Review of the Earnings Season so far.
The S&P 500 has fallen for nine days straight, which is rather unusual. It hasn’t fallen enormously but consistently, and that downward pull has tended to hide how good our stocks’ earnings results have been. (The S&P is down about 3.1% in the last nine trading days, and the Russell 2000 is down about 4.5% in the same time).
So I’m going to take a look at my stocks that have reported so far and see how they’ve done. I’ll take them alphabetically, and will discuss how they actually did, not how they did compared to some analyst’s expectation.
How did they do? Let’s see! Well…
Revenue was up 29%, and
Cloud Revenue (which is where the money is), was up 55%
Earnings per share were up 200%. (They tripled).
TTM Operating Cash Flow was up 49% from a year ago, and up 17% sequentially, and was over $30 per share.
TTM Free Cash Flow was up 59% from a year ago, and up 16% sequentially, and was almost $18 per share.
How has the stock reacted? Amazon’s stock price is down 9.4% in those 9 days we’re talking about.
And how did Arista do?
Revenue was up 33.4% and up 8.0% sequentially.
Adjusted earnings per share up 40.6%,
TTM earnings also up 41%.
How has the stock reacted? Arista is just down about a percent.
Bank of the Internet (BOFI)
Bofi is next:
Earnings per share were only up 12.5%, but
Tangible Book Value was up 24%
Non-Interest Income was up 50%
Efficiency Ratio was still under 40% (meaning Operating Income was over 60%)
An expansion of their H&R Block agreement was announced, by which they will provide additional services, and finally they were awarded Best Online Bank and Best Checking Account by MONEY.
How has the stock reacted? Bofi’s stock price is down 14.5% in the past nine trading days.
I find some reason for the impatience with Mitek. I know that they announced a year ago that they would be investing in growth this year, but…
Revenue was up 23% for the quarter and 37% for the fiscal year, and on that
Adjusted Earnings were 7 cents down from 9 cents on the quarter and flat at 26 cents for the fiscal year.
They keep announcing new deals signed and new patents granted, but nothing happens earnings-wise, and I guess people are getting impatient. When your revenue is up 37% for the fiscal year, you ought to set some money aside for growing profit. How has the stock reacted? Mitek is down about 17.8% in the past nine trading days.
Total Revenues were up 40%, and 98% were recurring revenue.
Adj Gross Margin was 83% of revenue.
Adj EBITDA was up 68.5% and was 23% of revenue.
Adj Net was up 91%.
Adj earnings - 15 cents up 87.5% from 8 cents.
Cash was $74 million and Total Debt was $30 million. This was solely debt on their corporate headquarters.
Repurchases: Started a repurchase plan in May, and have already repurchased over 525,000 shares.
Do you realize how good all this is? If not, read it again! So how has the stock reacted? PayCom’s stock is down 17.3% in the past nine days.
Signature Bank (SBNY)
They took a large write-off this quarter to put the Chicago medallion loans behind them for good. I decided to consider this as a one-time occurrence for my own record purposes and took the pre-charge-off values of earnings. All the other values are as given. And by the way, Weiss Ratings, a national provider of financial strength ratings, recently ranked them one of the top five highest-rated large banks in the U.S.
Earnings were up 12.2%
Efficiency Ratio was an incredible 31.9% (meaning that operating margins were 68.9%)
Tangible Book Value was up 17.7%
Average Assets were up 19.6% yoy
Loans were up 25% yoy
Deposits were up 18% yoy.
Remember that the are growing assets, loans and deposits about 20% in an economy that is growing GDP at 2-3%, so they are clearly taking market share in a huge way.
How has the stock reacted? I guess people figured out that these were excellent results and the stock actually bucked the market and rose 3.7% in the past nine trading days.
How’d they do? Let’s see.
Total Revenue was up 89%. That’s not a misprint! That’s revenue.
Subscription Revenue was up 69%
Monthly Recurring Revenue was up 67%
Merchant Solutions Revenue (based on how much the merchants sell) was up 114%
Gross Merchandise Volume was up 100%.
Etc, (You get the picture…)
How about profit? Well a long time ago they gave guidance that they would become profitable in the fourth quarter of 2017, and until then they would spend all their profits on seizing market share. Thus they spend just over revenue each quarter to have a tiny loss of 1% or 2% so that they can keep grabbing market share. They know that if they ever report a profit, even a penny, everyone will expect them to limit expenses to make more and more profit each quarter, while they want to keep grabbing market share. They say they are comfortable with their profitability target for the fourth quarter of 2017. Of course they are. They can turn on profit whenever they want by just limiting expenses a tiny bit.
How did the stock react? It’s down 10% in the past nine days, believe it or not!
We’ve discussed a lot about Skechers on the board so I won’t repeat it. Basically revenue was up 10% but earnings were down 14%. How did the stock react? It dropped 17% after earnings, but it’s actually up a few cents in the past nine days, and it actually up 5% from the closing the day after earnings.
Silver Spring (SSNI)
I think that they have begun to run into some of the same impatience that Mitek is experiencing. Silver Spring is winning huge contract after huge contract, their margins are rising, even their adjusted earnings are rising (from a loss of 50 cents in 2014, to 9 cents in 2015, to 17 cents so far this year), but the way they recognize revenue makes their revenue look stationary. This quarter their earnings per share was up 30% but revenue looked flat. That makes people nervous and the stock has fallen 10% in the last nine days.
How did they do? Super-great!
Revenue was up 36%, and up 10% sequentially
Earnings were up 55%, and up 14% sequentially
And they’ve introduced a bunch of new products that are just hitting the market.
How did the stock react? It’s up all of 2% in the past nine days.
Hope you found this helpful.
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