Case Study on GameStop (GME) with Nobias technology

Summary

• GameStop shares rallied by nearly 12% on Friday after the company reported earnings.

• GME missed consensus sales estimates during Q2. And, its earnings were negative.

• However, the company announced a new crypto partnership which inspired a spike in bullish sentiment.

GameStop (GME) has played a starring role in the financial news cycle in recent years because of its volatile trading momentum and its leading position in the recent “meme stock” movement. In 2020, GME shares rallied from approximately $1.00/share to highs in the $75.00 range. However, GameStop has struggled throughout much of 2022, with shares down by 24.3% on a year-to-date basis.

The stock was up nearly 12% on Friday in response to its Q2 earnings report. However, credible authors and analysts are still extremely bearish on shares. in a recent article at Zacks, Derek Lewis, a Nobias 5-star rated author, summed up the meme-stock mania  which broke down Wall Street’s expectations for GME coming into the company’s Q2 report.

The rise of "meme-stocks," Lewis noted, has been one of the market's most fascinating stories in recent years. Out of the group, GameStop was unquestionably the most well-liked, violently shaking the market with a short-squeeze of a rarely seen magnitude. No matter which side you were on, we can all agree on one thing – it was wild. " He goes on to point out that the “wild” momentum that GME shares have benefited from since 2020 has resulted in an abnormally high valuation.

GME Sep 2022

Lewis wrote, “The company’s shares appear elevated in valuation—its forward price-to-sales ratio of 1.4X is well above its five-year median of 0.2X and its Zacks Sector average.” Taking a look at GME’s bottom-line expectations coming into Q2, Lewis said, “the Zacks Consensus EPS Estimate of $0.38 reflects a year-over-year decline of a steep 100%.”

“However,” he continued, “the company’s top-line appears to be in much better shape – GameStop is forecasted to have generated $1.3 billion in revenue throughout the quarter, penciling in a solid 6% Y/Y uptick.”

When GameStop reported its Q2 results on September 7, 2022, the company beat analyst estimates on the bottom line, posting non-GAAP earnings-per-share of -$0.35/share. However, GME missed consensus estimates on the top line, posting $1.14 billion in sales.

Josh Arnold, a Nobias 4-star rated author, covered GME’s Q2 results in a Seeking Alpha article titled, “GameStop's Q2 Earnings Highlight Long-Term Issues”. Arnold began his piece by stating that the primary catalyst for GME’s 2020 bullish momentum has dissipated, leaving him with a bearish outlook on shares. He said, “I’ll be clear and state right up front that the short squeeze happened in early-2021 and is not going to reoccur." GME had short interest levels exceeding 100% of the float then, and shorts were scorched in spectacular fashion. Today’s short interest is around 20%, which is nowhere near high enough for the kind of move we saw earlier. "

Arnold continued, “What we have with GME is a retailer that, to my eye, is struggling to generate cash flow because, at the end of the day, its business is still a relic of the past.” Regarding the Q2 sales trend, Arnold said, “The Q2 report showed a year-over-year revenue contraction of 4%, to $1.14 billion. That’s obviously not the direction investors should want revenue to be moving, and it’s a departure from the past couple of years’ results."

Arnold mentioned that GME has been trying to diversify its revenue stream, moving away from physical game sales and into the collectables market. He stated, “That segment’s share of revenue was almost 20% in Q2, up from 15% a year ago.” Yet, Arnold continued, “That segment is still way too small to stem the tide of declines elsewhere, so the total continues to fall.”

Arnold transitioned from the top-line to the bottom-line, writing, “The second thing I’m concerned about, and even more so than sales, is that the company cannot get its act together from a margin perspective.” Regarding GME’s margin trend, he wrote, “This is ugly as we continue to see quarter after quarter of lower margins." Operating margins haven’t been positive on a TTM basis since 2019. Part of this is that gross margins have tanked and are showing no signs of slowing that descent. " Arnold stated, “Gross profit fell 12% while SG&A costs rose about 2%." That’s a massive deleveraging of SG&A costs and it is exactly the opposite of what GME needs to be showing investors. "

Furthermore, Arnold touched upon his earnings-per-share outlook, saying, “The share count rose by about 40 million in total, which means that if GME can ever achieve profitability again, it will be that much more difficult to move the needle on a per-share basis.”

The recent dilution came from equity sales, and Arnold noted that these moves by management can be viewed as positives. He said, “The good news is the big increase in shares has cleaned up GME’s balance sheet, and it ended Q2 with $909 million in cash, and almost no long-term debt." "That's fantastic, and it means the company should be able to operate for a long time, even if it’s unprofitable (which it is).”

Ultimately, though, Arnold concluded with a bearish opinion. He said, “It has bought itself some time (literally) with it [sic] share issuances, but it’s also burning through that cash at an alarming rate.” He continued, “This company is struggling in a variety of critical operating metrics, and I don’t see a path forward.”

Overall, traders didn’t share Arnold’s bearish outlook on the quarter. GME shares rallied by 11.96% on Friday, largely because of an announcement that management made during the quarterly report, which highlighted plans to enter into the cryptocurrency space.

Dan Berthiaume, a Nobias 4-star rated author, highlighted GME’s crypto plans in a recent article. Berthiaume wrote, “In its latest step toward becoming what GameStop CEO Matt Furlong publicly termed a “customer-obsessed technology company” in a March 2022 earnings call, the retailer has entered into a partnership with cryptocurrency exchange FTX U.S. According to GameStop, the partnership is intended to introduce more of its customers to FTX’s community and its marketplaces for digital assets.”

Berthiaume continued, “In addition to collaborating with FTX on new e-commerce and online marketing initiatives, GameStop will begin carrying FTX gift cards in select stores. During the term of the partnership, GameStop will be FTX’s preferred retail partner in the United States.”

Furthermore, Berthiaume touched upon GME’s plans to become an NFT marketplace. He said, “GameStop’s new cryptocurrency initiative follows its July 2022 launch of a beta version of an online platform where consumers and creators can buy, sell, and trade NFTs, which are unique digital assets stored on a blockchain ledger that certifies the owner.” He said that GME’s current platform is “a non-custodial, Ethereum Layer2 blockchain-based platform that enables users to own their digital assets."

Looking further down the road, Berthiaume said, “Over time, GameStop says its NFT marketplace will expand functionality to encompass additional categories such as Web3 gaming, more creators, and other Ethereum environments.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

In addition, Michael Grothaus, a Nobias 5-star rated author, touched upon these crypto/NFT plans in a post-earnings report as well. Grothhaus asked the hypothetical question, “Does the GameStop/FTX partnership make sense?” Then, he rescinded, “Sure. People who invest in meme stocks are also likely to invest in crypto. And GameStop has its fingers in various crypto products already as it seeks to remake itself for a new era. So the FTX partnership is understandable. "

Furthermore, Grothaus quoted GameStop CEO Matt Furlong, who highlighted his long-term vision in the company’s Q2 conference call, stating, “Our path to becoming a more diversified and tech-centric business is one that obviously carries risk and will take time. This said, we believe GameStop is a much stronger business than it was 18 months ago.”

The credible authors and analysts that the Nobias algorithm tracks who cover GME shares do not share Furlong’s bullish outlook. 63% of recent articles written about GME shares have expressed a “bearish” sentiment. Right now, the average price target being applied to GME shares by credible analysts is $6.63/share. Today, GME trades for $28.92. Therefore, this average price target implies downside potential of approximately 77%.




Disclosure:  Nicholas Ward has no GME position.  Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Kroger(KR) with Nobias technology

Summary

• Kroger posted Q2 earnings this morning, beating on the top and bottom lines.

• Management also raised its full-year EPS guidance.

• Kroger is investing heavily into its digital ecosystem.

• The stock's post-earnings rally has pushed shares up to credible analysts' average price target.

Kroger (KR) has been a top performer throughout 2022, showing its defensive nature during today’s volatile trading environment, with shares rising approximately 13.5% since the start of the year as opposed to the S&P 500, which has fallen by nearly 15% on a year-to-date basis thus far.  

Kroger reported second quarter earnings this morning.  The company’s beat and raise results have caused shares to rally.  Today’s 5%+ move has pushed KR shares up towards the consensus fair value estimate provided by the credible analysts that Nobias tracks.  

The Alpha Sieve, a Nobias 4-star rated author, published an earnings preview report at Seeking Alpha earlier in the week, highlighting Kroger’s past performance, consensus expectations coming into the Q2 results, and ultimately, providing an update on the author’s buy/sell/hold recommendation.  

KR Sep 2022

The Alpha Sieve touched upon Kroger’s reliable operations, stating, “KR has a fairly decent track record in [sic] beating street estimates, particularly on the bottom-line front. Indeed, if you want to consider when KR last fell short of consensus EPS estimates, you need to rewind the clock by 11 quarters, back to October 2019, when it missed EPS estimates by 4%.”

Looking ahead, the author expects to see this trend continue.  They stated, “with regards to the upcoming Q2 results, consensus currently expects EPS of $0.7986 on revenue of $34.19bn. Compared to Q1, this would represent some improvement at the EPS level (Q2 expected growth rate of 31%, vs 22% in Q1) but a continuation of the run rate seen in Q1 (+8% annual growth).” This opinion is in-line with management’s prior guidance.  

The Alpha Sieve said, “At the end of the Q1 results, Kroger's management had scaled up their FY guidance by ~3%, lifting the EPS range from previous levels of $3.75-$3.85 to $3.85-$3.95.” However, noting caution, they continued, “Consensus EPS estimates are currently only 0.5% lower than the upper end of that range at $3.931, so the potential for upside surprises isn't a lot.” And, due to the lack of upside potential the author expressed concern about the stock’s valuation.  

With regard to KR’s free-cash-flow yield, the author wrote, “Currently, KR stock only yields 6.93%, below its 5-year average of 7.67%.”  But, as The Alpha Sieve points out, KR has been a defensive stock that has provided investors with strong shareholder returns throughout recent volatility. 

Kroger’s dividend yield is currently 2.15%, which is well above the S&P 500’s 1.50% level.  Kroger is known for increasing its dividend.  The stock is on a 17-year dividend growth streak.  And, as The Alpha Sieve points out, the company has been generous with its stock buyback program as well.  

Touching upon Q2 shareholder returns, The Alpha Sieve said, “It would also be interesting to keep track of the level of buybacks Kroger did in Q2. Just for some perspective, in Q1 they were pretty aggressive doing around $552m of buybacks (the most for a quarter in three years), accounting for over half of the $1bn buyback program launched in late December last year.”

But, even with increasing dividends and share buybacks in mind, the stock’s valuation continues to be a concern for this author.  They concluded their report writing, “whilst Kroger has some useful defensive qualities, I don't see any great incentive in entering this stock at this juncture. Would prefer to stay on the sidelines. The KR stock is a HOLD.”

Russel Redman, a Nobias 5-star rated author, also posted a pre-earnings article this week at Supermarket News; however, instead of focusing on fundamental metrics, Redman’s piece put a spotlight on Kroger’s technological innovation and long-term growth opportunities, striking a more bullish tone.  

Redman’s piece highlighted Kroger’s omni-channel approach to retail, quoting Yael Cosset, senior vice president and chief information officer, who said, “Our aspiration is to be the destination for our customers for their food needs.  At the heart of our vision for a seamless ecosystem is the precise understanding of our customers.” “Unsurprisingly,” Redman continued, “technology is playing a central role.”

Regarding Kroger’s operations, Redman said, “Overall, The Kroger Co. operates 2,723 supermarkets and multi-department stores under more than 20 banners. More than 2,250 stores have pharmacies, and over 1,600 have fuel centers. Eighty-two percent of Kroger’s customers within five miles of one of its stores, with most living within two miles.”

Redman noted that the company aims to leverage this market penetration to collect consumer data and become more efficient in the new digital age.  He wrote, “Kroger, which serves more than 60 million households annually, is leveraging the vast stores of data from across its physical and virtual properties and brands to create more personalized experiences and value for customers.” He touched upon new logistics investments that Kroger is making into “Spoke” facilities via a four-year partnership with Ocado Group.  

Regarding these facilities, Redman said, “These high-tech facilities use Ocado’s automation and artificial intelligence technology to fill online grocery delivery orders, including in markets where Kroger doesn’t have physical stores.”

At a high level, Redman said that this company hopes to use the automation and the consumer data that it collects to “hone its supply chain to improve product freshness, expedite pickup and delivery service, and introduce new, on-trend items in its Our Brands portfolio.”

Overall, he stated, “Digital represents a more than $10 billion annual business for Kroger.” He noted, “About 18.5 million households engaged online with the retailer in 2021.” And he notes that this trend is just getting started due to KR management’s focus on using technology to develop a “seamless ecosystem” for customers moving forward.  

Kevin Coupe, a Nobias 4-star rated author, also recently highlighted KR’s logistical infrastructure build out in a report published at Morning News Beat, where he stated, “Kroger announced yesterday that it has opened "two new spoke facilities in Greater Nashville and the Chicago Metro Area. Serving as last-mile cross-dock locations, the new spokes will operate as a seamless extension of regional fulfillment centers, making Kroger Delivery available to more customers in Tennessee and Illinois.”  

When Kroger reported earnings this morning, the company beat Wall Street estimates on both the top and bottom lines.  KR produced Q2 sales of $34.64 billion, which represented 9.3% year-over-year growth, coming in $200 million ahead of consensus estimates.  KR’s Q2 non-GAAP EPS totaled $0.90/share, beating consensus estimates by $0.07.  

Kroger management highlighted 10.2% growth in its Our Brands category, which helped the company maintain profit levels in the face of rising inflation and raw material costs.   Kroger’s gross margin came in at 20.9% for the second quarter, up by 2 basis points on a year-over-year basis.  

The company said that its digital sales increased by 8% on a year-over-year basis.  The company’s CEO, Rodney McMullen, said, “Our consistent performance underscores the resiliency and flexibility of our business model, which enables Kroger to thrive in many different operating environments. We are applying technology and innovation to improve freshness, grow Our Brands, and create a seamless shopping experience so our customers can get what they want, when and how they want it, with zero compromise on quality, selection and affordability.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

With regard to shareholder returns, Kroger’s earnings press release stated, “Earlier this quarter, Kroger increased its dividend by 24%, marking the 16th consecutive year of dividend increases.  Additionally, during the quarter, Kroger repurchased $309 million in shares and year-to-date, has repurchased $975 million in shares.  On September 9th, the Board of Directors authorized a new $1 billion share repurchase program.”  

And, Kroger’s CFO, Gary Millerchip, also used the Q2 report as an opportunity to raise full-year guidance, yet again.   Millerchip said, “Our consistent execution of this strategy is building momentum in our business which, combined with sustained food at home trends, gives us the confidence to raise our full-year guidance. We now expect identical sales without fuel to be in the range of 4.0% to 4.5% and adjusted net earnings per diluted share in the range of $3.95 to $4.05.”

Overall, this beat and raise quarter caused KR stock to pop during Friday’s trading session.   At mid-day, shares were up by more than 5%.   Coming into the Q2 report the average price target for KR shares amongst the credible analyst community that Nobias tracks was $51.25.  That’s almost exactly where the stock trades at the moment - currently, KR shares are valued at $51.94.  

Currently 68% of recent articles written by credible authors that the Nobias algorithm tracks have expressed a “Bullish” sentiment.   Our algorithm hasn’t reported any new analyst updates on the stock which would reflect this updated 2022 guidance.  We expect to see this occur in the coming days, which could send the average analyst price target higher.  




Disclosure:  Nicholas Ward has no KR position.  Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Exxon Mobil (XOM) with Nobias technology

Summary

• Year-to-date, there are only two sectors with positive gains: energy and utilities.

• XOM shares are up by 50.44% on a year-to-date basis.

• After this strong rally, credible authors and analysts remain bullish on shares; the average price target amongst credible analysts calls for 11.85% upside moving forward.

