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This is the Value Investor podcast with Tracy Reinek. All things value, all the time.
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Welcome back value investors. So I decided this week to not look at the big winning stocks or just search for cheapness and instead I wanted to look at the stocks that are on sale. A lot of people have been talking about Nike in recent days because it did just recently hit an 11 year low. And I know as value investors we're wondering is that a value, you know, 11 year low? Should I be getting in here or is it still a trap? We've looked at Nike over the last couple of years because it keeps showing up in the screens. But I'm going to take a look at it again this, this week along with a couple other really well known companies that are also trading at least at their 52 week lows or near it. And most of, I believe all of these are at their five year low. So they are at multi year lows as well. But some of the story that's going around with Nike, Nike kind of reminds me of, well, at least it brings back memories for me of when McDonald's was struggling and this happened after the dot com boom and in early 2000s. I remember watching CNBC and they had, you know, the same thing they're saying with Nike now, oh, it's at 11 year lows. Are things really that bad? Because McDonald's was at like 21 year lows in 2003. It traded under $20. And I did remember, I thought it got down as low as like $11, but it was apparently Google has told me at $13 back in 2003. And at the time I was thinking, should I buy this here? This seems like a deal, 21 year low. Nothing was really different with the menu, the brand, it was losing some of its mojo to Starbucks on the drink side, which it ultimately fixed by launching its own drink drink line. But at the time we didn't know and it seemed like maybe the brand was finally stalling out after an over 30 year run as the leader in fast food. So I didn't buy it then. But at $13, if you had, the shares are now trading near 300 $273 right now. You would have if you stayed in all of those years, which would have included the Great Recession and the pandemic. It was quite the ride for McDonald's. But you know, I know some of you are thinking maybe a Nike or some of the other names on this list could be like a McDonald's. So I thought we should look at what is happening with the earnings right now, nobody can predict the the future years later. And nobody knows what management will be in and what kind of job that management can do on some of these companies, good and bad. But let's just dive right in because these are interesting stocks right now. So I am going to cover one that we've covered many times when I've done this kind of podcast. It's not Pool Corp. And it's not Helen of Troy, but both of those, you know, we're at the five year lows as well. But it is Whirlpool and I wanted to cover Whirlpool because it continues to make new lows. This is my concern with it. It's been at those five year lows several times over the last year or so, but it did recently fall to yet another new low. And so it doesn't appear to be getting any kind of rel from Wall street or anything really. So what is going on at Whirlpool? It is a number five strong sell. It did miss big on its last earnings and the analysts are dropping it way down again. So 60 days ago, the analysts were looking for $4.46 for this fiscal year and now after cutting all their estimates, they're looking for just A$73,446 all the way down to A$73. And then for next year they were looking for 595 and now 357. So that's pretty devastating there. After coming off of what is three years in a row with declining earnings, this is the fourth year here expected in 2026 and then next year, because 357 is bigger than 173, they're looking for an 83% bounce back for next year, but it's still well under where everybody thought they would be at this point. So the problems in housing have not solved themselves. And that's where the appliances come in is that you have a really lagging housing market in the United States, one of its largest markets, and there's just not demand as long as they're not selling new homes. When you, you know, get that new home, hopefully it has a appliances in it. And then even if you're buying a used house, a lot of times those sellers will update the appliances as well. But there's lower sales going on even in the used side. So it's looking still kind of grim. We keep waiting for the bottom here on Whirlpool. Ticker again on Whirlpool. Wh r whrs that ticker and you know, it doesn't look like we're getting there because housing hasn't gotten there yet. Now, maybe this will be it and we will see the turnaround in 2027. But investors aren't really sticking around at this point. They're, they're saying, you know, we can't do it. There just still isn't any good news. So the shares went from $54 all the way down to Dol. And it is his x number 5 strong sell now with those earnings cuts. But I know some of you probably looking at that dividend, I know it crossed my eye when I saw it. I did remember that they actually cut the dividend not too long ago. So the dividend right now is $3.60 or 9.8%. But again, they're only supposed to make a $57 this year and 357 next year. That's not even covering the dividend. Now some companies, especially these ones that have been around