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Healthcare Services Group

10/27/2016

0 Comments

 
If it became known that a company that provides housekeeping services and meal preparation services could increase your wealth fourfold over 10 years at an annual growth rate of 15.78%, most investors would be surprised. But that's exactly what Healthcare Services Group has done. A simple single investment of $10K growing over a lifetime would surely be a big step in ensuring financial freedom and security in retirement. 
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​Healthcare Services Group, Inc.
provides management, administrative, and operating services to the housekeeping, laundry, linen, facility maintenance, and dietary service departments to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. It operates through two segments, Housekeeping and Dietary. The Housekeeping segment engages in the cleaning, disinfecting, and sanitizing of patient rooms and common areas of client's facility, as well as laundering and processing of the personal clothing belonging to the facility's patients. This segment also provides laundry and linen services; and maintenance services comprising repair and maintenance of laundry equipment, plumbing, and electrical systems, and carpentry and painting services, as well as distributes laundry equipment. The Dietary segment is involved in the food purchasing; meal preparation; and the provision of dietician consulting services, which include development of a menu that meets the patient's dietary needs. As of December 31, 2015, the company provided its services to 3,500 facilities in 48 states. Healthcare Services Group, Inc. was founded in 1976 and is based in Bensalem, Pennsylvania.
​(Summary) (Company) (Chart)
24 October 2016
Price $36.82
1yr Target $44.17
Analysts 6
Dividend $0.74
Payout Ratio 81.31%

1yr Cap Gain 19.96%
Yield 2.00%
1yr Tot Return 21.96%

P/E 40.42
PEG 2.25
Beta 0.66


EPS (ttm) $0.91
EPS next yr $1.21
Forward P/E 30.40
EPS next 5yr 18.00%
1yr Price Support $21.78

Market Cap $2.69 Bil
Revenues $1.53 Bil
Earnings $66.20 Mil
Profit Margin 4.31%

Quick Ratio ---
Current Ratio 3.70
Debt/Equity 0.00


1yr RevGR 11.05%
3yr RevGR 9.95%
5yr RevGR 13.18%

1yr EarnGR 158.06%
3yr EarnGR 7.09%
5yr EarnGR 9.42%

1yr DivGR 2.80%
3yr DivGR 2.85%
5yr DivGR 2.33%

ROA 13.00%
ROE 21.00%


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13 years of increasing dividends.

Description of Services

Healthcare Services Group provides management, administrative and operating expertise and services to the housekeeping, laundry, linen, facility maintenance and dietary service departments of the health care industry.

They're organized into, and provide our services through, two reportable segments: housekeeping, laundry, linen and other services (“Housekeeping”), and dietary department services (“Dietary”). The operating results from their professional employer organization service contracts are included primarily in their Housekeeping segment as these services include the provision of housekeeping and laundry personnel. The Company’s corporate headquarters provides centralized financial management and administrative services to the Housekeeping and Dietary business segments.

Housekeeping consists of managing the client’s housekeeping department which is principally responsible for the cleaning, disinfecting and sanitizing of patient rooms and common areas of a client’s facility, as well as the laundering and processing of the personal clothing belonging to the facility’s patients. 

Dietary consists of managing the client’s dietary department which is principally responsible for food purchasing, meal preparation and providing professional dietitian consulting services, which includes the development of a menu that meets the patient’s dietary needs.

Both segments provide services pursuant to full service agreements. In these agreements, the company is responsible for the management of the department serviced, the employees located at clients’ facilities and the provision of certain supplies. They also provide services on the basis of a management only agreement for a limited number of clients. Agreements with clients typically provide for renewable one year service terms, cancelable by either party upon 30 to 90 days’ notice after an initial period of 60 to 120 days. 


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Housekeeping

Housekeeping Services. Housekeeping services is the company's largest service sector, representing approximately 44% , or $631,875,000 , of consolidated revenues in 2015. This service involves the management of the client’s housekeeping department responsible for cleaning, disinfecting and sanitizing resident areas in clients’ facilities. In providing services to any given client facility, the company typically hires and trains the employees that were previously employed by such facility. They normally assign an onsite manager to each facility to supervise and train the front line personnel and coordinate housekeeping services with other facility support functions in accordance with the direction provided by the client. Such management personnel also oversee the execution of a variety of quality and cost-control procedures including continuous training and employee evaluation and onsite testing for infection control. The onsite management team also assists the facility in complying with federal, state and local regulations.

Laundry and linen services. Laundry and linen services represented approximately 19% , or $275,477,000 , of consolidated revenues in 2015. Laundry services are under the responsibility of the housekeeping department and involve the laundering and processing of the residents’ personal clothing. Linen services involve providing, laundering and processing of the sheets, pillow cases, blankets, towels, uniforms and assorted linen items used by our clients’ facilities. At facilities that utilize both laundry and linen services, the company normally installs their own equipment. Such installation generally requires an initial capital outlay ranging from $5,000 to $100,000 depending on the size of the facility, installation and construction costs, and the cost of equipment required. The hiring, training and supervision of the employees who perform laundry and linen services are similar to, and performed by the same management personnel who oversee the housekeeping employees located at the respective client facility.

Maintenance and other services. Maintenance services consist of repair and maintenance of laundry equipment, plumbing and electrical systems, as well as carpentry and painting. This service sector’s total revenues of $2,357,000 represented less than 1% of consolidated revenues in 2015.

Laundry installation sales. The company sells laundry installations to their clients, which typically represents the construction and installation of a turn-key operation. They generally offer payment terms, ranging from 36 to 60 months. During the years 2013 through 2015, laundry installation sales were not material to the company's operating results.

(Housekeeping operating performance is significantly impacted by the management of labor costs. Labor accounted for approximately 80% of operating costs incurred at a facility service location, as a percentage of Housekeeping revenues. Changes in employee compensation resulting from legislative or other actions, anticipated staffing levels, and other unforeseen variations in the use of labor at a client service location could result in volatility of these costs. Additionally, the costs of supplies consumed in performing Housekeeping services, including linen costs, are affected by product specific market conditions and therefore are subject to price volatility. Generally, this volatility is influenced by factors outside the company's control and is unpredictable. Where possible, the company tries to obtain fixed pricing from vendors for an extended period of time on certain supplies to mitigate such price volatility.)

PEO services. Through the Company's wholly-owned subsidiary, HCSG Staff Leasing Solutions, LLC, the company enters into client services agreements to become a co-employer of the client's existing workforce, assuming responsibility for payroll, payroll taxes, insurance coverage and certain other administrative functions, while the client maintains physical care, custody and control of their workforce, including the authority to hire and terminate employees. HCSG services include housekeeping and laundry personnel and are provided to clients in the health care industry. During the years 2013 through 2015, operating results from our PEO service contracts were not material to our operating results.


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Dietary 

Dietary services. Dietary services represented approximately 37%, or $527,140,000, of consolidated revenues in 2015. Dietary consists of managing the client’s dietary department responsible for food purchasing, meal preparation and providing professional dietitian consulting services. These services include the development of a menu that meets the dietary needs of the residents. Onsite management is responsible for all daily dietary department activities, with regular support being provided by a district manager specializing in dietary services, as well as a registered dietitian. The company also offers consulting services to facilities to assist them in cost containment and to promote improvement in their dietary department service operations. 

(Dietary operating performance is also impacted by price volatility in labor and supply costs resulting from similar factors discussed above in Housekeeping. The primary difference in impact on Dietary operations from price volatility in costs of labor and food-related supplies is that such costs represent approximately 53% and 39% of Dietary revenues, respectively. In contrast, labor is approximately 80% of operating costs as a percentage of Housekeeping revenues.)

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Picture10 year annual growth rate of 15.78%
The Way Forward For Me.

Companies like Healthcare Services Group are a no-brainer for me. This company has been growing their revenue, earnings and dividends for a very long time and that's usually a great predictor of future fundamentals. 

​Unfortunately that type of predictability has usually resulted in investors bidding up the price of these companies, and Healthcare Services Group is no exception. Looking at the stock chart for this company is very revealing. The company has been expensive for several years and it's recently pull back about 13% and now sits on the lower Bollinger Band on the weekly chart. So that might be a reasonable price to start a position. 

I like this company and the business they're in. It's one of those businesses that everyone needs and expects yet very few pay attention to until it's absent. It's also a service that company's don't think a lot about and let contracts that are usually stable and long lasting.

​I expect to start a position in this company in the very near future an use dividend reinvestment and the sale of call options to increase my position over time. I don't expect this to become a large portion of my accounts but it should become a steady earner and welcome addition. 

