NWQ Managers (Trades, Portfolio) is a value-oriented money management firm with several funds products, and more than $54 billion under management. Professionals with the company have an average of 22 years experience.
During the last 5 years, the fund returned +14.8%, and +7.9% since inception. The portfolio has a total value of $8,334 Mil and is composed of 172 stocks. 26.7% of them are part of the Financial Services sector, and 19.6% are in Technology. Only three stocks look interestingly Undervalued using the Discounted Cash Flow Model.
These stocks are Apple Inc (AAPL), Oracle Corporation (ORCL) and Royal Dutch Shell PLC (RDS.A).
Apple Inc (AAPL)
The fund began to buy Apple in 2014 Q3. It is currently holding 27,790 shares (0.04% of its portfolio) at an average price of $108.82/share. As of yesterday, this investment returned +17%.
The DCF model says that Apple’s fair value is $211.23, and these days the stock is trading with a margin of safety of 40%. The Peter Lynch Earning Line gives a margin of safety of 22%.
The Fair Value votes of GuruFocus members, after 101 votes, gives a fair price of $329.5 (margin of safety of 61%).
AAPL's P/E(ttm) is 17.00 and is ranked higher than 77% of the 3171 Companies in the Global Consumer Electronics industry that has an average P/E ratio of 37.60.
Over the last five years, the company revenue grew by 35.60%, EBITDA grew by 40.50%, and EPS growth rate is 38.40%. This trend is confirmed even during the last 12 months. Apple has top ratios for the Global Consumer Electronics industry (ROE at 36.70%, ROA at 19.37% and ROC at 332.29%) and good Financial strength, rated 8/10.
Oracle Corporation (ORCL)
NWQ Managers (Trades, Portfolio) started to buy ORCL in 2013 Q3. It is currently holding 4,078,291 shares at an average price of $34.38/share, with an average return of 28%.
Based on the DCF model, ORCL fair value is $60.65, and these days the stock is trading with a margin of safety of 27%. Even the Peter Lynch Earnings Line put the company as Undervalued but with a smaller margin of safety (10%).
The Fair Value votes of GuruFocus members, after 37 votes gives a fair price of $53.05 (margin of safety of 18%).
ORCL's P/E(ttm) is 18.00 and is ranked higher than 87% of the 2979 Companies in the Global Software - Infrastructure industry that has an average P/E of 82.50.
Over the last five years, the company revenue grew by 12.80%, EBITDA grew by 14.40%, and EPS growth rate is 18.50%. ORCL has top ratios for the Global Software Industry (ROE at 23.08%, ROA at 11.43% and ROC at 471.15%) and good Financial strength, rated 6/10.
Royal Dutch Shell PLC (RDS.A)
The fund started to buy Royal Dutch ShellPLC in 2012 Q1. It is currently holding 1,513,725 shares at an average price of $68.99/share, with an average negative return of 9%.
Based on the DCF model, RDS.A’s fair value is $ 69.48, and these days the stock is trading with a margin of safety of 9%. The company looks Undervalued even for the Peter Lynch Earnings line’s Fair Value is set to $70.3 (a margin of safety of 12%).
The Fair Value votes of GuruFocus members, after just 4 votes gives a fair price of $68.82 (margin of safety of 8%).
RDS.A's P/E(ttm) is 15.00 and is ranked higher than 87% of the 270 Companies in the Global Oil & Gas Integrated industry that has an average P/E ratio of 17.90.
Over the last five years, the company revenue grew by 7.20%, EBITDA grew by 5.90%, and Book Value Growth rate is 4.60%. RDS.A has top ratios compared to its competitors (ROE at 8.17%, ROA at 4.06% and ROC at 15.12%) and good Financial strength, rated 7/10. Returns are better then 89% of other companies of the same sector.
Ben Van Beurden, the CEO of the company, said this about the forecast for 2015:
Coming into ‘15, lower oil prices, affordability constraints have actually helped us to further sharpen our minds here, and we’ve made some choices in the investment portfolio to curtail our spending. And this has resulted in over $15 billion reduction to our potential capital spend for ‘15 to ’17 period, and a much more concentrated sweet of projects to take the FID in the next two years. I think it’s very important that we do not get in a slash and burn mentality, so I want to have a measured approach, with levers to go ahead with new developments, or to pull back further if the financial framework calls for that.
Conclusion
Apple, Oracle and Royal Dutch Shell are companies in good shape and just RDS.A is facing some long downward trend with the price of the stock. Is important to remark that RDS.A has a yield of 6.22% with a reasonable payout of 79% with a 5 years growing rate of 32.70%. Apple is for sure the most solid company with stronger returns.
