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It's been a whirlwind couple of weeks but with Apple and Facebook on the record (and Twilio sneaking into their shadow) we now have critical mass on how well the BMR universe did last quarter. All in all, the numbers are even better than we expected.

 

We'll get to the developments of the last 24 hours in a few minutes. For now, let's look to The Big Picture. Right now BMR earnings are tracking a healthy 4% above last year's levels, assuming for a moment that every company we're still waiting to hear from hits the target. (We've removed Welltower (WELL) from the calculations because its 750% growth trend distorts everything else too much. If you insist on keeping them in the mix, the BMR universe is raising the bottom line 23% a year.)

 

Keep in mind that the market as a whole is staring at a 3% earnings decline at least, so even a little progress is noteworthy. Furthermore, even in the extremely unlikely scenario that every BMR stock that reports from here on out misses our forecast by 10 percentage points, we'll end the quarter ahead of the S&P 500 where the fundamentals are concerned. It only takes a little positive growth to move stocks higher. That's what we have.

 

Apple (AAPL: $243, down 1% this week but then bouncing back to $249 overnight) is a great example. We weren't expecting anything better than a 9% earnings decline on the back of a difficult iPhone sales environment. Instead, thanks to CEO Tim Cook's  commitment to buy back 330 million shares, slightly lower income ($13.7 billion versus $14.1 billion last year) turned into 4% improvement on a per-share basis. Furthermore, revenue is up 2% thanks to Services and Wearables picking up the slack from the iPhone. This year is shaping up a whole lot better than the last one. That's all it takes.

 

Facebook (FB: $188, flat this week before surging beyond $196 after hours) is a more straightforward growth story. Revenue hit $17.6 billion, well above our target and reflecting 29% expansion from last year. With $2.12 per share in profit, the bottom line is rising at an annualized rate of 20%. Let the S&P 500 match that. While guidance suggests a slightly slower path ahead, it's hard to argue with 2.8 billion people a day using the company's services. As long as management can find even incremental ways to monetize that vast audience, the money keeps flowing.

 

Wherever Facebook goes, its messaging technology partner Twilio (TWLO: $108, up 1% before dropping after hours) usually follows. While Twilio missed our calendar by waiting too long to schedule last night's report, we don't view its business as especially soft . . . if anything, the platform is now growing at an exponential rate. Active enterprise customers came in at 172,000, nearly triple the 61,000 accounts the company could brag about a year ago. Earnings of $0.03 per share on $295 million in revenue blew our targets away. Guidance was realistic. If anyone wanted the company to grow faster, they'll simply have to wait another month or two for satisfaction.

 

Universal Display (OLED: $173, up 2% and then soaring to $200 overnight) more than compensates. Outstanding quarter. The business has rebounded from last year's slump and is now rocketing beyond all historical limits. Earnings are up 60% from last year and revenue is up close to 30%. While the company is still small, it's roaring now.

 

MetLife (MET: $46, flat but then dropping overnight) felt more drag from its massive investment portfolio than we expected but factor that out and operating earnings are still nothing to sneeze at. With $1.27 per share in profit, the bottom line trend here is only matching the S&P 500. We prefer a slightly more exciting company so will review where this one fits into our universe. Likewise, Annaly (NLY: $8.92) did okay, but it was a grueling quarter and as the yield curve heals, the future looks brighter. The $0.25 dividend is safe, which is all that really matters. Watch this space.

 

All in all, the season has been much better than the last one. The market is rewarding strength at last, with winners jumping more than enough to balance the disappointments. And with that in mind, we're looking forward to this morning's numbers from The Carlyle Group (CG) as well as Office Properties Income Trust (OPI) . . . refer to yesterday's News Flash for details. After that, we only have two more companies to review this week.

 

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Earnings Preview: Alteryx (AYX: $97, up 4% this week)

Earnings Date: Thursday, 5:00 PM ET

Expectations: 3Q19
Revenue: $90 million
Net Profit: $5.6 million
EPS: $0.09

Year Ago Quarter Results
Revenue: $54 million

Net Profit: $5.3 million
EPS: $0.08

Implied Revenue Growth: 65%
Implied EPS Growth: 6%

Target: $160
Sell Price: $110
Date Added: November 8, 2018
BMR Performance: 68%

 

Key Things To Watch For in the Quarter

 

Alteryx is a little company unlocking the power of Big Data. BMR subscribers are up nearly 70% in their first year here, so clearly that story resonates on Wall Street. Look at the growth we're tracking here. In a world where earnings across the S&P 500 are shrinking, this little company is getting bigger practically day by day. The fact that it's already profitable at this stage speaks highly to the scalability of its business model.

 

From what we've seen with other small Tech companies, Alteryx can tell us anything about the historical quarter and the market will shrug. The important thing here is guidance. To satisfy critics, management needs to be upbeat about their ability to deliver at least $125 million in revenue when the 4Q19 numbers roll around three months from now. After all, that's where economies of scale really start kicking in and set up a truly spectacular quarter ahead. We can't wait.

 

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Earnings Preview: Berkshire Hathaway (BRK-B: $213, up 4%)

Earnings Date: when Warren Buffett decrees, but probably Saturday

Revenue: $66 billion
Net Profit: $7.1 billion
EPS: $6.04

Year Ago Quarter Results
Revenue: $78 billion

Net Profit: $6.8 billion
EPS: $5.74

Implied Revenue Decline: 16%
Implied EPS Growth: 5%

Target: $230
Sell Price: We would not sell Berkshire Hathaway.
Date Added: July 24, 2019
BMR Performance: 3%

 

Key Things To Watch For in the Quarter

 

Warren Buffett sets his own rules and doesn't see his brainchild as a trading vehicle. As such, he usually announces his numbers on Saturday, but once in awhile he relents and we see them on Friday. Stay alert. 

 

What we're looking for here is a soft quarter in terms of revenue, largely due to underperforming Insurance operations and a few questions on key components of Buffett's massive investment portfolio. Don't let any wobbles distract you. This company is a cash machine, the equivalent of any Silicon Valley behemoth only functioning here in the physical world. For that matter, it owns 5% of Apple and roughly $1 billion worth of Amazon. It also owns massive amounts of the big Banks, Coca-Cola and other stocks.

 

When the numbers come out, we'll get hints of where Buffett sees value in the market and where he's cautious. That's worth a look even if you never buy a share of his stock.