GTLS. Probably not the best day to be pushing an aggressive guide for next year when you disappoint the analysts estimates. To be fair, the updated guide for FY23 was within their previous guide from Q2:

"Our full year 2023 adjusted EPS range is $6.05 to $6.25 vs $6.20 consensus (in line with our prior outlook)"

And, they are reporting a) record backlog, b) record orders, c) record EBITDA as percentage of rev, and strong industry fundamentals:

Highlights include:
Continued broad-based demand with no indicators of slowing ahead.

Third quarter 2023 backlog of $4.1 billion set a new record, following the prior historical high backlog of $3.96 billion as of the end of the second quarter 2023. This reflects strong demand across our business and end markets which we expect to continue throughout the remainder of 2023 and the coming years. Third quarter 2023 orders of $1.13 billion did not include any Big LNG orders and resulted in a book-to-bill ratio of 1.26. We continue to expect one additional Big LNG order around year-end 2023. We are also very proud to announce that during the third quarter 2023 our IPSMR® liquefaction technology was chosen for a major international Big LNG project (modular design) for which the order is expected to be booked in late 2024 or early 2025 and engineering is already underway. We also received another patent for our mixed refrigerant technology in August 2023.
Updating 2023 Outlook and Providing 2024 Forecast.

We are updating our full year 2023 sales forecast to approximately $3.45 billion to $3.50 billion (prior 2023 full year sales forecast of $3.66 billion to $3.80 billion). This is driven by the removal of sales associated with American Fan, Cryo Diffusion, and Cofimco due to the accelerated closing as compared to the originally anticipated closing timing as well as our expectation of the timing of the delayed revenue recognition moving into 2024 primarily from supply chain delivery timing. Our full year adjusted EBITDA is anticipated to be in the range of $745 million to $760 million (prior 2023 full year forecast of $780 million to $810 million). In aggregate, we divested a total of approximately $225 million of annualized revenue at EBITDA multiples in-line with prior Chart transactions, as previously discussed. We expect to see a sequential step up in adjusted free cash flow in the fourth quarter 2023, resulting in a full year 2023 outlook for adjusted free cash flow of $335 million to $350 million, above the mid-point of our prior range of $300 million to $350 million. Our expected full year 2023 adjusted EPS is in the range of $6.05 to $6.25, narrowed from our prior outlook range of $5.70 to $6.70.

Our 2024 adjusted EBITDA forecast of approximately $1.3 billion remains unchanged from November 2022 despite the divestitures we announced year-to-date 2023. We are initiating a 2024 sales outlook of approximately $5.1 billion and an adjusted earnings per share estimate of $14.00 plus. In addition, we anticipate our full year 2024 free cash flow to be in the range of $575 million to $625 million.



----------
The analysts on the call expressed some concerns about the impact of higher rates on GTLS' customers and their ability to properly forecast the timing and completion of their projects in backlog. Here is an example:

Ben Nolan

So I – first of all, the orders are strong. The guidance is really strong. The backdrop though, in this environment with higher interest rates, it feels a little less certain than maybe it has in the past. In fact, I know, Jill, you would know that one of your competitors, or at least a fraction of their businesses competitive years, was out sort of saying there’s just too much uncertainty to have much confidence looking into next year. You don’t seem to be reflecting that at all, and certainly, it’s not in your orders.

So the question here is, sorry, that was a longwinded start, but the question here is, could you maybe talk through, maybe segment by segment, what your line of sight is for next year? And maybe by those segments, what portion of the business is economically sensitive and then what portion of it you think is maybe not?

Jill Evanko

All right. Thanks, Ben, for the question and the tee up. And before I answer your question directly, thank you for recognizing the strength in the order book and the outlook ahead. So that leads me to our view in our confidence level, our very high confidence level in these figures, in this outlook, in particular, given our record backlog, record orders ex-Big LNG, which I think is extremely important, right? It’s the shift in the dynamic of the business away from that heavy reliance on one or two orders coming in and this broad base demand where we have multiple end markets that we serve, which, by the way, we don’t have to change our manufacturing lines to serve, right? We can use the brazed aluminum heat exchangers, whether that’s in Big LNG, whether that’s in hydrogen liquefaction or helium liquefaction, in some cases carbon capture.

