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Investing

Ideas and Strategies on Investing.

Previous Articles

Apple, Janus and IBM

4/27/2016

0 Comments

 
These three companies each declared increases in their quarterly and annual dividend today. These three are great examples of companies worth buying because management obviously thinks the company is strong enough to increase the dividend. Each week I try to list all those companies that increase their dividends because I'm a firm believer that this is fertile ground for finding companies worth accumulating.

I generally like to take note of those companies that increase their dividend greater than the rate of inflation plus have a forward yield greater than 2 percent. From there I research their sales and profits, market capitalization, debt ratios, return ratios, and earnings and dividend growth rates. If everything looks good, I begin accumulating a position in that company. 

I've discovered over the years that companies that consistently increase their revenues, earnings and dividends are companies will increase my income and my net worth as I grow older. And that's the whole point of investing, isn't it? So if you're looking for ideas, like I'm always doing, then researching companies that are increasing their dividend may just be a great place to start. 
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Apple Inc. designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players to consumers, small and mid-sized businesses, education, and enterprise and government customers worldwide. The company also sells related software, services, accessories, networking solutions, and third-party digital content and applications. It offers iPhone, a line of smartphones; iPad, a line of multi-purpose tablets; and Mac, a line of desktop and portable personal computers. The company also provides iLife, a consumer-oriented digital lifestyle software application suite; iWork, an integrated productivity suite that helps users create, present, and publish documents, presentations, and spreadsheets; and other application software, such as Final Cut Pro, Logic Pro X, and FileMaker Pro. In addition, it offers Apple TV that connects to consumers’ TV and enables them to access digital content directly for streaming high definition video, playing music and games, and viewing photos; Apple Watch, a personal electronic device; and iPod, a line of portable digital music and media players. Further, the company sells Apple-branded and third-party Mac-compatible, and iOS-compatible accessories, such as headphones, displays, storage devices, Beats products, and other connectivity and computing products and supplies. Additionally, it offers iCloud, a cloud service; AppleCare that offers support options for its customers; and Apple Pay, a mobile payment service. The company sells and delivers digital content and applications through the iTunes Store, App Store, iBooks Store, Mac App Store, and Apple Music. It also sells its products through its retail and online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. Apple Inc. was founded in 1977 and is headquartered in Cupertino, California.
​(Summary) (Company) (Chart)
Janus Capital Group, Inc. is a publicly owned asset management holding company with approximately $167.7 billion in assets under management. It also provides retirement planning, investment planning, tax planning, investment for college, and tax planning services to its clients. The firm primarily provides its services to investment companies, retail investors, institutions, and individuals. Through its subsidiaries, it manages equity, fixed income, money markets, and balanced mutual funds for its clients and invests in the public equity and fixed income markets across the globe. The firm was formerly known as Stilwell Financial Incorporated. Janus Capital Group was founded in 1969 and is based in Denver Colorado with additional offices in the United States, Hong Kong; London; Milan; and Tokyo, Japan.
(Summary) (Company) (Chart)
International Business Machines Corp. provides information technology (IT) products and services worldwide. The company’s Global Technology Services segment provides IT infrastructure services, such as IT outsourcing, integrated technology, cloud, and technology support services. Its Global Business Services segment offers consulting and systems integration services for strategy and transformation, application innovation services, enterprise applications, and analytics; application management, maintenance, and support services; and processing platforms and business process outsourcing services. The company’s Software segment provides middleware and operating systems software, including WebSphere software to integrate and manage business processes; information management software that enables clients to integrate, manage, and analyze data from various sources; Tivoli software that manages business infrastructure in real time; Workforce Solutions, which enables businesses to connect people and processes; and Rational software that supports software development. This segment also provides Watson software to interact in natural language, process big data, and learn from interactions with people and computers; Watson Health that offers data analytics and insights of individual health; and Watson Internet of Things that allows direct sensing and communication of data. Its Systems Hardware segment offers infrastructure technologies, such as servers for businesses, organizations, and technical computing applications; and data storage products and solutions. The company’s Global Financing segment provides lease and loan financing; commercial financing to suppliers, distributors, and remarketers; and remanufacturing and remarketing services. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. The company was founded in 1910 and is headquartered in Armonk, New York.
​(Summary) (Company) (Chart)
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0 Comments

Herman Miller

4/19/2016

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When the economy grows businesses expand. For most businesses that means more infrastructure, more office space, and more office furniture. Even a company reorganizing is changing more than just the organizational chart. They're changing the company's look and the company's layout. That means new, more and different furniture. And that's where companies like Herman Miller excel.

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Herman Miller, Inc. engages in the research, design, manufacture, and distribution of office furniture systems, seating products, other freestanding furniture elements, textiles, and related services in the United States and internationally. It provides modular systems under the Canvas Office Landscape, Locale, Metaform Portfolio, Public Office Landscape, Action Office, Ethospace, and Resolve names; seating products under the Embody, Aeron, Mirra2, Setu, Sayl, Celle, Equa, and Ergon names; and storage products under the Meridian and Tu names. The company also offers wooden casegoods under the Geiger name; freestanding furniture products under the Abak, Intent, Sense, and Envelop names; and healthcare products under the Palisade, Compass, Nala, and Nemschoff names, as well as provides Thrive portfolio of ergonomic solutions and textiles. Its products are used in institutional environments, including offices and related conference, lobby, and lounge areas, as well as general public areas, such as transportation terminals; health/science environments comprising hospitals, clinics, and other healthcare facilities; industrial and educational settings; and residential and other environments. The company markets its products through its sales staff, own dealer network, independent dealers and retailers, and independent contract office furniture dealers, as well as through Internet. Herman Miller, Inc. was founded in 1905 and is headquartered in Zeeland, Michigan.
(Summary) (Company) (Chart)
17 April 2016
Price $30.88
1yr Target $40.00
Analysts 1
Dividend $0.59
Payout Ratio 29.79%

1yr Cap Gain 29.53%
Yield 1.91%
1yr Tot Return 31.44%
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P/E 15.57
PEG 0.92
Beta 1.46
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EPS (ttm) $1.98
EPS next yr $2.29
EPS next 5yr 17.00%
1yr Price Support $38.93

​Market Cap $1.83 Bil
Revenues $2.23 Bil
Earnings $119.50 Mil
Profit Margin 5.53%

Quick Ratio 0.80
Current Ratio 1.20
Debt/Equity 0.00
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1yr RevGR 13.81%
3yr RevGR 7.42%
5yr RevGR 10.19%

1yr EarnGR ---
3yr EarnGR 7.80%
5yr EarnGR 30.37%

​1yr DivGR 5.66%
3yr DivGR 84.17%
5yr DivGR 44.79%

ROA 10.00%
ROE 26.00%

Company Operations

The company's principal business consists of the research, design, manufacture, selling, and distribution of office furniture systems, seating products, other freestanding furniture elements, textiles, and related services. Most of these systems and products are designed to be used together.

The company's ingenuity and design excellence creates award-winning products and services, which has made them a leader in the design and development of furniture, furniture systems, and textiles. The company has created innovative designs associated with it modular furniture systems under the names Canvas Office Landscape, Locale, Metaform Portfolio, Public Office Landscape, Layout Studio, Action Office, Ethospace, Arras, and Resolve. The company also offers a broad array of seating designs under the names Embody, Aeron, Mirra2, Setu, Sayl, Celle, Equa, and Ergon office chairs, storage designs under the names Meridian and Tu, wooden caseloads under the names Geiger, freestanding furniture under the names Abak, Intent, Sense and Envelop, and healthcare products under the names Palisade, Compass, Nala, and Nemschoff.  

