Charged Alpha Stock Encyclopedia

Chevron Corporation (CVX) Q2 2026 — Net income $12,072M ($6.11/diluted share) vs $2,490M ($1.45). Adjusted $11,977M ($6.06), ~41c above consensus - the largest quarterly profit since 2022. Revenues $67,199M, +51.4%. Production 4,070 MBOED, +20%. Free cash flow $18,095M. ROCE 21.4%. Average Brent: $104/bbl vs $68.

Chevron's Q2 2026 is the biggest quarter it has printed since 2022, and almost all of the year-over-year increase is a price: average Brent spot was $104/bbl against $68 a year ago, and Chevron's own release says so. Net income $12,072M ($6.11 GAAP, $6.06 adjusted, a ~41c beat), production 4,070 MBOED (+20%, credited to legacy Hess assets first), free cash flow $18,095M in one quarter, and total debt down a record $8.4B. Execution was excellent - record U.S. output, 97% refinery utilisation, $3B of cost cuts six months early, $1.5B of Hess synergies 50% above target. But $1.4B of favourable timing effects, downstream earnings up 6.6x on crack spreads that lost $1,013M in Q1, and DD&A of ~$24.3B against ~$18B of capex do not repeat at a mid-cycle barrel. Normalise to $75 Brent and we get ~$22B of mid-cycle free cash flow and a DCF of ~$170 - about 12% below the $192.31 close. AVOID, 3/5.

THE CALL: AVOID (3/5, A RECORD QUARTER, PRICED OFF A $104 BARREL) — base-case value ~$170.0 vs ~$192.31 today.

KEY METRICS:

- Q2 2026 = three months ended June 30, 2026; reported pre-open 2026-07-31

- Net income $12,072M vs $2,490M; GAAP EPS $6.11 vs $1.45; ROCE 21.4% vs 6.2%

- Adjusted earnings $11,977M / $6.06 - ~41c above the Bloomberg consensus

- GAAP EPS is HIGHER than adjusted: special items were a NET BENEFIT of $144M (+$230M asset sale gain, -$86M pension settlement)

- Average Brent spot $104/bbl vs $68 a year ago - the biggest driver of the print

- Release discloses $1.4B of FAVOURABLE TIMING EFFECTS (derivative MTM + LIFO)

- Production 4,070 MBOED vs 3,396 (+20%); U.S. a record 2,077 MBOED; Hess credited first

- Upstream: U.S. $3,541M (from $1,418M); Int'l $4,641M (from $1,309M)

- Downstream: U.S. $2,411M (from $404M); Int'l $2,457M (from $333M); All Other -$978M

- Realizations: U.S. liquids $70.80/bbl (from $47.77); Int'l $96.41 (from $58.88)

- U.S. natural gas realization FELL to $0.91/mcf from $1.75 (Permian associated gas)

- Record U.S. refinery crude inputs 1,070 MBD at 97%+ utilisation; int'l inputs -10%

- CFFO $22,633M (vs $8,576M); capex $4,538M; FREE CASH FLOW $18,095M in the quarter

- Total debt cut by a record $8.4B to $37,075M; debt ratio 16.3%, net debt ratio 13.1%

- Returns $6.6B: $3,504M dividends + $3,117M buybacks; dividend declared $1.78/share

- $3.0B structural cost cuts hit SIX MONTHS EARLY; $1.5B Hess synergies in year one, 50% above target

- Signed a 20-year, ~2.67 GW behind-the-meter power agreement with Microsoft (West Texas)

- DD&A ~$24.3B annualised vs ~$18B capex - depletion running ahead of the capital budget

- Our model: ~$22B mid-cycle FCF at $75 Brent; DCF $170 base, $110 bear ($65), $263 bull ($90)

- Street: $206.93 avg target, median $210, range $174-$230, 34 Buy/15 Hold/4 Sell - all PRE-print

What to watch: Bull: the buyback holding at $3B+ a quarter through a quarter with Brent averaging below $80 - that proves the ~$26.5B of annual shareholder return is funded by the asset base, not the war; base case then moves toward $200. Bear: a buyback cut below $2.5B on a lower Brent, downstream earnings back under $1B (where they were in Q1 2026), or a 2027 capex budget above $20B. Any two and fair value is nearer $140. Real buyers around $145.

Also on YouTube: @ChargedAlpha

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

Starbucks Corporation (SBUX) Q3 FY2026 — Revenue $9,322.7M, -1.4% y/y on the China deconsolidation. Global comps +7.9% (transactions +4.2%, ticket +3.5%); North America +8.1%, U.S. +7.9%, International +5.7%. GAAP operating margin 10.5% (+60bps); non-GAAP operating margin 14.4% (+430bps). Non-GAAP EPS $0.85 vs $0.66 consensus (+70% y/y); GAAP EPS $0.91 (+85.7%), HIGHER than non-GAAP because the $536.3M China divestiture gain is excluded. FY26 non-GAAP EPS guidance RAISED to $2.55-$2.65 from $2.25-$2.45. Stock closed +1.64% at $105.85 on 30 July after opening +3.0% and fading.

Starbucks' fiscal Q3 2026 was the best quarter the company has printed in three years, and the price already owns it. Global comparable store sales rose 7.9%, led by a 4.2% increase in transactions - traffic, not price - the fourth straight quarter of comp growth. Non-GAAP EPS of $0.85 beat consensus by 29% and management raised the full year by roughly 30 cents. But three disclosed lines did about a third of the work: the non-GAAP tax rate fell 960bps to 21.8% (worth ~$0.10 of the $0.35 EPS increase), IEEPA tariff refunds covering three quarters of cost landed in one quarter's product and distribution costs, and the North America store base shrank by 363 units. Management's own raised guidance implies Q4 non-GAAP EPS of $0.64-$0.74 - 13% to 25% BELOW the quarter that caused the re-rating. At $105.85 that is 40.7x forward non-GAAP earnings on a flat-revenue guide. Our DCF lands at ~$70. AVOID.

