PM Images/DigitalVision via Getty Images Introduction The market has turned against a company famous for predictable cash flows, an incredible moat, and very reliable earnings growth. Having declined 55% since its peak in November of 2024, it is clear to the market that recent threats have changed its thesis. AI threatening its software offerings, as it has for other SaaS companies, and the FHFA’s...
PM Images/DigitalVision via Getty Images Introduction The market has turned against a company famous for predictable cash flows, an incredible moat, and very reliable earnings growth. Having declined 55% since its peak in November of 2024, it is clear to the market that recent threats have changed its thesis. AI threatening its software offerings, as it has for other SaaS companies, and the FHFA’s approval of VantageScore 4.0 as an alternative to Fair Isaac Corporation ( FICO ) are two game-changing threats that appear to be the main drivers of this collapse. In this article I will analyze the threats and determine if the market is overreacting. Its Moat In the US, around 50% of home loans are sponsored by the government through Fannie Mae and Freddie Mac, who buy mortgages and package them into MBS. To compare and securitize millions of mortgages, the market needed a uniform definition of borrower risk, and FICO, with its long historical track record, was perfectly positioned to become that standard. FICO had a data advantage through performance data across credit cycles and default correlation studies, which helped make the mortgage ecosystem build itself around FICO. MBS investor models, bank compliance frameworks, and risk-based pricing grids were all built around FICO, which made its moat exceptionally strong. With this moat, it enabled FICO to enjoy very high profitability metrics with a gross profit margin of 82%, an operating margin of 48%, a net margin of 31%, and an ROA of 35%. Seeking Alpha Its high moat also allowed FICO to increase its mortgage score price by 8X since 2018. These price hikes show how indispensable FICO’s algorithms are and how much leverage FICO has historically had within the mortgage ecosystem. Seeking Alpha With a perfect moat, high profitability, and growth, investors were willing to pay up to 100X earnings per share. Seeking Alpha How These Two Things Threaten FICO This moat is fundamentally challenged with the FHFA’s decision to a...
There's an old joke asking why we call freight that travels by car a "shipment," but freight that travels by ship is called "cargo." Nobody ever asks what we call freight that travels by electric vertical takeoff and landing vehicle (eVTOL), and up until now, we haven't needed a word for it. That's in part because U.S.-based eVTOL startups including Joby Aviation (NYSE: JOBY) and Archer Aviation (...
There's an old joke asking why we call freight that travels by car a "shipment," but freight that travels by ship is called "cargo." Nobody ever asks what we call freight that travels by electric vertical takeoff and landing vehicle (eVTOL), and up until now, we haven't needed a word for it. That's in part because U.S.-based eVTOL startups including Joby Aviation (NYSE: JOBY) and Archer Aviation (NYSE: ACHR) are almost exclusively focusing on air taxi service for passengers, not freight. But a crafty Chinese company has also been quietly pouring money into eVTOLs, and it just took a big step forward. Here's why this surprise competitor could be a big problem for Joby and Archer -- and their stockholders. Continue reading
June WTI crude oil (CLM26 ) on Thursday closed up +2.89 (+3.11%), and June RBOB gasoline (RBM26 ) closed up +0.0858 (+2.65%). Crude oil and gasoline prices settled sharply higher on Thursday, with gasoline climbing to a 3.75-year high. Energy prices remain underpinned as the Strait of Hormuz remains essentially...
June WTI crude oil (CLM26 ) on Thursday closed up +2.89 (+3.11%), and June RBOB gasoline (RBM26 ) closed up +0.0858 (+2.65%). Crude oil and gasoline prices settled sharply higher on Thursday, with gasoline climbing to a 3.75-year high. Energy prices remain underpinned as the Strait of Hormuz remains essentially...
Earnings Call Insights: EastGroup Properties (EGP) Q1 2026 Management View CEO Marshall Loeb framed the quarter around portfolio resilience, saying, "Our first quarter results demonstrate our portfolio quality and resiliency within the industrial market." He highlighted "funds from operations omitting involuntary conversions of $2.30 per share" and noted, "Quarter end leasing was 96.5% with occupa...