So the list could go on. And you’re really familiar with that. But that broad based nature of our backlog, the visibility that we have to where those projects are in terms of progression is one of the shifts that Joe talked about in his remarks thereof moving toward that solution provider gives us more visibility into that backlog. I’d also say specifically of more than 65% of our backlog for that covers – 65% of our 2024 covered by backlog. I think that’s an important metric, right? We talk about also the ability for us to move schedules around and to be able to adapt, how we serve our customers is another key element to how we deliver on that backlog.

And we did mention as well in our outlook that it does include commercial synergies. And I mean heck, I think you commented on it in your early look report. We delivered 100% more of our year one synergies commercially in the first seven months of our ownership of Howden. I mean, that shows the combination and that full solution offering coming into our backlog.

-------------
It will be interesting to see what the new estimates are for FY24 and whether that triggers some buying among investors in the coming days. Given the selling today, you'd think that they cut guidance in half instead of providing a new estimate for FY24 revenue and for adjusted eps to more than double over FY23. The current average of estimates for FY24 eps is 10.71/sh. (Projected EBITDA remains the same as before). Reminds me of when CROX got crushed after they announced a big acquisition (Hey Dude) that added a lot more debt to their balance sheet....similar story here. Chart (GTLS) bought Howden a year ago and closed the deal in March 2023. The stock went from 230 down to the low 100s in about 1 month. So its had some brutal corrections before, but it generally recovers because its in a highly desirable niche market for LNG production. The demand seems clear, but i guess the execution risk is what the market is concerned about right now.

GTLS getting hammered today on missing the analyst estimates for Q3 and slightly lowering their numbers for FY23. However, they guided for adj fd eps of 14.00/sh in FY24. Stock trades at 112. I've been nibbling at these levels for a rebound back up to 140

TZOO comes in with another good quarter. Reported 0.16 GAAP, my non-GAAP eps number is 0.20.
https://seekingalpha.com/pr/19507093-travelzoo-reports-third-quarter-2023-results

Forward estimates look low and they could be entering an ideal market for their type of business (think Groupon for travel). Consumers still want to travel, but on the cheap.

There are some red flags here though. I own a few shares, and I'm concerned about the large owner who's been selling a ton of stock lately in order to pay off a loan the company made to him. If they are largely done, and they could be, the stock should move higher.

http://www.openinsider.com/search?q=tzoo

EDIT: They just announced another 1MM share repurchase; replacing their previous repurchase plan that they had largely used up. YTD, they have repurchased $11.8MM worth, and $7MM in Q3 alone.

Did AVNW ever close that acquisition they announced a few months ago? I haven't seen anything out of the company, and its past the Q3 expected time of completion.

https://seekingalpha.com/pr/19323517-aviat-networks-acquires-necs-wireless-transport-business?hasComeFromMpArticle=false

I know they expect good things eventually, but I wonder if there will be a bit of drag on the first few quarters IF they close it:
<>
This acquisition will bring three immediate and significant benefits for Aviat, our combined customers and our shareholders:

Improvement to scale. Aviat anticipates an additional $150 million in revenue which will be accretive to adjusted EBITDA, non-GAAP EPS, and free cash flow by the end of the first year and we anticipate getting the acquired business to 11-13% EBITDA by the end of year two. Complimentary businesses and learnings from the 2019 channel partnership with NEC in North America will result in cost synergies that will pay for the acquisition. With little overlap in product offering and very few common accounts, we expect sales synergy opportunities in both Aviat and NEC customers, which represent upside not factored into our financial model;

-from the acquisition PR

AAOI. Some red flags:

1. They recently terminated their sale agreement of a subsidiary in China. They had been hoping on getting $150MM from this sale and also improving margins as well by exiting some lower margin products.

2. Around the same time, they doubled their equity distribution agreement (selling stock at the market price) from 35MM to 70MM.

