Charged Alpha Stock Encyclopedia

Advanced Energy Industries, Inc. (AEIS) Q2 2026 — Reported after the close on August 3 (three months ended June 30, 2026). Revenue $574.1M, +30.1%, above the HIGH END of guidance. GAAP gross margin 41.1% vs 37.0%. GAAP EPS from continuing operations $1.29; non-GAAP EPS $2.74 vs $2.21 expected. Q3 guidance $640M +/- $20M and non-GAAP EPS $3.00 +/- $0.25 vs consensus of ~$576M and $2.46 — the raise is bigger than the beat. The stock closed at $296.38, up 119% in twelve months.

The number nobody decomposed: revenue rose $63.1M sequentially and Semiconductor Equipment supplied $58.9M of it — 93% — on a record $278.3M. Data Center Computing, the entire reason this multiple exists, FELL sequentially, $194.2M to $191.5M. The quarter everyone will call an AI quarter was carried by the semi-cap cycle.

THE CALL: HOLD (3/5, AN EXCELLENT QUARTER AND A BETTER GUIDE — AT A PRICE THAT ALREADY ASSUMES BOTH) — base-case value ~$245.0 vs ~$296.38 today.

KEY METRICS:

- THE CALL: HOLD 3/5 - fair value ~$245 vs the $296.38 close (-17%); Street average $423.88 (17 buy / 7 hold / 1 sell, 25 analysts, range $325-$535, +43%), so we DIFFER on the rating and are far more CAUTIOUS on the number.

- DCF GRID (bear/base/bull x 9/10/11%): $187-161-141, $262-221-192, $320-266-228. Probability-weighted 25/50/25 gives $217 at 10% and $258 at 9%; we sit at $245. Base case: 2026 EXIT owner-earnings run-rate ~$420M (non-GAAP net income less stock comp, after tax) growing 15/15/10/8/6%, 3.5% terminal. REVERSE DCF: at $296.38 the operating business is priced at $11.74B, demanding ~$763M of owner earnings permanently - 82% more than today.

- THE PRINT: revenue $574.1M (+30.1%); GAAP gross margin 41.1% (vs 37.0%); GAAP operating income $95.1M (vs $31.6M); non-GAAP operating margin 21.9% (vs 14.6%); GAAP EPS $1.29, non-GAAP EPS $2.74; non-GAAP net income $112.2M (+98%); diluted shares 37.8M to 42.3M (+12%).

- BY END MARKET (Q2 2026 / Q2 2025 / Q1 2026): Semiconductor Equipment $278.3M / $209.5M / $219.4M (RECORD, 48.5% of revenue). Data Center Computing $191.5M / $141.6M / $194.2M (+35% y/y but -1.4% SEQUENTIALLY). Industrial and Medical $80.0M / $68.6M / $72.0M. Telecom and Networking $24.3M / $21.8M / $25.4M.

- QUALITY OF THE BEAT: 120bps of the gross margin was a tariff refund (the 10-Q's words); stock comp $21.4M, +57% y/y; H1 operating cash flow $80.0M vs H1 capex $86.1M = FCF of -$7.1M; working capital consumed $149.1M, inventory +$126.9M to $538.1M. Revenue shipped to Mexico went from $41.1M (9.3%) to $124.1M (21.6%) while US revenue FELL from $141.7M to $132.3M.

- BALANCE SHEET + TIMING: cash $1,396.5M (from $791.2M), net cash ~$132M. On May 18 sold $1.15B of ZERO-COUPON converts due 2031 (conversion $508.78; capped call to $678.38) and retired $440.5M of the 2028 notes; buyback SUSPENDED. Second-wave data center customers ramp in 2027; the 800V DC products ramp to production in 2028.

What to watch: Bullish: Data Center Computing back above $220M in September (proving the dip was a qualification gap, not a plateau); the December guide above $700M; gross margin above 41% WITHOUT a tariff refund. All three and we move toward $320. Bearish: Semiconductor Equipment back below $260M; the 800V ramp slipping past 2028; inventory climbing while growth decelerates. Any two and we are nearer $180.

Also on YouTube: @ChargedAlpha

DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.

TKO Group Holdings, Inc. (TKO) Q2 2026 — Reported after the close on August 3 (three months ended June 30, 2026). Revenue $1,547.1M, +18.3%. Adjusted EBITDA $649.9M, +23.4%, margin 42% vs 40%. GAAP diluted EPS $1.34 vs $1.41 expected — a seven-cent miss. FY2026 guidance RAISED again, to $5.775-5.825B revenue and $2.275-2.305B EBITDA. UFC $535.7M (+28.8%), WWE $620.9M (+11.6%), IMG $354.7M (+15.7%). The stock closed at $183.91.

The number nobody read: of the $303.9M TKO earned this quarter, $202.3M — 66.6% — went to NON-CONTROLLING INTERESTS. Only $101.6M belongs to the shares you can buy. TKO is an Up-C: 73.1M Class A plus 116.2M Class B paired 1:1 with TKO OpCo units, so the true economic count is 189.3M units and the real market cap is $34.8B — not the $13.8B screeners show. That error turns 17.0x forward EV/EBITDA into 7.8x.

THE CALL: AVOID (3/5, A GREAT BUSINESS AT A PRICE THAT NEEDS EVERYTHING TO GO RIGHT) — base-case value ~$138.0 vs ~$183.91 today.

KEY METRICS:

- THE CALL: AVOID 3/5 - fair value ~$138 vs the $183.91 close (-25%); Street average $227.50 (17 buy / 2 hold / 0 sell, 19 analysts, range $210-$237, +24%), so we DIFFER and are far more CAUTIOUS. DCF GRID (bear/base/bull x 8.5/9.25/10.0%): $110-98-89, $152-134-120, $208-181-160. Probability-weighted 25/50/25 gives $137; even our BULL case ($181) misses today's price. Base case: FY26 guided adjusted EBITDA $2,290M midpoint, less ~$300M cash interest, ~$95M capex, ~$165M equity comp, ~$80M normalised legal, taxed 24% = ~$1,254M owner earnings = $6.63 per economic unit on 189.3M units. REVERSE DCF: $183.91 prices those units at $34.81B, demanding ~12% compound owner-earnings growth for nine straight years.

- ANGLE 1 - THE MARKET CAP ON YOUR SCREEN IS 2.5x TOO SMALL. TKO is an Up-C: the 10-Q cover page (July 31, 2026) reports 73,111,098 Class A shares AND 116,158,615 Class B, each paired 1:1 with a TKO OpCo unit held by the Endeavor/Silver Lake side. Total economic units 189.3M; Class A owns 38.6%. That is why $202.3M of Q2's $303.9M net income went to non-controlling interests, leaving $101.6M and the $1.34 EPS. Vendors quote ~$13.8B (75.0M shares, Class A only); the real cap is $34.8B and the EV $38.9B. Wrong: 7.8x guided EBITDA. Right: 17.0x forward.

