to use electronic forms of payment instead of cash and checks. The company provides a range of payment solutions and services using its brands, including Mastercard?, Maestro? and Cirrus?. The company is a multi-rail network that provides customers one partner to turn to for their domestic and cross-border payment needs. The company has additional payment capabilities that include automated clearing house transactions. The company also provides offerings such as cyber and intelligence products, information and analytics services, consulting, loyalty and reward programs and processing.
Procter & Gamble provides consumer packaged goods. The company's products are sold primarily through mass merchandisers, e-commerce, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, baby stores, beauty stores, other stores and pharmacies. The company has five reportable segments: Beauty, which includes hair care, and skin and personal care products; Grooming, which includes shave care products; Health Care, which includes oral care and personal health care products; Fabric and Home Care, which includes fabric care and home care products; and Baby, Feminine and Family Care, which includes baby care, feminine care and family care products.
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.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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Many years later, our business model remains because little has changed on Wall Street.
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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