a long time, will keep a dividend for as long as they can. Whirlpool did for several years as those earnings kept going down. But then in May 2025, so about a year ago, they cut it from a $75 in the quarter down to $0.90. And that's where we're at right now, is at the 90 cents. But will they be cutting that again? I am nervous about that dividend given what I'm seeing with these earnings. So don't buy this one just for that dividend. You can get that dividend in REITs and some places in Energy and a few other places that don't have the earnings collapse as this one does. So Whirlpool definitely struggling. It's a trap right here until we get some kind of bottom and we're not there yet. So Whirlpool Ticker whr. Okay, then let's look at Nike because they're the one that kicked off this episode and Ticker Nke. They're also a number five. I, I actually didn't look at the earnings estimates before I chose these stocks, but Nike hasn't even reported earnings yet. It's supposed to report on June 30, 2026. So we're, we're still waiting on the earnings. We have one estimate being cut in the last 60 days for this quarter. It is down to $0.11 from $0.13 in those 60 days. So downward trajectory on the earnings with Nike as well, even ahead of this quarter. And a lot of people think it's just not going to be another it's just not going to be a good quarter again for the year. The analysts are lower a bit but we're waiting for this earnings report. So they haven't really been doing much in the last 60 days. Just one lowered, probably same one who lowered for the quarter. So we're looking for a $49 and still expecting negative earnings. Now they did have negative earnings last year. They lost earnings declined. I, I shouldn't say negative earnings. They declined 45% last year. Expected to decline 32% this year. Positive earnings of A$49. And then next year we're seeing the rebound so far. But are we really next year? Up 19.9 but just to $1.85 from that $49. Now they do pay a dividend as well. And because the shares are at five year lows, it's yielding 3.87% or about 3.9%. It's a dollar 64. So we're looking at $1.49 this year and $1.85 next year. But this is another year of earnings falling. So last year they made 216. So they could cover that dividend last year. And again a lot of these big companies that have been around a long time, if they think this is just temporary, they will keep the dividend. But no guarantees on this one. And that yield is 3.8 is pretty good 3.9 but it's not near whirlpools of nearly 10%. And it's not good enough if you're just interested in the, in the dividend to dive in. In my opinion right here, I would not be doing it again. There's reeds, there's even banks, other things that are a little more stable right now that I would be looking at before I looked at Nike. So this is at 11 year lows here. But trading with a PE of 22, that's not that cheap. The peg is 1.8. That's not that cheap. And then it's just the brand, believe it or not, is struggling quite a bit. And remember, they also own Converse. Converse is probably isn't as bad as Nike, but both are, you know, these things go in and out of favor, especially on shoes and that kind of thing. So we're in this kind of tough area. Price of sales is at 1.3, so that's pretty low. Price to book is at 4.4. So not quite a value there either. So I'm still not getting it dirt cheap on the valuation side. And where it's unclear where we're going from here. Also, management is in flux, so I'm not sure what to make about that. And it might, you know, a lot of these that hit these multi year lows usually see more changes in management. So that's Nike. Nike. I do recommend watching that movie that they recently made about getting Michael Jordan with the Nike shoes. It's on Amazon. It came out a couple of years ago. Excellent film. Especially if you like anything about branding or marketing or just are a fan of Nike in general. It's really well done with Ben Affleck and Matt Damon in that movie. So check that out. Okay, moving on. How about a restaurant? And no, it's not McDonald's, but it is Wendy's. Wendy's is still out there wen it has its fans. It's been around all these years and these shares now hitting five year lows. So I thought I'd take a look at what's going on there. And they also are paying a crazy high dividend as well because these shares have plunged down in the last two years really. But it's been a slow steady decline. Dividend is $0.56 and that's yielding about 9% as well. But look at the earnings. They were an earnings decline last year of 12% and an earnings decline expected this year of 35%. And so we're down to 58 cents for this year and expecting only 63 cents for next year, which is just 3.5% earnings growth. So they're not really expecting much of a rebound yet the analysts. So these estimates are just down, down, down. Also remember on the restaurant side, these burger chains, beef is at all time highs and these companies are just seeing a big increase in, in their costs, commodity costs and otherwise. So I'm sure that's playing a factor as well. And then whatever else is happening just with the brand being the number three. Is it the number three burger chain? It might not even be number three anymore. It might even be, you know, below something like a Shake Shack Smash Burger or some of those or in and out even. So Wendy's again having some kind of