The energy sector has been the big winner thus far throughout 2022.  Year-to-date, there are only two sectors with positive gains: energy and utilities.  The utility sector has posted gains of 3.7% during 2022 thus far.  However, energy has put those returns to shame, posting year-to-date gains of 43.95%.  And, within the energy space, Exxon Mobil (XOM), one of the world’s largest integrated oil companies, has posted even greater outperformance.  XOM shares are up by 50.44% on a year-to-date basis.  Yet, credible analysts still see double digit upside ahead.  

The Alpha Sieve, a Nobias 4-star rated author, recently published a report which highlighted XOM’s bull and bear case theses at Seeking Alpha.  On the bullish side, The Alpha Sieve said, “XOM is in an admirable position at the moment as they were prescient enough to still invest $13bn in exploration and development activities in 2020 when most other competitors were laying low.” They continued, “On account of that foundation, XOM has been able to ramp up production with great alacrity and take advantage of the attractive average realizations that have been prevalent in the energy space in 2022.”

XOM Sep 2022

The author noted that “On account of the elevated price realizations this year, and the volume uptake that XOM has been witnessing, cash flow generation too is a highly attractive facet (last year XOM generated $48bn in operating cash flow and intends to generate another $40bn this year).” This profitability has resulted in very attractive free cash flow multiples.  

The Alpha Sieve wrote, “The strong operating cash flow generation also enables Exxon to comfortably meet its CAPEX requirements leaving ample FCF. Incidentally, at the current share price, Exxon's FCF yield is at an impressive level of 12.6%, the highest it's been in 10 years, and exactly 3x higher than its 5-year average.”  

Furthermore, Exxon’s strong profits has allowed the company to repair its balance sheet in recent years.  The author stated, “It's also fair to say that Exxon has the balance sheet to withstand a prolonged down cycle (if it were to happen, which is not the base case). Last year they paid down $20bn worth of long-term debt (and this year they intend to pay down another $2bn), and currently, their debt to capital ratio is only at 20%, which is at the lower end of their target range of 20-25%.”

However, taking a look at bearish arguments, The Alpha Sieve highlighted negative growth expectations in the coming years and XOM’s troublesome forward valuation multiples.  They said, “For instance, in FY23, consensus estimates point to an EPS of only $10.48 (FY24: $8.65), this would imply annual de-growth of ~17%. In effect, the declining trajectory of the EPS base makes the XOM stock an expensive proposition on a forward P/E basis.”

The author continued, “At the current share price, an FY23EPS of $10.48 translates to a forward P/E of 8.72x, which is 48% greater than the 5-year average forward P/E multiple of 5.9x.” And in conclusion, The Alpha Sieve offered a cautious take on XOM shares after the stock’s 50%+ year-to-date rally, stating, “whilst Exxon Mobil currently appears to have the wind in its sails and a lot of attractive qualities, at this relatively elevated price point, I wouldn't be too enthused to commence a long position in XOM stock. I rate Exxon Mobil stock as a HOLD.”

Daniel Thurecht, a Nobias 4-star rated author, also recently published a report focused on Exxon at Seeking Alpha.  Thurecht’s work was focused on the company’s success in the gas space.  He wrote, “Even though oil prices often dominate the discussion surrounding Exxon Mobil, gas still forms a sizeable portion of their production. During the first half of 2022, their total oil and gas production was a massive 3.704mboe/d of which 2.282mboe/d was oil and associated liquids, as per their second quarter of 2022 results announcement. This means their gas production was 1.422mboe/d and thus comprises a formidable circa 38% of their total production, which largely stems from their once controversial acquisition of XTO Energy back in 2010.”

Thurecht viewed this move as a hedge against technological innovation and demand destruction in the oil markets.  He stated, “Since oil demand sees threats from electric vehicles, it means that a portion of demand destruction from high prices will never return as more consumers are pushed towards electric vehicles in response to crippling fuel prices.”

Regarding Exxon’s gas success, Thurecht said, “Even though gas prices were climbing during 2021, they were turbocharged during 2022 as Russian troops marched into Ukraine and set off a pivotal geopolitical shock that will shape the continent for decades to come. The ride is never smooth but despite this inherent volatility, gas in the United States prices are now consistently trading for over $9mmbtu for the first time in over a decade, helped along by the world scrambling to secure LNG supply.”

He continued, “Since gas sees very strong fundamentals following the Russia-Ukraine war, it creates very profitable prospects for Exxon Mobil whose once maligned gas production is now poised to benefit through feeding the increased demand for United States LNG to Europe.”

Ultimately, Thurecht said, “In my view, this actually represents a far greater opportunity for Exxon Mobil than what is offered by high oil prices because in the case of gas, it actually represents a structural change in the global energy market that stands to perpetually into the future for decades to come.”

However, even with the long-term growth tailwinds that gas provides in mind, like The Alpha Sieve, Thurecht concluded his piece with a neutral outlook on shares, writing, “thus with their share price near record highs, I believe that a hold rating is appropriate.”

Shareholder returns have attracted investors - especially income oriented investors - to the energy sector for decades.  High dividend yields are often at the center of a bullish XOM thesis.  The stock currently yields 3.68%, which is well above the S&P 500’s 1.46% yield.  

And, as Alex Kimami, a Nobias 4-star rated author recently pointed out in an article published at oilprice.com, with profits soaring, these strong shareholder return trends are likely to remain in place.  Kimami wrote, “According to data from Bernstein Research, the seven supermajors–including ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), BP (NYSE: BP) and Shell (NYSE: SHEL)--are poised to return $38bn to shareholders through buyback programmes this year, with investment bank RBC Capital Markets putting the total figure even higher, at $41bn.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

With specific regard to Exxon Mobil, he continued, “Exxon Mobil Corp. has been using the strength of its balance sheet to return significant capital to its shareholders via dividends and share buybacks and has announced plans to continue such distributions going forward.”

Kimami stated, “Exxon returned $7.6 billion to shareholders during the second quarter through dividends and share buybacks, with $3.9 billion for share repurchases and $3.7 billion going into dividends. Year-to-date, Exxon has repurchases amounting to $6 billion and eyes repurchasing up to $30 billion shares through 2023.”

Although The Alpha Sieve and Thurecht offered a “hold” rating on shares, 70% of recent articles published by credible authors (individuals who have received 4 or 5-star ratings by the Nobias algorithm) on XOM shares expressed a “Bullish” bias.  

4 out of the 6 credible Wall Street analysts that Nobias tracks that have expressed an opinion on Exxon Mobil believe that the company’s shares are headed higher.  Currently, the average price target being applied to XOM shares by these credible analysts is $106.5.   Today, XOM trades for $96.50.   Therefore, this average price target implies upside potential of approximately 11.85%.  

Disclosure:  Nicholas Ward has no position in any stock mentioned in this article.  Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on NVIDIA (NVDA) with Nobias technology

Summary

• On a year-to-date basis, NVDA is down by 54.69%, falling by 15.75% last week alone.

• The most recent leg of the sell-off was inspired by semiconductor sales restrictions between the U.S. and China.

• Yet, even with such strong negative momentum in mind, the credible analysts see upside potential of approximately 50%.

After establishing itself as a top Nasdaq performer in 2020 and 2021, Nvidia’s (NVDA) shares have suffered throughout 2022.  On a year-to-date basis, NVDA is down by 54.69%.  The stock is down 25.66% during the past month.  NVDA shares fell 15.75% last week alone.  And yet, even with such strong negative momentum in mind, the credible analysts that the Nobias algorithm follows continue to express very bullish opinions with regard to NVDA stock. 

Howard Smith, a Nobias 4-star rated author, touched upon NVDA’s most recent leg lower in an article published on September 2, 2022.  Smith said, “Shares hit a 52-week low on Thursday when the company reported it has the potential to lose up to $400 million in data center revenue in the current quarter after the U.S. government imposed a new license requirement that restricts some semiconductor chips from being sold in China.”

Smith continues, “Panic-selling can provide a good opportunity for long-term investors to buy shares at lower prices. But Nvidia's business was already in transition prior to these new impacts. Its recently reported quarterly results showed a 19% drop in revenue compared to the previous quarter. Year-over-year revenue still grew 3%, but investors had bid Nvidia shares up to a valuation that priced in much stronger annual growth.”

NVDA Sep 2022

During NVDA’s recent quarterly results, the company began its quarterly “Highlights” segment by showing its recent Data Center success.  The company’s press release stated, “Second-quarter revenue was $3.81 billion, up 61% from a year ago and up 1% from the previous quarter.” 

And, as Smith noted, this is why the China sanctions news was so significant to investors.  He said, “The news this week that this segment could take a hit from the new government restrictions was particularly troublesome for some shareholders.” 

Smith ended his article with a fairly neutral conclusion, stating, “It may take some time for the stock to settle from this news, and some questions remain about Nvidia's growth path and valuation. But for some investors, this week's drop could be a good time to get shares of a leader in a growing sector.”  

Nobias 4-star rated author, Shanthi Rexaline, also covered the semiconductor restrictions that the U.S. government put into place in an article that was published at Benzinga on 9/02/2022.   “The affected chips,” Rexaline said, are the “H100 and A100 from Nvidia and Advanced Micro Devices, Inc.”  

Rexaline said, “TFI Securities analyst Ming-Chi Kuo said the government’s move will ensure that the U.S. maintains its leadership position in the field of AI.” She continued, “However, the analyst noted that China was the frontrunner in terms of AI patent filings.”

Rexaline notes that there are national security implications to this type of move.   She stated, “According to Kuo, AI development is one of the core competitiveness of a country, and it has applications in aerospace and the military, among other things.”  

But, even though this situation creates a potential long-term growth headwind for semiconductor stocks like NVDA, Rexaline highlighted how these sanctions may bolster near-term quarterly results.  She wrote, “Kuo said Chinese clients may directly or indirectly place “rush orders” to boost inventory in order to lower the risk associated with the possible expansion of sales restrictions by the U.S. government.”  

Cavenagh Research, a Nobias 4-star rated author, published a bearish report on NVDA at Seeking Alpha after these restriction headlines broke.  Regarding the impacts of the sales restrictions the author wrote, “Nvidia has estimated the impact of the export restriction at $400 million in potential sales for its third fiscal quarter. Accordingly, the impact could be expanded to about $1.6 billion annually. If we apply Nvidia's 26% net income margin, and further apply the stock's current x81 one-ear forward P/E multiple, the impact on valuation loss could be estimated at about $33.7 billion of equity value.”

Then Cavenagh Research touched upon NVDA’s valuation metrics, stating, “Investors should consider that Nvidia's one-year forward GAAP P/E of 81x implies a 270% premium to the U.S. technology sector. Nvidia's P/B of 15.8x and P/S of 13.9x imply a 290% and 395% premium respectively.”

They continued, “In my opinion, Nvidia stock has for a long time been overhyped and overvalued. And although NVDA stock is down approximately 60% from all time highs, I argue there is still some excess valuation premium that need[sic] to be corrected in order for investors to enjoy an attractive risk/reward.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

The author concluded their report, “No doubt, Nvidia is a great business. But the company's stock is dangerous.”  Highlighting their “sell” rating, Cavenagh Research said, “Personally, I would not buy Nvidia at a valuation above 30x EV/EBIT and/or 10x EV/Sales, which are still very proud multiples. Accordingly, I see 20 - 30 percent more downside before the risk/reward for investors becomes justified (but arguably still not attractive given the regulatory risk and slowing business cycle).”  

Rexaline also published a report on 9/3/2022 which showed that not all investors are quite so bearish.  She noted that Ark Invest remains bullish, stating, “Ark Stands By Nvidia: Undeterred by the weakness, Cathie Wood continued to bulk up on the stock on Thursday and Friday. The fund manager’s Ark Invest bought 21,026 shares of Nvidia, valued at over $2.9 million, on Friday, a daily trade disclosure showed.”

While the majority of credible authors that the Nobias algorithm tracks are bearish on NVDA shares, the majority of Wall Street analysts that cover the stock remain bullish.   57% of recent articles published on the stock by credible authors have expressed a “Bearish” sentiment.  

However, 11 out of the 18 credible Wall Street analysts that Nobias tracks who offer opinions on Nvidia believes that shares are headed higher.  Right now, the average price target that credible Wall Street analysts are applying to NVDA shares is $197   Relative to NVDA’s closing price on Friday of $136.47 this average price target implies upside potential of approximately 50%.  





Disclosure:  Of the stocks discussed in this article, Nicholas Ward is long NVDA.  Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Lululemon (LULU) with Nobias technology

1) Lululemon reported Q2 earnings this week, beating Wall Street consensus estimates on both the top and bottom lines.
2) The company also raised full-year guidance.
3) Shares initially popped more than 10% in response to this beat and raise quarter.
4)Credible analysts still see double digit upside ahead.

Lululemon (LULU) has been a top performer in the retail and apparel space over the last 5 and 10-year periods, posting capital gains of 415.2% and 310.0%, respectively.  These gains represent strong outperformance relative to the broader market.  The S&P 500 is up by 62.2% during the trailing 5-year period and 177.2% during the trailing 10-year period.   However, LULU shares have struggled during the trailing 12 months, posting losses of 19.8%.  

Apparel stocks have suffered from inflationary headwinds in recent quarters and coming into the second quarter earnings season, there were credible analysts expressing concern about Lululemon’s growth prospects.  

LULU Sep 2022

Brain Sozzi, a Nobias 4-star rated author, recently published an article at Yahoo Finance which highlighted a negative analyst report on LULU shares coming into earnings season.   Touching upon LULU’s recent weakness and the headwinds impacting the apparel industry, Sozzi wrote, “Shares of the premium athletic-wear maker are down 21% year to date, hammered recently amid warnings on slowing demand (and rising inventories) for workout gear from retailers Kohl's, Macy's, Under Armour and others.”

Sozzi went on to shine a spotlight on a report published by Jefferies analyst Randal Konik, who is a Nobias 5-star rated analyst.  Sozzi quoted Konik, who said, "The quarter should be strong (belt bags likely helped too) and we expect the company's fiscal year 2023 outlook to be reiterated, but that's not our concern.”

Konik’s bearish report continued, "Our downgrade thesis is based on a view that long-term projections are aggressive across total revenues, EBIT [earnings before interest, taxes] margins, men's, and international. We believe in coming quarters, Lululemon will have to walk back its long-term projections as competition rises, end markets weaken, and promos increase industry-wide." Sozzi noted that Konik believes that Lulu’s sales are likely to continue to grow.  

However, the analyst concluded his report, stating, ​​"COVID likely pulled forward demand with Lululemon one of the biggest beneficiaries. As a result, we see risks to consensus estimates ahead as competition rises and headwinds grow." 

Lululemon reported second quarter earnings this week and it appears that Konik’s negative sentiment may have been misplaced.  LULU beat Wall Street estimates on both the top and bottom lines during Q2.  During the company’s Q2 report, Lulu’s Chief Executive Officer, Calvin McDonald, stated:  "The momentum in our business continued in the second quarter, fueled by strong guest response to our product innovations, community activations, and omni experience. I would like to express my gratitude to our teams around the world for their continued dedication and enthusiasm for our brand, which enabled us to generate this elevated level of performance. As we look ahead, we're excited about our ability to successfully deliver against our Power of Three ×2 growth plan and create ongoing value for all our stakeholders."

Also, during the Q2 report, Meghan Frank, Lululemon’s Chief Financial Officer, stated: "Our teams continue to execute at a high level, which is driving our strong financial and business performance. Despite the challenges around us in the macro-environment, guest traffic in our stores and on our e-commerce sites remains robust, which speaks to the strength of our multi-dimensional operating model. I am pleased with our start to the third quarter and believe we are well positioned for the fall and holiday seasons."

