Wednesday, January 29, 2014

Big Quarter for JBSS

JBSS reported second quarter earnings after today's close.   See excerpt below and look for updates on Seeking Alpha

  • Net sales increased by 4.4%
  • Sales volume increased by 12.0%
  • Net income increased by 11.1%
ELGIN, Ill.--(BUSINESS WIRE)-- John B. Sanfilippo & Son, Inc. (JBSS) (the Company) today announced operating results for its fiscal 2014 second quarter. Net income for the second quarter of fiscal 2014 was $9.2 million, or $0.83 per share diluted, compared to net income of $8.3 million, or $0.76 per share diluted, for the second quarter of fiscal 2013. Net income for the first two quarters of fiscal 2014 was $16.0 million, or $1.44 per share diluted, compared to net income of $15.8 million, or $1.45 per share diluted, for the first two quarters of fiscal 2013.

Tuesday, January 21, 2014

Muncipal Bond CEFs: Understanding the Risks on Seeking Alpha

Municipal Bond CEFs: Understanding the Risks

We just posted an article on Municipal Bond CEFs on Seeking Alpha.  Next we'll discuss strategies to reduce interest rate risk in your portfolio while being able to maintain much of the positive after tax features these funds can provide.  Keep checking the blog for our next post.

Wednesday, January 15, 2014

Mortgage Reits Specializing in Servicing Rights

With the ten year note quickly retracing some of its recent back-up yield it strikes me as the opportune time to add positions benefiting from the next upward movement in rates.  While the employment report was soft the economy is undeniably on the mend.  At some point the artificial fed bid has to end driving rates up -- in the meantime there is little likelihood we make  a substantial mark down.   One type of mortgage Reits are especially levered to an upward move in rates -- those specializing in Mortgage Servicing Rights.  Servicing rights are essentially an annuity stream for the life of the mortgage.   They decline in value as rates drop since the mortgage they are tied to is more likely to prepay and the annuity stream will end shortly.  As rates rise the opposite holds true and the projected annuity stream grows longer -- increasing the value of the MSRs.  Two mreits that specialize in MSRs are CHMI and NRZ.  I recommend NRZ over CHMI as the latter often purchases MSRs from an affiliated company posing potential conflict of interest. 

As always do your own research.


Saturday, January 11, 2014

Link to Seeking Alpha Article on JBSS

Seeking Alpha Article

Summary Valuation is below

Valuation Model Summary      
Valuation Figure 1: DCF - Free Cash Flow WACC Model Valuation Figure 2: Enterprise Value to Cash Flow Model Valuation Figure 3:  Net Asst Value
10 Year Treasury 3.00% EBITDA  55,073 Entity EV EBITDA Multiple Weight Equity Mkt Cap  267,215 Total Assets 373,261
Beta 1.25 Capex  (11,000) JBSS  352,840  55,073  6.4 0 Total Debt 86,820 Adj Intangibles (7,218)
Equity Risk Premium 4.96% Working Capital  (2,300)  

Less Cash: (1,195) Adjust DTA (1,002)
Cost of Equity 9.20% FCF  41,773 DMND  1,160,000  99,811  11.6  0.50 Enterprise Value  352,840 Re Mkt Val Adj. 17,683
Cost of Debt 5.50% Growth Rate 2.0% LNCE  2,540,000  178,650  14.2  0.08 EBiTDA TTM  55,073 Gross Asset Value 382,724
Tax Rate 0.3512 Mutliple 12.8 HSH  4,680,000  495,000  9.5  0.08 EV/EBITDA (Implied) 11.1 Liabilities 150,747
After Tax Cost of Debt 3.57% Enterprise Value  534,254 THS  3,300,000  302,840  10.9  0.08 Proj EV  610,452 FV Debt Adj & Def Tax ($3,852)
Total Debt 86,820 Equity Value 447,434 SENECA  6,444,900  673,400  9.6  0.25 Equity Value  524,827 Net Asset Value 228,125
Market Cap  267,215.13 FCF Value  $40.32  

EV Share Price  $47.29 NAV p/Share  20.56
Debt % 24.52% Current Price 24.08  

Current Price  $24.08 Current Price  $24.08
WACC 7.82% Target Gain 67.44%         11.1 Target Gain 96.41% Target Gain -14.63%

Wednesday, January 8, 2014

Recommend JBSS as Top Pick: Target Price $44

Glyndon Park recommends shares of JBSS trading at $23.20 with a target price of $44.  For our investment summary see our article posted on Seeking Alpha.