3. Current assets are less than Current liabilities; reason: 117MM in debts due within one year including a convert note of 80MM. They are losing money now, and cash has been dwindling.

They had sold roughly 3.7MM shares at an avg price of $6.50/sh as of the date of the increased EDA. Probably been heavily selling recently too with the stock price in the 7s. If they are successful at selling the full $70MM around 7 as an avg basis, that would add roughly 10MM shares to the share count. (In Q2, this was approx 29mm).

You could be right about the sales and op income rebounding in FY24. But to get there, they have some balance sheet restructing to do that might make that 1.50/sh forecast a bit too optimistic.

INMD is getting interesting in the mid 20s. They had projected a 2H slowdown in growth and the stock price is beginning to fully reflect that. The Hamas attack on Isreal isn't helping today, but I saw this comment posted on twitter from a reliable source:

Jefferies defended $INMD ,

spoke to management of the company in Israel,

INMD has just 1% of sales in Israel.
Plus, while it manufactures in the region, its plants are away from the conflict and operating normally. INMD carries safety stock with inventories of components for ~3 quarters.

----------
The key will be when do investors pivot and focus on FY24 prospects? They have a poor presentation of non-GAAP earnings (IMHO), but their balance sheet is quite strong. I think FV for the stock is in the 33-35 range, but the catalysts may not show up until after Q4.

I got some very bad flashbacks to 2010 with that short piece on GCT. Very similar feel with the lack of activity at the warehouses, the related party bs, and the disreputable investment bank involved - Aegis (which I believe was the former Rodman and Renshaw outfit).

I gave up here too.

Wow, these are two names from the distant past. Totally agree with your take on them both Nelson. I do wonder whatever happened to Apish.

I joined you today in GCT in the mid 9s. I suspect this is largely the unwinding of a huge overbought condition and it is now trading at a decent risk:reward ratio in the 9s. Treading lightly here, but will continue to accumulate on weakness. Definitely some macro headwinds out there that are keeping me a bit cautious given their focus on shipping logistics for large and bulky items.

INMD. The company's non-GAAP presentation is a bit confusing, but they appear to be using a tax rate of 8%. They reported fd non-GAAP eps of 2.42 in FY22, using that low tax rate which was granted to them from Israel tax authorities (they qualify for special low tax rates; the statutory rate is closer to 23%).

I couldn't determine how much longer this low rate will last for; conservatively you could assume the long-run tax rate should be closer to 20%.

Also, they don't back out their comp expense from non-GAAP earnings, so that offsets most of the artificially low tax rate. My own adjusted earnings model would put the company at 2.11/sh in fd eps for FY22, taxed at 20% rate and adding back SC. Using management's own presentation for non-GAAP earnings, they have guided for the 2H of adj eps to be flat y/y, based on their TTM adj eps of 2.66. I think that is probably behind a lot of the sell-off after Q2 results were released. It is starting to get interesting in the low 30s.

Retail Sales report comes in a bit better than expected:

Retail stays resilient: Winners and losers from the August retail sales report
Sep. 14, 2023 9:00 AM ETSPDR® S&P Retail ETF (XRT)WMT, COST, M, TGT, AMZN, MCD, LZB, JWN, KR, KSS, WSM, CMG, ETD, SFM, WBA, ETSY, ACIBy: Clark Schultz, SA News Editor
Business and stock exchange data on the screen.
Torsten Asmus/iStock via Getty Images

Retail sales rose 0.6% month-over-month in August to top the consensus expectation for a rise of 0.2%. Core retail sales were up 0.6% vs. 0.4% consensus. Headline retail sales were up 2.5% on a year-over-year basis.

