Weekly Earnings Review: August 7, 2023- August 11, 2023

     Hey guys! I apologize for not being as active during this past earnings season. I was finishing up my last semester of undergrad and the last couple of weeks ate my lunch. I'm jumping back onto this ship during the latter half of the earnings season. I will be reviewing all of my companies that reported earnings this week. I'm going to try and stay a little bit more active, but future posts may be similar to this one (lots of information crammed into one post). Thank you for continuing to read these posts and I hope my opinion can allow you to gain some insight. 

Tuesday, August 8th, 2023

United Parcel Service, Inc. (UPS)-

    UPS beat expectations on the bottom line, but had a slight miss on the top line. The company is undergoing a lot of publicity with the new deal that was struck with the teamsters union. The CEO recently came out and said that a driver at the company would make $170,000 in salary and benefits. This blew up the media and has caused memes to appear everywhere. Reflecting on this, it will be interesting to see what route the company will take in terms of compensating employees this well while still sustaining healthy margins. It's going to take a hike of prices in shipping products for them to compensate for the increase in compensation expenses. This leads us to the current challenges the company is facing. Although the cash flow remains in a relatively healthy state, we are seeing some economic shifts that are causing consumer sentiment to change. Consumers are starting to return to in-person purchasing as we return to pre-pandemic normalcy. This would be a main reason to why the revenue saw a dip in this past quarter. I personally think the company is still in a solid position and striking a deal with the teamsters was vital for not only the company but the economy as a whole. 

Datadog, Inc. (DDOG)-

    Datadog beat on both the top and bottom line compared to expectations. However, the lowering of guidance would be credited for dropping the stock. The stock price saw a sharp decline. The CEO said that customers are not spending what the used to on their services while still optimizing the use of their products. The CFO commented on the industry as a whole and said that cloud businesses are facing a lot of pressure compared to your traditional businesses. In other news, the company has rolled out a new Large Language Model observability tool. They have also launched "Bits AI" which is a generative AI-based assistant. It looks as if the company is diverging into AI a little bit as the company looks for new ways to both diversify its offerings and keep their growth track alive. The balance sheet is very healthy and the company is going to be stable for a while. This is still a wonderful company for the long-term and the pullback should not scare investors away from this one. 

Axon Enterprise, Inc. (AXON)-

    Axon saw the price of its stock skyrocket, after the company beat expectations on both the top line and the bottom line. The company recently acquired SkyHero, which is a drone company out of Belgium. The products will integrate over time into the Axon Air portfolio which is powered by DroneSense. In terms of results from the quarter, the company saw strong demand across the product portfolio and strength in the Cloud and Services portfolio. The launch of the new Taser 10 and Body Cam 4 are going to lead shipments in the second half of this year. However, most of the growth was seen from the services side of the business. Axon will look to dip into the European market and can see phenomenal gains if this goes as successful as their presence in the United States. Retention rates are solid with ARR at 52% growth and net retention rate at 122%. I am intrigued by the international move and I think it will fuel the growth of this company and allow them achieve new heights. We saw a lot of moved within top management, but they were all internal promotions, so I am not too concerned in this aspect. 

Darling Ingredients Inc. (DAR)-

    Darling Ingredients took a little tumble as the company missed on both the top and bottom line compared to expectations. The fat prices which dictate a lot about the company's performance decreased. This played a huge role in the misses on the expectations. The Diamond Green Diesel segment performed really well as the company sold 387.8 million gallons of that product. The company received a $101.4 million dollar dividend from their Joint Venture with Valero on Diamond Green Diesel. The momentum looks to continue to trend in the right direction with the Diamond Green Diesel. This company will continue to make acquisitions to keep growing at a global scale. 

New York Times Company (NYT)-

    New York Times saw a solid gain as the company beat expectations on both the top and bottom line. The bundle strategy looks to be showing resiliency as it is transitions the company to external market conditions and drives value creation. Subscriber count was up 8% to 9.88 million subscribers. Digital ARPU was up 3% on a year over year basis. The bundle seems to be showing some signs of success as it now accounts for 30% of subscribers. The company is in a solid position as it has totally changed the game in delivering the paper. With the acquisition of The Athletic last year, the company reached new heights and has been able to bundle this product to create better packages for consumers. The acquisition of Wordle also changed the dynamic of the company. They have a whole suite of games that are presented to consumers that are highly addictive. It is pretty impressive for such a simplistic business model to be growing at the rate it is. 

