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The week started on a high note with our stocks edging past the market as a whole once again. Risk has receded into the background with the Aggressive portfolio taking the lead thanks to a rebound for TPI Composites (TPIC: $24, up 7%). This bodes well for earnings in the next few days.

 

TPI Composites took a big step backward three months ago for warning that revenue had hit a snag. Over the weekend, management warned us again . . . but this time it looks like the worst is over and the company is getting the growth wind behind it again. The stock has rebounded a healthy 30% YTD and BMR subscribers are once more in positive territory with an 18% gain over the last two years. Not great compared to the rest of the market, but we have high hopes for this company in the coming year.

 

Don't forget to watch Akamai (AKAM: $96, flat) tonight. We have one more company to watch this evening and then three tomorrow morning.

 

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Earnings Preview: Exact Sciences (EXAS: $97, up 2%)

Earnings Date: Tuesday, 5:00 PM ET 

Expectations: 4Q19
Revenue: $283 million
Net Loss: $46 million
EPS: -($0.35)

 

Year Ago Quarter Results
Revenue: $143 million

Net Loss: $54 million
EPS: -($0.44)

 

Implied Revenue Growth: 98%
Implied EPS Growth: narrowing loss, but still big

 

Target: $145
Sell Price: $93
Date Added: August 23, 2018
BMR Performance: 38%

 

Key Things To Watch For in the Quarter

 

Look at that implied revenue growth. That's everything you need to know about Exact Sciences. While we might hear a little chatter about how profit remains elusive at this scale, it's really because management keeps investing in making sure it has the capacity to process enough Colon Cancer tests to meet market demand. There's a lot of demand for these mail-in tests. It's a lot cheaper and easier than a colonoscopy.

 

What impresses us is the way the quarterly loss is narrowing. At this rate, Exact Sciences will break even within the year, which will eliminate a lot of the bickering around this stock. And yes, revenue should track about double its present level by that point. We love it.

 

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Earnings Preview: Shopify (SHOP: $492, up 3%)

Earnings Date: Wednesday, 8:00 a.m. ET

Expectations: 4Q19
Revenue: $482 million

Net Profit: $27 million
EPS: $0.23

 

Year Ago Quarter Results
Revenue: $344 million

Net Profit: $28 million
EPS: $0.26

 

Implied Revenue Growth: 40%
Implied EPS Decline: 12%

 

Target: $510
Sell Price: $435
Date Added: March 29, 2017
BMR Performance: 583%

 

Key Things To Watch For in the Quarter

 

Shopify has been a true blockbuster over the last three years. The revenue trend looks a lot like Amazon in 1999. Back then, Jeff Bezos had built a $60 stock and a $30 billion company, without managing to book a penny in profit. Shopify management studied the Bezos machine extremely carefully. They're already earning money at this scale, with almost endless room to grow from here.

 

Admittedly, earnings probably dropped a bit compared to last year. That's all right. Much like the Bezos machine, this is still a revenue story, and on that front we're unlikely to be disappointed. The bottom line is practically a grace note.

 

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Earnings Preview: CyberArk (CYBR: $139, flat)

Earnings Date: Wednesday, 8:00 a.m. ET

Expectations: 4Q19
Revenue: $126 million
Net Profit: $32 million
EPS: $0.81

 

Year Ago Quarter Results
Revenue: $109 million

Net Profit: $33 million
EPS: $0.89

 

Implied Revenue Growth: 15%
Implied EPS Decline: 9%

 

Target: $151
Sell Price: $121
Date Added: December 22, 2018
BMR Performance: 100%

 

Key Things To Watch For in the Quarter

 

CyberArk has hit a rare sweet spot for a Technology company. It's still raising the top line relatively fast and it's profitable. Our math suggests that revenue is growing 15% a year and margins are tracking around 25%. That's enough to satisfy Silicon Valley's "Law of 40," in which a company is doing well when those two numbers add up to 40 or better. 

 

However, we're looking for a little more from CyberArk in the new year. If management can point to revenue accelerating even a few percentage points, investors will be happy. And since the stock is up 19% YTD (and has doubled since we initiated coverage just 13 months ago), any numbers that extend the recent trajectory are worth applauding.

 

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Earnings Preview: Ares Capital (ARCC: $19.20, flat)

Earnings Date: Wednesday, 8:00 a.m. ET 

Expectations: 4Q19
Revenue: $387 million
Net Profit: $192 million
EPS: $0.45

 

Year Ago Quarter Results
Revenue: $345 million

Net Profit: $193 million
EPS: $0.45

 

Implied Revenue Growth: 12%
Implied EPS Growth: flat

 

Target: $21
Sell Price: $15
Date Added: November 17, 2018
BMR Performance: 14%

 

Key Things To Watch For in the Quarter

 

We don't have a lot of guidance to work with here, but that's OK. Ares Capital runs like clockwork, only missing our earnings target twice in the last two years. This time around, our expectations are on the easy side . . . as long as the company maintains $0.45 per share in profit for the foreseeable future, we'll be happy. After all, this recommendation revolves round the ability to pay shareholders at least $0.42 per quarter. That translates to an 8.7% yield. And with revenue ramping up at a healthy double-digit rate, one day soon that dividend will increase.