Categories that showed strength during the month, included nonstore retailers (+7.2% year-over-year), health & personal care stores (+7.8%) and food services & drinking places (+8.5%). Those marks bode well for companies such as Amazon (AMZN), Etsy (ETSY), Walgreen Boots Alliance (WBA). McDonald's (MCD), and Chipotle (CMG). Department store sales lagged again, with a 3.4% year-over-year decline in a negative trend for Kohl's (KSS), Nordstrom (JWN), and Macy's (M). The furniture and home furnishing category was also weak (-7.8% year-over-year), which could be a concern for Williams-Sonoma (WSM), Ethan Allen Interiors (ETD), and La-Z-Boy (LZB). The general merchandise category that includes Walmart (WMT), Target (TGT), and Costco (COST) recorded 0.3% month-over-month sales growth and was up 2.0% from a year ago. The grocery store category leaned on higher pricing again to knock out a 0.4% month-over-month and 2.1% year-over-year gain, which is on trend with recent commentary from Kroger (KR), Albertsons Companies (ACI), and Sprouts Farmers Market (SFM).

Looking ahead, the early forecast for holiday retail sales is for the slowest growth rate in five years.

At first glance, SGMA results not all that great for the quarter. And the forward commentary isn't all that inspiring either. That "other expense" line could be hiding something, like the equity interest expense from Wagz? Will have to wait for the 10Q to be released. I have a very tiny position here and sold half of it at 7.50 as well.

R59, I see you keep your cash position invested in SGOV, the ultra short term bond fund. Another similar fund is Blackrock Temp Cash (symbol: TMCXX)

https://www.blackrock.com/cash/en-us/products/282738/temp-cash-institutional-fund

That minimum investment of 3MM is waived for Merrill clients (you only need a $1,000 initial investment). I don't know if other brokers offer this. For any other ML clients out there, this is a decent option for parking your cash in a high yielding MM fund. The current 30 day yield is 5.36%. The only catch is that you have to place the trades yourself; Merrill won't allow you to use it as a "sweep" option. But that would be true of SGOV as well.

As an aside, this issue of customers searching for higher yielding money market instruments was what put a dent in the Charles Schwab financial outlook a few months ago. It does require one to be a bit more active on a daily or weekly basis to maximize the returns available in your own personal float, but I think its worth it.

GTEC. R59, what is your sense of FV here and what are you basing that on? And then there is the short term trading question of which scenario concerns you the most? The fear of losing potential profits in a blow off spike from momentum traders which could push the stock price much higher? Or the fear of losing money on a significant pullback in price which becomes more likely every day that it continues to surge higher?

My target for FV looks too conservative since it blew through that price range earlier last week. But there is no crystal ball and if I'm true to my process, once I've seen a price target achieved that I think is fair, I will have a very itchy trigger finger to sell, especially if that milestone is combined with a level of price momentum that would clearly indicate overbought levels relative to the past price action. That also assumes that there isn't additional information that might cause me to re-assess FV.

What keeps you invested in a stock once its surged past your FV target? I am making the assumption that you have a price target on each stock you own, whether that is short term, intermediate or long term?

KEQU I guess I'm also worried about the sustainability and the lack of guidance from management. Backlog continues to drop, and that is a key concern. GM were great in the quarter but can they stay up? ON the flip side, even if you get a seq drop in revs and earnings, they are still likely to be putting up decent numbers and the forward PE looks pretty low. No conference calls either, which irks me.

I'm also wary of buying in right after a huge pop in price. The technicals are screaming its overbought at the moment and I'd look for it to come back into that gap in the chart it set today.

Nice job of hanging on to this point with GTEC. Its gone a lot further than I thought it could with minimal guidance for Q3 and the China connection. Given that they are a BVI/HK company, perhaps it flies a bit under the radar as an 8K/10Q filer.

On the technicals that I use, its way overbought and due for a nasty correction. My guess is it sells off into the close before the long weekend, but who knows?

PVH 83.72 I added a few on the backs of this quarterly earnings report. They beat estimates in Q2 and had a mixed guide; came up short of analysts estimates for Q3, but guided higher for the FY. They are increasing their share repurchase to $400MM up from $200MM. This is the company that owns the Calvin Klein and Tommy Hilfiger brands. Seems cheap to me 8x forward earnings with growth expected in excess of that going forward.