THE CALL: AVOID (4/5, THE TURNAROUND IS REAL. THE PRICE ALREADY OWNS IT.) — base-case value ~$70.0 vs ~$105.85 today.

KEY METRICS:

- Fiscal Q3 FY2026 = the 13 weeks ended June 28, 2026; 10-Q and 8-K Ex-99.1 both filed 2026-07-29

- Global comps +7.9% (transactions +4.2%, ticket +3.5%) - 4th straight quarter of growth

- North America comps +8.1% (txn +4.5%); U.S. +7.9% (txn +4.2%); International +5.7% (ticket-led)

- NO China comp is disclosed - China retail became a Boyu-run licensee JV this quarter

- Revenue $9,322.7M, -1.4% y/y; company-operated -3.9%, licensed +8.6%; beat the ~$9,174M Street

- GAAP operating margin 10.5% (+60bps) vs non-GAAP operating margin 14.4% (+430bps)

- GAAP EPS $0.91 (+85.7%) is HIGHER than non-GAAP EPS $0.85 (+70.0%) - the $536.3M gain is excluded

- Non-GAAP tax rate 21.8% vs 31.4% (-960bps) = ~$0.10 of the $0.35 non-GAAP EPS increase

- IEEPA tariff refunds: 3 quarters of tariff cost refunded into ONE quarter's P&D costs (30.3% vs 31.3%)

- $364.8M of restructuring/transaction/transformation costs is the GAAP-to-non-GAAP bridge

- 41,304 stores (33% company-operated, 67% licensed); 7,991 China stores converted to licensed

- North America store base 18,371 vs 18,734 a year ago - down 363, and -14 net this quarter

- Segments: North America $7,395.1M +7.0% (margin 13.6%); International $1,322.6M -34.2% (margin 19.1%)

- Channel Development $587.9M +21.5% at a 52.1% operating margin; Corporate and Other -$587.5M

- China: $2,544.2M net proceeds, $536.3M book gain, 40% retained stake; goodwill -$2,130M

- $2,815.9M of long-term debt repaid in 9M incl. ~$1.3B of tender offers; LTD $14,575.9M to $11,780.2M

- 9M cash from operations $3,604.1M (+7.1%); capex only $887.8M vs $1,849.5M; 9M FCF ~$2.72B

- Shareholders' DEFICIT $7,674.3M; total debt $13,278.6M plus $9,155.5M of operating leases

- Dividend $0.62/qtr (65th consecutive) = ~$2.84B/yr against ~$3.2B FY26E FCF - 1.1x coverage

- FY26 guidance RAISED: non-GAAP EPS $2.55-$2.65 (from $2.25-$2.45), GAAP $2.14-$2.24

- That leaves Q4 non-GAAP EPS of $0.64-$0.74 vs $0.85 in Q3 - down 13% to 25% sequentially

- FY26 non-GAAP operating margin guided >11.0% against the 14.4% just printed

- Valuation: 40.7x FY26E non-GAAP EPS of $2.60; 47-49x the GAAP range. MCD 22.1x, YUM 19.6x, CMG 35.3x

- DCF at 8.0%: bear $41 / base $71 / bull $107; probability-weighted 30/50/20 = $69

- Reverse DCF: $105.85 requires 12.6% FCF growth every year for a decade, or a 6.4% cost of capital

What to watch: Bull: non-GAAP operating margin holding above 13% in fiscal Q4 and Q1 with no tariff refund and a normal tax rate, proving the 430bps was structural; plus U.S. comps staying above 6.5% while the store base stops shrinking. Both, and our base case moves toward $90. Bear: Q4 non-GAAP EPS below $0.64 (the bottom of the implied range); U.S. comps under the guided 6.5%; or an FY27 outlook showing the tax rate normalising back toward the high twenties, worth roughly $0.10 a quarter on its own. Any two and fair value is nearer $55 than $70. Real buyers around $60.

Also on YouTube: @ChargedAlpha

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

Anheuser-Busch InBev SA/NV (BUD) Q2 2026 — Revenue $16,660M, +5.6% ORGANIC but +11.0% REPORTED. Normalized EBITDA $5,938M +5.8% organic, margin 35.6% (+4bps). Underlying EPS $1.21, +23.4% reported but only +12.9% constant currency. Reported EPS $1.90, flattered by a $1,402M mark-to-market gain on ABI's own share price. FY26 EBITDA guidance REAFFIRMED at 4-8%, not raised. ADR closed +1.50% at $86.14, a 52-week high; the Brussels line closed DOWN 0.19%.

AB InBev's Q2 2026 produced three different earnings numbers and they are all in the same release. Underlying EPS $1.21, up 23.4% as reported and up 12.9% in constant currency — meaning 45% of the headline growth was the dollar, not the beer. Reported EPS $1.90, more than double last year, because a $1,402M mark-to-market gain on derivatives hedging ABI's own share-based pay ran through the P&L when its stock rose. Underneath: Latin America is a machine (Middle Americas EBITDA +10.3% at a 50.3% margin), while the US delivered +0.1% EBITDA growth on STRs of -1.9%, and China's EBITDA fell 16.1%. Our DCF lands at ~$87 against an $86.14 close. That is a one percent gap. HOLD.