Huw Hughes, a Nobias (4-star) rated author, published a piece at Fashion United which examined the company’s Q2 results.  Regarding Lulu’s top-line, Hughes wrote, “The US-Canadian company reported a 29 percent increase in net revenue to 1.87 billion dollars thanks to 28 percent growth in its North American business and 35 percent growth in its international business.” He continued, “Total comparable sales increased 28 percent in the second quarter, or 29 percent on a constant dollar basis, while comparable store sales were up 24 percent.”

Moving onto the bottom-line, Hughes stated, “Net income for the quarter came in at 289.5 million dollars, up from 208 million dollars a year earlier.” What’s more, Hughes noted that LULU management raised its forward looking guidance.   He said, “The company now expects annual net revenue to be in the range of 7.87 billion dollars to 7.94 billion dollars. That’s up from its previous guidance of between 7.61 billion dollars and 7.71 billion dollars.”

Furthermore, he said, “It now forecasts diluted earnings per share to be in the range of 9.82 dollars to 9.97 dollars compared to previous guidance of between 9.42 dollars and 9.57 dollars.” This beat and raise quarter caused LULU shares to spike higher on Friday morning.  LULU shares were trading up by more than 11.5% shortly after the opening bell range on Friday, September 2, 2022.  

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

Throughout the trading day this strength has waned a bit.  It’s 12:25 pm and shares are currently up slightly less than 8%.  However, it’s clear that the company’s strong guidance is overshadowing the fears that investors and analysts shared with regard to ongoing issues within the apparel space, brought on by supply chain issues, rising material costs, and inventory gluts.  

Overall, the majority of the credible authors and analysts that the Nobias algorithm tracks agree with today’s upside momentum.  71% of recent articles published on LULU by credible authors (those with 4 and 5-star Nobias ratings) have expressed a “Bullish” sentiment.   5 out of the 9 credible Wall Street analysts (once again, only individuals with 4 and 5-star Nobias ratings) who cover LULU believe that shares are headed higher.  

Right now, the average price target being applied to LULU from his cohort of credible analysts is $352.22.   Therefore, even after today’s high single-digit pop, credible analysts still see strong upside ahead.   LULU shares are currently trading for $317.50.   Therefore, that average analyst price target implies upside potential of approximately 10.9%.  







Disclosure:  Nicholas Ward has no position in any stock mentioned in this article     Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Macy's (M) with Nobias technology

1) Macy’s shares are down by more than 30% on a year-to-date basis.
2) The company reported earnings this week, beating Wall Street expectations on the top and bottom lines.
3) Macy’s lowered its full-year guidance during its Q2 report.
4) Yet, credible analysts believe that the stock’s valuation is too low, with an average price target that implies 52% upside potential.Title: Macy’s SEO 

Macy’s (M) is the biggest U.S. department store chain and one of the most iconic names in the American retail space.  The company was founded in 1858, moved into its landmark location in Herald Square in 1902, and the company’s red star logo has been a part of popular culture in the United States for well over a century.  However, in recent years, shares of this once prominent department store have struggled due to the secular headwinds created by the growing eCommerce trend.  Macy’s shares are down roughly 9.9% during the last 5 years.  During this same period of time, the S&P 500 is up by more than 71.5%.  

During the trailing twelve months, Macy’s is down by 19.2%, once again, trailing the S&P 500, which is down by only 6.55% during this period.  On a year-to-date basis, M shares have fallen by 30.39%.  During 2022 thus far, the S&P 500 is down by approximately 12.2%.  And yet, after all of this underperformance, the credible Wall Street analysts that track Macy’s shares believe that the beaten down stock has upside potential with an average price target that implies strong double digit upside.  

M Aug 2022

Macy’s reported its second quarter earnings last week, beating Wall Street consensus estimates on both the top and bottom lines during its 8/23/2022 release; however, management cut forward looking guidance.   Coming into Macy’s Q2 report, The Alpha Sieve, a Nobias 4-star rated author, published an earnings preview on the stock at Seeking Alpha.  

The author highlighted the difficult macro environment that retailers like Macy’s find themselves in, stating, “Elevated fuel costs too will likely leave their mark on Macy’s cost dynamics, although I do suppose it helps that they have a lower amount of digital sales versus what it was last year.” 

Alpha Sieve cites another potential profit-related headwind, writing, “Also consider that Macy’s higher minimum wage of $15 (per hour) for around 100,000 US employees would have come into play by May (the average base pay will be closer to $17 an hour)”.  

The Alpha Sieve also touched upon Macy’s inventory issues, stating, “they had almost $5bn of merchandise inventory on their books at the end of Q1, up by 17% on an annual basis and 13% on a quarterly basis”.   The author wrote that inventories “will be needed [sic] to be wound down at lower prices, particularly in some overstocked categories such as activewear and soft home categories.” 

However, despite these operational issues and touch macro headwinds, The Alpha Sieve concludes that Macy’s is an attractive value.  They wrote, “Whilst Macy’s forward EV/EBITDA multiple has grown pricier by 6% (4.27x) since the May 2022 update (4.01x), its discount relative to its peers in the department stores arena has only widened; previously Macy's could be picked up at a 19% discount to the average multiple of its peers (4.94x); now it can be picked up at a 21% discount (5.39x).”  

Rachel Fox, a Nobias 4-star rated author, covered Macy’s Q2 results in a recent article published at investors.com.  Regarding Macy’s earnings results, Fox wrote, “Analysts expected Macy's earnings for the quarter to fall 33% year over year to 86 cents per share. But the retailer's earnings per share fell 22% to $1. Analysts also saw a 2.9% decline sales [sic], to $5.49 billion, down from $5.65 billion in 2021. But revenue only fell slightly to $5.6 billion.” She said, “Retail stocks have generally reported mixed results over the past week as inflation pressures cut into consumer spending.”  

Fox noted that Macy’s is showing technical strength, stating, “The stock remains above its conjoined 50-day and 21-day lines.” However, she concluded, “But Macy's still has a lot of repair work to do before it becomes a legitimate candidate for investors. Shares maintain a low 26 RS Rating at this time.”

SGB Media also covered Macy’s Q2 earnings in an article titled, “Macy’s Cuts Outlook Despite Q2 Beat”.   SGB media covered a slew of quarterly highlights; its report read:

• Macy’s comparable sales were down 2.9 percent on an owned basis and down 2.8 percent, on an owned-plus-licensed basis.

• 43.9 million active customers shopped the Macy’s brand, on a trailing twelve-month basis, a 7 percent increase compared to the prior year.

• Star Rewards program members made up approximately 70 percent of the total Macy’s brand-owned plus licensed sales on a trailing twelve-month basis, up approximately 5 percentage points versus the prior year.

• The company continued to see strength in occasion-based categories, including career and tailored sportswear, fragrances, shoes, dresses, and luggage.

• Bloomingdale’s comparable sales on an owned basis were up 8.8 percent and on an owned-plus-licensed basis were up 5.8 percent. 4.0 million active customers shopped the Bloomingdale’s brand, on a trailing twelve-month basis, a 14 percent increase over the prior year. Results were driven by strength across women’s, men’s and kid’s contemporary and dressy apparel as well as luggage.

• Bluemercury comparable sales were up 7.6 percent on an owned and owned-plus-licensed basis. Approximately 700,000 active customers shopped the Bluemercury brand, on a trailing twelve-month basis, a 9 percent increase over the prior year.

SGB touched upon inventory trends, stating, “Inventory was up 7 percent year-over-year and down 8 percent versus 2019, reflecting disciplined inventory management in an environment of continued supply chain volatility. Where it had flexibility, the company cut receipts to manage inventory levels in line with consumer demand. However, in certain categories inventory levels remain elevated due to reduced year-over-year sell-throughs since Father’s Day driven by the industry-wide levels of excess inventory and a slowdown in consumer discretionary spend.” 

The analyst continued, “The company is targeting appropriate inventory levels by the end of the year and will continue to flow fresh product in those categories in which customers are signaling demand. Simultaneously, the company is taking the required markdowns to clear aged inventory, in seasonal goods, private brand merchandise and pandemic-related categories, such as active, casual sportswear, sleepwear, and soft home.”

The SGB report also put a spotlight on Macy’s disappointing guidance.   The firm stated, “The updated guidance calls for:

• “Sales in the range of $24,340 million to $24,580 million, down from guidance in the range of $24,460 million to $24,700 million previously;

• Adjusted EBITDA as a percent of sales to be approximately 10.5 percent, down from 11.2 percent to 11.7 percent previously; and

• Adjusted diluted earnings per share in the range of $4.00 to $4.20, down from $4.53 to $4.95 previously.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

Since Macy’s Q2 results were reported, Paul Lejuez of Citi, a Nobias 5-star rated analyst, lowered his price target for M shares from $23.00 to $21.00.  

Theflyonthewall.com highlighted Lejuez’s analyst note, stating, “The company's Q2 earnings were above expectations, despite a slowdown toward the end of the quarter and the annual guidance reduction was inline with what many were expecting, Lejuez tells investors in a research note. As a mall-based player selling discretionary products, Macy's "may continue to feel the pinch if consumers concentrate shopping around occasions," says the analyst.”  

51% of recent articles published by credible authors (individuals with 4 or 5-star ratings by the Nobias algorithm) have expressed a “Bullish” bias, implying a neutral stance.  However, the credible analyst community’s consensus implies upside ahead. Right now, the average price target being applied to M shares by the credible analysts that the Nobias algorithm tracks is $29.00/share.  Today, M trades for $17.06/share; therefore, that average price target implies upside potential of approximately 55%.  







Disclosure:  Nicholas Ward has no M position.      Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Affirm (AFRM) with Nobias technology

During the second half of 2021, Affirm (AFRM) shares rose from approximately $50.00/share to its current 52-week high of $172.65.  However, throughout 2022 the sentiment has turned bearish for AFRM shares, which are now down by more than 74% on a year-to-date basis.  

AFRM posted fiscal Q4 earnings this week and although the company beat Wall Street’s expectations for Q4 sales, poor forward looking guidance spooked investors, causing shares to crater.  Affirm shares fell by 19.47% this week.  

However, after this precipitous sell-off, the credible analysts that Nobias tracks remain bullish on shares, with an average price target that points towards strong double digit upside potential.  Dave Kovaleski, a Nobias 4-star rated author, published an article at the Motley Fool on Monday this week, highlighting some of Affirm’s recent share price weakness.  

AFRM Aug 2022

Kovaleski pointed towards a shift in the macro environment, especially regarding the Federal Reserve’s hawkish stance, as an ongoing headwind for growth stocks like AFRM.  He wrote, “The overall decline likely stems from renewed concerns about inflation. While the inflation rate dropped in July, sparking some hope that the Federal Reserve might ease up on its aggressive posture on interest rate hikes, the minutes of the July Fed meeting, released last week, indicated that the Fed would not pull back on rate hikes until inflation came down substantially. That, in turn, stoked fears of an economic slowdown, which would not be good for payment companies like Affirm.”

Rising rates have been a headwind throughout 2022 and Nobias 5-star rated author, Shrilekha Pethe, touched upon this in a report that she published at Nasdaq.com after AFRM’s Q3 report back in July.  Regarding headwinds created by a tough macro environment for Affirm, Pethe said, “Another major concern among investors has been that as cash becomes tight, BNPL borrowers could default on their payments.” “However,” she continued, “Affirm believes it is well-placed to weather the potential storm.”

Pethe stated, “Affirm’s management pointed out that, unlike many of its competitors, the company does not charge a late payment fee, which it says would appeal to consumers during a downturn. The company also stated that it does not expect rising interest rates to immediately ramp up its borrowing costs.”

Despite management’s confidence, it appears that AFRM is struggling to execute.  Chris Lau, a Nobias 4-star rated author, published a post-earnings report on AFRM stock at Seeking Alpha, where he stated, “In after-hours trade after the Q4 report, Affirm issued guidance for Q1/2023 and the full year of 2023. This disappointed investors.”

Regarding AFRM’s Q4 results Lau wrote, “In the last quarter, Affirm posted revenue growing by 39.1% Y/Y to $365.13 million. It lost 65 cents a share on a GAAP EPS basis.” He continued, “Active consumers and gross merchandise volume both soared by 96% and 77% year-on-year, respectively.”

Highlighting losses, Lau wrote, “The net loss increased from $123.4 million last year to $186.4 million. This weak result will deter investors. The bearish short interest is 20.23%. Short-sellers are ahead by 57% (before the post-market selling).”  

Touching upon the disappointing forward guidance figures, Lau said, “For the first quarter, the revenue of $345 million to $365 million is below the consensus of $390.87 million.”  He also stated, “More worrisome is the adjusted operating margin forecast of negative 12% to negative 10%.”

Looking out over the coming year, Lau also put a spotlight on disappointing top-line expectations writing, “Affirm's 2023 revenue growth outlook is not enough to satisfy shareholders. The company's revenue forecast of $1.625 billion to $1.725 billion is below the consensus estimate of $1.9 billion.”  

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

But, looking further out into the future, Lau sees strong growth tailwinds for a name like Affirm which is a major player in the buy now, pay later (BNPL) industry.  He said, “Stretched for disposable income, BNPL (buy now, pay later) will become a critical driver to stimulating spending online. Affirm could potentially double its revenue. BNPL will more than double from 3.8% of e-commerce spending in 2021 to 8.5% by 2025.”  

Yet, even with this in mind, Lau provided a neutral stance in his conclusion.  He wrote, “Affirm's post-earnings sell-off is warranted. Markets will adjust for the weaker revenue outlook. The high cash burn rate increases the risk of the company raising cash.”

All in all, Lau stated, “In reflecting the opportunities against its near-term risks, I rate Affirm stock between a hold and a buy. The credible author community that the Nobias algorithm tracks appears to share this tepid outlook. 57% of recent articles published on AFRM shares have expressed a “Bearish” sentiment.  

However, the credible Wall Street analysts that Nobias tracks are much more bullish.  After AFRM posted its Q4 earnings, Andrew Jeffrey of Truist, a Nobias 5-star rated analyst, lowered his price target for AFRM shares from $55.00 to $45.00.  This reduced the average price target amongst the credible analysts that Nobias follows to $35.00 for Affirm shares.  AFRM ended the week with a $24.57 share price.  Therefore, that $35.00/share credible analyst average price target represents upside potential of approximately 42.5%.  



Disclosure:  Nicholas Ward has no AFRM position.      Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Home Depot (HD) with Nobias technology

Home Depot reported second quarter earnings this week, beating analyst estimates on both the top and bottom-lines, bucking some of the negative trends that have plagued big-box retailers in recent months.  

Richard Saintvilus, a Nobias 4-star rated author, provided investors with an earnings preview piece that he published at Nasdaq.com prior to HD’s Q2 report.   Saintvilus highlighted Home Depot’s recent strength, noting that it “has been a strong Dow performer over the past two years.” He continued, “Home Depot management noted in their recent earnings call that home equity values over the last two years had increased by 40% or over $7 billion. Because of home price appreciation, the homeowner had more money to spend on home improvement projects, which is the main driver of Home Depot’s revenue.”

However, the recent changes in the domestic housing market have caused investors’ sentiment to sour on HD shares.   Saintvilus wrote, “But so far in 2022 the company has been adversely impacted by soaring interest rates which have helped to slow the housing market. If that weren't bad enough, the company's gross margins have been shrinking because of higher inflation rates. Higher input costs and weakening consumer demand has caused margin erosion within this business.”

HD Aug 2022

Coming into the Q2 report, Saintvilus stated, “In the three months that ended July, the Atlanta, GA.-based company is expected to earn $4.95 per share on revenue of $43.37 billion.” He also noted, “For the full year, ending in December, earnings of $16.46 per share would rise 6% year over year from $15.53 per share, while full-year revenue of the $156.23 billion would rise 3.4% year over year.”

