Watch Our Earnings Recap on Home Depot, Lowes, Target, Dollar Tree, Palo Alto Networks, and More

Welcome everybody. This is our earnings watch for May 22nd. We're going to be talking about retailers. I think retailers are a big deal these days because they are really giving us the, the truth around where tariffs are going to impact. Let me share my screen. We jump in here. I'm going to be sharing with you what our Stock Tracker 50, our introductory website, looks like. I'm going to create a portfolio here of the companies we're talking about, add them in. You can see they all get added. And doesn't recognize because it's not a real ticker, but you get the idea. The stocks we're talking about today are here. And in this situation, you know, you can sort and track and get a quick and dirty on what our ratings are. A stock rating. You get to see how the economic earnings compare to reported earnings, return on invested capital, free cash flow yield, price to economic book value, and growth appreciation period. You'll get alerts. You can manage which alerts you want to get and when, so you can turn this on or off, save it. New coverage alerts as well if you want those. And if you want a different email address to put in here so that you can see, you know, you can send one to a colleague or to an analyst. You can get that set up all in here. The main thing really is you have access to the best ratings in the business, the best in the world on stocks, ETFs, and mutual funds. Please let me know who all is here today. We've got a new group. I believe this should be mostly new folks, and I'd like to get to know you guys a little bit better. With that, I'm going to jump into our presentation. I'm going to go through a few slides, and then we're going to go through these stocks. I want to give you a little bit of background because I believe most of you are new to us here today. So I want to make sure that there's some background on what New Constructs is about and what you're getting into, because there's never been a research firm like New Constructs before. We're going to talk about stocks, but we're also going to talk about why we are who we are. First of all, we are not an investment advisory firm. We are not an investment advisor. We recommend you get that kind of advice someplace else. Again, let me know in the chat if this is your first time with us. And the more you can give me about what kind of investor you are, the better this presentation can go. And best of all, if you put your request in there, I will probably have time to go through a couple of tickers based on your request. We can show you how the system works in real time. So headlines: market volatility is back. Looks like the bond market is calling Congress's bluff in terms of spending. Interest rates have been moving higher, and your trade war is clearly driving prices up. Sure, we're better off than we were at 145% tariff, but we're still, you know, double, triple, quadruple where we were before all this started. So why is New Constructs even here? What is this about? Why are we going to help you find some clarity and some sanity in all these sort of Well, the answer is, I've been on Wall Street. I know how the sausage is made. I just got off the phone with a buddy that I was on Wall Street with during the tech bubble days. And we were joking about the $5,000 gift bags and $25,000 dinners for all those big tech IPOs that were the norm back during that time. He called it the good old days. It was certainly the good old days for those of us on Wall Street. Not the good old days for those who cared for the truth. I've seen the tricks they pull. And when I started New Constructs, I wanted to build something better, something that gives investors the truth. And when I say truth, I'm not just talking about something that's a different narrative. I'm talking about something that is so true that it gives you better performance. And that performance is no better measured and proven by the fact that we've been ranked number 1 on SumZero for 47 straight months in a row in multiple categories. And SumZero is a buy-side only platform. These are professional stock pickers. Our work has been vetted and validated by some of the top institutions in the world. They've published papers proving that our data is proprietary, unique, no one else has it, and that it generates alpha. If you want to see alpha in real time, Look no further than the family of Bloomberg indices that demonstrate this alpha. You can see here this index based on our very attractive stock rating. So if you have access to the very attractive stocks, you can get access to this kind of performance. Or if you can just vet your portfolio for which stocks are unattractive or very attractive, you've got a leg up on the competition and all of Wall Street for that matter. By the way, what we're doing isn't just better. Than the other research firms out there. It's better than all of Wall Street. You see, the Wall Street analysts are at a competitive disadvantage. They can't be honest about their ratings because they are beholden to the bankers. The bankers have relationships with the underlying companies, the stock they're trying to sell. Do you think companies are going to allow an investment banking firm, a Wall Street firm, to sell stock for them, to sell debt for them, if the banking firm has a sell rating on their stock? No, they