branding issues. But shares as I'm recording this on June 24 are up 21% after hitting a multi year low because they got a new CEO recently and now they have a new cfo. And both of these people had been at Potbelly, remember them? That chain struggled for years as well. And then these guys took over. They were at pot bellies from 2020 to 2025 and they grew the revenue from 338 million up to 600 million in that time. And then the chain was bought out by, I believe private equity bought it out. So they, they have this reputation now as turnaround masters of these kinds of chains, of the fast, casual, fast food chains. And so the shares are surging on this news. Can they do it again? That's going to be the question. And that's always the question. With any of these stocks hitting new multi year lows, probably getting some new management in there, can they be the ones to turn it around? It's very difficult to turn around struggling chains, but sometimes it does happen and it happened with potbellies. So we're gonna see if it happens with Wendy's. I did look at that dividend. So they have cut it in the past year or so. They cut it in June 2025. So it has been just a year ago. They cut it. They used to pay 25 cents in the quarter. They cut it down to 14 cents. They're still paying that 14 cents, which is 56 cents for the year if they keep it. But again, the earnings are only expected to be at 58 cents. So I kind of fear a bit for that dividend as well. Do not buy Wendy's for that dividend. What are the analysts doing? Nobody. Well, Everybody's lowering. So six estimates were lowered in the last 60 days for this coming quarter. And for the year though, four were raised, three were lowered for this year. So we had some analysts still having to get into line. But next year, one raised, but five lowered for next year. So not a lot to celebrate there. Not as big a cut as what we just saw with Whirlpool though. We went from 58 cents for the entire 2026. It's still at 58 for the last 90 days. 2027 was at 65 and went to 63. So they're just kind of getting in line. And it sounds like nothing catastrophic is happening, but still just the weakness and they can't shake it. So they've got the new management in. This is the dream team, basically. Can they turn it around? That's Wendy's ticker. Wen it is also a stock under $10. Look for a lot of volatility as we're seeing now. Even just looking at this now, it was up 21%, but right now it's up 29. So we're getting a real big boost, a dollar 84. The stock was trading, you know, around six bucks before this news. So everybody's diving in. But expect volatility for sure. On this one they don't report again until August. So again, that's Wendy's Wen and then I'm continuing on with a couple more stocks. We're going to do five because there are quite a few we could have looked at. What about tractor supply? It was one of the premier retailers out there. It is for life out there. That is their tagline and they are a rural retailer. People always think with the tractor in there, oh, they sell tractors. Not really, but they do sell riding mowers. But they sell other things you might need in the more rural lifestyle. They do sell hay, at least they used to. They sell, you know, things to grow in your gardens and seeds and things like that. They also sell a lot of clothes, clothes and shoes for life out there. They again were for many years one of the premier retailers out there and then they fell off a cliff this year. So they are at five year lows as well. So I wanted to take a look at their earnings and even the dividend as well. I'm looking at all these dividends here to see what is really going on. So earnings look not too bad for one of these ones that are hitting five year lows. So in 2023 they grew on 4.1%. But remember this is coming off of the pandemic when everybody was out shopping and staying home staycations and everybody was doing great on the ret sales side. Then we kind of came off that high in there. And then 2024 up just 1%, 2025, again just 1%. These aren't great numbers. You do want to see better growth than this in 2026 however, expecting 4.4. So now we are starting to see maybe a little bit of a turnaround on the earnings side. And then 2027, 9.8%. So no trap here with these earnings. On the growth side, Tractor supply is a number four, however sell. So keep that in mind. It's number four. But one of those earnings not until July, July 23rd or thereabouts. It hasn't been confirmed yet, but late July. It could be that the estimates have just kind of fallen off, but I'm looking at it now. No, there are some that are have been cut in the last seven days both for the quarter and also for the year. Not significantly, but a cut is a cut. So for the quarter the latest estimate that has been cut is looking for 82 cents. The consensus is for 85. So they're coming in below that consensus. So that is bearish. And then on the full year they're looking for 202, consensus is looking for 211 and that's down from 215 in the last 60 days. So just a few pennies down, but down is down. But next year also seeing a slide. We had six estimates cut in 60 days, but one has also been in the last week. So one analyst is cutting across the board, but looking now that analyst for 218 and the consensus is looking for 232 for 2027. So somebody's Beari there. But we do see an earnings rebound a bit going into next