Welcome back everyone. We have an exciting week ahead
of us. We have some of the biggest
earnings in the market happening this week.
In fact, this is considered the biggest earnings week of the
earnings season and front of us. Now, we have a list of the most
anticipated earnings reports. Lots of big companies here.
And what I've done is, I've gone through.
And I've circled, the ones that I think are the most notable the
ones that I want to go over and give my predictions of.
We just had Coca-Cola, they reported this morning but then
tomorrow we have Verizon McDonald's Spotify.
Microsoft and Google. So two big tech companies and
then we have visa and chipotle. So tomorrow we get to see how
Verizon's doing. I'm going to give some thoughts
on Verizon and a little bit of analysis on it.
We get to see how the food industry is doing with
McDonald's and Chipotle. We can see what spotify's up to.
We haven't looked at that company in a while and then we
have two big tech companies, which these ones really drive
the market. So, tomorrow is a massive day in
the market. Then on Wednesday, we have meta,
another big tech company will See how Matt is doing.
We have Roku and then Thursday's another, massive day Thursday,
we have Amazon Intel Snapchat, MasterCard and Crocs.
So another five, huge companies reporting earnings.
I'm going to be going over all of these and giving my thoughts.
My predictions on what's going to happen and what investors
should have in their mind. Going into these earnings.
So we have a lot to get to. We're going to be reviewing all
of these. I think it's going to be a very
fun video. I'm going to put timestamps with
all the ticker As of the different companies but I hope
you enjoyed the whole video. Okay, now let's go ahead and
Jump Right In the first thing I want to mention is before we get
to the specific companies, I want to share some thoughts
about how I view, earnings reports.
My mind frame going into them. When I first started, investing
the big thing for me that I focused on was what the news
focused on and when you go into earning season, there's a couple
things that the news always focus is on, they focus on
whether or not the company beat its earnings per share
estimates, or whether they missed it.
Whether they beat their revenue estimates or whether they missed
it, every single quarter, a bunch of different analysts,
come up with different analysis of what the EPS will be, and
what the revenue will be, and that forms a consensus EPs, and
revenue estimate. And then the company either
beats that by coming in above those estimates, or they miss it
by coming and Below. Like it's a pass fail, even if
they're really close, but they missed by a couple pennies they
missed the company failed. It was pass fail and they miss
their earnings per share estimates.
So when I first started investing, I'd look at all the
companies in my portfolio and I would see the news that this
company missed its earnings per share estimate and I'd be so
bummed because of that. I think the company is doing
poorly, it's missing its revenue and its earnings per share.
If a company beat its earnings per share, I'd feel so good.
Like my company is doing a great job and that is a totally wrong
way to look at earnings. If you're a long-term investor,
if you're a long-term investor then if the company came in a
few pennies above its earnings per share.
That's not really all that relevant to the long-term story
of the company, the company's margins were 100 basis points
above or below. That's just not that relevant
instead. What long-term investors should
be focused on is the overall story arc of the company.
The overall qualities of the company, the moat the earnings
power, the amount of customers, it can gain the long-term
Investments, the companies, making many of the things that
are short-term are whether or not they beat Quarter by quarter
but long term. We should look at the overall
qualities of a company. So when I'm looking at earnings
season, coming up the type of questions, I'm asking, are not
just if they beat their earnings per share Revenue, but I'm
asking if the company still growing, if it's still
maintaining a moat, if the leadership is still in acting in
a way that's in the long-term benefit of the company, we can
look at different metrics and different Investments That
companies do in order to accomplish those goals.
So that's my thought process going in, it's more of a
long-term approach. And I think that most investors
should not pay so close attention to the earnings per
share estimates and the revenue and base the entire company's
performance on that. Now, having said that, let's go
ahead and Jump Right In. We'll start off and we'll go
left to right throughout this week.
The first one that I want to mention is Coca-Cola.
They just reported earnings this morning and the story of
Coca-Cola is all the same. It's still on track.
Nothing's changed. It has a wide moat has an
incredibly lucrative business. I think it's very difficult to
Dislodge or disrupt Coca-Cola where it is right now.
They do have some competitors with Monster Energy Celsius, Red
Bull, some other companies in the energy drink category, but I
think overall if you're a Coca-Cola investor like Warren
Buffett, you don't feel any need to sell the company right now.
Now there's some other companies on this list.
Starting off Tuesday, we have Verizon reporting their
earnings. And let me bring it up here on
qual trim. Quatrain, by the way, is a
website that I developed. It's part of the patreon
membership, you can try it out for free.
