My thoughts about earnings so far.
Here’s a little recap on what I think of earnings on some of my stocks.
FB - I had been out of my small position in FB because their earnings growth seemed to be stagnating, but they had great earnings this time, with great customer metrics, so I added a small position this week (0.77% of my portfolio).
AMZN - Yesterday was a strange day. I had a small (3.5%) position. Amazon shot up to $635 on anticipation of earnings, then fell off to $550 in after hours after they announced. I thought they had great results and bought all I could at $549 to $552 in after hours, increasing my position to over 5.2%. Those purchases look okay as they are now at $584 at midday. Those who sold off apparently did so because earnings missed estimates. As I’ve explained earlier, I follow Cash Flow instead.
Here’s what Operating Cash Flow (TTM) looks like for the past three years.
2013: 4.2 4.5 5.0 5.5 2014: 5.3 5.3 5.7 6.8 2015: 7.8 9.0 9.8 11.9
You can see that something happened in 2015 as OCF took off. Now let’s look at Free Cash Flow (TTM)
2013: 0.2 0.3 0.4 2.0 2014: 1.5 1.0 1.1 1.9 2015: 3.2 4.4 5.4 7.3
The same thing happened there in 2015, with a very strong fourth quarter for each.
By the way they have about $24.74 per share in TTM Operating Cash Flow, and $15.18 per share in Free Cash Flow. No longer a company that can’t make money, it seems to me. And sales were up 22%.
INBK - I was a bit disappointed at first as earnings were flat, but anirban explained what was happening so clearly that even I could understand it. Their primary banking earnings are Net Interest Income, which is the major part of their earnings and is growing at 30% annually. They also make non-interest income, which is smaller and bounces around. It bounced down this quarter. Soon Net Interest Income will be big enough that the bounces in non-interest income won’t matter.
CELG - Biotechs in general have sold off, and taken Celgene, which is a 4% position for me, along. Their revenue was $2.54 billion, up from $2.05 billion, which looked fine to me. Earnings were $1.18 up from $1.01, but reduced 7 cents by a milestone payment that they paid to OncoMed during the period. I figure that having to make the payment is good news and implies that things are progressing. For the first quarter their outlook is for $1.27 to $1.30. I have no worries about CELG.
MITK - Is a little microcap brought to the board by Neil. I have about a 1.4% position. Their earnings were 4 cents, down from 5 cents a year ago, and down from 9 cents sequentially. However they let us know in advance that they would be spending to build out the business. Revenue was up over 30% from a small base of $5.4 million the year before. In other words it’s really a tiny company! And therefore risky.
SBNY is a new small position recommended by Ophir Gottlieb at the CML Pro newsletter. (I have a 1.5% position). Their earnings were up 25% for the quarter and 23% for the year. They are larger than INBK, and growing a bit slower than INBK and BOFI, but they are more stable than INBK and don’t have the problems that BOFI is fighting. I was happy with their results.
SWKS is interesting. There was so much negative hype that when they did exactly what they said they would everyone breathed a sigh of relief. I was slightly disappointed as I hoped they would do even better than that. They forecast next two quarters to be up a small amount from the year before, and that then the business will really take off in the second half of 2016. They specified that that was not just wishful thinking but that they have pre-knowledge of what they will be in in the second half of the year. It remains my largest position.