Weekly Earnings Review: September 5, 2023- September 8, 2023

     This week was shortened by the Labor Day holiday that was celebrated on Monday. September has historically been a bad month for stocks, so it is no surprise to see the market start the month on a decline. At least we saw some sort of recovery with indices finishing higher on Friday. Apple and NVIDIA look to be facing a lot of pressure and have been the talk of stocks this week. In my world, I had 3 companies report earnings. Two of them being technology companies and one retailer that specializes in outdoor equipment. I do not have any companies reporting in the next 14 days, so there will be a break from posts until earnings pick back up again.

Tuesday, September 5, 2023

Zscaler Inc. (ZS)-

    Zscaler beat earnings expectations on both the top and bottom line. The company also raised guidance after strong Q4 results. The revenue growth was outstanding and the company outperformed its initial guidance. One of the more impressive things that I like is the growing customer base the company has. The growth rate has slowed, but the matter of the fact is that they are still able to continue to grow these categories while operating in a challenging macro environment. The main reason that the stock is seeing a decline is do to the slowing growth of the revenue. I think the company outperformed itself this year, so the 33% revenue growth isn't as appeasing to shareholders. 33% growth is still phenomenal and I will be completely satisfied if they can accomplish this. I also like the growing operating margin as the company becomes consistent with profitability. The stock has seen a nice increase of around 80% this year and the financial results back that up. There is an abundant amount of things to like about Zscaler as it continues to be a major player in the cybersecurity space. 

Thursday, September 7, 2023

DocuSign, Inc. (DOCU)-

    DocuSign beat on both the top and bottom line, in comparison with analysts expectations. The company is trying to revitalize itself after a huge downfall after the surge in demand during the pandemic. The results this quarter showed strong attestation to the transformation with numbers continuing to get better. The company was able to return to profitability, thanks in part to some wonderful investments by the CFO to drive interest income higher. The operating cash flow reflected a positive number even after adding stock-based compensation back. The billings growth slowed down a little bit, but it was still up higher than the previous quarter. The retention is something that I would like to see return to levels seen during the pandemic. The can retain the customers but now they need the customers to spend more money using their products. The cost strategy that they are implementing is working effectively as they lowered the growth of their operating expenses to only 1.7%. I think revenue growth has slowed down, but DocuSign is focusing on expanding services with its higher paying clients. This company is going to be closely watched over the next couple of quarters. I think they are headed in the right direction, but plenty of work still needs to be done to right the ship.

The Toro Company (TTC)- 

    Toro saw a miss on both the top and bottom line, in comparison with expectations. The company had a really tough quarter as it saw stagnant demand for its household products. Toro blamed unfavorable weather patterns and a tough macro environment as the main factors to the slowing demand. The company also reported a loss on the bottom line for the first time in a decade. This was not due to the operations of the business but a one-time impairment charge affected the profitability this quarter. The company acquired Intimidator early last year for $400 million. They had to write down the asset as the company's value decreased which led to some impairment. Although this looks bad, it should be overlooked by long-term investors because profitability will return in no time. Toro took initiative with the slumping residential segment and announced a strategic partnership with Lowe's. This will put its products in Lowe's stores starting in early 2024. I see this as a huge win for the company as it will be able to appeal its products to more customers and should drive up their sales number. It has been an odd year for not only the economy but with the El Nino oscillation. Living in Texas, I can see why people were not going out to buy a mower because the grass won't even grow. Although this company produced a rough quarter, I expect some recovery and actions are being taken to recover. Toro has enough diversity through its subsidiaries to stay afloat and I expect it to keep growing and stay around for decades to come. 

Thank you for reading!