give their business to the people who are their friends. That's why so many ratings on Wall Street are positive. So new constructs, you can beat Wall Street and you can beat everyone else that doesn't have this insight. This, our Very Attractive Stocks model portfolio, outperformed the S&P by 9% in just the first quarter of this year. It's beaten the S&P by over 80% over the last 5 years. The core earnings weighted S&P 500. That's, that's just the S&P 500 based on weighting the stocks based on core earnings as opposed to market cap, right? So someone else can pick the stocks, we can still outperform, still beat you because we're going to weight those stocks according to their core earnings power or core earnings capture. And right, you can see here this index beat the S&P by 1% in the first quarter. and beat it by 33% over the last 5 years. Any questions about our performance or any questions about the validity of the data, the alpha in the data? Any questions about any other firms who have similar papers written on us? Anybody know of anyone who can validate their research as well as we can? Please put in the chat. I'll give you a free stock report on the ticker of your choice if you can come up with a company, any research firm that has Harvard Business School papers about them and has indices that prove their alpha. Put it in there, free report on the ticker of your choice. One key takeaway is that these indices are managed by Bloomberg, but they're not available for the public to purchase. You got to go through us. You got to buy the research. Now, they may one day be ETFs. That would be great. But right now, you got to go through us. Part of the reason you want to go to us and not rely on everyone else 96% of the stocks covered by Wall Street are listed as a buy or hold. Almost nothing is a sell. In fact, I've seen some recent studies from very smart firms saying sell-rated stocks on Wall Street are probably the ones you want to focus on the most. Actually, those are their best buys. And that's, again, as I mentioned before, because their paychecks depend on you buying stock. They don't make, they don't make money from the research firms. The purpose of the research firm is to build a relationship with a company. Research analysts kiss up to companies. So that bankers can get a meeting. That's why 57% of all stocks from Wall Street coverage get a buy rating. So, oh, so part of the problem with all this is that when you dig into the real numbers, you're going to see a gap between what Wall Street talks about and valuations. Now, I'm not saying that this is going to blow every stock up. I just want to— I want to give you a mathematical example A purely empirical example that's clear beyond a shadow of a doubt as to how misleading Wall Street research is, because it only gives you the tip of the iceberg in terms of what the company has to do to justify the price. Wall Street doesn't want you to know the difference between the tip of the iceberg. They want you to see the whole iceberg. They prefer you don't have any idea how big the gap might be. Because you'd be terrified if you knew the whole truth. So here's what I'm talking about. The best Wall Street can offer us is a few years of flawed EPS estimates. We've already established that our measure of core earnings is better and has alpha in it. Put that to the side. Let's say their numbers are good. They're going out for 4 or 5 years, maybe 6 years if you're lucky. Right now, I'm going to give you what you deserve, the whole truth. Our models will show you all the cash flows baked into those stock prices. The gap between the cash flows and the earnings is staggering. Let me show you exactly what I mean. This is where we've used our reverse DCF model featured in Forbes, CNBC, Harvard Business Review, all these places, right? And we've demonstrated, we've got case studies that show you how all this work. These are the cash flows required to justify Tesla stock price at $276. It's gone up since then. This is the full lifecycle of cash flows required. How far does Wall Street go out? Oh, these estimates go out to like 2030 on a per-share basis. They don't want you to talk about or know how really big the future cash flows have to be. And the same is true for Amazon, for Nvidia. And when you look at really what the performance of the businesses have to— has to be to justify To earn this kind of cash flow, you're looking at revenue in the trillions, bigger than the largest country's GDP in the world, profits bigger than the largest, you know, top 10 countries' GDP. So the point is Wall Street's able to sell you a tale, a narrative without any regard to underlying economic reality because no one talks about that. They talk about a few years of EPS estimates. And that's what gets people. That's enough. Here we go. Party on. Easy. EPS estimates are definitely not enough, especially not in this environment. How do we do it? What's our edge? Well, if you've been part of our community for a while, you know our edge is the RoboAnalyst technology. We use the first and best and only AI for investing. We got better data, better models, and better results. Some of the biggest firms in the world have been using our system for years, and they pay us handsomely for it. But here's the good news: we make it super simple for you, for any investor, especially you guys who are beginners and new to us, new to new