- ANGLE 2 - 2026 IS A TRIPLE-STACKED PEAK. Paramount's $7.7B/7-yr UFC deal started in January, ESPN's WWE deal in September 2025, and the FIFA World Cup came to North America: IMG adjusted EBITDA +171% to $78.6M, margin 9% to 22%, 'primarily related to FIFA World Cup 2026 hospitality sales at On Location'. Precedent: in the 2024 Olympics year IMG did $1,970.2M of revenue and LOST $48.0M of adjusted EBITDA; in 2025 total TKO revenue FELL 3.1% to $4,735.2M. ANGLE 3 - THE LIVE GATE FELL 18%. UFC + WWE live events was $199.8M vs $244.2M: UFC Freedom 250 at the White House sold no tickets, and TKO says UFC's margin fall from 59% to 52% was 'entirely due to the financial profile' of that event. Q2 add-backs were $123.7M (19% of adjusted EBITDA), incl. $71.1M of legal costs vs $9.7M. And a $900M term loan funded an $800M buyback at $191.97 - above the close.

What to watch: Bullish: UFC sponsorship holding its $144.8M pace (+69%) WITHOUT a White House event; FY2027 revenue guided above ~$5.9B; FCF conversion back over 70% → $180. Bearish: FY2027 EBITDA guided flat or lower; legal costs above $50M a quarter; more debt-funded buybacks above $190 → $110.

Also on YouTube: @ChargedAlpha

DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.

Vertex Pharmaceuticals Incorporated (VRTX) Q2 2026 — Reported after the close on August 3 (three months ended June 30, 2026). Total revenue $3,333.9M, +12.5%, ahead of the ~$3.23B expected. GAAP EPS $4.31 vs $3.99; non-GAAP EPS $4.73 vs the $4.74 expected — a one-cent miss. FY2026 revenue guidance RAISED to $13.1-13.2B from $12.95-13.1B, with every expense line left unchanged. CASGEVY $76.4M, +151%. JOURNAVX $49.6M on ~535,000 prescriptions. Cash and marketable securities $13.64B with zero debt. The stock closed at $470.72, 11% below the $529.59 high it made on July 6 — the day it agreed to buy Crinetics.

The number nobody read: TRIKAFTA/KAFTRIO — 74.9% of Vertex's entire revenue — did $2,497.2M against $2,551.1M, a 2.1% DECLINE, and it fell 4.6% across the first half. The money did not leave, it rotated into ALYFTREK ($573.6M vs $156.8M), which is deliberate and smart. But cystic fibrosis is 96.2% of revenue in a patient pool already ~95% penetrated, the four diversification pillars are 3.8% of revenue, and R&D spending was FLAT while SG&A rose 37.1%.

THE CALL: HOLD (3/5, A REAL MONOPOLY, FULLY PRICED — AND A $10B BET NOBODY ELSE WOULD MAKE) — base-case value ~$415.0 vs ~$470.72 today.

KEY METRICS:

- THE CALL: HOLD 3/5 - fair value ~$415 vs the $470.72 close (-12%); Street average $549.21 (47 buy / 8 hold / 1 sell, 56 analysts, range $350-$616, +17%), so we DIFFER on the rating and are more CAUTIOUS on the number. DCF GRID (bear/base/bull x 7.5/8.5/9.5%): $331-289-257, $470-396-343, $653-534-452. Probability-weighted 25/50/25 gives $404 at 8.5% and $481 at 7.5%; we sit at $415, respecting the low-beta argument without paying for it. Base case uses TTM free cash flow of $3.71B (operating cash flow less capex, from the filings) growing 8% then 5%, 2.5% terminal. REVERSE DCF: at $470.72 the operating business is priced at $108.4B, which at 8.5% with 2.5% terminal growth demands ~$6.50B of perpetual FCF starting now - 75% more cash than today, and it has to come from the 3.8% of revenue that is not cystic fibrosis.

- THE UNDER-COVERED ANGLE - THE BIGGEST MEDICINE IS SHRINKING, AND THE SECOND ACT IS 3.8% OF REVENUE. TRIKAFTA/KAFTRIO did $2,497.2M, DOWN 2.1% year over year and down 4.6% across the first half, while still being 74.9% of all revenue. That is a deliberate conversion - ALYFTREK went from $156.8M to $573.6M (+266%), is once-daily, carries a lower royalty burden and extends patent protection from 2037 to 2039 - so the franchise is fine. The issue is shape: cystic fibrosis is 96.2% of revenue ($3,207.9M) in a population Vertex already treats ~95% of. Revenue grew 7.8% in Q1, 12.5% in Q2, and the raised guidance implies ~9.0% in H2. Non-CF revenue is $126.0M, or 3.78% of the company; H1 non-CF was $197.9M against a '$0.5B or greater' full-year guide, so H2 needs $302M.

- ALSO: R&D WENT FLAT, SG&A ROSE 37%, AND $10B IS LEAVING FOR A SOLE-BIDDER DEAL. Research and development rose just 1.6% to $993.8M - and across the first half it was $1,955.4M vs $1,958.1M, DOWN 0.1%. SG&A rose 37.1% to $582.2M. So 12.5% revenue growth produced 3.2% non-GAAP net income growth; non-GAAP operating margin fell 202bps from 44.7% to 42.7% and gross margin slipped from 86.3% to 85.3%. Computed from the release: ~535,000 JOURNAVX prescriptions and $49.6M of revenue is $92.71 per filled prescription, against a ~$232.50 list price for a 7-day course - about 40 cents on the list-price dollar (Q1 was $79.45, so it is improving fast). Meanwhile Vertex is paying $85.00/share cash for Crinetics, ~$10.0B equity value (~$8.8B net of cash), a 102% premium to the $42.03 undisturbed price, funded partly by a $4.5B bridge. The proxy shows Vertex was the SOLE bidder: the only other party that engaged concluded it could not go above $6B and withdrew. Crinetics did $7.7M of revenue and lost $465.3M in 2025, and Vertex says the deal is not accretive to non-GAAP operating income until 2029.

What to watch: Bullish: povetacicept approved on the November 30 PDUFA date with a broad IgAN label; non-CF revenue clearing the $500M full-year guide (needs $302M in H2 vs $197.9M in H1); JOURNAVX net revenue per prescription above $120. All three and we move toward $520. Bearish: non-CF missing the $500M guide; TRIKAFTA falling again WHILE ALYFTREK decelerates; the combined expense guide breaking upward as Crinetics integrates on top of the JOURNAVX launch. Any two and we are nearer $350.

Also on YouTube: @ChargedAlpha

DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.

BWX Technologies, Inc. (BWXT) Q2 2026 — Reported after the close on August 3 (three months ended June 30, 2026). Revenue $901.6M, +18.0%. GAAP EPS $0.97 vs $0.85; non-GAAP EPS $1.07 vs $1.02, ahead of the ~$1.04 expected. Adjusted EBITDA $155.5M, +6.6%. Record backlog $8.40B, +39.6%. Guidance raised four ways. BWXT also agreed to sell its medical business to Nordic Capital for up to $800M and closed the Precision Components Group deal on July 1. The stock closed at $173.79, already 27% below its April high.

The number nobody read: Government Operations — naval nuclear propulsion, 67% of revenue and about 81% of segment earnings — grew 2.1%, and its segment operating income FELL 3.4%. The actual nuclear franchise went sideways and earned less than a year ago. Commercial delivered 92% of all the growth, at roughly half the margin, largely acquired — with backlog up just 1.3%.

THE CALL: AVOID (3/5, A GREAT FRANCHISE AT A PRICE THAT ASSUMES A DECADE) — base-case value ~$105.0 vs ~$173.79 today.