"Zac Coughlin, Chief Financial Officer, said, “We drove another quarter of strong performance, and excluding restructuring charges, have raised our full year EPS outlook, while continuing to project a double-digit EBIT margin, underscoring the conviction we have in our ability to drive improved profitability. In addition, reflecting the confidence that we have in our ability to deliver sustainable long-term growth, we have increased our share repurchases. We now expect to repurchase up to $400 million of stock in 2023, having repurchased $200 million of stock in just the second quarter. We are well-positioned to achieve strong EPS growth in 2023 and generate significant and increasing cash flow to create value for shareholders.”

I'm selling the small position I had on this pop. I do think it could reach the 2.40s, but technically its overbought and likely to retrace.

I also don't understand the pessimism in the analysts who provide the estimates for GTEC. They are estimating a substantial drop in eps in Q3 vs Q2. They do have an easy y/y comp, but still.

I'm probably going to wait for a retest of the 50DMA. Would start to nibble again in the high 9s

BBW Guidance is given in terms of rev and pretax income growth vs last year:

2023 Outlook
The Company is reaffirming its fiscal 2023 outlook with expectations of delivering growth in total revenues and pre-tax income, as compared to fiscal year 2022.

For fiscal 2023, the Company continues to expect:

Total revenues to increase in the range of 5% to 7%, with growth in its three operating segments
Pre-tax income growth of 10% to 15%, surpassing 2022’s record high
To open 20 to 30 experience locations, through a combination of partner-operated and corporately-managed business models
Capital expenditures in the range of $15 million to $20 million
Depreciation and amortization of approximately $13 million to $14 million
Tax rate to approximate 25%, excluding discrete items
While the Company notes that its fiscal 2023 is a 53-week year compared to a 52-week year in fiscal 2022, it expects to deliver growth in total revenues and pre-tax income versus the prior year exclusive of the projected benefit of the 53rd week. For reference, the additional week in fiscal 2023, which will be reflected in the Company’s fourth quarter, is estimated to be $7 million in total revenues with approximately 35% flow-through to EBITDA.

They are tracking towards the higher end of their range if you look at the 1H results. Pretax growth is just slightly ahead of the top end guide of 10-15% growth. Analysts will also have to update their eps models for the reduction in share count. I estimate that the company will probably earn closer to 3.61 - 3.67 in FY24. The extra week this year probably adds about 0.05/sh and would be a slight headwind for FY25.

BBW (24.50) in with a strong Q2. Beat top and bottom line ests:
https://seekingalpha.com/news/4005896-build-bear-workshop-gaap-eps-of-0_57-beats-0_16-revenue-of-109_23m-beats-7_34m?mailingid=32494353&messageid=2900&serial=32494353.111&utm_campaign=rta-stock-news&utm_content=link-1&utm_medium=email&utm_source=seeking_alpha&utm_term=32494353.111

No debt. Ev/EBITDA is 4.1x. Solid growth projected this year and analysts ests look a bit low. Trades at 7x forward PE; could it get 8-10x? If so, the stock could be worth mid 30s.

Same here. I sold it around 12. Thought it might see a pullback again below 10, but no luck yet.

I agree that GTEC looks cheap here. Even if you discount its forward PE because of its China connection, I don't see why it can't trade at 4x PE. Margins look strong because of sales mix and where demand appears to be for their electric transmissions. They had a stiff currency headwind also but still showed decent y/y sales growth in spite of that:

"On a constant currency basis, our revenue growth was even stronger at 19% year-over-year, after excluding the impact of FX. Further, our strategic focus on higher value products continued to pay off and drove our gross margin to improve nearly 600 basis points to 29.4%, which is a record high for us over the last few years."

"Looking into the second half of the year, we expect demand to remain strong and we continue to anticipate revenue growth for our core transmission business in 2023."

Looking ahead, GTEC has an easy comp in Q3 and they reported a loss for Q4. They also did a private placement about a year ago at substantially higher prices. I wonder if that could be a source of the some of the heavy selling today; perhaps those investors are giving up and wanting out on the higher volumes that usually accompany the earnings releases?

