Core Viewpoint - The article discusses the recent earnings season, highlighting the performance of individual stocks, particularly those that are showing signs of recovery despite high market expectations and challenges in the broader economy [1][2]. Group 1: Earnings Season Insights - Q2 earnings season has revealed significant surprises, with companies like NVIDIA Corp. missing EPS expectations but still achieving impressive revenue of $44 billion [2]. - AI capital expenditure has contributed more to U.S. GDP growth than personal consumption expenditures this year, indicating a strong market focus on AI investments [3]. - High expectations have led to stock declines even for companies that beat earnings estimates, as seen with Coinbase and Chipotle, where stocks fell 14% and 13% respectively after reporting [4]. Group 2: Stocks with Positive Q2 Reports - The article identifies three companies that are changing their narratives through strong Q2 earnings: SoFi Technologies, Boeing, and PayPal [6]. - SoFi Technologies reported a 34% year-over-year growth in new customers, with revenue increasing by 42% year-over-year, and loan originations up 64% to a record $8.8 billion [9]. - Boeing's Q2 revenue of $22.75 billion represented nearly 35% year-over-year growth, with a backlog exceeding $600 billion, indicating a potential turnaround for the company [12][13]. - PayPal's Q2 earnings showed EPS and revenue beats, driven by a 20% year-over-year revenue growth from Venmo, despite the stock being down 20% this year [14][15].

Group 1: Earnings Reports Overview - Palantir has secured a $10 billion Army contract and is expected to report strong quarterly results, with predictions of a "total blowout" due to strong business performance [2] - Berkshire Hathaway's upcoming earnings report is anticipated to be different under Greg Abel's leadership, with expectations of a potential stock price increase if results are favorable [1] - DuPont's breakup is on track, with expectations that the individual parts will be valued higher than the whole [3] Group 2: Sector Insights - Caterpillar is expected to post strong results, benefiting from domestic infrastructure and reshoring trends [3] - Eli Lilly's performance will be closely watched, especially in light of competitor Novo Nordisk's disappointing quarter, raising questions about market share dynamics in the GLP-1 drug sector [5] - Disney's shares have been climbing, with positive remarks on its streaming, theme park, and cruise line segments [4] Group 3: Other Companies to Watch - McDonald's is viewed as a buy due to recent improvements and new offerings [4] - Warner Bros Discovery is undergoing reorganization and debt reduction, with anticipation around its earnings report [6] - Pinterest is expected to deliver solid results, being recognized as a family-friendly advertising platform [6]

Core Viewpoint - High-growth tech stocks are becoming more expensive, prompting investors to consider the auto sector for potential bargains, particularly Ford and General Motors, which both exceeded Q2 expectations [1][2]. Group 1: Q2 Results - Ford's Q2 sales increased by 5% year over year to $46.94 billion, surpassing estimates of $41.72 billion by 12%. However, tariff costs of $800 million impacted earnings, resulting in Q2 EPS of $0.37, down from $0.47 a year ago but above expectations of $0.34 [3]. - General Motors reported Q2 sales of $47.12 billion, exceeding estimates of $46.24 billion but down 2% year over year. Q2 EPS was $2.53, exceeding expectations of $2.39 by 6%, but down 17% from $3.06 in the prior period, impacted by $1.1 billion in tariffs [4]. Group 2: Guidance - Ford reinstated its full-year guidance, projecting adjusted EBIT of $6.5-$7.5 billion, revised down from $7-$8.5 billion, accounting for an estimated $2 billion net tariff-related impact. Adjusted free cash flow is forecasted at $3.5-$4.5 billion with capital expenditures around $9 billion [5]. - General Motors reaffirmed its full-year guidance, expecting FY25 adjusted EBIT of $8.2-$10.1 billion and raised its annual net income guidance to $11.2-$12.5 billion from a previous range of $10.4-$11.1 billion, considering an estimated $5 billion tariff-related hit [6]. Group 3: Stock Performance - Year to date, Ford's stock is up approximately 11% to around $11 per share, while General Motors shares are virtually flat at around $53. Ford has outperformed the S&P 500's gains of 8% this year [7]. - Over the last five years, General Motors' stock has increased over 100%, outperforming the broader market and the Automotive-Domestic Market's returns of 73%, while Ford's stock has risen 65% [8]. Group 4: EPS Outlook & Valuation - General Motors has a forward earnings multiple of 5.5X, with annual EPS expected to dip 11% in FY25 but projected to stabilize and rise 3% in FY26 to $9.69. Ford's forward earnings multiple is 9.5X, below the industry average of 12X, with FY25 EPS expected to drop 38% to $1.14 [9]. - Ford's annual EPS is forecasted to rebound and rise 13% in FY26 to $1.28 [9]. Group 5: Dividend Comparison - Ford offers a dividend yield of 5.52%, significantly higher than General Motors' 1.15% yield and the S&P 500's average of 1.16%. General Motors also provides a generous dividend compared to most automakers [10]. Group 6: Conclusion - Following Q2 reports, both Ford and General Motors hold a Zacks Rank 3 (Hold). General Motors presents a more appealing investment potential due to its robust bottom line, while income investors may prefer Ford's stock [14].