KEY METRICS:

- THE CALL: AVOID 3/5 - fair value ~$105 vs the $173.79 close (-40%); Street average ~$235 (11 buy / 4 hold / 1 sell, 16 analysts), so we DIFFER on the rating and are more CAUTIOUS on the number. DCF GRID (bear/base/bull x 8/9/10%): $55-45-37, $106-85-70, $138-109-89 - not one of the nine cells reaches $173.79. Probability-weighted 25/50/25 gives $81 at 9% and $101 at 8%; we sit at $105, using the 8% rate a sole-source naval monopoly deserves. REVERSE DCF: at $173.79 EV is $17.3B, which at 8% with 3% terminal growth demands ~$867M of FCF starting now against $352M guided - at 10% annual growth BWXT does not get there until 2035.

- THE UNDER-COVERED ANGLE - THE NUCLEAR FRANCHISE GREW 2%. Government Operations did $601.3M, +2.1%, while segment operating income FELL 3.4% to $105.7M and segment adjusted EBITDA fell 4.9% to $126.5M (margin 22.6% to 21.0%) - management cites larger positive contract adjustments in the prior-year quarter and weaker mix. Commercial contributed $126.4M of the $137.6M revenue increase (92% of all growth), rising 71.7% to $302.5M - but much of that is acquired (Kinectrics, then PCG from July 1) and Commercial BACKLOG is $1.600B vs $1.580B, up just 1.3%.

- ALSO: THE BACKLOG HEADLINE IS A Q1 EVENT, AND THE MIX IS DILUTIVE. Total backlog $8.40B (+39.6%) is real, but Q2 BOOKINGS were $648.9M vs $1,640.5M a year ago (-60%) - a 0.72x book-to-bill, though YTD bookings of $2.90B are a healthy 1.65x. Government earns a 21.0% adjusted EBITDA margin vs Commercial's 11.9%, so the mix shift (Commercial 23% to 34% of revenue) cut consolidated margin from 19.1% to 17.2% even as Commercial's own margin ROSE 270bps; FY Commercial margin was guided DOWN to ~13%. Free cash flow fell 9.0% to $115.0M as capex rose 26.6% to $41.4M while GAAP net income rose 14%. Net debt $1.41B ($2,019.9M debt less $608.2M cash).

What to watch: Bullish: Commercial adjusted EBITDA margin above 16%; book-to-bill back above 1.2x for two quarters with Commercial backlog growing; a named, funded microreactor or SMR contract. Then $140. Bearish: Government under 3% growth again, Commercial margin stuck at ~13%, or FCF missing the raised guide. Any two and we are nearer $85.

Also on YouTube: @ChargedAlpha

DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.

Sterling Infrastructure, Inc. (STRL) Q2 2026 — Reported after the close on August 3 (the three months ended June 30, 2026). Revenue $1,168.2M, up 90.1% from $614.5M with roughly 50 points organic. GAAP diluted EPS $5.00 vs $2.31, +116%. Adjusted diluted EPS $5.80 vs $2.69. Adjusted EBITDA $256.7M at a record 22.0% margin. Signed backlog $4.33B, +116% and +50% organic. Full-year guidance raised for the second time this year, to $4.00-4.15B of revenue and $19.70-20.30 of adjusted EPS. The stock closed at $611.47 and traded down to about $583 after hours, near -4.7% — and it went into the print 38% below its June 4 high of $993.74.

The number nobody read: a year ago E-Infrastructure Solutions was 51% of Sterling's revenue. This quarter it was 78%. Transportation fell from 32% to 13%, on purpose. And 92% of E-Infrastructure's backlog is mission-critical work — data centers, semiconductor fabs, manufacturing. In four quarters Sterling converted itself from a diversified infrastructure contractor into a single-end-market company levered to one capital-expenditure cycle, while deliberately running down the state-funded highway business that used to be its shock absorber.

THE CALL: AVOID (3/5, EXCEPTIONAL OPERATOR. WRONG PRICE.) — base-case value ~$400.0 vs ~$583.0 today.

KEY METRICS:

- THE CALL: AVOID 3/5 - fair value ~$400 vs the $611.47 close (-35%) and ~$583 after hours (-31%); Street average $717 (7 buy / 2 hold / 0 sell, 9 analysts), so we DIFFER on both the rating and the number. OWNER EARNINGS ~$600M: guided FY26 GAAP net income $536-555M plus half of intangible amortization after tax, uplifted for the beat we expect, cross-checked against 1H free cash flow of $258M ($328.0M operating cash flow less $69.6M capex). DCF GRID (bear/base/bull x 10/11/12%): $237-211-190, $416-366-326, $638-555-490 - only ONE of nine cells clears $611. REVERSE DCF: $19.0B of market value on ~$600M of owner earnings is 31.7x, needing 15.9% compounding every year for a decade at an 11% discount rate.

- THE UNDER-COVERED ANGLE - 78% OF REVENUE IS NOW ONE SEGMENT. E-Infrastructure did $905.0M, up 191.6% from $310.4M, going from 51% of revenue to 78% in four quarters. Transportation fell 20.4% to $156.7M (32% of revenue to 13%) - deliberately, as management reallocates crews to data-center work at an accelerated pace. Building Solutions was flat at $106.5M. With 92% of E-Infra backlog mission-critical, roughly seven-tenths of Sterling now rides on one capex cycle, while the countercyclical state-DOT segment that carried it through 2020 and 2022 is run down on purpose.

- ALSO: THE RECORD WAS BOUGHT AT A LOWER MARGIN, AND THE SCARY GUIDE IS A PROVEN SANDBAG. E-Infra revenue grew 192% but adjusted operating income only 148% - segment margin FELL 28.3% to 24.1% (-420bps) as CEC and Stone Ridge diluted the mix. The FY guide leaves $2.081B for 2H vs $1.994B banked, an implied $1.04B quarter, 11% BELOW Q2 - but the identical math in Aug 2025 implied $1.080B and actual was $1.445B, +33.8%. Net cash $180.6M; tangible book equity only ~$81M vs $1.28B of goodwill and intangibles.

What to watch: Bullish: E-Infra adjusted operating margin back above 27% (it fell to 24.1%) with organic backlog still compounding; a Q3 that beats the implied 2H guide like last year. Then we move toward $500. Bearish: book-to-burn under 1.0x, E-Infra margin under 22%, or combined backlog falling sequentially. Any two and we are nearer $260.

Also on YouTube: @ChargedAlpha

DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.

Palantir Technologies Inc. (PLTR) Q2 2026 — Reported after the close on August 3 (the three months ended June 30, 2026). Revenue $1,935.5M, up 92.8% from $1,003.7M against a Street number near $1,810M — growth ACCELERATED from 48%. GAAP diluted EPS $0.41 vs $0.13. GAAP operating margin 47.1% from 26.8%; adjusted 62%. Rule of 40 score 155%, from 94%. Adjusted free cash flow $1,220.4M at 63%. Every line of guidance raised. The stock closed at $125.65 and traded to about $144.42 after hours, near +15% — but it went into the print 39% below its November high of $207.18.

