Final results for the earnings season & comments

If you think the world is coming to an end because of the recent downturn, please read the following all the way through with some attention.

AMBA (Ambarella) was the last of my companies to report from the second quarter. They are later than the others as their fiscal quarter ended in July instead of June. For the quarter they made 88 cents, up from 37 cents.

INFN ---- 18/11 = 63.6%
SWKS —134/83 = 61.4%
INBK ----50/22 =127.3%
SNCR — 56/41 = 36.6%
SXK -----155/68 = 127.9%
BOFI ---- 154/109 = 41.3%
CRTO — 15/09 = 66.7%
EPAM — 64/53 = 20.8%
ABMD — 26/06 = 333% (but I’ll max it out at 200%)
ANET — 54/35 = 54%
SWIR — 26/08 = 225% (but I’ll max it out at 200%)
SEDG — 31/(06) = 200% (maxed at 200%)
AMBA — 88/37 = 138%

The average gain in quarterly earnings (year-over-year) was = 102.8%. If you are comparing, the Mar quarter results for my entire portfolio were an average earnings gain of 69.8%. This has been a very good earnings season! So far, does any of that sound like the end of the world?

And here’s the 1YPEG information, with results at the time of reporting. Please note that these are from the time of reporting of each company’s earnings, and that I don’t update them.

INFN ---- PE was 36.7, TTM earnings growth is 142%, so 1YPEG was 0.26
SWKS ---- PE was 21.2, TTM earnings growth is 76.4%, so 1YPEG was 0.28
INBK ---- PE was 17.8, TTM earnings growth is 123%, so 1YPEG was 0.14
SNCR ---- PE was 21.7, TTM earnings growth is 31.6%, so 1YPEG was 0.68
SKX ----- PE was 29.5, TTM earnings growth is 107%, so 1YPEG was 0.28
BOFI ----- PE was 21.2, TTM earnings growth is 41.3%, so 1YPEG was 0.51
CRTO ----- PE was 44.2, TTM earnings growth is 105%, so 1YPEG was 0.42
EPAM ----- PE was 29.55, TTM earnings growth is 29.3%, so 1YPEG was 1.01
ABMD ----- PE was 60.9, TTM earnings growth is 149%, so 1YPEG was 0.41
ANET ----- PE was 41.4, TTM earnings growth is 77.5%, so 1YPEG was 0.53
SWIR ----- PE was 24.2, TTM earnings growth is 225.8%, so 1YPEG was 0.10
SEDG ----- PE was 45.9, TTM earnings growth is 200%, so 1YPEG was 0.22
AMBA ----- PE was 30.4, TTM earnings growth is 136%, so 1YPEG was 0.22

Average PE was 32.7
Average twelve-month trailing earning’s growth rate is 111.1%

That would give a 1YPEG for the portfolio of 32.7 divided by 111.1, which equals 0.29.

For comparison, for the March quarter
Average PE was 28.0.
Average TTM earnings growth was 67.8%.
1YPEG for the portfolio was 0.42

The quarterly average earnings growth of 103% and the average twelve-month trailing earnings growth of 111% seem quite extraordinary to me! Think about it! Thirteen stocks with an average year-over-year rate of trailing twelve-month earnings growth of 111%! If I take off the outliers, the highest and lowest, I still get 108.2% for the remaining stocks, and if I remove the top two outliers and the bottom two, the core nine stocks in the middle were still up 106.4%. That’s incredible! End of the world?

For those who worried that my portfolio was high beta:

At yesterday’s close the S&P was down 7.0% and my portfolio was up 33.8% on the year. In comparison my portfolio is doing 43.9% better than the S&P for the year (133.8 divided by 93.0 = 1.439).

Since the end of July, in the downdraft,

The S&P dropped from 102.2 to 93.0, a drop of 9.0% (93.0 divided by 102.2 = .91)

I dropped from 148.8 to 133.8, a drop of 10% (133.8 divided by 148.8 = .90 — or for further explanation, 10% of 148.8 is roughly 15.0, and 148.8 minus 15 gives 133.8).

Does that sound like a lot of dangerous beta to you? Much more beta in the rising market actually :wink:

And above all, do you see any reason to panic? I don’t.

Saul

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