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0 Comments

Robert Half International

10/25/2016

0 Comments

 
As temporary staffing becomes a larger portion of the workforce in an ever evolving economy, companies like Robert Half become more and more critical to the successful functioning of companies. For many workers it fits better into the work styles of a new generation with new values surrounding work, family and personal life. For others, it's the beginning of a lifelong career.
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​Robert Half International Inc.
provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. The company operates through three segments: Temporary and Consultant Staffing, Permanent Placement Staffing, and Risk Consulting and Internal Audit Services. It places temporary personnel for accounting, finance, and bookkeeping; temporary and full-time office and administrative personnel consisting of executive and administrative assistants, receptionists, and customer service representatives; full-time accounting, financial, tax, and accounting operations personnel; and information technology contract consultants and full-time employees in the areas of platform systems integration and end-user support, including specialists in Web development, networking, application development, systems integration, database design, security and business continuity, and desktop support. The company also offers temporary and full-time employees in attorney, paralegal, legal administrative, and legal secretarial positions; senior level project professionals in the accounting and finance fields for financial systems conversions, expansion into new markets, business process reengineering, business systems performance enhancement, and post-merger financial consolidation. In addition, it is involved in serving professionals in the areas of interactive media, design, marketing, advertising, and public relations; and placing project consultants in various positions, such as creative directors, graphics designers, Web content developers, Web designers, media buyers, brand managers, and public relations specialists. Further, the company provides business and technology risk consulting, and internal audit services. It markets its staffing services to clients, as well as to employment candidates. The company was founded in 1948 and is headquartered in Menlo Park, California.
(Summary) (Company) (Chart)
23 October 2016
Price $38.88
1yr Target $40.12
Analysts 14
Dividend $0.88
Payout Ratio 31.54%

1yr Cap Gain 3.18%
Yield 2.26%
1yr Tot Return 5.44%

P/E 13.93
PEG 1.85
Beta 1.04


EPS (ttm) $2.79
EPS next yr $2.97
Forward P/E 13.10
EPS next 5yr 7.54%
1yr Price Support $22.39

Market Cap $4.99 Bil
Revenues $5.26 Bil
Earnings $365.20 Mil
Profit Margin 6.93%

Quick Ratio 2.10
Current Ratio 2,10
Debt/Equity 0.00


1yr RevGR 8.49%
3yr RevGR 7.33%
5yr RevGR 9.91%

1yr EarnGR 19.02%
3yr EarnGR 30.52%
5yr EarnGR 43.63%

1yr DivGR 11.11%
3yr DivGR 9.95%
5yr DivGR 8.99%

ROA 21.00%
ROE 35.40%


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​Operations


Robert Half International Inc. provides specialized staffing and risk consulting services through Accountemps, Robert Half Finance & Accounting, OfficeTeam, Robert Half Technology, Robert Half Management Resources, Robert Half Legal, The Creative Group, and Protiviti. The Company, through its Accountemps, Robert Half Finance & Accounting, and Robert Half Management Resources divisions, is the world’s largest specialized provider of temporary, full-time, and project professionals in the fields of accounting and finance. OfficeTeam specializes in highly skilled temporary administrative support personnel. Robert Half Technology provides information technology professionals. Robert Half Legal provides temporary, project, and full-time staffing of attorneys and specialized support personnel within law firms and corporate legal departments. The Creative Group provides project staffing in the interactive media, design, and marketing fields. Protiviti, which began operations in 2002, is a global business consulting and internal audit firm. Protiviti, which primarily employs professionals specializing in risk, advisory and transactional services, is a wholly owned subsidiary of the Company.

The Company’s business was originally founded in 1948. Prior to 1986, the Company was primarily a franchisor, under the names Accountemps and Robert Half (now called Robert Half Finance & Accounting), of offices providing temporary and full-time professionals in the fields of accounting and finance. Beginning in 1986, the Company and its current management embarked on a strategy of acquiring franchised locations. All of the franchises have been acquired. The Company believes that direct ownership of offices allows it to better monitor and protect the image of its tradenames, promotes a more consistent and higher level of quality and service throughout its network of offices and improves profitability by centralizing many of its administrative functions.

Since 1986, the Company has significantly expanded operations at many of the acquired locations, opened many new locations and acquired other local or regional providers of specialized temporary service personnel. The Company has also expanded the scope of its services by launching the new product lines
OfficeTeam, Robert Half Technology, Robert Half Management Resources, Robert Half Legal and The Creative Group.


In 2002, the Company hired more than 700 professionals who had been affiliated with the internal audit and business and technology risk consulting practice of Arthur Andersen LLP, including more than 50 individuals who had been partners of that firm. These professionals formed the base of the Company’s Protiviti Inc. subsidiary. Protiviti® has enabled the Company to enter the market for business consulting and internal audit services, which the Company believes offers synergies with its traditional lines of business. 


Marketing and Recruiting

The Company markets its staffing services to clients as well as employment candidates. Local marketing and recruiting are generally conducted by each office or related group of offices. Local advertising directed to clients and employment candidates consists of radio, digital, search engine marketing, social media, websites, job boards, and trade shows. Direct marketing through e-mail and telephone solicitation also constitutes a significant portion of the Company’s total advertising.

National advertising conducted by the Company consists primarily of radio, streaming audio, digital display, search engine marketing, social media amplification, and advertisements in national digital and print news publications, websites, social media sites, and trade publications. Additionally, the Company has expanded its use of job boards and aggregators in all aspects of sales and recruitment. Joint marketing arrangements have been entered into with major software manufacturers and typically provide for development of proprietary skills tests, cooperative advertising, joint e-mail campaigns, and similar promotional activities.

The Company also actively seeks endorsements and affiliations with professional organizations in the business management, technology, office administration, and professional secretarial fields. In addition, the Company conducts public relations activities designed to enhance public recognition of the Company and its services. This includes outreach to journalists, bloggers and social media influencers, and the distribution of thought leadership via print, video, corporate- maintained social media sites and other online properties.  


Organization
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Management of the Company’s staffing operations is coordinated from its headquarters facilities in Menlo Park and San Ramon, California. The Company’s headquarters provides support and centralized services to its offices in the administrative, marketing, public relations, accounting, training and legal areas, particularly as it relates to the standardization of the operating procedures of its offices. As of December 31, 2015, the Company conducted its staffing services operations through 332 offices in 42 states, the District of Columbia and 17 foreign countries. Office managers are responsible for most activities of their offices, including sales, local advertising and marketing and recruitment. 

The Way Forward For Me

Robert Half International has benefitted from being in the right place with the right product as the economy has significantly changed over the years. They also have a lot of attributes that a dividend growth investor admires. But this industry is not in 100% control of its own destiny because it's so dependent on the health of the economy. Notice in the charts on the right that revenues and net income fell during the recession in 2009-2010 but bounced back as the economy bounced back. Unfortunately that can be expected to occur again if, and when, the economy has difficulties in the future. 

Notice also that despite the economic difficulties, the company continued to increase their dividend throughout the entire period (although obviously the payout ratio had to increase during that period). This is a great sign that the company had confidence in, and believed in, the continued success of the business. That's good management.

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Looking at a long term stock price it also becomes obvious that as the company came out of the recession and as earnings grew rapidly, investors pushed the stock higher faster than it should have been and expanding the P/E ratio beyond a level that was sustainable. The last year or so the stock has fallen to the point where the P/E ratio is below 14 and the PEG is below 2 which is much more reasonable than it's been in awhile. 

I think it may be time to start picking up shares of this company in expectation that the economy will continue to expand. I'd like to own shares in this company at prices in the low 30s but looking at the chart, the stock may be basing near $35 per share. That may be the best that one could expect on a company with these fundamentals, so initially that's where I'll put my buy points. Anywhere below that I'll simply increase my buying activity. I really believe that this company will continue to increase its dividend at a rate greater than inflation and in the low double digits. That rate will obviously increase my purchasing power in the future as income increases faster than the cost of living.

One last observation. Reviewing a company like Robert Half is a perfect example of buying dividend growth companies at the appropriate price. Buying shares in this company in early 2015 when the P/E ratio and PEG were at all time highs would have bought you a great company consistently raising its dividend, but an investor would have lost almost 40% of his money. Even with growing dividends it would have taken a decade to recover that type of loss of wealth. I'm a dividend growth investor but I'm also a smart investor. I believe that no matter what an investor's overall strategy is, he needs to understand the concept of total return on investment.
 