THE CALL: HOLD (3/5, A GOOD BUSINESS, CORRECTLY PRICED) — base-case value ~$88.0 vs ~$86.14 today.

KEY METRICS:

- 1 BUD ADS = 1 ABI ordinary share; AB InBev reports in USD — no conversion needed

- Revenue $16,660M: +5.6% ORGANIC vs +11.0% REPORTED ($822M of the $1,656M increase was FX)

- Volumes +0.9% organic; revenue per hl +4.2% — ~75% of growth is price, not beer

- Normalized EBITDA $5,938M +5.8% organic; margin 35.6% +4bps — H1 margin -5bps

- Underlying EPS $1.21: +23.4% reported but +12.9% constant FX — 45% was the dollar

- Reported EPS $1.90: profit $3,751M incl. a $1,402M gain on ABI's OWN share price

- Normalized ETR 26.1% vs reported ETR 18.7% (derivative gains are non-taxable)

- Middle Americas $5,091M +9.8%, EBITDA +10.3% at a 50.3% margin — now the largest zone

- South America $2,961M +7.6%, EBITDA +14.3%, margin +171bps — the best profit line

- North America $4,039M +2.6%, EBITDA +0.5%, margin -74bps; US STRs -1.9%, US EBITDA +0.1%

- Asia Pacific $1,648M -2.8%, EBITDA -10.9%, margin -269bps; China volumes -9.7%, EBITDA -16.1%

- Megabrands +6.2%: Corona +17%, Stella +19%, Michelob Ultra +21% outside home markets

- No-alcohol beer +27%, Beyond Beer +44%; BEES carries 72% of revenue, $15.0bn GMV +16%

- H1 free cash flow $3,881M vs $1,355M; H1 cash from operations $5,241M vs $2,704M

- Net debt $64.2bn — UP from $60.9bn at Dec-25 — but net debt/EBITDA 2.86x vs 3.27x

- $3,389M on minority buy-ins vs $1,301M buyback; $1.9bn of the $6bn programme done

- FY26 guidance REAFFIRMED not raised: EBITDA +4-8%, ETR 26-28%, capex $3.5-4.0bn

- FY23/24/25 revenue $59.4/$59.8/$59.3bn — flat; EBITDA margin 33.6% -> 35.8%

- Valuation: FY26E underlying EPS ~$4.50 -> 19.1x forward; EV $234.4bn = ~10.1x FY26E EBITDA

- Our DCF at 8.0%: bear $60 / base $88 / bull $120 (base is $112 at 7.0%, $70 at 9.0%)

- Reverse DCF: $86.14 implies 2.6% perpetual FCF growth at 8%, or an 8.1% discount rate on our path

What to watch: Bull: China volumes turning flat or positive (Asia Pacific EBITDA -10.9% is a 269bp drag that would reverse fast), plus US EBITDA growing actual profit dollars rather than share points. Both, and fair value moves toward $100. Bear: FY26 EBITDA landing in the lower half of the 4-8% band as the tax rate steps up to 26-28%; the buyback continuing at 32%-in-nine-months while net debt stays above $64bn; or the dollar strengthening, which takes reported growth back to the constant-currency rate. Any two and fair value is in the low seventies. Real buyers near $72.

Also on YouTube: @ChargedAlpha

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

GSK plc (GSK) Q2 2026 — Turnover £8,409M +5% AER/CER, ahead of consensus. Core operating profit £2,800M +7% CER at a 33.3% margin; core EPS 50.5p +9% ($1.36 per ADS). But TOTAL operating profit fell 75% to £481M and Total EPS fell 69%, on a £1.3bn camlipixant write-off. Free cash flow £1,994M +77%. FY26 guidance reaffirmed.

GSK reported two different quarters in one release and both are real. Core: turnover £8.4bn +5%, core operating profit +7% CER, core EPS 50.5p +9%, free cash flow +77%. Reported: total operating profit -75% and total EPS -69%, on a £1.3bn write-off of camlipixant. But the episode is really about one date GSK published itself: dolutegravir loss of exclusivity, 2028-2030 — 17% of group turnover, growing just 3%, against long-acting injectable HIV at £593M a quarter growing 34%.

THE CALL: HOLD (3/5, CHEAP FOR A REASON, AND NOT QUITE CHEAP ENOUGH) — base-case value ~$48.0 vs ~$52.07 today.

KEY METRICS:

- 1 GSK ADS = 2 ordinary shares; GSK reports in GBP. All $ figures at GBP/USD 1.3447 (30 Jul 2026)

- Turnover £8,409M +5% AER and CER — a beat

- Core operating profit £2,800M +7% CER; core margin 33.3% (+0.6ppts)

- Core EPS 50.5p +9% = 101.0p = $1.36 per ADS

- Total operating profit £481M -75%; Total EPS 10.8p -69% = $0.29 per ADS

- £1.3bn camlipixant impairment; programme discontinued after CALM-1/CALM-2

- Specialty Medicines £3,782M +14%; Vaccines £2,284M +8% (Shingrix £888M only +3%); General Medicines £2,343M -9% (Trelegy £775M -7%)

- HIV £2,078M +10% = 24.7% of group turnover

- Dolutegravir (Dovato/Tivicay/Triumeq/Juluca) £1,441M +3% = 17% of group — LoE 2028-2030

- Long-acting injectables Cabenuva £453M +33% + Apretude £140M +39% = £593M +34%, 80% of all HIV growth