Three. Let's go ahead and plug in
Verizon. Here we have it up.
Verizon is a company. And I've said this for over two
years, straight Verizon's, a company that I believe is a
value trap. I think it's just a
run-of-the-mill value trap. I don't like the investment, I
was invested in it very early when I started off a dividend
investing. And once I learned more about
the economics of companies and what drives intrinsic value
growth and compounding, I sold out of this company, the value.
Trap part of it is that always trades at low multiples and High
free cash flow yields. So trades at a 6.6 percent free,
cash flow yield trades at a PE ratio of a 7.
So it's always decent value. And that's what a value trap is.
You get lured into the good valuation metrics.
And if you just focus on those and you don't look at the other
economics of the company, you realize that you buy into a
company that's going nowhere and gives you very, very battery
turns, over long period of time. We can look at just one piece of
evidence here and I won't spend too much time on this but this
is the free cash flow of Verizon here is a 10 billion dollar.
Mark notice something there. The free cash flow has been the
same since 2002. So they have not improved their
free cash flow growth since literally 2002 over 20 years
ago. No, free cash flow growth.
And then we can just simply look at some other things that they
have changed over time, like the amount of debt we can.
Look at the long-term debt here. And even though their free cash
flow has remained the same there amount of debt has gone up
substantially since then. So overall, I think the company
is becoming less attractive over time, not more attractive.
And personally, when I invest in companies, I'm looking for
companies that can grow their free cash flow by at least 12
percent per year. I want free cash flow per share
growth of around 15% per year. So Verizon my opinion is a value
trap and this is one of the companies that even though
earning Seasons coming up and they have earnings tomorrow.
Even if they beat their earnings and beat their revenue which
they probably will, that does not make it a good investment in
my opinion. I think it's very very poor
investment. Next up, we have McDonald's
here. Let's go ahead and bring up
McDonald's on on quiet room here.
I believe that the restaurant category still going to do
really well. Now I have a hard time saying
this because it's done so well for so long that you believe
there has to be a pullback at some point or another.
But when I look at fast-food lines, when I look at McDonald's
fast-food lines, we have two of them in my city and both
McDonald's are constantly backed up with people in the lines.
What I see is, I see a lot of demand all the time with
McDonald's McDonald's has also been on top of their app.
And they have a great mobile app, they're better at getting
orders out. Consistently, they've improved
the consistency of their food, the Management's doing a great
job. This company is in good position
and I think they're going to have good earnings.
I think that once again the restaurants are going to have
good earnings throughout this year.
So McDonald's would surprise me. It would surprise me if they
came in way below expectations, or they had something go
fundamentally wrong with their business.
This quarter, that would be a shock because I think this
company I think it's fire. On all cylinders McDonald's.
Unlike Verizon would be a company that I'd be happy to be
invested in. I think the company is great.
My problem with McDonald specifically is I think the
company is very expensive for a restaurant.
It's a pretty expensive company. 26 forward, P/E free cash flow,
yield of 2.56. So investors are paying a lot
for McDonald's. Right now, it has very high
expectations. I'm not willing to pay that much
for McDonald's because I have other companies that I think
deserve the cash a little bit more companies that are growing.
A little bit faster. Now after McDonald's, we have a
tech company, which is Spotify, Spotify is a great product.
It's a company that I've used the product for a number of
years. I'm I'm glue to it.
Whenever I try to leave Spotify, I end up coming back and that's
a good sign for the company because you actually have stats
on this over 70% of the people that leave the company Spotify
and try to go to a competing product.
They come back. So it is a very sticky product.
Having said that the problem I have with Spotify is They focus
on all these different kpis, like usership, growth Revenue,
growth growing out there podcast platform, they're growing, but
they're not growing profitably. So even though the company is
getting bigger and bigger and bigger, the economics have an
improved check out this chart here that shows in Orange, the
amount of free cash flow, they generate.
And then in blue, the amount of stock-based compensation, they
do over the past year. They've, they've done more in
stock based compensation done in freak.
Cash flow in, this is for a very mature company.
Spotify, has been around for a long time companies very, very
old and I don't love the idea of owning a company that even
though it gets bigger and bigger and bigger, it never becomes
profitable. It never has any year where it
has any massive profits right now, I'm staying out of that
one. Now, after Spotify, Tuesday on
market closed, we have two massive earnings reports I'd
even say three because visas, that's a pretty big deal but we
have Microsoft, Google, and Visa three massive earnings reports
coming up Tuesday after market close.
Let's go ahead and start off with Microsoft hair.