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0 Comments

Cintas Corp

10/19/2016

0 Comments

 
Cintas Corporation is a uniform company. That doesn't seem very exciting or sexy, but they just raised their dividend by 26.70% and that kind of raise is very exciting. But what has it done in the past and what will it do in the future? It's time to find out. Dividend increases of that magnitude catch my attention and drive me to once again look at the fundamentals of the company and the technicals of the company's stock chart.
Cintas Corporation  declares a $1.33/share annual dividend, 26.7% increase from its prior dividend of $1.05. Forward yield is now 1.23% and is payable on Dec. 2 for shareholders of record Nov. 4. Ex-div is on Nov. 2.
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​Cintas Corporation
provides corporate identity uniforms and related business services primarily in North America, Latin America, Europe, and Asia. Its Rental Uniforms and Ancillary Products segment rents and services uniforms and other garments, including flame resistant clothing, mats, mops and shop towels, and other ancillary items; and provides restroom cleaning services and supplies, and carpet and tile cleaning services. The company’s Uniform Direct Sales segment is involved in the direct sale of uniforms and related items. Its First Aid, Safety, and Fire Protection Services segment offers first aid, safety, and fire protection products and services. The company offers its products and services through its distribution network and local delivery routes, or local representatives to small service and manufacturing companies, as well as corporations. Cintas Corporation was founded in 1968 and is based in Cincinnati, Ohio.
(Summary) (Company) (Chart)
19 October 2016
Price $108.08
1yr Target $121.18
Analysts 11
Dividend $1.05
Payout Ratio 23.23%

1yr Cap Gain 12.12%
Yield 0.97%
1yr Tot Return 13.09%

P/E 23.92
PEG 2.31
Beta 0.84


EPS (ttm) $4.52
EPS next yr $4.88
Forward P/E 22.14
EPS next 5yr 10.34%
1yr Price Support $50.45

Market Cap $11.35 Bil
Revenues $5.00 Bil
Earnings $487.70 Mil
Profit Margin 9.74%

Quick Ratio 1.90
Current Ratio 2.20
Debt/Equity 0.61


1yr RevGR 9.58%
3yr RevGR 4.88%
5yr RevGR 5.18%

1yr EarnGR 71.07%
3yr EarnGR 34.66%
5yr EarnGR 29.88%

1yr DivGR 26.66%
3yr DivGR 19.76%
5yr DivGR 19.75%

ROA 17.20%
ROE 37.90%


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​My Path Forward

When company's want to present a consistent, appealing and pleasant look for their employees, they often turn to Cintas Corporation to provide the uniforms that create that look. And that look is a lot better than uniforms of yesteryear. One of the many things I like about this company is its ability to continually increase its dividend over time. They've also been able to increase its top and bottom lines which making increases in the dividend much easier to continue. Add in a payout ratio below 24% and it's obvious that there's plenty of room to raise the dividend again next year. Other good areas are the company's ability to have more assets than liabilities and a nice return on assets and equity. 

On a  less desirable perspective, it's relatively expensive. A P/E ratio more than twice its long term estimated earnings per share growth rate informs me that the current ratio can't be sustained. When that happens the rise in the price of the shares won't keep up with the rise in the increases in earnings. That's got to be taken into consideration when evaluating share price. 

I would love to buy these shares closer to 20 times earnings. Whether an investor is looking at today's earnings or next year's earnings, it's obvious that the stock would be desirable to me between $91-$98 per share. But the stock was recently near $120 per share and has now fallen to $108 per share. That's a 10% fall already so I'm not sure how much further it will fall. So I guess that's difficulty in determining when to begin accumulating shares in the company. 

I plan to monitor this stock closely for any movement that brings the stock price closer to a P/E ratio of 20. That will probably be my trigger point for buying shares. 


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0 Comments

Pebblebrook Hotel Trust

10/19/2016

0 Comments

 
Pebblebrook Hotel Trust is a REIT found in the hotel/motel industry that owns a number of pretty impressive properties throughout the US. They also have a nice growing dividend that's been growing at a pretty nice clip. And that's the kind of company that a DGI like myself is interested in. Like most REITs, most of the company's profits are paid out in dividends with little growth, but Pebblebrook Hotel seems to be growing its share price also.
 
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​Pebblebrook Hotel Trust
, through Pebblebrook Hotel, L.P., operates as a real estate investment trust. The company acquires and invests primarily in hotel properties located in the United States. It holds interests in the Doubletree Bethesda Hotel and Executive Meeting Center located in Bethesda, Maryland; Sir Francis Drake Hotel located in San Francisco, California; and InterContinental Buckhead Hotel located in Atlanta, Georgia. As a REIT, the company is not subject to federal income tax to the extent that it distributes at least 90% of its taxable income to its shareholders. The company was founded in 2009 and is based in Bethesda, Maryland. 
(Summary) (Company) (Chart)
16 October 2016
Price $26.68
1yr Target $27.69
Analysts 8
Dividend $1.52
Payout Ratio 88.37%

1yr Cap Gain 3.78%
Yield 5.69%
1yr Tot Return 9.47%

P/E 15.51
PEG 0.21
Beta 1.20


EPS (ttm) $1.72
EPS next yr $1.03
Forward P/E 25.90
EPS next 5yr 73.00%
1yr Price Support $75.19

Market Cap $1.96 Bil
Revenues $818.30 Mil
Earnings $124.00 Mil
Profit Margin 15.15%

Quick Ratio ---
Current Ratio ---
Debt/Equity 0.59


1yr RevGR 28.73%
3yr RevGR 26.21%
5yr RevGR 67.90%

1yr EarnGR 32.39%
3yr EarnGR 87.46%
5yr EarnGR ---

1yr DivGR 34.78%
3yr DivGR 36.77%
5yr DivGR 59.53%

ROA 4.10%
ROE 7.20%


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​What I Plan To Do.


I own shares in several REITs and they've been very nice investments, especially the investment I have in Chatham Lodging Trust. I really don't do much with that investment. I just let the stock dividends reinvest back into more shares of the company and that seems to be doing very well for me. I believe Pebblebrook Hotel Trust would be a very similar type investment for me. While this may not make me a millionaire in my lifetime, I expect it to grow nicely over the years. And that's all I can ask from any of my investments. 

​I expect to start accumulating shares of this company very soon but I'd like to buy shares as cheaply as I can (obviously!). That said, a good level to start accumulating would be at or below $25. And with a dividend that's going to grow another 22% this year, the dividend reinvestment could add to the number of shares rather quickly.
 
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0 Comments

The Ensign Group

10/18/2016

0 Comments

 
An investment in The Ensign Group is an investment in the demographic trends occurring throughout the US and particularly the Southwestern US. As the population ages and requires increased medical care, the demand on the post acute care industry will dramatically increase. The Ensign Group appears to be positioned to take advantage of these trends toward skilled nursing care facilities, assisted living centers, and home healthcare. 
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The Ensign Group, Inc. provides health care services in the post-acute care continuum, urgent care center, and mobile ancillary businesses in the United States. It operates through two segments, Transitional, Skilled and Assisted Living Services; and Home Health and Hospice Services. The company offers various healthcare services, such as skilled nursing, assisted living, home health and hospice, mobile ancillary, and urgent care services. Its skilled nursing facilities provide a range of medical, nursing, rehabilitative, and pharmacy services, as well as routine services comprising daily dietary, social, and recreational services to Medicaid, private pay, managed care, and Medicare payors; and assisted and independent living facilities offer residential accommodations, activities, meals, security, housekeeping, and assistance in the activities of daily living to seniors who are independent. The company’s home health care services include nursing, speech, occupational and physical therapists, medical social workers, and certified home health aide services; and hospice care services, such as physical, spiritual, and psychosocial needs, including palliative and clinical care, education, and counseling for terminally ill individuals and their families. Its urgent care centers provide daily access to healthcare for minor injuries and illnesses, including X-ray and lab services; and mobile diagnostic services, including digital X-ray, ultrasound, electrocardiograms, patient transportation, ankle-brachial index, and phlebotomy services to people in their homes or at long-term care facilities. As of February 10, 2016, the company had 187 healthcare facilities, 14 hospice agencies, 15 home health agencies, 3 home care businesses, and 17 urgent care clinics in California, Arizona, Texas, Washington, Utah, Idaho, Colorado, Nevada, Iowa, Nebraska, Oregon, Wisconsin, Kansas, and South Carolina. The company was founded in 1999 and is based in Mission Viejo, California.
(Summary) (Company) (Chart)
16 October 2016
Price $19.66
1yr Target $24.40
Analysts 5
Dividend $0.16
Payout Ratio 17.77%

1yr Cap Gain 24.10%
Yield 0.81%
1yr Tot Return 24.91%

P/E 21.77
PEG 1.45
Beta 0.89


EPS (ttm) $0.90
EPS next yr $1.63
Forward P/E 12.06
EPS next 5yr 15.00%
1yr Price Support $24.45

Market Cap $999.91 Mil
Revenues $1.52 Bil
Earnings $47.60 Mil
Profit Margin 3.09%

Quick Ratio 1.60
Current Ratio 1.60
Debt/Equity 0.44


1yr RevGR 30.57%
3yr RevGR 17.48%
5yr RevGR 15.62%

1yr EarnGR 35.89%
3yr EarnGR 4.59%
5yr EarnGR 2.00%

1yr DivGR 19.68%
3yr DivGR 29.77%
5yr DivGR 21.25%

ROA 6.30%
ROE 11.40%


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Company Overview

The Ensign Group is a provider of healthcare services across the post-acute care continuum, as well as urgent care centers and mobile ancillary businesses located in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, Oregon, South Carolina, Texas, Utah, Washington and Wisconsin. Their operating subsidiaries provide a broad spectrum of skilled nursing, assisted living, home health and hospice, mobile ancillary and urgent care services. As of December 31, 2015, the company offered skilled nursing, assisted living and rehabilitative care services through 186 skilled nursing and assisted living facilities across 13 states. Their home health and hospice business provided home health, hospice and home care services from 32 agencies across nine states. Their 17 urgent care centers and mobile ancillary operations are located in Arizona, Colorado, Utah and Washington.

