It looks like Armstrong World Industries, Inc. (NYSE:AWI) is about to go ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date, which is the cut-off date on which you must be present on the company’s books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves a full business day. So if you miss that date, you would not show up on the company’s books on the record date. In other words, investors can purchase Armstrong World Industries’ shares before the 6th of March in order to be eligible for the dividend, which will be paid on the 20th of March.

The company’s next dividend payment will be US$0.308 per share, on the back of last year when the company paid a total of US$1.23 to shareholders. Based on the last year’s worth of payments, Armstrong World Industries stock has a trailing yield of around 0.8% on the current share price of US$153.66. If you buy this business for its dividend, you should have an idea of whether Armstrong World Industries’s dividend is reliable and sustainable. As a result, readers should always check whether Armstrong World Industries has been able to grow its dividends, or if the dividend might be cut.

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Armstrong World Industries is paying out just 19% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It distributed 28% of its free cash flow as dividends, a comfortable payout level for most companies.

It’s encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it’s a relief to see Armstrong World Industries earnings per share are up 4.2% per annum over the last five years. Recent growth has not been impressive. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.

The board of Packaging Corporation of America (NYSE:PKG) has announced that it will pay a dividend of $1.25 per share on the 15th of April. This payment means that the dividend yield will be 2.3%, which is around the industry average.

Packaging Corporation of America’s Payment Could Potentially Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Packaging Corporation of America was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

The next year is set to see EPS grow by 39.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 44%, which is in the range that makes us comfortable with the sustainability of the dividend.

Packaging Corporation of America Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $1.60 in 2015 to the most recent total annual payment of $5.00. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Packaging Corporation of America May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. However, Packaging Corporation of America has only grown its earnings per share at 4.0% per annum over the past five years. Growth of 4.0% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This could mean the dividend doesn’t have the growth potential we look for going into the future.

In Summary

Overall, we don’t think this company makes a great dividend stock, even though the dividend wasn’t cut this year. While Packaging Corporation of America is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don’t think this company has the makings of a good income stock.

It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we’ve identified 1 warning sign for Packaging Corporation of America that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Let’s dig into the relative performance of Caterpillar (NYSE:CAT) and its peers as we unravel the now-completed Q4 construction machinery earnings season.

Automation that increases efficiencies and connected equipment that collects analyzable data have been trending, creating new sales opportunities for construction machinery companies. On the other hand, construction machinery companies are at the whim of economic cycles. Interest rates, for example, can greatly impact the commercial and residential construction that drives demand for these companies’ offerings.

The 4 construction machinery stocks we track reported a slower Q4. As a group, revenues missed analysts’ consensus estimates by 1.4%.

While some construction machinery stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.6% since the latest earnings results.

Weakest Q4: Caterpillar (NYSE:CAT)

With its iconic yellow machinery working on construction sites, Caterpillar (NYSE:CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.

Caterpillar reported revenues of $16.22 billion, down 5% year on year. This print fell short of analysts’ expectations by 2%. Overall, it was a softer quarter for the company with a significant miss of analysts’ adjusted operating income estimates and a miss of analysts’ organic revenue estimates.

“I’m proud of our global team’s strong performance in 2024 as they delivered record adjusted profit per share and strong ME&T free cash flow,” said Caterpillar Chairman and CEO Jim Umpleby.

Caterpillar delivered the slowest revenue growth of the whole group. Unsurprisingly, the stock is down 13.4% since reporting and currently trades at $340.48.

Is now the time to buy Caterpillar? Access our full analysis of the earnings results here, it’s free.

Best Q4: Astec (NASDAQ:ASTE)

Inventing the first ever double-barrel hot-mix asphalt plant, Astec (NASDAQ:ASTE) provides machines and equipment for building roads, processing raw materials, and producing concrete.

Astec reported revenues of $359 million, up 6.5% year on year, falling short of analysts’ expectations by 4%. However, the business still had a strong quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.

Astec achieved the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 14.8% since reporting. It currently trades at $35.85.

Is now the time to buy Astec? Access our full analysis of the earnings results here, it’s free.

Last week saw the newest full-year earnings release from The Home Depot, Inc. (NYSE:HD), an important milestone in the company’s journey to build a stronger business. Home Depot reported in line with analyst predictions, delivering revenues of US$160b and statutory earnings per share of US$14.91, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Taking into account the latest results, the current consensus from Home Depot’s 35 analysts is for revenues of US$164.3b in 2026. This would reflect a satisfactory 3.0% increase on its revenue over the past 12 months. Statutory per share are forecast to be US$14.86, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$164.3b and earnings per share (EPS) of US$15.57 in 2026. So it looks like there’s been a small decline in overall sentiment after the recent results – there’s been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at US$431, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic Home Depot analyst has a price target of US$484 per share, while the most pessimistic values it at US$292. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Home Depot shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Home Depot’s revenue growth is expected to slow, with the forecast 3.0% annualised growth rate until the end of 2026 being well below the historical 5.7% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.1% per year. So it’s pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Home Depot.