The company's products are marketed worldwide by its own sales staff, independent dealers and retailers, its owned dealer network, and via its e-commerce website. Salespeople work with dealers, the architecture and design community, and directly with end-users. Independent dealerships concentrate on the sale of Herman Miller products. It is estimated that approximately 74 percent of the company's sales in the fiscal year ended May 30, 2015, were made to or through independent dealers. The remaining sales were made directly to end-users, including federal, state, and local governments, and several major corporations, by the company's own sales staff, its owned dealer network, DWR retail studios or independent retailers.

The company is a recognized leader within its industry for the use, development, and integration of customer-centered technologies that enhance the reliability, speed, and efficiency of our customers' operations. This includes proprietary sales tools, interior design and product specification software; order entry and manufacturing scheduling and production systems; and direct connectivity to the company's suppliers.
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The company's furniture systems, seating, freestanding furniture, storage, casegood and textile products, and related services are used in (1) institutional environments including offices and related conference, lobby, and lounge areas, and general public areas including transportation terminals; (2) health/science environments including hospitals, clinics, and other healthcare facilities; (3) industrial and educational settings; and (4) residential and other environments. 

Recent Developments
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In July 2014, Herman Miller acquired Design Within Reach, Inc. (DWR) and formed a new consumer-focused business unit comprised of DWR and the company's existing eCommerce and retail wholesale business. This acquisition represents an important step in the company's strategy to extend the reach of its brand into the consumer and design trade markets. It also represents a step toward enhancing the awareness and connection of the Herman Miller brand to the users and specifiers of products sold within the company's core contract furniture business (an ambition the company refers to as shifting from an “Industry” to “Industry+Consumer” focus). DWR brings with it a powerful multi-channel distribution structure that integrates brick and mortar retail studios (33 locations as of May 30, 2015), a successful direct-mail catalog program, an eCommerce platform, and a focused business-to-business selling model aimed at serving contract customers in work and hospitality environments. 

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​My Perspective

This entire industry of business furnishing is directly related to the healthiness of the economy and the overall business community. With the economy doing very well recently, this company, along with its competition, are doing very well. They are also estimated to continue to do well and that's why I'm interested in accumulating a position in this industry. 

I'm already a shareholder of Steelcase Inc and I have been very pleased with the acquisition. Now I'm also interested in Steelcase's competition and that includes Herman Miller. Other significant competitors include Haworth, HNI Corporation, Kimball International, and Knoll. Of those I've already looked at HNI Corp. Another I'm interested in researching in the near future is Knoll Inc.

​I expect to start a position in one or more of these companies in the near future. Once I lay them all out I'll compare their fundamentals and technicals to see which additional companies will make it into my portfolio. Based on the numbers above, Herman Miller has a great chance of being one of those companies.

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0 Comments

LSI Industries

4/15/2016

0 Comments

 
This is the kind of company that's all around you all of the time. You're usually attracted to their products and other companies rely on that fact to attract you to their products. And you really don't realize that you're looking at this company's products. You see them but you don't really notice them. Welcome to the world of LSI Industries. 
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​LSI Industries Inc. provides corporate visual image solutions in the United States, Canada, Australia, Latin America, Europe, and the Middle East. It operates through Lighting, Graphics, and Technology segments. The Lighting segment manufactures and markets outdoor and indoor lighting and lighting controls for the commercial, industrial, niche, and multi-site retail markets, including the petroleum/convenience store, quick-service, and automotive markets. It primarily offers exterior area, interior, canopy, and landscape lightings; and lighting controls, light poles, lighting analysis, and photometric layouts, as well as solid-state LED solutions. The Graphics segment manufactures and sells exterior and interior visual image elements used in graphics displays and visual image programs in various markets, including the petroleum/convenience store market and multi-site retail operations. It provides signage and canopy graphics, pump dispenser graphics, building fascia graphics, decals, interior signage and marketing graphics, aisle markers, wall mural graphics, fleet graphics, prototype program graphics, digital signage and media content management, and installation services for graphics products. The Technology segment designs, engineers, and manufactures electronic circuit boards, assemblies, lighting controls, and solid state LED video displays for use in OEM, transportation, commercial, industrial, entertainment, sports, and medical markets. LSI Industries Inc. was founded in 1976 and is headquartered in Cincinnati, Ohio.
(Summary) (Company) (Chart)
13 April 2016
Price $13.06
1yr Target $15.00
Analysts 1
Dividend $0.20
Payout Ratio 52.63%

1yr Cap Gain 14.85%
Yield 1.53%
1yr Tot Return 16.38%
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P/E 34.55
PEG 1.73
Beta 1.51
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EPS (ttm) $0.38
EPS next yr $0.51
EPS next 5yr 20.00%
1yr Price Support $10.20

​Market Cap $316.97 Mil
Revenues $315.30 Mil
Earnings $9.60 Mil
Profit Margin 3.04%

Quick Ratio 2.50
Current Ratio 3.90
Debt/Equity 0.00
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1yr RevGR 2.80%
3yr RevGR 4.62%
5yr RevGR 3.88%

1yr EarnGR 525.00%
3yr EarnGR 17.14%
5yr EarnGR 28.47%

​1yr DivGR 11.00%
3yr DivGR 3.53%
5yr DivGR 5.92%

ROA 5.20%
ROE 6.50%
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LSI Graphic Solutions
Operating Units 
 
LSI Industries is a leading provider of comprehensive corporate visual image solutions through the combination of extensive digital and screen graphics capabilities, a wide variety of high quality indoor and outdoor lighting products, lighting control systems, and related professional services. They also provide graphics and lighting products and professional services on a stand-alone basis. LSI Industries is the leading provider of corporate visual image solutions to the petroleum/convenience store industry and they use their leadership position to penetrate national retailers and multi-site retailers, including quick service and casual restaurants, retail chain stores and automobile dealerships. In addition, they are a provider of digital solid-state LED (light emitting diode) video screens to sports stadiums and arenas. They design and develop all aspects of their solid-state LED lighting and video screens, from the electronic circuit board, to the software to drive and control the LEDs, to the structure of the LED product. 
 
LSI Industries is expanding the traditional commercial/industrial lighting market by combining their LED product innovation and lighting control solutions with a strong emphasis on high service levels, U.S. manufactured products and market focused solutions. They offer a complete line of energy efficient exterior and interior lighting products and their lighting and graphic solutions are targeted to both energy retrofit and new construction markets.
 
The integration of the company's graphics, lighting, technology and professional services capabilities allows their customers to outsource the development of an entire visual image program from the planning and design stage through installation. The company's approach is to combine standard, high-production lighting products, custom graphics applications and professional services to create complete customer-focused visual image solutions. They also offer products and services on a stand-alone basis to service their existing image solutions customers, to establish a presence in a new market or to create a relationship with a new customer. 

The company's focus on product development and innovation creates products that are essential components of their customers’ corporate visual image strategy. LSI Industries spending on research and development was $5.6 million in fiscal 2015, $8.2 million in fiscal 2014, and $6.5 million in fiscal 2013.  Representative customers include BP, Chevron Texaco, 7-Eleven, ExxonMobil, Shell, Burger King, Dairy Queen, Taco Bell, Wendy’s, Best Buy, CVS Caremark, JC Penney, Target Stores, Wal-Mart Stores, Chrysler, Ford, General Motors, Nissan, and Toyota. LSI services their customers at the corporate, franchise and local levels. 
 
The company is organized into three segments and a catch all category: (1) the Lighting Segment, which represented 71% of our fiscal 2015 net sales; (2) the Graphics Segment, which represented 21% of our fiscal 2015 net sales; (3) the Technology Segment, which represented 7% of our fiscal 2015 net sales; and an All Other Category, which reported net sales of less than 1% in fiscal 2015.
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​Lighting Segment 
 
The Lighting Segment manufactures and markets outdoor and indoor lighting and lighting controls for the commercial, industrial, niche, and multi-site retail markets, including the petroleum/convenience store, quick-service, and automotive markets. The products are designed and manufactured to provide maximum value and meet the high-quality, competitively-priced product requirements of the company's niche markets. LSI generally avoids specialty or custom-designed, low-volume products for single order opportunities and concentrate on proprietary products used by their national account customers in large volume. Their concentration is on our high-volume, standard product lines that meet their customers’ needs and by focusing their product offerings, they normally achieve significant manufacturing and cost efficiencies. 
 
