Cirrus Logic, Inc. (CRUS:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 17.5x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, which may be unwarranted given management’s confidence about demand for their DACs and their Cipher acquisition, justifying outperformance going forward

Each week, Valens focuses on several companies that were analyzed in the prior week, where material distortions caused by as-reported GAAP accounting need to be corrected to understand a company’s economic fundamentals. Boot Barn Holdings, Inc. (BOOT), OneSpan, Inc. (OSPN), CEVA, Inc. (CEVA)

This week the Valens Research team highlights our most interesting equity insight from across our tools and our analysis. Management’s smart strategic decisions, low market expectations, and sustained confidence about the business builds the case for equity upside

Highlighted Top: GME – GameStop Corp., LEN – Lennar Corporation, RAD – Rite Aid Corporation

Summary Headlines – Inside This Month

• Weak earnings growth and a recession are two different things, focus on the former.  Recent signals around corporate investment growth and management concerns about cost pressures from trade and macro overhangs point to slower earnings growth going forward.
• Profits and profitability are growing at a slower rate, though profitability remains at all-time highs across US corporations (UAFRS-adjusted, accurate calculations)
• The combination of profitability and low-to-no credit risk suggests limited risk to US equities in 2019

Using Adjusted Earnings and Assets, Harley-Davidson’s Adjusted Return on Assets was 19% in 2015 – significantly higher than the 7% ROA most financial databases report.

Discovery, Inc. (DISC.A:USA) currently trades below historical averages relative to UAFRS-based (Uniform) Earnings with a 9.6x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, which may be unwarranted given management’s confidence about their international growth, market share, and advertising revenues

Each week, the Valens Research team highlights our most interesting insights from across our tools and our analysis, including individual company, industry, and macro insights. Top Highlight: UNFI – United Natural Foods, Inc. Other Highlights: ABT, CVS, NFLX Other Recent Analyses: AAPL, ABBV, CCK, DIS, FLS, GNTX, HCC, HRB, KSU, MDR, MGM, MTN, POOL, PVH, RMAX, SKX, SNX, UNH

Jabil Inc. (JBL:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 13.7x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is confident about their growth, EPS, and core income growth

United Natural Foods, Inc. (UNFI:USA) currently trades at historical lows relative to UAFRS-based (Uniform) Assets, with a 0.4x Uniform P/B. At these levels, the market has bearish expectations for the firm, but management is confident about their Thrive 2 initiative and long-term business transformation

Each week, Valens focuses on several companies that were analyzed in the prior week, where material distortions caused by as-reported GAAP accounting need to be corrected to understand a company’s economic fundamentals. Roper Technologies, Inc. (ROP), Tactile Systems Technology, Inc. (TCMD), Hermès International S.A. (RMS:FRA)

This week the Valens Research team highlights our most interesting equity insight from across our tools and our analysis. COF is set to cash in with accelerating fundamentals, strong management alignment, and a robust business strategy just as markets are overly pessimistic on the company

Abbott Laboratories (ABT:USA) currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a 24.7x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, however management has concerns about guidance, their Nutrition business, and future growth

Highlighted Top: HTZ – Hertz Global Holdings, Inc., LB – L Brands, Inc., LEE – Lee Enterprises, Incorporated 

RE/MAX Holdings, Inc. (RMAX:USA) currently trades at the low end of historical levels relative to UAFRS-based (Uniform) Earnings with a 3.5x Uniform P/E, implying bearish expectations for the firm. Additionally, management is concerned about their forecast, future growth, agent quality, Motto Mortgage, competition, and booj platform

Each week, the Valens Research team highlights our most interesting insights from across our tools and our analysis, including individual company, industry, and macro insights. Top Highlight: NIKE, Inc. Other Highlights ASGN, CME, VEEV Other Recent Analyses: ALXN, CIEN, CMG, DUK, FLS, GPS, GRUB, HAL, IBM, IRBT, ISRG, JNJ, MSFT, OMC, PM, SLB, SNA, THRM

CVS Health Corporation (CVS:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 17.0x Uniform P/E. At these levels, markets are pricing in bearish expectations for the firm, and while management has concerns about expansion, operating income, and capital allocation, the firm’s leadership position in its space suggests longer-term upside remains warranted

Netflix, Inc. (NFLX:USA) currently trades above historical averages relative to UAFRS-based (Uniform) Earnings, with a 47.0x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about their self-produced content and subscriber growth

Each week, Valens focuses on several companies that were analyzed in the prior week, where material distortions caused by as-reported GAAP accounting need to be corrected to understand a company’s economic fundamentals. Prestige Consumer Healthcare, Inc. (PBH), Yelp, Inc. (YELP), Big Yellow Group PLC. (BYG:GBR)

Veeva Systems Inc. (VEEV:USA) currently trades at the higher end of historical averages relative to UAFRS-based (Uniform) Earnings with a 58.1x Uniform P/E, implying bullish expectations for the firm. Management appears to be concerned about growth, innovation, new products, and improving efficiencies