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Commentary

Every few weeks, a note that steps back from the single companies and reads the whole list together. It looks at the themes that connect them, which discounts are likely to close and which probably will not, and the dates worth watching next. It is information, not advice (see the disclaimer).

Updated

Sixteen picks reported, and guidance cuts decided most of the failed tests

Sixteen picks reported third-quarter results from October 20 to October 21, and eight of them passed the test the site had set. Most of the eight failures came from a lower outlook or one weak line, while the defense companies and Wyndham raised theirs. 130 picks report from October 22 to October 31.

Half of the reports passed

Sixteen picks reported in the first two days of the week, and each had a checkpoint for its third-quarter results. Eight passed: NOC, RTX, ALLY, KEY, SAP, NEE, WFRD and WH. Eight failed: EFX, SYF, META, DHR, MCO, ROL, LVS and ELS.

Most of the failures were not about the quarter itself. Equifax met its revenue and EPS guidance, Danaher's core revenue grew 3.0%, at the top of its guide, and Equity LifeStyle's normalized FFO of $0.79 per share was the middle of its range. All three then lowered part of their outlook: Equifax its 2026 revenue because of a weaker US mortgage market, Danaher its 2026 core growth to about 2.5% from 3% to 4%, and ELS its full-year RV and marina rent growth to 1.2% from 1.6%.

Companies: NOC, RTX, ALLY, KEY, SAP, NEE, WFRD, WH, EFX, SYF, META, DHR, MCO, ROL, LVS, ELS

One weak line was enough for the others

Las Vegas Sands shows the pattern. Macao recovered, with adjusted property EBITDA of $529 million against $430 million in the second quarter, but Marina Bay Sands fell to $590 million, far from the $700 million the test asked for. Moody's ratings revenue fell 1% against a record third quarter of 2025, while its analytics ARR grew 8%. Rollins' organic growth slowed to 4.4%, against about 6% expected, and its operating margin fell to 20.5% from 21.9%.

Meta is the largest case. Revenue grew 26%, but costs without the legal charge grew about 36%, and free cash flow was negative $2.12 billion, against $784 million in the second quarter. Meta also raised the low end of its 2026 capital spending guide to $135 billion.

Companies: LVS, MCO, ROL, META

Defense, hotels and oil services raised their outlooks

Northrop Grumman raised its 2026 segment operating income and EPS guidance, with a segment margin of 12.1% and no new large charge. RTX grew organic sales 12%, its defense backlog rose to $164 billion, and it raised its 2026 free cash flow outlook to $9.0 billion to $9.2 billion. Wyndham's U.S. RevPAR rose 6%, and it raised its 2026 adjusted EPS outlook to $4.84 to $4.92. Weatherford raised its free cash flow guidance again after an adjusted EBITDA margin of 22.2%.

SAP is the software company in the group, and its report did not show damage from AI tools. Cloud revenue grew 25% and the current cloud backlog 26%, both at constant currency, and SAP moved its 2026 cloud outlook to the upper end of its range.

The market moved before all the reports were out. From the October 16 close to the October 21 close, WFRD rose 12.2%, EFX 8.9% after its guidance cut, and KEY 5.2%. META, LVS and ROL reported after the close on October 21, so these closes do not show their reports yet.

Companies: NOC, RTX, WH, WFRD, SAP, EFX, KEY

130 picks report by October 31

From October 22 to October 31, 130 of the 309 picks report, and 12 of those dates are still estimates. October 29 is the busiest day, with 36 picks, and October 28 has 33.

Seventeen report on October 22, among them PG, LMT, RELX, HBAN and BX. The large AI spenders follow: MSFT and GOOGL on October 28 and AMZN on October 29, with NOW on October 28 and CTSH and GIB.A on October 29 for the software and IT services side. The REITs AMT, BXP, EXR and VTR report on October 27, and the utilities AEP on October 28 and D and EXC on October 30. Boeing reports on October 27 and the defense companies HII, LHX and GD on October 29 and October 30.

Companies: PG, LMT, RELX, HBAN, BX, MSFT, GOOGL, AMZN, NOW, CTSH, GIB.A, AMT, BXP, EXR, VTR, AEP, D, EXC, BA, HII, LHX, GD

Themes

Interest rates

109 companies

Earnings or valuation move with interest rates and the housing market.

FIS, CNH, GPI, BN, KMX, WLK, PNR, LPLA

Median low-end discount
7.0%
Structural gap
2 of 109

High debt

99 companies

Carries a lot of debt, so cash flow goes to lenders first.