Carvana (NYSE:CVNA) recently announced its fourth quarter and full year earnings, showing significant growth in sales and a return to profitability with a net income of $79 million after a previous loss. However, the net income for the full year was $210 million, a decline from the previous year’s $450 million, which may have influenced investor sentiment. Alongside these financial results, Carvana’s filing of a shelf registration for $660 million in Class A Common Stock might have raised concerns about future share dilution among shareholders. These company-specific developments occurred against a backdrop of mixed market performance, as the broader U.S. stock market experienced fluctuations amid tariff announcements and tech stock volatility. The overall market dip of 3.6% over the past month was mirrored by Carvana’s share price decreasing by 3.93%, reflecting broader market uncertainties and company-specific challenges during this period.

Carvana’s shares delivered a remarkable total return of 208.24% over the last year. During this period, the company’s stock outperformed both the US market, which saw a 16.9% return, and the specialty retail industry, which achieved a 9.1% return. Several key events contributed to this performance. In July 2024, Carvana expanded its market reach by offering same-day vehicle delivery services in regions such as Las Vegas, Houston, and Kansas City. This strategic expansion helped cater to a broader customer base, potentially enhancing revenue streams.

Moreover, the company’s integration into the Russell 1000 Index on July 1, 2024, may have positively influenced investor perceptions, attracting more institutional attention. Earnings announcements throughout the year, including a swing to profitability with a US$79 million net income in Q4 2024, further strengthened investor confidence. However, the filing of a shelf registration in February 2025 for US$660 million in common stock hinted at potential future dilution, possibly tempering enthusiasm among some investors.

Aerospace and defense company HEICO (NSYE:HEI) reported Q4 CY2024 results topping the market’s revenue expectations , with sales up 14.9% year on year to $1.03 billion. Its GAAP profit of $1.20 per share was 26.6% above analysts’ consensus estimates.

Is now the time to buy HEICO? Find out in our full research report.

HEICO (HEI) Q4 CY2024 Highlights:

• Revenue: $1.03 billion vs analyst estimates of $977.6 million (14.9% year-on-year growth, 5.4% beat)

• EPS (GAAP): $1.20 vs analyst estimates of $0.95 (26.6% beat)

• Adjusted EBITDA: $273.9 million vs analyst estimates of $251.6 million (26.6% margin, 8.9% beat)

• Operating Margin: 22%, up from 20.1% in the same quarter last year

• Free Cash Flow Margin: 18%, up from 11% in the same quarter last year

• Market Capitalization: $27.97 billion

Company Overview

Founded in 1957, HEICO (NYSE:HEI) manufactures and services aerospace and electronic components for commercial aviation, defense, space, and other industries.

Aerospace

Aerospace companies often possess technical expertise and have made significant capital investments to produce complex products. It is an industry where innovation is important, and lately, emissions and automation are in focus, so companies that boast advances in these areas can take market share. On the other hand, demand for aerospace products can ebb and flow with economic cycles and geopolitical tensions, which can be particularly painful for companies with high fixed costs.

Sales Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, HEICO’s sales grew at an exceptional 13.8% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. HEICO’s annualized revenue growth of 30.6% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, HEICO reported year-on-year revenue growth of 14.9%, and its $1.03 billion of revenue exceeded Wall Street’s estimates by 5.4%.

Looking ahead, sell-side analysts expect revenue to grow 7.8% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and implies the market is baking in some success for its newer products and services.

Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.

Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

HEICO has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 21.4%.

Looking at the trend in its profitability, HEICO’s operating margin rose by 1.5 percentage points over the last five years, as its sales growth gave it operating leverage.

 

This quarter, HEICO generated an operating profit margin of 22%, up 1.9 percentage points year on year. This increase was a welcome development and shows it was recently more efficient because its expenses grew slower than its revenue.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

HEICO’s EPS grew at a decent 8.4% compounded annual growth rate over the last five years. Despite its operating margin expansion during that time, this performance was lower than its 13.8% annualized revenue growth, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

 

Diving into the nuances of HEICO’s earnings can give us a better understanding of its performance. A five-year view shows HEICO has diluted its shareholders, growing its share count by 2.2%. This dilution overshadowed its increased operating efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

 

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For HEICO, its two-year annual EPS growth of 24.9% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q4, HEICO reported EPS at $1.20, up from $0.82 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects HEICO’s full-year EPS of $4.04 to grow 9.8%.

