Wednesday, 28 October 2015

US earnings Tuesday: Alibaba, UPS, Coach

Following on from my Europe Tuesday earnings wrap (link here) let's looks Stateside with the pre-open round of US earnings.  

Alibaba is a stock that I like (link here) and today's numbers continued the bounce from the Barron's front page 'the stock may halve from here' mid US$60s call just over a month ago.


Thematically there were some real ticks in the box today.  As I noted earlier on Twitter: 

Sure slowing GMV growth at ...but 28% still kind of alright to say the least. Structural +ves...

Mobile revenue split for now >60%. Clear theme if we did not know it already...& monetisation rate v close too

Only note of caution for me at first glance on these numbers if reconciling the first and third charts here

(but on this latter point, add back the share buybacks and the reconciliation sort of works). 

The cash flow is still the most exciting part of the Alibaba story.  Annualise up that last quarterly free cash flow generation and the free cash flow yield (using market cap) is well over 4%...hence why I saw value back in the US$60s.  

I still like Alibaba here and based off what I see here and the continuing expansion of the Chinese consumer / online economy the capability for the stock to trade back towards US$100/share.  


Another company talking about the consumer today was UPS where I noted on Twitter:

On CC: poor industrial production (-ve in Q4 they est) = ‘mixed bag in the economy...b2b faded a little bit…(but) b2c solid quarter'

Looking through my other conference call notes: 

$UPS blames lower gas prices for revenue miss (!) "Lower fuel surcharge rates dampened rev growth & lowered rev per package by about 250bp."

$UPS says ground products dropped slightly as slowing industrial production contributed to the 1st y/y decline in B2B shipments this year

B2C slightly offset

Intl ‘momentum continues’

Said fuel charges reduced growth by 350 bps

4.6bn FCF after 1.7bn capex

Repurch 2bn, 1.9bn in div

Q4 op profit best of year, high single digit yoy


‘mixed bag in the economy…b2c solid quarter’

So another company noting the rise of the consumer online economy...and cash flow.  With a just over US$100bn market cap it still feels good value (5%+ free cash flow yield potential etc.).  Tactically I talked about a sub US$95 share price before (link here).  I would say that the level now is below US$100. 

Finally onto Coach.  I noted on Twitter earlier: 

Held Aug guidance & 'positive North American comps by the end of the year'. No wonder shares called up 3%+

I talked about a feeling of turnaround / deep value here (with a few numbers) and I think the comment above and the chart below support this along with comments about progress in Asian sales and good reviews of recent fashion launches.



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