The number nobody read: revenue grew 93% but total contract value grew 49%. Book-to-bill fell from 2.26x to 1.74x. And when you subtract U.S. commercial TCV ($2.132B, +153%) from the $3.373B total, everything else — U.S. government plus ALL of international — booked $1.241B against $1.427B a year ago. That is DOWN 13%. Roughly 60% of the revenue base signed less new contract value than a year ago, in the quarter the CEO called otherworldly.

THE CALL: AVOID (3/5, EXTRAORDINARY BUSINESS. IMPOSSIBLE PRICE.) — base-case value ~$92.0 vs ~$144.42 today.

KEY METRICS:

- THE CALL: AVOID 3/5 - fair value ~$92 vs ~$144 after hours (-36%) and the $125.65 close (-27%); Street average $167.67. OWNER EARNINGS: guided FY26 adjusted operating income $4.893B, plus ~$0.32B interest, LESS ~$1.10B stock comp, taxed at Palantir's OWN stated 23.0% long-term rate = $3.17B, against $4.6B of headline adjusted FCF. DCF GRID (bear/base/bull x 9/10/11%): $60-52-46, $101-84-72, $143-116-98 - exactly ONE of nine cells clears $144. REVERSE DCF: $144 needs $5.55B of owner earnings starting TODAY vs $3.17B actual; our base case does not reach it until 2028.

- THE UNDER-COVERED ANGLE - REVENUE +93%, BOOKINGS +49%. Total contract value closed was $3.373B (+49%) against revenue +92.8%, so book-to-bill fell from 2.26x to 1.74x. Subtract U.S. commercial TCV ($2.132B, +153% from $843M) and everything else - U.S. government plus ALL of international - booked $1.241B vs $1.427B a year ago, DOWN 13.0%. Roughly 60% of the revenue base signed LESS new contract value. THE TAX CLIFF: a 1.4% effective rate ($15.4M on $1,081.3M) while the accumulated deficit fell -$3,562M to -$1,630M and flips positive within months; Palantir's own long-term rate is 23% - about $1.1B a year, ~$40/share in our DCF.

- AND THE BEAR CASE THAT DIED: diluted shares 2,562,912k to 2,568,694k, +0.23% for a full year; SBC/revenue fell 15.9% to 13.7%; GAAP EPS $0.41 EQUALS adjusted EPS $0.41. Our case is price, not dilution. Sources: Ex-99.1 to the 8-K of 2026-08-03 (accession 0001321655-26-000039) and the Q2 2025 Ex-99.1 (0001321655-25-000105), both grepped for 'Palantir' and the period first. International revenue, book-to-bill and non-U.S.-commercial TCV are DERIVED by arithmetic.

What to watch: Bullish: book-to-bill back above 2.0x (bookings growing at least as fast as revenue, removing the arithmetic ceiling); international revenue re-accelerating above 50% (it grew ~34% vs 115% for the U.S.); U.S. commercial RDV compounding above 100% (now $6.238B, +124%). Get the first two and our value moves toward $130. Bearish: U.S. commercial growth below 100% — that one segment is carrying everything; TCV growth under 30%; or the effective tax rate stepping into the twenties as the NOLs run out. Any two and we are in the sixties.

Also on YouTube: @ChargedAlpha

DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.

Old Dominion Freight Line, Inc. (ODFL) Q2 2026 — Reported before the open on July 29 (Q2 2026, the three months ended June 30, 2026). Revenue $1,554.0M, up 10.4% from $1,407.7M, against a Street number near $1,539.4M. Diluted EPS $1.68 against $1.27, up 32.3%, and against a $1.54 estimate — a figure management says ties the company record set in Q3 2022. The operating ratio improved 450 basis points to 70.1% from 74.6%, the best in company history. The stock still fell, from $226.28 to $222.79 in the reaction session (-1.5%), then another 4.6% to $212.47 the next day. It closed at $211.52 on August 3 — down 6.5% from the pre-print close.

The number nobody put on air: 91% of the revenue growth was the fuel surcharge. Old Dominion publishes LTL revenue per shipment both with and without fuel — $568.55 and $446.44. The difference is $122.11 a shipment against $69.00 a year ago. Multiplied by the 2,709,000 and 2,874,000 shipments the company reports, fuel surcharge revenue went from $198.3M to $330.8M: an increase of $132.5M against a total revenue increase of $146.3M. Strip it out and core LTL revenue rose 1.1%, from $1,196.5M to $1,209.4M, on 5.7% fewer shipments per day and 4.1% fewer tons. The same arithmetic off revenue per hundredweight ($37.84 less $29.71, against $32.84 less $28.17) gives the identical answer.

THE CALL: AVOID (3/5, THE BEST OPERATOR IN LTL, PRICED FOR A RECOVERY IT HAS NOT HAD YET.) — base-case value ~$158.0 vs ~$211.52 today.

KEY METRICS:

- CALL: AVOID 3/5 — fair value ~$158 vs $211.52 (about 25% BELOW) and 32.4% below the Street's $233.63. FREE CASH FLOW BASE: first-half operating income of $782.6M annualises with a normal second half to roughly $1.58B; taxed at 25% that is about $1.19B, plus about $372M of depreciation, less the guided $380M of capital spending and about $45M of working capital = ~$1.09B for 2026. Cross-check: H1 operating cash flow $646.3M less $139.6M of capex = $506.7M of free cash flow in six months. STEP 1, a 3x3 DCF grid across free-cash-flow bases of $950M / $1,090M / $1,230M and bear/base/bull: $82-$106, $141-$182, $195-$252. Exactly TWO of the nine cells clear $211.52 and both need the BULL row — a full freight cycle already delivered. Probability-weighted 30/45/25 in both directions the grid gives $156, rounded to ~$158. REVERSE DCF: today's price needs roughly 16% compound free-cash-flow growth for five years, then 9% for five more, then 3% forever — on a business whose shipments per day are falling 5.7%.

- THE UNDER-COVERED ANGLE — 91% OF THE REVENUE GROWTH WAS THE FUEL SURCHARGE. Fuel surcharge per shipment = $568.55 less $446.44 = $122.11, against $485.31 less $416.31 = $69.00 (+77.0%). Times 2,709,000 and 2,874,000 shipments: $330.8M vs $198.3M, an increase of $132.5M against a total revenue increase of $146.3M. Core LTL revenue excluding fuel surcharges: $1,209.4M vs $1,196.5M, up just 1.1%. Verified independently off revenue per hundredweight: $37.84 less $29.71 = $8.13 vs $32.84 less $28.17 = $4.67, times tons times twenty — same answer. The surcharge was 16.6% of ex-fuel revenue in Q2 2025, 18.5% in Q1 2026 and 27.4% in Q2 2026. In JANUARY it was subtracting from yield (revenue per hundredweight +3.1%, ex-fuel +3.9%).

- THE 450 BASIS POINTS DECOMPOSE EXACTLY — AND MOSTLY THEY ARE NOT COST REDUCTION. Off the disclosed percent-of-revenue column: salaries, wages and benefits -350bp (47.7% to 44.2%), miscellaneous income -140bp, depreciation and amortisation -50bp, operating taxes plus insurance plus communications -60bp; against operating supplies +130bp (10.1% to 11.4%) and purchased transportation +20bp. 600 favourable less 150 unfavourable = 450. But salaries DOLLARS rose 2.3% ($672.1M to $687.3M) on an average headcount that fell 7.1% (21,621 to 20,081) — compensation per employee rose about 10% and shipments per day per employee improved only 1.5%. And the miscellaneous line swung $21.0M, from an $11.3M expense to a $9.6M credit, driven by $17.2M of disclosed net GAINS on disposal of property and equipment. EX THOSE GAINS THE OPERATING RATIO WAS 71.2%, NOT 70.1%.