GIL, FLUT, CPB, FIS, FISV, SARO, MOS, CLX

Median low-end discount
11.0%
Structural gap
3 of 99

Weak consumer

98 companies

Sales depend on households that are spending less on big or optional purchases.

TME, LULU, GIL, CPB, CLX, ABG, GPI, KHC

Median low-end discount
12.5%
Structural gap
1 of 98

New management

71 companies

A new chief executive or a reset plan must prove itself.

LULU, FLUT, FISV, SARO, CLX, KMX, PNR, CMCSA

Median low-end discount
12.0%
Structural gap
0 of 71

Tariffs and trade

70 companies

Tariffs or trade rules change its costs or its sales.

LULU, GIL, CPB, GNTX, ABG, CNH, ESAB, F

Median low-end discount
11.0%
Structural gap
2 of 70

AI disruption risk

40 companies

AI tools could replace part of what customers pay this company for.

ACM, MBGL, LPLA, APP, CSGP, RELX, BR, CHKP

Median low-end discount
13.0%
Structural gap
1 of 40

Power and energy

40 companies

Earns from electricity, gas or oil demand, including power for data centers.

WLK, PCG, POR, SOLS, BKR, DTE, NGG, AR

Median low-end discount
2.0%
Structural gap
2 of 40

China and geopolitics

30 companies

Exposed to China, Taiwan or export rules between governments.

TME, GNTX, BABA, MOS, YUMC, MGM, OTIS, NTES

Median low-end discount
14.0%
Structural gap
5 of 30

AI spender

7 companies

Spends heavily on AI data centers; the market asks when that spending pays back.

BABA, BIDU, GOOGL, SKM, META, AMZN, MSFT

Median low-end discount
11.0%
Structural gap
2 of 7

Gap types

Not every discount can close. Tap a company to read why its gap is of its type.

Can close

229

74% of rated picks

A dated event that someone can check can close the gap within about two years.

  • GIL
    Why GIL: 53% to 62%

    The Q3 2026 and full-year 2026 reports show whether sales hold up against the short seller's claim and whether debt falls.

  • FLUT
    Why FLUT: 51% to 64%

    The NFL season results, the Brazil decision due within 120 days and the 2027 guidance give dated tests within about two years.

  • FIS
    Why FIS: 48% to 57%

    Quarterly growth and debt reduction, and the 2027 outlook in February 2027, show within about two years whether the TSYS deal works.

  • SARO
    Why SARO: 44% to 54%

    The Q3 2026 report and the first 2027 guidance of the new CEO show within about a year whether airline demand and margins hold.

  • MOS
    Why MOS: 40% to 56%

    The Q3 2026 report in early November 2026 and the Q4 2026 report in February 2027 show whether sulfur costs fall and phosphate plants restart.

  • AVGO
    Why AVGO: 39% to 55%

    Each quarterly report checks the FY2027 AI chip revenue target, starting with the December 2026 report.

  • ABG
    Why ABG: 39% to 55%

    The end of the Tekion rollout in fall 2026 and the next two to four quarterly reports show whether costs fall back and leverage drops.

  • ESAB
    Why ESAB: 39% to 50%

    The Q3 2026 report and the 2027 outlook in February 2027 show within about two years whether margins recover and debt falls.

Slow

69

22% of rated picks

The gap can close, but only over several years of execution.

  • TME
    Why TME: 59% to 70%

    Competition for light users and the China discount change slowly, so stable membership growth must show over several quarters.

  • LULU
    Why LULU: 55% to 67%

    A brand turnaround under a new CEO and product team needs several years of sales evidence, not one dated event.

  • CPB
    Why CPB: 48% to 57%

    Management does not expect margins to recover before fiscal 2028, and legacy soup and snack demand may keep falling.

  • FISV
    Why FISV: 46% to 60%

    Fiserv must show several years of growth and margin recovery under new leaders to meet targets that run to 2029.

  • GNTX
    Why GNTX: 44% to 55%

    New products ramp with car model launches over several years, so revenue growth above vehicle production takes until about 2028 to prove.

  • CLX
    Why CLX: 39% to 50%

    Clorox needs a new CEO, an earnings recovery and debt repayment through the end of 2027, so the gap closes only step by step.

  • CNH
    Why CNH: 39% to 50%

    The gap closes only as the farm cycle recovers, which depends on crop prices and farm incomes over 2027 and 2028.

