The Shares Researcher

In January 2023 – nearly three years ago – this blog highlighted Warner Bros. Discovery. Since then, the company has made significant strides, notably reducing its debt and expanding its streaming business. These improvements have attracted attention from other industry players, leading to an acquisition offer from Netflix last week. Following this development, Warner Bros. Discovery’s share price has approached the fair value estimate. Given this momentum, it could be an opportune moment to consider taking the profits and reallocating funds to other investment opportunities. Since January 2023, the stock has surged approximately 175%. Congratulations to all readers who capitalized on this growth. Current Price $26.08

Intro There is not much of an introduction needed for Warner Bros. since probably everybody is familiar with the name. Warner Bros. Discovery is an entertainment company which creates as well as distributes content on TV, film or streaming. The portfolio consists, amongst others, of Discovery Channel, CNN, HBO or Warner Bros. Pictures. Recently, however, there was a big change in the company: In 2021, Discovery acquired WarnerMedia from AT&T and combined Warner with Discovery. Former AT&T shareholders ended up with around 71% of the new Warner Bros. Discovery company. Since trading of the new Warner Bros. Discovery started in spring 2022, the stock price mainly knew one direction: down. As a result, in a bit less than a year, the stock lost around 60% of its value. One reason might be the lack of a dividend payment, which former AT&T shareholders may not appreciate and made them sell their shares.   Valuation Due to the merger, there is currently some uncert...

Intro I have to warn you. Compared to almost all other companies mentioned on this blog, Agios is not generating any meaningful cash flow at the moment and, as you may have guessed, is in the “risky” biopharmaceutical business. Do I have any special knowledge in this sector? No. So why bother? Without going into any details in terms of their products or clinical pipeline which consists of programs in alpha- and beta-thalassemia or sickle cell disease where I certainly cannot add any value, I will try to focus on what I better understand: its financial position. At the end of 2020, Agios sold its oncology business for up to $2 billion plus royalties. The proceeds will and have been used to advance its pipeline and to buy back roughly $1.2 billion worth of its own shares.   Valuation At the end of March 2022, Agios had cash and marketable securities worth almost $1.2 billion and pretty much no financial liabilities. There are currently 71 million shares outstanding which ...

Intro Walgreens is a global leader in retail and wholesale pharmacy with a history going back to 1849. The company is present in more than 25 countries delivering to more than 250,000 pharmacies, doctors, health centers and hospitals. Besides an impairment for its assets in the UK by approx. $2 billion, the firm has ‘survived’ COVID-19 rather well with 2% higher sales for the full year ending in August and growth of 2.3% in the last quarter compared to last year. While it might be that the retail segment will decline over time due to online sales, Walgreens has partnered with Microsoft and Adobe on the digital front and its e-commerce business has shown strong sales growth, especially this year.   Valuation Mainly as a result of the UK impairment, EPS for the last 12 months has been under pressure albeit still being decently positive. Adjusted for these negative events, the company’s adjusted EPS would have been $4.74. However, a real figure might be more in the area of...

Intro The first company discussed is probably well-known for everybody: The Kraft Heinz Company. After the merger between Kraft Foods and Heinz (yes, the Ketchup maker) in 2015, the company had its struggles culminating in 2019 with impairment charges and a SEC investigation. Since then, a new CEO took office and the quarterly dividend was reduced. Valuation Even though sales have been declining slightly, net profits have hovered around $400 to $900 million per quarter which translates into roughly $3 billion net profits per year. Assuming the consumer behavior doesn’t change massively in the next few years, Kraft Heinz ought to be able to generate at least similar profits going forward. It is believed that EPS of at least $3.00 per share will be possible and sustainable, which turns into a P/E ratio of 10x, an attractive valuation for a quality food stock such as Kraft Heinz. With total long-term debt of approx. $30 billion (and total assets of >$100 billion), the leverage of Kraft...