LSI's lighting fixtures, poles and brackets are produced in a variety of designs, styles and finishes. Important functional variations include types of mounting, such as pole, bracket and surface, and the nature of the light requirement, such as down-lighting, wall-wash lighting, canopy lighting, flood-lighting, area lighting and security lighting. Their engineering staff performs photometric analyses and wind load safety studies for all light fixtures and also designs their fixtures and lighting systems. Their lighting products utilize a wide variety of different light sources, including solid-state LED, high-intensity discharge metal-halide, and fluorescent. Major products and services offered within the lighting segment include: exterior area lighting, interior lighting, canopy lighting, landscape lighting, lighting controls, light poles, lighting analysis, and photometric layouts. All of these products are designed for performance, reliability, ease of installation and service, as well as attractive appearance. The company also has a focus on designing lighting system solutions and implementing strategies related to energy savings in substantially all markets served. 
 
LSI offers their customers expertise in developing and utilizing high-performance solid-state LED solutions, which when combined with the company’s lighting fixture expertise and technology, has the potential to result in a broad spectrum of white light LED fixtures that offer equivalent or improved lighting performance with significant energy and maintenance savings as compared to the present metal halide and fluorescent lighting fixtures. 
 
Lighting Segment net sales of $219,920,000 in fiscal 2015 decreased 1.2% from fiscal 2014 net sales of $222,604,000. The Lighting Segment’s net sales of light fixtures having solid-state LED technology totaled $127.0 million in fiscal 2015 (58% of total lighting net sales), representing a $27.1 million or 27.2% increase from fiscal 2014 net sales of solid-state LED light fixtures of $99.9 million (45% of total lighting net sales). There was a reduction in the company’s traditional lighting sales (metal halide and fluorescent light sources) from fiscal 2014 to fiscal 2015 as customers converted from traditional lighting to light fixtures having solid-state LED technology.
 
Graphics Segment 
 
The Graphics Segment manufactures and sells exterior and interior visual image elements related to graphics. These products are used in graphics displays and visual image programs in several markets, including the petroleum / convenience store market and multi-site retail operations. The company's extensive lighting and graphics expertise, product offering, visual image solution implementation capabilities and other professional services represent significant competitive advantages. They work with corporations and design firms to establish and implement cost effective corporate visual image programs. They also offer installation management services for those customers who require the installation of interior or exterior products (utilizing pre-qualified independent subcontractors throughout the United States).

The business can be significantly impacted by participation in a customer’s “image conversion program,” especially if it were to involve a “roll out” of that new image to a significant number of that customer’s and its franchisees’ retail sites. The impact to LSI can be very positive with growth in net sales and profitability. This can be followed in subsequent periods by lesser amounts of business or negative comparisons following completion of an image conversion program. An image conversion program can potentially involve any or all of the following improvements, changes or refurbishments at a customer’s retail site: interior or exterior lighting (see discussion above about our lighting segment), interior or exterior store signage and graphics, and installation of these products in both the prototype and roll out phases of their program.  
 
The major products and services offered within the Graphics Segment include the following: signage and canopy graphics, pump dispenser graphics, building fascia graphics, decals, interior signage and marketing graphics, aisle markers, wall mural graphics, fleet graphics, prototype program graphics, digital signage and media content management, and installation services for graphics products. 
 
The Graphics Segment net sales of $64,895,000 in fiscal 2015 increased $13.9 million or 27.3% from fiscal 2014 net sales of $50,970,000.  The $13.9 million increase in Graphics Segment net sales is primarily the net result of image conversion programs and sales to several petroleum / convenience store customers ($3.0 million net increase), a national drug store retailer ($0.4 million decrease), several quick-service restaurant chains ($8.4 million increase), two commercial customers ($0.9 million increase), one banking customer ($0.8 million increase), and changes in volume or completion of several other smaller graphics programs in various markets ($1.3 million increase). The Graphics Segment net sales of graphic identification products that contain solid-state LED light sources and LED lighting for signage totaled $1.4 million in fiscal 2015, representing a $1.0 million decrease from fiscal 2014 net sales of $2.4 million.
 
Technology Segment 
 
The Technology Segment designs, engineers, and manufactures electronic circuit boards, assemblies, lighting controls and large format solid state LED video displays. Applications for these products include but are not limited to OEM, transportation, commercial, industrial, entertainment, sports, and medical markets.  This segment also has significant inter-segment sales to the Lighting Segment to support that segment’s customer sales of solid-state LED lighting and lighting controls.    
 
Technology Segment net sales of $23,001,000 in fiscal 2015 decreased $1.5 million or 6.2% from fiscal 2014 net sales of $24,515,000. The $1.5 million decrease in Technology Segment net sales is primarily the net result of a $0.5 million decrease in sales to the telecommunications market, a $0.3 million decrease in sales to the transportation market, a $1.4 million increase in sales to original equipment manufacturers, a $0.3 million increase in sales to the medical markets, a $2.8 million decrease in sales to the sports market, and a $0.4 million increase in sales to various other markets. In addition to the Segment’s decrease in customer sales, its inter-segment sales decreased 14.1% due to decreased intercompany demand of LED circuit board assemblies used in light fixtures having solid-state LED technology. The Technology Segment’s net sales related to LED video screens totaled $2.3 million in fiscal 2015, representing a $2.8 million or 55.1% decrease from fiscal 2014 net sales of $5.0 million.
 
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​My Perspective
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This is a pretty small company and not normally one I would be interested in, but it showed up on one of my screens and I found the chart rather interesting. I also liked the fact that this company had no debt and it could cover its liabilities several times over ensuring the continuation and growth of their dividend. 

Unfortunately it looks like I found this three weeks too late. Three weeks ago an investor could have snapped up these shares for $11 per share which would have increased the estimated one year stock growth to 36.36% and the yield to 1.81%.  

As a result, I place this company on my watch list with the intent to start a position on any pullback below $12 and near its 20 week moving average. 

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0 Comments

Simulations Plus

4/14/2016

0 Comments

 
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At the crossroads of chemistry, biology, mathematics, and computer science lies a company called Simulations Plus. They develop models and simulations that are bringing physiologically based pharmacokinetics (PBPK) into clinical pharmacology in order to speed up the discovery of new drugs and medicines.