The company's organizational structure is centered upon local leadership. The company believes the organizational structure, which empowers leaders and staff at the local level, is unique within the healthcare services industry. Each of their operations is led by individuals who are responsible for key operational decisions at their operations. Leaders and staff are trained and motivated to pursue superior clinical outcomes, high patient and family satisfaction, operating efficiencies and financial performance at their operations.

The company encourages and empowers their leaders and staff to make their operation the “operation of choice” in the community it serves. Leaders and staff are generally authorized to discern and address the unique needs and priorities of healthcare professionals, customers and other stakeholders in the local community or market, and then work to create a superior service offering for, and reputation in, that particular community or market. The company believes that their localized approach encourages prospective customers and referral sources to choose or recommend the operation. In addition, leaders are enabled and motivated to share real-time operating data and otherwise benchmark clinical and operational performance against their peers in order to improve clinical care, enhance patient satisfaction and augment operational efficiencies, promoting the sharing of best practices.

The company views healthcare services primarily as a local business, influenced by personal relationships and community reputation. They believe success is largely dependent upon an ability to build strong relationships with key stakeholders from the local healthcare community, based upon a solid foundation of reliably superior care. Accordingly, the brand strategy is focused on encouraging the leaders and staff of each operation to focus on clinical excellence and to promote their operation independently within the local community.

​Much of the company's historical growth can be attributed to an expertise in acquiring real estate or leasing both under-performing and performing post-acute care operations and transforming them into market leaders in clinical quality, staff competency, employee loyalty and financial performance. They have also invested in new business lines that are complementary to their existing businesses, such as urgent care centers and ancillary services. The company plans to continue to grow revenue and earnings by:
  • continuing to grow the talent base and develop future leaders;
  • increasing the overall percentage or “mix” of higher-acuity patients;
  • focusing on organic growth and internal operating efficiencies;
  • continuing to acquire additional operations in existing and new markets;
  • expanding and renovating our existing operations;
  • constructing new facilities in existing and new markets, and
  • strategically investing in and integrating other post-acute care healthcare businesses. 


Segments

Skilled Nursing Operations. As of December 31, 2015, the company's skilled nursing companies provided skilled nursing care at 146 operations, with 15,099 operational beds, in Arizona, California, Colorado, Idaho, Iowa, Kansas, Nebraska, Nevada, South Carolina, Texas, Utah, Washington and Wisconsin. Through the skilled nursing operations, the company provides short stay patients and long stay patients with a full range of medical, nursing, rehabilitative, pharmacy and routine services, including daily dietary, social and recreational services. The company generates revenue from Medicaid, private pay, managed care and Medicare payors. During the year ended December 31, 2015, approximately 44.0% and 29.5% of the skilled nursing revenue was derived from Medicaid and Medicare programs.

Assisted and Independent Living Operations. The company provides assisted as well as independent living services at 55 operations, of which 15 are located on the same site as the skilled nursing care operations. As of December 31, 2015, the company had 4,554 units. The assisted living companies located in Arizona, California, Colorado, Idaho, Kansas, Nebraska, Nevada, Texas, Utah, Washington and Wisconsin, provide residential accommodations, activities, meals, security, housekeeping and assistance in the activities of daily living to seniors who are independent or who require some support, but not the level of nursing care provided in a skilled nursing operation. The independent living units are non-licensed independent living apartments in which residents are independent and require no support with the activities of daily living. The company generates revenue at these units primarily from private pay sources, with a small portion earned from Medicaid or other state-specific programs. During the year ended December 31, 2015, approximately 92.3% of assisted and independent living revenue was derived from private pay sources.

Home Health. As of December 31, 2015, the company provided home health care services in Arizona, California, Colorado, Idaho, Iowa, Oregon, Texas, Utah and Washington. Home health care services generally consist of providing some combination of nursing, speech, occupational and physical therapists, medical social workers and certified home health aide services. Home health care is often a cost-effective solution for patients, and can also increase their quality of life and allow them to receive quality medical care in the comfort and convenience of a familiar setting. The company derives the majority of their home health revenue from Medicare and managed care organizations. During the year ended December 31, 2015, approximately 55.9% of our home health revenue were derived from Medicare.

Hospice. As of December 31, 2015, the company provided hospice care services in Arizona, California, Colorado, Idaho, Texas, Utah and Washington. Hospice services focus on the physical, spiritual and psychosocial needs of terminally ill individuals and their families, and consists primarily of palliative and clinical care, education and counseling. The company derives the majority of their hospice revenue from Medicare reimbursement. During the year ended December 31, 2015, approximately 85.5% of our hospice revenue was derived from Medicare.

Other. In addition, as of December 31, 2015, the company operated 17 urgent care clinics and held majority membership interest of mobile ancillary operations located in Arizona, Colorado, Washington and Utah. Their urgent care centers provided daily access to healthcare for minor injuries and illnesses, including x-ray and lab services, all from convenient neighborhood locations with no appointments.

​New Business. The company has invested in and is exploring new business lines that are complementary to their existing transitional, skilled and assisted living services and home health and hospice businesses. These new business lines consist of mobile ancillary services, including digital x-ray, ultrasound, electrocardiograms, patient transportation, ankle-brachial index, and phlebotomy services to people in their homes or at long-term care facilities. To date these businesses are not meaningful contributors to operating results. 


Future Growth

The Ensign Group has an established track record of successful acquisitions. Much of the company's historical growth can be attributed to acquiring real estate or leasing both under-performing and performing post-acute care operations and transforming them into market leaders in clinical quality, staff competency, employee loyalty and financial performance. With each acquisition, the company can apply their core operating expertise to improve those operations, both clinically and financially. 

In the last few years, acquisition activity accelerated, allowing the company to add 84 facilities between January 1, 2012 and December 31, 2015. From January 1, 2008 through December 31, 2015, The Ensign Group acquired 125 facilities adding 12,548 operational beds to their operating subsidiaries.

During the year ended December 31, 2015, the company continued to expand operations with the addition of 50 stand-alone skilled nursing and assisted living facilities, seven home health, hospice and home care agencies, and three urgent care centers. In addition, the company has invested in new business lines that are complementary to their existing TSA services and home health and hospice businesses.

The Ensign Group also established a New Market CEO program in 2006 to evaluate a target market, develop a comprehensive business plan, and relocate to the target market to find talent and to connect with other providers, regulators and the healthcare community in that market. The goal ultimately is to acquire facilities and establish an operating platform for future growth. Since its beginning this program has expanded to broaden the company's reach into other lines of business closely related to the skilled nursing industry through a New Ventures program. This program took the company into home healthcare. The New Ventures program encourages facility CEOs to evaluate service offerings with the goal of establishing an operating platform in new markets. The Ensign Group believes that this program will not only continue to drive growth, but will also provide a valuable training ground for the next generation of leaders, who will have experienced the challenges of growing and operating a new business. 