When I look at Microsoft, I've said this many times before I'm
heavily invested in this company, I think it's the poster
child of a company with great fundamentals.
Having said that Microsoft's business, relies heavily on the
entire economics of the Fortune 500.
So if your Fortune 500 company, you use Microsoft products, one
way or another, you As Microsoft teams use Azure Cloud hosting
use the suite of excel products, and that type of thing, they
have so many different products. They sell business to business.
And the issue for Microsoft that they're facing is that they sell
to all these Fortune 500 companies.
And many of these Fortune 500 companies and even smaller.
Tech companies, they're cutting back their cutting back in the
amount of licenses. They need the amount of seats.
Many of them are doing layoffs and of course, when they do
layoffs, they say, hey Microsoft, we don't need as many
licenses for Excel. We don't need as many licenses
for this Nat. We don't need as much Cloud
hosting. So Microsoft I believe.
I'm not sure on this but I think it might show some weaknesses
quarter. That would be my guess I think
it's going to be tough for them to grow their business and have
a lot of growth when all of their customers and the broader
S&P 500 in the Fortune 500 companies, they're all cutting
back a little bit. So I think Microsoft is trying
to swim upstream. They're fighting an uphill
battle Why? I think it's going to be a very
difficult next three quarters for them.
Now, the history, statistically speaking, Microsoft
statistically beats earnings per share in Revenue all the time.
They beat it, nine times out of ten out of the past 20 or
earnings reports. I believe they beat it like 18
times so they're very good at beating their earnings per share
in Revenue. But again I have my concerns
this time with the way the economy is working and how
businesses are focusing on efficiency and profitability.
And Cutting back on excess. A lot of that.
Cutting back. On excess is cutting back on
Microsoft. So that's my thoughts on it.
I think it might be a weaker earnings report in terms of the
fundamentals of the business and the continued story arc of it, I
believe the moat is still in place.
So even if it goes through a weaker quarter or two, I'm not
concerned about this company. It is incredibly strong, it has
an incredibly wide mode. The economics are incredible
with this company. The profitability, the margins
of it are very consistent. They're even going over time.
They've done such a good job with the company.
So I think Microsoft is just as relevant today, as it was 20
years ago, I think the cloud business is still going to grow
over time. I think they're sweet of Office
products are still very well positioned.
I think that chat GPT the technology behind that and how
they got ahead of Google with that.
I think was incredible, incredible pivoting by
forgetting his name, not Sundar pichai.
He's of Google. What is a Microsoft Satya
Nadella? I think that he did such a good
job, getting ahead of Sundar pichai, so they're taking
different approaches with it. But I really like what Microsoft
is done. I think another weakness
potential in Microsoft's business.
Might be the gaming portion. I still think people are in the
mode of going out, getting out of the house having experiences
and I think it's going to take a while for the pull forward of
covid to work its way out of the gaming category.
So it'll be interesting to see long-term ERM.
I'm very bullish on Microsoft. I'm invested in the company
short term. I think that they're going to
have a little bit of struggle. Now, moving on, of course, we
have Google the other massive big tech company.
Reporting this week. We have it pulled up here,
Google trades at a lower valuation of Microsoft.
So that's why a lot of companies are sorry.
Investors are focused on Google is because the company trades at
a lower valuation. An 18 forward, P/E ratio of four
point two, three percent free cash flow yield.
These are very good valuation metrics, it Paints the company's
being relatively cheap. Right now and I think Google has
created down too much. I think the company is
undervalued, I'm invested in the company personally.
Now a couple notes on Google, Google release, their AI
chatbot, which is Google barred, and investors quickly noticed.
It's not as good as chat GPT. So investors got concerned that
maybe Google doesn't have as much of an edge on AI as
Microsoft does. Maybe they're, they're behind
Microsoft, but then Sundar pichai, just last week, went on
to 60 minutes and he said in that, that Yes, we know it's not
as powerful, but this isn't all we have.
He said, obviously, this is not our most capable chatbot.
They have more powerful chatbots that they have not yet released
and he said that he wanted to basically get people a little
bit used to Bard before doing the next releases because the
next releases are scary powerful, so we don't really
know. But he gave a strong impression
that Google has something much more powerful than Bard, much
more powerful language models, And even ones that are hooked up
to search and internet access, which is different than how
barred operates right now. So basically, it's a long way of
saying that Google might actually still be ahead of
Microsoft and AI, but they just haven't released the tech yet.
