Charged Alpha Stock Encyclopedia

Charged Alpha Stock Encyclopedia

By Colton ThomasBusinessInvesting
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Charged Alpha Stock Encyclopedia episodes

  • Marzetti (MZTI) Q4 FY2026: One Restaurant Chain Is 30% Of The Company
    The Marzetti Company (MZTI) Q4 FY2026 — Q4 FY2026 (quarter and fiscal year ended June 30, 2026): Q4 net sales $465.0m, DOWN 2.19%; adjusted diluted EPS $1.46 vs a $1.40 bar; GAAP $1.76. FY2026 net sales $1,929.8m, adjusted EPS $6.83. Reported BEFORE the bell Aug 25 (8-K accepted 07:38 ET); shares gapped +2.74%, closed +1.37%, then fell 3.32% on Aug 26.
    Marzetti (formerly Lancaster Colony) reported adjusted EPS of $1.46 against a $1.40 bar and net sales of $465.0m against $479.0m. But the fact that reframes the business is in the 10-K: one privately held restaurant chain, Chick-fil-A, is 30% of consolidated net sales ($575.7m of $1,929.8m), up from 29% and 28%, and Marzetti sits on BOTH sides of it - licensee of the brand in the grocery aisle, private-label supplier to the kitchens. In FY2026 the licensed half (Retail) saw operating profit FALL 3.79% to $203.7m while the private-label half (Foodservice) grew it 17.70% to $131.3m. We value MZTI at $136.61 against $113.45 and rate it BUY, conviction 3/5.
    THE CALL: BUY (3/5, THE PROFIT ENGINE MOVED TO THE UNBRANDED HALF) — base-case value ~$136.61 vs ~$113.45 today.
    KEY METRICS:
    - CONCENTRATION: Chick-fil-A is $575.7m of $1,929.8m of FY2026 net sales - 30%, up from 29% and 28% - across BOTH a Foodservice supply relationship and an exclusive Retail licence. Its sales grew $27.5m; the company grew $20.7m, so the other $1.35bn FELL 0.50%.
    - THE TWO HALVES: Foodservice operating profit +17.70% to $131.3m at a 14.17% margin, best of five filed years; Retail -3.79% to $203.7m at 20.31%. Segment profit rose $11.7m and Foodservice supplied $19.8m of it - 168.5%.
    - THE BRANDED PREMIUM: Retail's margin advantage over Foodservice was 1,002bp in FY2024, 878bp in FY2025 and 614bp now - 38.7% of it gone in two filed years.
    - EPS BASIS, PROVED: the four filed FY2026 quarters of GAAP diluted EPS (1.71+2.15+1.35+1.76) sum to $6.97 vs a filed annual $6.98. The $1.46 reported as 'actual' is ADJUSTED; GAAP Q4 was $1.76 on an $18.5m land-sale gain in operating income.
    - THE MISS WAS PRE-ANNOUNCED: $465.0m against a $479.0m bar is a $13.9m shortfall, and $12.2m of it - 87.5% - is a supply agreement the company said in May had already ended.
    - THE DEAL: Bachan's closed May 1 for $399.3m, the largest in company history and 27% of total assets, adding $15.4m in two months - 4.31x annualised sales against 1.61x for MZTI itself. $161.5m of net cash became $174.9m of net debt.
    - THE MODEL: owner earnings $182.2m (midpoint of a $193.8m cash build and a $170.5m profit build), 6.97% WACC carrying a full point of concentration premium, blended 50/50 with 12.0x EBITDA = $136.61. Street average $131.67, all holds.
    What to watch: UP: a 63rd straight year of dividend increases, a 3.48% yield covered 1.90x by free cash flow, Foodservice margin at a five-year high, and a $170.04 bull case. DOWN: Retail pounds fell 3.2% ex-Bachan's and the licence agreements can end on short notice.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • Gold Fields (GFI) H1 2026: The Earnings Were Public 14 Days Early
    Gold Fields Limited (GFI) H1 2026 — H1 2026 (six months ended June 30, 2026): revenue $5,936.9m from continuing operations, UP 79%. Profit attributable to owners $1,854.6m, or $2.07 a basic share, UP 81%. Interim payout 1,625 SA cents, UP 132%. Released on SENS in Johannesburg on Aug 25; the ADSs closed +3.25% on 1.11x median volume.
    Gold Fields reported profit attributable to owners of $1,854.6m for the six months to June 30, 2026 - up 81% - and more than doubled its interim payout to 1,625 SA cents. But paragraphs 6.26-6.33 of the JSE Listings Requirements had already forced it to publish that earnings range on August 11: headline earnings of $1.98-$2.18 a share. The print was $2.08, the EXACT midpoint. We value GFI at $38.05 against $47.82 and rate it SELL, conviction 3/5.
