Weekly Earnings Review: October 23, 2023- October 27, 2023

     This week was by far the busiest week for earnings. With half of the magnificent seven reporting earnings this week, a lot of stock market moves was dictated on their performance. Stocks continue to tumble as we face a lot of economic uncertainty. It may be a factor of starting to price in the economic downturn that may come upon us over the first half of next year. Surprisingly strong GDP numbers show that the economy is strong and the bad news is that interest rates may stay higher for longer. I expect GDP to not grow as strong as it did this quarter (Q3), in Q4, as we have factors from geopolitical and student loan resumption starting to come in effect. Overall, earnings were not too shabby, in fact it seems companies are starting to return to pre-pandemic ways. I am going to keep it pretty brief when it comes to the companies because there are a lot to get to. 

Tuesday, October 24, 2023

General Motors Company (GM)-

    General Motors beat on both the top and bottom line in comparison with analysts expectations. The company reported a whopping $3.1 billion in net profit, despite the ongoing strike that still lingers with UAW. The strike started in the later part of the quarter, so the effects were not felt too much in this quarter. However, the company says that they have already lost $600 million in Q4 due to the strikes. The news broke that the UAW would go on strike at the plant in Arlington which produces one of GM most profitable products. The takeaway is that the Q4 earnings report might look pretty detrimental as the company has suffered tremendously from the UAW strike. GM has a huge stake in Cruise (autonomous taxi service) and that has been suspended from operations in California as an ongoing incident continues to be investigated. Cruise has seen a huge ramp up in expansion, but it seems like problems keep coming about and wreck havoc on Cruise. The EV production unit is going to delay as demand isn't as high as expected and interest rates remain high and unattractive to customers. The strike is also playing a toll on the slowdown of EV production, but this may benefit the company as it looks to slowdown the costs going into the EV production. Overall, financials were a lot better than I anticipated. I expect a rough Q4 and a rough couple of quarters after that. I continue to like this company for its long-term prospectus, it may just take a little longer than originally anticipated to attain their goals. 

Alphabet Inc. (GOOG)-

    Google saw a drastic decline in the share price, despite the company beating on both top and bottom line. The advertising side of the business saw nice growth and I think this was overlooked. Investors focused on the cloud section of the financials that saw 22% growth, but unfortunately Google reported on the same day as Microsoft, and Microsoft's cloud business looked a lot better. The problem with Google is that the cloud business is smaller than Microsoft's, and it is growing at a slower rate. The fear is that Google is losing share in the cloud, which is companies main focus, as the margins are extremely well for this segment. Google is looking to continue innovating with Generative AI and connect it with their ads they produce. I thought the financials were really well in this quarter and the company looks extremely strong. One reason that I continue to invest and hold this company is because of their strength of the balance sheet. The amount of cash compared to debt is astronomical and something that should be attractive to every investor. The decline in the price may be a good thing for valuation purposes as the stock seems a lot more attractive. I expect this company to continue growing and the upside looks promising for the next 5-10 years. 

The Coca-Cola Company (KO)-

    Coca-Cola beat on both the top and bottom lines after an exceptional quarter by the company. The company also raised both full-year revenue and earnings guidance. This was my most recent acquisition in my dividend growth portfolio after the company dropped 11%. The main reasoning for the drop was the weight loss drugs causing consumers to stray away from products the company has to offer. That was shut down as the company saw an 11% increase in revenue. The volumes on a global scale grew 2% while the company increased pricing by 6%. This goes to show the pricing power that the company owns. Raising prices and still seeing an increase in volume is outstanding. This is one of the main reasons that many invest in this company as it is seen as safe and the dividend growth is also attractive. Latin America is experiencing the highest growth for this company, but I expect the company to continue to grow and diversify through acquisitions. This quarter was surprising to me, as the company did a lot better than I anticipated. I am glad I got in and look forward to holding this one over the long-term. 

NextEra Energy Inc. (NEE)-

    NextEra Energy beat earnings on both the top and bottom line, in comparison with analysts expectations. The company kept the guidance steady, as they see earnings per share staying at the midpoint level. Revenue saw a decent level of growth, but the bottom line saw a decrease of 30% compared to last year. The company ran into some headwinds that has dropped the stock significantly. The opportunity presents itself for the company to keep growing, but the higher interest rates are apprehending its growth. The company is seeing a lot of growth in its Florida business and also the renewables sector is driving a lot of growth as well. Overall, the quarter wasn't too bad. I was a little upset with the significant drop, but I believe in the future of this company. NextEra Energy will continue to struggle as rates stay higher. When we see the economy stabilize is when we will see this company thrive. 

Waste Management, Inc. (WM)-

    Waste Management saw a decline in its stock price after the company reported earnings. The company saw a miss on the top line but beat earnings on the bottom line. Waste Management credited the strong results to the optimization of their cost structure and had a lot more pricing discipline. This stock is labeled as the boring stock because it has similar earnings every quarter. The company saw its collection volume jump by 0.3%. With money becoming tight for a lot of people, the company has decided to expand its capex out by a few quarters. The bright spot for the company is the returning of capital to shareholders. The company paid out $855 million in dividends and purchased nearly a billion back in stock. The company doesn't have much to it as they collect trash. However, this is an essential business and why I invest in it. Consumers need places in which they can dispose their trash and no company does it better than Waste Management. 

