5 Value Stocks with Strong Values
Erin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Invierte con Dios! Invest with God!
Are companies with religious owners and ethics better investments? That's a hard call to make, but it is interesting to note that publicly traded companies that started out with owners with strong religious values do have a few similarities between them.
A Bible in the nightstand
Marriott International (NYSE: MAR) started out as a family-owned chain of soda shoppes, and is now an international hotelier. Pictures of the original Marriott brothers hang in nearly every hotel lobby the company owns. Complimentary Bibles, as well as Books of Mormon, can be found in most of their hotel rooms (the Marriott family is Mormon). And the hotel recently announced it would remove pay-per-view pornography from its television access. The company opened nearly 5,300 rooms during the most recent quarter. The company operates 3,800 properties in 74 countries, with more than 650,000 rooms.
Marriott’s revenue for the first quarter of 2013 was $3.1 billion, an increase of 23% year-over-year. Net income rose 31% to $136 million. Marriott International is up 11.9% since the start of the year, up 7.5% over the past year and up 37.7% over the past five years.
Marriott recently announced its decision to hike its quarterly dividend by 30% to $0.17 per share from $0.13 per share. Marriott has a consistent track record of paying dividends and the latest hike brings the forward annual dividend yield, as of May 10, to 1.5%.
JetBlue Airways (NASDAQ: JBLU) was founded by David Neeleman, another Mormon. A key Mormon ethic encourages mothers to not work outside of the home, and stay at home with their children. JetBlue targets “stay-at-home” mothers in Utah to be home-based reservation and customer service phone agents, a very popular and competitive job to get in that area.
JetBlue's earnings-per-share growth comes in at an impressive 30%, and analysts expect it to continue. The company has seen a 51% increase in gross sales, and a 120% increase in net income over the past four years.
According to Purdue University, JetBlue had the highest customer-quality rating of U.S. carriers in 2011. JetBlue operates nearly 180 aircraft across the US, Caribbean and Latin America.
Speak the truth
Salem Communications (NASDAQ: SALM) is a radio broadcaster, Internet-content provider, and magazine and book publisher targeting audiences interested in Christian and family-themed content and conservative values.
In the most recent quarter, Salem Communications reported that total revenue increased 2.5% to $55.6 million from $54.3 million. The company had a net loss of $18.6 million, or $0.75 net loss per share, compared to net income of $0.8 million, or $0.03 net income per diluted share in the prior year. Adjusted EBITDA decreased 4.2% to $11.2 million from $11.7 million.
Salem is currently an “under-perform” with analysts. However, this might just be a quiet little sleeper stock that doesn’t get the credit it deserves. The company recently increased its quarterly dividend payments by 43%, went under a major refinancing with a large tender offer, and retired its outstanding debt.
Between the Bible and the belt
With over 100,000 employees, Tyson Foods (NYSE: TSN) touts a “faith-friendly” approach to business. The company's core values statement begins: “We are a company of people engaged in the production of food, seeking to pursue truth and integrity, and committed to creating value for our shareholders, our customers, our team members, and our communities… We strive to be honorable. We strive to be a faith-friendly company.”
Tyson Foods is worth about $8.8 billion. The market values the company at only about 6.2 times EV/EBITDA. The company had revenue of $8.4 billion for the most recent quarter, up 1.8% from the same quarter a year ago.
Tyson operates in four main business segments: Chicken, pork, beef and prepared foods. Chicken is the biggest income source with $446 million in operating income in 2012. Among those segments, the pork business enjoyed the highest operating margin at nearly 7.6%, while the operating margin of the chicken segment was only 3.8%. The prepared foods segment contributed around $181 million in income, with the operating margin at 5.6%.
The company also recently declared a quarterly dividend of $0.20 on an annualized basis and a yield of 0.8%.
But of all of these companies, none of them sell a religious themed-or-based product. They are companies built on religious ethics, but that is where the religion ends. There are many more companies throughout the U.S. with religious values and owners, but most have remained family-owned businesses. (Not a coincidence I am sure.)
But the largest retailer of Christian products may surprise you. In FY 2013, Wal-mart (NYSE: WMT) brought in more than $469 billion in sales. Some estimates find that the company sells as much as $1 billion in Christian products.
Wal-Mart founder Sam Walton's autobiography shares that he taught Sunday school, prayed with his children, and felt a calling to better people's lives. With the Protestant values of respect for the individual, thrift, and hard work, Walton was eager to improve customers' living standards through low prices.
"Is Wal-Mart a Christian company? No," said former Wal-Mart executive Don Soderquist. "But the basis of our decisions was the values of scripture."
Of interesting note is that both Tyson Food and Wal-Mart are headquartered very nearby each other in Bentonville, Ark., a small Bible-belt town.
While each of these companies have very little in common on the surface, there does appear to be at least one common thread- dividends. Each of the companies, except for JetBlue, offer a dividend. Maybe it is a coincidence, maybe it is not? It does seem to fit with the values that each company holds in giving back and supporting their stakeholders to offer a dividend. Each company is also well known for giving back to the community.
There does not appear to be any obvious lightning rod that says a religious-values company is superior to the competition or succeeds where others fail. But it is interesting that Wal-Mart, Tyson, Marriott, and JetBlue are tremendously successful in their industries, with Wal-Mart and Marriott being two of the most historically successful companies in the United States.
Is religion behind it? Maybe yes, maybe no. Or perhaps at the end of the day, business is just business. And what you do with your money is nobody's business but your own.
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Erin McBride has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!