Saintvilus concluded his piece writing, “On Tuesday investors will want to see whether Home Depot can continue to navigate through inflationary headwinds as well has [sic] it has in the past two quarters.”

And, as it happens, the company beat Wall Street’s consensus estimates on both the top and bottom lines, posting Q2 revenue of $43.79 billion, which was up 6.5% on a year-over-year basis, and non-GAAP earnings-per-share of $5.05, beating estimates by $0.10/share.  

Regarding HD’s Q2 sales trends, Michelle Chapman, a Nobias 4-star rated author, stated, “Sales at stores open at least a year, a key indicator of a retailer's health, climbed 5.8%, and 5.4% in the U.S.”

In her recent article published at Newsmax, Chapman continued, “While the number of customer transactions fell 3%, the amount shoppers spent per transaction rose 9.1%.”

Michael E. Kanell, a Nobias 4-star rated author, published a post-earnings breakdown of Home Depot this week in the Atlanta Journal-Constitution, putting a spotlight on the company’s strong results.  

Kanell wrote, “Home Depot officials had worried about consumer staying power, but the robust increase in home prices meant a surge of trillions of dollars in the amount of equity held by millions of people, and that has fueled spending on repairs and renovations.” He quoted Richard McPhail, the company’s chief financial officer, who told the AJC, “In the first quarter, we were somewhat surprised by the resilience of our customers and that resilience has continued.”

Regarding HD’s recent operational strength throughout recent home price inflation, Kanell wrote, “One of the reasons home prices have climbed is the shortage of homes for sale. That shortage, made exacerbated by the pandemic, has meant fewer people moving. And when people stay put, they are much more likely to spend money on renovations and repairs — the heart of Home Depot’s business.”  

Point towards a potential risk moving forward, Kanell wrote, “If there is a downturn, homeowners may do less expensive projects, and Home Depot might see tighter profit margins, said Shoggi Ezeizat, a sector analyst at Third Bridge, a global research firm.”

However, Kanell continued, “Still, unless a downturn really rattles homeowners, Home Depot should fare relatively well, he [regarding Ezeizat] said.”   Kanell quoted Ezeizat who said, “The home improvement sector tends to perform well during recessions.  Home Depot was built in a recession in the early ‘90s.”

In a separate article published in the Atlanta Journal-Constitution this week, Kanell touched upon Home Depot’s recent announcements regarding shareholder returns.  He said, “The board of Home Depot, flush with sales and profit amid the pandemic, has approved a $15 billion buyback of its stock as a way to use “excess cash,” company officials said.”

Kanell put a spotlight on HD’s strong balance sheet, stating, “A company filing said Home Depot finished the quarter with $1.3 billion in cash on hand.” He said that Margaret Smith, a spokeswoman for the company, stated, “Our overall capital allocation principles have remained consistent for over a decade,” she said. “We invest in the business, pay our dividend and return excess cash to shareholder in the form of share repurchases.”

Gary Gambino, a Nobias 5-star rated author, covered Home Depot’s recent earnings results and provided his readers with an in-depth breakdown of the company’s current valuation in a recent article at Seeking Alpha.   Gambino offered a more cautious tone on the company, writing, “​​Home Depot delivered average EPS growth of 19.5% in the 7 years ending in February 2020. Since then, the company enjoyed 2 years of strong growth from the pandemic stay-at-home trade. This growth has slowed considerably in the current fiscal year although current quarterly results show that the consumer is more resilient to macroeconomic concerns than expected. Still, Home Depot is maintaining its guidance of "mid-single digit" EPS growth this year. While this guidance may be conservative, future year growth looks more likely to be around 10%.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

Gambino concluded his piece, stating, “With this lower growth rate, the historical P/E range of 20 - 25 is probably too high going forward. Home Depot remains a great company but at $327 it is still worth about 20 times this year's estimated earnings. The stock traded around $270 in June which is a more reasonable 16.5 times earnings for a stalwart 10% grower. I would not tell anyone to sell here, but those looking to start a new position should consider waiting for a pullback to that level.”

Overall, however, the credible authors and analysts that Nobias tracks express a bullish sentiment for HD shares.  65% of recent articles published by credible authors about HD have included a “Bullish” bias.  Right now, 7 out of the 8 credible Wall Street analysts that Nobias tracks who offer an opinion about HD shares believe that the stock is primed to head higher.  

The average price target from these 8 individuals for HD is currently $350.   Today, HD trades for $300.  At this price point, HD shares are down by more than 25% on a year-to-date basis.  And, looking at the credible analyst average price target, which implies upside potential of approximately 12%, it appears that the stock has more upside ahead.  




Disclosure:  Nicholas Ward is long HD.      Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Lowe's (LOW) with Nobias technology

Lowe’s (LOW) reported its second quarter earnings this week, posting mixed results.  However, despite a top-line miss, LOW shares were still higher by 2.5% on the week.  Lowes fought through the inflationary environment that retailers are currently operating in, growing its earnings by nearly 10%.  Since Lowe’s posted Q2 results, several credible Wall Street analysts have raised their price targets for LOW shares.  Right now, the average credible analyst price target for LOW implies double digit upside potential.  

Derek Lewis, a Nobias 5-star rated author, published an earnings preview article at Zacks this week.  Lewis began his piece by highlighting the recent strength shown by LOW shares. He said, “The Zacks Building Products – Retail Industry has been hot over the last month, gaining a rock-solid 11.8% and just marginally underperforming the S&P 500’s gain of 12.2%.”

This article was published on 8/15/2022; during the week of 8/15-8/21, LOW shares rose another 2.5%.  This means that during the last 30 days, LOW shares are now up by 13.71%.  Lewis notes that mean reversion is likely a factor at play here. 

LOW Aug 2022

During the summer, the sentiment surrounding LOW shares pushed its valuation down well below its long-term historical averages as higher interest rates, higher mortgage rates, and a slowdown in the housing market caused investors to move away from the home improvement names.  Lewis said, “Lowe’s shares carry solid valuation levels; the company’s 15.4X forward earnings multiple is well beneath its five-year median of 18.3X and represents an enticing 8% discount relative to its Zacks Industry.”  

Regarding this negative sentiment, Lewis notes that it was spreading throughout the analyst community in recent weeks as well. He wrote, “Analysts have been overwhelmingly bearish for the quarter to be reported, with five downwards estimate revisions coming in over the last 60 days. Still, the Zacks Consensus EPS Estimate of $4.63 pencils in a notable 9% year-over-year uptick in earnings.”  

But, he notes, this company has a history of outperforming analyst estimates.  Lewis stated, “LOW has been the definition of consistency within its bottom-line results, chaining together an impressive 13 consecutive EPS beats. Just in its latest print, the company posted a solid 8.3% bottom-line beat.”  He continued, “Top-line results have also been remarkable; Lowe’s has posted eight revenue beats over its last ten quarters.”  

When Lowes posted earnings on 8/17/2022 its results were mixed.  LOW continued its trend of beating Wall Street estimates on the bottom-line, posting non-GAAP EPS of $4.67/share, beating consensus estimates by $0.07/share.  This $4.67/share EPS result represented 9.9% year-over-year growth.  Lowes missed analyst estimates on the top-line, however.  

The company’s Q2 sales came in at $27.48 billion, representing -0.3% year-over-year growth, and missing estimates by $680 million.  During the company’s second quarter report, LOW’s CEO, Marvin Ellison, stated: “I am pleased that our team drove operating margin improvement and effectively managed inventory despite lower-than-expected sales – a clear reflection of our relentless focus on operating discipline and productivity.  Our results in the first half were disproportionately impacted by our 75% DIY customer mix, which was partially offset by our double-digit Pro growth for the ninth consecutive quarter. Despite continued macro uncertainty, we remain confident in the long-term strength of the home improvement market and our ability to take share. To help our hourly front-line associates during this period of high inflation, we are awarding an incremental bonus of $55 million. I’d like to thank our associates for their continued hard work and dedication.”

Lowes noted that its same-store sales fell by 0.3% during the quarter.  But, in the U.S., LOW’s same-store numbers were slightly better, rising by 0.2%. Management noted that “DIY sales were impacted by the shortened spring and lower demand in certain discretionary categories, which was partially offset by a 13% increase in Pro customer sales.”  

During the company’s Q2 earnings conference call, Ellison mentioned some of the tough year-over-year comparisons that his company is facing, especially when it comes to the DIY customer.  He said, “Also, while we plan for a modest sector pullback this year as we lap outsized DIY consumer demand, we now believe that certain categories like patios and grills are disproportionately impacted by the unprecedented demand from 2020 and 2021. This unprecedented demand was likely fueled by the combination of three rounds of government stimulus, an increase in consumer savings rate and a temporary shift away from spending on services towards spending on goods, including home improvement products.”

Elison also put a spotlight on his company’s continued eCommerce growth, stating, “On Lowes. com, sales grew 7% this quarter, representing a sales penetration of nearly 10%. We're continuing to invest in omnichannel capabilities because we believe there is still tremendous runway for further growth ahead.”  

LOW highlighted its shareholder returns during the quarter, stating, “With a disciplined focus on its best-in-class capital allocation program, the company continues to create sustainable value for its shareholders. During the quarter, the company repurchased approximately 21.6 million shares for $4.0 billion, and it paid $524 million in dividends.”  

During its Q2 earnings press release, Lowe’s provided investors with an update on full-year guidance, stating:  Full Year 2022 Outlook -- a 53-week Year (comparisons to full year 2021 -- a 52-week year)

• Total sales of $97 billion to $99 billion, including the 53rd week

• 53rd week expected to increase total sales by approximately $1.0 billion to $1.5 billion

• Comparable sales expected to range from a decline of -1% to an increase of 1%

• Gross margin rate up slightly compared to prior year

• Depreciation and amortization of approximately $1.75 billion

• Operating income as a percentage of sales (operating margin) of 12.8% to 13.0%

• Interest expense of $1.1 to $1.2 billion (previously $1.0 to $1.1 billion)

• Effective income tax rate of approximately 25%

• Diluted earnings per share of $13.10 to $13.60

• Total share repurchases of approximately $12 billion

• ROIC of over 36%

• Capital expenditures of approximately $2 billion

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

After the market had a chance to digest Lowe’s Q2 results, shares ended the week trading for $211.36.  This is 24.2% above the stock’s recent lows of $170.12; however, despite this recent rally, LOW shares are still down by 17.28% on a year-to-date basis. 

However, the credible authors and analysts that the Nobias algorithm tracks believe that the stock’s recent positive trend will continue.  Since LOW posted Q2 results, several analysts have come out with bullish calls on the company.  

Michael Baker, a Nobias 5-star rated analyst from Davidson, raised his price target for Lowe’s from $225 to $247.  Seth Basham, a Nobias 5-star rated analyst from Wedbush, raised his price target from $200 to $225.   And, Scot Cirrarelli, a Nobias 4-star rated analyst from Truist, raised his price target from $237 to $263. 76% of recent articles published by credible authors (only those with 4 and 5-star Nobias ratings) have included a “Bullish” bias.  Right now 5 out of the 7 credible analysts (once again, only those with Nobias 4 and 5-star ratings) believe that LOW shares are likely to head higher.   Amongst these credible analysts, the current average analyst price target for LOW shares is $240.   Relative to the stock’s $200 price tag, this implies upside potential of 20%. 




Disclosure:  Nicholas Ward is long LOW.      Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Bed Bath and Beyond (BBBY) with Nobias technology

Bed Bath and Beyond (BBBY) has been in the financial news lately due to extremely volatile momentum, in both bullish and bearish directions, in recent weeks.  Since late July, BBBY shares have traded from approximately $5.00 up to more than $28.00 and then back down to the $10.00 level where they trade today.   Authors and analysts alike are describing BBBY as the latest “meme” stock due to the retail interest that is driving the momentum behind shares.  

Bed Bath and Beyond is another short-squeeze story which involves Ryan Cohen, who is the chairman of Gamestop Corp. (GME), probably the most famous “meme” stock.  When news broke that Cohen made a bullish trade on BBBY months ago, the shares rallied.  And then, in recent days, when filings showed that Cohen took profits on his position, BBBY shares cratered.  

Jesse Pound, a Nobias 4-star rated author, touched upon the stock’s recent weakness in a CNBC article, stating that, “Shares of the stock fell 42% in morning trading Friday, adding to a loss of nearly 20% during Thursday’s regular trading session.”

NVDA Aug 2022

Sophie Mellor, a Nobias 5-star rated author, covered BBBY’s recent rally in a Yahoo Finance report this week.   She wrote, “Shares in Bed Bath & Beyond surged more than 70% on Tuesday as retail investors on social media flocked to the stock after a filing revealed activist investor Ryan Cohen is holding steady on his bet.”

Mellor continued, “The influx of trading brought the share price up 440% in the past month.” She also noted that this isn’t the first time that this has happened to BBBY shares.  Mellor said, “The short squeeze in Bed Bath & Beyond shares mirrors what happened in January 2021, when retail traders rallied the price of the company to $53.90. The January short squeeze was primarily triggered by users of the subreddit r/wallstreetbets, an internet forum on the social news website Reddit.”

Prior to that 2021 rally, BBBY shares were trading in the mid-single digit range.  Coming out of the COVID-19 pandemic periods, BBBY shares rallied by more than 1000% from March of 2020 to their 2021 highs.  However, by mid-2022, Bed Bath and Beyond shares were once again trading in the mid-single digits, hitting their current 52-week lows of $4.38 in June.  

In recent weeks the sentiment surrounding BBBY shares turned positive yet again.  Mellor wrote, “Cohen, the founder of online pet goods retailer Chewy and the chairman of GameStop, bought a 10% stake in Bed Bath & Beyond in March this year and also snapped up call options on 1.67 million shares with a strike price ranging from $60 to $80 expiring in January 2023.” She continued, “The filing that triggered the short squeeze revealed Ryan Cohen’s investment fund RC Ventures had maintained his percentage ownership of Bed Bath & Beyond and held on to his bet that the price of shares in the home goods retailer would increase to $80.”

Yet, she notes, this meteoric rise doesn’t appear to be based on the company’s underlying fundamentals.   Mellor said, “In the company's latest quarterly earnings report in 2022, Bed Bath & Beyond saw its same-store sales fall 24% and revenue decrease to $1.46 billion. The company also indicated it was drowning in $3.28 billion in debt with only $107 million cash on hand on its balance sheet.”

Just days after BBBY’s 400%+ rise, the shares sold off sharply.   An article titled “Cohen Makes Millions on Bed Bath & Beyond as Meme Traders Recoil” co-authored by Nobias 4-star rated author, Anders Melin, explains why.  Melin stated, “Billionaire Ryan Cohen pocketed a $68.1 million profit from the sale of his stake in Bed Bath & Beyond Inc., scoring a 56% gain on an investment he held for roughly seven months.” He wrote, “Bed Bath & Beyond shares, which were hammered on Thursday, plunged as much as 43% Friday after Cohen’s exit was disclosed in a regulatory filing. It’s setting up to be a repeat of other meme-stock moments, with the price drop being just as dramatic as its ascent.” 

“The worst part for the Reddit crowd,” Melin said, “was Cohen’s very involvement in the stock that fueled their enthusiasm.” Melin continued, “The price at one point this week more than quadrupled from a recent low in July, with at least some pointing to a disclosure that showed the GameStop Corp. chairman still was holding onto his stake, which at that point exceeded 10% of the firm. It included call options that would only be in-the-money if the stock continued to soar.”

Regarding retail investor activity with BBBY shares, Melin said, “A torrent of cash from retail traders pumped up Bed Bath & Beyond’s shares in recent weeks, even with the company’s financial situation deteriorating.”   He stated, “They bought $58.2 million of the stock on Wednesday, a day after snapping up a record $73.2 million. Net purchases over three weeks totaled $229.1 million, according to data compiled by Vanda Research.” 

