Slope of Enlightenment: Recent Episodes
Piker Media
This episode we dive into GAW. We start off talking a little bit about the company, give a quick overview of the financials and give a little bit of an opinion on where we think it's going!
We talk about how Call of Duty (COD) is as big as it's ever been, especially with the release of it's smash hit Battle Royale game, Warzone, they released right at the beginning of the Pandemic.
We also discuss how they are slowly using more and more of King's mobile skills to expand the reach of the IP from Activision and Blizzard which will think will result in revenue growth for $ATVI for the first time in nearly a decade.
Reminds us a little bit of Lorillard. Focused mainly on one brand which had a few line extensions (Newport), lean, focused, and had great ROA/ROE.
Focused on American whiskey where they have 50%+ market share 😍
ROA is 17% 🤩 Vs. Diageo’s ~9%
Their inventory gets more valuable with age. This also serves as a barrier to entry, as startup whiskey makers have the worst cash-conversion cycle imaginable.
Seems to be laser-focused on three brands, in order, Jack Daniels, Woodford Reserve, and El Jimador. They’re selling off non-premium brands (SoCo and Canadian Mist to Sazerac).
Priced to near-perfection at a 38 PE. 10-year EPS growth only 1% higher than Diageo, which has a PE of roughly half that.
We like the strategy of hyper-focusing on one brand (like Monster). Tennessee Honey, Gentleman Jack, Jack Daniels Cola - all successful line extensions. Nothing is more American than Jack Daniels. It’s a timeless brand which should get better with age if properly managed. I kind of wish they would have kept Southern Comfort though.
Forgive the poor audio quality for one of us -- Future episodes are recorded on a better set up with monitoring so we know when we sound bad :).