- THE FUEL LAG, QUANTIFIED: fuel surcharge revenue rose $132.5M while the ENTIRE operating supplies and expenses line — diesel plus tyres, parts and maintenance — rose just $35.2M. Old Dominion's surcharge is indexed to published diesel prices with a lag, so a fast rise over-recovers. That gap is a large share of the $107.4M increase in operating income and it is symmetrical: it reverses when diesel flattens. Volume context: LTL tons per day 31,804 (-4.1%), shipments per day 42,332 (-5.7%), weight per shipment 1,503 lbs (+1.7%), intercity miles -4.8%, average length of haul 909 miles. Yield ex fuel +5.5%; revenue per shipment ex fuel $446.44 (+7.2%).

- THE BULL CASE IS REAL AND WE SIZE IT: the incremental operating margin was 73.4% ($146.3M more revenue, $107.4M more operating income) and 61.7% even after removing every cent of the $17.2M of gains — against a company average operating margin of 25.8%. That is what carrying 260 service centres, 10,184 tractors and 45,137 trailers against volumes 10.5% below 2024 buys you. Management RAISED the 2026 capital plan 43% in ninety days, from $265M guided on April 29 to $380M on July 29 — real estate and service centres $125M to $180M, tractors and trailers $95M to $155M — with only $139.6M spent in H1, implying about $240M in the back half. And the volume decline rate has almost halved: shipments per day -9.8% in January, -7.9% in Q1, -5.3% in May, -5.7% in Q2, while yield ex fuel accelerated from +3.9% to +5.5%.

- BALANCE SHEET AND CAPITAL RETURNS: cash $283.9M (from $120.1M at December 31), total debt $20.0M of current maturities, LONG-TERM DEBT NOW ZERO, net cash $263.9M, shareholders' equity $4,547.4M, total assets $5,735.5M. H1 repurchases $239.7M ($88.1M in Q1, so $151.6M in Q2 — an accelerating pace) plus $120.7M of dividends = 71% of free cash flow; the quarterly dividend is $0.29, up 3.6%. AND WE TESTED THE LAZY CRITICISM: the diluted share count fell only 1.6% (212.164M to 208.715M), so the buyback contributed under two points of the 32.3% EPS growth. This is NOT a buyback story. Note net property and equipment FELL from $4,504.2M to $4,440.5M in six months despite $139.6M of capex — depreciation and disposals ran ahead of investment, consistent with the $17.2M of gains.

- STREET vs US: 36 analysts, consensus HOLD — 12 buy, 20 hold, 4 sell. Average target $233.63, median $229.50, range $205-$263, about 10.5% above the $211.52 close. The post-print revisions on July 30 went UP: Stifel $263 (Buy), Goldman Sachs $244 (Buy), Evercore $243 (Outperform), UBS $228 (but still Neutral) — while Jefferies LOWERED to $227. In the four weeks before the print Morgan Stanley downgraded to Equal Weight, Citigroup upgraded from Sell to Neutral and Wells Fargo upgraded to Overweight. That is a genuine argument, not a consensus. On the BUSINESS we ALIGN: 99% on-time service, a 0.1% claims ratio, a 25.8% trailing operating margin against 11.0% at Saia, 9.8% at XPO, 7.1% at TFI International and 0.7% at ArcBest. On the PRICE we DIFFER and are far more CAUTIOUS — 40.8x trailing EPS of $5.19, about 39x normalised 2026 earnings power near $5.45, and a 2.5% free-cash-flow yield.

- NOTE ON BASIS AND SOURCES: every figure here is rebuilt from Old Dominion's own filings — the 8-K of July 29, 2026 (accession 0000878927-26-000021, Exhibit 99.1) for the Q2 P&L, operating statistics, balance sheet and capital commentary; the 8-K of June 3, 2026 for the May monthly metrics; the 8-K of April 29, 2026 for Q1 and the ORIGINAL $265M capital plan; and the FY2025 10-K (accession 0001193125-26-067161) for the 260 service centres at December 31, 2025, the fleet counts, FY2024/FY2025 results and the January 2026 monthly update. Fuel surcharge revenue, ex-fuel revenue and the Q1 2026 per-shipment split are DERIVED by arithmetic from the company's published tables, not taken from a third party. FMP supplied only the daily closing price series, the analyst consensus and the peer trailing operating margins.

- COMPANY AND CYCLE CONTEXT: Old Dominion Freight Line, founded 1934, Thomasville, North Carolina; Marty Freeman President and CEO, Adam N. Satterfield EVP and CFO; union-free, single integrated LTL network; the Congdon family remains a large holder. FY2024 revenue $5,814.8M at a 73.4% operating ratio and $5.48 of diluted EPS on 47,288 shipments per day. FY2025 revenue $5,496.4M (-5.5%) at 75.2% and $4.84 on 43,762 shipments per day. Q1 2026 revenue $1,334.7M (-2.9%) at a 76.2% operating ratio and $1.14 of EPS. Trailing twelve-month revenue is $5.60B against $5.81B in 2024 — this is a smaller company than it was two years ago, running a network built for roughly 47,000 shipments a day and handling 42,332.

What to watch: Bullish: LTL tons per day turning POSITIVE year over year in one of the monthly 8-Ks — that single line is the whole thesis and it is currently minus 4.1%; a second quarter of 60-plus percent incremental operating margins on revenue growth that is NOT fuel surcharge, which would prove the operating leverage is structural rather than a diesel artefact; and management executing the raised $380M capital plan and guiding higher again, since they have better volume visibility than anyone and just committed $115M more on ninety days' notice. Bearish: diesel flattening or falling — the surcharge went from 16.6% of ex-fuel revenue a year ago to 18.5% in Q1 to 27.4% in Q2, and if it merely stops rising the year-on-year revenue comparison collapses back toward the underlying 1.1%; the $17.2M of net gains on disposal of property and equipment not repeating, which is 111 basis points of operating ratio on its own; and a third quarter where shipments per day stop improving, because the entire bull case rests on the decline rate continuing to shrink toward zero.

Also on YouTube: @ChargedAlpha

DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.

O'Reilly Automotive, Inc. (ORLY) Q2 2026 — Reported after the close on July 29 (Q2 2026, the three months ended June 30, 2026). Sales $4,892.0M, up 8.1% from $4,525.1M. Comparable store sales +6.0%, on top of +4.1% a year ago. Diluted EPS $0.86 against $0.78, up 10.3%, and against a Street number near $0.86 — in line. Management RAISED full-year comparable sales guidance to 4.0-6.0% from 3.0-5.0% and EPS guidance to $3.20-$3.30. The stock fell from $90.63 to $87.36 the next session, down 3.6%, and closed at $89.76 on August 3.

The number nobody put on air: the incremental operating margin was 19.4%. Sales rose $367.0M, gross profit rose $190.2M, SG&A rose $118.9M — so operating income rose just $71.3M. Every new dollar of sales earned 19.4 cents of operating income against a company average of 20.2. That is why the strongest comparable store sales in years arrived with the operating margin FALLING six basis points, from 20.21% to 20.15%, gross margin flat at 51.4% and SG&A DELEVERAGING nine basis points. Net income grew 7.0%. Diluted EPS grew 10.3%. The entire gap is a 3.4% smaller share count, bought with $1.19B more debt.