Wednesday , October 25, 2023

Meta Platforms Inc. (META)-

    Meta's share price saw a lot of volatility following the earnings report, but ultimately traded lower. The company beat on the top line and had a significant beat on the bottom line. Meta also beat on their guidance expectations for revenue. The company saw daily active users rise by about 5%, which is a healthy growth. If I'm not mistaken, I think this company has around half of the worlds population using at least one of its social media services. Impressions on Ads rose by 31%, while the price of the Ads fell by 6%. Advertising on these platforms is becoming a lot more cheaper. The Reality Labs unit is mounting up losses, but the company is still optimistic about the future in AI and the products that will come out of this. Meta saw its FCF levels reach 13.6B which is extremely healthy, especially with all of the cash they burn with innovating investments. There is a lot of hype around the new AR glasses that will be released in a partnership with Ray-Ban. This is supposed to be a huge hit for consumers and drive in a lot of revenue. Overall, this stock has crushed the market and I look forward to a bright and innovative future for this company. 

ServiceNow Inc. (NOW)-

    ServiceNow saw an exceptional quarter with beats on both the top and bottom line. The company saw exceptional revenue growth at 25%. The Adjusted EPS metric was up 49% compared to prior year. The management team said that the quarterly results reflected exceptional execution and they surpassed the high end of their guidance metrics. All parts of the business experienced strong growth. The company saw a 98% renewal rate for its services, which shows that they are doing a wonderful job of retaining their customers despite the competitive landscape. Free Cash Flow was significant and the company was able to provide some return to shareholders by purchasing back $282 million in stock. Overall, this company seems to be on the opposite end of where most tech companies are heading right now. The stock is performing well on all levels and they are even putting effort in to return to shareholders. The business model is fantastic and the company should carry this momentum into the end of the year.

Thursday, October 26, 2023

Amazon.com, Inc. (AMZN)-

    Amazon had a really strong quarter with top and bottom line beats compared to analysts estimates. The revenue growth is back on track, with a solid 13% increase for overall revenue. Earnings came in a lot better than where the company was positioned last year. The company is becoming a lot more frugal when it comes to expenditures and are doing a wonderful job of optimizing performance in the businesses they already have. In terms of the cloud business, the margins were able to return to pre-pandemic levels and the growth seems to be stabilizing. The cloud business is the leader in the game and Amazon and Microsoft seem to be the front runners in this space. The company saw improvement in profitability in all of their retail segments. The company announced it was investing nearly $4 billion into Anthropic to get its feet in the water for the AI LLM. The advertising landscape seems to be improving, as Amazon saw 25% in revenue growth. Overall, I like what the company is doing in focusing on its core businesses and starting to optimize performance. We can already see a lot of improvement based on the results from this quarter. 

Intel Corporation (INTC)-

    Intel had a really strong quarter with a beat on both the top and bottom line. The company also beat on its guidance figures. The thing that stood out the most was the metric at which they were able to grow revenue. This company is seen as stabilized company, but with the semiconductor industry undergoing a lot of growth, the company has decided to indulge in some things to grow its revenue. The company has a lot of products that are looking to hit the market later this year. They are trying to compete with NVIDIA and other big names to get foot into the AI space for chips. I think the company is motivated in the shift of the industry and so far they are doing the right things to get ahead of the ballgame. I think they can be a competitor in this industry if they continue to track the way they are going. 

Kinsale Capital Group Inc. (KNSL)-

    Kinsale saw a significant drop in share price as the company missed earnings on the top line. The company beat on the bottom line and was able to grow earnings by 128%. Despite the revenue missing expectations, it still grew at 45%. The NII was up 96% and this is to likely to keep rising over the next several years. The combined ratio sits at 74.8%, a leading number in the industry. This number was down around 190 basis points, but still sits at a very strong level. The written premiums was up 33%, so the company is still driving in more business. Kinsale Capital does a wonderful job of taking the money left over after paying customers and investing wisely. They have a lot of credit investments that are expiring and they are taking them and rolling them over to get the high yields that stand in the current market. Overall, this revenue miss doesn't spook me and I love this company as it continues to grow.

Mastercard Inc. (MA)-

    Mastercard saw a rare decline in share price that may attract me to add to my position. The company missed on the top line but was able to beat on the bottom line. The thing that stood out most for the company was the cross-border volumes growth. This metric grew at 21%, as travel and cross-border spending continue to strengthen. The revenue grew at 14%, which is a strong level for the company. This company is commonly misconceived, as they are actually a tech company that grows at decent levels. The gross dollar volume grew by 11% to reach $2.3B. The company was able to return around $2.5B to shareholders in capital. The operating margins improved mightily to 58.8% compared to 54.1% last year. The cash from operations saw a slight decline due to a one-time litigation issue that has been resolved. The company looks poised for the future and the decline in stock price makes it attractive to pick up.

United Parcel Service Inc. (UPS)-

    UPS had a rough quarter, following striking a deal with the labor union. The company missed on the top line but beat on the bottom line. However, the revenue growth declined by 12% and the earnings growth declined by 56%. UPS has blamed the economic conditions for these downturns and said that it impacted global demand of the companies services. The new labor agreement that was ratified in September will take a toll and increase expenses. The company will need to grow revenue unlike they did this quarter for earnings to keep pace on where they want it. The domestic volume fell 11.5% and the global volume fell 6.6%. The company says they are ready for the holiday season and as a shareholder I hope they are. I want to see an exceptional holiday season and hopefully a trend in the right direction next quarter. I hope this downfall is not a sign of a slowdown in the market share of the company. I have faith in the long-term of this company and will continue to hold and hope for volumes to start rising again.

Thank you for reading!

Disclaimer: This is not advice to buy or sell stocks based on my recommendations, this advice is very opinionated and interpretive of facts presented in earnings.