We don't know. But that's one of the
assumptions being made here outside of the, a ichat GPT
barred debate. Google has its core products,
which are doing great. I think, out of everything that
I'm going to be looking for on Google's earnings report, the
Thing, I'm going to be looking for, I'll be ignoring the Google
The Google course search. I'll be ignoring YouTube that
stuff is going to be fine. We already know about those
businesses, the thing that I'll be looking at is the cloud
service Revenue. The cloud product, I want to see
that grow. And more importantly, I want to
see the margins improve on that to where it can eventually
become profitable hopefully profitable this year.
If Google Cloud became profitable, that would be a
massive Tailwind for this company.
So far Google has multiple parts of their businesses that are
profitable. They have, the course, search,
they have Android, Dev YouTube, all generating profits.
Then they have their other bets, which is a money furnace.
They burn money in the other bets, then they have Google
cloud. Google cloud is the fastest
growing portion of the business, it's where they've hired the
most new employees where they put the most new capital in and
it's not yet profitable. So once that gets profitable,
that is another entire pillar of their business.
It's more important than YouTube that will suddenly become
profitable and be a Tailwind with growing profits year over
year. So that's what I'm gonna be
looking for. When I look at Google's report,
I'll be looking over the other stuff but the cloud is by far
the most important story line right now with this company, I
think that Google's earnings are going to be good, I think they
will be, I think YouTube has been doing well.
I think Google search has been doing well.
I don't think that chat gbt is taking massive market share from
search or anything like that but again, my Kiss when I'm looking
at Google, it's going to be Google Cloud.
I'm hoping at the margins, go up and that it loses less money,
this quarter than it did the previous quarter.
It's not going to be profitable this quarter but I want to see
the losses decrease and accelerated rate, so it gets
closer and closer to profitability.
So Microsoft and alphabet. Those are going to be two big
ones. The next big one is going to be
Visa. Now if we think about how Visa
reacts Microsoft is a weather vane for corporate spending, if
corporate spending is doing well, and the business world is
doing well in growing. And Microsoft's earnings are
going to grow Visa is similar but with consumer spending so
it's a weather vane for the overall consumer economy and how
much we're spending. I think their earnings are going
to be good. I think they're going to meet
their expectations or be right in line with them.
I believe the company right now is a high-quality compounder
that has a lot of continued. Growth ahead of it.
Visa has a natural hedge against inflation.
As inflation goes up, consumers, spend more money.
They already hedge against that and the company right now, I
think trades at a good. You're Wastin.
So there's not too much baked into the price already, in my
opinion, with this company. So the earnings report for Vis,
I think will be very simple. I think the earnings will be
good, I think consumer spending is going to be very strong.
You'll probably see even headlines up being stronger than
expected, but I wouldn't bet on this.
This is just my prediction. I can't see the future.
Maybe I could be wrong. Let's go ahead and move on to
Chipotle hair. Now, we have Chipotle brought up
here, ticker symbol CMG, and this company trades, if you can
see it, there, let me zoom in a bit at Thousand eight hundred
dollars per share. The stock price has really gone
up and they haven't done any stock split.
So it's trading at a very high valuation.
The valuation right now is that a PE ratio of 35 and a free cash
flow? Yield of 1.7, which fills too
expensive when you first glance at this company, it feels too
expensive, but keep in mind, this PE ratio of 35 is the same
as it was five years ago. So the PE Ratio hasn't changed
all that much or the past five years.
But the stock prices, Up hundreds and hundreds of
percentages over the past five years.
This has been a wonderful investment an incredibly strong
company to invest in. This is one of bill ackman's
main Holdings and one of the ones that he was most notably
public about. And no matter what you think of
Bill Ackman, he got chipotle, right?
He really nailed this investment.
This shows you that again. A lot of investors are focused
on the next quarter. What's going to be the earnings
per share, what's going to be the revenue?
What is the PE Ratio? That's East on next year's
earnings. These are all quarterly
short-term viewpoints. And I did a video on this where
I went into an interview that Bill Ackman had years and years
and years ago. This was all the way back in
2017, 2017 to put that in perspective.
During the time of this interview that I'm going to show
you a Chipotle was trading as a seven billion dollar company.
Now, it's a fifty billion dollar company so the interview was
seven billion dollars. It's currently trading at a
fifty billion dollar. Valuation.
Let's go ahead and take a look at some of this the summer.
Just the parts of this interview that I think stand out well
Chipotle Bill. If we could sure she has got
crushed again last week on earnings.
Yeah. What makes you still convinced
that you can turn this thing around?
So we're early. We joined the board in the last
year and we're going to work hard to make it helped the
company turn, but it's working this work to do for sure.
