5-Bullet Sunday

5-Bullet Sunday – #31

Again a productive week! Summer and Covid can’t stop me and I’m still enjoying enough time outside and with the family. Focus has been the key here!

This week I created the following content:

Stock Analysis: British American Tobacco
Dividend Talk: Episode #7 – Q2 Earnings and our view on it (#Danone, #Pfizer, #ADP, #UPS)

Enjoy today’s 5-Bullet Sunday!


5-Bullet SundayΒ is a weekly blog post with 5 topics that were on my mind this week related to Financial Independence and Dividend Growth Investing or something that just fed my curiosity. An overview of earlier posts can be foundΒ here

🌟 Vacation-Time

It’s literally the middle of the summer right now over here in Europe. This time is different though, because many people have decided due to covid-19 to enjoy their vacation differently. The evidence is visible in Google Trends πŸ˜‰

This is the same for us. We decided to make a little road trip in Poland instead of seeking the nice beaches somewhere in the south of Europe. It’s a pity, but from the other side we get to explore places which we’ve never seen before. This country is really beautiful and literally has everything: white beaches, lakes, an ancient forest and mountains.

It’s nice to be out here and I’m just grateful that we aren’t in a lock down so that we actually get to get out for a bit.

Having said that, I wanted to thank all of you for following me on my journey. I hope that I’ve been able to add some value to your journey in return. Enjoy the summer break and I hope that you get to spend some time with the family.

🌟 Last week earnings

I have to be a bit selective, because there were so many earnings this week. Hence I will only highlight some of the stocks that I personally own.

Abbvie reported a loss of $0,46 based on GAAP earnings. Their adjusted earnings diluted earnings came in at $2.34 and the main reasons are asset amortization and acquisition related costs. The company started to really feel the impact of bio-similar competition outside of the US. It’s sales for the product dropped by another 19.9%. Humira still grew in the US with 4.8%. I find these numbers quite strong. The decline of international Humira sales should come as no surprise to us and I think that the company is managing it very well. Last but not least, Allergan’s acquisition is finalized and it started to be included in the numbers.

Danone reported pretty good numbers as well. See below my one-pager which I discussed in the latest episode of the Dividend Talk podcast.

Exxon Mobil reported a GAAP EPS of $-0,26 and a non-GAAP EPS of $-0,70. Their revenue was only half compared to what it was a year ago. It just shows how severe the decline in the oil market is due to oversupply (Saudi price war) and covid-19. The company is committed to its dividend and decided to further cut capital spending. We need to keep an eye on this, because it might mean issues for the company few years down the road.

Royal Dutch Shell reported similar poor numbers. They earned $-2.33 in basic EPS which was largely impacted by $16.8 billion write-off on assets. Free cash flow-wise they were barely positive with 243 million (decline of 12 billion quarter-over-quarter). No wonder that they had to cut the dividend! Having said that, investors will need to re-evaluate the balance sheet, because their “gearing” went up to 32.7% due to the write-off. This means a lot of debt for less value in assets. Was this their kitchen-sink quarter?

BASF SE reported so so numbers. Their sales declined by 12%. Almost all business units saw declines up to 28% except for Nutrition & Care. The company reported a -0,95 EPS per share, largely impacted due to write-offs on some of their assets. Therefore their adjusted EPS came in at 0,25. BASF is a typical cyclical business and they are very committed to their dividend. Hence, I might add some more BASF to my portfolio in the upcoming weeks.

PS: This is were DSM made a great transformation over the recent years, because they created a much more stable business than BASF by getting fully into Nutrition. Besides BASF I would definitely like to own DSM as part of my desired portfolio.

Last but definitely not the least: Apple reported stellar numbers. I guess you all heard about them in the news already. Revenue increased with 11% and EPS 18%. Let that sink in for a moment…

It’s really huge! Enjoy popping some Champaign at this moment, because we all need to celebrate at certain moments during our journey.

But lets get back to reality again. I assume that most of the sales increase is a one-off or at least being brought forward. Savings rates exploded during the last quarter as we were in the middle of the lock down. This was for most of us the perfect time to spend it on new hardware or additional apps to spend our time at home. Working from home was actually a very good justification to buy this shiny product from Apple. Having said that: be cautious in modeling your fair value estimates for Apple. I would recommend to not extrapolate from last quarter’s earnings. Rather use an average trailing twelve months number.

🌟 Upcoming European earnings

Last week was a very busy week, but that doesn’t mean that we’re done. Another exciting week is upcoming with some great companies reporting their earnings. See below some of the companies of my interest. Noble 30 Index members are identified with a βš” behind their name.Β 

🌟 Recommended Reads

I started this blog at the beginning of this year as a new years resolution. I tried to blog 2 times before, but both times I failed to write consistently and I think that I never wrote more than 10 posts on those blogs. This time is different and today I’m writing blog post #61.

Why is this time different? The answer is simple: I’ve built a routine by committing myself to this weekly blog post.

The learning that I took from my first two failed attempts was exactly that: the lack of routine. That’s why I made this commitment to you, so that I would force myself to wake up every Sunday and get this post out. It also forced me to not only consume financial information behind my smartphone, but also to think and reflect on it and to judge whether it is something worth sharing in 5-Bullet Sunday.

My recommendation therefor to all new bloggers that are reading this post is to quickly build a routine and get the engagement going. This will fuel your motivation and if you’re like me, it might also give you some additional pressure to keep adding valuable content.

Having said that, let’s get to the main topic of this bullet.

Beurswolf just launched his blog last week πŸŽ‰. He’s on to a good start and I recommend to check it out.

I liked his content in his threats on Twitter already and now he started to write more in-depth on topics related to financial freedom. I especially liked his piece on Gold and it’s a topic far out of my circle of competence so you would not quickly find a post about gold from me on this blog.

Just-Dividends wrote an analysis about IBM. I like that he considers both the bull- and the bear case. I don’t own IBM, but I have considered it several times. I guess some old sentiment from having worked with quite some “IBM-ers” has prevented me to pull the trigger.

Bert from Dividend Diplomats wrote a post about his June purchases. Quite a nice list and it’s nice to see how small additions to the portfolio can build up over time. The ability to buy fractional shares or at zero-commissions has really benefited us as retail investors. We can easily invest as little as our lunch nowadays instead of saving up enough money (i.e. 4-digit numbers) to overcome the commissions.

🌟 Recommended Video

Is value-investing dead? That’s a phrase that I hear from time-2-time due to the ever-increasing prices for tech stocks.

I don’t think so, I just think that Tech stocks are in their own multi-year upward trend which was put on dopamine due covid-19.

A good video that makes us remember about the importance of value-investing, especially during these times, is the latest one from FastGraphs. I had a subscription to it in the past, but I couldn’t justify the costs anymore, but it doesn’t mean that I didn’t like it. I actually like their graphs a lot, because they provide a tremendous insight in a single picture.

Having said that, enjoy the below video. It keeps our feet on the ground πŸ˜‰

PS: I’m not associated to FastGraphs and I don’t earn anything from posting this link. I just think that the message in this video is very spot-on.

That was it for 5-Bullet Sunday, edition #31

It was again full of items around last week’s earnings and I hope that you enjoyed it.

Have a lovely week ahead!

Yours Truly,

European Dividend Growth Investor

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