year. And so I'm looking at this because I'm actually seeing year over year growth now is down because of that estimate cut to 2.4% down from 4. So it's down to 2.4 now. And we could maybe see this go negative if this next quarter is bad. So that's why the shares have plunged for right now going into, into next year. It we are seeing the estimates being cut there. We are looking for earnings growth but the, the way it's going is not good. So I was initially thinking, oh, this isn't a trap at all. But it's only June so we're not sure where we're going for even this year. And they did miss on earnings last quarter as well. So this is why these stocks are just, you know, losing steam. Nobody knows what's happening. A lot of uncertainty. I looked up the dividend, so the dividend is at $0.96 and we're expecting $2.11 now on the consensus. So that is easily covered. And they actually have been doing their usual raising of the dividend. So it looks like over the last at least five years back to 2021, they've been raising the dividend a little bit each year, which a lot of companies tend to do. And then they can say, you know, we raise it every year for this number of years. And so they did raise it $0.01 to $0.24 in February of 2026. So that is probably not going anywhere. Things are not that bad yet where they have to have to worry about that dividend, especially if they've been paying it, you know, through like the pandemic. And those times they are going to be real reluctant to cut that dividend. So the dividend on this one is looking a little better, but again, nothing is guaranteed. The yield is 3.2% now on tractor supply because we are at those five year lows. So I am surprised to see tractor supply at this level. But again, the consumer issues Inflation issues. A lot going on with these retailers. So I keep this one on my watch list because it is one of the premier retailers out there and it's trading at 14 times. So it's pretty cheap here. But I really don't trust anything in retail. But that's why it's going on my watch list. So that's Tractor, Supply, Ticker, tsco and then I wanted to finish up with a actual tech company. We know a lot of the software stocks are real weak here, but the earnings maybe are not. It's just people really looking out there for something that's AI related and not something that has the uncertainty with AI on the tech side. So the one I chose because it too is at five year lows yet again. We did talk about this one a couple months ago, but at least on one of the podcasts, but it has fallen to yet another new low. So the bottom wasn't really the bottom, but the earnings estimates look like they're actually being raised here. So maybe this one is the only one that's not a trap here. So this is Adobe Ticker A, D, B E and earnings have been green, have been, you know, gaining every year since 2023 in the double digits. So nothing to dislike about that. 2026 expected to be up 15.2%. 2027 expected to be up 12.8. It's dirt cheap here at 5 year lows forward P is just 8.1 with a peg of 0.56. Peg under 1 means value and growth price to sales 3.1. But a lot of these tech names, you know, usually don't get down to 1. If this got down to a 1 on the price of sales, I would even be diving in at that point. Price to book is at 6.8, but those again are usually a little more elevated. So that's all really cheap. But everybody hates the software side. They just think it's going to be AI, you know, dominated and wiped out. But Adobe itself has been introducing its own AI tools and so people, you know, their customers have been embracing that. So we're not, let's see, this is a number three by the way, which is the hold. We only see earnings increases here on the estimates. So 12 or higher in the last 30 days for this fiscal year and nine are higher for this fiscal quarter. So nobody's been cutting. Everything still looks good, but the street just isn't buying it. So we're looking for 2417 for this fiscal year. That's up from 2351 and then next year, 2727, and that's also up from 2655. So the analysts are still bullish here. Even the most accurate estimate is higher than the consensus just a little bit, but it is higher for the, for this fiscal year and next fiscal year. So Adobe is not a trap here. Those estimates are actually being raised. But the stock continues to fall. The street just hates it. So if you're a daring value investor, maybe dollar cost average into something like Adobe as you. Wait, this is the, the problem with being a value investor. It takes guts to jump in because we would have thought that the last couple of months maybe was the bottom around 240. It hung out around $240 for a couple of months. It had a little bit of sell off, one one down to 230 and then, you know, it would rebound, but it's always kind of staying down there. Maybe the worst was over. I probably even said that on one of the podcasts. The worst is over maybe. But alas, in June the shares started to sell off again. And here in June, even after the earnings, they sold off more even with the analysts raising earnings estimates. And so now we're back under 200 here and that is a five year low. And so that's quite a story with Adobe. And I'm sure management is probably a little confused with what's going on as the shares keep selling off. They actually did have record second quarter results when they reported on June 11th they had record