Okay, so he says that there's work to do with the company and
again, this was back in 17, the stock price of Chipotle was $275
currently 1800 dollars. So, there was a lot of work to
do, and it seemed to work out really well for him, but I want
you to listen to part of the debate here of what the other
investors are focused on the gang here.
Today, Josh, you been - on AAA Steve.
You've been - on AAA suggesting that there's no reason why this
stock can't continue to go lower.
I love the, by the way, I love the restaurant.
I just think I just think there was a You can about the company
and sometimes the magic wears off and once it wears off, then
people say okay, it's quick service restaurant.
Why am I paying 30 times earnings for it?
Why would investors pay 30 times earnings for Chipotle back in
2017? That's the problem with focusing
on the short-term earnings estimates, is they only show you
what's going to happen over the next couple of months.
They do not tell you how the story arc of a company's going
to be over the next five years. And this is what everyone was
focused on. What is the PE ratio of the
company? What our next year's earnings
next quarter's earnings, the current multiple of the company.
None of them. Look at it, through the lens of
a long-term story arc. They look at it through the lens
of next quarterly. Earnings how much you paying for
that in the current multiple? I mean, it's still a skit about
with the stocks done that and that doesn't really matter.
What matters is one of the earnings done and what's the
valuation and a 30 x, next year, giving the benefit they hit
their target for once first time in three years, it's still very
expensive. In a competitive space, I would,
it was $275 and Very expensive, very expensive.
At that time. And notice how Bill Ackman does
not focus on the current multiple he focuses on the
long-term story arc, probably the opportunities in the stock
market are created because most investors are focused on what
our next year's earnings going to be, what's an appropriate,
multiple? And first story like this, when
we're company's been through what they've been through sales
of gone from Two and a half to two million.
The right way to look at in our view is not just about a
multiple next year. You're like, okay, what's a
reasonable trajectory for a recovery and what will the
earnings be two years out for years out?
Years out and then discount those earnings back in time on
that basis. It's a very cheap stock, if they
can perform. So that's the biggest
distinction there. While all of them are focused on
next. Quarterly report, the next
earnings Ackman is focused on the long-term storyline of the
company. So I think that's important to
keep in mind, instead of focusing on just the current
multiple, just the free cash flow yield.
Look at the qualities of the business and how things will
develop over. The next five years, it has a
much bigger determining Factor. So right now the multiple is
around the same for Chipotle's that was back in 2017.
We look at the performance since then it's up.
Well, over 500 percent. This goes back to 2018 back in
2017 was right here at the lowest point to be buying the
company, two hundred and seventy three hundred dollars per share.
Now, with my expectations going forward with Chipotle, I think
they're going to have good results.
I think just like McDonald's, I'm expecting the food industry,
the quick service restaurant industry to do really well
overall. So Chipotle is one that I'm
bullish on. I think it's going to do great.
I look forward to the earnings It's going to be on my watch
list. If we do have a sell-off, if we
have investors panic because of a slow quarter, I just might
jump into that one. Now, moving on from Chipotle, we
have another giant company reporting earnings, which is
meta, another big tech company here.
Let's go ahead and type this one in here.
Mehta has always been around The Narrative of the company.
That's what's been driving this company stock price performance.
Now, we have a story here. I used to own meta, I sold out
of the company at a very favorable time.
Right around here, I sold out of the company because Mark
Zuckerberg was talking about the metaverse.
That's all he was focused on here was the metaverse.
He is talking about all the Investments, they're making in
the new goggles are coming out with and all the he was coming
out with videos and advertisements and promos for
the metaverse and talking about how he's going to sink a lot of
money into this metaphors, and the ROI on this money is very
unknown. So obviously investors did not
like all of this discussion around.
The metaverse the stock price completely plummeted over the
following year. And what did Mark Zuckerberg do?
He had a choice there, he could continue to talk about the
metaverse ad, nauseam and talk about how he's investing more
and more money there but he made a huge pivot.
Once the stock price, it an ultimate low a couple weeks
later Mark Zuckerberg came out with a letter, you publish a
letter saying that he was optimizing the business and the
letter really did not mention the metaverse at all.
This letter was a complete pivot.
A 180-degree turn from all of the talk of the metaverse now,
he was focused on profitability laying off, employees of the
company. Doing a different layout of the
management structure to have less managers and more people
working at the company doing the Hands-On stuff.
He talked incessantly about cost structure and optimization after
doing that. The company had a huge rally
back to $200 per share. It's not back to where it was in
2021, is things were getting out of control, but it's had a huge.
Huge rally up 100 percent from its lows.