    THE CALL: SELL (3/5, A GREAT HALF THE COMPANY DID NOT CREATE) — base-case value ~$38.05 vs ~$47.82 today.
    KEY METRICS:
    - PRE-ANNOUNCED: the JSE-mandated trading statement of August 11 guided headline earnings to $1.98-$2.18 a share. The print, 14 days later, was $2.08 - the exact midpoint. Basic earnings guided $1.97-$2.17 and printed $2.07.
    - SO WAS THE CASH FLOW: adjusted free cash flow before discretionary growth was guided to $2,385m-$2,636m. Midpoint $2,510.5m; filed $2,510.0m - 0.02% away. Output guided 1,260koz, printed 1,267koz; AISC guided $1,900/oz, printed $1,893/oz.
    - SO WAS THE PAYOUT: policy is a fixed 35% of that cash flow. 35% of $2,510.0m is $878.5m, or 98.3c a share; the declared 1,625 SA cents is 99.1c at the filed June 30 rate of R16.39. The only new number was $500m added to the returns programme - 1.17% of market value.
    - PRICE, NOT PERFORMANCE: revenue per ounce $3,089 to $4,681, AISC $1,682 to $1,893, on 1,126koz to 1,292koz sold. The cash margin pool rose $2,017.8m: metal +$1,792.6m, volume +$233.6m, unit cost -$237.6m, interaction +$229.2m. Volume less cost is MINUS $4.0m.
    - SEVEN OF NINE MINES PRODUCED LESS GOLD: Gruyere -17%, St Ives -8%, Agnew -15%, South Deep -1%, Tarkwa -18%, Damang -57%, Cerro Corona -42%. Salares Norte alone added 213.3koz against a group increase of 131koz. Eight of nine saw dollar AISC rise; six by more than 30%.
    - NO SUPERLATIVE INHERITED: H2 2025 reported $2,540.7m of attributable profit against this half's $1,854.6m, because it holds a $808.2m NON-CASH gain on remeasuring the prior 50% of Gruyere. On headline earnings, $1,854.7m IS the largest half filed.
    - THE VALUATION: 2.5Moz a year at $2,011/oz of all-in cost outside Windfall, inflating 2.5%, taxed 32%, discounted 9% over 18 years, gold held FLAT at $4,598/oz. Fair value $38.05 vs $47.82 - and $47.82 implies a flat $5,183/oz forever, 12.7% above spot.
    What to watch: UP: net cash of $22.4m excluding leases, 0.06x leverage, $2,225.3m of adjusted free cash flow in six months, and a $51.59 bull case if gold keeps pace with inflation. DOWN: seven of nine operations produced LESS gold and the price already discounts a flat $5,183/oz.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • J.M. Smucker (SJM) Q1 FY2027: 80% Of The Raise Was A Tariff Refund
    The J.M. Smucker Company (SJM) Q1 FY2027 — Q1 FY2027 (quarter ended July 31, 2026): net sales $2,219.3m, UP 5.02%. GAAP diluted EPS $3.03; adjusted $3.24 against a $2.22 bar. FY2027 guide raised to $10.50-$11.00 from $9.75-$10.25. Reported BEFORE the bell Aug 26 (8-K header 07:02 ET); shares opened +7.45% and closed +4.34%.
    Smucker reported adjusted earnings of $3.24 a share against a $2.22 consensus bar - up 71% - and raised its full-year guidance midpoint by $0.75. The shares rose 4.34%. But $0.84 of that quarter is a refund of import duties Smucker had already paid: $115.0m landed in cost of products sold, plus $4.0m of interest, under IEEPA claims filed in April 2026. That is 82.35% of the entire beat - and the company says $0.60 of the $0.75 raise is the same money, so 80.00% of the raise is a customs refund the 10-Q says has now been substantially all collected. We value SJM at $125.56 against $130.90 and rate it HOLD, conviction 3/5.
    THE CALL: HOLD (3/5, A DEPENDABLE DIVIDEND, A BORROWED EARNINGS YEAR) — base-case value ~$125.56 vs ~$130.9 today.
    KEY METRICS:
    - THE REFUND, DERIVED: $115.0m of IEEPA duty refunds in cost of products sold plus $4.0m of interest = $119.0m pre-tax; at the filed 24.2% rate on 107.1m diluted shares that is $0.8422 a share. The company says $0.84.