THE CALL: HOLD (4/5, A SUPERB BUSINESS WHOSE EPS ENGINE IS NOW A THIRD BUYBACK.) — base-case value ~$75.0 vs ~$89.76 today.

KEY METRICS:

- CALL: HOLD 4/5 — fair value ~$75 vs $89.76 (about 16% BELOW) and 30.4% below the Street's $107.77. OWNER EARNINGS = trailing net income $2,650.4M plus D&A $537.7M less roughly $775M of maintenance capital (capex is guided at $1.30-1.40B, of which about $575M opens the 225-235 new stores) = ~$2,413M, a 3.3% yield on a ~$72.6B market value. STEP 1, a 3x3 DCF grid across owner-earnings bases of $2.25B / $2.41B / $2.65B and bear/base/bull growth: $46-$54, $62-$73, $84-$98. Exactly TWO of the nine cells clear $89.76 and both need the bull row — 8% growth for five years at a 7.75% discount rate. Probability-weighted the grid gives $68. STEP 2, a multiple grid on 2027E EPS of $3.58 at 20x/22x/24x/26x, weighted, gives $82. Blend to ~$75. REVERSE DCF: today's price needs 9.3% compound owner-earnings growth for a decade; the Street's $107.77 needs 11.6%.

- THE UNDER-COVERED ANGLE — A 6% COMP WITH NEGATIVE OPERATING LEVERAGE. Sales +$367.0M. Gross profit +$190.2M, a 51.8% flow-through. SG&A +$118.9M — 32.4% of the incremental sales against a 31.3% average. Operating income +$71.3M, an incremental margin of 19.4% against the 20.2% the company already earns. The marginal dollar is LESS profitable than the average dollar. Result: gross margin 51.45% vs 51.41%, SG&A 31.30% vs 31.21%, operating margin 20.15% vs 20.21% — DOWN six basis points on the best comp in years.

- PROFESSIONAL PASSED DIY, AND THAT IS WHY THE MARGIN IS FLAT: sales to professional service providers rose 12.5% to $2,469.6M while DIY rose 4.9% to $2,336.9M. Professional is now 50.5% of total revenue against 48.5% a year ago — a year ago DIY was the bigger half. The gap went from DIY ahead by $32.7M to professional ahead by $132.7M. DIFM is the lower-margin half (wholesale pricing, volume, negotiation), so the fastest-growing half is the thinnest one. The lazy 'ageing car parc guarantees DIY comps' thesis is being monetised through the SHOP, not the driveway — and the shop pays less. First-half professional +13.5%, DIY +5.8%.

- THE BUYBACK IS DEBT-FUNDED AND THE SUPPLIER FLOAT IS RUNNING DOWN: H1 free cash flow $1,477.8M, H1 repurchases $2,433.0M — 165% of it, funded with $651.9M of net commercial paper and $847.4M of new notes against $500.0M repaid. Long-term debt $5,823.7M to $7,014.5M; interest expense +21.9% to $69.9M. Shareholders' equity went from a $763.4M deficit at December 31 to a $1,835.7M deficit — $1,072.4M more negative in six months. Adjusted debt/EBITDAR 2.06x to 2.17x. And accounts payable to inventory fell from 127.0% to 123.7%: the float SHRANK from $1,459.1M to $1,413.1M while inventory grew $572.3M.

- THE RAISE GUIDES TO A SLOWDOWN: comps went to 4.0-6.0% from 3.0-5.0%, revenue to $18.9-19.2B from $18.7-19.0B, EPS to $3.20-3.30 from $3.15-3.25. But H1 revenue was $9,452.6M, so the guide implies H2 of $9,447-9,747M against $9,120M — growth of 3.6% to 6.9% versus 9.1% in H1. H1 comps were 7.0%, so a 4-6% year implies roughly 1-5% to come. H1 EPS $1.58 implies H2 of $1.62-1.72 against $1.56, versus the 12.9% just delivered. And gross margin, operating margin and FREE CASH FLOW guidance were all left UNCHANGED — H1 FCF of $1,477.8M against an unchanged $1.8-2.1B year implies H2 FCF of $322-622M, below the $659.2M of H2 2025.

- STREET vs US: 47 analysts, consensus Buy — 28 buy, 18 hold, 1 sell. Consensus target $107.77, median $109, range $98-$115, about 20.1% above the $89.76 close, and the post-print revisions on July 31 went UP: Roth $111, Raymond James $110, D.A. Davidson $106, Baird $100. On the BUSINESS we ALIGN: 6,695 stores, sales per weighted-average store of $733K against $698K, 110 net new stores in six months toward a 225-235 target, and 1.50 billion shares retired since 2011 at an average price of $20.32. On the PRICE we DIFFER and are more CAUTIOUS. $107.77 is about 30x our 2027E $3.58 against a 2021-2025 average of 25.0x. Over five years the stock rose 120.9%, EPS rose 57.0% and the multiple rose 40.7% — roughly 43% of the return was re-rating, and it has already reversed from 32.8x last August to 27.6x.

- NOTE ON BASIS: O'Reilly split 15-for-1 effective June 10, 2025. Every per-share figure here is post-split, taken off the Q2 2026 release or off the FY2025 10-K's restated XBRL. Shareholders' equity is NEGATIVE $1,835.7M (retained deficit $3,416.4M), so return on equity, price-to-book and debt-to-equity are arithmetically meaningless for this company and none is quoted. Share count: 816,165,813 at June 30, about 808.9M after the 7.3M shares repurchased at $86.81 between the quarter end and the release — screens still show ~828.9M.

What to watch: Bullish: gross margin above 51.5% with professional still growing double digits, which would prove the DIFM mix is not capping the margin and the operating leverage is real after all; SG&A growing slower than sales for two consecutive quarters, turning a 19.4% incremental margin into something above 20; a second-half comp of five or six percent, which would show the raised guide was simply conservative and reset the whole deceleration argument. Bearish: accounts payable to inventory falling through 120% — that supplier float has been a free, self-funding balance sheet for three decades and it has already gone from 127.0% to 123.7%; DIY comping below two percent while professional stays strong, which is the mix getting worse and the retail thesis failing at the same time; and leverage pushed through 2.5x EBITDAR to hold the buyback at this pace.

Also on YouTube: @ChargedAlpha

DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.

Royal Caribbean Cruises Ltd. (RCL) Q2 2026 — Reported before the open on July 28 (Q2 2026, the three months ended June 30, 2026). Total revenue $4,832M, up 6.5% from $4,538M. Adjusted EPS $4.21 against a Street number near $3.98 — a beat — and against $4.38 in the same quarter last year, a 3.9% DECLINE. Operating income fell 1.7% to $1,307M and the operating margin went from 29.3% to 27.0%. Adjusted EBITDA fell 1.1% to $1,830M and that margin fell 290bp, from 40.8% to 37.9%. Management raised full-year adjusted EPS guidance to $17.73-$17.87. The stock rose from $305.04 to $322.50, up 5.7%, and closed at $324.00 on August 3.