Earnings Call Insights: EastGroup Properties (EGP) Q1 2026 Management View CEO Marshall Loeb framed the quarter around portfolio resilience, saying, "Our first quarter results demonstrate our portfolio quality and resiliency within the industrial market." He highlighted "funds from operations omitting involuntary conversions of $2.30 per share" and noted, "Quarter end leasing was 96.5% with occupancy at 95.9%." Loeb emphasized leasing economics and tenant diversification, stating, "Quarterly re-leasing spreads were 37% GAAP and 20% cash for leases signed during the quarter" and adding, "our top 10 tenants falling to 6.7% of rents." He also pointed to a key operational split: "the portfolio is well leased, while development leasing has been taking a little longer." President R. Dunbar described a measured-but-improving development leasing backdrop, saying, "businesses continue to operate amid headline volatility and decision cycles continue to remain extended." He raised full-year development starts guidance, stating, "we are increasing our guidance for the year to $265 million," and added, "we commenced construction on 4 projects totaling 586,000 square feet, of which 27% is pre-leased." CFO Staci Tyler attributed Q1 upside and reiterated balance sheet positioning: "FFO exceeded the midpoint of our guidance range at $2.30 per share, excluding gains on involuntary conversion" and "The outperformance in first quarter was primarily driven by lower-than-anticipated G&A expense and higher-than-projected property net operating income." She also cited a credit catalyst: "Moody's ratings upgraded our issuer rating to Baa1 with a stable outlook." Loeb flagged leadership changes, saying, "Our executive team restructuring is nicely falling into place. I'm excited to welcome Jim Traynor to the team" and "John Coleman... is entering a well-earned retirement on June 30." Outlook Tyler guided Q2 FFO, stating, "FFO for second quarter is estimated to be in the range of $2.30 to $2.3...
Earnings Call Insights: Bread Financial (BFH) Q1 2026 Management View “Today, Bread Financial reported strong first quarter results, which were underscored by a return to loan growth alongside increasing growth in credit sales and continued improvement in our credit metrics.” (President, CEO & Director Ralph Andretta) “On the new brand partner front, we were excited to launch new credit card relat...
Earnings Call Insights: Bread Financial (BFH) Q1 2026 Management View “Today, Bread Financial reported strong first quarter results, which were underscored by a return to loan growth alongside increasing growth in credit sales and continued improvement in our credit metrics.” (President, CEO & Director Ralph Andretta) “On the new brand partner front, we were excited to launch new credit card relationships with Ford and Ethan Allen in the quarter.” (President, CEO & Director Andretta) “We are also offering Bread Pay installment loans for AAA, Dell and Ford as we continue to expand this product offering.” (President, CEO & Director Andretta) “Our first quarter financial results highlight our company's strong capital and cash flow generation, earning net income of $181 million, generating revenue growth of 5% year-over-year and growing tangible book value per common share by 26% to $61.57.” (President, CEO & Director Andretta) “During the quarter, credit sales of $6.5 billion increased 7% year-over-year.” (Executive VP & CFO Perry Beberman) Outlook “Our 2026 outlook is unchanged.” (Executive VP & CFO Beberman) “We expect full year 2026 average credit card and other loans -- the loan growth to be up low single digits compared to 2025.” (Executive VP & CFO Beberman) “Total revenue growth is anticipated to be up low single digits, largely in line with average loan growth.” (Executive VP & CFO Beberman) “We expect second quarter total expenses to be up sequentially from the first quarter… Initial estimates of the second quarter expenses are just under $500 million.” (Executive VP & CFO Beberman) “Specifically for the second quarter, we expect this dynamic to pressure noninterest income up to $40 million compared to the first quarter of 2026.” (Executive VP & CFO Beberman) “Given the ongoing gradual improvement in our credit metrics, we are on track to achieve a net loss rate at the low end of our 7.2% to 7.4% targeted range for 2026.” (Executive VP & CFO Beberman) Financia...