- Nucala £610M +23%; Jemperli £248M +27%; Ojjaara £187M +36%; Arexvy £192M more than doubled

- Free cash flow £1,994M +77%; H1 £2,809M +54%; cash from operations £2,906M +19%

- Total net debt £15,132M (from £14,453M at Dec-25) — rose despite £2.8bn H1 FCF, on £2,083M of M&A

- Dividend 70p FY26 = 140p = $1.88 per ADS, ~3.6% yield, ~39% of core EPS

- Accelerate Growth: £1.9bn annual savings by 2029 for £2.4bn cost; 20+ Phase III starts (was 10); 2031 sales >£40bn

- FY25 base: turnover £32,667M, core EPS 172.0p, total EPS 141.1p, FCF £4,029M

- Valuation: FY26E core EPS ~181p = ~$4.86 per ADS -> 10.7x forward; EV £92.9bn = 8.9x FY26E core operating profit

- Our DCF at 8.5%: bear $30 / base $48 / bull $65 (base is $59 at 7.5%, $40 at 9.5%)

- Reverse DCF: $52.07 implies 2.7% perpetual FCF growth, or an 8.1% discount rate at a 2.0% terminal

What to watch: Bull: Cabenuva and Apretude compounding above 30% for another four to six quarters — the only thing that closes the dolutegravir gap on time — plus Shingrix re-accelerating out of low single digits. Add a clean Zantac resolution and fair value moves toward $60. Bear: dolutegravir turning negative before 2028; long-acting injectable growth decaying below 20%; or an appellate reversal on Zantac. Any two and fair value is in the thirties. Real buyers near $44.

Also on YouTube: @ChargedAlpha

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

Illumina, Inc. (ILMN) Q2 2026 — Revenue $1.159B, +9.5% and ahead of consensus; organic +6.5%, rest-of-world organic (ex-China) +8.1%. Non-GAAP diluted EPS $1.31 vs $1.19 and above the ~$1.25 expected. GAAP diluted EPS FELL to $1.35 from $1.49 on a strategic-investment comp. FY26 guidance RAISED: revenue $4.60-4.64B (from $4.52-4.62B) and non-GAAP EPS $5.30-5.40 (from $5.15-5.30) - but non-GAAP operating margin guidance was left UNCHANGED at 23.4-23.6%. Reported after the close on July 30; the stock had closed that session +5.3% at $205.09, a 52-week high, having already doubled in 12 months.

The quarter was good. The price is the problem. Illumina beat and raised, but non-GAAP gross margin fell 120bps to 68.2% (from 69.4%) and non-GAAP operating margin fell 130bps to 22.5% (from 23.8%) - GAAP margins only expanded because the prior-year quarter carried a $23M intangible impairment in cost of revenue. Free cash flow fell 21% to $162M from $204M; year-to-date FCF is $412M, exactly flat. Trailing twelve-month FCF is ~$932M and has stopped growing. Underneath the 5% consumables line is a split: clinical consumables +15% ex-China (>20% in the US and Canada), research and applied consumables -7% with management explicitly assuming NO recovery this year. Greater China is $56M, -19%, still on the unreliable entity list - it cost 1.6pts of growth. And for the first time there is credible competition at the top end: Roche launched Axelios 1 on June 29, 2026 at ~$750,000, roughly half a top-spec NovaSeq X. Run the reverse DCF and the $205 price asks for $1.53B of free cash flow starting today against the ~$950M we model.

THE CALL: AVOID (4/5, GREAT FRANCHISE, THE RE-RATING HAS OUTRUN IT) — base-case value ~$135.0 vs ~$205.09 today.

KEY METRICS:

- Revenue $1,159M +9.5%; organic +6.5%; ROW organic ex-China +8.1%; China drag 1.6pts

- Product revenue $982M; service and other $177M

- Sequencing consumables $775M +5% (clinical +15% ex-China, research/applied -7%)

- Sequencing instruments $125M +31%; service and other $154M; microarrays/other $105M

- USCAN $653M +13% organic; EMEALA $368M flat; APAC $82M +9%; Greater China $56M -19%

- GAAP gross margin 66.4% (vs 65.6%); non-GAAP 68.2% (vs 69.4%) - DOWN 120bps

- GAAP operating margin 21.1% (vs 20.2%); non-GAAP 22.5% (vs 23.8%) - DOWN 130bps

- R&D $252M; SG&A $273M (+16.7%); total opex $525M vs $481M

- GAAP diluted EPS $1.35 vs $1.49; non-GAAP $1.31 vs $1.19; net income $207M vs $235M

- Other income $15M vs $92M - the entire GAAP EPS decline (strategic investment gains)

- Operating cash flow $201M, capex $39M, FCF $162M vs $204M (-21%); YTD FCF $412M, flat

- TTM free cash flow ~$932M; cash + ST investments $1,168M; term debt $1,991M

- Diluted shares 153M vs 157M; ~$1.8B remaining buyback authorisation

- NovaSeq X: >95 placements (model 50-60/qtr); ~83% of volume and 92% of high-throughput gigabases on X, but only 59% of high-throughput consumables revenue

- Pull-through per instrument NO LONGER DISCLOSED; clinical customers take 6-9 months to normalise, so 2026 placements mostly benefit 2027

- FY26 guide RAISED: revenue $4.60-4.64B, non-GAAP EPS $5.30-5.40, ROW organic >5%

- FY26 non-GAAP operating margin guidance UNCHANGED at 23.4-23.6%; YTD is 22.2%, so H2 must run ~24.5%

- Competition: Roche Axelios 1 launched Jun 29 2026 at ~$750k (~half a top-spec NovaSeq X); Element Biosciences raised $277M and is winning mid-throughput

