Weekly Earnings Review: November 6, 2023- November 10, 2023

We saw another week of solid gains for the indices. Stocks continue to rise as we near the end of the year. It was a busy week for my portfolio, as we saw a number of companies report earnings. I will break down some of the highlights from each of their quarters below. 

Monday, November 6, 2023

Vertex Pharmaceuticals (VRTX)-

    Vertex missed on the top line, but beat estimates on the bottom line. The company saw wonderful results from its CF business, so it decided to raise revenue guidance slightly. This next quarter and beyond is going to be really pivotal for the future of the company. The Exa-cel seeks approval on December 8th and the TDT looks for approval on March 30th of next year. The company is trying to diversify from its CF drugs that they dominate the market in. Hopefully these approvals go as planned and the company will be an attractive company to own. The domestic sales saw a rise of 7% and the overall sales grew at 6%. The sales have definitely seen a slowdown but this was anticipated. Vertex still generates significant amounts of cash and is putting it to use by investing in new drugs. I truly hope this company passes these regulations and gets these drugs on the market not only to benefit the business, but benefit the people in need of treatment for these diseases. Overall, not an information packed quarter as we wait and see what the upcoming results and determinations bring us.

Tuesday, November 7, 2023

Axon Enterprise (AXON)-

    Axon had yet another wonderful quarter with the company beating on both the top and bottom line. The growth on both the top and bottom line were impressive as well with top line growing 33% and bottom line increasing from $0.17 per share to $0.78 a share. The company saw its seventh quarter of growth over 30% which attests to the companies execution and product market fit. The cloud and services sector (SAAS) grew at 55%. This is the main driver of the margins and the growth driver of the business. The Taser revenue grew 12%, which is really impressive and shows the dynamic of the innovation of their products. The revenue retention rate continues to grow and sits at 122% right now. The company raised guidance and seems to have a lot of momentum going for them. I love this quarter and it attests to the dominance that they hold in their market. If you look at any body cam footage, you will likely see their logo in the corner of the screen. They have a stronghold on the domestic market, but are now looking to get their foot in the door in the international realm. This is one of my highest conviction stocks and I continue to commend the job management is doing. 

Datadog (DDOG)-

    Datadog had a really impressive quarter as the company beat on the top and bottom line. The company also raised the guidance based on some impressive results from the quarter. Datadog is noticing trends that are stronger than they have seen in the past year. One big thing that was noted, is the fact that the company is not profitable on a GAAP basis. Management seems to be executing some cost savings plans because the gross margin increased by 257 basis points and the operating margin saw a 600 basis point increase. Operating income jumped 86% and the profitability gives the shareholders a lot more sense of safety. They are doing a wonderful job with expanding their products to the customers. They offer a variety of products, but they are trying to get customers to resort to all of their products and it seems to be working. Overall, this company seems to be doing a lot better than they have over the past year. I am excited to be a shareholder and look forward to the continuation of the wonderful things they keep doing. 

Masimo (MASI)-

    Masimo struggles continue, as the company missed estimates on the top line and beat estimates on the bottom line. The growth saw a decline with revenue slowing down around 13% and adjusted net income falling 38%. The healthcare side of the business is transitioning from the Covid conditions and look for the transition to be smooth. The Healthcare business saw a 6% drop in revenues and the Non-Healthcare unit saw a 23% drop. Guidance looked good for the next quarter, but the full year guidance was revised down. This is the second quarter in a row that the company has struggled. I have to give some credit because they are still a small business and are making acquisitions. They need to get back to the growth story and need to improve margins to catch my eye. If things keep going south, I may liquidate and put my capital in a better place. 

Upstart (UPST)-

    Upstart had a disappointing quarter, as they missed on both the top and bottom line. The company revised the outlook lower, but the GAAP profitability actually saw an increase. Upstart says they are making progress in becoming the first and best AI lending platform. They are investing heavily in the teams and the Core AI product. The balance sheet looked a little worse with loans increasing and with higher interest rates, could be a bad sign. The contribution margin saw a slight drop, but the number is still pretty strong for the company. The companies AI platform seems to be working well as 88% of the loans created were automated, and that figure was up from 75% last year. They lacked clarity in how many banks they added to the platform, but we know they now have over a 100 banks on the platform. I think this company will continue to struggle as long as interest rates stay high. Once we return to a more normalized economy, we may see this company thrive again.  