I owned a small position coming into the report and would probably add on weakness. Will be interesting to hear the CC which is later this afternoon. The analysts ests on this one are way off. They've earned 0.29 in the 1H and are already ahead of the estimate for the entire FY23 . Decent chance they will earn 0.60 - 0.65 this year.
https://finance.yahoo.com/quote/GTEC/analysis?p=GTEC

Nelson, thanks for the dish.

What are your thoughts on CRNT now? Still trading above the 200 DMA, but looks like it might touch it again. Chart pattern looks to be at a critical point.

This one moves fast. I just missed the spike over 12 and have limit orders to sell there.

Sorry, I have no idea why GCT took off back then; was not following it at the time. Hweb, you made the right call on ESOA today; its been the better trade so far. You flipping it?

I re-established a starter position in GCT today avg of 9.50. The 50 DMA is around 8.20, and this volatile stock has a habit of revisiting those moving averages. Its still a bit extended and could pull back more. I think its worth at least 12, so I'll be accumulating at 9 and below if it gets there.

GCT was up roughly 60% since that Form 144 filing on June 30. Since it ran up into the Q2 print, profit taking after the report is probably expected and is likely muting the response to a great report.

Re China, I'd adjust for the geo risk by taking a smaller position size and a reduced forward multiple. And no, I don't think this is a scam. What gives you that impression other than most of their operations are based in China and they are incorporated in the Cayman Islands?

They are converting from a foreign filer to a domestic one starting in FY24.

I follow and like GCT, but I have been scared off by the crazy volatility and the 144 filed by JD to sell 2.8MM shares on June 30. They still have 1.4MM shares left to sell and are now below the 5% threshold, so they could be lurking.

This company is helped by lower shipping costs; that has led to dramatically higher GMs. Seems sustainable. The earnings expectations from analysts seem way too low to me for FY23

I think of these guys as supply chain managers and offer offsite storage for inventory management. Its a valuable service and they are growing their buyers and sellers in their online marketplace.

I'm struggling to figure out what a good forward multiple is. Oh, and they are going to be a 10k filer for 2024. Headquarters is Walnut Creek, CA

Not going to chase ESOA, because I see from Nelson's earlier post that backlog is starting to trend lower sequentially, Q3 and Q4 are the seasonally best quarters and the balance sheet needs work.

They got a waiver from their lenders because they didn't meet all the covenants in the Q3 quarter. The company does expect to be in compliance over the next 12 months.

I agree that it should pop on this great quarter, but my advice is don't hold it too long. This could be a peak top for this energy services company.

I don't know if any others here follow the truck/auto parts suppliers, but I thought that a bunch in this group had very decent quarters and outlooks in their last earnings calls. My favs are LEA, MGA, CVGI, and BWR. Seems like they are trading down in sympathy with some of the auto stocks, likely due to the upcoming fear of how a strike and/or higher wages might impact the auto industry. Not to mention general economic/recession fears. Many of them had hit 52 week highs recently and have pulled back. I added a few today in LEA and MGA and looking to accumulate if they keep trending a bit lower.

IMMR. Hweb, I noticed that operating income was down y/y in Q2 and YTD. Net was boosted by other income which came from recognized cap gains and changes in derivative values. So, the quality of the earnings growth is a bit suspect.

Balance sheet looks fantastic. Maybe this trades at valuations based on book value? Hard to get a sense of what the catalysts are here to get the share price moving. Classic value trap, potentially.

Hey Nelson, I quickly looked at MESA. Quite the ugly quarter, with adjusted earnings AND ebitda negative....so it probably can't get any worse...? I don't usually buy into situations that have declining and negative EBITDA.

I didn't see any guidance provided in the PR. The analysts seem to believe that the turnaround to positive earnings will begin in the March quarter of 2024, but that was before this quarter's results. Airlines are such a tough sector. If I had to own one (and I did own a few earlier this year) it would be, in order, DAL, ALK or UAL.

The RCMT Q2 CC transcript is up. I read through it quickly; the discussion on GM is this:

"Gross margin in the second quarter was 28.0% also flat with the first quarter. We saw outstanding gross margin performance from our Life Sciences and IT segment at 39.4% While this may be a high watermark, we do expect to see gross margins in the upper thirties going forward. Engineering gross margin saw a small sequential uptick as revenue increase. However, we expect better gross margin performance going forward. We are targeting the upper twenties.