- Our DCF: bear $88 / base $125 / bull $161 at 9%; base is $150 at 8% and $107 at 10%

- Reverse DCF: at $205.09 (EV ~$32B) the price requires ~$1.53B of FCF today vs ~$950M, or 16% FCF growth for 5 years from a company guiding 6-7%

What to watch: Bull trigger: Illumina reinstating annualised pull-through per instrument - a metric it disclosed for a decade and has now retired - plus research and applied consumables returning to growth. Add a China de-listing and fair value moves toward $170. Bear confirmation: instrument revenue growth fading back to single digits after this quarter's +31% (which would mean the NovaSeq X placement surge was a pull-forward); any cut to the unchanged 23.4-23.6% non-GAAP operating margin guide, since H2 has to run at ~24.5% to hit it; or the first quarter where management is asked about Roche's Axelios and cannot answer with a share number. Any two of those and fair value is nearer $100. We would be a real buyer around $120 (~22x forward).

Also on YouTube: @ChargedAlpha

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

Carvana Co. (CVNA) Q2 2026 — Record retail units 197,325 (+37.7%), record revenue $7.376B (+52.4%) vs ~$7.04B expected, record gross profit $1.384B, record GAAP operating income $680M, record net income $513M (7.0% margin) and record adjusted EBITDA $769M. Diluted EPS $0.42 vs ~$0.41. But adjusted EBITDA margin FELL to 10.4% from 12.4%, and FY26 adjusted EBITDA guidance of $2.7-3.0B implies a second half BELOW the first. The stock fell 7.4% to $61.44 (down 15% intraday).

Do the guidance arithmetic nobody did. Carvana earned $672M of adjusted EBITDA in Q1 and $769M in Q2 - $1.441B already banked. The full-year guide of $2.7-3.0B leaves $1.259-1.559B for H2, a midpoint of $1.409B, BELOW what is already earned - while management guided Q3 retail units sequentially HIGHER. More cars, less profit. The Street was far above this: Deutsche Bank $3.0-3.2B, Morgan Stanley $4.45B. Where did the margin go? Total GPU fell $412 to $7,014, but retail GPU was fine at $3,547 (-2% YoY, +12% vs Q1). The decline is the Other line - finance and ancillary - down to $2,666. Management's own words: Other GPU was lower due to increasing benchmark rates because they followed the market on retail pricing but kept customer-facing interest rates stable. Translation: rates rose, Carvana declined to reprice the customer, and the gain it books on selling the loan absorbed it. Part of 38% unit growth was bought with finance margin. That Other line is 38% of total gross profit, and 1H gain on loan sales was $703M against $918M of net income.

THE CALL: HOLD (3/5, GREAT MACHINE, DEMANDING PRICE) — base-case value ~$55.0 vs ~$61.43 today.

KEY METRICS:

- Retail units 197,325 +37.7%; wholesale units 105,052 +44.4%; industry was DOWN YoY

- Revenue $7.376B +52.4% (retail $5.507B +61.7%, wholesale $1.343B, other $526M)

- Gross profit $1.384B +30.1%; GAAP operating income $680M vs $511M

- Net income $513M (+$205M), 7.0% margin; adj EBITDA $769M, margin 10.4% vs 12.4%

- EPS basic $0.43 / diluted $0.42; 719M Class A + 381M Class B; 1.127B as-converted

- Total GPU $7,014 (-$412, -5.5%); non-GAAP $7,125 (-$455)

- Retail GPU $3,547 (-2.4% YoY, +12% vs Q1 $3,165); wholesale GPU $801 (-13%)

- Other GPU $2,666 (-7.1%) - the entire GPU shortfall; 38% of total gross profit

- SG&A $704M; SG&A/unit $3,568 vs $3,846 (-7.2%); non-GAAP $3,228 vs $3,385

- 1H26 gain on loan sales $703M vs $918M of 1H net income (77%)

- Ally MPSA amended Jul 27, 2026 to $8.0B of purchases to Jul 2027; fixed pools to $12B

- Finance receivables held for sale $921M; beneficial interests in securitisations $502M

- Cash $2.630B; total debt $5.236B; net debt $2.606B; total liquidity $7.024B

- Tax receivable agreement $2.130B ($1.645B to related parties); deferred tax asset $2.968B

- 1H26 operating cash flow $345M less $102M capex = ~$243M FCF on $918M net income (26%)

- Related-party other revenue $117M of $526M (22%), principally DriveTime

- ADESA: 3 sites integrated in Q2 (19 total); capacity 1.5M units built out, land for 3M

- FY26 guide adj EBITDA $2.7-3.0B vs $2.24B in 2025; Q3 retail units sequentially higher

- Guide implies H2 adj EBITDA $1.259-1.559B vs $1.441B already earned in H1

- Our DCF: bear $24 / base $52 / bull $80 at 10%; base is $64 at 9% and $44 at 11%

What to watch: Bull trigger: Other GPU stabilising above ~$2,800 while units still compound 30%+. That combination proves the growth is not being bought with finance margin and is the cleanest quality-of-earnings test on this company; add a Q3 that convincingly beats the implied H2 guide and evidence the first full ADESA buildout is on schedule for early 2027, and fair value moves toward $75. Bear confirmation: a second guide implying a sequential profit step-down while units rise; total GPU breaking below ~$6,700; or worsening terms on loan sales - watch securitisation pricing and whether retained beneficial interests climb faster than originations. We would be a real buyer nearer $46 (~15x FY27E EBITDA).