Baker Hughes press release ( BKR ): Q1 Non-GAAP EPS of $0.58 beats by $0.09 . Revenue of $6.59B (+2.5% Y/Y) beats by $260M . The Company's total book-to-bill ratio in the first quarter of 2026 was 1.2; the IET book-to-bill ratio was 1.5. Adjusted EBITDA (a non-GAAP financial measure) for the first quarter of 2026 was $1,158 million, which excludes adjustments totaling $556 million. See Table 1a in...
Baker Hughes press release ( BKR ): Q1 Non-GAAP EPS of $0.58 beats by $0.09 . Revenue of $6.59B (+2.5% Y/Y) beats by $260M . The Company's total book-to-bill ratio in the first quarter of 2026 was 1.2; the IET book-to-bill ratio was 1.5. Adjusted EBITDA (a non-GAAP financial measure) for the first quarter of 2026 was $1,158 million, which excludes adjustments totaling $556 million. See Table 1a in the section titled "Reconciliation of GAAP to non-GAAP Financial Measures." Adjusted EBITDA for the first quarter was down $179 million, or 13% sequentially, and up $121 million, or 12% year-over-year. Remaining Performance Obligations ("RPO") in the first quarter of 2026 ended at $36.1 billion, an increase of $0.2 billion from the fourth quarter of 2025. OFSE RPO was $3.0 billion, down $0.5 billion sequentially, while IET RPO was $33.1 billion, up $0.7 billion sequentially. Within IET RPO, Gas Technology Equipment and Gas Technology Services were $11.6 billion and $16.0 billion, respectively. More on Baker Hughes Baker Hughes Company's Surge Makes For A Great Time For A Downgrade Baker Hughes: Best Picks And Shovels Play In The Energy Sector Chart Industries: The Baker Hughes Conundrum Baker Hughes Q1 2026 Earnings Preview Nasdaq hits record high after Iran opens Strait of Hormuz
Earnings Call Insights: Dover Corporation (DOV) Q1 2026 Management View Richard Tobin said the quarter started strongly, with “Revenue grew double digits in the quarter” and “First quarter bookings totaled $2.5 billion, up 24% year-over-year,” adding that “Book-to-bill was healthy at 1.2 in the quarter, with each of the 5 segments well above 1,” which he said provided “improved visibility and conf...
Earnings Call Insights: Dover Corporation (DOV) Q1 2026 Management View Richard Tobin said the quarter started strongly, with “Revenue grew double digits in the quarter” and “First quarter bookings totaled $2.5 billion, up 24% year-over-year,” adding that “Book-to-bill was healthy at 1.2 in the quarter, with each of the 5 segments well above 1,” which he said provided “improved visibility and confidence in our forecast.” Tobin framed earnings momentum and guidance posture as: “adjusted EPS of $2.28 per share was up 11% year-over-year,” and “We remain committed to delivering double-digit adjusted EPS growth for the full year… We have chosen to reaffirm full guidance for the year for the time being. But clearly, based on order rates, we are driving to the top end of the range. We will revisit guidance next quarter.” In segment updates, Tobin highlighted Climate & Sustainability Technologies as “a standout… delivering 15% organic growth,” with heat exchangers performing “particularly in North America on the growth in liquid cooling applications and data centers,” while noting Clean Energy & Fueling “grew 11% organically” and that “recent pricing actions [are] expected to further bolster margin performance over the balance of the year.” Christopher Woenker detailed cash and spending priorities: “Our free cash flow in the quarter was $131 million or 6% of revenue,” and “Our full year capital expenditure estimate remains at $190 million to $210 million… Our guidance for 2026 free cash flow remains on track at 14% to 16% of revenue.” Tobin emphasized select end-market exposure and M&A performance, including: “We expect to generate over $1 billion in revenue from applications tied to artificial intelligence and power generation infrastructure this year,” and “SIKORA is performing well ahead of its acquisition underwriting case.” Outlook Management maintained its full-year posture, with Tobin stating: “We remain committed to delivering double-digit adjusted EPS growth for th...
