D.R. Horton, Inc. (DHI:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 12.3x Uniform P/E. At these levels, markets are pricing in bearish expectations for the firm, which may be unwarranted given management’s confidence in the progress of their projects, their ability to increase market share, and opportunities to monetize land

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 Ideas AXL – American Axle & Manufacturing Holdings, Inc., GTT – GTT Communications, Inc. MCK – McKesson Corporation 

General Motors Company (GM:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 13.6x Uniform P/E, implying bearish expectations for the firm. However, management is confident in their Cadillac sales, cost management, and South American business turnarounds

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: Pfizer Inc. DIS, LAMR, XOM Other Recent Analyses: ABBV, ACAD, AMAT, BA, BMY, CAH, CAT, HD, MTCH, MTD, PM, PYPL, TEVA

United Technologies Corporation (UTX:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 21.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about the HVAC and housing markets, Otis sales growth, and synergies with Collins Aerospace

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. CVS Health Corporation (CVS), Apple Inc. (AAPL), Microchip Technology Incorporated (MCHP)

Lamar Advertising Company (REIT) (LAMR:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 23.2x Uniform P/E. At these levels, the market has expectations for stable profitability for the firm, but management has concerns about sales growth and competition

Exxon Mobil Corporation (XOM:USA) currently trades below UAFRS-based (Uniform) Assets, with a 0.9x Uniform P/B, implying bearish expectations for the firm. However, management is confident in their Liza Phase 2, Guyana, and Payara projects, their ability to make investments across the value chain, and their asset sale program

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

Under Generally Accepted Accounting Principles (GAAP), DLPH’s as-reported financial statements and financial ratios do not reflect economic reality. The traditional ROA computation understates the company’s profitability by incorrectly including certain items.

Moody’s rates Delta Air Lines, Inc. (NYSE:DAL) with a cross-over Baa3 rating. However, Valens rates DAL with an upper medium investment grade IG3 credit rating, or an A2 equivalent using Moody’s ratings scale.

The problem with Generally Accepted Accounting Principles (GAAP) is that they create inconsistencies when comparing one company to another and when comparing a company to itself from year to year.

Highlighted Top Ideas RFP – Resolute Forest Products Inc., SKT – Tanger Factory Outlet Centers, Inc., UNT – Unit Corporation

Pfizer Inc. (PFE:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 16.3x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is excited about the approval of KEYTRUDA plus Inlyta, and confident in their gene therapy partnership and ability to drive growth

– No Traded CDS, Base Case iCDS 484bp

– Negative Case iCDS 614bps, 2024 7.875% Bond YTW of 12.010%, iYTW of 6.900%

– B2 Rating from Moody’s, XO- (equivalent to Ba1) Rating from Valens

– High Refinancing Need

The Walt Disney Company (DIS:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 19.4x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is excited about Avengers: Endgame and Jessica Jones, and is confident in the interest surrounding Marvel movies and their ability to retrieve content from Netflix

Microsoft Corporation (MSFT:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 22.0x Uniform P/E. However, even at these levels, the market has bearish expectations, while management is confident in the potential of Azure, the value of their compliance security, and their ability to reduce operating expenses

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. Discovery, Inc. (DISC.A), Inogen, Inc. (INGN), NuVasive, Inc. (NUVA)

This week the Valens Research team highlights our most interesting equity insight from across our tools and our analysis. EBAY is a winning investment with robust returns, strong economic moats, and management that is properly aligned and showing more confidence that imply low market expectations are too pessimistic