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Industry Trends and the Future

The post-acute care industry has evolved to meet the growing demand for post-acute and custodial healthcare services generated by an aging population, increasing life expectancies and the trend toward shifting of patient care to lower cost settings. The industry has evolved in recent years which has led to a number of favorable improvements in the industry, as described below:
  • Shift of Patient Care to Lower Cost Alternatives. The growth of the senior population in the US continues to increase healthcare costs, often faster than the available funding from government-sponsored healthcare programs. In response, federal and state governments have adopted cost-containment measures that encourage the treatment of patients in more cost-effective settings such as skilled nursing facilities, for which the staffing requirements and associated costs are often significantly lower than acute care hospitals, inpatient rehabilitation facilities and other post-acute care settings. As a result, skilled nursing facilities are generally serving a larger population of higher-acuity patients than in the past.
  • Significant Acquisition and Consolidation Opportunities. The skilled nursing industry is large and highly fragmented, characterized predominantly by numerous local and regional providers. This fragmentation will provide significant acquisition and consolidation opportunities for the industry.
  • Improving Supply and Demand Balance. The number of skilled nursing facilities has declined modestly over the past several years. This supply and demand balance in the skilled nursing industry will continue to improve due to the shift of patient care to lower cost settings, an aging population and increasing life expectancies.
  • Increased Demand Driven by Aging Populations and Increased Life Expectancy. As life expectancy continues to increase in the US and seniors account for a higher percentage of the total US population, the overall demand for skilled nursing services will increase. At present, the primary market demographic for skilled nursing services is primarily individuals age 75 and older. According to the 2010 US Census, there were over 40 million people in the United States in 2010 that are over 65 years old. The 2010 U.S. Census estimates this group is one of the fastest growing segments of the population and is expected to more than double between 2000 and 2030.
  • Accountable Care Organizations and Reimbursement Reform. A significant goal of federal health care reform is to transform the delivery of health care by changing reimbursement for health care services to hold providers accountable for the cost and quality of care provided.  Medicare and many commercial third party mayors are implementing Accountable Care Organization (ACO) models in which groups of providers share in the benefit and risk of providing care to an assigned group of individuals. Other reimbursement methodology reforms include value-based purchasing, in which a portion of provider reimbursement is redistributed based on relative performance on designated economic, clinical quality, and patient satisfaction metrics. In addition, CMS is implementing demonstration and mandatory programs to bundle acute care and post-acute care reimbursement to hold providers accountable for costs across a broader continuum of care. These reimbursement methodologies and similar programs are likely to continue and expand, both in public and commercial health plans. On January 26, 2015, CMS announced its goal to have 30% of Medicare payments for quality and value through alternative payment models such as ACOs or bundled payments by 2016 and up to 50% by the end of 2018. Providers who respond successfully to these trends and are able to deliver quality care at lower cost are likely to benefit financially.

​The post-acute industry has been and will continue to be impacted by several other trends. The use of long-term care insurance is increasing among seniors as a means of planning for the costs of skilled nursing services. In addition, as a result of increased mobility in society, reduction of average family size, and the increased number of two-wage earner couples, more seniors are looking for alternatives outside the family for their care. 


My Perspective

I don't have any positions in the long term care industry but it seems like an obvious place to invest for many of the reasons cited above. It's also a fragmented industry that's going to consolidate in the years ahead so there's going to be a lot of winners and losers. I think The Ensign Group is going to be one of the winners. There will be others and I intend to dig deeper into this industry in the weeks and months ahead, but this is a great company to start my research.

One of the things that's not particularly appealing about this stock is the dividend. It's less than one per cent but at least it's growing at a pretty fast clip. On the plus side, I do believe that the stock can grow 25% this year and I expect it to grow 15% per year going forward. 

I intend to start a position in this company in the near future (I'd like these shares at a price less than $19) and then let it grow naturally through dividend reinvestment and the sale of options (although the options are sold on a monthly basis only and the volume is very low). This could end up being a very nice addition to the portfolio.   
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0 Comments

Video Game Makers

10/13/2016

0 Comments

 
Activision Blizzard and Electronic Arts are two companies with great fundamentals. The companies are also moving higher through an upward slanting channel and currently bouncing off their 50 day moving average. These are great signs from both a fundamental as well as a technical perspective so it's time to look at the numbers and compare the companies. 
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Activision Blizzard develops and publishes online, personal computer (PC), video game console, handheld, mobile, and tablet games. The company operates through two segments, Activision Publishing, Inc. and Blizzard Entertainment, Inc. The company develops, publishes, and sells interactive software products and content through retail channels or digital downloads; and downloadable content to a range of gamers. It also publishes subscription-based massively multiplayer online role-playing games; and strategy and role-playing games. In addition, the company maintains a proprietary online gaming service, Battle.net that facilitates the creation of user generated content, digital distribution, and online social connectivity in its games. Further, it engages in creating original film and television content; and provides warehousing, logistical, and sales distribution services to third-party publishers of interactive entertainment software, as well as manufacturers of interactive entertainment hardware products. The company serves retailers and distributors, including mass-market retailers, consumer electronics stores, discount warehouses, game specialty stores, and consumers through third-party distribution, licensing arrangements, and direct digital purchases in the United States, Canada, Canada, the United Kingdom, France, Germany, Ireland, Italy, Sweden, Spain, the Netherlands, Australia, South Korea, China, and internationally. Activision Blizzard, Inc. is headquartered in Santa Monica, California. (Summary)
Electronic Arts develops, markets, publishes, and distributes games, content, and services for consoles, personal computers, mobile phones, and tablets worldwide. It develops and publishes digital interactive entertainment games primarily under the FIFA, Madden NFL, Star Wars, Battlefield, The Sims, Need for Speed, Mass Effect, Dragon Age, Plants vs. Zombies, and Titanfall brand names. The company also offers casual games, such as cards, puzzles, and word games through its Pogo online service. Electronic Arts Inc. was founded in 1982 and is headquartered in Redwood City, California. (Summary)
12 October 2016
Price $43.33
1yr Target $47.49
Analysts 18
Dividend $0.26
Payout Ratio 26.00%

1yr Cap Gain 9.60%
Yield 0.60%
1yr Tot Return 10.20%

P/E 43.50
PEG 1.86
Beta 1.09

EPS (ttm) $1.00
EPS next yr $2.17
Forward P/E 20.00
EPS next 5yr 23.44%
1yr Price Support $50.86

Market Cap $32.18 Bil
Revenues $5.37 Bil
Earnings $742.00 Mil
Profit Margin 13.81%

Quick Ratio 1.50
Current Ratio 1.60
Debt/Equity 0.59

1yr RevGR 5.80%
3yr RevGR -1.33%
5yr RevGR 0.95%

1yr EarnGR 5.30%
3yr EarnGR 5.56%
5yr EarnGR 29.24%

1yr DivGR 15.00%
3yr DivGR 8.42%
5yr DivGR 8.92%

ROA 4.70%
ROE 9.00%


12 October 2016
Price $82.53
1yr Target $89.42
Analysts ---
Dividend $0.00
Payout Ratio ---

1yr Cap Gain 8.34%
Yield 0.00%
1yr Tot Return 8.34%

P/E 22.90
PEG 1.41
Beta 0.53

EPS (ttm) $3.60
EPS next yr $4.11
Forward P/E 20.08
EPS next 5yr 16.24%
1yr Price Support $66.74

Market Cap $25.05 Bil
Revenues $4.46 Bil
Earnings $1.15 Bil
Profit Margin 25.78%

Quick Ratio 2.40
Current Ratio 2.40
Debt/Equity 0.30

1yr RevGR -2.64%
3yr RevGR 4.95%
5yr RevGR 4.13%

1yr EarnGR 30.11%
3yr EarnGR 122.53%
5yr EarnGR NA

1yr DivGR NA
3yr DivGR NA
5yr DivGR NA

ROA 17.70%
ROE 34.80%


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My Perspective

Both of these companies are in a tough business that can turn on the whim of 16 year old kids. While there may be a few adults playing video games, the vast majority of gamers are kids and young adults. And their allegiance to a particular brand is tentative at best. But they do have allegiance to particular games. So an investor that understands and/or plays video games would probably have an inside track to these investments. 

As for my type of investing, I'd only be interested in Activision Blizzard simply because it pays a dividend and Electronic Arts does not. And for the most part that's a deal breaker for me because at heart I'm a dividend growth investor. 

From a technical point of view it would be a tough call between the two. They're both in an upward trend and they're both ready to bounce off their 50 day moving average. So from a short term view they're probably equal to each other, so it's really a coin toss. Either way I hope the information is of some value to other investors. 

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0 Comments

Marriott Vacations Worldwide

10/6/2016

0 Comments

 
Marriot Vacations Worldwide is the premier company in the vacation ownership industry and sells the dream of owning a second home in an exotic locale without all the responsibility of taking care of it. The vacation ownership industry (also known as the timeshare industry) enables customers to share ownership and use of fully-furnished vacation accommodations in some of the most desirous locations throughout the world.

​Typically, a purchaser acquires an interest (known as a “vacation ownership interest”) that is either a real estate ownership interest (known as a “timeshare estate”) or a contractual right-to-use interest (known as a “timeshare license”) in a single resort or a collection of resort properties. The obvious advantage is that you live in your own home while being on vacation in a place you otherwise couldn't afford a home. 