So it's gone through this dramatic pivot and the stock
prices run back up to where it now has a PE ratio of 15, a more
average value where it's neither really undervalued or really
overvalued at this point. And it has a free casual yield
of 3.4 1%. So I know a lot of met investors
bought into the company when it was dipping are now taking
gains. Many of them are moving on to
different positions. Now, my thoughts on meta, first
of all, I'm a little bit biased against meta because I don't
like, so, Media companies overall all that much, I don't
like the industry. I don't like Pinterest that
much. I don't like Snapchat and I
don't love Instagram and Facebook that much.
I just don't love the industry all that much.
I think it has a lot of problems.
There's always the legality issues.
They're always being called in front of Congress and then they
have ADD problems and there's all different things with it.
So I'm a little bit biased against this industry.
I've invested in meta before I made a little bit of money on
the company, but I was never a huge holding when I look at the
company that Challenges. They're facing one of the
biggest ones is the cost structure of the company.
You can see the problem here with the growing amount of
stock-based compensation, like every Big tech company meta
faces this as well. And I think this is a challenge
for the company. So I think what investors should
be focused on with these upcoming earnings is looking at
the cost structure. Looking at the, the amount of
stock-based compensation compared to the amount of free
cash flow, and compared it to the amount of capex Investments,
we should see stock-based compensation.
Start to fall a little bit. Has he been doing these
aggressive layoffs? And we should also see free cash
flow. Start to go back up as they're
at least leveling out their capex.
Spend in the past quarter, they've been spending nine
billion dollars on capex in a single quarter which is massive.
This is around 30 percent of their revenue, going to capex,
massive capex. Spend that needs to level out at
a minimum or at least go down for them to generate their
growing free. Cash flows.
So that's what I'm going to be focused on with medicine.
Earnings report the cost structure of the company.
The stock based compensation, the capex spend, and the other
stuff whether or not they gained a few 10 million, new users or
lose 10 million users. I don't think is the biggest
deal. I think the cost structure is
going to be the primary focus and I think the overall they're
going to have positive metrics because it sounds like
Zuckerberg has been very focused on this pivot.
It's not just talk. He has laid off a lot of people
he has focused on optimizing costs.
Now next up of course we have a Roku Earnings Wednesday after
closes. Well this is a company that I've
never. I've never been behind the story
of this company. I think there's too many
problems and headwinds that it faces.
First of all the performance of the company over the past two
years has been - 84%. It got hyped up to a point that
was incredible where people thought that Roku is taking over
the world. This was in line with the Kathy
would Arc invest hype one of her key Holdings and then it came
back down to reality that this company is not making Money
right now and it faces intense competition part of their
competition is apple with the Apple TV and then you have even
more intense competition from Amazon with the Amazon Fire.
Amazon's practically giving away TVs on Amazon just to get people
using their Fire TV. So when you buy the Amazon TV,
it comes with the Fire TV built inside like many, many Roku TVs
as well. They have the Roku built inside.
The the reason that they want to subsidize the Where to get you
using their their piece of software is just like apple
wanting to get you to use an iPhone.
They want you to get into the ecosystem and they can monetize
you a bunch of different ways through advertisements through
different media and content that they produce.
They're all different means. So this is a platform play Roku
wants to become such a massive platform in Smart TVs that they
can leverage that to sell advertising that they can build
out their own little mini Netflix service that they can
sell subscriptions and different things in shops.
They can have lots of different ways.
As of monetizing it, if they become a big enough platform.
So that's the story in the thesis of the company, but like
many of these companies, it talk really big about their big
grandiose plans. The metrics don't look too
favorable. The earnings per share has been
- for the past three quarters. It's expected to be - this next
quarter. We're going to have - earnings
per share and then of course this is another company where
their free cash flow is all over the place.
Sometimes positive, sometimes negative but then there's
another one where they have the high stock-based compensation.
It's an expense that's going up over time.
Meaning, they're deluding shareholders.
I don't know if they'll beat or missed.
I can't say, but I think it's just going to be tough.
That's my guess on this one. Now, next up, we have Thursday
morning, we have MasterCard the duopoly with Visa reporting
earnings as well. And the comments that I said
around Visa, you could almost use those for MasterCard as
well. I'm personally invested in,
MasterCard, I'm extremely bullish on the company.
The more that I read about it and research it, the more that
my concerns about the of the company and competitive threats.
Those go away a little bit and I realized the fundamentals of
this company and how good of a compounder it is, the revenue.
Growth is remarkable it transfers, all of its Revenue
into ibadah. The free cash flow is so
efficient. All of their cash that they
generate goes right back to the investors.