    - THE BEAT: adjusted EPS $3.24 vs a $2.22 bar = a $1.02 beat, of which $0.84 (82.35%) is the refund. Ex-refund the quarter earned $2.40 - growth of 26.32%, not 71% - and beat by $0.18.
    - THE RAISE IS SMALLER THAN THE WINDFALL: the FY2027 midpoint went $10.00 to $10.75, up $0.75, against $0.84 already banked in Q1. The company states $0.60 of the range is the tariff benefit = 80.00% of the raise; $0.15 is the business.
    - THE SPEND: the SD&A guide moved from +5.0% to +8.0% on a filed $1,496.6m base = $44.9m of new planned spending - the $0.24 a share difference between the $0.84 received and the $0.60 retained.
    - THE MARGIN GUIDE FELL: adjusted gross margin guided 38.00% to 38.75%, but the release says the new figure now includes the $115.0m of refunds. Ex-refund it is 37.46%, DOWN 54bp - and the $181.0m of revenue added to the guide earns 11.41 cents on the dollar.
    - COFFEE IS A CYCLE: segment margin 37.14% vs 18.71% (+1843bp), best of five filed quarters, and 87.49% of the rise in segment profit. But across fiscal 2026 coffee sales rose 17.75% while coffee profit FELL 11.77%.
    - THE BALANCE SHEET: net debt $6,694.6m, leverage 2.92x trailing EBITDA vs 3.76x in April - but 3.07x with the refund stripped out. Dividend $4.48 (3.42%), 41.67% payout, covered 2.29x by guided free cash flow.
    What to watch: UP: a $4.48 dividend, a 3.42% yield covered 2.29x by guided free cash flow, net debt down $210.5m in the quarter, and a $151.42 bull case if the 37.14% coffee margin is a new level. DOWN: net sales are still guided to FALL 1-2% and the ex-refund gross margin guide fell 54bp.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • Semtech (SMTC) Q2 FY2027: Paid $1.24B, Selling It For $62M
    Semtech Corporation (SMTC) Q2 FY2027 — Q2 FY2027 (quarter ended July 26, 2026): net sales $341.9m, UP 32.73%, an all-time quarterly record. GAAP diluted EPS $1.59; adjusted $0.71 against a $0.614 bar. Q3 guided to $410.0m and $1.05. Reported AFTER the close Aug 25 (8-K header 16:06 ET); shares closed +10.41% on Aug 26 on 5.17x median volume.
    Semtech filed the largest quarter in its history - net sales of $341.9m, up 32.73% - and guided the third quarter to $410.0m and $1.05 a share. The shares rose 10.41%. But reported EPS of $1.59 sits ABOVE adjusted EPS of $0.71, which is backwards for a semiconductor company: pre-tax income was $54.7m and the tax line was a $101.4m BENEFIT, 63.34% of net income, on a $112.4m non-cash release of a U.S. valuation allowance carried since fiscal 2024. And twelve days before the print, Semtech agreed to sell 14.07% of its revenue for $62.0m. We value SMTC at $140.07 against $140.80 and rate it HOLD, conviction 3/5.
    THE CALL: HOLD (3/5, A REAL INFLECTION AT A FAIR PRICE) — base-case value ~$140.07 vs ~$140.8 today.
    KEY METRICS:
    - THE ROUND TRIP: $1,240.8m paid for Sierra Wireless; $847.9m of goodwill written off (68.34%); $62.0m agreed sale price to Compal Electronics = 5.00% of the purchase price.
    - TWO PRICES FOR REVENUE: the disposal group did $48.1m of sales (14.07% of the company) at a 22.66% gross margin. Compal pays 0.322x annualised revenue; SMTC trades at 10.59x - a 32.9x gap.
    - NO LOSS ON SALE: assets held for sale $132.2m less liabilities held for sale $70.7m = $61.5m net book value against a $62.0m price.
    - THE TAX ENTRY: pre-tax income $54.7m, tax line a $101.4m BENEFIT (63.34% of net income), from a $112.4m non-cash valuation allowance release. At an 18% rate the quarter earns ~$0.49.
    - WHAT WORKS: Signal Integrity +64.32% to $126.2m at 65.3% gross margin - 58.6% of the entire revenue increase. Infrastructure +68.70%; IoT +10.70% with gross margin -550bp.
    - THE GUIDE: Q3 net sales $410.0m (+19.92% seq), adjusted EPS $1.05 (+47.89%), adjusted operating margin 31.0% vs 24.40%; incremental margin 63.73%.
    - THE TAPE: +10.41% on Aug 26, 5.17x median volume, 3rd heaviest of 256 sessions. +190.49% in twelve months and still 19.42% below the $174.73 closing high of June 22.