Also on YouTube: @ChargedAlpha

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

Bristol-Myers Squibb Company (BMY) Q2 2026 — Revenue $12.973B (+6%, +5% ex-FX) beat consensus by ~$1.1B; non-GAAP EPS $2.04 vs $1.60 expected (+28%); GAAP EPS $1.62 vs $0.64. FY2026 guidance RAISED: revenue $46.0-47.5B to $49.0-50.0B (+$2.75B at the midpoint) and non-GAAP EPS $6.05-6.35 to $6.75-7.00. Growth Portfolio $7.560B (+15%, now ~58% of revenue). The stock rose 2.79% to $64.86 — a fresh 12-month high.

Read management's own guidance bridge and the raise has only two components: Eliquis, whose FY26 growth guide jumped from 10-15% to 20-25%, and a legacy portfolio eroding more slowly than modelled (now -4% to -6%). Gross margin, tax rate and other income were all left unchanged; operating expense actually rose to $16.5B. So the raise is almost entirely the run-off book. Eliquis did $4.481B (+22%) and annualises near $17.5B — roughly 35% of total revenue — and it loses U.S. exclusivity on April 1, 2028. Part of the raise is mechanical: Eliquis was in the IRA's first Medicare negotiation round, and the $231 per 30-day maximum fair price took effect January 1, 2026 against a $521 list. Management stated that H2 U.S. sales benefit from the resulting elimination of the accumulated CPI penalty in certain government channels — the gross price fell, the net price BMS keeps rose. That is a one-time change in net realisation, not an extendable growth rate. Meanwhile consensus already models revenue falling to $36.7B and EPS to $4.77 by 2030, so at $64.86 you are paying 9.4x peak earnings but 13.6x the trough.

THE CALL: HOLD (3/5, A GOOD QUARTER, MOSTLY PAID FOR) — base-case value ~$70.0 vs ~$64.86 today.

KEY METRICS:

- Revenue $12.973B +6% (+5% ex-FX); U.S. $8.991B +6%, int'l $3.982B +6%

- Non-GAAP EPS $2.04 vs $1.46; GAAP EPS $1.62 vs $0.64; GAAP net income $3.317B vs $1.310B

- Growth Portfolio $7.560B +15% (+14% ex-FX), ~58% of revenue; Legacy $5.422B -4%

- Eliquis $4.481B +22% (U.S. $3.357B +27%); FY26 Eliquis guide raised 10-15% to 20-25%

- Opdivo IV $2.485B -3%; Opdivo Qvantig $261M vs $30M, now a ~$1B run rate

- Reblozyl $735M +29%, Breyanzi $484M +41%, Camzyos $416M +60%, Opdualag $349M +23%, Cobenfy $63M +81%

- Revlimid $425M -49%, Pomalyst $204M -71%, Sprycel $88M -27%, Abraxane $55M -47%

- Gross margin 71.3% GAAP / 71.4% non-GAAP, down ~120bps on mix; SG&A $1.826B +7%

- R&D $2.959B GAAP +15% (PRV purchase + IPRD impairments); non-GAAP $2.316B +2%

- Acquired IPRD $0 vs $1.508B a year ago; amortisation $437M vs $830M (-47%)

- Q2 operating cash flow ~$3.4B (management); $1.2B of debt repaid in the quarter

- Net debt $31.656B vs $34.043B at Dec 31; cash + marketable securities $11.464B

- Dividend $0.63/qtr = $2.52/yr, 3.9% yield, ~38% of free cash flow; no buybacks

- FY26 guide: revenue $49.0-50.0B, non-GAAP EPS $6.75-7.00, opex ~$16.5B, GM ~69-70%, tax ~18%

- Eliquis U.S. exclusivity to April 1, 2028; ~$1.5-2B European step-down expected in 2027

- Consensus FY30: revenue $36.7B, EPS $4.77 — so 9.4x FY26 EPS but 13.6x the 2030 trough

- Our DCF: bear $43 / base $74 / bull $104 at 8%; base is $93 at 7% and $61 at 9%

What to watch: Bull trigger: milvexian. A Factor XI win on non-inferior efficacy with lower bleeding would let BMS replace its own cliff with its own drug, and fair value moves toward $90. Also watch the Cobenfy ADEPT readout landing in early 2027 as now guided. Bear confirmation: another ADEPT-style pipeline slip against a fixed April 2028 date; Eliquis decelerating hard in 2027 once the gross-to-net benefit anniversaries and the European step-down lands; Growth Portfolio momentum fading below 10%. We would be a buyer nearer $55 (about 8x earnings, 4.6% yield).

Also on YouTube: @ChargedAlpha

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

Butterfly Network, Inc. (BFLY) Q2 2026 — Revenue $32.612M (+39.5%), gross margin 71.4% vs 63.7% (+770bps), adjusted EBITDA loss cut 78% to $1.4M, and FY2026 guidance raised to $119-123M. But the core ultrasound business grew 2.2% ($21.851M vs $21.387M); the other 37 points came from Butterfly Embedded chip licensing, $10.761M vs $1.996M (+439%). Q3 is guided BELOW Q2 at $26-30M. The stock rose 15.1% to $8.17.