So the free cash flow generation is incredible.
Stock-based compensation, not a problem for this company, their
free cash flow per share growth is around 17 percent.
Even when you adjust out stock-based compensation, And
it's still around around sixteen and a half percent.
The market average, is around eight percent.
So MasterCard is growing, its free cash flow per share at a
rate of around, double the speed of the market average.
So even though the company trades at a 29 forward P/E, it
deserves to trade that way because it's growing its
intrinsic value at roughly double the annual rate of the
S&P 500 citing, this company's wonderful.
I think it's high-quality compounder.
I think it trades at a reasonable valuation.
I'm personally bought it into the company and the story of it.
I don't concern myself with the competitive threats of
cryptocurrency or any of that type of stuff.
I don't think that that's credible threat.
I think the biggest Potential Threat to MasterCard.
Maybe sometime down the road, is something like Apple pay.
I think that could potentially be a threat, but right now, it
seems like apples much more inclined to work alongside Visa
Mastercard than to butt heads with them.
So as of right now, I think the Earth.
For MasterCard and Visa both of them are going to be good.
I think the companies are very high quality, I don't think
there's too much baked into their price and I expect a lot
from MasterCard. I have very high expectations
for the company. We look at Crocs here.
This is another company that I own just a little bit of, I own
a hundred dollars right now. At one point, I invested 1000
dollars into Crocs and it grew to a $1800 position.
So I quickly made 80 percent gains in the company and around
three months. And so this is a small by for
me. I bought a thousand dollars
worth of it right here. It raised up to an 18 hundred
dollar position and I sold the majority of it right there to
lock in the gains and I put those gains into Google that was
a trade that I did. Now it probably would have been
better if I would have just kept it in Crocs and I think that's a
mistake. I made, I sold the company
because at the time, getting any gains from any company was
incredibly tough and 2022. So when this company went up
80%, I felt like it was prudent to at least lock in some Those
canes and put it into a different company.
That's a little bit less volatile.
Having said that when I look over the fundamentals of Crocks
and the brand value of this company, which I know it sounds
funny. It's Crocs the silly shoes, you
have gen Z decking out there. Croc shoes.
I believe there's sustainable brand value with Crocs people,
like the brand Crocs, they don't want the Chinese knock-offs,
they don't want the, the second-hand pairs.
They want brand-new 60 dollar pair Crocs on top of that.
Crocs bought the brand. Hey dude.
Another very casual shoe, that's incredibly comfortable.
Now, I've never worn a pair of Crocs shoes in my life.
I haven't owned a pair ever, but I do own a number of pairs of
hey, dudes. I think they're the most
comfortable shoes on Earth. So Crux owns two.
Different brands that are both different enough that they give
them access to a different category of consumer, but
they're both incredibly comfortable and they have good
brand value when I buy hey dudes, I don't want to buy
knockoffs, I want to buy the real thing.
So I think this company has Or sustained ability to keep its
economics. Then a trendy company.
I wouldn't consider this just a trendy company, but when I look
at the company, I regret selling it a little bit because I
actually don't think that it's overvalued, it's still trading
at a PE ratio below 9, very low expectations for the company.
The only real downside of the company right now is to buy the
hey, dude brand, they overpaid a little bit.
They bought it during the peak hype and they paid mostly with
cash. So they Took out a lot of debt
for it. They're paying this down super
fast. So they went from 2.8 billion
down to 2.2 billion in just a year, incredibly fast pay off of
their debt, and they're also buying back shares while paying
back the debt. So, Crocs is a really neat
company, they've really done. Well, the management has done
great, very cool company below a ten billion dollar valuation.
Another thing I'd pay attention to with Crocs is we have right
here? This part on quiet room that
shows you the Insider trades of the And you can see what they're
doing if they're buying and if they're selling, I would pay
attention to what the Insiders are doing.
Because one of the biggest indicators to me that this
company was undervalued was, the amount of insane buying that was
happening from all of the Insiders, the executives, the
board of directors. Everybody in the company was
buying the company hand over fist.
When it's sold down here, they were using their own money,
their own salaries, it wasn't just stock options.
Just maturing This was them, buying the company like crazy
when I saw that as well as the valuation, as well as the
acquisition. I thought it was a good buy as
well, and I think that's a big indicator.
So keep that in mind, insiders sell stocks for all different
reasons, but when you see all of them buying a company, they only
really do that for one reason and it's to make a lot of money.
Now, moving on from Crocs, we have a slightly bigger company
which is Amazon. I've talked about Amazon a lot,
so I'm not going to restate the thesis hair but let me give you
my predictions of this upcoming quarter.