Realty Income (O)-

    Realty Income had a slight miss on the top line, but beat estimates on the bottom line. The company raised AFFO per share guidance for the year. The stock has been hammered this year, along with a lot of the REITs. Real Estate is a frowned upon market with interest rates being so high. However, companies like Realty Income don't bring me any concern because of their diverse and strong portfolio. The company owns 13,282 properties across different regions and they operate net-leases that allows the company to have a hands-off approach with upkeep. Realty Income is deploying its capital in acquiring $2B worth of investments at an average cash yield of 6.9%. The company also announced that they will be acquiring Spirit Realty Capital to grow its portfolio. The dividend yield sits at 6.1% and the dividend is paid out monthly. My one concern is that they borrowed money at an average rate of 5%. This will probably drive up the interest expense, but I think they can continue successfully acquiring properties that will cover the interest. Overall, this stock is extremely attractive after a fall of around 25% and this company is going nowhere. I would highly recommend this company for both income and growth purposes. 

Wednesday, November 8, 2023

Walt Disney (DIS)-

    Disney is starting to see some improvements in building its business again. The company beat on the top and bottom line. They saw a 5% growth on the top line and saw significant growth in its profitability. One positive was that the company added 7 million subscribers in the quarter and saw revenue jump 12% in that category. It seems that people are starting to demand the Disney experience again because the parks and experiences business saw a 13% jump. The free cash flow is finally starting to build up again and there are rumors that a dividend might be coming back. This will be a huge win for shareholders as we will start to get some of the returns that were stripped a couple of years ago. Management is expecting the streaming business to be profitable by the end of next year. The company is also in talks to get full ownership of Hulu, this would allow them to bundle services and make packages more attractive to customers. I am pleased with the results of this quarter and look forward to the continuation of the rebuild into a strong company. 

HubSpot (HUBS)-

    HubSpot had a wonderful quarter with beats on the top and bottom line. The company also raised guidance and has some very strong growth expected. HubSpot was able to grow revenues at 26% on the top line and 130% on the bottom line. The momentum continues to carry for this company as they are making significant progress in becoming the #1 customer platform for scaling costs. The customers increased by 22% and they are almost past 195,000 in total. A significant metric is that the company is generating around $11,520 per customer, which is a 3% increase. This is a wonderful thing to see as the company is able to charge more for services and customers are still staying loyal to the company. The cash from operations grew by 48% and sat at $89 million. Overall, I really like the momentum this company is carrying. If they can stay on this track, they can easily become the leader in the space and the stock will see plenty of upside. `

New York Times (NYT)-

    This company has definitely revolutionized from just printing newspapers everyday. NYT offers a wide range of bundles and has enticing games that consumers are addicted to. The company beat on both the top and bottom line. The top line grew at 9.3% and the bottom line saw growth of 54%. They are expecting the bundle they offer to futher the company down the path to stronger profits. The company reached a nice milestone of 10 million digital subscribers. This figure was up 8% from last year. They are utilizing this to their benefit, as 40% of subscribers are now receiving the bundle or multi-product. The company is also raising prices which is driving the average revenue per user up 1.4%. I am genuinely impressed with how successful this business has transformed and adapted to a new digital market. I continue to invest in this one and look forward to the future strengthening of the profits. 

Warner Bros. Discovery (WBD)-

    The company reported some poor results, but it is quite understandable. Given the fact that management is going through a huge restructuring right now, it makes sense to see optimism still low. The top and bottom line both missed compared to estimates. The revenue saw slight growth of 1.6% but the bottom line saw a big drop of 82%. Management says that it is has made a lot of progress over the past 19 months and they are optimistic about building on the current momentum they have. The company did release a very successful Barbie movie that was one of the top hits in the box office this year. The main focus is to continue trimming debt and cutting costs. I am a little worried about the company having $43.5 billion in debt right now, but they are trimming it significantly. The global subscribers saw a decline in the quarter, but rising subscription prices raised the ARPU levels up. This company is going through a lot right now, but I think they can get it down. I am excited about the success of the Barbie movie and look forward to them creating more content of that level. Still a long way to go for this company, but it is doing the right things about the situation it was put in. 

Thursday, November 9, 2023

The Trade Desk (TTD)-

    The stock is plummeting, as the company missed on guidance expectations and lowered it for Q4. The company beat on both the top and bottom line and sustained their revenue growth in the 20% range. The adjusted earnings per share also came in well at $0.33 a share, which represents 27% growth. The management team states that they have never been in a better position to capture greater market share. The advertising market is huge and The Trade Desk has continued to do a wonderful job of growing its presence in this market. This upcoming quarter is usually one of the strongest for the advertising market, so the revisions down kind of spooked investors. The downgrade of guidance calls for revenue growth only being 18%, which is lower than normal. The EBITDA growth rate is only expected to be 10%. I am shocked and can't tell you the exact reason for the revisions in guidance, however it is kind of scary when these things arise. There is some suspicious activity that the business growth could be trickling down because some members of the management team sold off some of their shares recently. I think this downfall represents a solid entry point. This company is destined for a really bright future and they enhance the ad market in great ways. I see upside in this one and I see a nice rebound coming in next earnings report.  

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.