Healthcare gross margin performance was off in the second quarter, due primarily to June school closings, a mix shift and several discrete adjustments. We also expect better gross margins in healthcare going forward and target the upper twenties as well. As we look to the second half of 2023, we expect healthcare to continue to experience its underlying sequential growth trend. However, due to seasonal school closings, we will see a set sequential top line decline in the third quarter as we do every year."

==========
GMs vary by segment. Their best GMs are in their smallest segment (Life Sciences, 15%). They are expecting the biggest improvement in GMs in their engineering segment which is about 29% of Rev and the rest in Specialty Health Care coming in around 28% GM and 56% of all revenues. The mix of all that comes in around 28%, and they can probably increase that to 29%+, based on their commentary further on. They do still have some margin related headwinds from the 2H of last year:

"Alex Rygiel

Helpful. And then your margin commentary in that segment would suggest high twenties. Last year, you were in the low thirties in the second half of the year. So, is the variance just sort of mix or is it something?

Kevin Miller

Yeah, we had a confluence of factors in Q2 that I think created, a gross margin for healthcare that is not indicative of the actual margin. But I think the way that you should think about the gross margin in healthcare is, we did 28.8 year-to-date. And, I think that's a pretty good number on a go forward basis, we're always looking to improve the margin. The thing that there's a fair amount of uncertainty around healthcare, just because, we have a lot of new contracts.

And we never know exactly how they're going to really start with a lot of these new schools. But certainly, I think that 28.8% indicates a pretty good range. I would be surprised if our margins in Q3 and Q4 are in the 28% to 29% area. And hopefully we're pushing up towards the top of that."

RCMT. One problem with trying to match EBITDA projections with net income is that interest expense and taxes come into play. With rising interest rates and a higher debt level (which RCMT partially used to fund the share repurchase) net income growth will be negatively impacted. In Q2, they had approx 400k of other exp, assumed to be int exp. Net of tax rate of 25%, fds count of 7.9MM that's about a 0.04/sh headwind per quarter. They could use some of their cash flow to pay down the debt too.

I did not have a chance to listen to the call yet.

RCMT call is this morning at 11:30AM.

https://www.rcmt.com/news/2023/08/rcm-technologies-inc-announces-conference-call-2/

No stream available?

Just a few comments on HRMY, which I follow and have a small position in.

1. The analysts use GAAP for their estimates here, not non-GAAP, so by that measure, the GAAP earnings of 0.56 missed the estimate of 0.61. This is extremely confusing, especially since so many assume all the estimates are non-GAAP. (!)

2. Going by GAAP (which I don't think is appropriate) they have a difficult comp next quarter because of a tax refund booked in Q3 of last year. That completely screws up the income statement because its one-time in nature and one of the many reasons why adjustments have to be made.

They also announced a $125MM share repurchase, perhaps to offset any anticipated selling coming in?

Topline growth is still strong, but decelerating a bit from previous quarters and they have some difficult 2nd half comps. Balance sheet strength allows them to do a buyback but they also have to continue efforts to diversify away from Wakix, perhaps with another acquisition.

If you like this sector, try looking at COLL which is much cheaper and has a similar growth profile.

wow, great trade Nelson!

Hweb, here are a few for your skilled and savvy review:

BBW
COLL
DXC
PKOH
PLAY

I agree with you that many stocks have run, and the setups aren't great given the guidance and/or the macro. However, the valuation divergence between large cap growth (esp tech) and small cap value hasn't been this wide since 2000. And many of us long-timers remember how great the years between 2001-2003 were for value. Hoping for something of a repeat like that, but still wary of the macro headwinds!

Nice post Value1008!

I thought it was fairly valued around 6.60 - 6.80, so I've already sold.

EDIT: I think a lot of this buying is driven by short covering. Aren't there some trading rules about forced covering when the symbol changes?