    What to watch: UP: the guided quarter implies a 63.73% incremental adjusted operating margin against a 24.40% base, and Signal Integrity grew 64.32% at a 65.3% gross margin. DOWN: the case spread is 312%, the bear values the company near where it traded twelve months ago, and the divestiture still needs regulatory approval.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • Williams-Sonoma (WSM) Q2 FY2026: A 6.2% Comp That Moved The Stock 1%
    Williams Sonoma (WSM) Q2 FY2026 — Q2 FY2026 (13 weeks ended August 2, 2026): net revenues $1.96bn, UP 6.70%, comparable brand revenue +6.2%. GAAP diluted EPS $2.84; non-GAAP $2.10 against a $2.08 bar. Outlook RAISED. Shares opened -4.58% and closed +1.15% at $237.43 on 2.34x median volume.
    Comparable brand revenue grew 6.2%, the best of the eight filed quarters we assembled, and every brand was positive. But $123.0m of new revenue produced only $10.4m of new operating profit on the company's own adjusted basis - 8.47 cents on the dollar, against a base business earning 17.3 cents. Occupancy (+40bp) and supply chain (+30bp) both levered; merchandise margin, which the release attributes to tariff costs, took 230bp. That is why the RAISED margin guide of 17.8%-18.2% still has a midpoint BELOW the 18.1% fiscal 2025 delivered.
    THE CALL: SELL (4/5, AN EXCELLENT RETAILER AT A FULL MULTIPLE) — base-case value ~$177.58 vs ~$237.43 today.
    KEY METRICS:
    - THE INCREMENTAL DOLLAR: $123.0m of new revenue produced $27.0m of new non-GAAP gross profit (21.96 cents) and $10.4m of new non-GAAP operating profit - 8.47 cents on the dollar against a 17.3% base margin, 48.98% of the base rate. Over the half: 5.75 cents.
    - THE DEMAND SIDE IS FINE: comparable brand revenue +6.2%, the best of eight filed quarters, on revenue +6.70% to $1.96bn. Pottery Barn (39.33% of the quarter) went from -2.3% two quarters ago to +5.1%. West Elm +6.4%, Williams Sonoma +7.6%, Kids and Teen +3.5%.
    - THE COMPANY'S OWN BRIDGE: occupancy leverage +40bp and supply chain efficiency +30bp against merchandise margin -230bp, which the release attributes to tariff costs - about $45.1m at this quarter's revenue. The two scale wins covered 30.43% of the tariff bill.
    - THE INVERTED GAAP SPREAD: reported EPS $2.84 sits ABOVE non-GAAP $2.10 because of a $167.8m IEEPA tariff refund inside cost of goods sold plus $6.3m of interest, less a $47.5m vendor provision and a $10.0m one-off 401(k) cost - $116.7m pre-tax, $0.74 a share.
    - THE RAISE IS A REVENUE RAISE: the margin band went 17.5%-18.1% (18 March), was reiterated word for word (21 May), and became 17.8%-18.2% (26 August) - a 20bp midpoint move against 125bp on revenue. FISCAL 2025 DELIVERED 18.1%, above the 18.0% midpoint.
    - THE PRICE: 23.94x trailing earnings against a 15.80x median we measured across 25 quarterly observations. Since March 2023 the shares are up 4.06x and trailing earnings 1.18x - 88.1% of the return is re-rating. At 9.5% the price needs 5.52% growth forever.
    - THE COUNTERWEIGHT, WHICH IS REAL: zero borrowings, $1,028.9m of cash, a filed 42.3% return on invested capital and the best operating margin on our board. Fiscal 2025 returned $1.17bn - 110.9% of that year's free cash flow. Our bull case $244.59 clears the tape.
    What to watch: UP: merchandise margin recovering as the tariff comparison laps - management called Q2 the peak quarter of tariff pressure. DOWN: the raised guide needs second-half margin EXPANSION after a first half in which it fell 60bp, at 23.94x against a 15.80x six-year median.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    16 min
  • Intuit (INTU) Q4 FY2026: They Changed What Earnings Means
    Intuit (INTU) Q4 FY2026 — Q4 FY2026 (year ended July 31, 2026): Q4 revenue $4,354m (+13.65%) vs a $4,266.8m bar; Q4 adjusted EPS $4.03 vs $3.58 - a 12.6% BEAT. Full year: revenue $21,448m (+13.90%), adjusted EPS $24.27 (+20.45%). Shares gapped -9.51% and closed -3.24% at $345.88.