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​Marriott Vacations Worldwide Corp.
 develops, markets, sells, and manages vacation ownership and related products under the Marriott Vacation Club and Grand Residences by Marriott brands. The company also develops, markets, and sells vacation ownership and related products under The Ritz-Carlton Destination Club brand; and holds right to develop, market, and sell ownership residential products under The Ritz-Carlton Residences brand. It sells points-based vacation ownership products through two points-based ownership programs: Marriott Vacation Club Destinations and Marriott Vacation Club, Asia Pacific programs; and weeks-based vacation ownership products. As of January 1, 2016, the company operated 61 properties with 12,807 vacation ownership villas and approximately 410,000 owners in the United States, and 8 other countries and territories. In addition, it is involved in financing consumer purchases of vacation ownership products; and renting vacation ownership inventory. The company sells its upscale tier vacation ownership products primarily through a network of resort-based sales centers and off-site sales locations. Marriott Vacations Worldwide Corporation is headquartered in Orlando, Florida.
(Summary) (Company) (Chart)
5 October 2016
Price $73.32
1yr Target $82.00
Analysts 6
Dividend $1.20
Payout Ratio 26.17%

1yr Cap Gain 11.83%
Yield 1.63%
1yr Tot Return 13.46%

P/E 19.18
PEG 1.22
Beta 1.20


EPS (ttm) $3.82
EPS next yr $5.24
Forward P/E 14.00
EPS next 5yr 15.70%
1yr Price Support $82.26

Market Cap $1.96 Bil
Revenues $1.81 Bil
Earnings $115.40 Mil
Profit Margin 6.35%

Quick Ratio ---
Current Ratio ---
Debt/Equity 0.91


1yr RevGR 5.47%
3yr RevGR 3.70%
5yr RevGR ---

1yr EarnGR 63.94%
3yr EarnGR ---
5yr EarnGR ---

1yr DivGR 320.00%
3yr DivGR ---
5yr DivGR ---

ROA 4.90%
ROE 12.20%


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​Overview


Marriott Vacations Worldwide is one of the world’s largest companies whose business is focused almost entirely on vacation ownership, based on their number of owners, number of resorts and revenues. They are the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club and Grand Residences by Marriott brands. They are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, and they have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand.

The company's business is grouped into three reportable segments: North America, Europe and Asia Pacific. As of January 1, 2016, the company's portfolio consisted of 61 properties in the US and eight other countries and territories, including two hotels that the company intends to convert to vacation ownership interests. Marriott Vacations generates most of their revenue from four primary sources: selling vacation ownership products; managing resorts; financing consumer purchases of vacation ownership products; and renting their vacation ownership inventory.

Marriott Vacation's strategic goal is to further strengthen their leadership position in the vacation ownership industry through initiatives to drive profitable contract sales growth, maximize cash flow and optimize their capital structure, selectively pursuing compelling new business opportunities, and focusing on owners, guests and associates. They believe that they have significant competitive advantages, including scale and global reach, the quality and strength of the Marriott and Ritz-Carlton brands, their system of high-quality resorts, their loyal and highly satisfied customer base, their long-standing track record of their experienced management team and associates.
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​History

Marriott Vacations Worldwide recently celebrated their 30 year anniversary of providing vacation memories and experiences to millions of families. Prior to the incorporation of Marriott Vacations Worldwide Corporation in Delaware in June 2011, their operations were the vacation ownership division of Marriott International. Marriott International completed the spin-off of its vacation ownership division on November 21, 2011. Since the Spin-Off, Marriott Vacations has been an independent public company, with common stock listed on the New York Stock Exchange under the symbol “VAC”. Their corporate headquarters located in Orlando, Florida.

Since 1984, when Marriott became the first major lodging company to enter the vacation ownership industry with its acquisition of American Resorts, a small vacation ownership company, they have been recognized as a leader and innovator in the vacation ownership industry. Marriott International leveraged its well-known “Marriott” brand to sell vacation ownership intervals, which were frequently located at resorts developed adjacent to Marriott International hotels. Over time, the company differentiated its offerings through its high-quality resorts that were purpose-built for vacation ownership, exchange opportunities available under its Marriott Rewards customer loyalty program that increased the flexibility of use of ownership, its dedication to excellent customer service and its commitment to ethical business practices. These qualities encouraged repeat business and word-of-mouth customer referrals.

In connection with the Spin-Off, Marriott Vacations entered into a License, Services, and Development Agreement with Marriott International and its subsidiary Marriott Worldwide Corporation and a License, Services, and Development Agreement with The Ritz-Carlton Hotel Company, L.L.C., a subsidiary of Marriott International. Under the License Agreements, the company was granted the exclusive right, for the terms of the License Agreements, to use certain Marriott and Ritz-Carlton marks and intellectual property in their vacation ownership business, the exclusive right to use the Grand Residences by Marriott marks and intellectual property in their residential real estate business and the non-exclusive right to use certain Ritz-Carlton marks and intellectual property in their residential real estate business. 
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​Our Sources of Revenue


Marriott Vacations generates most of their revenue from 4 primary sources: selling vacation ownership products; managing our resorts; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.

Sale of Vacation Ownership Products

The company's principal source of revenue is the sale of vacation ownership interests. 

Resort Management and Other Services

The company generates revenue from fees they earn for managing each of the resorts. They earn revenue for providing ancillary offerings, including food and beverage, retail, and golf and spa offerings at the resorts. They also receive annual fees, club dues, settlement fees from the sale of vacation ownership products, and certain transaction-based fees from owners and other third parties, including external exchange service providers.

Financing

The company earns interest income on loans that they provide to purchasers of the vacation ownership interests, as well as loan servicing and other fees. 

Rental

The company generates rental revenue from transient rentals of inventory they hold for sale as interests in their vacation ownership programs or as residences, or inventory that they control because owners have elected alternative usage options permitted under the vacation ownership programs.

The Brands

Marriott Vacations designs, builds, manages and maintains properties at upscale and luxury levels under four brands in accordance with the Marriott and Ritz-Carlton brand standards.

The Marriott Vacation Club brand is the signature offering in the upscale tier of the vacation ownership industry. Marriott Vacation Club resorts typically combine many of the comforts of home, such as spacious accommodations with one, two and three bedroom options, living and dining areas, in-unit kitchens and laundry facilities, with resort amenities such as large feature swimming pools, restaurants and bars, convenience stores, fitness facilities and spas, as well as sports and recreation facilities appropriate for each resort’s unique location.

Grand Residences by Marriott is an upscale tier vacation ownership and whole ownership residence brand. The accommodations for this brand are similar to those offered under the Marriott Vacation Club brand, but the duration of the vacation ownership interest is longer, ranging between three and thirteen weeks. The company also offers whole ownership residential products under the Grand Residences by Marriott brand.

The Ritz-Carlton Destination Club is a luxury tier vacation ownership brand. The Ritz-Carlton Destination Club provides luxurious vacation experiences commensurate with the legacy of the Ritz-Carlton brand. The Ritz-Carlton Destination Club resorts typically feature two, three and four bedroom units that generally include marble foyers, walk-in closets, custom kitchen cabinetry and luxury resort amenities such as large feature pools and access to full service restaurants and bars. On-site management and services, which usually include daily maid service, valet, in-residence dining, and access to fitness facilities as well as spa and sports facilities as appropriate for each destination, are provided by The Ritz-Carlton Hotel Company.

The Ritz-Carlton Residences is a luxury tier whole ownership residence brand. The Ritz-Carlton Residences includes whole ownership luxury residential condominiums co-located with The Ritz-Carlton Destination Club resorts. Owners can typically purchase condominiums that vary in size from one-bedroom apartments to spacious penthouses. Owners of The Ritz-Carlton Residences can avail themselves of the services and facilities that are associated with the co-located The Ritz-Carlton Destination Club resort on an a la carte basis. On-site management and services are provided by The Ritz-Carlton Hotel Company.
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​My Perspective


​While I've been able to find only limited information on the fundamentals of this company, I like the concept of shared ownership of vacation resorts. It allows individuals and families the opportunity of own a premier luxury vacation home at a fraction of the cost of whole ownership and without all the costs associated with maintaining the property when not occupying the property. And Marriott Vacations can make a tidy sum of money hosting the entire enterprise. 

I intend to start a small position to see how an investment in this company develops. But I want to buy these share as cheaply as I can. Looking at the weekly chart of this company, I would like to buy shares near the lower Bollinger Band which is near $60. This would also bring the PEG down to 1.00 and the P/E ratio closer to its expected 5yr estimated earnings growth rate. 