Core Insights - The article emphasizes the importance of thorough analysis during earnings season, highlighting that successful investing requires more than just surface-level metrics and press releases [2][3] Company Analysis - Allison Transmission Holdings Inc. (ALSN) has demonstrated consistent growth, with revenue and net operating profit after tax (NOPAT) increasing by 4% and 9% compounded annually since 2014, respectively [6] - The NOPAT margin for Allison Transmission improved from 15% in 2014 to 25% in the trailing twelve months (TTM), while invested capital turns increased from 0.5 to 0.8 during the same period [6] - The return on invested capital (ROIC) for Allison Transmission rose from 8% in 2014 to 19% in the TTM, indicating enhanced operational efficiency [6] Valuation Insights - At a current price of $95 per share, Allison Transmission has a price-to-economic book value (PEBV) ratio of 0.9, suggesting that the market anticipates a permanent decline of 10% in NOPAT from TTM levels, which appears overly pessimistic given the company's historical growth [8] - Even with a conservative estimate where NOPAT margin falls to 22% and revenue grows by only 3% compounded annually through 2034, the stock could be valued at $127 per share, representing a 34% upside [9] Financial Adjustments - Significant adjustments were made in financial filings, including nearly $150 million in income statement adjustments, resulting in a net effect of removing under $100 million in non-operating expenses [10] - Over $2 billion in adjustments were made to the balance sheet to calculate invested capital, with a net decrease of over $600 million, particularly notable for deferred tax assets [11] - Valuation adjustments totaled under $4 billion, leading to a net decrease of over $2 billion in shareholder value, with significant adjustments for total debt and excess cash [11]

Core Insights - The earnings season is progressing positively, with major banks setting a strong tone and other companies following suit [1] - Visa and PayPal are significant players reporting next week, with expectations remaining stable [6] Visa - Visa is expected to see an 18% increase in earnings and an 11% rise in sales, reflecting strong investor confidence [2] - Total Payments Volume (TPV) grew 8% year-over-year, indicating healthy consumer spending despite macroeconomic uncertainties [3] - The current forward 12-month earnings multiple for Visa is 28.2X, which is above its five-year median of 26.9X, suggesting shares are relatively expensive [4][13] PayPal - PayPal is projected to achieve 9% EPS growth and a 2.7% increase in sales, with sales growth expected to accelerate [7] - PayPal's TPV reached $417 billion, a 3% increase year-over-year, with a consensus estimate of $434.4 billion for the next period [11] - The current forward 12-month earnings multiple for PayPal is 14.3X, reflecting a 37% discount compared to the S&P 500 [12][14]

_Before trading options, please read the Options Disclosure Document: https://www.theocc.com/Company-Information/Documents-and-Archives/Options-Disclosure-Document._ The major indexes have hit more all-time highs as earnings season gets underway, but there may be signs of exhaustion on the S&P 500 and Nasdaq. With that market backdrop, Tony shares what he believes to be a rare opportunity to capture potential upside in a mega-cap tech stock. - For more about In the Money: https://www.fidelity.com/learning-c ...

Market Outlook & Economic Indicators - Goldman Sachs anticipates an "interesting period" influenced by upcoming jobs reports and inflation data, leading to a significant Fed meeting in September [2][3] - The firm projects 16% economic growth for the year, despite market uncertainties [5] - The market's focus is shifting from uncertainty in the first half of the year to resiliency in the second half [5] Investment Strategies & Opportunities - Goldman Sachs highlights ETFs focused on income generation, particularly appealing due to market highs [7] - These ETFs, such as GPI and GPIQ, aim to capture broad market returns while providing income through higher dividend yields and option strategies, targeting 85% annualized monthly distributions [8][9] - The firm suggests overweighting international equities, noting a 20% increase in international equities [12][13] - Opportunities exist in both income-generating stocks and fixed income markets, particularly high yield and higher carry strategies outside the US, where rate cuts are occurring [15][16][17][18] Earnings & Market Drivers - Earnings are a key driver of markets, with 70% of companies beating sales estimates and 85% beating EPS estimates [20]

A solid earnings season shows Corporate America’s profit engine is humming along https://t.co/KSlGtTGUOd ...

WATCH: Earnings Season Showing Signs Tariffs Are Seriously Impacting Companies https://t.co/qBZu52GSB4 ...

Market Trends & Trade Deals - Positive trade news with Japan is sending stocks higher, with the NASDAQ up approximately 0.67%, the Dow adding roughly 230 points, and the S&P 500 up around 0.3% [5] - President Trump states a trade deal with Japan has been reached, with a 15% tariff rate on imports to the US, boosting shares of automakers like Toyota [11] - Goldman Sachs economists estimate the US effective tariff rate is around 15%, significantly higher than at the start of the year [18] Company Performance & Earnings - AT&T anticipates saving up to $8 billion from this year to 2027 due to the newly signed bill [2][32] - Hilton issued below consensus guidance, partly due to reduced inbound tourism [2][14][49] - Hasbro took a $1 billion impairment charge in Q2 in its toy business due to tariffs, mainly on China [3] - Texas Instruments is experiencing losses despite a Q2 beat, with Q3 outlook projecting 11% sales growth, a slowdown from last quarter [6] - NXP Semiconductors issued Q3 guidance that failed to impress investors, with concerns about growth drivers and lower profit margins, leading to a share decline of about 3% [8][9] - Tesla's earnings are under scrutiny, with Goldman Sachs analysts estimating EPS for Q2 and the year below consensus [4][37] - Otis is issuing soft full-year EPS guidance due to weak demand for new equipment out of China and the Americas [34][35] Meme Stocks & Retail Investor Activity - Renewed meme stock trade is evolving, with moves in Crispy Cream and GoPro [12][13][25] - Doge is up more than 50% and Sheiba Enu is up more than 20% over the last month, indicating frothiness in the market [29] Economic Outlook & Bond Market - Concerns exist about the economic outlook in the second half, with GM calling out weak second-half demand and travel-related stocks showing concerns about lower-end income consumers [46][47] - The US economy is described as K-shaped, with a bifurcation between haves and have-nots at both the consumer and stock levels [48] - The bond market has been relatively quiet, but a flare-up could occur if investors believe the Fed is acquiescing to Trump or if Powell were to leave [50][51][52][59]