    Effective August 1, 2026 - day one of the year it was guiding - Intuit stopped excluding share-based compensation from non-GAAP. FY2026's reported $24.27 contained $7.42 a share of added-back stock pay. The FY2027 guide of $22.88-$23.12 INCLUDES $5.81 of it, so the printed figure FALLS 5.2% while the release advertises +23% to +24% growth - against a restated base of $18.63 printed nowhere in the document.
    THE CALL: BUY (3/5, CHEAP ON THE GUIDE IT WROTE, NOT THE ONE THE STREET READ) — base-case value ~$413.13 vs ~$345.88 today.
    KEY METRICS:
    - THE DEFINITION CHANGED ON DAY ONE OF THE GUIDED YEAR: from Q1 FY2027 non-GAAP no longer excludes share-based compensation. FY2026's $24.27 added back $2,056m of stock pay - $7.42 a share pre-tax, 30.6% of the reported figure. The FY2027 guide includes $5.81 of it.
    - SO THE GUIDE IS SMALLER THAN LAST YEAR AND STILL CALLED GROWTH: $22.88-$23.12 is 5.2% BELOW the $24.27 just reported, yet the release prints '+23% to 24%'. Reconstructed: $2,056m at the company's own 24% non-GAAP rate over 277m shares is $5.64; $24.27 less $5.64 is $18.63 - a base never printed.
    - A 21.3-POINT SWING IN ONE NUMBER: against the Street's $27.30 FY2027 bar the headline guide reads -15.8%, a miss. Add the $5.81 back and it reads +5.5%, a beat. Proof the bar is on the old basis: Q1 guidance of $2.46 plus its own stated $1.48 of stock pay is $3.94 vs a $3.99 consensus.
    - THE REVENUE LINE HAS NO ACCOUNTING DEFENCE: Table E shows GAAP revenue IS non-GAAP revenue. FY2027 guided $23,279-$23,512m = +8.5% to +9.6% against +13.9% delivered, and 1.4% under the $23.72bn Street figure. The three-year GBS target was cut on the call from 15-20% to 10-15%.
    - TURBOTAX GREW ON PRICE, NOT PEOPLE: US federal units FELL 2.3% to 39.0m and desktop fell 6.8%, while TurboTax revenue rose 7% to $5.3bn. FY2027 guides TurboTax +2.2%. Mailchimp was carved into its own segment in the same release that guides it to -1% to 0%.
    - A 17% WORKFORCE CUT MOVED THE STOCK-PAY BILL 1.8%: the May 20 8-K estimated $300-340m of charges; the charge landed at $293m, BELOW its own low end, all in Q4 - 61.7% of that quarter's $475m of GAAP operating income. Yet FY2027 stock pay is guided $2,020m vs $2,056m.
    - THE BALANCE SHEET TAKES ALMOST NOTHING OFF THE TABLE: $7.2bn cash and investments vs $7.7bn debt, so net debt is $469m. Operating cash flow $8,838m (+42.4%), but $1,279m is deferred tax, so normalised free cash flow is $7,338m - a 7.76% yield.
    What to watch: UP: the October quarter, guided +11% against a full year of 9-10%, and TurboTax units turning positive after falling 2.3%. DOWN: another year of falling federal units, or the cut 10-15% GBS target being cut again on September 17.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    13 min
  • Abercrombie & Fitch (ANF) Q2 FY2026: Up 36% On A Zero Comp
    Abercrombie and Fitch (ANF) Q2 FY2026 — Q2 FY2026 (13 weeks ended August 1, 2026): net sales $1,266.7m, UP 4.81%, a second-quarter record, against a $1,247.9m bar. Diluted EPS $4.17 against a $1.99 bar and $2.32 adjusted a year ago. CONSOLIDATED COMPARABLE SALES: +0%. Shares closed +35.67% at $147.75 on 12.27x median volume.
    The two brands traded places. Abercrombie brands comped +4% against -11% a year ago; Hollister comped -3% against +19%. A 15-point swing one way, a 22-point swing the other, and the consolidated comparable sales line came out at exactly 0% - so all 4.81% of the net sales growth is square footage and channel. Strip the company's own $1.75 a share of IEEPA tariff refund and net income FELL 5.43%, while EPS still rose 4.31% on a 9.27% smaller share count.
    THE CALL: HOLD (3/5, A GOOD BUSINESS AT A PRICE THAT ASKS FOR MORE) — base-case value ~$142.18 vs ~$147.75 today.
    KEY METRICS:
    - THE HANDOFF: Abercrombie brands comped +4% (from -11%) and Hollister -3% (from +19%) - a +15 and a -22 point swing that cancel, leaving CONSOLIDATED COMPARABLE SALES at exactly +0%. Hollister is the LARGER brand at 52.88% of net sales.