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​Simulations Plus, Inc. designs, develops, and markets drug discovery and development software for mechanistic modeling and simulation. It offers GastroPlus that simulates the absorption, pharmacokinetics, and pharmacodynamics of drugs administered to humans and animals; DDDPlus, which simulates in vitro laboratory experiments that measure the rate of dissolution of the drug and additives in a dosage form; and MembranePlus that simulates laboratory experiments. The company also provides PKPlus, a standalone program that provides the functionality needed by pharmaceutical industry scientists to generate the analyses and outputs to satisfy regulatory agency requirements for NCA and compartmental pharmacokinetics; ADMET Predictor, a chemistry-based computer program that takes molecular structures as inputs and predicts their properties; and MedChem Designer, a molecule drawing program or sketcher that integrates with MedChem Studio and ADMET Predictor. In addition, it offers MedChem Studio, a tool for data mining and designing new molecules; and KIWI, a cloud-based Web application that organizes, processes, maintains, and communicates the volume of data and results generated by pharmacologists and scientists over the duration of a drug development program. Further, the company provides consulting services ranging from early drug discovery through preclinical and clinical trial data analysis, and reporting to regulatory agencies; and population modeling and simulation contract research services for the pharmaceutical and biotechnology industries. It offers software and services to pharmaceutical, biotechnology, agrochemical, and food companies, as well as regulatory agencies in North America, South America, Europe, Japan, Australia, New Zealand, India, Singapore, and the People’s Republic of China. Simulations Plus, Inc. was founded in 1996 and is headquartered in Lancaster, California.
(Summary) (Company) (Chart)
12 April 2016
Price $8.80
1yr Target $13.30
Analysts 1
Dividend $0.20
Payout Ratio 76.92%

1yr Cap Gain 51.13%
Yield 2.27%
1yr Tot Return 53.40%
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P/E 34.11
PEG 1.71
Beta -0.11
EPS (ttm) $0.26
EPS next yr $0.35
EPS next 5yr 20.00%
1yr Price Support $7.00

​Market Cap $149.51 Mil
Revenues $19.10 Mil
Earnings $4.40 Mil
Profit Margin 23.03%

Quick Ratio 3.20
Current Ratio 3.20
Debt/Equity 0.13
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1yr RevGR 59.80%
3yr RevGR 24.41%
5yr RevGR 11.32%

1yr EarnGR 27.77%
3yr EarnGR 6.50%
5yr EarnGR 12.08%

​1yr DivGR 5.26%
3yr DivGR 9.95%
5yr DivGR ---

ROA 16.00%
ROE 22.70%
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Simulations Plus is a premier developer of groundbreaking drug discovery and development modeling and simulation software. They then license that software to major pharmaceutical, biotechnology, agrochemical, and food industry companies and to regulatory agencies worldwide for use in the conduct of industry-based research. They also provide consulting services to these industries. In addition they are exploring the application of some of their machine-learning technologies for problems in aerospace and healthcare outside of their traditional markets. Simulations Plus is headquartered in Southern California and its common stock trades on the NASDAQ Capital Market under the symbol “SLP.”

In September 2014, Simulations Plus acquired Cognigen Corporation (Cognigen) as a wholly owned subsidiary. The acquisition has added $5 million to their revenues for the fiscal year ended August 31, 2015. Cognigen, incorporated in 1992, is a leading provider of population modeling and simulation contract research services for the pharmaceutical and biotechnology industries. Cognigen’s clinical pharmacology-based consulting services include pharmacokinetic and pharmacodynamic modeling, clinical trial simulations, data programming, and technical writing services in support of regulatory submissions. Cognigen develops software for harnessing cloud-based computing in support of modeling and simulation activities and provides consulting services to improve interdisciplinary collaborations and R&D productivity.

Simulation Plus is the global leader focused on improving the ways scientists use knowledge and data to predict the properties and outcomes of pharmaceutical and biotechnology agents, and one of only two global companies who provide a wide range of preclinical and clinical consulting services and software. Their innovations in integrating new and existing science in medicinal chemistry, computational chemistry, pharmaceutical science, biology, and physiology into our software have made them the leading software provider for physiologically based pharmacokinetics (PBPK) modeling and simulation.
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The company generates revenue by delivering relevant, cost-effective software and creative and insightful consulting services. Pharmaceutical and biotechnology companies use our software programs and scientific knowledge to guide discovery and preclinical development programs. They also use it to enhance their understanding of the properties of potential new medicines and to use emerging data to improve formulations, select and justify dosing regimens, support the generics industry, optimize clinical trial design, and simulate outcomes in special populations, such as the elderly and pediatric patients. 

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General

Simulations Plus develops and produces software for use in pharmaceutical research and in the education of pharmacy and medical students, as well as provides contract consulting services to the pharmaceutical and chemical industries. Their wholly owned subsidiary, Cognigen, conducts high-quality analysis and regulatory report generation for data gathered during clinical trials of new and existing pharmaceutical products. Cognigen also has developed a proprietary software product called KIWI which is used internally and by some of its customers to access data and analysis results on Cognigen’s internal computer cloud.  

Simulations Plus

The company currently offers six software products for pharmaceutical research: three simulation programs that provide time-dependent results based on solving large sets of differential equations: GastroPlus, DDDPlus, and MembranePlus; and three programs that are based on predicting and analyzing static (not time-dependent) properties of chemicals: ADMET Predictor, MedChem Designer, and MedChem Studio. The combination of ADMET Predictor, MedChem Designer and MedChem Studio is called the ADMET Design Suite. 

GastroPlus. The company's flagship product and largest source of revenues is GastroPlus. GastroPlus simulates the absorption, pharmacokinetics, and pharmacodynamics of drugs administered to humans and animals, and is currently the most widely used software of its type in pharmaceutical companies, the U.S. Food and Drug Administration (FDA), the U.S. National Institutes of Health (NIH), and other government agencies in the U.S. and other countries.

Because of the widespread use of GastroPlus, Simulation Plus was the only non-European company invited to join the European Innovative Medicines Initiative (IMI) program for Oral Bioavailability Tools (OrBiTo). OrBiTo is an international collaboration among 27 industry, academic, and government organizations working in the area of oral absorption of pharmaceutical products. 

In September 2014 the company entered into a research collaboration agreement (RCA) with the FDA to enhance the Ocular Compartmental Absorption and Transit (OCATTM) model within the Additional Dosing Routes Module of GastroPlus to provide a tool for generic companies and the FDA to assess the likely bioequivalence of generic drug formulations dosed to the eye. Under this RCA, Simulation Plus receives $200,000 per year. This RCA may be renewed for up to a total of three years based on the progress achieved during the project.

An interim release of GastroPlus, version 8.6, was released in August 2014, adding two important requested capabilities: (1) the addition of minipig physiology – a species becoming common in preclinical research; and (2) the expansion of the Drug-Drug Interaction (DDI) Module to include population simulations.

The next major release, version 9.0, added the ability to simulate dermal (through the skin) drug absorption from creams and ointments. This capability was developed through a funded collaboration with a top-5 pharmaceutical company, and is currently in use at the customer’s sites. A number of other improvements will be included in version 9.0 that will be announced with the release of the product, and which the company believes will expand the market for GastroPlus in pharmaceutical research and development. 

DDDPlus. DDDPlus simulates in vitro laboratory experiments used to measure the rate of dissolution of the drug and, if desired, the additives (excipients) in a particular dosage form (e.g., tablet or capsule) under a variety of experimental conditions. This software program is used by formulation scientists in industry and the FDA to (1) understand the physical mechanisms affecting the dissolution rate for various formulations, (2) reduce the number of cut-and-try attempts to design new drug formulations, and (3) design in vitro dissolution experiments to better mimic in vivo conditions.

MembranePlus. MembranePlus is a relatively new product that was released in October 2014. Similar to DDDPlus, MembranePlus simulates laboratory experiments, but in this case, the experiments are for measuring permeability of drug-like molecules through various membranes, including several different cell cultures (Caco-2, MDCK) as well as artificially formulated membranes (PAMPA). The value of such a simulation derives from the fact that when the permeabilities of the same molecules are measured in different laboratories, results are often significantly different. These differences are caused by a complex interplay of factors in how the experiment was set up and run. MembranePlus simulates these experiments with their specific experimental details, and this enables the scientist to better interpret how results from specific experimental protocols can be used to predict permeability in human and animals, which is the ultimate goal. 

ADMET Predictor. ADMET (Absorption, Distribution, Metabolism, Excretion, and Toxicity) Predictor is a chemistry-based computer program that takes molecular structures as inputs and predicts approximately 145 different properties for them at an average rate of over 100,000 compounds per hour. This capability allows chemists to generate estimates for a large number of important molecular properties without the need to synthesize and test the molecules, or to generate estimates of unknown properties for molecules that have been synthesized but for which only a limited number of experimental properties have been measured. Thus, a chemist can assess the likely success of a large number of existing molecules in a company’s chemical library, as well as molecules that have never been made, by providing their molecular structures, either by drawing them using a tool such as the company's MedChem Designer software, or by automatically generating large numbers of molecules using various computer algorithms, including those embedded in our MedChem Studio software.