constructs. We make it simple. I'm not here to bombard you with complexity. If I'm delivering the truth, I don't need to put it in a fancy wrapper. It's straight up: green means good, red means bad. And there are multiple metrics that play a key point in our system, a key role in our system. It's the system, the only system that has a US patent behind it. It's the only system that has indices behind it. It's the only system that has Harvard Business School, MIT, and Ernst Young behind it. Pretty incredible. The real issue is that nobody has time to read the 200-page filings. It would cost millions of dollars per quarter. I know because our institutional clients tell me that. I go in and I say, hey, we're going to raise the price 20% this year. And they say, oh, no problem. It'd be costing you— it would cost me 100 times this to do this on my own. That's the kind of relationships we have with institutions. I'm excited to bring this to more people. Now, clearly, this kind of diligence requires countless pages of data documentation, including information from balance sheets, income statements, footnotes. I've even got examples, right? Sneak peek here of how we pull data from the footnotes for a specific company. These are, these are charges we found to identify a company, Meta, that was actually more profitable than people thought. That's part of why one of our, our indices were owning Meta in, in 2023 and 2024 when it skyrocketed. We've since had to trim back. So let me give you a live demonstration now about how the system works. I talked about our ratings and what goes behind them and all that data we're talking about, but for our introductory Stock Tracker 50 membership, You don't need all that data. You do get the benefit of the signal. So let's break it down. Home Depot, recent earnings report. They came out, made a lot of— made a big splash and didn't help the stock that much. Big splash in that they said they were going to try their best to mitigate the impact of tariffs on their prices, and they had a lot of operational opportunity to Mitigate that in their system. You know, look, I believe it. Look, look, Home Depot is one of the best companies, greatest companies of all time. I mean, you can see that right here. Quality of earnings, your economic earnings and versus reported earnings, attractive. Return on invested capital, top tier. So they've got room in their in their system to not have to pass on price increases, but it's going to hurt margins. So someone's going to have to pay. Right now they're saying they're going to pay. That's great. Could be great for volume. But here's the issue with Home Depot. Good company. It's what in this section, quality of earnings. This means good company. This means bad stock. This means very expensive. When you see especially market implied growth appreciation period, which gives you the number of years required to justify the price, number of years of profit growth to justify the price. When you see that as very unattractive, that's a big red flag, my folks, my friends, because that means that even when we run our model, our reverse DCF model out for 100 years, assuming consensus revenue growth, we— that model will not, cannot generate a price equal to the current stock price. Can't get high enough. Price to economic book value, also unattractive. Free cash flow yield, also just neutral. So, good company, bad stock, neutral rating. What does that mean? Means meh, right? Most stocks in the market are meh. Good stocks are hard to find. Super bad stocks hard to find, right? What you should short, what you should go long, it's hard to find. If it was easy, like Wall Street wants you to believe, everybody'd be doing it and you'd underperform like Wall Street ratings underperform, right? So, the point is, the market is semi-efficient. If the market were totally inefficient, nobody can invest anything. It's semi-efficient. Most stocks are going to get a neutral rating. And this is a situation— good company, bad stock, too expensive. That's why, despite the fact they had relatively good news, stock is down 3% over the last 5 days. That's the takeaway. Let's take a look at Intuit. All right, we should be getting the earnings later today. What are we thinking about this stock? Whoops, wrong one. Let's take a look at Intuit. All right, so good company, even worse stock. So this gets an unattractive rating. This is a level of expensiveness, expense that is, you know, it's just double bad. So pretty similar to Home Depot. Good company, strong economic earnings, not quite as strong a return on invested capital, but the valuation, unattractive times both of these. So we're basically, this is a stock I would say that you're, you know, no matter how good the earnings report, The stock's probably going to go down, you know, especially if we're looking at an overall market that's flat to down. I think you're going to be, you know, when you're priced for perfection, and I think this is the critical point, everybody, in the economy, in the market today. Look, you know, every all the good news is priced in. All the good news is priced in. There's no question. This bounce back we saw, especially when you're looking at geopolitical tensions, war in the Middle East, tariffs have gone up. They're not going away. We've got a budget, a global budget— I'm sorry, a US budget that doesn't look to be addressing our sort of spiraling debt. And yet we've got a stock market predicting everything's going to be great. Well, where you're going to see the cracks emerge first is in the really expensive stocks. This is one of them. So Walmart, if we wanted to add Walmart, and we can do that here at the end, let's knock out the rest of these real fast. But good question on Home Depot and Walmart, right? 