Key Takeaways from HEICO’s Q4 Results

Revenue, EBITDA, and EPS all beat by pretty convincing amounts this quarter. Zooming out, we think this was a solid quarter. The stock traded up 6.7% to $242.99 immediately after reporting.

HEICO put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.

Industrial equipment and engineered products manufacturer Albany (NYSE:AIN) missed Wall Street’s revenue expectations in Q4 CY2024, with sales falling 11.3% year on year to $286.9 million. The company’s full-year revenue guidance of $1.22 billion at the midpoint came in 6% below analysts’ estimates. Its non-GAAP profit of $0.58 per share was 12% below analysts’ consensus estimates.

Is now the time to buy Albany? Find out in our full research report.

Albany (AIN) Q4 CY2024 Highlights:

• Revenue: $286.9 million vs analyst estimates of $299.5 million (11.3% year-on-year decline, 4.2% miss)

• Adjusted EPS: $0.58 vs analyst expectations of $0.66 (12% miss)

• Adjusted EBITDA: $218.9 million vs analyst estimates of $59.65 million (76.3% margin, significant beat)

• Management’s revenue guidance for the upcoming financial year 2025 is $1.22 billion at the midpoint, missing analyst estimates by 6% and implying -1.3% growth (vs 8.1% in FY2024)

• EBITDA guidance for the upcoming financial year 2025 is $250 million at the midpoint, below analyst estimates of $276.8 million

• Operating Margin: 8.5%, down from 12.9% in the same quarter last year

• Free Cash Flow Margin: 21%, up from 12.2% in the same quarter last year

• Market Capitalization: $2.50 billion

“We continue to perform well in both our businesses, as evidenced by strong results at Machine Clothing and ongoing operational progress steered by new leadership at Engineered Composites,” said Gunnar Kleveland, President and Chief Executive Officer.

Company Overview

Founded in 1895, Albany (NYSE:AIN) is a global textiles and materials processing company, specializing in machine clothing for paper mills and engineered composite structures for aerospace and other industries.

General Industrial Machinery

Automation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand for general industrial machinery companies. Those who innovate and create digitized solutions can spur sales and speed up replacement cycles, but all general industrial machinery companies are still at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

Sales Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Albany’s 3.1% annualized revenue growth over the last five years was sluggish. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.

 

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Albany’s annualized revenue growth of 9% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

 

We can better understand the company’s revenue dynamics by analyzing its most important segments, Machine Clothing and Engineered Composites, which are 65.6% and 34.4% of revenue. Over the last two years, Albany’s Machine Clothing revenue (paper manufacturing belts) averaged 11.4% year-on-year growth while its Engineered Composites revenue (aerospace components) averaged 7.3% growth.

This quarter, Albany missed Wall Street’s estimates and reported a rather uninspiring 11.3% year-on-year revenue decline, generating $286.9 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 3.2% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds.

Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.

Operating Margin

Albany has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 15.7%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Albany’s operating margin decreased by 7.8 percentage points over the last five years. This raises an eyebrow about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

 

This quarter, Albany generated an operating profit margin of 8.5%, down 4.4 percentage points year on year. Since Albany’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Albany, its EPS declined by 5% annually over the last five years while its revenue grew by 3.1%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

 

Diving into the nuances of Albany’s earnings can give us a better understanding of its performance. As we mentioned earlier, Albany’s operating margin declined by 7.8 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Albany, its two-year annual EPS declines of 9.5% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q4, Albany reported EPS at $0.58, down from $1.22 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Albany’s full-year EPS of $3.17 to grow 21.3%.

Key Takeaways from Albany’s Q4 Results

We were impressed by how significantly Albany blew past analysts’ EBITDA expectations this quarter. On the other hand, its full-year revenue guidance missed significantly and its full-year EBITDA guidance fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 2.1% to $77.20 immediately following the results.

Albany underperformed this quarter, but does that create an opportunity to invest right now? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

Theater company AMC Entertainment (NYSE:AMC) announced better-than-expected revenue in Q4 CY2024, with sales up 18.3% year on year to $1.31 billion. Its non-GAAP loss of $0.18 per share was 10.2% below analysts’ consensus estimates.

Is now the time to buy AMC Entertainment? Find out in our full research report.