ADMET Predictor has been top-ranked for predictive accuracy in peer-reviewed, independent comparison studies, while generating its results at a high throughput rate. Although the state-of-the-art of this type of software does not enable identifying the best molecule in a series, it does allow early screening of molecules that are highly likely to fail as potential drug candidates (i.e., the worst molecules, which is usually the majority of a chemical library) before synthesizing and testing them. Thus, millions of compounds can be created and screened in a day, compared to potentially months or years of work to actually synthesize and test a much smaller number of actual compounds.

During 2014 the company released version 7.1 of ADMET Predictor. This version incorporates a powerful new model for predicting ionization constants (pKa’s), developed in a collaboration with Bayer AG that enabled the company to more than double the size of their data set from about 16,000 pKa values to more than 35,000, and to expand the chemical space it covers to include a larger number of molecules more like those of interest to the pharmaceutical industry today. Simulation Plus believes the resulting improvement in pKa prediction will further differentiate their best-in-class model from any competitor. Predicting ionization is critical to predicting most other properties, so all of their models (approximately 144) were retrained based on this new capability for version 7.1.

The ADMET Modeler subprogram that is integrated into ADMET Predictor enables scientists to use their own experimental data to quickly create proprietary high-quality predictive models. Pharmaceutical companies expend substantial time and money conducting a wide variety of experiments on new molecules each year, resulting in large databases of experimental data. Using this proprietary data to build predictive models can provide a second return on their investment. The automation in ADMET Modeler makes it easy for a scientist to create very powerful models with a minimum of training.

Simulation Plus is examining two different applications for this modeling engine: (1) building predictive models for missile aerodynamic force and moment coefficients as a function of missile geometry, Mach number, and angle of attack, and (2) classifying patients as healthy or experiencing some disease state or genetic disorder evidenced by magnetic resonance imaging (MRI) of the brain. 

The analysis of magnetic resonance imaging (MRI) data to classify patients as healthy or (in the company's first proof-of-concept case) likely to experience a form of autism has been developed in cooperation with the MRI facility at Auburn University. This state-of-the-art facility has two MRIs: a 3-Tesla machine and a 7-Tesla machine. The company's current goal is to demonstrate the potential for modeling technology to provide useful classification of a patient into one of the four groups based only on MRI data, so that Simulation Plus can approach various agencies (such as the NIH) to obtain funding to develop commercial products.

MedChem Designer. MedChem Designer was launched in 2011. It was initially a molecule drawing program, or “sketcher”, but now has capabilities exceeding those of other molecule drawing programs because of its integration with both MedChem Studio and ADMET Predictor. When used with a license for ADMET Predictor, MedChem Designer becomes a de novo molecule design tool. With it, a researcher can draw one or more molecular structures, then click on the ADMET Predictor icon and have over 140 properties for each structure calculated in seconds, including the company's proprietary ADMET Risk index. Researchers can also click on an icon to generate the likely metabolites of a molecule and then predict all of the properties of those metabolites from ADMET Predictor, including their ADMET Risk scores. This is important because a metabolite of a molecule can be therapeutically beneficial (or harmful) even though the parent molecule is not.

This proprietary ADMET Risk score provides a single number that tells the chemist how many default threshold values for various predicted properties were crossed (or violated) by each structure. The rules can be modified and new rules added by the user to include any desired rule set based on any combination of calculated descriptors, predicted properties, and user inputs. Thus, in a single number, the chemist can instantly compare the effects of different structural changes in many dimensions. As chemists attempt to modify structures to improve one property, they often cause others to become unacceptable. Without ADMET Risk, the chemist would have to individually examine many key properties for each new molecule (and its metabolites) to determine whether any of them became unacceptable as a result of changing the structure.

Version 3.0 of MedChem Designer added the ability to capture the image of a molecular structure from a variety of publication files with a new snapshot tool, and then have the program automatically convert the graphic image into any of several computer-based chemical structure files. Converting from lines and letters on the screen to an exact chemical representation of the molecule (Optical Structure Recognition, or OSR) is a complex task. Such a capability allows chemists to quickly capture molecular structures from the scientific literature to use for various purposes, including for use in our simulation and modeling software programs.

MedChem Studio. MedChem Studio is a tool that is used both for data mining and forde novo design of new molecules. In its data-mining role, MedChem Studio facilitates searching of large chemical libraries to find molecules that contain identified substructures, and it enables rapid generation of clusters (classes) of molecules that share common substructures from high throughput screening (HTS) data.

While MedChem Designer can be used to refine a small number of molecules, MedChem Studio can be used to create and screen (with ADMET Predictor) a very large number of molecules down to a few promising lead candidates. MedChem Studio has features that enable it to generate new molecular structures using a variety of de novo design methods. When MedChem Studio is used with ADMET Predictor and MedChem Designer (which the company refers to as their ADMET Design Suite), the company believes the programs provide an unmatched capability for chemists to search through large libraries of compounds that have undergone high-throughput screening experiments to find the most promising classes (groups of molecules with a large part of their structures the same) and molecules that are active against a particular target. In addition, MedChem Studio can take an interesting (but not acceptable) molecule and, using a variety of design algorithms, quickly generate many thousands to millions of high quality analogs (similar new molecules). These molecules can then be screened using ADMET Predictor to find molecules that are both active against the target as well as acceptable in a variety of ADMET properties.

NCE Projects. Simulation Plus initiated a new molecule (NCE, or New Chemical Entity) design project in which they used their own products to design novel molecules and have them synthesized and tested. Their goal was to demonstrate the ability of theirr ADMET Design Suite to generate new lead molecules in a fraction of the time and cost normally required in the pharmaceutical industry. They have conducted two NCE design projects so far. In the first, they designed molecules to test against the malaria parasite and in the other they designed molecules to test against the cyclo-oxygenase-2 (COX-2) enzyme that is the target for Celebrex®. Both projects were successful. When the molecules that they designed were tested against the malaria parasite and the COX-2 enzyme, the molecules successfully inhibited the malaria parasite and the COX-2 enzyme. Simulation Plus believes these projects demonstrate that their ADMET Design Suite can save considerable time and money in developing new lead compounds for particular targets. 

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​Cognigen 

​Simulation PLus acquired Cognigen in Sep 2014 because it had a reputation for high-quality analysis and regulatory reporting of data collected during clinical trials of new and existing pharmaceutical products. The analysis of clinical trial data that Cognigen performs is different from the type of consulting services offered by Simulations Plus. Cognomen relies more on statistical models, whereas the Simulation Plus relies more on mechanistic models. Statistical models rely on equations that are shown to fit the data, but without a detailed mechanistic understanding of why they do so. Mechanistic models involve detailed science-based mathematical representations of phenomena involved in drug absorption, distribution throughout the body, metabolism, and other effects. 

​At recent meetings held by the FDA and other regulatory agencies, such agencies emphasized an interest in bringing physiologically based pharmacokinetics (PBPK – a core strength of Simulations Plus) into clinical pharmacology (a core strength of Cognigen). The company believes that the combined strengths of Cognigen and Simulation Plus will uniquely position the company at the forefront of model-based drug development going forward. 
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​My Perspective

I found this company while doing one of my normal sorting routines.  Usually when I do this I get many of the same companies over and over again which provides a level of confidence in those companies that I've already invested in. But occasionally a new company surfaces. One that I've never heard of. And that happened recently when I uncovered Simulation Plus.

It's an extremely small company that's been around for a little while and it appears that it's finally starting to get some traction in the area of sales and profits. Interestingly enough this small company pays a relatively large 2.27% dividend that's growing faster than inflation. 

