Consumer Staples

Report by Paragon Intel

Tim Cofer will extend his proven track record of growing corporations organically by capturing market trends and creating economies of scale as well as driving profits inorganically through M&A. Paragon Intel interviewed former colleagues who worked with Cofer for more than 30 years combined. Sources gave him the highest rank for his strategic acumen and fitness as a CEO. However, this praise is somewhat offset by the beliefs of some that he lacks transparency and can be arrogant. Paragon likes the appointment. They believe Cofer’s ability to create a very cohesive and forward-looking strategy makes him well suited to lead KDP.

Report by Behind the Numbers

BTN have been warning investors about companies enjoying an unsustainable tailwind to cash flow growth by accelerating their use of short-term financing vehicles. However, rising rates are about to end the SCF party. They highlight Keurig Dr Pepper, JM Smucker and Procter & Gamble who have utilised SCF arrangements to a material degree and offer a simple framework for assessing the impact on their earnings and cash flows. They also discuss the implications of the FASB announcement this summer that it will be requiring enhanced disclosure regarding these programs (new rules go into effect in 2023).

Report by Behind the Numbers

Increasingly aggressive accounting practices means it is only a matter of time before these companies face a day of reckoning:

Keurig Dr Pepper (KDP) - touts its debt reduction efforts, but a closer look reveals the company is simply moving debt to unorthodox short-term financing instruments.
Iron Mountain (IRM) - many integral cash costs are ignored by the company’s REIT metrics and are set to rise when the impact of Covid wanes. If these costs are subtracted from AFFO, IRM is not covering the dividend.
IBM (IBM) - large, never-ending charges and non-operational benefits have significantly eroded the quality of reported profit growth.