The number nobody put on air: total revenue divided by guests carried was $2,013.26 a year ago and $2,014.12 this quarter. That is EIGHTY-SIX CENTS more per guest, on 145,009 more guests. Royal Caribbean did not raise the price of a cruise in any way that reached the income statement — it sold more of them. Available passenger cruise days rose 4.9%, load factor was 110.2% against 110.3%, and passenger ticket revenue per available berth-day actually FELL 0.3%, from $247.17 to $246.38. In constant currency net yields grew 1.2% against net cruise costs excluding fuel of 3.9% — a spread of NEGATIVE 270 basis points. That is why revenue grew 6.5% and operating income fell.

THE CALL: HOLD (4/5, A SUPERB OPERATOR, AND THE SPREAD JUST WENT THE WRONG WAY.) — base-case value ~$270.0 vs ~$324.0 today.

KEY METRICS:

- CALL: HOLD 4/5 — fair value ~$270 vs $324.00 (about 17% BELOW). An ENTERPRISE frame, because $21,961M of net debt and $16.5B of ships on order make an equity-only model the wrong lens. EV = 267,448,348 shares (303,877,626 issued less 36,429,278 treasury) at $324.00 = $86.65B, plus net debt of $22,836M of debt less $875M of cash = $108.61B — 14.4x the ~$7.53B of FY2026E adjusted EBITDA the guidance implies. STEP 1, an EV/EBITDA grid on FY2027E EBITDA of $7.5B / $8.1B / $8.6B at 9.5x / 12.5x / 14.0x: exactly TWO of the nine cells clear $324 and both need a 14x multiple, the multiple RCL trades at today. Weight the diagonal 30/45/25 and the grid gives $284. STEP 2, an unlevered DCF (EBITDA less cash tax less ALL capex plus the customer-deposit float, 9.25% WACC, 3% terminal), which charges the entire $16.5B order book against the cash: PV of 2027-2036 $35,911M plus terminal $51,715M = EV $87,626M, less $21,961M of net debt, over 267.4M shares = $246. We blend to ~$270.

- THE UNDER-COVERED ANGLE — THE YIELD-COST SPREAD INVERTED. In constant currency net yields rose 1.2% ($283.56 to $287.05 per available berth-day) while net cruise costs excluding fuel rose 3.9% ($126.76 to $131.71). As reported the figures are $288.95 and $132.30. Per berth-day RCL took in $3.49 more and spent $4.95 more ex-fuel, $9.49 more including it. The company's own GROSS MARGIN YIELD — published right next to net yields and almost never quoted — fell 5.6%, from $142.00 to $134.11. That is why revenue +6.5% became operating income -1.7% and a 290bp adjusted EBITDA margin decline.

- GROWTH IS BERTHS, NOT PRICE: APCD rose 4.9% (12,942,385 to 13,572,396), guests rose 6.4% to 2,399,066, and load factor was 110.2% vs 110.3% — unchanged. Roughly four-fifths of the revenue growth was simply more berths. Revenue per available berth-day rose only 1.5%, $350.63 to $356.01. Split it: passenger ticket revenue per berth-day FELL 0.3% ($247.17 to $246.38) while onboard rose 6.0% ($103.46 to $109.63). All of the pricing came from what happens after boarding. Customer deposits are a record $6,736M — but that is +5.6% against +4.9% capacity, so the record book is largely a capacity effect.

- THE FUEL TAKE IS WRONG, THE LABOUR LINE IS THE STORY: fuel was 7.3% of revenue at $355M (+27.2%), $839 a metric ton net of hedging on 422,000 tons — but 58% of forecast consumption is hedged and the company's own sensitivity table says a 10% move in fuel prices is worth just $26M for the rest of the year, about 1% of guided EPS. Strip fuel out entirely and costs still ran +3.9% against yields of +1.2%. PAYROLL rose 23.1%, $329M to $405M — $25.42 to $29.84 per berth-day, UP 17.4% per unit. Commissions and transportation rose only 2.6% to $622M; other operating rose 9.6% to $615M; D&A rose 11.3% to $464M and is guided at $1,905-$1,915M for the year.

- THE RAISE RESTS ON Q4: first-half adjusted EPS was $7.81, Q3 is guided to $6.26-$6.36, and the full-year midpoint is $17.80 — so the implied Q4 is $3.68 against $2.77 a year ago, UP 33%, in the seasonally smallest quarter. The cost guide needs the same pivot: NCC ex-fuel per APCD ran +2.5% in H1 and must average roughly -2% across H2 to land at the guided +0.4%. CASH: H1 operating cash flow $3,694M but capex went $1,264M to $3,237M, so free cash flow fell from $2,109M to $457M; strip the $996M increase in customer deposits and it was NEGATIVE $539M. They returned $1,709M to shareholders and raised $5,716M of debt. Net debt went $20,520M to $21,961M — up $1,441M in six months, though the RATIO improved to about 3.0x LTM adjusted EBITDA.

- STREET vs US: 52 analysts, consensus rating BUY — but 25 buys, 21 holds and 6 sells, so 27 of the 52 are not buyers. Consensus target $354.50 in a wide $296-$425 range, about 9.4% above the $324.00 close, which is thin for a Buy-rated mega-cap. On the BUSINESS we ALIGN with the Street almost completely: best operator in the sector, real demand, repaired balance sheet, good capital allocation (3,797,452 shares repurchased in H1 at an average of $285.20, against $324.00 today). On the PRICE we DIFFER and are more CAUTIOUS: our ~$270 is 16.7% below the close and 23.8% below the Street. $354.50 requires roughly 13.9x EV/EBITDA on our 2027 estimate, sustained — the multiple RCL holds today and near the highest it has ever held.

What to watch: Bullish: net cruise costs excluding fuel per APCD actually printing negative in Q3 as guided (-1.6% to -1.1% in constant currency), which would flip the yield-cost spread positive and prove the first half was timing; net yields re-accelerating above 3% in constant currency as the private destinations go from three to eight by 2028 — owned destinations capture spend that leaks to third-party ports; continued buybacks in the $280s while free cash flow inflects after the 2028 capex peak. Bearish: payroll per available berth-day compounding at 17.4% — crew cost is contractual and Icon-class ships need more of it; the 2028 order-book wall, $4,587M of ship installments in a single year against a business that generated $457M of free cash flow in the first half; and the implied Q4 of $3.68, guided in the same release that flagged a booking impact from prolonged geopolitical activity.

Also on YouTube: @ChargedAlpha

DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.

MakeMyTrip Limited (MMYT) Q1 FY2027 — Reported August 3 (Q1 FY2027, the three months ended June 30, 2026 — MakeMyTrip's fiscal year ends 31 March, so the June quarter is Q1 of FY2027). Gross bookings $2,854.7M, up 9.4% reported and 19.9% in constant currency. Revenue $285.6M, up 6.2% reported and 16.1% in constant currency. Adjusted operating profit $51.4M, up 8.6%. But profit for the period fell 64.7% to $9.1M and diluted EPS fell from $0.22 to $0.09, because net finance costs went from $4.0M to $28.3M — $29.2M of non-cash discount accretion on $1.6625B of 0.00% convertible notes. Adjusted diluted EPS was $0.53 (vs $0.42) on revenue of $285.58M. The stock closed at $61.78, UP 8.5% from a $56.95 close, having traded $60.16 to $65.00.