 It also seems that this company is in the highly needed and desirable area of bio-chemical modeling and simulation. And it doesn't appear to have much competition. I'm sure that many of the large pharmaceutical companies have this expertise in-house but many of the smaller pharmaceutical and bio-technology companies do not. And that's where Simulation Plus excels.

I think there's potential here and the company's future earnings estimates confirm this. Near term estimates have this company's earning growing 20% this year as well as next year. Future estimate continue this with 20% growth extending for the next 5 year. This is simply a continuation of the success of the company's stock which can be seen simply by looking at its stock chart. 

​I intend to start a small position in this company very soon. It will by no means be a core holding but rather fall into that area of speculative investing in my portfolio. As such it'll never be a large portion of my accounts but it the company progresses as I expect, it will probably become a more substantial investment over time. I have low expectations in the near term and high hopes for the future of this company. 

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0 Comments

La-Z-Boy

4/12/2016

0 Comments

 
La-Z-Boy Incorporated is the third largest furniture maker in the U.S., the largest reclining-chair manufacturer in the world and America's largest manufacturer of upholstered furniture. The company was founded in 1927 and is based in Monroe, Michigan. 

The company has a $1.3 Billion market cap with a forward P/E of 17. It sports a Zacks Style Score of “A” in Growth and “B” in value and has a VGM score of “A”. La-Z-Boy pays a dividend of 1.53% and expected EPS growth of 17.5%.
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Over the last 60 days, analysts have revised current fiscal year estimates 2.5% higher, from $1.55 to $1.59. If the company can beat again it should break out of this recent range it has been stuck in over the last year. La-Z-Boy will go for its fifth straight positive EPS surprise next quarter on June 21st.
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​La-Z-Boy Incorporated manufactures, markets, imports, distributes, and retails upholstery furniture products, accessories, and casegoods furniture products in the United States, Canada, and internationally. The company also produces reclining chairs; and manufactures and distributes residential furniture in the United States. It operates in three segments: Upholstery, Casegoods, and Retail. The Upholstery segment manufactures or imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans, and sleeper sofas. This segment sells its products directly to La-Z-Boy Furniture Galleries stores, operators of Comfort Studios and England custom comfort center locations, dealers, and other independent retailers. The Casegoods segment manufactures, imports, markets, and distributes casegoods furniture, including bedroom sets, dining room sets, entertainment centers and occasional pieces, and upholstered furniture. This segment sells its products to dealers, La-Z-Boy Furniture Galleries stores, and other independent retailers under the American Drew, Hammary, and Kincaid brand names. The Retail segment sells upholstered furniture, casegoods, and other accessories to the end consumer through its retail network. La-Z-Boy Incorporated sells its products through a network of 325 La-Z-Boy Furniture Galleries stores and 576 Comfort Studio locations, as well as in-store gallery programs for its Kincaid and England operating units. The company was formerly known as La-Z-Boy Chair Company and changed its name to La-Z-Boy Incorporated in 1996. La-Z-Boy Incorporated was founded in 1927 and is based in Monroe, Michigan.
(Summary) (Company) (Chart)
10 April 2016
Price $25.81
1yr Target $30.17
Analysts 6
Dividend $0.40
Payout Ratio 26.84%

1yr Cap Gain 16.89%
Yield 1.54%
1yr Tot Return 18.43%
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P/E 17.35
PEG 0.99
Beta 1.39
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EPS (ttm) $1.49
EPS next yr $1.74
EPS next 5yr 17.50%
1yr Price Support $30.45

​Market Cap $1.29 Bil
Revenues $1.48 Bil
Earnings $79.00 Mil
Profit Margin 6.12%

Quick Ratio 1.90
Current Ratio 3.10
Debt/Equity 0.00
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1yr RevGR 5.01%
3yr RevGR 6.84%
5yr RevGR 3.86%

1yr EarnGR 32.35%
3yr EarnGR -18.30%
5yr EarnGR 16.66%

​1yr DivGR 26.66%
3yr DivGR 33.03%
5yr DivGR ---

ROA 9.80%
ROE 14.40%
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La-Z-Boy furniture is sold in thousands of retail residential outlets in the United States and Canada and is manufactured and distributed under license in other countries including the United Kingdom, Germany Indonesia, Italy, Japan Mexico, New Zealand, Turkey, and South Africa. La-Z-Boy holds US and international patents on more than 200 different styles and mechanisms.

La-Z-Boy Incorporated is divided into three reportable operating segments: the Upholstery Group, the Casegoods Group and the Retail Group. The Upholstery Group primarily manufactures and sells upholstered furniture to furniture retailers and proprietary stores. This includes recliners and motion furniture, sofas, loveseats, chairs, ottomans and sleeper sofas. The Casegoods Group primarily sells manufactured or imported wood furniture to furniture retailers, including tables, chairs, entertainment centers, headboards, dressers, accent pieces and some coordinated upholstered furniture. The Retail Group consists of 70 company-owned stores in the US. The Retail Group sells mainly upholstered furniture to end consumers through the retail network.
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La-Z-Boy includes various companies and brands including La-Z-Boy Residential, La-Z-Boy Kids, La-Z-Boy Hospitality, Lea Furniture, American Drew, Kincaid Furniture, Bauhaus USA Furniture, Hammary Furniture and England Furniture Incorporated.
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My Perspective
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La-Z-Boy Inc. has been increasing its revenues over the last 5 years while at the same time increasing its operating margin. These kinds of efforts by management often result in increasing earnings over time. In the case of La-Z-Boy, earnings are  estimated to increase over 25% in FY16 and then another 10% in FY17 as a direct result of revenues increases.
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As revenues increased, La-Z-Boy restrained their operating costs causing an increase in their overall operating margins from  2.1% to 7.2% between FY2011 and FY2015. The company has also embarked on efforts to reduce their overall debt as can be seen in the following chart. 
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This reduction of corporate debt has allowed the company to significantly increase their cash position available for programs that can benefit their shareholders. As can be seen in the third chart below, the company has both increased the amount of money available for share repurchase and for dividend increases. This is the kind of information that Dividend Growth Investors like to see.
I believe that La-Z-Boy is fully priced at in the mid $20s and I believe it could easily rise to its estimated one year price of $30 within the next 12 -15 months. I also believe that with a beta of 1.39, this stock could possible be bought a couple of dollars lower than it current price. But with earnings estimated to increase 17.5% annually for the next 5 years, this stock end up being near $60 per share and paying a dividend near $0.90 annually. 
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Based on that alone, I expect to start a position in La-Z-Boy on any pullback to $25 or $24 per share with the intent to add to that position as long as the P/E ratio remains below 17.5 and the PEG remains below 1. I intend to add to that position over time through reinvestment of dividends, through the sale of call options, and through the open market purchase of additional sales at opportune times.  
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0 Comments