Melin highlights the fact that this rally ignored Bed Bath & Beyonds poor balance sheet.  He said, “Bed Bath & Beyond’s bonds and loans are already trading at distressed levels. The sharpest drop came after the company announced dismal earnings on June 29, though the debt dropped anew after Cohen’s filing.”  He also noted that BBBY recently “hired law firm Kirkland & Ellis to help it address an unmanageable debt load, according to a person with knowledge of the decision.”  

Jesse Pound touched upon balance sheet concerns in his report as well.  He stated, “Of top concern is that its liquidity could be drying up, and the company must raise new capital in order to stay afloat.” Pound continued, “Bed Bath & Beyond reported roughly $108 million in cash and equivalents in its fiscal first quarter, down from $1.1 billion a year prior.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

On Thursday morning, shortly after the Cohen sale news broke, Howard Smith, a Nobias 4-star rated author, published a piece at The Motley Fool, titled, “Why the Bubble Burst for Bed Bath & Beyond Stock Today”.  In his report, Smith touched upon Cohen’s investing activity which likely served as inspiration for BBBY’s recent rally.   He said, “The discussion of those call options seemed to be the catalyst for the recent surge in the company's stock price. It's possible that retail traders and others who consider this a meme stock didn't realize those call options had been purchased months ago, and thought Cohen was making a more current bet. But now Cohen wants to cash in, and it is tanking the stock. “  

Smith went on to highlight a recent analyst report published by Seth Basham, a Nobias 5-star rated analyst, writing:  “Today, Wedbush analyst Seth Basham issued a downgrade to the equivalent of a sell rating. In a note shared by MarketWatch, he wrote, "More pressing, however, is BBBY's cash burn and the prospects for further financing needed to shore up its balance sheet and rebuild supplier confidence." Basham has a $5 price target on the stock, which would be a drop of more than 78% from Wednesday's closing price.”

Overall, Basham isn’t the only credible analyst that the Nobias algorithm tracks that believes that BBBY shares are irrationally valued.   BBBY shares currently trade for $11.07.  Right now, the average price target of the 6 credible analysts who cover the company is $4.80/share.  This consensus estimate implies downside potential of approximately 59%.  Furthermore, the credible authors that the Nobias algorithm tracks share this bearish sentiment.  71% of recent articles published on BBBY stick have expressed a “Bearish” bias. 





Disclosure:  Nicholas Ward has no BBBY position.      Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Nvidia (NVDA) with Nobias technology

Nvidia pre announced its second quarter earnings last week, missing analyst estimates, which caused its stock to fall.  On a year-to-date basis, NVDA shares are down by 37.89%.  However, during the last month, Nvidia has rallied alongside the broader market, rising by 23.89%.  And, despite the recent quarterly miss, the credible analysts that Nobias tracks believe that NVDA’s recent rally is likely to continue.  

Sweta Killa, Nobias 5-star rated author, touched upon NVDA’s Q2 struggles in a recent article at Nasdaq.com writing, “Nvidia slashed its revenue guidance to $6.70 billion for the fiscal second quarter from the previous forecast of $8.10 billion on weak gaming-chip sales. Notably, gaming revenues dropped 33% from the year-ago level and 44% from the prior quarter. The gaming industry, which is largely considered to be recession-proof, is started to weaken as consumers weigh purchases of discretionary items such as video-game consoles.”

Killa continued, “The move came after Intel Corp. INTC, Qualcomm QCOM and Sony Group forecast weak sales on demand concerns for personal computers and phones”.  In other words, the data points towards the current market environment being tough for the major semiconductor players, across the board.  

The Value Portfolio, a Nobias 5-star rated author, published a post-earnings update on NVDA which highlighted the company’s recent struggles.  The author wrote, “Nvidia (NASDAQ:NVDA) is back down to a $430 billion market capitalization, and down almost 50% from its 52-week highs, as the company announced incredibly weak preliminary earnings.”

NVDA Aug 2022

Regarding the company’s relatively poor results, The Value Portfolio wrote, “The company is announcing revenue 20% below its guidance combined with a more than 20% drop in gross margin. That double impact is from operating expenses remaining roughly constant, meaning that profits are expected to be fairly minimal.”  

But, the author continued, “Despite the company's tough earning guidance, there is some glimmer of hope.”  They said, “The company's datacenter business has continued to outperform. In the company's datacenter GPU space, the company has much less competition in the consumer space, with Intel and AMD much less powerful customers. The segment already represents more than 50% of the company's preliminary revenue results with Y/Y up 61%.” 

Furthermore, the author predicts that NVDA will see renewed consumer demand for its next generation of chips.  They wrote, “The 4xxx series will be launching soon and the company has spent almost $10 billion to secure capacity. Those who upgraded two years ago or missed the 3xxx cycle might now be ready to upgrade. Especially as despite rising interest rates, the economy remains strong.”  

The Value Portfolio continued, “We expect what we're seeing in the current quarter represents the bottom before a recovery.” After admitting that Nvidia “clearly had a terrible quarter” The Value Portfolio concluded, “we also feel that that weakness is an opportunity.”   They stated, “The company normally sees demand decline before new GPU releases and the company has a major 4xxx GPU release coming out in the fall. The company's datacenter business has continued to perform incredibly well with more than 60% YoY growth and consistent QoQ performance. Putting all of this together, we expect that Nvidia's recent weakness makes now a valuable time to invest.”  

Manali Bhade, a Nobias 4-star rated author, published a post-earnings report at The Motley Fool, which concluded in a similarly bullish tone.   Bhade touched upon NVDA’s operations, stating, “Nvidia's data center revenue was up 61% year over year to $3.81 billion. The data center business now accounts for nearly 56% of the company's total revenue. The company offers a broad suite of data center-focused hardware such as GPUs, CPUs, and DPUs (data processing units). Additionally, Nvidia also offers a CUDA toolkit, which is an environment for developers to easily build GPU-accelerated applications as well as GPU-optimized software libraries, targeting the needs of the data center industry.”

Regarding data center strength, Bhade continued, “Thanks to its broad catalog of product and software offerings catering to all the needs of the data center, every major cloud provider such as Amazon, Microsoft, and Alphabet is now using the company's chips.”  

Bhade also noted, “The use of the company's technologically superior and cost-efficient data center chips is expected to become even more relevant in the current recessionary environment. Hence, being a leader in accelerated computing, Nvidia is well poised to benefit from the rapid expansion in the global data center accelerator market (expected to be worth $75.2 billion by 2027).”  

Bhade also put a spotlight on Nvidia’s growth opportunity in the autonomous driving space writing, “Nvidia DRIVE Orin system-on-a-chip (SoC) is a very powerful and intelligent chip capable of processing huge amounts of data (feeds from interior and exterior cameras, RADARS, ultrasonic sensors, and LiDAR or light detection and ranging sonar) in a very short time.”  

Bhade continued, “More than 25 vehicle manufacturers have opted for this SoC, which is currently in production.”  Furthermore, the author states, “Nvidia estimates its design wins in the automotive industry to be worth $11 billion for the next six years.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

Bhade highlighted the strength of the company’s balance sheet, writing, “Nvidia is a company with a significant technological advantage and a robust balance sheet (cash balance of $20.34 billion and total debt of $11.85 billion at the end of the first quarter).”   But, they were quick to say that valuation here is “lofty” with NVDA shares trading for “177 times forward earnings.” 

Ultimately, however, Bhade concluded, “However, despite the risks, Nvidia remains an amazing business. With prices somewhat corrected, a small investment in this stock may prove to be a good decision for retail investors.”  

Overall, the majority of credible authors and Wall Street analysts that the Nobias algorithm tracks remain bullish on NVDA, even after its Q2 miss.   53% of recent articles written by credible authors (those with 4 and 5-star Nobias ratings) have included a “Bullish” bias.  14 out of the 19 credible Wall Street analysts that Nobias tracks who have provided analysis on NVDA shares believe that Nvidia’s stock price is headed higher.  

Right now the average price target attached to NVDA shares by these 19 analysts is $234.94.  Today, NVDA trades for $187.09, which means that this average price target implies upside potential of approximately 25.6%.  





Disclosure:  Of the stocks mentioned in this article, Nicholas Ward is long NVDA, QCOM, AMZN, MSFT, and GOOGL.    Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Trade Desk (TTD) with Nobias technology

The Trade Desk (TTD) shares were up more than 33% this week.  TTD shares rallied after the company reported Q2 results which beat Wall Street sales growth expectations and included strong forward guidance.  However, even after this 30%+ post-earnings rally, TTD shares are still down by more than 17% on a year-to-date basis.  

At its current share price of $74.49, The Trade Desk is down by approximately 34.7% from its 52-week high of $114.09.  However, the credible authors and analysts that Nobias tracks who have recently provided opinions about TTD shares continue to believe that the company has more upside ahead.  

Andres Cardenal, CFA, a Nobias 5-star rated author, recently published a bullish report on the company at Seeking Alpha, highlighting its business operations and the “massive growth” opportunities that lie ahead of the company.  

Cardenal wrote, “The Trade Desk is a demand-side platform that works with advertisers and advertising agencies to produce more efficient and better-targeted advertising, ultimately providing data-driven decisions with more control, increasing return on investment - ROI, and delivering a better experience to consumers.” He continued, “The Trade Desk has launched a better solution to replace third-party cookies with Universal ID 2.0. This new identifier is gaining popularity as privacy-conscious technology that also allows for better measuring and more transparent results. Among many other notable companies, Amazon Web Services has recently joined UID2.” 

TTD Aug 2022

Looking at the advertising market from a high level, Cardenal wrote, “Advertising is basically demand creation, which is at the backbone of the global economic system. The overall size of the market is estimated at around $750 billion, and technological improvements are making advertising more effective, which will only increase spending in the years ahead, regardless of the natural fluctuations that always come with the business cycle.”   He notes that TTD is “ at the forefront of innovation in advertising” and serves as a major “disruptor” in the space.  

Taking a look at the company’s execution, Cardenal wrote, “Revenue has increased from $308 million in 2018 to $1.59 billion in 2022, and it is expected to reach $3.9 billion in 2026.” He highlighted bottom-line results as well, stating, “Free cash flow has increased from $61 million in 2018 to $471 million expected this year and $1.1 billion projected by 2026.”

Regarding TTD’s competitive position, he said, “From a competitive point of view, the business is stronger than ever. The Trade Desk is expected to grow at above 33% this year, while the rest of the industry is growing 8%-14% depending on the estimates.” 

Cardenal touched upon macro risks that the company faces, writing, “High inflation, a potential recession, and supply chain disruptions are obviously problematic for the advertising industry.”  He also put a spotlight on stock-based compensation and ongoing shareholder dilution as a potential headwind for the company, writing, “The main negative factor is that there is a huge stock-based compensation expense of $124.9 million last quarter, including $66 million for CEO Jeff Green due to long-term performance incentives.”   However, he believes that the company is a great long-term play in the advertising space, not only because of recent execution, but also, because of the opportunity that international expansion provides.  

Cardenal wrote, “International markets offer enormous room for expansion in the years ahead. The Trade Desk is currently making only 12% of revenue from international markets. On the other hand, international represents 2/3 of the global advertising industry.”   Overall, Cardenal concluded, “Leaving aside the short-term economic risks, The Trade Desk is the top player in an industry with enormous potential, both revenue and cash flows are growing spectacularly well, and valuation is not excessive considering the quality of the business. The Trade Desk is an excellent candidate for growth investors to consider owning over multiple years.”   And, this 5-star author is not alone with this bullish sentiment.  

On August 1st, 2022, prior to The Trade Desk’s recent quarterly results, Shrilekha Pethe, a Nobias 5-star rated author, published an article at Nasdaq.com which highlighted the broad bullish sentiment surrounding TTD shares coming into the Q2 earnings season.  

Regarding TTD’s recent share price weakness, Pethe wrote, “The Trade Desk’s stock has plummeted as investors have been concerned about whether the rising interest rates, soaring inflation, and other macro headwinds could see a pullback in advertising.”

However, coming into the company’s second quarter results, Pethe pointed out that the Wall Street community remained largely bullish on the stock, stating, “Wall Street analysts remained bullish about Trade Desk with a Strong Buy consensus rating based on 10 Buys and one Hold. The average Trade Desk price target of $71.20 implies an upside potential of 62.5% at current levels.”   She wrote, “Even as the macro environment remains volatile, it appears that Trade Desk could very well ride out this challenging environment.”  And, now that the Q2 numbers have been posted, it’s clear that Pethe’s bullish sentiment was correct.  

The Trade Desk reported earnings on August 9th, 2022, beating Wall Street consensus estimates on the top line.  The company posted Q2 revenue of $377 million, which was up by 34.6% on a year-over-year basis.   TTD’s non-GAAP earnings-per-share came in at $0.20, which was in-line with Wall Street’s consensus expectation.  

The company’s Co-Founder and CEO, Jeff Green, said:  “We delivered outstanding performance in the second quarter, growing 35% versus a year ago, significantly outpacing worldwide programmatic advertising growth. More of the world’s leading brands are signing major new or expanded long-term agreements with The Trade Desk, which speaks to the innovation and value that our platform provides compared to the limitations of walled gardens.  This trend also gives us confidence that we will continue to gain market share in any market environment. At the same time, we continue to invest to drive future growth in key areas such as identity, Connected TV, retail media and supply chain optimization. In each of these areas, we signed major new partnerships with some of the world’s leading publishers, broadcasters, retailers and technology partners in the second quarter.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

Chris Ciaccia, a news editor at Seeking Alpha, highlighted TTD’s Q2 results, stating, “The Trade Desk said second-quarter revenues grew 35% year-over-year to $377M, while operating expenses rose 72% to $375.2M, including a 177% increase in stock-based compensation.” He continued, “For the third-quarter, The Trade Desk anticipates $385M in revenue, ahead of the $382.3M analysts were expecting. It also expects EBITDA to be about $140M.”  

TTD’s CFO, Blake Grayson provided more details on the company’s forward growth expectations during the Q2 conference call, stating:  “Turning to our outlook for the second quarter. We estimate Q3 revenue to be at least $385 million, which would represent growth of 28% on a year-over-year basis. In Q3, we anticipate U.S. political midterm election spend to represent a low single-digit share as a percent of our business. We estimate adjusted EBITDA to be approximately $140 million in Q3. While there’s continued uncertainty about the macroeconomic environment, we continue to feel confident in our ability to execute and take share. Given the large available market in front of us, we see significant opportunities to invest in our business. In more uncertain times, this enables us to widen the distance between ourselves and our competition in areas such as technology, identity, supply chain optimization and customer service.”  

It appears that this strong growth was expected by both the Nobias credible authors and analysts who cover TTD.   91% of recent articles published by credible authors (individuals with 4 and 5-star Nobias ratings) on TTD have expressed a “Bullish” bias.  And, right now, 100% (6/6) of the credible Wall Street analysts that Nobias tracks who have expressed an opinion on TTD shares are bullish.  All 6 credible Wall Street authors who follow the stock expect to see TTD shares increase in value over time.  




Disclosure:  Nicholas Ward has no TTD position.    Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Disney (DIS) with Nobias technology

The Walt Disney Company (DIS) reported earnings this week, causing its shares to rally.  Coming into its Q3 earnings report, Disney shares were down approximately 28.4%.  Throughout 2022 Disney shares struggled alongside other major players in the media/entertainment space due to results that pointed towards slowing subscriber growth and lower consumer spending.  However, DIS’s Q3 report bucked those trends.  

Disney beat Wall Street consensus estimates on both the top and bottom lines, causing its shares to rally by approximately 7.5% since its earnings report was published.  During the last week alone, Disney shares are up by 10.9%.  During the last month, Disney shares are up by more than 28%.  And yet, even after this strong rally, the credible analysts that Nobias tracks believe that Disney shares have more room to run to the upside.  

