NoBull Posts

Zillow’s 1Q23 Report Provides Housing Insight

Zillow’s 1Q23 Report Provides Housing Insight

Zillow reports that the current housing macro environment is very challenging with no clear indications of a turn. Supply continues to be low (as potential sellers are locked into their existing low-rate mortgages) & high demand to move supports a stable pricing environment.

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Checking on the S&P 500

Checking on the S&P 500

The VIX is a useful gauge of perceived stock market risk, and the lower its price, the better. Even though recent concerns about bank stocks are currently pushing the VIX higher, its price remains relatively low on a post-covid basis.

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Amazon’s 1Q23 Reports on the Consumer & AI

Amazon’s 1Q23 Reports on the Consumer & AI

Customers seek to stretch their budgets further & are focused on value. This is not the case for enterprises looking to implement AI, and Amazon is ready to capitalize on helping implement this burgeoning tech which is poised to transform customer service. 

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RR Posts

Panera Bread

Panera Bread

While Panera is well positioned for the long-term with a healthy halo and digital strength, near-term results may be tempered by the need for more value in a difficult economy and the need for a higher level of labor efficiency to support store-level profitability.

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Restaurant Finance & 2H:22 Valuations

Restaurant Finance & 2H:22 Valuations

RR’s Finance & Valuation report is based on survey responses (equally weighted) from 60 finance companies including traditional cash flow lenders, sale leaseback companies, SBA lenders and equipment finance companies.

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Church’s Texas Chicken 2023

Church’s Texas Chicken 2023

Church’s is executing around a well-conceived strategic plan, the chain’s performance is currently challenged by ongoing inflationary pressures that are particularly hard on its core low income target market.

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Sonic & Annual Databook Insights 2023

Sonic & Annual Databook Insights 2023

Sonic enjoys strong brand equity (particularly in core South & Central Plains markets) around its unique drive-in format with car stalls, friendly carhops and a plethora of specialty drinks & frozen treats. While Sonic’s unique positioning provides valuable brand equity, the chain’s prospects will also be a function of the success of its burger repositioning and, likely, the strength of its value equation given the current economic environment.

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Dashboard: Unit Level

Dashboard: Unit Level

With restaurant stocks through the roof in January, it seems that investors are expecting a material improvement in unit-level profitability for 2023.

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Dashboard: Capital Markets

Dashboard: Capital Markets

Bullish investors’ sentiment towards restaurant stocks during January reflects an outlook for continued consumer resiliency and moderating costs. Notably, this seems somewhat contrary to McDonald’s base case for a mild to moderate recession this year.

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New Unit Investment

New Unit Investment

New Unit Investment Report provides average building cost estimate details (excluding land) for the $1B+ Chains in addition to new store ROI, franchisor incentives, franchise fees and new prototypes.

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15 Second Posts

What is the Federal Government’s Job?

A couple of weeks ago we conducted a thought experiment in which the government became a nonprofit, and this week we propose another thought experiment in which the government becomes a public corporation. We suggest that this could provide very useful input into the debt ceiling debate.

The Importance of the Balance Sheet in Financial Analysis

While most investors are focused on sales growth & margins, they would be well served to further consider the strength of a company’s balance sheet. We look at BlackRock’s financial condition as an illustrative point.

The Importance of Free Cash Flow in Financial Analysis

Cash represents the lifeblood of all business enterprises which is why it is important to analyze free cash flow which we define as operating cash flow minus capex, dividends, and stock buybacks. We illustrate DoorDash as an example of why cash flow analysis is so important. 

Lessons From Tucker Carlson

There are many theories about why Fox booted Tucker Carlson, but it may be a very simple reason which can instruct everyone involved in the consumer retail segment.

It is Imperative that Climate Change Regs Incorporate Economic Reality

This week we spotlight efforts by international agencies to lower the earth’s temperature by imposing onerous regulations on energy producers. We suggest it will be better to: begin a process of implementing continuous improvements designed to support both economic & climate progress; and use international organizations to share tech & best practices as opposed to providing them with regulatory powers best left to individual nation-states.   

Part 3 – It’s Nice for the US to Save the Climate, But What About the Rest of the World?

In our last 2 posts, we outlined the probability that the UN’s push to lower the world’s temperature by -2 degrees Celsius could drive significant U.S. energy price hikes & shortages. How is this going to help as Asia ramps up the use of coal? Can humans lower the earth’s temperature anyhow?

Part 2: Who is Left to Make Investments in Fossil Fuels & Clean Energy?

There is not a lot of incentive for profit-seeking companies to invest in demonized fossil fuels or in clean energy projects lacking ROI. This points to substantially higher energy prices and supply shortages that will have a profound economic impact.

Part 1: Ramping Energy Demand Clashes with UN’s Environmental Goals

From 2021 to 2050, ExxonMobil forecasts that 85% of the population growth will be driven by developing countries, which in turn, will drive a +15% increase in energy demand.

What if the Federal Government Was Turned into a 501c3 Non-Profit?

Given all the focus on the debt ceiling, we propose a thought experiment in which all 100 federal agencies must compete for charitable donations. If taxpayers get to choose for themselves what to fund, what might we learn? 

Like Sinatra Croons: “So you see it’s all up to you, you can be better than you are.”

The top-paid hourly workers are currently enjoying the fastest wage growth, indicative of the current challenge to recruit & retain a skilled labor force.