VGR - Embedded Expectations Analysis - 2020 03 31
ï€ Vector Group Ltd. (VGR:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.4x Uniform P/E, implying bearish expectations for the firm. Moreover, management may be concerned about their debt, Eagle 20's performance and positioning, and investmentsï€ Specifically, management may lack confidence in their ability to pay down debt and increase their dividend going forward, and they may be concerned about their investment securities and partnership interest positioning. Moreover, they may lack confidence in their ability to sustain Elliman revenue growth and Eagle 20's performance, realize volume benefits from lower gas prices, and position Eagle 20's as the #1 or #2 discount brand in the nation. Furthermore, they may be exaggerating the strength of their market positioning, and they may be downplaying concerns about wholesale shipment declines and their long-term investment strategy
Vector Group is a holding company. The company is engaged principally in the manufacture and sale of cigarettes in the U.S. through its Liggett Group LLC (Liggett) and Vector Tobacco Inc. subsidiaries; and the real estate business through its New Valley LLC (New Valley) subsidiary. The company's business segments were Tobacco, and Real Estate. The Tobacco segment consists of the manufacture and sale of conventional cigarettes. The Real Estate segment includes the company's investment in New Valley, which includes Douglas Elliman, Escena, Sagaponack and investments in real estate ventures.
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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