When reporting Q3 results, Disney stated, “Revenues for the quarter and nine months grew 26% and 28%, respectively.”  Disney’s non-GAAP earnings-per-share came in at $1.09 which beat consensus analyst estimates by $0.10/share and represented 36% year-over-year growth.  

DIS Aug 2022

During the Q3 report, Bob Chapek, Disney’s Chief Executive Officer, said, “We had an excellent quarter, with our world-class creative and business teams powering outstanding performance at our domestic theme parks, big increases in live-sports viewership, and significant subscriber growth at our streaming services. With 14.4 million Disney+ subscribers added in the fiscal third quarter, we now have 221 million total subscriptions across our streaming offerings.  We continue to transform entertainment as we near our second century, with compelling new storytelling across our many platforms and unique immersive physical experiences that exceed guest expectations, all of which are reflected in our strong operating results this quarter.”

Disney broke down its operating segment results, highlighting $14.11 billion in sales from its “Disney Media and Entertainment Distribution” segment, up 11% on a y/y basis and $7.39 billion in sales from its “Disney Parks, Experiences and Products” segment, up 70% on a y/y basis.  

Howard Smith, a Nobias 4-star rated author, covered Disney’s post-earnings rally in a piece at Nasdaq.com titled, “Why Disney Shares Popped This Week”. Smith wrote, “Walt Disney (NYSE: DIS) reported its fiscal third-quarter earnings this week, and investors were pleasantly surprised by several items of note.”  

Smith highlighted the strength of Disney’s Disney+ streaming service, stating, “Many investors were more focused on the streaming services, especially after some other providers like Netflix have seen growth declining. But Disney added more than 14 million subscribers just for its Disney+ offering since the previous quarter. That brings Disney's total paid subscribers to over 221 million including ESPN+ and Hulu services. That's now more than Netflix reported as of June 30.”   He continued, “Disney still reported a loss from its streaming segment, but that wasn't unexpected. The company estimates it will turn profitable by late 2024.”  

Smith also cited Disney’s Theme Park segment performance as a bullish catalyst for shares, writing, “The company's theme park segment saw revenue soar 70% year over year in its third quarter.”   Shanthi Rexaline, a Nobias 4-star rated author, also published a bullish post-earnings piece on Disney.  

Rexaline titled her Business Insider piece, “This Stock Is 'Only Asset We Want To Own' In Media, Analyst Says While Forecasting 40% Return For A Juggernaut”. In her report, Rexaline highlighted a recent opinion on DIS shares provided by Brandon Nispel an analyst from KeyBanc, who “maintained an Overweight rating on Disney shares and increased the price target from $131 to $154, suggesting about 37% upside from the current level.”

Like Smith, Rexaline noted the strength of Disney+ subscriber growth.  Rexaline also pointed out the pricing power of the service as a bull catalyst for shares.   Citing Nispel’s report, she wrote, “The $3 per month price increase for the ad-free Disney+ subscription was higher than the $1 per month increase the company announced last year, Nispel said. An ad-supported Disney+ tier, priced at $7.99 per month, will launch on Dec. 8, the analyst noted.”

During Q3 2022, Disney’s average revenue per user (ARPU) on its “Domestic Disney+” subscribers (hailing from the U.S. and Canada” was $6.27.  This figure was down 5% on a y/y basis, compared to the $6.62 ARPU that Disney generated on Domestic Disney+ subscribers during the third quarter of 2021.  

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

Disney’s upcoming price hikes should increase this figure drastically moving forward and this provides the company with a clear path towards profitability in the streaming space.  During Disney’s Q3 conference call its Chief Financial Office, Christine McCarthy, stated, “As we sit here today, we remain confident that Disney+ will achieve profitability in fiscal 2024 and look forward to several upcoming catalysts including reaching a steady state of tentpole original content releases, delivery of premium general entertainment and international local originals and the upcoming launch of our ad-supported tier alongside the new pricing structure announced earlier today.”  

According to Rexaline, the Keybanc analyst stated, “We continue to see DIS as the only asset we want to own in Media given the platform of DTC products, relatively strong linear brands, and ability to tie content and experiences together with Parks.”  

The credible authors and  analysts that the Nobias algorithm tracks appear to agree with Nispel’s bullish sentiment.  57% of recent articles published on Disney by the credible authors that Nobias tracks have expressed a “Bullish” bias.  80% of the credible analysts that Nobias tracks who follow Disney shares believe that the stock will increase in value moving forward.  Right now, the average price target being applied to Disney by those credible analysts is $135.75.  Today, Disney trades for $120.43.  Therefore, that average analyst price target implies upside potential of 12.7%.  




Disclosure:  Of the stocks mentioned in this article, Nicholas Ward is long DIS and NFLX.   Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on British Petroleum (BP) with Nobias technology

British Petroleum (BP), the British oil major, reported earnings last week.  The company posted record results, raised its dividend, and announced further share buybacks.  BP shares rallied on this news and even though BP shares are up 8.37% on a year-to-date basis, outperforming the S&P 500 by a wide margin, the credible authors and analysts that the Nobias algorithm tracks largely agree that this company has more upside potential ahead.  

Nobias 5-star rated author, Sophie Mellor, published a report at Yahoo Finance highlighting several bullish aspects of BP’s recent earnings report.  At a high level, Mellor said that “In total, the five oil and gas majors—ExxonMobil, Chevron, Shell, BP, and Total— have announced $59 billion of profits in the second quarter of the year, 45% of which will go directly into the pocket of shareholders.”

BP shares rose by roughly 4.5% after the company’s results were published, largely because of large profits and shareholder returns.  Mellor wrote, “BP has reported its highest quarterly profit in 14 years, making it the last of the five oil and gas supermajors to report a record-breaking second quarter in 2022 as the ongoing war in Ukraine continues to send the price of oil soaring.” She continued, “BP’s underlying profits increased threefold compared with a year ago. In 2021, when energy profits were still slowed by depressed demand from ongoing COVID-19 pandemic lockdowns, BP reported profits of $2.8 billion in the second quarter of 2021.” 

TWLO Aug 2022

Regarding BP’s $8.5 billion profit figure, Mellor said, “BP’s eye-popping second-quarter profits far exceeded the average analyst estimates of $6.8 billion and were far greater than the $6.2 billion it recorded in the first quarter of 2022.” She continued, “The last time BP’s profits were this high was in 2008 when oil prices peaked at $147.30 a barrel in July 2008 due to rising tensions in the Middle East, increased demand from China, and a falling value of the U.S. dollar. At the time BP reported third-quarter profits in 2008 of $8.8 billion.” 

Mellor transitioned to BP’s dividend data, stating, “BP bumped up its quarterly dividend payout to shareholders by 10%, raising it to 6.006 cents per ordinary share.” Furthermore, with regard to shareholder returns, Mellor stated, “BP committed to buying back $3.5 billion of shares in the third quarter of 2022 after completing $2.5 billion of share buybacks between April and July. BP has so far bought back $3.8 billion of shares across the first half of the year.”

Tsvetana Paraskova, a Nobias 4-star rated author, also covered BP’s recent results in an article published at oilprice.com.  Paraskova highlighted shareholder returns as well, providing a quote from the company that puts a spotlight on the company’s dividend growth prospects moving forward.  

According to Paraskova the company said, "Looking ahead, on average, based on bp's current forecasts, bp continues to expect to have capacity for an annual increase in the dividend per ordinary share of around 4% through 2025 at around $60 per barrel Brent and subject to the board's discretion each quarter.”  

Paraskova noted that this oil major isn’t just returning cash to shareholders, but also improving the strength of its balance sheet.   She wrote, “BP's net debt fell for the ninth successive quarter to reach $22.8 billion at the end of Q2, down by $4.6 billion from the end of the first quarter.”

There has been pushback by regulators who are concerned about the massive windfall that oil majors like BP have received from the energy crisis created (especially in Europe).  BP is producing record profits while English citizens are seeing their energy bills skyrocket.   And, as Pedro Goncalves, a Nobias 4-star rated author, points out in another Yahoo Finance report, recent commentary by BP’s management team isn’t helping to tame the negative sentiment surrounding the company from consumers who are struggling to make ends meet.  

Goncalves wrote, “Looney, who previously called BP a “cash machine”, could pocket as much as £11.7m, while finance head Murray Auchincloss, who said in February it had “more cash than we know what to do with”, could net up to £6.3m in pay and bonuses.”

In his piece, Goncalves quoted Neil Wilson, the chief market analyst for Markets.com, who said, “BP said the windfall tax introduced last month on profits through to the end of 2025 will result in a one-off deferred tax charge of $0.8bn – a drop in the ocean by today’s numbers it would seem."

Goncalves pointed towards potentially more legislative headwinds for BP, stating, “Friends of the Earth campaigner Sana Yusuf said: “Ministers must impose a much tougher windfall tax on massive oil and gas firm profits. It beggars belief that these companies are raking in such huge sums in the midst of a cost-of-living crisis.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

However, Goncalves notes that not all English legislators are voicing support of further windfall taxes.  He wrote that Brexit opportunities minister Jacob Rees-Mogg said, “I’m not in favour of windfall taxes. The energy industry is enormously cyclical. “You need to have a profitable oil sector so it can invest in extracting energy,” Rees-Mogg continued.  

At this point in time it’s impossible to predict what, if any, further legislative headwinds will arise for BP; however, it appears that the credible authors and analysts that the Nobias algorithm tracks are content to look past these threats, and instead, focus on BP’s record results and strong guidance figures, because the majority on individuals from each camp remain bullish on BP shares.  

58% of recent articles published by credible authors have expressed a “Bullish” bias for BP shares.  Right now, 5 out of the 6 credible analysts that Nobias tracks who have expressed an opinion on BP believe shares are headed higher.  Today, BP shares trade for $29.66.  The average price target currently being applied to BP shares by the credible analyst community is $38.00, representing upside potential of approximately 28.1%.  

Disclosure:  Nicholas Ward has no BP position.   Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Twilio (TWLO) with Nobias technology

Twilio (TWLO), a market darling during 2020 and 2021 when there was a lot of appetite for risk in the markets, has severely struggled throughout 2022 thus far.  TWLO shares were trading for $103.15 at the end of 2019.  Despite the COVID-19 pandemic, they experienced a massive rally during 2020, ending that year trading for $338.50. 

This positive momentum continued into 2021, where the stock eventually hit highs in the $435 area.  However, with investor sentiment turning sour on relatively high growth, speculative stocks, especially in the software-as-a-service (SaaS) space, TWLO has lost significant market capitalization over the last year or so.  

Twilio shares are down 77.48% during the trailing twelve months.  They’re down 67.62% on a year-to-date basis.  The stock is currently trading for $84.92, hovering slightly above its recent 52-week lows of $77.21.  The stock sold off by 13.51% on Friday, after posting its second quarter results.  And yet, even with this negative momentum, the credible authors and analysts that the Nobias algorithm tracks maintain a clear “Bullish” bias for the stock.  

TWLO Aug 2022

Harsh Chauhan, a Nobias 4-star rated author, recently published an article titled “Better Buy: Twilio vs. Zoom Video Communications” in which he provided a bullish outlook for TWLO shares.  Chauhan described TWLO’s operations, stating, “Twilio has been helping its clients bring their physical contact centers into the cloud with the help of its application programming interfaces (APIs). The company plays a critical role in helping companies connect with their customers through different channels such as voice, messaging, video, and email, among others.” He continued, “For instance, Lyft uses Twilio's platform to enable interactions between its drivers and users, while Airbnb has automated messages between hosts and guests with Twilio's help to simplify the accommodation booking process.” 

Chauhan highlighted the potential size and strength of TWLO’s addressable market, writing, “This communications platform-as-a-service (CPaaS) market in which Twilio operates is growing at a terrific pace. Juniper Research estimates that the global CPaaS market could hit $10 billion in revenue this year, and could be worth $34 billion by 2026 as more companies adopt APIs to bolster their customer interaction efforts.”  

And, with regard to market share, Chauhan noted TWLO’s market leading position stating, “Given that Twilio was sitting on a 38% share of the global CPaaS market last year and it was well ahead of second-placed Vonage's share of 11.8%, it is easy to see why it is one of the best bets on this massive opportunity.”  

Regarding future fundamental growth, Chauhan wrote, “Twilio seems to be pulling the right strings to capitalize on a huge end-market opportunity, which explains why analysts expect its bottom line to increase at a compound annual rate of 155% for the next five years.” 

Ultimately, Chauhan named TWLO as the better pick (relative to Zoom shares), citing faster growth, a cheaper valuation, and a stronger competitive position.  However, as Mike Robinson, a Nobias 5-star rated author cites, not everyone is quite as bullish on TWLO shares as Chauhan.  

In a recent report, Robinson puts a spotlight on a bearish report from Barclays analyst Ryan MacWilliams, who downgraded TWLO shares from overweight to equal weight, reducing his price target from $175.00/share to $110.00/share.  

Robinson wrote, “The analyst believes that Twilio’s core API enterprise doubtlessly faces challenges going ahead as a consequence of a slowing digital economic system. Furthermore, MacWilliams “had hoped to see higher progress with Phase/Have interaction at this level.”’ 

However, as Robinson notes, the analysts’ bearish outlook here is not necessarily set in stone.   He said, “Nonetheless, the analyst says he could possibly be flawed if Twilio manages to speed up natural development in Q3. This might immediate traders to purchase Twillio inventory as shares would merely be “too low cost at 6x CY23 eV/gross revenue and doubtlessly 30%+ natural development.”’ 

TWLO reported its second quarter earnings this week, beating analyst consensus estimates on both the top and bottom lines.  The company posted sales of $943.35 million, beating estimates by 22.38 million, representing 41% growth on a year-over-year basis.  On an organic basis, Twilio’s y/y revenue growth was 33% during the quarter.   TWLO’s non-GAAP earnings-per-share came in at -$0.11, beating analyst estimates by $0.09/share.  

During Twilio’s Q2 report, Jeff Lawson, Twilio’s co-founder and CEO, said, “We closed a strong second quarter, delivering $943 million in revenue and 41% year-over-year growth, while also signing our largest Flex deal ever.  Based on our results and what we’re currently seeing, we remain confident in our growth trajectory as our customers continue to turn to Twilio's Customer Engagement Platform to help build direct relationships with their customers. We are closely following the macroeconomic environment and are taking proactive steps that will enable us to remain laser focused on our customers and executing against our top priorities.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

In TWLO’s Q2 report the company highlighted its expanding customer base, stating: “More than 275,000 Active Customer Accounts as of June 30, 2022, compared to 240,000 Active Customer Accounts as of June 30, 2021.”  The company also established guidance for the third quarter, highlighting expectations for $965m-$975m in sales, which would represent 30%-32% y/y growth.   The company expects to see organic sales growth of 29%-30% during Q3.  

Twilio doesn’t expect to turn a profit during Q3, either.  The company is calling for a non-GAAP loss-per-share of -$0.43 to -$0.37 during the third quarter.  It appears that Wall Street was displeased with Twilio’s quarterly results/Q3 guidance because TWLO shares sold off by 13.51% during Friday’s post-earnings trading session.   However, at TWLO’s current price point, it appears that the credible authors/analysts that the Nobias algorithm tracks aren’t overly concerned about slowing growth and the lack of profits.  

Looking at the credible analysts community that Nobias tracks (only individuals with 4 and 5-star Nobias ratings), 81% of recent articles published on Twilio have expressed a “Bullish” bias.   Since Twilio’s second quarter report, we’ve already seen a slew of credible analysts lowering their price targets for TWLO shares, largely citing the company’s disappointing growth outlook.  However, even with these price target reductions in mind, credible analysts are still calling for immense upside.  

Right now, the average price target being applied to TWLO shares by the credible Wall Street analyst that our algorithm tracks (once again, only those with 4 and 5-star Nobias ratings) is $145.   Relative to TWLO’s present share price of $87, this average analyst price target represents upside potential of 75%.  