revenue of 6.6 billion, up 13% year over year. They don't pay a dividend as many tech companies don't, but they are repurchasing shares and they repurchase 8.5 million shares in the quarter. It's pretty sizable. That was probably keeping the floor under the stock there for a couple those months and now it's fallen back down. Maybe they're waiting on the sidelines. Hey, you know, it is a buy here. We're going to buy some more with the share repurchase plan here in this quarter too. But they're, they're trying to get a deal as well. Eight times their earnings and pretty low price to sales. So it is looking juicy even for their own buyback program. So over the last month we have had a sell off in almost all of these stocks. Let me look here. Wendy's is getting this big jump suddenly. So over the last month it's now up 8.2%, but that's only because of the 29 on the day I'm recording this. Otherwise would have been down around 16% for the month. Adobe down 17%. Whirlpool down 12. Nike down 6. Tractor supply down about 1%. So they're still pretty weak here. Year to date they're all down except Wendy's which is kind of break even now after this big surge. But we're at Whirlpool down another 48% year to date, Tractor Supply down 40. Adobe down 40. Nike down 34. So these are why these are on the radar now for all of us value investors. These are big name stocks. These are ones that have been around for, you know, decades now. Basically all of them decades. And you know, they, it's just surprising to see them all at multi year lows here at the same time struggling while you know, a lot of other areas of the economy and the stock market are doing a lot better than these. That's why as value investors we need to poke around, we need to look at where we can find deals and a lot of these maybe aren't there yet. I would say Adobe is the only one that's a true value here and is looking very good at these new lows. Ticker A D B E A D B as in boy E as in Edward. Whirlpool still a trap here. Nike is looking trappy and they have their earnings coming up and people are very pessimistic, maybe too much so we'll see. But Nike also looking trappy. Wendy's definitely looking trappy. But the new CEO and cfo, the dream team in there, can they turn it around so some people willing to take a chance and get in there. But we just had the 29 pop today. They'll probably trade that and give up a lot of that in the next, you know, days or weeks. So keep it on your watch list though if you're a believer in Wendy's and believer in this management team. Tractor Supply, I am surprised they're at the five year low but I just don't trust retail here. So this is a trap too. And then again only Adobe as a true value. So let me recap. Just those tickers again. We had Whirlpool, WH r Nike, Nke, Wendy's, Wen, Tractor Supply, tsco, Adobe, Adbe. The hardest thing to do is to buy at multi year lows as I'm an expert on that because McDonald's at multi year lows and I did not buy in 2003 because of all the uncertainty and the worries. But brands can go under. So keep that in mind and watch these dividends if they're cut or eliminated completely, that's always a bad sign. So I don't like to see that Tractor supply is the only one that's still raising it. Adobe does not pay one, but it's doing the share buyback, so I'm still liking that. If they get rid of the share buyback, that's a sign. But they're not so and not with record results. They're not going to. So keep that in mind. Watch those dividends. Nike's not being cut, but Wendy's cut last year, Whirlpool cut last year and the struggle continues with those so this was kind of a Debbie Downer episode again, but that's how us Value investors roll. We have to dig down deep into some of these stocks that are just struggling here to see if we can find deals when everybody else is racing for the exits. So keep them on your watch list. Though, as I continue to do listening on those conference calls, hopefully we get a turnaround in some of these. Adobe doesn't need to turn around, it's just being sold off because it is. But you know, some of these others, it's a little bit more of a struggle. So I will check in on these again. As we move through the summer, we get some more earnings reports in, so be sure to subscribe to not miss a single episode here on the Value Investor Podcast. We are on Amazon, Amazon Music, they have podcasts there. We are on Spotify, we are on Apple, of course. But get us somewhere and I'll see you again next week with some more Value Stocks.
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This material is being provided for informational purposes only, and nothing herein constitutes investment, legal, accounting or tax advice or a recommendation to buy, sell, or hold a security. Do not act or rely upon the information and advice given in this podcast without seeking the services of competent and professional legal, tax or accounting counsel. Publication and distribution of this podcast is not intended to create and the information contained herein does not constitute an attorney client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities companies, sectors and markets identified described were or will be profitable. All information is current as of the date herein and is subject to change without notice. Any views or opinions expressed may not reflect those of Zack's investment Research as a whole.