BGC Corant closing, Telus 3Q21 and Amdocs schedules plus follow-up and look ahead +3

21:55 01-Nov-21

Orbital Energy Group has scheduled its third quarter report for the morning of Monday, November 15th.  The mid-point of the two analyst estimates is a loss of 10+/-3 cents per share from $31.8M of revenue, increasing to $31.9M this quarter.  Despite my lack of investment interest, I'll be curious for color on the observations I've made below, and will probably provide at least a brief write up.

Though I am also somewhat curious about Amdocs, I doubt I will provide real time write up of its earnings release, scheduled for tomorrow evening, ahead of the broader investor event, not the other way around, as I mistakenly implied below.  Though DOX looks fairly valued at the moment, with a hybrid P/E of 16, it would take a lot to pull me into after hours action hours before the Fed statement and days before the investor event; I will probably have  something out by morning, though, certainly if there is an investment case to made.

Some more follow-up, starting with the Akoustis call.  There was no additional color on the new customer, but the company has brought its WLP (wafer level processing) process in house.  This increases and moves forward some costs, but management still expects to hit breakeven in the next 12-18 months.  That's all a good thing, and probably accounts for the cost control miss that I referenced in my original note.  Accordingly AKTS is now up over 12.5%, validating my willingness to nibble at or below $8.  I wouldn't chase much on today's developments, given the state of the market, but I do view them as positive.

Supply chain and labor issues remain a threat, but that's true for most everyone, including Orbital, whose completion of its stadium telecom project with the help of Full Moon seems to confirm my fears.  That said, the trend toward nepotistic business is particularly applicable here as new federal broadband funding allocations are seeking to be exempt from public scrutiny.

Finally, my COP26 comments should have noted the effect on AMSC, which has risen over 25% on such new, along with domestic initiatives.  Although the trend is generally positive, I am not at all inclined to chase, as I see no way to be sure of the connection, let alone quantify actual benefit.

On 11/1/21 10:13 AM, Esekla wrote:

BGC Partners has finally announced the closing of its Corant insurance business sale.  Management affirms that the $535M in proceeds will go towards further share buybacks and Fenics growth.  The gain will also be excluded from the Wednesday's adjusted earnings forecast.  I continue to look forward to crypto announcements for both BGCP and Virtu as regulation takes shape and regulated trading subverts the traditional markets.

Amdocs has announced an investor event for the morning of November 5th not long ahead of when earnings are expected.  The average of 7 analyst estimates comes to $1.18 of EPS from $1.1b of revenue, which is expected to remain steady.  However, the usual bunch of press releases that the company issues at once has been a bit weak as has the stock price, all of which may be indicative of further OpenRAN tremors.  I will review the event, but am staying hands off of DOX for the moment, even though there is potential for something transformative.

Telus has scheduled its third quarter report for the same morning.  No estimates are available for the event, and I will only write about it if there is some sort of surprise.  Nonetheless, I wanted to note that TU has been quite steady through volatility and I remain willing to buy and significant dips.

eMagin has announced a prototype microdisplay with impressive stats claiming a new record for brightness.  EMAN is up over 10% but prototypes don't impress me from an investment perspective until there's evidence that they can be duplicated at commercially competitive pricing.  Still, this could jump start the military business, and with almost two years left on its contract, the announcement is a significant positive.

I'll also note that Covanta managed to beat estimates on Thursday, but it doesn't matter in light of cost cutting associated with the private equity buyout.

Looking more broadly ahead, we saw Microsoft take the market cap lead from Apple last week, which is a further sign of the effect of supply chain effects.  This provides some hope that America and China will be pushed towards some sort of detente.  However, with real-world and investor focus this week on COP26 and the Fed, Magnachip has received the expected extension of its second CFIUS review to December 13th.  In any case, there is every reason to believe that stocks like MX and HIMX should be highly valued.  However, the same can't be said for INTC, as the company prices its latest chips cheaply in effort to regain/preserve market share.  My take is that they are a step forward, but hardly a silver bullet.  We won't really know if Intel has made the transition it needs to just to stay competitive until 2023.

Hydrocarbon pricing has been all over the place as aspirations bump against reality.  It's disappointing that Biden's negotiations have dropped methane action, which is a minor negative for New Fortress and Russian action is a bigger one for Golar.  Even so, I think the end of COP26 on the 12th, could represent a nadir for the stocks, but this week could wind up being a pivot point for many stocks.