Disclosure:  Nicholas Ward has no TWLO position.   Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Amazon (AMZN) with Nobias technology

Amazon (AMZN) reported its second quarter earnings after the market’s closing bell on Thursday of last week and that quarterly report sent the stock soaring on Friday.  Amazon shares rallied by 10.46% during Friday’s trading session, leading the Nasdaq higher on the day.  When Amazon reported results, it beat analyst estimates on both the top and bottom lines.  Furthermore, the company provided Q3 guidance, which put investors at ease.  

After Friday’s double digit rally, AMZN shares are still down 20.8% on a year-to-date basis.  However, looking at the opinions expressed by the credible authors and analysts that the Nobias algorithm tracks, it appears that both cohorts see further upside ahead.  Right now, 55% of recent reports published on AMZN stock by the credible authors that Nobias tracks (only those with 4 and 5-star ratings) have expressed a “Bullish” bias on shares.  

Looking at the credible Wall Street analysts that Nobias follows (once again, only those with 4 and 5-star Nobias ratings), 100% of them (15/15) believe that AMZN shares are going to rise in value.  Zach Bristow, a Nobias 5-star rated author, published a post-earnings report, highlighting both the strengths and weaknesses of Amazon’s second quarter results.  

AMZN Aug 2022

Bristow wrote, “The key standout for Amazon for the period was its $121 billion in quarterly revenue. In what appears to have been good news for the Amazon share price, this beat analysts’ expectations by more than $2.04 billion.” He continued, “Advertising revenue was particularly strong this quarter, growing 18% year on year to around $8.8 billion.”

Bristow did put a spotlight on Amazon’s profit-related struggles, however.  He said, “These results actually overshadowed a net loss of $2 billion for the quarter. The result gives a loss on earnings per share (EPS) of 20 cents, below analyst estimates of a positive 12 cents EPS.”

During its second quarter report, Amazon stated, “Operating cash flow decreased 40% to $35.6 billion for the trailing twelve months, compared with $59.3 billion for the trailing twelve months ended June 30, 2021.” The company also said, “Free cash flow decreased to an outflow of $23.5 billion for the trailing twelve months, compared with an inflow of $12.1 billion for the trailing twelve months ended June 30, 2021.”

Yet, with regard to these quarterly losses, Bristow stated, “the bottom-line result appeared to be skewed somewhat, as it reflects an approximate $4 billion charge related to Amazon’s equity stake in electric automaker, Rivian Automotive.”

And, looking at management commentary, Bristow notes that these near-term losses appear to be one-time items, which is likely why the market overlooked them and sent shares roaring higher in their aftermath.  He quoted Amazon’s CEO, Andy Jassy, who spoke about his company’s operations during the quarterly results and conference call.  

Jassy said: “Despite continued inflationary pressures in fuel, energy, and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network.

We’re also seeing revenue accelerate as we continue to make Prime even better for members, both investing in faster shipping speeds, and adding unique benefits such as free delivery from Grubhub for a year, exclusive access to NFL Thursday Night Football games starting September 15, and releasing the highly anticipated series The Lord of the Rings: The Rings of Power on September 2.”

Bristow continued, “The strong result saw management reinstate third-quarter guidance of net sales between $125 billion and $130 billion, calling for growth of 13-17%.” Looking at forward bottom-line projections, Bristow stated, “Amazon also forecasts operating income of $3.5 billion at the upper end.”

Adria Cimino, a Nobias 4-star rated author, published a bullish report on Amazon after the company’s Q2 earnings were released titled, “Bear Market Blues?  Buy Amazon Now”.  Cimino noted that Amazon’s retail business struggled during Q2; however, she remains very bullish on the prospects of the company’s cloud operations.   She wrote, “If we look at AWS, the cloud computing business, the picture looks even brighter.

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

The difficult economic environment hasn't hurt AWS. In fact, this business reported a 36% gain in operating income and a 33% increase in net sales. AWS is the global leader in the cloud computing market. It holds a 33% share, according to Synergy Research Group.”  

Cimino continued, “Amazon CFO Brian Olsavsky said during the earnings call that the adoption of cloud services still is in the early stages. This means AWS can drive much more growth at Amazon in the years to come.”   She concluded her report stating, “Amazon's track record shows it has delivered gains over the long term. It looks like the company can do that again. And that's exactly why this is a stock you'll want to snap up during the bear market.”  

Since AMZN’s Q2 results were published, several analysts with high credibility scores have increased their price targets for AMZN shares.  Justin Post of Bank of America, who is a Nobias 5-star rated analyst, maintained his “Buy” rating on shares and increased his price target from $168.00 to $170.00.  

Scott Devitt of Stifel, who is a Nobias 4-star rated analyst, maintained his “Buy” rating on AMZN shares and increased his price target from $185.00 to $200.00.  And, Nicholas James of JMP Securities, a Nobias 4-star rated analyst, kept his “outperform” rating on shares, raising AMZN’s price target from $172.50 to $180.00.  



Disclosure:  Nicholas Ward is long AMZN.   Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Starbucks (SBUX) with Nobias technology

Thus far throughout the Q2 earnings season,  retail and apparel stocks have largely posted disappointing results and therefore, negative sentiment surrounds much of this space, with stocks like Walmart (WMT) and V.F. Corp (VFC) trading near their 52-week lows.  However, a notable exception to this underperformance in the consumer discretionary space has been in the quick service restaurant segment, with companies like Chipotle (CMG) and Starbucks (SBUX) posting results recently that caused their shares to rally.  

Although SBUX shares are down more than 25% on a year-to-date basis, the sentiment surrounding their shares on Wall Street has shifted a bit recently.  Starbucks has experienced a bullish rally of nearly 12% during the last month, alone.  The company reported second quarter earnings on August 2, 2022, beating consensus analyst estimates on both the top and bottom lines.  

Starbucks suspended full-year guidance during this report because of economic uncertainties; however, overall, the news was positive enough to inspire a 3.8% rally.  Marianne Wilson, the editor-in-chief of chainstoreage.com and a Nobias 4-star rated author, wrote an article this week, breaking down Starbuck’s fundamental results during Q2.  

SBUX Aug 2022

Wilson said, “The coffee giant reported earnings of $912.9 million, or $0.79 a share, for the quarter ended July 3, down from $1.15 billion, or $0.97 a share, in the year-ago quarter. The company cited labor costs and inflation as weighing on its margins”. She continued, “Adjusted earnings totaled of $0.84 a share, a decline from $1.01 a share a year ago. Analysts expected adjusted earnings of $0.77 a share.”

Moving onto the top-line, Wilson stated, “Sales rose 9% to $8.2 billion, up from $7.5 billion a year ago. Same-store sales rose 3%. Same-store sales in North America rose 9%, driven by an 8% increase in the average ticket. U.S. comparable sales increased 9%, primarily driven by an 8% increase in average ticket.” She touched upon SBUX’s international segment, writing, “International comparable store sales fell 18%, driven by a 15% decline in comparable transactions. Comp sales plunged 44% decline in China amid COVID lockdowns. (China is Starbucks’ second biggest market after the U.S.).”  

Regarding the company’s digital app presence, Wilson said, “Starbucks said the 90-day active members in its U.S. rewards loyalty program rose to 27.4 million, up 13% compared to a year ago.” She also noted that “The company opened 318 net new stores during the third quarter, for a total of 34,948 stores globally, with 51% company-operated and 49% licensed.”

Leslie Patton, a Nobias 4-star rated author, recently published a report at Yahoo Finance which put a spotlight on SBUX’s performance during the unique inflationary environment that we’re witnessing across the world right now.  

Regarding the company’s Q2 earnings, Patton said, “The results reinforce the message found in recent reports from McDonald’s Corp. and Chipotle Mexican Grill Inc.: Americans are still opening up their wallets to eat out -- even if inflation is starting to erode purchasing power.” She noted, “The average ticket -- or cost per order -- rose 6%, but comparable transactions fell 3%. This shows that higher prices are making up for a lower volume of sales.”

Patton paraphrased Howard Schultz, SBUX’s CEO, who touched upon his coffee chain’s pricing power during the quarterly conference call, writing, “He said the company has raised prices by around 5% in the last 12 months. Other coffee sellers have also pushed prices higher with Dutch JDE Peet’s reporting better-than-expected first-half sales Wednesday after increasing prices by 1 euro-cent per cup on average.”

Then, Patton shifted her focus across the Pacific to the Chinese region, which has long been a bright spot, in terms of growth, for Starbucks.  She said, “While US diners are still spending -- with cold drinks being a particular standout -- the Chinese market remains a source of uncertainty.” Patton continued, “On-and-off pandemic rules have restricted mobility in major cities, and comparable sales in the country fell 44% during the quarter. That’s deeper than the 39% drop expected by analysts.”

With regard to this issue, Patton said that, “Starbucks said its financial guidance remains suspended “for the balance of this fiscal year” amid unpredictability in China’s pandemic restrictions.”  However, she noted that SBUX management highlighted an “immediate improvement” to its Chinese operations recently after dining rooms were allowed to open in Shanghai.  

Inflation remains top of mind across the analyst community (especially with several large retailers and consumer discretionary stocks having recently reported disappointing earnings results).   However, like Patton, Mary Meisenzahl, another Nobias 4-star rated author, also published an article this week which highlighted the fact that SBUX continues to buck that trend.  

Meisenzahl said, “Prices in the food away from home category, which includes restaurants, are up 7.7% over last year according to the Consumer Price Index, and food overall is up 10.4%, meaning dining out is becoming relatively less expensive compared to cooking at home.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

Yet, in spite of this, She wrote, “Despite the state of the economy, it's "critically important," interim CEO Howard Schultz told investors in a third-quarter earnings call, "that you all understand we are not currently seeing any measurable reduction in customer spending or any evidence of customers trading down."’ She continued, “Demand has remained strong despite price increases of about 5% over the last year, he said.” 

Meisenzahl stated, “Starbucks is unusual compared to other quick service chains in customers not downgrading to less expensive products.”  With regard to this strong competitive position, Meisenzahl noted that Shultz highlighted popularity with Gen Z customers, Starbucks "significant competitive advantage" in customizing drinks, and its unique cold beverage offerings, as reasons for his company’s relative strength.  

Although SBUX shares have rallied 11.8% during the last month, the credible authors that Nobias follows remain largely bearish on the company’s forward prospects.   79% of recent articles published by the credible authors that the Nobias algorithm tracks (only those with 4 and 5-star Nobias ratings) have included a “Bearish” bias for SBUX shares.   And, the credible analyst community that Nobias tracks is also largely negative on the stock’s prospects.   4 out of the 6 credible Wall Street analysts that Nobias tracks (once again, only those with 4 and 5-star ratings) believe that the value of SBUX shares is likely to fall.   Right now, the average price target amongst the credible analysts covering SBUX is $88.83.  Today, SBUX trades for $86.87.  Therefore, this average price target implies relatively tepid upside potential of approximately 2.2%.  



Disclosure:  Nicholas Ward is long SBUX.   Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Apple (AAPL) with Nobias technology

Apple (AAPL) reported its third quarter earnings last week after the market’s closing bell, posting revenue that was in-line with Wall Street’s consensus and earnings-per-share which beat analyst estimates.   This bottom-line beat allowed investors to breathe a sigh of relief.  Apple shares rallied more than 3% during the trading session of Friday in response to the Q3 data.  

After making recent lows in the $130/share range in mid-June, Apple has rallied roughly 25% to its current share price of $162.51.  Yet, even after this bullish move in recent weeks, the company continues to trade at a discount to its 52-week highs of $182.94.  The credible analysts that Nobias tracks believe that the company’s positive momentum is likely to continue, with an average price target that implies a move back to those prior all-time highs.  

Mike Peterson, a Nobias 5-star rated author, published an article at Apple Insider breaking down the company’s third quarter results.  Peterson said, “Apple has reported that it made a record-breaking $83 billion in the third quarter of 2022, coming slightly ahead of Wall Street expectations for the economically impacted fiscal period.” He continued, “Its Q3 2022 results mark a slight 2% year-over-year increase from the $81.4 billion in revenue reported in 2021.”

AAPL Aug 2022

During the quarter, Apple produced GAAP earnings-per-share of $1.20 during Q3.  This figure was slightly lower than the $1.30/share that Apple produced during Q3 one year ago; however, it did beat analyst consensus estimates on the bottom-line.  

Peterson wrote, “Analysts were expecting Apple to report revenue around $82 billion and earnings-per-share of $1.16 in the June quarter.” Peterson broke down Apple’s operating segments, showing that iPhones and Apple’s Services segment served as the primary growth vehicles for the company during the third quarter.  He wrote, “The company's iPhone revenue reached $40.6 billion, up slightly from $39.6 billion in the year-ago quarter. iPad revenue is down to $7.22 billion, a decrease from $7.37 billion in Q3 2021.” He continued, “Mac revenue went down to $7.38 billion, down from the year-ago revenue of $8.2 billion. Wearables, Home, and Accessories decreased slightly to $8.08 billion, down from $8.8 billion.”

And lastly, Peterson said, “Services, which has long been a growth driver for Apple, brought in $19.6 billion in the June quarter, an increase from the $17.4 billion it raked in during Q3 2021.” Touching upon the macro environment that Apple was operating in during the third quarter, Peterson stated, “Apple's Q3 2022 also saw the brunt of effects from Covid-related disruptions in China and supply chain issues. Although it did not provide formal guidance, Apple warned of a $4 billion to $8 billion revenue hit from those problems.”

Yaёl Bizouati-Kennedy, a Nobias 4-star rated author, published a post-earnings report at Yahoo Finance, where she highlighted the bullish Wall Street response to Apple’s quarter.  Regarding the company’s top-line print, Bizouati-Kennedy wrote, “The revenue figures were “better than expected despite supply constraints, strong foreign exchange headwinds, and the impact of our business in Russia,” Tim Cook said in an earnings call, according to a transcript.” She also quoted Apple’s CFO, Luca Maestri, who spoke on the Q3 conference call as well.  

Maestri said, “Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment. We set a June quarter revenue record and our installed base of active devices reached an all-time high in every geographic segment and product category.  During the quarter, we generated nearly $23 billion in operating cash flow, returned over $28 billion to our shareholders, and continued to invest in our long-term growth plans.”

This bullish tone by management was accepted by Daniel Ives of Wedbush Securities, who is a Nobias 5-star rated Wall Street analyst.  Bizouati-Kennedy highlighted commentary provided by Ives in a recent analyst note.  She said, “Wedbush Securities analyst Dan Ives views revenue of $14.6 billion from “the all-important China region” — down just 1% year-over-year despite the nation’s pandemic shutdowns — as a “‘Top Gun’ Maverick-like feat for Cook and company, and speaks to the overall demand story seen with Apple.”’

Bizouati-Kennedy noted that Ives reiterated his outperform rating on Apple, with a $200/share price target.   According to Bizouati-Kennedy, Ives concluded his research note stating, “Looking ahead, we believe the key to Apple’s success over the next 6-12 months will be the company’s ability to capitalize on the iPhone upgrade cycle while staying on track for the fall of 2022. With China issues and supply chain as a ‘peak issue’ in the rear view mirror for now, Cook and company laser focus their sights on the iPhone 14 production/demand cycle for the September launch of this next key iPhone model. We estimate roughly 225 million Apple customers have not upgraded their iPhones in 3.5 years, creating a strong pent-up demand story with iPhone 14 despite the darkening global macro backdrop.”  

Luc Olinga, a Nobias 4-star rated author, offered a more bearish take on the quarter in a post-earnings article that he published at The Street, titled, “Apple May Have a Big Problem with the Mac and iPad”.   Olinga highlighted the strong iPhone numbers that Apple generated during Q3, but said, “there is a vagueness surrounding two other flagship products: the Mac and the iPad.”  He wrote, “Mac sales were down 10.4% year-over-year  at $7.38 billion and below analysts' expectations of $8.45 billion.” 