2 very different messages. Walmart's saying, hey, it's going to affect prices. Part of the problem with Walmart is their return on capital isn't quite as high as Home Depot, so they don't have as much room to eat price increases or cost of goods increases as Home Depot. But Home Depot does have a similar rating to Walmart. Both good companies, but bad stocks. Let's talk about Lowe's. Another situation. Right? If we were to add Walmart, which we could do easily here, let's put Walmart in. We'll see Walmart looks just like Home Depot. It's the same thing. Good company, bad stock. And we take a look at Lowe's. Very similar. Very similar. Decent businesses. They've been profitable. They're well run. They're great companies. They've had success. If I'm like the CEO or I'm an employee of Lowe's or Home Depot or Walmart, I got no complaints. My stock's fully valued. We're doing great, good business, fully valued stock. It's great for them. Now, if I'm a marginal investor, a new investor, it's too expensive. It's run away. I want to go someplace where I can see good company and good stock. Right now, we're not really getting that. So Lowe's, yeah, Lowe's had a much, much less optimistic outlook. For its— I wonder why we got it. I must have put the wrong ticker in here. LOW, my bad. So, you know, it's, you know, the performance is not that different from Home Depot, right? Even though they came out and said, yeah, we're going to see lower sales and we're going to see lower profits. Company reports better than expected earnings, but lower revenues, I believe, was the takeaway. Yeah. So similar situation. You know, Lowe's and Home Depot are pretty much the same thing. Both pretty well-run businesses. I think I'm looking at both had good ratings, great grades on the same grade here. Home Depot's a little more expensive, a little bit better business, a little bit higher return on capital, but same situation. How about Palo Alto Networks? We like to track this stock because it's been really interesting because it's been so expensive for so long. Again, you got a good company, bad stock, right? And we're not going to— this is what we should expect in this market. Boring but true for new constructs. But this is super expensive. It is suspended. We will pull stocks out and suspend them for a variety of reasons, and you can look that up on our site in the analyst notes section. All the reasons—that's free. We don't give out the reasons for our stock tracker fifty that why it's suspended. There's a variety of reasons, whether it's An issue with internal controls, or it's about to be acquired, or they have going concern issues. There is a large variety of reasons why a stock's going to be suspended. The takeaway is we don't have confidence in the financials. So that could be because the auditor said, oh my gosh, we think there's issues. Could be that they've made a big acquisition. Could be that they're about to be acquired. But the acquisition would be big, be so big that it would effectively change the landscape of the financials. So that's what we see here with Palo Alto Networks. How do they do in their report? All right, it's up, down over the last 5 days. So they beat on earnings and revenue, but the stock is still, still dropped. So again, folks, great example, great example of good company, bad stock, priced for perfection. Even though they're beating In a popular spot, stock can't go up any higher. It's already super expensive. Sure, momentum could send stocks higher. We've seen crazy stocks go up. I showed you some slides with like Nvidia and Tesla where we know they're just going up. They're not just— they're not connected with reality. Yeah, that can happen. We've also seen how quickly that can reverse. And the idea that Trump is just going to kind of go to sleep and not really do anything else to, to get her— garner any attention for, I think, the next 3 years is probably pretty unlikely. I think what we saw earlier this year might be par for the course. Let's take a look at Analog Devices. All right, unattractive, not a very good company, not a very good stock. How do they do? Down 4% today, down 6%, so down even worse. They beat estimates and on revenue, so that's great, but boom, stock's still down. 6%, worse than the market, worse than other stocks. Why is that? Well, bad company, bad stock. Gonna see even more sensitivity to the downside if they don't pull out good news— if that— sorry, if they don't put out extraordinarily good news. All right, let's take a look at Target. So Target, okay company, good-looking stock. It's cheap. Is it cheap for a reason? Yeah, you know, good question. Good question. Hard to say here with Target. You know, they've got a lot. You know, it's a very competitive space. I used to sort of think of Target as sort of like a fancier version of Walmart that was in town and easier for people in the suburbs to get to. Because Walmart's like, that's a journey, man. You know, because they're not usually in convenient locations. But it just takes a while to get