That may take awhile for the stock price to drop to $60 but luckily I've got plenty of time and plenty of other stocks to watch in the meantime. 
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0 Comments

Hooker Furniture Corp

10/5/2016

0 Comments

 
Hooker Furniture has been an industry leader for quality bedroom sets, dining room sets, living room furnishings, and home office furniture for over 90 years. The company was incorporated in Virginia in 1924 and is ranked among the nation’s top 10 largest publicly traded furniture sources, based on 2015 shipments to U.S. retailers.

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Hooker Furniture Corporation operates as a home furnishings marketing, design, and logistics company worldwide. The company designs, manufactures, imports, and markets residential household furniture products. It operates through three segments: Casegoods, Upholstered, and All Other. The Casegoods segment offers accents, home office, dining, bedroom, and home entertainment furniture under the Hooker Furniture brand, as well as private label products under retailers' brand name. The Upholstered segment provides residential leather and fabric upholstered furniture, such as leather reclining and motion chairs, sofas, club chairs, and executive desk chairs under the Bradington-Young and Hooker Upholstery brands; and upscale occasional chairs, settees, sofas, and other seating products under the Sam Moore brand. The All Other segment supplies upholstered seating and case goods to upscale senior living facilities under the H Contract and Homeware brands. The company serves traditional and online retailers of residential home furnishings, as well as independent furniture stores, specialty retailers, department stores, catalog and Internet merchants, interior designers, and national and regional chains. It sells its products through a network of retailers and independent sales representatives. Hooker Furniture Corporation was founded in 1924 and is headquartered in Martinsville, Virginia.
(Summary) (Company) (Chart)
2 October 2016
Price $24.49
1yr Target $32.00
Analysts 1
Dividend $0.40
Payout Ratio 26.84%

1yr Cap Gain 30.66%
Yield 1.63%
1yr Tot Return 32.29%

P/E 16.48
PEG 0.97
Beta 0.72


EPS (ttm) $1.49
EPS next yr $2.27
Forward P/E 10.79
EPS next 5yr 17.00%
1yr Price Support $38.59

Market Cap $283.10 Mil
Revenues $383.90 Mil
Earnings $16.60 Mil
Profit Margin %

Quick Ratio 2.10
Current Ratio 3.60
Debt/Equity 0.28
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1yr RevGR 1.08%
3yr RevGR 4.15%
5yr RevGR 2.77%

1yr EarnGR 28.44%
3yr EarnGR 22.78%
5yr EarnGR 37.78%

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

ROA 7.00%
ROE 9.90%


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Operations.

Hooker Furniture Corporation is a home furnishings marketing, design and logistics company offering worldwide sourcing of residential and contract casegoods and upholstery, as well as domestically produced custom leather and fabric-upholstered furniture. The company was incorporated in Virginia in 1924 and is ranked among the nation’s top 10 largest publicly traded furniture sources, based on 2015 shipments to U.S. retailers, according to a 2015 survey published by Furniture Today, a leading trade publication. They are a key resource for residential wood and metal furniture (commonly referred to as “casegoods”) and upholstered furniture.  

Their major casegoods product categories include accents, home office, dining, bedroom and home entertainment furniture under the Hooker Furniture brand. Their residential upholstered seating companies include Bradington-Young, a specialist in upscale motion and stationary leather furniture and Sam Moore Furniture, focused on upscale occasional chairs, settees, sofas and sectional seating with an emphasis on cover-to-frame customization.  An extensive selection of designs and formats along with finish and cover options in each of these product categories makes Hooker Furniture a comprehensive resource for retailers primarily targeting the upper-medium price range.  

​The company also markets a line of imported leather upholstery under the Hooker Upholstery trade name and the company works directly with several large customers to develop private-label, unbranded products exclusively for those customers. Thei
r H Contract division supplies upholstered seating and casegoods to upscale senior living facilities throughout the country, working with designers specializing in the contract industry to provide functional furniture for senior living facilities that meets the style and comfort expectations of today’s retirees. Homeware is an online-only brand that is sold through leading international e-commerce retailers. It supplies unique chairs, sofas and ottomans designed to be assembled in minutes by the consumer with no tools or hardware required.

For the company's core product line, their principal customers are both traditional and online retailers of residential home furnishings that are broadly dispersed throughout the United States and in thirty-six other countries around the globe. Their customers include independent furniture stores, specialty retailers, department stores, catalog and internet merchants, interior designers and national and regional chains. They are serviced by over 60 independent North American sales representatives and 8 foreign sales representatives. H Contract’s customers include designers, design firms, industry dealers and distributors and senior living facilities throughout the United States. It has its own sales force of independent multi-line sales representatives. Homeware’s customers are primarily online home furnishings retailers including Wayfair, Hayneedle and One Kings Lane.

​Recent Developments


On January 5, 2016, Hooker Furniture entered into an asset purchase agreement with Home Meridian International, Inc. to acquire substantially all of HMI’s assets.  On February 1, 2016, the company closed the transaction by paying $85 million in cash and issuing 716,910 shares of their common stock to designees of HMI as consideration for the Acquisition.


The Home Meridian division includes five business units: Pulaski Furniture, Samuel Lawrence Furniture, Samuel Lawrence Hospitality, Prime Resources International and Right 2 Home. HMI has a unique business model which allows the company to create global sourcing solutions for major customers and multiple channels of distribution. This business model, global sourcing and broad experience have allowed HMI to adapt and gain significant market share within the industry. HMI has consistently been recognized as an industry and regional leader in sales gain and growth. Its divisional headquarters is located in High Point, N.C., with distribution centers on both coasts and Asian operations in China, Vietnam and Malaysia.

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Bassett Furniture Industries

10/4/2016

0 Comments

 
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Bassett Furniture is a furniture manufacturer and retailer, headquartered in Bassett, Virginia, United States. It was founded in 1902, by John David Bassett, Charles C. Bassett, Samuel H. Bassett, and Reed L. Stone. Bassett Furniture is one of the oldest furniture manufacturers in Virginia and has been producing hand-crafted furniture for over 100 years.

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​Bassett Furniture Industries, Incorporated
engages in the manufacture, import, and retail of home furnishings in the United States. The company operates in three segments: Wholesale, Retail, and Logistical Services. It is involved in the design, manufacture, sourcing, sale, and distribution of furniture products to a network of company-owned and licensee-owned Bassett Home Furnishings (BHF) retail stores, as well as independent furniture retailers; and wood and upholstery operations. As of January 21, 2016, the company operated a network of 93 stores, including 60 company-owned and 33 licensee-owned stores. It also provides shipping, delivery, and warehousing services to customers in the furniture industry. The company was founded in 1902 and is based in Bassett, Virginia.
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Summary) (Company) (Chart)
2 October 2016
Price $23.25
1yr Target $28.67
Analysts 3
Dividend $0.37
Payout Ratio 24.34%

1yr Cap Gain 23.31%
Yield 1.59%
1yr Tot Return 24.90%

P/E 15.33
PEG 0.96
Beta 1.06


EPS (ttm) $1.52
EPS next yr $1.67
Forward P/E 13.95
EPS next 5yr 16.00%
1yr Price Support $26.72

Market Cap $251.10 Mil
Revenues $440.10 Mil
Earnings $16.60 Mil
Profit Margin 3.77%

Quick Ratio 1.20
Current Ratio 1.90
Debt/Equity 0.09


1yr RevGR 26.46%
3yr RevGR 16.72%
5yr RevGR 12.86%

1yr EarnGR 116.09%
3yr EarnGR -7.87%
5yr EarnGR ---

1yr DivGR 12.5%
3yr DivGR 30.68%*
5yr DivGR ---

ROA 6.00%
ROE 9.30%


*ex-special dividend

​Operations


Bassett is a leading vertically integrated manufacturer, importer and retailer of high quality, mid-priced home furnishings. With 93 Bassett Home Furnishings stores in November 28, 2015, they have leveraged their brand name in furniture into a network of corporate and licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories.  

Bassett created their store program in 1997 to provide a single source home furnishings retail store that provides a unique combination of stylish, quality furniture and accessories with a high level of customer service.  The store features custom order furniture ready for delivery in less than 30 days, more than 1,000 upholstery fabrics, free in-home design visits, and perfectly coordinated decorating accessories.  The company believes that their capabilities in custom furniture have become unmatched and their manufacturing team takes pride in the breadth of its options, the precision of its craftsmanship, and the speed of its delivery. Sales people are referred to as Design Consultants and are trained to evaluate customer needs and provide comprehensive solutions for their home decor. 

