Weekly Earnings Review: September 25, 2023- September 29, 2023

    It was a nice little break in the earnings report, but just like that we are back! We are slowly easing our way back into earnings season. However, this week marked the end of Q3 and September. September was a downturn from the rally we saw earlier in the year. There is a lot of stuff looming as the government is set to shut down on October 1st. The Fed is keeping a close eye on inflation but this weeks prints showed some signs of improvement. The average consumer is struggling as savings keep dwindling. In terms of our earnings, we just had two companies that reported this week. One is a warehouse style retailer and the other is a wide range consulting firm. 

Tuesday, September 26, 2023

Costco Wholesale Corporation (COST)-

    Costco beat expectations on both the top and bottom line. The stock saw a decline after the initial earnings report, but by the end of the week it has hit a new 52-week high. The revenue growth was impressive as it grew by a hair under 10%. The COGS growth was also less than the revenue growth which allowed for a nice increase in the gross margin. Although the consumer spending is becoming a lot tighter, consumers do not seem to be straying away from Costco. The company saw membership fees spike up by 13.7% and have seen a lot more traffic in their warehouses. Unfortunately, the average ticket has decreased. I think one positive thing to note is that the stores saw no significant increases in shrinkage. A lot of retailers have been experiencing a lot of theft that is stripping them from profits. Costco has an efficient checking system that prevents theft from happening, plus a lot of the items are bulky so they are a lot harder to steal. One of the hot topics with the company this quarter is that they are now selling gold bars on their website. These are extremely popular items as they are selling out within a couple hours of being listed on the website. Costco has put a limit of purchasing two per member. Overall, it was another really strong quarter for Costco as the Food and sundries are still strong. This company will continue to thrive, as the business model is impeccable. They also have a wonderful advantage because they own around 85% of their real estate. Costco will continue to thrive and hold a competitive advantage. 

Thursday, September 28, 2023

Accenture (ACN)-

    Accenture came in with mixed quarterly results. The company missed on the top line but beat on the bottom line. The guidance was pretty weak as well, with the numbers coming in below analysts expectations. The stock price saw a decline following the release of the earnings report, but it has recovered a bit since. Accenture says that there has been a lot more caution with discretionary spending which is a constituent of the miss on the revenue metric. Corporations are becoming a lot slower when it comes to decision making as the margin for error is getting slimmer with tighter credit and not as much free cash flow. This hurts Accenture because companies that would typically outsource may look to internal solutions for cost savings. Accenture continues to have a healthy free cash flow amount with $3.2B being the amount they had at the end of the quarter. The company was able to reward shareholders effectively with a 15% increase in the dividend and had a $4B repurchase plan get approved. Accenture saw record booking numbers in the quarter with $72B in total bookings and $16.6B in new bookings. It looks like the company is starting to grow its generative AI sales, as they have reached $300M in sales for the year in that category. The Communications, Media, and Technology segment was a main constituent to the miss on the revenue estimate. The segment saw a 12% decline in growth. The company is showing some signs of slowing growth as the consumer spending dwindles. I think they are in an extremely healthy position with their Free Cash Flow and they continue to reward shareholders with dividends and buybacks. Overall, a great company and one that I will continue to hold. 

Thank you for reading!