All things STOCKS

#13,451
#13,451
Ernest T. Vol said:
Well, your EPS of $3.22 is GAAP trailing. The non-gaap estimated fiscal 4/2023 eps is $5.25 to $5.30. This was the last updated guidance by MDT on 11/22/22. In their case, there are big differences between gaap and non-gaaap because a court case required them to book a $764 million expense within this last quarter. When calculating the payout ratios, do you think we should go strictly by gaap or use non-gaap? You'll see different analysts using both. Both can be distorted and misleading. In this case, the non-gaap eps makes the payout ratio around 52%. I usually like between 40% and 60% payout for my div picks. MDT's 52% is not bad when one considers the overall situation. Forty four years of div increases is strong. Maybe they cant increase it like they have. The pandemic may have disrupted them too much but I doubt they reduce.
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I’d always use GAAP. Too often companies’ managements are polishing turds. With non-GAAP arguments there’s potential for manipulation in some period. Eventually it’s all going to hit. A reason that I don’t trust broadcasters numbers so much. They like to ignore big pieces of the picture. Eventually, rebuilding studios and other CapEx and putting large pieces (FCC licenses and broadcast towers for example) of over priced acquisitions on balance sheets needs to fall onto P&Ls. EBITDA ignores big pieces.

If MDT can keep booking $5 or better GAAP then I wouldn’t worry about such a high payout. As long as other hidden expenses don’t pop up. They also carry net debt of a bit under $20 billion. I wonder how rich their inventory carrying value might be. Revenue is just a hair over $30 billion and grows around 5%. I’d be more worried about what will push up share prices with earnings not likely to meaningfully advance until about 5 more years out. Share price is where it was 20 years ago.

I’d like to hear what surgeons using da Vinci have to say about Hugo. A miss on that front would be painful for MDT. It seems like a bold move away from their core businesses. ISRG won’t necessarily refrain from aggressive moves to counter MDT moving onto their turf.

MDT is also more exposed to supply chain and staffing than a lot of the investment universe.

I wouldn’t be overly aggressive buying up shares. But it really wouldn’t scare me either to own shares for the LT.
 
#13,452
#13,452
Thunder Good-Oil said:
L3 and Harris merged a couple of years ago. L3 was a high flying defense stock. Harris was more radio focused and might have been more commercial oriented (radio and TV broadcasters). Combined it’s a communication systems behemoth. LMT, BA, and RTX are in the missile business. Raytheon is closer to a pure play. They sell the Patriot defense system. The government is allowing them to sell to more countries niw other than our closest allies and partners. Dot Gov doesn’t want Russia or China to overrun any country and get a look at the technology.

Raytheon and L3-Harris are sound equity investments. Those businesses are critical for national defense which reduces much of the risk of holding for a long time.
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I love Raytheon by itself. The problem I have understanding their business model is that they also bought United Technologies. Somehow in that mix, they own Otis Elevators, Carrier Air Conditioning, and Pratt & Whitney. I don't know what to make of that combination.

If Raytheon was just Raytheon, I would be all over them.
 
#13,453
#13,453
Jax_Vol said:
I love Raytheon by itself. The problem I have understanding their business model is that they also bought United Technologies. Somehow in that mix, they own Otis Elevators, Carrier Air Conditioning, and Pratt & Whitney. I don't know what to make of that combination.

If Raytheon was just Raytheon, I would be all over them.
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No. They spun off Otis and Carrier as separate companies. They are focused on defense and aerospace.
 
#13,457
#13,457
Aerojet (AJRD) going to be a wild thing today. If it every reachs $56, I would short it Allen.

They have an offer of $58 on table.

So, around $56 - $56,50, we know either Apes or MM's will make it dive dive dive just to create the movement. Probably will run it up and down 3-4 times early.
 
#13,460
#13,460
The L3 Harris CEO will be on CNBC this morning. Commentators noted that LMT was denied as it wasn’t integrating vertically whereas with L3H it will be. L3H is arguing that they are trying to become the 6th prime defense contractor (with LMT, Gee Dee, RTX, BA, and NOC).
 
#13,461
#13,461
Thunder Good-Oil said:
The L3 Harris CEO will be on CNBC this morning. Commentators noted that LMT was denied as it wasn’t integrating vertically whereas with L3H it will be. L3H is arguing that they are trying to become the 6th prime defense contractor (with LMT, Gee Dee, RTX, BA, and NOC).
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Isn't L3H way too small to be the 6th? Whatever SAIC (LDOS?) is now seems larger.