Earnings Call Insights: S&T Bancorp (STBA) Q1 2026 Management View CEO Christopher McComish said the quarter delivered “$35 million in net income” and “$0.94 per share,” alongside “a 1.44% ROA” and “an ROTCE of 13.22%,” adding that “almost $50 million in buybacks in the quarter played a key role in this ROTCE improvement.” (CEO & Chairman Christopher McComish) McComish highlighted deposit performa...
Earnings Call Insights: S&T Bancorp (STBA) Q1 2026 Management View CEO Christopher McComish said the quarter delivered “$35 million in net income” and “$0.94 per share,” alongside “a 1.44% ROA” and “an ROTCE of 13.22%,” adding that “almost $50 million in buybacks in the quarter played a key role in this ROTCE improvement.” (CEO & Chairman Christopher McComish) McComish highlighted deposit performance as a central development, saying “our customer deposit growth was up over $300 million” and that the company “achieved the highest level of customer deposit growth in the 125-year history of our company, surpassing $8 billion.” He added that deposit growth “allowed us to reduce wholesale fundings by almost $200 million,” while “DDA levels relative to total deposits increased to 28%.” (CEO & Chairman McComish) President Dave Antolik said “loan balances declined in Q1 by $113 million,” citing “increased competition for new commercial deals, especially related to pricing,” higher-than-anticipated “commercial real estate payouts,” and “a slight reduction in utilization rates on our revolving credit commitments.” (President & Director Dave Antolik) CFO Mark Kochvar attributed the quarter’s NIM movement to calendar and mix effects, stating “first quarter net interest income declined by $2.6 million,” and “the net interest margin rate decline in the first quarter of 7 basis points to still a very strong 3.92%.” He added that “we expect relative NIM stability to continue.” (Senior EVP, CFO & Investor Relation Officer Mark Kochvar) Outlook Antolik updated near-term growth expectations, saying “we’re adjusting our loan growth guidance to low single digits for the second quarter,” while describing actions to respond to growth pressure: “we’re focused on adding talent and building for the long term with the goal of increasing our commercial banking team in 2026.” (President & Director Antolik) Kochvar reiterated fee and expense run-rate expectations: “our expectations for fees in 2...
Earnings Call Insights: Gentherm (THRM) Q1 2026 Management View "I want to start by saying that the Gentherm team demonstrated strong execution in the first quarter." (President, CEO & Director William Presley) "Therefore, during the quarter, we initiated an organizational realignment that reduced spans and layers to increase agility and provides a concentrated focus on internal improvements as we...
Earnings Call Insights: Gentherm (THRM) Q1 2026 Management View "I want to start by saying that the Gentherm team demonstrated strong execution in the first quarter." (President, CEO & Director William Presley) "Therefore, during the quarter, we initiated an organizational realignment that reduced spans and layers to increase agility and provides a concentrated focus on internal improvements as well as the ability to accelerate our growth platforms." (President Presley) "Strategically, this quarter marked an inflection point in our journey to transform Gentherm." (President Presley) "We took action to position the company for sustainable, profitable growth with our announcement to combine with Modine Performance Technologies." (President Presley) "Headwinds are beginning to emerge across the globe." (President Presley) "These include direct cost increases in logistics due to lane disruptions and fuel surcharges as well as cost increases of petrochemicals used in raw materials." (President Presley) "We are preparing to implement pass-through or reimbursement mechanisms on applicable costs." (President Presley) "Overall, first quarter results were above expectations as revenue was higher, driven by stronger automotive volumes and outperformance in China." (Executive VP, CFO & Treasurer Jonathan Douyard) Outlook "Despite the stronger first quarter performance, given the high level of uncertainty in the macro environment, we are maintaining our full year guidance at this time." (CFO Douyard) "We expect revenue to be between $1.5 billion and $1.6 billion" and "for adjusted EBITDA, we expect to be in the range of $175 million to $195 million." (CFO Douyard) "Inflationary impacts stemming from the current geopolitical environment are expected to drive approximately $20 million in incremental costs during the year, recognizing that this estimate remains fluid and is evolving real time." (CFO Douyard) "Although we expect to mitigate a meaningful portion through commercial an...