Charles Schwab Corp

4/8/2016

0 Comments

 
As Charles Schwab Corp's earnings have slowed over the last few years, so has its share's meteoritic rise higher. Despite this rise, the company's dividends have remained stagnant for the last six years. The result has been that as revenues and earning have continued to increase, the payout ratio has continued to fall. Today it's sitting at the lowly level of only 23%. I expect Charles Schwab to once again start increasing its dividend and that dividend could easily double over the next few years. 
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The Charles Schwab Corporation provides wealth management, securities brokerage, banking, money management, custody, and financial advisory services. The company operates through two segments, Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services, and other corporate brokerage services; and stock plan services, compliance solutions, and mutual fund clearing services, as well as engages in the off-platform sales business. The Advisor Services segment provides custodial, trading, and support services; and retirement and corporate brokerage retirement services. The company provides brokerage accounts with cash management capabilities; third-party mutual funds through the Mutual Fund Marketplace, including no-transaction fee mutual funds through the Mutual Fund OneSource service, which includes proprietary mutual funds, plus mutual fund trading, and clearing services to broker-dealers; exchange-traded funds (ETFs), including proprietary and third-party ETFs; and advice solutions, such as managed portfolios of proprietary and third-party mutual funds and ETFs, separately managed accounts, customized personal advice for tailored portfolios, and specialized planning and portfolio management. It also offers banking products and services, including checking and savings accounts, certificates of deposit, first lien residential real estate mortgage loans, home equity loans and lines of credit, and Pledged Asset Lines; and trust services comprising trust custody services, personal trust reporting services, and administrative trustee services. The company serves individuals and institutional clients in the United States, the Commonwealth of Puerto Rico, London, and Hong Kong. The Charles Schwab Corporation was founded in 1971 and is headquartered in San Francisco, California.
(Summary) (Company) (Chart)
7 April 2016
Price $26.39
1yr Target $31.59
Analysts 16
Dividend $0.24
Payout Ratio 23.30%

1yr Cap Gain 19.70%
Yield 0.90%
1yr Tot Return 20.60%
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P/E 25.67
PEG 1.21
Beta 1.60
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EPS (ttm) $1.03
EPS next yr $1.54
EPS next 5yr 21.26%
1yr Price Support $32.74

​Market Cap $34.43 Bil
Revenues $6.50 Bil
Earnings $1.36 Bil
Profit Margin 20.92%

Quick Ratio ---
Current Ratio ---
Debt/Equity 11.09
1yr RevGR 5.31%
3yr RevGR 9.22%
5yr RevGR 8.47%

1yr EarnGR 8.42%
3yr EarnGR 14.13%
5yr EarnGR 22.07%

​1yr DivGR 0.00%
3yr DivGR 0.00%
5yr DivGR 0.00%

ROA 0.80%
ROE 11.70%

​Background.

​In 1963, Chuck Schwab and three other partners launched Investment Indicator, an investment newsletter. At its height, the newsletter had 3,000 subscribers, each paying $84 a year to subscribe.

In April 1971, the firm incorporated in California as First Commander Corporation, a wholly owned subsidiary of Commander Industries, Inc., to offer traditional brokerage services and publish the Schwab investment newsletter. In November of that year, Schwab and four others purchased all the stock from Commander Industries, Inc.

In 1972, Schwab bought all the stock from what was once Commander Industries. In 1973, the company name changed to Charles Schwab & Co., Inc. 

In September 1975, Schwab opened its first branch in Sacramento, California, after offering discount brokerage from May 1, 1975.

In 1977, Schwab began offering seminars to clients.

By 1978, the company had 45,000 client accounts total, and the number grew to 84,000 in 1979.

In 1980 Schwab established the industry’s first 24-hour quotation service, and the total of client accounts grew to 147,000.

In 1981 Schwab became a member of the NYSE, and the total of client accounts grew to 222,000.

In 1982, Schwab became the first firm to offer 24/7 order entry and quote service. It opened its first international office in Hong Kong, and the number of client accounts totaled 374,000.

Today the company serves more than 8.2 million client brokerage accounts with more than $1.65 trillion in assets from over 300 offices in the U.S., Puerto Rico, London, and Hong Kong.

​My Perspective

Owning shares of any brokerage house is tempting if only to get back some of the many thousands of dollars that were spent on commissions over the years. But looking at the fundamentals of Schwab isn't causing me to jump into a position at this price. While an estimated 5 year EPS growth rate can support a price near $32 next year, the stock chart tells me that I may be able to buy these shares at a price a few dollars lower than where it sits today. And a beta of 1.6 tells me that the stock's inherent volatility may just provide a lower price in the near future.

While I don't expect the dividend yield to increase to 2% anytime in the near future, a pullback of just a few dollars in conjunction with potential future dividend increases would go a long way to make this a very nice investment. 

I believe that as the wealth and number of investors increases in the future, the value of investment advice will also increase. I'll be starting a position in this company as the price pulls back below $24 per share and the yield rises above 1%.
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0 Comments

NASDAQ Inc

4/4/2016

0 Comments

 
For most investors who analyze and invest in stocks on a daily, weekly or monthly basis, it never occurs to them to look at the exchange itself as an investment. That might just be a mistake, because there's a lot more to the NASDAQ than simply being a clearinghouse for stocks. And that "more" makes a lot of money for its shareholders. 
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​Nasdaq, Inc. provides trading, clearing, exchange technology, regulatory, securities listing, information, and public company services worldwide. It operates in four segments: Market Services, Listing Services, Information Services, and Technology Solutions. The Market Services segment offers equity derivative trading and clearing; cash equity trading; fixed income, currency, and commodities trading and clearing; and access and broker services. This segment operates various exchanges and other marketplace facilities across various asset classes, including derivatives, commodities, cash equity, debt, structured products, and exchange traded products; and provides clearing, settlement, and central depository services, as well as offers transaction-based platforms. The Listing Services segment operates various listing platforms, which offer capital raising solutions for private and public companies. Its primary listing markets include The NASDAQ Stock Market, and the Nasdaq Nordic and Nasdaq Baltic exchanges. The Information Services segment sells and distributes historical and real-time quote and trade information to market participants and data distributors; and develops and licenses Nasdaq branded indexes, associated derivatives, and financial products, as well as provides custom calculation services for third-party clients. The Technology Solutions segment offers corporate solutions in investor relations, public relations, multimedia solutions, and governance. It also provides technology solutions for trading, clearing, settlement, surveillance, and information dissemination; facility management and systems integration, and advisory services; and broker services, as well as enterprise governance, risk management, and compliance software and services. The company was formerly known as The NASDAQ OMX Group, Inc. and changed its name to Nasdaq, Inc. in September 2015. Nasdaq, Inc. was founded in 1971 and is headquartered in New York, New York.
(Summary) (Company) (Chart)
31 March 2016
Price $66.38
1yr Target $66.79
Analysts 14
Dividend $1.00
Payout Ratio 39.84%

1yr Cap Gain 0.61%
Yield 1.50%
1yr Tot Return 2.11%
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P/E 26.45
PEG 2.98
Beta 0.75
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EPS (ttm) $2.51
EPS next yr $4.17
EPS next 5yr 8.88%
1yr Price Support $37.02

​Market Cap $10.88 Bil
Revenues $3.40 Bil
Earnings $428.00 Mil
Profit Margin 12.58%

Quick Ratio 1.10
Current Ratio 1.10
Debt/Equity 0.42
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1yr RevGR -2.69%
3yr RevGR 2.85%
5yr RevGR 1.28%

1yr EarnGR 4.60%
3yr EarnGR 6.94%
5yr EarnGR 5.53%

​1yr DivGR 55.17%
3yr DivGR 31.77%
5yr DivGR ---

ROA 3.60%
ROE 7.60%
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My Perspective

​Looking at the company's fundamentals shows a company that's pretty rock solid, but not exceptional. If anything, the numbers are a little less than optimal primarily because the stock has run up in value, especially 2016. So this is all about the chart (see below). For the most part this company has simply moved in one direction over the last couple of years - up! And there's no reason it won't continue to move higher. I don't see anyway this company will cease to exist. And as more companies go public and more investors enter the markets, NASDAQ Inc will only benefit from that increase. 

