David Einhorn (Trades, Portfolio) is the founder of Greenlight Capital. He is a value-oriented investor who believes purchasing businesses below their respective intrinsic values will achieve consistent absolute investment return in a risk-averse manner, regardless of the market environment. He will take activist positions at times if the situation dictates that it needs to happen.
Here are three companies from David Einhorn (Trades, Portfolio)’s portfolio that we find interesting at current levels:
Apple (AAPL) – Forward P/E of 11.92, FCF yield of 9.94%, EV/EBIT of 9.87 and dividend yield of 1.71%
The company’s shares are up 6% over the past 12 months and trade at $119.00 per share. In its most recent fiscal second quarter, Apple reported revenue of $51.50 billion (preliminary), compared to $42.123 billion in the same quarter a year ago. Net earnings were $11.12 billion ($1.96 per share diluted) compared to $8.46 billion ($1.42 per diluted share) in the same periods.
The company just reported FY 2015 numbers, and it was the most successful year in the company’s history. This was fueled by record sales of iPhones, the Apple Watch and all-time record sales of Macs. As Tim Cook, Apple’s CEO, said, “This continued success is the result of our commitment to making the best, most innovative products on earth, and it’s a testament to the tremendous execution by our teams. We are heading into the holidays with our strongest product lineup yet, including iPhone 6s and iPhone 6s Plus, Apple Watch with an expanded lineup of cases and bands, the new iPad Pro and the all-new Apple TV which begins shipping this week.”
Tim Cook mentioned that China markets are doing well, and the company continues to gain share in the high-end smartphone market. The Apple Watch is highly touted; it will be interesting to see the numbers after the Christmas surge.
Shares look appealing at current levels with a forward P/E of 11.92, FCF yield of 9.94%, EV/EBIT of 9.87, and dividend yield of 1.71%.
Michael Kors (KORS, Financial) – P/E of 9.95, FCF yield of 7.36% and EV/EBIT of 6.17
The company’s shares are down 44% over the past 12 months and trade at $42.34 per share (near multi-year lows). In its most recent fiscal second quarter, Kors reported revenue of $1.13 billion, compared to $1.05 billion in the same quarter a year ago. Net earnings were $193 million ($1.01 per share diluted) compared to $207 million ($1.00 per diluted share) in the same period.
Recent results were somewhat mixed, however, as the luxury fashion house showed signs of stability. This was a welcome sign for investors as there has been increased competition in this segment. Management continues to seek expansion opportunities overseas with the store base abroad reaching 700 stores in the next few years. The company has no debt and plenty of cash. And the company continues to buy back shares at a satisfactory rate.
Shares look appealing at current levels with a P/E of 9.95, FCF yield of 7.36% and EV/EBIT of 6.17.
Time Warner Inc. (TWX, Financial) – Forward P/E of 13.30, FCF yield of 6.07%, EV/EBIT of 11.43 and dividend yield of 1.98%
The market is becoming impatient with management's growth plans for the company. As a result, we’ve seen the company’s shares down 15% over the past 12 months and trade at $70.60 per share (near 52-week lows).
For its most recent fiscal second quarter, Time Warner reported revenue of $6.56 billion, compared to $6.24 billion in the same quarter a year ago. Net earnings were $1.03 billion ($1.26 per share diluted) compared to $967 million ($1.11 per diluted share) in the same periods.
The company is better able to focus on video content with the divestiture of the publishing arm (Time Inc.). This should led to better ROI opportunities in programming and content. Management continues to be shareholder friendly and has returned ~$25 billion of capital to shareholders in the past five years through share repurchases and dividends.
Shares look attractive at current levels with a forward P/E of 13.30, FCF yield of 6.07%, EV/EBIT of 11.43 and dividend yield of 1.98%.