Olinga continued, “The resurrection of the iPad observed at the time of the covid-19 pandemic seems to be fading. The iPad's revenue fell 2% to $7.22 billion but came in above analysts' expectations ($6.93 billion), which were very low as there is consensus that Apple may give tablets less priority if the chip shortage continues.” 

Olinga noted the macro headwinds that Peterson highlighted leading to the $4b-$8b headwind in the coming quarter.  He also said, “The dollar has risen more than 13% so far this year and reached a two-decade peak against its global peers earlier this month.”  

The strong dollar hurts the profitability of Apple devices sold in emerging markets.   And, at a higher level, Olinga stated, “Besides these explanations, the Mac and the iPad also suffer from a demand problem on the part of consumers, who have begun to limit their spending in preparation for difficult times.”  He wrote, “Semiconductor makers and computer vendors have warned that demand for PCs and smartphones is slowing across the world. The Mac and the iPad do not seem to be spared by this trend.”   And, this is a problem in Olinga’s eyes, because he wants to see the company continue to diversify its revenue stream.  He stated, “The consumer tech giant from Cupertino, California continues to rely on the iPhone, its flagship product, but until when?”

Luke Lango, a Nobias 4-star rated author, offered a counter argument to Olinga’s thesis in a recently published report titled, “It’s Time to Prepare for the Next Big Apple Product Launch”.  Lango acknowledged Apple’s heavy reliance on the iPhone, stating, “Today, there are more than a billion iPhones across the globe. In the just-ended quarter, Apple sold more than $40 billion worth of them. And it’s now the most valuable company in the world, with a $2.6 trillion market capitalization.”  He continued, “Talk about a revolutionary product. Since the iPhone was first announced, AAPL has risen more than 4,000%, turning every $10,000 investment into more than $400,000!”   But, as he notes, “The smartphone market is saturated.”

Regarding annual iPhone sales, Lango said, “The number of iPhones sold per year by Apple soared from 11.6 million in 2008 to 231.2 million in 2015. Since then, annual unit sales have plateaued between 200- and 240 million units per year.”

Lango transitioned to his next big idea for the company, writing, “Now, what if I told you that Apple was about to do it all over again? What if it were set to release a brand-new product over the next 12 months?”  Lango believes that moving into the car space is going to be the next major bullish catalyst for AAPL stock.   He said, “In 2008, just a year after the launch of the iPhone, Steve Jobs speculated that the company’s next big breakthrough product would be an Apple car.  Nearly 15 years later, that vision is becoming a reality.”

Lango wrote, “Rumors first broke about an Apple car back in 2015. Then in 2017, the company made a dramatic pivot. It decided to ditch making a car in favor of just developing self-driving technology. In another equally dramatic pivot in 2019, Apple switched back to its plans of making a full-scale EV. And just last year, Digitimes reported that Apple will mass produce its long-awaited and highly anticipated Apple car in 2024.”

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

Looking at Apple’s iPhone success, Lango sees similarities to the electronic vehicle market. He wrote, “In 2007, smartphone penetration rates in the U.S. were about 10%. Last year, global EV penetration rates were about 10%.”  He believes that the ~10% market adoption rate is the sweet spot for Apple’s entry into this major global market, stating, “That’s exactly where we are today with EVs. Naturally, Apple is planning to soon launch its own EV.”

Lango does note that the law of large numbers is likely to limit Apple’s upside moving forward.  He said, “With a $2 trillion market cap, Apple stock’s days of scoring investors 10X-plus returns is behind it.” However, he concluded, “if the Apple car is a hit, it’ll be able to grow that business by leaps and bounds for the next 10-plus years!”  

The community of credible authors that Nobias tracks (only those with 4 and 5-star Nobias ratings) don’t share Lango’s enthusiasm for AAPL shares.  61% of recent articles published on Apple by credible authors have expressed a “Bearish” sentiment.  

However, the credible Wall Street analysts that we track (once again, only those with 4 and 5-star Nobias ratings) are much more bullish on the stock.   11 of the 14 credible analysts that have a buy/sell/hold rating on Apple expect to see its share price move higher.   Right now, the average price target being applied to AAPL shares by these credible analysts is $184.91.  Apple closed Friday’s post-earnings trading session up 3.28% to $165.35.  Therefore, that $187.69 average credible analyst price target represents upside potential of approximately 13%.  

Disclosure:  Nicholas Ward is long AAPL.   Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Microsoft (MSFT) with Nobias technology

Microsoft (MSFT) reported its fourth quarter results for its fiscal 2022 year on Tuesday of this week.  Since then, MSFT shares have rallied $251.90 to the $276.00 range.  This 9.5% rally comes on the heels of an earnings report where the company missed consensus estimates on both the top and bottom lines.  Yet, it appears that the market has been more focused on Microsoft’s bullish guidance, as opposed to the disappointing results that the company posted during the fourth quarter.  And, despite several credible analysts lowering their price target for MSFT shares, the credible analysts community that Nobias tracks remains very bullish.  100% of credible analysts that the Nobias algorithm tracks see further upside ahead.  Their average price target implies upside potential north of 20%.  

Kareem Anderson, a Nobiad 5-star rated author, broke down Microsoft’s quarterly results in a report published at OnMSFT.com.   Anderson said, “Microsoft fell just shy of its projections for FY22 Q4, hauling in $51.9B in total revenue and $16.7B in net income on $20.5B in operating income. The diluted earnings per share for investors comes in at $2.23 which represents a 3% increase year over year.” He quickly noted that “This is the first time since 2016 Microsoft failed to meet or exceed its own earnings projections.”

MSFT Jul 2022

Anderson touched upon the operating results from each of MSFT’s major business segments.   Regarding Productivity and Business segment, Anderson highlighted the following metrics: 

• Office Commercial products and cloud services revenue increased 9% driven by Office 365 Commercial revenue growth of 15%

• Office Consumer products and cloud services revenue increased 9% and Microsoft 365 Consumer subscribers grew to 59.7 million

• LinkedIn revenue increased 26%

• Dynamics products and cloud services revenue increased 19% driven by Dynamics 365 revenue growth of 31%

Moving onto Microsoft’s Intelligent Cloud business, Anderson stated, “Server products and cloud services revenue increased 22% driven by Azure and other cloud services revenue growth of 40%”.  

And, looking at MSFT’s Personal Computing date, he highlighted the following metrics:

• Windows OEM revenue decreased 2%

• Windows Commercial products and cloud services revenue increased 6%

• Xbox content and services revenue decreased 6%

• Search and news advertising revenue excluding traffic acquisition costs increased 18%

• Surface revenue increased 10%

Anderson also touched upon MSFT’s shareholder returns during its most recent quarter, writing, “Despite the doom-and-gloomish headlines, Microsoft managed to return $12.4B back to shareholders for the quarter through dividends and repurchases of stocks, which represents an increase on its buyback programs year over year.”

Looking at the risks that the company faces moving forward, he said, “Microsoft warns of increased cloud computing competition, potential government litigation and regulatory activity could pose disruption in next quarter for the company.”

Anderson concluded his piece on a bullish note, saying, “On the positive side, Microsoft's search efforts continue to quietly improve, as the advertising business chalks up another 18% of growth year over year (missing the projected 20%), and that's heading into the big Netflix partnership which see that revenue total increase over time.

Sweta Killa, a Nobias 5-star rated author, also covered MSFT’s Q4 miss in an article published at Yahoo Finance.   Killa noted that MSFT’s $2.23 earnings-per-share figure “represents the lowest earnings growth in two years.”

Nobias 4-star rated author, Patrick Seitz, covered MSFT’s Q4 report in an article at Investors.com and in his piece, Seitz highlighted several of the near-term headwinds that MSFT faced during the quarter which contributed to the consensus miss.  

Regarding MSFT’s Q4 headwinds, Seitz wrote, “Unfavorable foreign exchange rates lowered Microsoft's revenue by $595 million and cut earnings per share by 4 cents in the June quarter, the company said in a news release.” He continued, “Also, Covid-related production shutdowns in China and a deteriorating PC market lowered its Windows software revenue by more than $300 million from the company's target.”

Regarding the macro economy, Seitz stated, “Reduced advertising spending negatively impacted Microsoft's LinkedIn, search and news advertising revenue by over $100 million”.  Lastly, he touched upon ongoing geopolitical issues, writing, “Plus, Microsoft took a hit from scaling down its operations in Russia because of that country's war with Ukraine.”

Seitz quoted Microsoft’s Chief Financial Officer, Amy Hood, who looked past the company’s near-term headwinds to focus on longer-term growth prospects, during the company’s quarterly conference call.  "We continue to expect double-digit revenue and operating income growth in both constant currency and U.S. dollars," Hood said. 

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

"Revenue growth (in fiscal 2023) will be driven by continued momentum in our commercial business and a focus on share gains across our portfolio,” she continued.  This bullish longer-term outlook appears to be key to the rally that MSFT shares have experienced since the Q4 miss.  

Killa touched upon this, stating that while MSFT’s disappointing Q4 results “ended its long track of beating estimates by missing on both earnings and revenues,” the company “issued an optimistic growth forecast.”  Killa continued, “Following the solid guidance, shares of MSFT jumped as much as 6% in after-market trading on an elevated volume.”

The credible analysts that Nobias tracks appear to agree with the positive direction that MSFT shares have embarked upon in recent days.  Right now, 100% of the credible analysts that Nobias tracks who have a price target for MSFT shares (17/17) believe that the stock will continue to head higher.  The average price target that these credible analysts have for MSFT shares is currently $330.   Today, MSFT trades for $280.  Therefore, relative to the current share price, that consensus credible price target of $330 implies upside potential of approximately 20%.  

Disclosure:  Nicholas Ward is long MSFT.   Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.

Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.

Case Study on Verizon (VZ) with Nobias technology

Telecommunications giant, Verizon (VZ), posted Q2 earnings on Friday morning, before the opening bell on Wall Street.  The company missed analyst earnings estimates and posted lower than expected forward-looking guidance, which caused VZ shares to fall by 6.74% on Friday.  After this drop, VZ is lower by 15.24% on a year-to-date basis.  The share price weakness has pushed VZ’s dividend yield up to the 5.75% threshold; well above the S&P 500’s 1.52% yield.  However, the stock’s performance on Friday showed that investors are more concerned about slowing growth than they are about strong dividend income.  

Scott Moritz, a Nobias 4-star rated author, recently published an article at Bloomberg which covered Verizon’s Q2 woes.  He began that piece by stating, “Verizon Communications Inc. shares plunged to their biggest drop in 14 years after the mobile-phone company cut its forecast for the second straight quarter, adding to concerns that consumers are pulling back on spending.”

Regarding the company’s operations, Moritz said, “Verizon said Friday that it added only 12,000 monthly wireless phone subscribers in the second quarter, well below analysts’ predictions for 167,200 new phone customers.”  He also wrote, “Verizon lost a net 215,000 consumer wireless customers in the second quarter and gained 227,000 business customers.” 

Not only is Verizon struggling to grow its subscriber base, but as Moritz points out, Verizon’s rival, AT&T, recently noted that subscribers are having trouble, and even delaying, bill payments.  

VZ Jul 2022

Moritz noted that Verizon management said that late bill payments aren’t an issue for the company at the moment; however, he did say that Verizon recently “returned to free phone promotions in an effort to counter discounts and giveaways by AT&T and T-Mobile US Inc.” alluding to the fact that these promotions are likely to serve as another headwind to its margins and therefore, its bottom-line performance moving forward.  

Regarding full-year guidance, Moritz wrote, “Earnings per share, excluding some items, are now expected to be between $5.10 to $5.25 for the year, down from a range of $5.40 to $5.55, Verizon said Friday in a statement.”  

Reinhardt Krause, a Nobias 5-star rated author, published an article at Investors.com in the aftermath of the company’s sell-off on Friday, which highlighted VZ’s Q2 results.  Krause said, “For the second quarter, Verizon earnings came in at $1.31 a share, excluding items. Revenue rose 3% to $33.8 billion, edging by estimates.” He continued, “A year earlier, Verizon earned $1.37 a share on revenue of $34.77 billion. Analysts had projected Verizon earnings of $1.33 a share on revenue of $33.77 billion.”

Krause also touched upon the disappointing guidance that management provided.  He highlighted the poor earnings-per-share growth data that Moritz put a spotlight on, and continued further, stating, “The telecom now expects adjusted EBITDA growth of minus 1.5% to flat vs. earlier guidance for adjusted EBITDA growth of 2% to 3%.

Krause wrote, “Verizon cut its outlook for wireless service revenue growth to a range of 8.5% to 9.5%, down from 9% to 10%.” In a separate article that Krause published at Investors.com on Friday, he quoted Craig Moffett, analyst at MoffettNathanson, who spoke about the tough competitive landscape that Verizon finds itself in.  "They have built their brand on a decades-long positioning as the nation's 'best network' and they have been able to charge a premium for that positioning," Moffett said. "Unfortunately, as we enter the 5G era, we believe T-Mobile, not Verizon, will have bragging rights to best network status."

Krause also included a Moffett quote, which read, "As subscriber growth in an already-saturated wireless industry decelerates back towards population growth, we believe Verizon will be hard-pressed to post positive unit growth."

Krause wrote about another potential headwinds for Verizon moving forward: a high debt load and too few cash flows to repurchase shares into the stock’s recent bout of weakness.   He said, “One overhang on VZ stock involves mid-band radio spectrum it bought for 5G wireless services. Verizon stock spent $53 billion in a government auction, including incentive payments to satellite operators and clearing costs. The purchase of midband spectrum for 5G services will delay a VZ stock buyback.”  

With regard to that spectrum auction, Krause stated, “Now that Verizon owns sufficient 5G midband spectrum, its network buildout will be key. Verizon aims to reach 175 million people by the end of 2022 with midband spectrum-based 5G services that provide faster data speeds.”  However, he continued, “Revenue growth remains an issue. Verizon's long-range problem is that the U.S. wireless market is saturated. Many consumers have delayed upgrading to new smartphones. Plus, data-gobbling mobile video hasn't panned out as a big moneymaker.”

Moving forward, Krause says that “Pundits expect 5G wireless to have a role in manufacturing automation, cloud gaming, autonomous vehicles, drones and remote health care services.”   Therefore, the 5th industrial revolution and several of the secular growth trends associated with it could provide long-term demand and fundamental growth opportunities for Verizon.  

Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.

However, the stock is trading for just 8.6x the mid-point of management’s new guidance range.  This single digit P/E ratio clearly points towards negative sentiment surrounding the stock on Wall Street.   During the company’s Q2 report, Verizon’s Chief Financial Officer, Matt Ellis, acknowledged his company’s near-term issues, but maintained a bullish stance looking out over the long-term.  

Ellis said, "Although recent performance did not meet our expectations, we remain confident in our long-term strategy.  We believe that our assets position us well to generate long-term shareholder value." However, looking at the data collected by the Nobias algorithm, it appears that even with a historically low valuation attached to shares, the majority of credible authors are bearish on the stock.  57% of recent articles published by authors with 4 and 5-star Nobias ratings have expressed a “Bearish” bias. 

Right now, the average price target that the credible Wall Street analysts that we track for VZ shares is $56.  That figure implies upside potential of approximately 25.4%.  Yet, we’ve already seen credible analyst come out with post-earnings updates which included lowered price targets in recent days (such as Nobias 4-star rated analyst, Peter Supino of Wolfe Research, who reduced his VZ price target from $60 to $51, and Douglas Mitchelson from Credit Suisse who is a Nobias 4-star rated analyst, who reduced his VZ price target from $58 to $54).   If this trend continues, VZ’s average price target will drop, resulting in a narrower margin of safety.  

Disclosure:  Nicholas Ward is long VZ.   Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.

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