  • KHC
    Why KHC: 37% to 48%

    Brand volume can recover only over several years of higher spending, and the paused split removes a dated event that could close the gap sooner.

Will probably not close

11

4% of rated picks

A lasting reason holds the price below fair value, so the discount overstates the opportunity.

  • BABA
    Why BABA: 40% to 56%

    The VIE structure, the US military-company listing and US-China tension keep a discount on Alibaba whatever its cloud business does.

  • BN
    Why BN: 38% to 49% (Management)

    The multi-layer holding structure stays after the merger, so part of the gap to plan value will probably never close.

  • YUMC
    Why YUMC: 36% to 48%

    US-China tension and a weak Chinese consumer keep a country discount on Yum China that its own results cannot remove.

  • PCG
    Why PCG: 29% to 42%

    California has no cap on wildfire liability, the 2026 reform bill failed, and one bad fire can erase years of profit.

  • NTES
    Why NTES: 28% to 47%

    Most of the gap comes from Chinese game regulation and US-China tension, which NetEase cannot control and which have no end date.

  • BIDU
    Why BIDU: 18% to 39%

    The weighted voting structure, the VIE structure and US-China tension keep a discount on Baidu whatever its AI cloud business does.

  • TSM
    Why TSM: 10% to 27%

    Strong results can close the execution part, but the market will probably keep a discount for Taiwan-China risk that TSMC cannot control.

  • D
    Why D: 5% to 22%

    Dominion agreed to merge into NextEra for a fixed number of NextEra shares, so its price follows NextEra's share price and the risk that state regulators delay or change the deal.

Earnings by week

The next 6 weeks of reports, with the themes of the companies that report.

  1. Week of Oct 19: 4 reports — Regulation and courts ×3, AI disruption risk ×2, Weak consumer ×1, China and geopolitics ×1, High debt ×1, Tariffs and trade ×1

    1 of 4 dates is estimated (last report plus three months), not confirmed by the company.

  2. Week of Oct 26: 109 reports — Interest rates ×45, Regulation and courts ×37, Weak consumer ×36, High debt ×30, Tariffs and trade ×29, New management ×25, Power and energy ×15, AI supplier ×13, AI disruption risk ×8, China and geopolitics ×7, AI spender ×3, Weight-loss drugs ×3

    11 of 109 dates are estimated (last report plus three months), not confirmed by the company.

  3. Week of Nov 2: 94 reports — High debt ×38, Interest rates ×34, Regulation and courts ×34, Weak consumer ×22, New management ×20, Power and energy ×19, Tariffs and trade ×16, AI disruption risk ×13, China and geopolitics ×8, AI supplier ×5, Weight-loss drugs ×5, AI spender ×1

    22 of 94 dates are estimated (last report plus three months), not confirmed by the company.

  4. Week of Nov 9: 12 reports — High debt ×6, Regulation and courts ×5, Interest rates ×4, AI disruption risk ×3, AI supplier ×2, Weak consumer ×2, New management ×2, Tariffs and trade ×2, China and geopolitics ×1, Power and energy ×1

    5 of 12 dates are estimated (last report plus three months), not confirmed by the company.

  5. Week of Nov 16: 14 reports — Weak consumer ×6, China and geopolitics ×6, Regulation and courts ×6, AI disruption risk ×3, Tariffs and trade ×3, Interest rates ×2, High debt ×2, New management ×2, AI spender ×1, AI supplier ×1

    8 of 14 dates are estimated (last report plus three months), not confirmed by the company.

  6. Week of Nov 23: 6 reports — Weak consumer ×4, China and geopolitics ×2, New management ×2, Tariffs and trade ×2, AI spender ×1, AI disruption risk ×1, High debt ×1, Regulation and courts ×1

    • BABA Nov 24 (est.)
    • DKS Nov 25 (est.)
    • VIPS Nov 25 (est.)
    • ADSK Nov 27 (est.)
    • GAP Nov 27 (est.)
    • HRL Nov 27 (est.)

    6 of 6 dates are estimated (last report plus three months), not confirmed by the company.

  7. Week of Nov 30: 6 reports — Weak consumer ×4, Tariffs and trade ×4, New management ×3, AI supplier ×1, Interest rates ×1, Regulation and courts ×1, Weight-loss drugs ×1

    6 of 6 dates are estimated (last report plus three months), not confirmed by the company.

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