Would have to think about that (or Google), but would think we have ten with $100B plus market cap. With AJRD, L3H is like $45B?
 
#13,463
#13,463
Jax_Vol said:
Isn't L3H way too small to be the 6th? Whatever SAIC (LDOS?) is now seems larger.

Would have to think about that (or Google), but would think we have ten with $100B plus market cap. With AJRD, L3H is like $45B?
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L3H will be approaching $50 billion market cap after buying Aero J. The market cap of Gee Dee is only $70 billion. L3 isn’t necessarily going to stop acquiring companies. L3 is already around #6 by defense revenue. But it gets a little fuzzy dissecting defense contractors and government contractors. Especially with where you put the aerospace business. NASA isn’t part of defense, but they certainly do work for the military. The Soace Firce is clearly military, but is small. Ball, the container company actually does lots of business with the military. Honeywell. SpaceX. IBM. MMM. It all gets pretty murky.
 
#13,466
#13,466
BlackStone (BX) keeps falling. I sold 79 puts which hasn’t worked out ideally. I might double down though. This pull back might could be muchly driven by tax loss harvesting. I hope so. BX’s leadership knows well how the game is played in lower Manhattan.
 
#13,467
#13,467
Thunder Good-Oil said:
L3H will be approaching $50 billion market cap after buying Aero J. The market cap of Gee Dee is only $70 billion. L3 isn’t necessarily going to stop acquiring companies. L3 is already around #6 by defense revenue. But it gets a little fuzzy dissecting defense contractors and government contractors. Especially with where you put the aerospace business. NASA isn’t part of defense, but they certainly do work for the military. The Soace Firce is clearly military, but is small. Ball, the container company actually does lots of business with the military. Honeywell. SpaceX. IBM. MMM. It all gets pretty murky.
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Yes. You are right. This list I found has them 7, which includes BAE which is British.

Never would have guessed that.

Top Defense Contractors with the Highest Revenue - ClearanceJobs

Speaking on Ball, makes me think of Burlington. So many mid-cap mutual funds have Burlington as a top holding. I always thought that place sux. Later found, our DoD buys in mass from Burlington. (I think...?)
 
#13,468
#13,468
Jax_Vol said:
Yes. You are right. This list I found has them 7, which includes BAE which is British.

Never would have guessed that.

Top Defense Contractors with the Highest Revenue - ClearanceJobs

Speaking on Ball, makes me think of Burlington. So many mid-cap mutual funds have Burlington as a top holding. I always thought that place sux. Later found, our DoD buys in mass from Burlington. (I think...?)
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I’ve never paid attention to Burlington. It seems like there are about 3 of them.
 
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#13,470
#13,470
Looks like L3Harris is about to drop another 3-4%. Heavy selling.

Guess people think they overpaid?

Funny, I think they got a deal at $58/share. AJRD will have ten times their current number of propulsion systems in Europe within next 3-5 years. Putin should/could be a great asset for USA economy.

Buy Invasion.jpg
 
#13,471
#13,471
#13,472
#13,472
Jax_Vol said:
Is the one mentioned in this contract award, the same as Burlington Coat Factory? I think the one many mutual fund own is BURL.

DoD Announces $6.8 Million Defense Production Act Title III Agreement with Burlington Industries, LLC to Strengthen the Domestic Clothing and Textile Industrial Base > U.S. Department of Defense > Release
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I would think that the Burlington textile company is the defense contractor. They used to sell parachutes. Although somebody is selling uniforms to the military as well. Even big pharmas have major contracts with the DoD.

Burlington Industries is a brand controlled by private equity. Part of it was sold to Mohawk (carpets). I wouldn’t think that BURL does a ton of DoD business. They are a retailer.
 
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#13,474
#13,474
Thunder Good-Oil said:
BlackStone (BX) keeps falling. I sold 79 puts which hasn’t worked out ideally. I might double down though. This pull back might could be muchly driven by tax loss harvesting. I hope so. BX’s leadership knows well how the game is played in lower Manhattan.
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I own a bunch of BX also. Most seem to blame their exposure to commercial real estate for the depressed stock price. Falling knife?
 
#13,475
#13,475
Go aeiou said:
I own a bunch of BX also. Most seem to blame their exposure to commercial real estate for the depressed stock price. Falling knife?
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It’s had a 50% haircut. I’d think that most of the damage to the share price has now happened. Those are smart guys. The pull back is probably overdone as they most likely run with high quality tenants and triple net, long term leases. They’ve basically just given back the spike from the recent overdone surge in real estate prices.

I do wonder how carried interest tax treatment could play out.
 
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