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It's been a great couple of days for BMR stocks. Our overall universe has rebounded 3% this week, with Technology and the Aggressive portfolio once again leading all but a handful of our recommendations higher. Now let's see what the next wave of 4Q19 earnings reports does. 

 

The Carlyle Group and Spotify are on track this morning. Then we have four stocks tonight, followed by one more tomorrow morning.

 

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Earnings Preview: Paycom Software (PAYC: $338, up 6%)

Earnings Date: Wednesday, 5:00 PM ET 

Expectations: 4Q19
Revenue: $190 million
Net Profit: $45 million
EPS: $0.77

 

Year Ago Quarter Results
Revenue: $150 million

Net Profit: $35 million
EPS: $0.61

 

Implied Revenue Growth: 26%
Implied EPS Growth: 26%

 

Target: $311. (Raising soon.)
Sell Price: Raising from $255 to $315
Date Added: April 11, 2018
BMR Performance: 204%

 

Key Things To Watch For in the Quarter

 

Paycom has come a long way in the last two years. We first recommended it at $111. Here we are barely two weeks from our last Target raise and the stock has soared another 9%, blowing out our $310 Target in the process. Once we can gauge reaction to this quarter's numbers, we'll be happy to raise our sights again. This company is a machine. Management routinely makes audacious forecasts and then hits its marks. The only stumbles come when expectations get too far ahead of reality . . . and that's the fault of overly ambitious investors, not the company.

 

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Earnings Preview: MetLife (MET: $50, up 1%)

Earnings Date: Wednesday, 5:00 p.m. ET

Expectations: 4Q19
Revenue: $16.8 billion

Net Profit: $1.3 billion
EPS: $1.37

 

Year Ago Quarter Results
Revenue: $15.4 billion

Net Profit: $1.3 billion
EPS: $1.35

 

Implied Revenue Growth: 9%
Implied EPS Growth: 1%

 

Target: $56
Sell Price: $39, raising to $45
Date Added: October 30, 2018
BMR Performance: 26%

 

Key Things To Watch For in the Quarter

 

MetLife has been a relative sleeper in the BMR world, more interesting as a diversifier and a turnaround story than for any intrinsic dynamism it has demonstrated in the past year. Yes, by our standard a 26% gain in 15 months is small stakes. But MetLife has kept its slot in the Special Opportunities portfolio because we recognize that challenging year-over-year comparisons and sluggish interest income will eventually give way to more vibrant operating conditions.

 

This company barely squeezed a 2% per-share earnings gain out of last year's results by buying back 70 million shares. In 2020, we're looking for that trickle of upside to turn into a double-digit surge. And we want to make sure BMR subscribers are here when it happens. This $46 billion market cap company has been around for a log time, and will be around for many decades to come, churning out profits year after year.

 

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Earnings Preview: Twilio (TWLO: $132, up 6%)

Earnings Date: Wednesday, 5:00 PM ET 

Expectations: 4Q19
Revenue: $312 million
Net Profit: $2 million
EPS: $0.01

 

Year Ago Quarter Results
Revenue: $204 million

Net Profit: $5 million
EPS: $0.04

 

Implied Revenue Growth: 53%
Implied EPS Decline: 75%

 

Target: $156
Sell Price: $111
Date Added: October 11, 2016
BMR Performance: 152%

 

Key Things To Watch For in the Quarter

 

Twilio remains one of our favorite revenue stories. This company isn't about the bottom line yet . . . profit is incidental and we aren't seriously expecting more than $0.03 per share in any given quarter for at least the next year. But a 50% sales growth curve is positively thrilling. What we want is management to confirm that growth will continue at something like its exponential rate. Our math suggests that Twilio can double its top line by 2022, at which point economies of scale will ensure that earnings stack up nicely.

 

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Earnings Preview: Omega Healthcare (OHI: $43, up 1%)

Earnings Date: Wednesday, 5:00 PM ET 

Expectations: 4Q19
Revenue: $240 million
Net Profit: $85 million
EPS: $0.37
Funds From Operations: $0.77

 

Year Ago Quarter Results
Revenue: $220 million

Net Profit: $62 million
EPS: $0.31
Funds From Operations: $0.73

 

Implied Revenue Growth: 9%
Implied EPS Growth: 19%
Implied FFO Growth: 5%

 

Target: $45
Sell Price: $38
Date Added: March 22, 2016
BMR Performance: 44%

 

Key Things To Watch For in the Quarter

 

The entire Senior Living industry remains on tentative ground after Ventas came out with vague warnings about occupancy rates and property operators under pressure. However, that muttering has yet to either translate into reality or spread to rivals like Omega. We haven't seen a cloud in this company's sky. After all, management has already made the tough decisions to cut the weakest properties loose. Now we're looking for a record year here.

 

Growth here will be good. Any Funds From Operations reading above $0.67 will ensure that the company can pay its dividend out of incoming cash. And while we're probably a few quarters away from the next raise, any profit left over can feed back into the balance sheet ($9 billion in assets against $5 billion in liabilities), or simply acquire underperforming properties from elsewhere. Rivals' lapses will be Omega's windfall, one way or another.

 

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Earnings Preview: Twitter (TWTR: $34, up 5%)

Earnings Date: Thursday, 8:00 AM ET 

Expectations: 4Q19
Revenue: $996 million
Net Profit: $226 million
EPS: $0.28

 

Year Ago Quarter Results
Revenue: $908 million

Net Profit: $244 million
EPS: $0.31

 

Implied Revenue Growth: 10%
Implied EPS Decline: 10%

 

Target: $47
Sell Price: $25, raised now to $30
Date Added: September 28, 2018
BMR Performance: 21%

 

Key Things To Watch For in the Quarter

 

Expectations are low after the unexpected 3Q19 billing software glitch, but with those problems resolved management is confident that revenue will come in within 5% of $1 billion this quarter. The business has bounced back nicely. However, we're still looking for significant margin pressure thanks to increased hiring, sales expenses and other overhead, as well as the cost of ramping up the ability to support Video content.

 

CEO Jack Dorsey is currently committed to raising the quality of the platform even if it means giving up a few percentage points of revenue growth. "Health" is management's top priority. Revenue will come when it comes.