The biggest in Music value drivers of Amazon is the AWS
business, the growth of that business over time and the
economics of it, the advertising business, another huge intrinsic
value, driver of the company. And then you also have the prime
business, which is layered upon the retail business.
I believe that the retail business is going to do fine, it
might come in slightly above slightly below, that doesn't
really matter my opinion. I think it's going to be mostly
in line with expectations. I think the advertising business
is going to do well, I believe that.
Amazon is taking advertising market share from Google and
meta. They have a better advertising
platform because it's directly what the customers shopping for.
And I believe we're Amazon is going to struggle is with AWS,
Amazon's web services. I think this is going to be a
big frowny face for the company. It's going to be sad.
I'm expecting that going in as an investor and I'm expecting
people to blast Amazon investors saying look at this AWS has
slowed down so much over the past 90 days.
It's slow down. It's now down to the low, teens
growth rate, like I said, with Microsoft companies in the
Fortune, 500 are pulling back on their spin.
They're trying to optimize their trying to cut costs and they're
doing that everywhere possible. So a lot of them are firing
employees, they're finding off different divisions and they're
cutting back on licenses from companies like Adobe like
Microsoft. And then they're also cutting
costs where they can in one of their biggest expenses which is
cloud. I think we're going to see a lot
of investors. Bosch Amazon for the slow growth
and AWS that I'm expecting. But I don't think that's going
to be too detrimental to the story.
So, if you're invested in Amazon, like I am, I think
that's what you have to be ready for it.
You have to be ready for the critics, talking about the big
slowdown and Amazon AWS. Now, moving on, we gotta talk
about until this is one of the most popular value Investments
dividend-paying Investments and it's one that I've been bearish
on and I've been trying to persuade investors away from for
a long period of time. I don't like this company in the
Isn't said it's in the risks that it has and the operating
efficiency of it, it's not that efficient of a business.
It has a lot of expenses, a lot of risks and research and
development and capex. The performance of it has been
horrible over the past couple of years because a company has
faced intense competition from new Rivals.
But I will say what makes me think that there may be some
upside with this company is like I said with Crocs seeing the
Insiders aggressively by the company that really changes the
calculation when you see it Insiders aggressively buying the
company over and over again. They could be wrong, but
insiders usually know what's going on.
The most with the company, I see the CEO of the company buying a
lot of the company. These aren't just little
symbolic. Buys he bought 9700 shares right
there, he bought another nine thousand shares back in January
31st and he continues to buy more and more shares of the
company Beyond what's necessary. He really believes the company's
undervalued and that you can turn the company around.
So Intel's a company. Don't find attractive because of
the qualities of the company. It's not one that I'm ever going
to be buying the dip of, but it is encouraging to see the CEO of
the company by more and more shares of the company.
Now, finally, we have the best right here.
We saved the best for last, which is Snapchat.
The nice thing about Snapchat in this earnings report, is
normally, Snapchat is at the beginning of the week.
And that's, that's meaningful. Because what Snapchat
historically does is Snapchats an awful business.
If you're not aware, it's a terrible business, a terrible
investment, It's been one of the worst Investments all time since
the IPO I've routinely stated that this company is terrible in
the way that it manages itself, it has super high expenses, it
has a Founder, that's a multi-billionaire.
And the investors in the company have only lost money.
So it's been an awful investment and what they typically do is
they report before, all these other big companies, Snapchat
has horrible, earnings, horrible reports with the advertising
business, and it drops, the stock price of meta and Google
as Result. Because investors believe that
Snapchat similar to meta and Google, the nice thing is now
they're reporting after both Google and meta.
So, Snapchat can't hurt Google and meta this week, which is
nice for Google meta investors. So whether or not Snapchat beats
or mrs. Is not something I'm too
concerned about it can impact alphabet and meta this time and
the company's one that I've never liked, I don't like the
management. I don't like the way that they
structure their business. I don't like the app.
I don't like anything about it. So Snapchats not one.
One that I'll ever be investing in, but that is my earnings
predictions and I hope this was helpful to you looking forward
to the next week, a lot to dive into.
And of course, after all of this happens, I'll have another
video. That's a follow-up for the next
week, so that's all for now. I hope you enjoyed and I'll see
you in the next one. One that I'll ever be investing
in, but that is my earnings predictions and I hope this was
helpful to you looking forward to the next week, a lot to dive
into. And of course, after all of this
happens, I'll have another video.
That's a follow-up for the next week, so that's all for now.
I hope you enjoyed and I'll see you in the next one.