Masimo Corporation (MASI)-

    Masimo missed on both the top and bottom line, in comparison to expectations. The stock saw a slight dip, but the main effects happened a month ago. The company came out and lowered forecast and caused the stock to slump over 20% on July 18. The second quarter was relatively weak with sales coming in about $100 million lower than the first quarter. The growth is set to rebound a little bit in the second half of the year, but it will be very modest growth. Ironically, the company gained new hospital customers at a record pace in their healthcare unit. In the Non-healthcare unit, the demand was strong for the stork baby monitor, but the luxury items that they sell saw a decrease in volume purchased. The balance sheet looks to be in a solid position, with no real concerns over the current period in terms of paying off debt or not having enough cash. The business has a tough hill to climb to get back to where it was. The two units that are operating seem to be operating completely separate from each other. The company has a solid product, it's just a matter of how well they can implement it into these hospitals. 

Upstart Holdings, Inc. (UPST)-

    Upstart saw its stock price plummet even though the company beat on both the top and bottom line, in comparison to expectations. The guidance was the lagging point once again for the company. Upstart saw positive cash flow, but this was to them reducing the loans off the balance sheet. The volumes are growing lower and lower as creditors are tightening standards. The company is blaming the tough economic environment for lenders as the main reason for the weak guidance. Once a normalized economy comes set in stone, the company believes that it will be able to grow quickly and grow profitability at a high metric. This stock seems more like a meme stock with the fluctuation in share price over the past year. I am hoping for a return to a more stabilized economy for this one to get back to its growth days and the stock price to flourish again. 

Wednesday, August 9th, 2023

Walt Disney Company (DIS)-

    Disney saw a decline right after reporting earnings, but turned into a gain as investors digested more information. The company missed on top line numbers but was able to beat on the bottom line. Revenue saw stagnant growth while only growing 4% in the quarter. The restructuring and impairment losses led the company to report a loss under GAAP. The media and streaming business continues to struggle as the parks and experiences side of the business had to carry the weight in this quarter. Subscriber counts fell for Disney + and Hulu and ESPN showed flat subscriber growth in the quarter. CEO Bob Iger said it will start to implement a Netflix like crackdown on password sharing to hopefully drive the subscriber growth back up. Capital Expenditures looked like they have dwindled as Bob Iger is implementing his cost cutting strategy and trying to reclaim that long-term successful business model. Disney now faces a lot of pressure in the media side of business as they will have to produce some high-quality content to keep up with the rival studios. This will all be on hold for now, as the strike continues to fallout and production is being postponed. I am with Bob Iger and his efforts to continue transitioning the company, I still like the long-term strategy and its Disney, like come on.

The Trade Desk, Inc. (TTD)-

    The Trade Desk saw its share price slump despite beating expectations on the top and bottom line. The guidance can be blamed for the downfall in the stock price. The advertising market seems to be at a weak point which explains the slow down in the growth of revenue. The guidance calls for around the same growth rate in the next quarter. I think it is still solid that the company is still growing at near 25% and will help benefit them in the future. Once the advertising market sees a return to normalcy, I think the company offers a viable product that will once again drive the growth rate higher. The balance sheet remains extremely healthy and the profitability is starting to grow and become more stable. The company now is profitable on a GAAP and non-GAAP basis. This stock is poised for a bright future and now may be a good opportunity to buy in.

Thursday, August 10th, 2023

YETI Holdings, Inc. (YETI)-

    Yeti stock price jumped after the company missed on top line expectations but beat on the bottom line. The top line miss was due to a recall reserve adjustment that impacted sales by $24.5 million. The stock popped on the raising of guidance as the company expects the latter half of this year to be strong. Inventory looks to be stronger as the company had less on the balance sheet. This could mean that the products are being sold efficiently and not sitting on the shelves for longer period of times. YETI has done a mighty fine job of diversifying its product portfolio and hopping on popular trends. These allow the consumers to get all of their necessities from YETI and not have to look other places. I am happy with the performance and I hope the company can maintain their performance to achieve what they have guided. If this is the case, the share price will appreciate over the next 4 months or so. 

If you have made it to the end, I appreciate you taking the time to read this. It was definitely a mixed earnings season for the companies that I own. However, I was kind of expecting this with the economy seeming to contract a bit. It is going to be interesting to see what the economy does over the latter part of this year. We have a bunch of mixed signals telling us all different kinds of things. It is important to keep your head on a swivel because it could continue to rise or it could head south pretty quick. Until next report, thank you guys!