By Eddy Elfenbein,
The filing prospectus for WeWork’s IPO contains this sentence, “Our mission is to elevate the world’s consciousness.”
I’m not kidding you. It actually says that.
In addition to raising the world’s consciousness, they’re raising cash — a lot of it.
Ever since WeWork’s S-1 filing form was released, Wall Street has entertained itself by highlighting the self-importance of a company that’s in the consciousness-elevating business of providing office space.
Don’t believe me. Check out the description of Adam Neumann, the company’s co-founder, “Adam is a unique leader who has proven he can simultaneously wear the hats of visionary, operator and innovator while thriving as a community and culture creator.”
That’s certainly a lot of hats.
Softbank thinks the company is worth $47 billion. Reality, however, may have a different opinion. Consider this comparison: WeWork’s main rival generates more revenue and earns a profit. WeWork doesn’t lose money as much as they hemorrhage it. Last year, WeWork lost $1.6 billion.
WeWork is valued at ten times its main rival. On top of that, the company has a pile of debt and lease obligations. I don’t see how they plan to build a sustainable business dealing with what they currently have.
This is a train wreck happening in front of our eyes. Perhaps a train conductor’s hat would be another hat for Mr. Neumann?
I don’t mean to make fun of the folks at WeWork. Truthfully, my heart is with all entrepreneurs. I admire folks who put it on the line and try to stand or fall. I just think these guys need to tone it down several notches.
I always think of how Barry Sanders played football. When he got to the endzone, Sanders rarely did some crazy in-your-face celebration. Instead, he calmly handed the ball to the ref and went back to the sideline.
I always thought that was far more intimidating to your opponents. It says to the other team that I’ve been here before, and I plan to be back. That’s how the game should be played.
Within the stock market, there’s a good example of a Barry Sanders-type stocks, and that’s Donaldson (DCI) of Minneapolis, MN.
I love Donaldson because it’s the exact opposite of flashy. It’s boring. It’s dull. And it’s very profitable. Donaldson is a filtration company. While that may not sound sexy, it’s an important business, and there’s heavy demand for their services.
Donaldson currently has more than 14,000 employees, and last year, the company generated revenues of $2.7 billion.
What’s most impressive is Donaldson’s long-term track record. Since 1988, the shares are up more than 100-fold. That includes dividends as well.
That track record is far better than most stocks, and it’s much better than so many high-fee hedge funds. Without drawing attention to itself, Donaldson has been a market-beater for decades.
This is actually a good time for investors to give Donaldson a look. That’s because they missed their fiscal Q3 earnings report. Wall Street had been expecting a profit of 63 cents per share. Instead, Donaldson earned 58 cents per share. Despite the earnings miss, that’s still growth of more than 9% over last year.
Donaldson also lowered its full-year earnings range. The previous range was $2.27 to $2.41 per share. The new range is $2.20 to $2.24 per share. I’m not too worried. With a long-term grower like Donaldson, it’s a minor blip in the road.
The company doesn’t seem worried. Donaldson just rewarded shareholders in June with a new share buyback and dividend increase. Donaldson said they’re going to buy back another 13 million shares. They still had another 2.4 million shares left under the previous authorization. Donaldson will also raise its dividend from 19 cents to 21 cents per share. Donaldson has now raised its dividend every year for more than 20 years.
I’d much rather have my investments focus on elevating dividends rather than elevating the world’s consciousness.
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