In order to reach markets that cannot be effectively served by their retail store network, the company distributes their products through wholesale channels including multi-line furniture stores, specialty stores and mass merchants. They use a network of over 25 independent sales representatives who have their own specific geographical territories. These sales representatives are compensated based on a standard commission rate. 

 
For several years the company owned 49% of Zenith Freight Lines. During that time the strategic significance of their partnership rose to include the over-the-road transportation of furniture, the operation of regional freight terminals, warehouse and distribution facilities in eleven states, and the management of various home delivery facilities that service Bassett Home Furnishings stores and other clients in local markets around the United States. On February 2, 2015, Bassett acquired the remaining 51% of Zenith, which now operates as a wholly-owned subsidiary of Bassett.

The acquisition of Zenith brings to the company the ability to deliver best-of-class shipping and logistical support services that are uniquely tailored to the needs of the furniture industry, as well as the ability to provide the expedited delivery service which is increasingly demanded by the furniture industry. 

 
In September of 2011, the company announced the formation of a strategic partnership with HGTV (Home and Garden Television), a division of Scripps Networks, LLC, which combines Bassett's heritage in the furniture industry with the penetration of 96 million households by HGTV. As part of that alliance, the in-store design centers have been co-branded with HGTV to more forcefully market the concept of a “home makeover”, an important point of differentiation for Bassett stores that also mirrors much of the programming content on the HGTV network. In October of 2015 Bassett announced the extension of that partnership with HGTV through 2019. 

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Structural Alignment of Operations

Bassett has been strategically aligned along three reportable segments: Wholesale, Retail and Logistical services.

 
Wholesale Operations. The wholesale home furnishings segment is involved principally in the design, manufacture, sourcing, sale and distribution of furniture products to a network of BHF stores and independent furniture retailers. The wholesale segment accounted for approximately one half of net sales, excluding logistical services, during fiscal 2015, 2014, and 2013, respectively.

The wholesale furniture industry is very competitive and there are a large number of manufacturers both within and outside the United States who compete in the market on the basis of product quality, price, style, delivery and service. Additionally, many retailers source imported product directly, thus bypassing domestic furniture manufacturers and wholesale importers. Bassett believes that they can be successful in the current competitive environment because their products represent excellent value combining attractive prices, quality and styling, prompt delivery, and superior service.
 
Retail Operations. The retail furniture industry remains very competitive and includes local furniture stores, regional furniture retailers, national department and chain stores and single-vendor branded retailers. As a whole, the Bassett store network, with 60 company-owned stores and 33 licensee-owned stores, ranks in the top 30 in retail furniture sales in the United States. The company plans to continue opening new stores, primarily in underpenetrated markets where we currently have stores. 
 

Logistical Operations. Zenith is a specialized supply chain solutions provider, offering the home furnishings industry the benefit of an asset-based network to move product with greater efficiency, enhanced speed to market, less damage, and a single source of shipment visibility. Bassett provides fully integrated solutions with the highest commitment to customer care and service as they seek to go beyond their customers’ transactional expectations to create collaborative partnerships that provide a single source network to:
  • Better manage inventory across multiple locations and provide total audit-ready accountability
  • Reduce line haul and delivery costs
  • Ensure availability of high-volume items in stores
  • Integrate the omnichannel nature of today’s retail supply chain
  • Management and predictability of the total landed cost of goods
  • Achieve full visibility from vendor to showroom to final delivery

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Ethan Allen Interiors

10/3/2016

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Ethan Allen Interiors, Inc. is an American furniture chain with almost 300 stores across the United States, Canada and the United Kingdom. The company makes customized furniture domestically (Maiden, NC), such as upholstered furniture, sofas, and chairs, custom made in a selected fabric. Ethan Allen has 295 Design Centers and Studios, six manufacturing facilities including two sawmills, six wholesale distribution centers, 29 retail service centers, one hotel, and sales of $980 million located across the United States. It is one of the largest furniture companies in the United States. 
​
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​Ethan Allen Interiors Inc.
operates as an interior design company, and manufacturer and retailer of home furnishings in North America, Europe, Asia, and the Middle East. The company operates through two segments, Wholesale and Retail. Its products include case goods items, such as beds, dressers, armoires, tables, chairs, buffets, entertainment units, home office furniture, and wooden accents; upholstery items comprising sleepers, recliners, chairs, ottomans, custom pillows, sofas, loveseats, cut fabrics, and leather; and home accents and other items, including window treatments and drapery hardware, wall decors, florals, lighting, clocks, mattresses, bedspreads, throws, pillows, decorative accents, area rugs, wall coverings, and home and garden furnishings. The company markets and sells its products under the Ethan Allen brand name through home furnishing retail networks and independent retailers, as well as through ethanallen.com Website. As of August 4, 2016, it operated a network of approximately 300 retail design centers. Ethan Allen Interiors Inc. was founded in 1932 and is headquartered in Danbury, Connecticut.
​(Summary) (Company) (Chart)
28 September 2016
Price $32.21
1yr Target $37.33
Analysts 3
Dividend $0.68
Payout Ratio 34.00%

1yr Cap Gain 15.89%
Yield 2.11%
1yr Tot Return 18.00%

P/E 16.11
PEG 1.04
Beta 1.57


EPS (ttm) $2.00
EPS next yr $2.44
Forward P/E 13.20
EPS next 5yr 15.50%
1yr Price Support $37.82

Market Cap $893.83 Mil
Revenues $794.20 Bil
Earnings $56.60 Mil
Profit Margin 7.12%

Quick Ratio 0.70
Current Ratio 2.00
Debt/Equity 0.11


1yr RevGR 5.24%
3yr RevGR 2.86%
5yr RevGR 3.18%

1yr EarnGR 57.48%
3yr EarnGR 21.44%
5yr EarnGR 14.64%

1yr DivGR 24.00%
3yr DivGR 19.64%
5yr DivGR 23.02%

ROA 9.60%
ROE 14.80%



​Operating Segments


Ethan Allen's products are sold through a dedicated global network of approximately 300 retail design centers (the company's retail segment). As of June 30, 2015, the Company operated 144 design centers and their independent retailers operated 155 design centers. The wholesale segment sales include sales to the company's retail segment (which are eliminated in consolidation), and sales to their independent retailers. The retail segment net sales accounted for 77% of the company's consolidated net sales in fiscal 2015. The wholesale segment net sales to independent retailers accounted for 23%, including approximately 13.5% of net sales in fiscal 2015 to the ten largest independent retailers who operate 96 design centers. The company's independent retailer in China operated 75 of these locations at the end of fiscal 2015.

The company's wholesale and retail operating segments represent strategic business that operate separately and provide their own distinctive services. This vertical structure enables the company to offer a complete line of home furnishings and accents more effectively while controlling quality and cost. 

Home furnishings and accents are marketed and sold in a similar manner in the wholesale and retail segments, although the type of customer (wholesale versus retail) and the specific services that each operating segment provides are different. Within the wholesale segment, Ethan Allen maintains revenue information according to each respective product line (i.e. case goods, upholstery, or home accents and other). Case goods include items such as beds, dressers, armoires, tables, chairs, buffets, entertainment units, home office furniture, and wooden accents. Upholstery items include sleepers, recliners and other motion furniture, chairs, ottomans, custom pillows, sofas, loveseats, cut fabrics and leather. Skilled artisans cut, sew and upholster custom-designed upholstery items which are available in a variety of frame, fabric and trim options.

Home accessory and other items include window treatments and drapery hardware, wall decor, florals, lighting, clocks, mattresses, bedspreads, throws, pillows, decorative accents, area rugs, wall coverings and home and garden furnishings. The allocation of retail sales by product line is similar to that of the wholesale segment. 
​


The company's strategy has been to position Ethan Allen as a preferred brand offering complimentary design service together with products of superior style, quality and value to provide consumers with a comprehensive, one-stop shopping solution for their home furnishing and interior design needs. In carrying out this strategy the company continues to expand their reach to a broader consumer base through a diverse selection of attractively priced products, designed to complement one another, and reflecting current fashion trends in home decorating.

During fiscal 2015, the company strengthened its product offerings by introducing new products to retail consumers in case goods, upholstery, and home accents, by introducing a very large collection of new products and existing products in new finishes under the umbrella of “Classics”. Regular product introductions, a broad range of styles and custom options within our upholstery and case good lines and expanded product offerings to accommodate today’s home decorating trends, continue to define Ethan Allen positioning it as a leader in home fashion.


The interior of their retail design centers are organized to facilitate display of their product offerings in both room settings that project the category lifestyle and by product grouping to facilitate comparisons of the styles and tastes of clients or customers. To further enhance the experience, technology is often used throughout the design centers to expand the range of products viewed by including content from the company's website in applications used on large touchscreen flat panel displays. 

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