    - SO THE GROWTH IS SPACE: net sales +4.81% to $1,266.7m with a zero comp, so all 4.81 points are new square footage, channel and currency. Guidance is ~30 net openings (50 openings, 20 closures) plus 80 remodels on roughly 850 stores.
    - STRIP THE REFUND: ~$100m of IEEPA tariff refunds landed inside cost of sales, worth $1.75 a share after tax on the company's own arithmetic - 41.96% of net income. Ex-refund net income was $106.6m against $112.8m adjusted, DOWN 5.43%.
    - BUT EPS STILL ROSE 4.31% ($2.42 vs $2.32) because diluted shares fell 9.27% to 44.05m. The 9.74-point wedge between falling profit and rising per-share earnings is entirely the buyback: 3.2m shares retired this year at an average of $88.13.
    - THE UNDERLYING MARGIN CONTRACTED: on the company's own quarterly tariff table the year-on-year swing was 690bp, so operating margin ex-tariffs was 13.05% against 13.91% adjusted last year - DOWN 86bp. Selling expense rose 18.3% and G&A 16.8% on sales up 4.81%: a 566bp rise in the cost ratio.
    - THE RAISE, DECOMPOSED: the full-year EPS midpoint went $10.60 to $13.35, a $2.75 raise - of which the company's own full-year refund estimate, inclusive of interest, is $2.10. That is 76.36%. The underlying raise is $10.60 to $11.25, or +6.13%, against a +35.67% day: a 5.82x ratio.
    - THE PRICE: at $147.75 that is 13.13x the recurring $11.25 against 10.27x paid for the old forecast the day before - a 27.8% re-rating. Net cash is $638.0m with nothing drawn, inventories DOWN 0.2% on sales up 4.81%, and $500m of buyback is ~7.87% of market value.
    What to watch: UP: Hollister comps turning positive while Abercrombie holds, and the selling and administrative cost ratio - up 566bp this quarter - stopping its climb. DOWN: a second negative Hollister quarter takes the consolidated comp negative, and fiscal 2027 is the first year with no refund in it.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • DICK’S Sporting Goods (DKS) Q2 FY2026: The Worst Day In 5,000 Sessions
    DICK'S Sporting Goods (DKS) Q2 FY2026 — Q2 FY2026 (13 weeks ended August 1, 2026): net sales $5,586.8m, UP 53.2%, against a $5,642.9m bar. Operating income $440.8m, DOWN 2.5%. Non-GAAP EPS $3.53 against a $3.74 bar and $4.38 a year ago; GAAP $3.50 against $4.71. DICK'S Business comps +4.9%; Foot Locker proforma comps -3.6%. The shares closed at $124.31, down 30.68% on 38,849,960 shares.
    One ticker now holds two retailers moving in opposite directions. The DICK'S Business comped +4.9%, grew segment profit 2.16% to $485.2m and had its full-year comparable-sales outlook left untouched. Foot Locker, 31.1% of the quarter's sales, comped -3.6% and LOST $31.9m. Full-year operating profit guidance came down $260.5m at the midpoint and 73.08% of that cut is Foot Locker, from a business that is 33.79% of the guided revenue. The shares fell 30.68% - the worst session in 5,000 of price history.
    THE CALL: BUY (3/5, A HEALTHY TWO-THIRDS BEING GIVEN AWAY WITH A SICK THIRD) — base-case value ~$155.39 vs ~$124.31 today.
    KEY METRICS:
    - THE SPINE: non-GAAP operating income IS the sum of the two segment profits, to the dollar, in both years: $485,204k of DICK'S plus a $31,876k Foot Locker LOSS = $453,328k. DICK'S ADDED $10.3m (+2.16%); Foot Locker SUBTRACTED $31.9m. No attribution argument is available.
    - THE GUIDANCE CUT: full-year non-GAAP operating profit $1.77bn -> $1.51bn, a $260.5m midpoint cut. DICK'S gave back $70m; Foot Locker swung from a guided +$130m PROFIT to a -$60m LOSS = $190m, 73.08% of the cut on 33.79% of guided revenue. The DICK'S comp outlook was MAINTAINED at +2.5% to +4.0%.
    - THE DILUTION, MEASURED: non-GAAP EPS fell $0.85, $4.38 to $3.53. Holding earnings constant and moving only the share count, $0.3964 - 46.89% - is nothing but the 9.6 million shares issued to buy Foot Locker. Diluted shares went 81.0m to 90.1m.