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​I intend to simply monitor this company at this time because the stock has moved up quite a bit since the beginning of 2016. With a P/E over 26 and a PEG near 3, this company is just too expensive for me right now. Unfortunately I don't think this company's P/E ratio will pullback to a level near the company's 5 year estimated earnings growth rate, but a pullback in the price of 10% over the next few months to near $60 would provide a P/E near 15. And that would be close enough to allow me to begin accumulating shares. Because I think the NASDAQ is here to stay.
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0 Comments

HNI

4/1/2016

0 Comments

 
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Sometimes investing in a company is really investing in a management that will take care of your investment and cares for its shareholders. HNI Corporation may just be one of these companies and it could just be great for an investor's portfolio. HNI has been around for more than 60 years and has been growing its revenues, earnings and dividends for at least the last 15 years. It also has a great set of core principles and beliefs and believes in building the best products and returning their profits back to their shareholders. And that's the kind of company I'm always interested in.
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HNI Corporation (formerly known as HON Industries) is the secound-largest office furniture manufacturer in the world in regard to revenues resulting from office segment sales, behind Steelcase . Its headquarters is in Muscatine, Iowa. HNI is the leading gas and wood burning fireplace manufacturer and marketer in the US. HNI's brands include The HON Company, Allsteel, Gunlocke, Paoli, Maxon, HBF, Sagus, Heatilator, Heat & Glo, Harman, and Quadra-Fire. The company was founded in 1944 by engineer, C. Maxwell Stanley; advertising executive, Clem Hanson; and industrial designer, H. Wood Miller.

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​HNI Corporation engages in the design, manufacture, and marketing of office furniture and hearth products primarily in the United States, Canada, China, Hong Kong, India, and Taiwan. The company’s Office Furniture segment offers a range of metal and wood commercial and home office furniture, which include storage products, desks, credenzas, chairs, tables, bookcases, freestanding office partitions and panel systems, and other related products under the HON, Allsteel, Maxon, Gunlocke, Paoli, HBF, artcobell, Midwest Folding Products, American Desk, basyx by HON, Lamex, and ERGO brands, as well as under private labels. This segment sells its products through independent, local office furniture, and office products dealers; national office product distributors; selling relationships with the end-users; wholesalers; and direct sales to federal, state, and local government offices. The Hearth Products segment provides various gas, electric, wood, and biomass burning fireplaces; inserts; stoves; facings; and accessories, primarily for the home under the Heatilator, Heat & Glo, Majestic, Monessen, Quadra-Fire, Harman Stove, Vermont Castings, and PelPro brand names. This segment markets its products through dealers and distributors, as well as through company-owned distribution and retail outlets. HNI Corporation was founded in 1944 and is headquartered in Muscatine, Iowa.
(Summary) (Company) (Chart)
30 March 2016
Price $38.55
1yr Target $42.00
Analysts 1
Dividend $1.06
Payout Ratio 31.92%

1yr Cap Gain 8.94%
Yield 2.74%
1yr Tot Return 11.68%
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P/E 16.62
PEG 0.92
Beta 1.33
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EPS (ttm) $2.32
EPS next yr $2.97
EPS next 5yr 18.00%
1yr Price Support $53.46

​Market Cap $1.70 Bil
Revenues $2.30 Bil
Earnings $105.40 Mil
Profit Margin 4.56%

Quick Ratio 0.70
Current Ratio 1.00
Debt/Equity 0.41
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1yr RevGR 9.34%
3yr RevGR 4.71%
5yr RevGR 6.44%

1yr EarnGR 30.96%
3yr EarnGR 29.09%
5yr EarnGR 31.50%

​1yr DivGR 6.00%
3yr DivGR 3.32%
5yr DivGR 4.27%

ROA 8.20%
ROE 23.50%

Operating Businesses

HNI Corporation is an Iowa corporation incorporated in 1944. The Corporation is a provider of office furniture and hearth products. Office furniture products include panel-based and freestanding furniture systems and complementary products such as seating, storage and tables. These products are sold primarily through a national system of dealers, wholesalers and office product distributors but also directly to end-user customers and federal, state and local governments. Hearth products include a full array of gas, wood and pellet burning fireplaces, inserts, stoves, facings and accessories. These products are sold through a national system of dealers and distributors, as well as Corporation-owned distribution and retail outlets. In fiscal 2015, the Corporation had net sales of $2.3 billion, of which approximately $1.8 billion or 77% was attributable to office furniture products and $0.5 billion or 23% was attributable to hearth products. 

An important element of the Corporation's success has been its member-owner culture, which has enabled it to attract, develop, retain and motivate skilled, experienced and efficient members(i.e., employees). Each of the Corporation's eligible members has the opportunity to own stock in the Corporation through a number of stock-based plans, including a member stock purchase plan and a profit-sharing retirement plan, which drives a unique level of commitment to the Corporation’s success throughout the workforce. 

Strategy

The Corporation's strategy is to build on its position as a leading manufacturer of office furniture and hearth products in North America and pursue select global markets where opportunities exist to create shareholder value. The components of this growth strategy are to introduce new products, build brand equity, provide outstanding customer satisfaction by focusing on the end-user, strengthen the distribution network, respond to global competition, pursue complementary strategic acquisitions, enter markets not currently served and continually reduce costs.

The Corporation’s strategy has a dual focus: working continuously to extract new growth from its core markets while identifying and developing new, adjacent potential areas of growth. The Corporation focuses on extracting new growth from each of its existing businesses by deepening its understanding of end-users, using new insights gained to refine branding, selling and marketing and developing new products to serve them better. The Corporation also pursues opportunities in potential growth drivers related to its core business, such as vertical markets or new distribution models. 

Products and Solutions

Office Furniture  

The Corporation designs, manufactures and markets a broad range of office furniture systems and seating across a range of price points. The Corporation's portfolio includes panel-based and freestanding furniture systems and complementary products such as seating, storage and tables. The Corporation offers a complete line of office panel system products and freestanding desks, classroom solutions, bookshelves and credenzas in order to meet the needs of a wide spectrum of organizations. The Corporation offers a variety of storage options designed either to be integrated into the Corporation's office systems products or to function as freestanding furniture in office applications. The Corporation's seating line includes chairs designed for all types of office work. The chairs are available in a variety of frame colors, coverings and a wide range of price points. 

To meet the demands of various markets, the Corporation's products are sold under the Corporation's brands – HON, Allsteel, Maxon, Gunlocke, Paoli, HBF, artcobell, Midwest Folding Products, American Desk, basyx by HON, Lamex and ERGO, as well as private labels.

Hearth Products

The Corporation is North America’s largest manufacturer and marketer of prefabricated fireplaces, hearth stoves and related products, primarily for the home, which it sells under its widely recognized Heatilator, Heat & Glo, Majestic, Monessen, Quadra-Fire, Harman Stove, Vermont Castings and PelPro brand names.

The Corporation’s line of hearth products includes a full array of gas, wood and pellet burning fireplaces, inserts, stoves, facings and accessories. Heatilator, Heat & Glo, Majestic and Monessen are brand leaders in the two largest segments of the home fireplace market: gas and wood fireplaces. The Corporation is the leader in “direct vent” fireplaces, which replace the chimney-venting system used in traditional fireplaces with a less expensive vent through the roof or an outer wall. In addition, the Corporation is the leader in wood and pellet-burning stoves and furnaces with its Quadra-Fire, Harman Stove, Vermont Castings and PelPro product lines which provide home heating solutions using renewable fuels. 
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My Perspective

​Since I currently own shares of Steelcase Inc. and I am very satisfied with that investment, I believe an investment in HNI Corp would fit in very well. I like the idea that this company's list of shareholders includes many of its employees. It assures that my interests line up with the interests of both management as well as the workers of the company and that what's in their best interest is the same as my best interests. 

Like many of my other investments, I intend to begin by accumulating a small position in this company and then adding to that position through dividend reinvestment, sales of options, and additional purchases with limit orders as prices become favorable. I also expect to hold and grow this position for a very long time. Perhaps years.
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    I am an Individual Investor with specific interest in long term growth and then enhancing my returns with income from dividends and derivatives. I don't recommend stocks to anyone (it's a good way to lose friends) and no one reading this should misinterpret my blog as a recommendation for any type of investment. I am writing this solely for myself and my kids.

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