Tuesday, 24 November 2015

US numbers today: Tiffany's and Campbell Soup

A few thoughts on some US reporting today.

First Tiffany's.  I invested in the stock earlier in the year and traded out as noted here near the US$100/share level. Interestingly impacted by a combination of global angst, US consumer caution and a strong dollar the shares are back to the sub US$85 level which first piqued my attention earlier in the year:

Yes, that US dollar impact.  It is amazing to see the differing impacts on geographies around the world as FX rates move around and tourists follow.  Japan and Europe helped, whilst the Americas are shabbier.  Of course one differentiation for Tiffany's against some of the other names is that its Asian position is relatively lowly developed.  
Of course there is an impact on numbers but trading on x12.7 EV/ebit with a clean balance sheet and a thick end of a 5% free cash flow yield.  

 Back in March I noted:

These are not terrible multiples but not hugely compelling if like me you have a starter position already.  Nevertheless I would certainly encourage zero position investors to consider the stock and my trading instinct is not just to hold on but to look to double my position in the US$75-80 range (the lower price equates to around a forward x12 EV/ebit multiple)'.  

The above maths still broadly work although in today's slightly shabbier world I think you take the second observation as your initial level.  So basically am looking for a buying opportunity on a bad day.  

Another name I have written about before is Campbell Soup.  As I noted on Twitter earlier: 

kicking around at a 10 year+ high. '16 earnings revised up...and there was I thinking it was organic based

Anyway that is still...a high teens P/E multiple or a mid-teens EV/ebit metric.  Not classic value even if cash flow generation is nicely higher than the current 2.5% dividend yield.  Despite the new divisional split highlighting progress and re-focus on the snacks business to complement the classic soup and related business I noted earlier on Twitter:

Always my fav slide from the deck. I guess would be pleased. Hardly premiumisation.

At prevailing I still looking for an entry price much nearer US$40.  



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