    - THE PRIOR-YEAR DISTORTION: the $4.71 GAAP comparison contained $49.7m pre-tax of non-cash gains on DICK'S pre-bid stake in Foot Locker equity - $0.4542 a share, 37.54% of the GAAP decline. 81.6% of the whole pre-tax decline is that one non-operating line.
    - THE PROPORTIONALITY TEST: enterprise value fell $17.16bn to $12.20bn - $4.96bn in one session - against a $260.5m cut to this year's operating profit. That is 19.04x the cut: 50.9% the earnings reset at Monday's multiple, 49.1% the multiple itself, 9.69x to 8.08x.
    - THE REVERSE SOLVE: hold the DICK'S Business at 10.0x its own guided $1.57bn of segment profit and it is worth $15.70bn - $3.50bn MORE than the entire enterprise. Foot Locker is worth exactly zero only if DICK'S itself is worth 7.77x.
    - THE TAPE: $179.33 to $124.31, -30.68%, on 38,849,960 shares = 32.9x the median and 1st of 252 sessions. It gapped -20.62% and closed 1.38% off its own low. Worst of 5,000 sessions since October 2006; the prior worst was -24.15% in August 2023.
    - CAPITAL RETURN: net debt $992.6m, 0.66x guided operating profit, revolver undrawn. The board declared $1.25 a share on August 24, the day BEFORE the print - an annual $5.00, a 4.02% yield here against 2.79% the day before, 43.5% of guided earnings. The half's buyback went at $196.38, now -36.70%.
    What to watch: UP: a real repurchase against the $3.00bn unused authorisation, and a Foot Locker proforma comp that stops deteriorating in the November quarter. DOWN: Foot Locker inventory rising into a falling comp, which would take the announced clean-up bill above the current $750m ceiling.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    14 min
  • Napco Security (NSSC) Q4 FY2026: A Record Quarter With A Customs Refund Inside It
    Napco Security (NSSC) Q4 FY2026 — Q4 FY2026 (three months ended June 30, 2026): net revenue $55.809m, UP 10.03%, an all-time quarterly record. Net income $17.767m, UP 52.74%, also a record. Diluted EPS $0.50 against a $0.3867 Street bar - but the release states $0.09 of it is net tariff refunds. Shares OPENED UP 21.19% at $46.16, printed $51.77, and CLOSED DOWN 1.31% at $37.59 on 6.76x median volume.
    Napco printed record revenue and record net income in the June quarter, and the stock opened up 21%, printed a 52-week high inside thirty minutes and closed down 1.31%. The reason is in the company's own headline bullet: $0.09 of the $0.50 is a refund of import duty from U.S. Customs after the Supreme Court struck the IEEPA tariffs down. Note 14 of the 10-K puts the figure at $3,353,000, all of it booked to cost of goods sold in one quarter.
    THE CALL: HOLD (3/5, A GENUINE RECORD QUARTER WITH A CUSTOMS REFUND INSIDE IT, AT A PRICE THAT ALREADY PAYS FOR THE HALF THAT COMPOUNDS) — base-case value ~$34.51 vs ~$37.59 today.
    KEY METRICS:
    - THE SPINE: a $3,353,000 IEEPA tariff refund, ALL of it recognised in the June quarter's cost of goods sold. That is 601bp of the quarter's gross margin and $0.09 a diluted share - 79.44% of the entire beat against the $0.3867 Street bar.
    - SEVEN OF THE NINE CENTS ARE A REVERSAL: only $1,003,000 of the refund relates to a prior year. The other $2,350,000 - 70.09% - gives back duty Napco paid in its own first three quarters, which is why the FULL YEAR benefit is 50bp and $0.03.
    - AND IT IS NOT CASH: $2,931,000 of the $3,353,000 was still a receivable at June 30 - 87.41% of it, and 49.96% of the entire increase in accounts receivable. Replacement tariffs are already imposed under Section 122 and Section 301.
    - STRIP IT AND THE BEAT IS TWO CENTS: $0.50 less $0.09 is $0.41 against a $0.3867 bar - a 6.03% beat, not 29.30%. $0.41 is also the figure the newswires printed at 10:22 ET while the screen showed the stock up 14.2%.
    - THE PRICE RISE THAT LOST ITS COST: 71.67% of the year's 10.0% equipment growth was PRICE (7.14 points) against 2.82 points of volume, on the company's own MD&A percentages. The access alarm division shipped 15.2% FEWER units.
    - THE HALF THAT COMPOUNDS: recurring service revenue is 48.21% of sales at a 90.3% gross margin and 73.49% of all gross profit. But the company's own exit run rate grew 9.57% ($94m to $103m) while reported recurring revenue grew 12.97%.
