Stocks’ Details

Walt Disney Company

4QFY20 Earnings Impacted by COVID-19: Walt Disney Company (NYSE: DIS) is an American entertainment company with four business segments: Media Networks, Parks Experiences and Products, Studio Entertainment, and Direct-To-Consumer and International. On 12 November 2020, the company announced that it had decided to defer the semi-annual cash dividend for the second half of fiscal 2020. The company is aiming to preserve cash due to uncertainties around Covid-19.

4QFY20 or FY20 Financial Update:  On 12 November 2020, the company announced its fourth-quarter or full-year earnings update, wherein, the company reported total revenues of $14,707 million, down by 23% on a y-o-y basis, due to the impact of covid-19 on all operating business. The media networks segment revenues reported a growth of 11% on a y-o-y basis and came in at $7.2 billion. The cable network segment stood at $4.7 billion in FY20, up by 11% on a y-o-y basis. Loss per share during the quarter came in at $0.39 as compared to earnings per share of $0.43 4QFY19. In the same period, the net loss came in at $710 million from a profit of $777 million in the previous corresponding year. DIS ended the year with a cash balance of $17.9 billion, which increased from $5.4 billion at the end of September 28, 2019.

 Quarterly Financial Highlights (Source: Company Reports)

Outlook: The company is focused on improving the direct-to-consumer business, which significantly, exceeds expectations of the management in the form of 73 million paid subscribers for the Disney+ application.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: The stock of the company went up by 12.62% in the past three months and is currently trading close to its 52-week high level of $153.41. The company has a market capitalization of ~$260.04 billion, with a P/E multiple of 88.35x. On a technical analysis front, the stock has a support level of ~$137.90 and a resistance level of ~$147.80. We have valued the stock using an EV/sales multiple based illustrative relative valuation method and arrived at a target price of high single-digit upside (in percentage terms). For the purpose, we have taken peers ViacomCBS Inc (NASDAQ: VIAC), Fox Corp (NASDAQ: FOXA), Netflix Inc (NASDAQ: NFLX). Considering the factors mentioned above, growth in media networks segment in 4QFY20, decent outlook and valuation, we give a “Hold” recommendation on the stock at the closing price of $143.90, down by 0.42% on 18 November 2020.

 

Mr. Cooper Group Inc.

3QFY20 Financial Highlights: Mr. Cooper Group Inc. (NASDAQ: COOP) is engaged in servicing, origination, and transaction-based services (mortgage servicing and a loan originations platform) to its clients. During 3QFY20, the company reported robust net income at $214 million, as compared to $83 million in Q3 FY19. The company’s operating income came in at $348 million as compared to $171 million in 3QFY19. The tangible book value per share increased to $23.95 from $21.41 reported in the last quarter. During 3QFY20, the company had repurchased 1.2 million of common stock for an amount of $23.3 million and redeemed $950 million of senior notes. Also, the company issued new debt of $850 million at 5.5% in the quarter, with an additional financing capacity of $2.0 billion, of which $1.5 billion is unused at the end of the quarter. 

Quarterly Financial Highlights (Source: Company Reports)

Outlook: The company expects single-digit portfolio growth in 4QFY20 on new subscribing relationship and further ramp-up in correspondent volumes.

Valuation Methodology: Price/Book Value Multiple Based Relative Valuation (Illustrative)

Price/Book Value Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: The company exited the quarter with a cash balance of $946 million. The stock of COOP gave a return of 7.58% in the past one month. The stock is trading close to its 52-week high of $25.64. The company has a market capitalisation of ~$2.31 billion, with a P/E multiple of 12.7x. On a technical analysis front, the stock has a support level of ~$23.9 and a resistance level of ~$26.46. We have valued the stock using a Price/Book Value multiple based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in percentage terms). For the purpose, we have taken peers like PennyMac Financial Services Inc (NYSE: PFSI), Ocwen Financial Corp (NYSE: OCN), and New Residential Investment Corp (NYSE: NRZ), to name few. Considering the factors mentioned above, excellent Q3FY20 results, healthy balance sheet, valuation, and key investment risks, we give a “Speculative Buy” recommendation on the stock at the closing price of $25.53 on 18 November 2020.

OneSpan Inc.

Appointment of a New Director: OneSpan Inc. (NASDAQ: OSPN) is focused on providing anti-fraud and digital transaction management solutions to financial institutions and other businesses with a market capitalization of ~$752.5 million as on 18 November 2020. On 11 November 2020, the company announced the appointment of Mr Alfred Nietzel as a new Independent Director, with immediate effect. Also, Mr Nietzel will be a member of the Company's Audit and Finance & Strategy Committees.

3QFY20 Financial Update: During the quarter, the company reported revenue of $51.4 million, down by 35% year over year. Gross profit for the period decreased to ~$36 million as compared to $53 million in 3QFY19. In the same time span, the adjusted EBITDA stood at $2.7 million, as compared to $19.1 million in 3Q FY19. Net loss, on a GAAP basis, came in at $1.7 million, as compared to a profit of $11.8 million in 3Q FY19. The company exited the period with cash balance amounting to $112.7 million.

 
Quarterly Financial Highlights (Source: Company Reports)

Outlook: The company has provided guidance for FY20, wherein it expects to report total revenue in the range of $203 million - $207 million. Software and Services’ segment revenue is likely to come in the range of $126 million - $128 million and Hardware segment revenue is expected to come between $77 million - $79 million.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

P/E Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters) 

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months 

Stock Recommendation: The stock of OSPN gave a return of 1.59% in the past six months but went down ~26.56% in the last one month. On a technical front, the stock of OSPN has a support level of ~15.05 and a resistance level of ~$21.7. We have valued the stock using the P/E multiple based illustrative relative valuation method and arrived at a target price with a downside of low double-digit (in % terms). For the purpose, we have taken peers like Norton LifeLock Inc (NYSE: NLOK), Proofpoint Inc (NYSE: PFPT) and Palo Alto Networks Inc (NYSE: PANW). Hence, considering the aforesaid facts and valuation, we suggest investors to wait for a better entry level and give an ‘Expensive’ rating on the stock at the closing price of $18.52, down by 2.68% on 18 November 2020. 

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

---

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.

Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.