The number nobody put on air: MakeMyTrip's reported profit fell 64.7% not because the business weakened but because of a decision made thirteen months earlier. On June 23, 2025 it issued 18.4M shares at $90.00 ($1,656.0M) plus $1,437.5M of 0.00% convertible notes due 2030, and used the combined $3,038.8M to repurchase 34,372,221 Class B Shares from Trip.com at roughly $88 a share. The stock is $61.78. The notes pay no cash coupon, but IFRS still accretes the discount — $29.2M this quarter against $6.1M a year ago. Total equity at June 30 was NEGATIVE $59.3M.

THE CALL: AVOID (4/5, GREAT FRANCHISE, AND THE PRICE IS OUR BULL CASE.) — base-case value ~$37.0 vs ~$61.78 today.

KEY METRICS:

- CALL: AVOID 4/5 — fair value ~$37 vs $61.78 (about 40% BELOW). An OWNER-EARNINGS DCF, because MakeMyTrip is IFRS-profitable and free-cash-flow positive. THE BUILD: FY2026 (year ended 3/31/26) operating cash flow $182.5M, less capex of $12.4M (PP&E $5.5M + intangibles $6.9M), less share-based compensation of $23.0M — a real cost paid in dilution, and one every adjusted measure in this release adds straight back — gives owner earnings of ~$147M. Grow 13% for five years and 9% for five more IN REPORTED DOLLARS (not constant currency), 4.0% terminal, discount 10.5%: enterprise value $4.11B, less net debt at par of $638M, divided by 100.0M as-converted shares = $35. Bear (8%/5%, 3.0% terminal) $18; bull (19%/13%, 4.5% terminal) $61. Probability-weighted 25/50/25 = $37. SHARE COUNT: 90,448,984 ordinary shares (including 1,686,012 treasury) + 5,295,690 Class B at 3/31/26 = 94.06M outstanding, plus 5.94M from the $230M 2028 Notes which are IN THE MONEY at a $38.75 conversion price. NET DEBT: $1,432.5M of 2030 Notes at par (the $121.50 conversion price is nearly double the stock, so they are cash to repay, not equity) less $370.7M cash and $423.6M term deposits.

- THE REVERSE DCF IS THE CALL: at $61.78 the enterprise value is $6.82B — 36x FY2026 adjusted operating profit of $188.8M, 33x the annualised Q1 run-rate, 6.5x FY2026 revenue and 46x our owner-earnings estimate. Discounted at 10.5% with 4% terminal growth, that price requires ~21% owner-earnings growth for five years and ~15% for five more, in reported dollars. Delivered this quarter: adjusted operating profit +8.6%, free cash flow $19.9M vs $37.9M (MINUS 47.5%). The price is almost exactly our BULL case ($61 at 10.5%), which is the definition of no margin of safety.

- THE UNDER-COVERED ANGLE — MAKEMYTRIP IS BUYING THE GROWTH: customer inducement costs, which are booked as a REDUCTION OF REVENUE and therefore never appear as an expense, were $106.833M (vs $89.070M). Add marketing and sales promotion of $48.785M (vs $43.925M) and total demand spend was $155.6M, UP 17.0% against adjusted margin growth of 9.4%. That is 5.4% of gross bookings (management gave the same figure on the call, vs 5.2% in the preceding quarter) against 5.1% a year ago — and 50.2% of adjusted margin, up from 47.0%. Half of every dollar of gross profit now goes straight back out to buy the next booking. That is why +19.9% constant-currency gross bookings converted to +8.6% adjusted operating profit.

- TAKE RATES AND MIX: Adjusted Margin % (adjusted margin divided by gross bookings — the company's own take-rate measure) fell in AIR TICKETING from 6.8% to 6.4%, on 54% of group gross bookings. Underneath it, FLIGHT SEGMENTS FELL 2.0%, from 14,479k to 14,185k — air gross bookings rose 7.6% reported on higher fares (fuel costs, capacity cuts, elevated airfares), not on volume. Hotels and packages improved to 18.0% from 17.7% on 19.9% room-night growth (12,773k vs 10,657k) and is now the largest adjusted margin contributor at $134.5M. Bus ticketing, the fastest grower at +31.4% cc gross bookings and 23.9% more tickets, earns only 10.3%. Segment adjusted margin: air $98.5M (+10.8% cc), hotels & packages $134.5M (+21.3% cc), bus $51.8M (+32.4% cc), others $24.9M (+27.2% cc); total $309.7M.

- THE CURRENCY WEDGE AND THE BALANCE SHEET: MakeMyTrip reports in USD but the functional currency of its material subsidiaries is the INR, which depreciated MORE THAN 10% year on year in the quarter. Reported revenue growth 6.2% vs 16.1% constant currency — $26.6M, or 9.9 points, of pure translation drag; gross bookings 9.4% vs 19.9%; air ticketing revenue actually FELL 7.5% as reported while rising 1.1% in constant currency. On the balance sheet at 6/30/26: cash and cash equivalents $370.656M (including $2.6M restricted) plus term deposits $423.6M = $794.3M, against $1,662.5M of convertible principal ($230.0M of 0.00% 2028 Notes at $38.75, $1,432.5M of 0.00% 2030 Notes at $121.50 after $5.0M was repurchased in FY2026). Loans and borrowings $1,435.4M. TOTAL EQUITY IS NEGATIVE $59.305M. Interest expense on financial liabilities measured at amortised cost: $29.219M this quarter vs $6.064M.

- STREET vs US: eleven analysts, consensus rating BUY (8 buy / 3 hold / 0 sell), consensus 12-month target $77 with a range of $70 to $84 — about 25% above the $61.78 close. HSBC initiated coverage at Buy with a $70 target; a separate ten-analyst panel shows an average nearer $71.90 with a low of $58. We do NOT align and we are far more CAUTIOUS: our $37 is 40% BELOW the price. The gap is not the operating forecast — we model the same ~20% constant-currency booking growth. It is three choices. One: we discount REPORTED DOLLARS, because a US-listed shareholder is paid in dollars and the rupee is a standing tax. Two: we treat $1.6625B of zero-coupon principal as DEBT AT PAR, because a $121.50 conversion price against a $61.78 stock is not equity. Three: we DEDUCT share-based compensation from owner earnings rather than adding it back.

What to watch: Bullish: the air ticketing Adjusted Margin % holding at or above 6.4% for two more quarters while flight segments return to growth (that would prove the take-rate slide was fuel and fares, not competition); the MMT India IPO — a pre-filed DRHP went to SEBI on July 17, 2026 for a Main Board listing of up to ~$1B, entirely offer-for-sale by the Mauritius parent and ibibo Group — pricing the Indian subsidiary at a multiple that makes the Nasdaq parent look cheap on a look-through basis, with proceeds visibly retiring the 2030 Notes; AI cost leverage converting to operating margin (AI now writes >75% of code and resolves >50% of support calls, with management targeting 65-70%). Bearish: customer inducements plus marketing rising through 5.6% of gross bookings year over year, which would mean Cleartrip/ixigo/EaseMyTrip are forcing the pace; the air ticketing Adjusted Margin % breaking below 6.2%; a further leg down in the INR that keeps reported dollar growth in mid-single digits while the constant-currency headline stays glossy.

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DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.