    - THE CALL: HOLD, conviction 3/5, fair value $34.51 against $37.59 (-8.19%). EV of $1.21bn is 19.44x normalised EBITDA of $62.079m, a 34.6% premium to Allegion at 15.77x and Alarm.com at 13.13x. Five named Street houses average $50.80.
    What to watch: UP: a September-quarter gross margin holding near 55.30% with replacement duties in force, OR next August's recurring run rate implying growth back above 12.97%, OR a resumed buyback. DOWN: Section 122 and Section 301 duties replacing what was refunded, unit volume staying near 2.82%, or the second shareholder class action turning into cash.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    15 min
  • PDD Holdings (PDD) Q2 2026: Revenue +8%, Earnings -12%, And A $61bn Portfolio
    PDD Holdings (PDD) Q2 2026 — Q2 2026 (three months ended June 30, 2026): total revenue RMB112,358m (US$16.6bn), UP 8.05%. Operating profit RMB27,764m, UP 7.64%. Net income attributable to ordinary shareholders RMB27,182m, DOWN 11.61%. Non-GAAP diluted EPS per ADS RMB19.33 (US$2.85); GAAP diluted RMB18.45 (US$2.72). Shares closed at $87.07, DOWN 1.48% after opening UP 2.91%.
    PDD Holdings grew revenue 8.05% and operating profit 7.64% in the June quarter, and net income FELL 11.61%. Every step between the two sits below the operating line, and one of them - other income, net - swung RMB7,518m in the quarter and RMB12,810m across the half, 2.35x everything operating profit added. Neither the release nor the audited 20-F ever decomposes it.
    THE CALL: BUY (3/5, A CHEAP PLATFORM, A HUGE PORTFOLIO NOBODY CAN REACH, AND EARNINGS SET BELOW THE OPERATING LINE) — base-case value ~$99.21 vs ~$87.07 today.
    KEY METRICS:
    - THE SPINE: operating profit RMB27,764m, UP 7.64%, against net income RMB27,182m, DOWN 11.61%. Across the half operating profit is UP 13.02% and net income DOWN 12.68%. The bridge closes to the RMB million and every step of it is non-operating.
    - THE LINE NOBODY EXPLAINS: other income, net swung RMB7,518m in the quarter and RMB12,810m across the half - 2.35x what operating profit ADDED. On SEC XBRL it was POSITIVE every year 2020-2025, best ever RMB3,119.8m. The half alone is -RMB9,430m.
    - HALF THE COMPANY IS A PORTFOLIO: cash, restricted cash, short-term investments and debt securities total RMB630,071m. Less ALL RMB215,620m of liabilities (no borrowing among them) = US$61.08bn, or $42.91 an ADS - 49.29% of the share price.
    - AND IT HAS NEVER BEEN RETURNED: no dividend has ever been paid and no ordinary share or ADS repurchased - the only repurchases in the 20-F are of its own convertible notes. Every physical asset it owns totals US$1.34bn, 1.08% of market value.
    - WHAT THE MARKET PAYS FOR THE PLATFORM: strip the portfolio and US$62.85bn is left against US$11.74bn of trailing after-tax operating profit - 5.35x, a 26.24% cash yield. At the Nov 10, 2025 closing high the same sum gave 13.35x: a 59.89% de-rating.
    - THE EARNINGS BASIS, PROVED NOT ASSUMED: the vendor's epsActual IS the company's non-GAAP diluted per ADS, matching four straight quarters exactly. So $2.85 against a $2.76 bar is a real beat - but GAAP diluted is $2.72, which MISSES it and fell 11.08%.
    - THE CALL: US$61.08bn of net financial assets at 0.65/0.75/0.85 plus US$11.74bn of after-tax operating profit at 5.5x/8.0x/11.0x. Bear $73.27 / base $98.18 / bull $127.22, weighted 25/50/25 = FAIR VALUE $99.21 vs $87.07, +13.95%. BUY 3/5 - and LESS bullish than the nine dated houses at $102.56.
    What to watch: UP: the September-quarter other income line back near zero, OR any dividend or buyback - the first in the company's history. DOWN: that line repeating at this size, which would be roughly RMB29.6bn a year against a platform earning US$11.74bn.
    Also on YouTube: @ChargedAlpha
    DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.
    13 min

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⚡ Charged Alpha — The S&P 500 Stock Encyclopedia Data-driven deep dives into every stock in the S&P 500 after every earnings report. Each episode breaks down one company from open to close:…