Butterfly's own revenue disaggregation table splits the quarter two ways, and the second split is the story. Core business — every probe, subscription, health system and medical school — went from $21.387M to $21.851M. That is 2.2%. Butterfly Embedded, the Ultrasound-on-Chip licensing and co-development line, went from $1.996M to $10.761M: +439%, a third of the quarter, and roughly 95% of all year-on-year growth. It is also the entire reason gross margin expanded, because licensing carries almost no cost of sales. Meanwhile units fulfilled rose 22.5% and, by the company's own sentence, that volume produced $0.4M of additional revenue — revenue per device fell about 16%. International revenue fell 14%. Remaining performance obligations fell 13.9% in six months, from $99.6M to $85.8M, while guidance was raised. And the Midjourney co-development agreement driving Embedded is capped at up to $74M over five years, with terms filed in an 8-K on November 17, 2025 — seven months before the stock added roughly $840M of market value on it in a single session.

THE CALL: AVOID (4/5, THE CHIP IS REAL. THE PRICE ASSUMES IT ALREADY WON.) — base-case value ~$3.0 vs ~$8.17 today.

KEY METRICS:

- Revenue $32.612M +39.5% (vs $23.383M); H1 $59.142M vs $44.608M

- Core business $21.851M vs $21.387M = +2.2%; Embedded $10.761M vs $1.996M = +439%

- Product revenue $15.720M -5.4%; software & other services $16.892M +149.8% (51.8% of revenue)

- Gross margin 71.4% vs 63.7% (+770bps); product GM 53.1% vs 59.9%, software GM 88.4% vs 73.1%

- Units fulfilled +22.5% (+1,176 devices) produced +$0.4M revenue — revenue per device about -16%

- US revenue $27.591M +57%; international $5.021M -14%

- Operating expenses $36.952M +19.2%; GAAP operating loss -$13.664M; net loss -$12.910M

- Adjusted EBITDA -$1.378M vs -$6.153M, but reached via $10.626M of add-backs = 32.6% of revenue

- Operating cash flow H1 -$30.163M vs -$18.844M (60% worse); ex-working-capital burn about -$8.6M

- Deferred revenue fell $10.643M in six months; $14.3M of Q2 revenue released from opening deferred (vs $5.6M)

- Remaining performance obligations $85.8M vs $99.6M at Dec 31 = -13.9%; 60% converts within 12 months

- Cash & equivalents $124.659M, no debt; accumulated deficit $904.781M

- Shares: Class A 237,995,479 + Class B 26,426,937 = 264.4M; fully diluted 287.2M (+22.8M options/RSUs/ESPP)

- All 20,652,690 SPAC warrants ($11.50 strike) expired unexercised February 12, 2026

- Midjourney co-development agreement capped at up to $74M over 5 years (8-K filed Nov 17, 2025)

- FY2026 guidance RAISED to $119-123M revenue (+22-26%) and adj. EBITDA loss $19-23M; Q3 guided $26-30M

- EV about $2.22B = 18.4x FY26E revenue and 25.4x annualised core revenue

What to watch: Watch CORE business growth, not total revenue. It was 2.2% this quarter. If the September and December quarters show the core ultrasound franchise growing 10%+ with revenue per device stabilising, the platform thesis has a foundation and fair value moves toward $5. What confirms the bear case: Q3 landing in the guided $26-30M range (below Q2's $32.6M), remaining performance obligations falling again from $85.8M, and revenue per device continuing to slide.

Also on YouTube: @ChargedAlpha

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

BigBear.ai Holdings, Inc. (BBAI) Q2 2026 — Revenue $36.7M (+13%) and gross margin 32.8% vs 25.0% (+781bps). Net loss shrank 89% to $25.7M — but $135.3M of that was a smaller non-cash derivative swing and $70.6M was last year's absent goodwill impairment. Adjusted EBITDA got WORSE: −$11.6M vs −$8.5M. Operating cash burn quadrupled to $40.2M for H1. FY26 revenue guidance affirmed at $135–165M. The stock printed a 52-week low of $2.59 the day BEFORE the print, then rose 9.8% to $2.845.

The number nobody put on a slide: revenue per share. In 2021 BigBear.ai produced $145.6M of revenue across 107.0M shares — $1.36 per share. In 2026 it guides to ~$150M across 479.5M shares — about $0.31. Revenue grew 3% in five years; the share count grew 348%. Every repair to this balance sheet was paid for in ownership: $300M from the 2025 at-the-market, $65M from warrant exercises, and in January the entire $125M of 6.00% convertible notes due 2029 converted at 305.5254 shares per $1,000 — roughly 38M new shares in one transaction. Shares outstanding went 437.0M to 479.5M in six months alone, with no ATM at all. Meanwhile gross margin of 32.8%, in the best quarter of the company's listed life, is still less than half of what real enterprise software earns — and the market is paying about 7x FY26E revenue for it.

THE CALL: AVOID (3/5, THE COMPANY IS IMPROVING. YOUR SHARE OF IT IS NOT.) — base-case value ~$1.4 vs ~$2.845 today.

KEY METRICS:

- Revenue $36.749M +13% (vs $32.472M); H1 $71.184M vs $67.229M (+5.9%)

- Gross margin 32.8% vs 25.0% — +781bps, driven by the Ask Sage GenAI mix

- Adjusted EBITDA −$11.572M vs −$8.498M — WORSE by 36% on higher revenue

- Net loss −$25.749M vs −$228.619M, but $135.3M was a non-cash derivative swing and $70.6M last year's goodwill impairment

- Operating cash flow −$22.207M in Q2 (vs −$3.868M); H1 −$40.208M vs −$10.532M

- SG&A $31.848M +48%, R&D $7.562M +72% — opex $40.6M now exceeds quarterly revenue

- Shares outstanding 479,494,493 vs 436,955,655 at Dec 31 — +9.7% in six months, no ATM

- Weighted shares 479.1M vs 320.6M a year ago (+49.5%); basic = diluted (antidilutive)

