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Two days after the Chinese fired back in the trade war by guiding their currency lower against the dollar, Wall Street is starting to realize the world as we know it did not actually end. While the mood remains brittle, we remain focused on the quarterly numbers we're seeing.

Earnings Review:

Shutterstock (SSTK: $34, down 10% this week) is still having trouble growing as fast as we'd like, with $162 million in revenue representing only 3% expansion over the past year. We were looking for $10 million more, but at this point a stubborn top line is no surprise for anyone in the stock. The real sizzle is the way that the company's video licensing platform is now functionally complete, giving the margins a little relief from capital expenditures. As a result, earnings came in at $0.33 per share, up 10% from last year and substantially above the $0.31 we wanted. We have already temporarily relaxed our $35 Sell Price and while we don't want to liquidate when the market as a whole is dragging it down, we suspect Shutterstock's time with us is limited now.

Omega Healthcare Investors (OHI: $36, down 2%) gave us a full $0.77 per share in Funds From Operations even though both revenue growth and earnings came in a tiny bit below our targets. The company is also paying $345 million in cash (plus taking on $390 million in mortgage obligations) to add another 60 Skilled Nursing and Assisted Living facilities to its portfolio, a move we like immensely. The dividend is secure. That's all we need.

JBG Smith (JBGS: $38, down 2%) did indeed sneak out with its 2Q19 numbers last night. We don't see anything to hide in $0.41 per share in core Funds From Operations, more than enough to cover the $0.22 dividend. Revenue came in at $161 million, significantly better than either the previous quarter or what we expected. Usually this is a weak quarter-to-quarter comparison so it's impressive to get any progress here at all. We especially like the way Property Management fees keep ramping up. While it's only $14 million a quarter now, the trend is right.


Earnings Preview: TPI Composites (TPIC: $25, down 1%)

Earnings Date: Tuesday, 5:00 PM ET

Expectations: 2Q19
Revenue: $328 million 
Net Loss: $11 million
EPS: -($0.25)

Year Ago Quarter Results
Revenue: $237 million

Net Loss: $4 million
EPS: -($0.12)

Implied Revenue Growth: 38%
Implied EPS Decline: steeper losses

Target: $35
Sell Price: $25
Date Added: March 9, 2018
BMR Performance: 23%

Key Things To Watch For in the Quarter

Last quarter was essentially an upset thanks to a key customer's bankruptcy and a short labor strike in TPI Composites' Mexican manufacturing plant. We're eager to see what this company can do without those "extraordinary and disappointing" events (to use the CEO's phrase at the time) weighing against it. In a normal season, demand for Wind Turbine blades is heavy and any slippage from one customer will be almost immediately rectified by another. Look at that revenue growth target. That's what we're talking about.

Admittedly, TPI seized the opportunity to bundle a $12 million restructuring charge into a season already punctuated by bad news, which means that what we initially anticipated would be a quarterly profit is turning into a steeper loss. It happens. If this is the worst that the world can throw at this company, the odds of a relief rally are high. However, if management's bad luck continues, we'll review the stock's future in the Aggressive portfolio and get back to you.


Earnings Preview: Roku (ROKU: $98, down 2%)

Earnings Date: Wednesday, 5:00 PM ET

Expectations: 2Q19
Revenue: $224 million
Net Loss: $25 million
EPS: -($0.21)

Year Ago Quarter Results
Revenue: $157 million

Net Profit: $0.5 million
EPS: $0.00 (breakeven)

Implied Revenue Growth: 42%
Implied EPS Decline: flip from breakeven to loss

Target: $125
Sell Price: $95
Date Added: May 24, 2018
BMR Performance: 181%

Key Things To Watch For in the Quarter

The most dynamic stock we're looking at this morning, Roku is all about the revenue trend. We want the top line to move at least 40% and suspect management will squeeze a few more points of growth from the increasingly lucrative Advertising platform. Sales of the Roku device itself have already become a sideshow . . . barely an excuse to get people into the company's entertainment ecosystem and start pushing those ads onto the living room TV. 

We don't think we're asking too much. Management told us three months ago to expect at least $220 million in revenue and to accept continued losses as Roku keeps investing in its Advertising systems. Beyond that, insight into the competitive environment would be welcome. Every Big Media company that pushes into the Streaming TV space is a win here. As long as Amazon remains a fringe rival in terms of moving that content from computer to wall screen, more channels mean more money for Roku.


Earnings Preview: Dropbox (DBX: $22, down 6%)

Earnings Date: Thursday, 5:00 PM ET

Expectations: 2Q19
Revenue: $400 million
Net Profit: $34 million
EPS: $0.08

Year Ago Quarter Results
Revenue: $340 million

Net Profit: $48 million
EPS: $0.11

Implied Revenue Growth: 17%
Implied EPS Decline: 27%

Target: $30
Sell Price: $18
Date Added: October 17, 2018
BMR Performance: -13%

Key Things To Watch For in the Quarter

Unlike rival Box, Dropbox was profitable before pivoting its Data Storage business to lock up market share gains while potential customers are auditioning long-term solutions. Every account captured now will be extremely "sticky," generating incremental subscription revenue for the future. And as revenue scales, profit can start expanding again any time management decides enough is enough. We suspect that moment won't come before 4Q19, by which point the company will be booking 15% more revenue than it was able to attract six months ago.

At that point, Dropbox should generate plenty of profit. For now, it's all about that top-line trend. If customers aren't coming and, more importantly, signing up for paid accounts, the strategy isn't working. On the other hand, if it is, we've backed the right Storage stock.


Earnings Preview: Hospitality Properties Trust (HPT: $24, down 3%)

Earnings Date: Friday, 8:00 AM ET

Expectations: 2Q19
Revenue: $606 million
Net Profit: $62 million
EPS: $0.30
Funds From Operations: $1.01

Year Ago Quarter Results
Revenue: $612 million

Net Profit: $97 million
EPS: $0.59
Funds From Operations: $1.07

Implied Revenue Decline: 1%
Implied EPS Decline: 50%
Implied FFO Growth: 6%

Target: $33
Sell Price: $22
Date Added: May 18, 2018
BMR Performance: -6%

Key Things To Watch For in the Quarter

Our last big week of the 2Q19 earnings season ends with a Real Estate company in transition. Management has been selling roadside travel centers and renovating full-service hotels, creating significant churn in the comparisons and taking significant room inventory off the books. As such, we aren't looking for year-over-year growth this quarter. We'd like management to provide a sense that the renovations will stop digging into the margins by 4Q19 and that the $0.54 dividend is safe. Anything more, including discussion of the $2.4 billion acquisition of nearly 800 properties from liquidating rival Spirit MTA, is a bonus.