from the parking lot into where you want to be. And Target's got nicer stuff, smaller selection. You know, you're not buying you know, quite as many, you know, farm equipment tools and, and bulk of pork and beans. So it's a little bit nicer. It feels like a good business model. We've liked it in the past as a focus list stock. I don't think it's on the focus list anymore. But Target, interesting story. It's different, different situation here. Still neutral, right? So I wouldn't say we should be jumping into this. Let's take a look at Dollar Tree so we can look at Dollar Tree and Target together here. What a target. Up pretty good today. Down around with the market. Sales fell short. Bad earnings. Still dealing with DEI headwinds. Yeah, I think they maybe leaned a little too far into some of that stuff. DLTR, Dollar Tree, doing a lot better over the last 5 days. Let's take a look at Dollar Tree. Neutral rating. Not such a great company. Not such a great stock. I'm guessing though that Dollar Tree earnings probably were pretty good here. See what they said. Summer steals. So not getting a lot of information on the earnings conference call. Maybe that's about to happen today. Maybe it's happening as we speak. The takeaway is cheaper. All right. So I got time for one quick request. We've already done one with Walmart. I'm gonna do one more. Uh, ATKR, very attractive. How about that? Thank you, Marlene. Good to get something exciting in here. So very attractive stocks. You know, by the way, very attractive stocks do very well. This is the Bloomberg Very Attractive Stocks Index year to date versus the S&P 500. Looking good, up while the S&P 500 is down. 5 years Up way more. So we like to see very attractive stocks. That's a good one. So before we go, everybody, I got a special offer for you today. Everyone who's here today can sign up for our Stock Tracker 50 membership for one year for one free month. So if you were to go to the site, get access, go to individual investors, go to retirement, start your annual stock Stock Tracker 50 membership. I will put this link into the chat. And with Stock Tracker 50, you get access to everything I showed you today. Plus, you can go to this ratings page, you can type in as many stocks as you want. So if we wanted to go ATKR, or whoops, that's not a good one. So if you wanted to go into RTX, Or if you wanted to go AAPL, you can rattle this off. And then on the portfolio side, you can track and get alerts for up to 50 stocks. You also get access to our education, which is the best education in the world on stocks, ETFs, and mutual funds. You want to know our stock rating methodology? There it is. You want to know Value Investing 2.0? You want to understand accounting, finance, valuation? I've guest lectured at Harvard Business School, Columbia Business School, Chicago School of Business, Booth School of Business, Vanderbilt, and Owen. I, they bring me in because nobody knows this better than we do. We have the best system for implementing it in the world as well. So some great stuff here. If you want to understand economic versus accounting earnings, the power of expectations, how a reverse DCF model works, we show you that. You want to know all the accounting loopholes we're closing? We show you these. There's a level of transparency in New Constructs you don't get anywhere else. Why? Because we're proud of what we do. And we want you to know the standard to which you should hold all research providers. That's why I talk about the papers, the indices, the ETFs, all this stuff. Like, these are things that separate us. That means you have something you can trust here more than anything else. You should lean into that. For $49 a month, it's a drop in the bucket for the level of security, insight, trust you can have compared to other firms charging Way more. And if you take this offer today, you can get it for 11 months for $49. For— you get 12 months for $49, or for the price of 11 months. So $500, I think comes out to $539 for a year. But you can also see all of our metrics. So you want to know how to calculate economic earnings or core earnings, we will show you the formulas. There they are, right? We're here to show you how it all works because we want you to know you can trust us. So the greatest education, the greatest ratings, and one of the best blogs. It's a lot of free reports here for folks to see. My, like, a lot of free training, all these watch parties, reverse DCF models, my free e-letters where we show people how to use a reverse DCF model. All that here for you all today. So please take advantage anytime you have any questions. You can also join these earnings watches. We do them at least once a week. We do a big monthly webinar where we talk about all kinds of stuff. We actually show off our professional membership so you can see all kinds of details and submit stock picks there as well, or requests. So we're doing a ton. We're doing big training every month on how to use the system to find the best stocks in the market because we've got amazing screeners for our professional subscribers as well. But for you Stock Tracker 50 members, You get access to the best ratings in the world, work across millions of filings or millions of pages of filings to get you to the truth about profitability and valuation. All right. Hit that link and sign up, and I will see you next time. Thanks for being with us.