- Revenue per share: $1.36 (2021) to ~$0.31 (2026E) = −77%, on +3% revenue and +348% shares

- $125M of 6.00% 2029 converts fully converted Jan 2026 at 305.5254 sh/$1,000 (~38M shares)

- Cash & investments $409.8M ($36.3M cash + $282.9M current + $90.6M non-current AFS); LT debt $0

- Backlog $269.6M, +9% since December = ~1.8x guided revenue; funded/unfunded split NOT disclosed

- Accumulated deficit $948.1M vs paid-in capital $1.719B; equity $770.3M incl. $369.4M goodwill+intangibles

- FY2026 guidance AFFIRMED (not raised) at $135–165M revenue; NO adjusted EBITDA guidance given

- EV ~$1.04B = ~7x FY26E revenue for a 32.8% gross margin; net cash is $0.85/share of the $2.845 price

What to watch: Watch adjusted EBITDA, not revenue. It was −$11.6M this quarter vs −$8.5M a year ago. If the September and December quarters show that loss NARROWING year on year while gross margin holds above 32%, the operating leverage is real and fair value moves toward $2.00. What breaks it further: a large acquisition paid for in stock, a restart of the ATM at these prices, or gross margin slipping back below 30%.

Also on YouTube: @ChargedAlpha

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

Automatic Data Processing, Inc. (ADP) Q4 FY2026 — FY26 revenue $21,947.4M (+7%, +6% organic cc) and adjusted diluted EPS $11.12 (+11%) — the top of the guide. Q4 revenue $5,473.8M (+7%), adjusted EPS $2.64 (+17%), GAAP $2.45. Adjusted EBIT margin +80 bps to 26.8%. FY27 guide: revenue +5–6%, margin +70–90 bps, adjusted EPS +9–11%. But interest on client funds was $1,354.8M (+14%) — 23% of adjusted EBIT — and supplies ~38% of the guided FY27 EBIT increase. Stock closed $273.37 on the print, then gave the whole pop back at $263.87.

Three things the coverage missed. (1) The float: interest on client funds was $1,354.8M — 6.2% of revenue but 23% of adjusted EBIT. ADP guides it to $1,540–1,560M in FY27, a $195M increase against a guided adjusted-EBIT increase of ~$509M. That is ~38% of next year's profit growth from one line, resting on Fed Funds futures as of July 28, 2026 (blended new-purchase rate 4.4%, yield ~3.7%). (2) The correlation: client-funds balances are payroll dollars in transit. ADP guides balances +3–4% while pays per control grows 0–1%, so nearly all balance growth is wage inflation — a labour market weak enough to force faster cuts hits the yield, the balances AND the volume at once. (3) PEO: reported margin fell 110 bps to 13.1%, but on revenue excluding zero-margin pass-throughs ($2,520.8M vs $2,401.4M) it fell 39.6% to 37.1% — 245 bps, double the headline. PEO earnings FELL 2% to $936.1M, the only part of ADP that shrank.

THE CALL: HOLD (3/5, A SUPERB BUSINESS, HONESTLY PRICED) — base-case value ~$273.0 vs ~$263.87 today.

KEY METRICS:

- FY26 revenue $21,947.4M +7% (+6% organic cc); Q4 revenue $5,473.8M +7% (+6% organic cc)

- FY26 adjusted diluted EPS $11.12 +11% (top of guide); GAAP diluted EPS $10.94 +10%

- Q4 adjusted diluted EPS $2.64 +17%; GAAP $2.45 +10%; Q4 adj EBIT margin +140 bps to 25.1%

- FY26 adjusted EBIT $5.9B +10%; adjusted EBIT margin +80 bps to 26.8%; net earnings $4,413.5M +8%

- Interest on client funds $1,354.8M +14% = 6.2% of revenue but 23% of adj EBIT, 24% of pre-tax

- Avg client funds balance $40.4B +7%; avg yield +20 bps to 3.4%; Q4 balance $41.0B, yield 3.5%

- FY27 float guide $1,540–1,560M = ~$195M of the ~$509M guided adj EBIT increase (~38%)

- Employer Services revenue $14,831.4M +7% (+5% organic cc); segment margin +60 bps to 36.7%

- ES bookings $2.2B +6%; client retention flat 92.1%; U.S. pays per control +1% (FY27 guide 0–1%)

- PEO revenue $7,128.1M +7%; ex zero-margin pass-throughs $2,520.8M +5%; avg WSEs 762,000 +2%

- PEO margin ex pass-throughs fell 39.6% to 37.1% (-245 bps); segment earnings $936.1M, DOWN 2%

- Cash from ops $5,441.2M +10%; capex $197M + capitalised software $469M = 3.0% of revenue

- Corporate net debt only $873M ($4,964M LT debt + $139M repo less $4,230M cash) — client funds excluded

- Returned $4,710M: $2,626M dividends + $2,083M buybacks; shares 405.3M to 397.8M (-1.9%); ROE 72%

- FY27 guide: revenue +5–6%, adj EBIT margin +70–90 bps, adj diluted EPS +9–11%, tax ~23%

What to watch: Bullish: pays per control reaccelerating above 1%, and ES bookings at the top of the 4–7% guide while retention holds at 92.1% rather than sliding the guided 10–30 bps. Bearish: the client-funds yield missing the ~3.7% path (100 bps of extra easing costs ~$100M of pre-tax income in year one, and compounds), and PEO margin ex pass-throughs below 36%. We would buy in size around $235.

Also on YouTube: @ChargedAlpha

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