AMC Entertainment (AMC) Q4 CY2024 Highlights:

• Revenue: $1.31 billion vs analyst estimates of $1.29 billion (18.3% year-on-year growth, 1.6% beat)

• Adjusted EPS: -$0.18 vs analyst expectations of -$0.16 (10.2% miss)

• Adjusted EBITDA: $164.8 million vs analyst estimates of $128.8 million (12.6% margin, 27.9% beat)

• Operating Margin: 0.4%, up from -13.6% in the same quarter last year

• Free Cash Flow was $113.9 million, up from -$149.9 million in the same quarter last year

• Market Capitalization: $1.45 billion

Company Overview

With a profile that was raised due to meme stock mania beginning in 2021, AMC Entertainment (NYSE:AMC) operates movie theaters primarily in the US and Europe.

Leisure Facilities

Leisure facilities companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted their spending from “things” to “experiences”. Leisure facilities seek to benefit but must innovate to do so because of the industry’s high competition and capital intensity.

Sales Growth

A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Over the last five years, AMC Entertainment’s demand was weak and its revenue declined by 3.3% per year. This was below our standards and is a sign of lacking business quality.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. AMC Entertainment’s annualized revenue growth of 8.9% over the last two years is above its five-year trend, but we were still disappointed by the results. Note that COVID hurt AMC Entertainment’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.

This quarter, AMC Entertainment reported year-on-year revenue growth of 18.3%, and its $1.31 billion of revenue exceeded Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 10.8% over the next 12 months. While this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.

Cash Is King

Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

While AMC Entertainment posted positive free cash flow this quarter, the broader story hasn’t been so clean. Over the last two years, AMC Entertainment’s demanding reinvestments to stay relevant have drained its resources, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 7.8%, meaning it lit $7.80 of cash on fire for every $100 in revenue.

 

AMC Entertainment’s free cash flow clocked in at $113.9 million in Q4, equivalent to a 8.7% margin. Its cash flow turned positive after being negative in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends are more important.

Over the next year, analysts predict AMC Entertainment will continue burning cash, albeit to a lesser extent. Their consensus estimates imply its free cash flow margin of negative 6.4% for the last 12 months will increase to negative 2.5%.

Key Takeaways from AMC Entertainment’s Q4 Results

We were impressed by how significantly AMC Entertainment blew past analysts’ EBITDA expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its EPS missed significantly. Zooming out, we think this was a decent quarter featuring some areas of strength but also some blemishes. The stock traded up 4.6% to $3.43 immediately following the results.

Is AMC Entertainment an attractive investment opportunity right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.

Advertising and marketing company Zeta Global (NYSE:ZETA) announced better-than-expected revenue in Q4 CY2024, with sales up 49.6% year on year to $314.7 million. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $254 million was less impressive, coming in 1.2% below expectations. Its GAAP profit of $0.06 per share was $0.02 above analysts’ consensus estimates.

Zeta (ZETA) Q4 CY2024 Highlights:

• Revenue: $314.7 million vs analyst estimates of $295 million (49.6% year-on-year growth, 6.7% beat)

• EPS (GAAP): $0.06 vs analyst estimates of $0.04 ($0.02 beat)

• Adjusted EBITDA: $70.38 million vs analyst estimates of $65.84 million (22.4% margin, 6.9% beat)

• Management’s revenue guidance for the upcoming financial year 2025 is $1.24 billion at the midpoint, beating analyst estimates by 2.4% and implying 23.3% growth (vs 37% in FY2024)

• EBITDA guidance for the upcoming financial year 2025 is $256.5 million at the midpoint, above analyst estimates of $241 million

• Operating Margin: 2.2%, up from -15.1% in the same quarter last year

• Free Cash Flow Margin: 6.2%, down from 9.6% in the previous quarter

• Market Capitalization: $5.14 billion

   

  “At Zeta, we’ve consistently skated to where the puck is going. Our early investments in AI and first-party data are resonating with customers and prospects, fueling our record fourth quarter results and contributing to our market share gains,” said David A. Steinberg, Co-Founder, Chairman, and CEO of Zeta.

  Company Overview

  Co-founded by former Apple CEO John Sculley, Zeta Global (NYSE:ZETA) provides software and data analytics tools that help companies market their products to billions of customers.

  Advertising Software

  The digital advertising market is large, growing, and becoming more diverse, both in terms of audiences and media. As a result, there is a growing need for software that enables advertisers to use data to automate and optimize ad placements.

  Sales Growth

  Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Zeta’s 29.9% annualized revenue growth over the last three years was impressive. Its growth beat the average software company and shows its offerings resonate with customers, a helpful starting point for our analysis.

  

  This quarter, Zeta reported magnificent year-on-year revenue growth of 49.6%, and its $314.7 million of revenue beat Wall Street’s estimates by 6.7%. Company management is currently guiding for a 30.3% year-on-year increase in sales next quarter.

  Looking further ahead, sell-side analysts expect revenue to grow 20.2% over the next 12 months, a deceleration versus the last three years. Still, this projection is noteworthy and suggests the market sees success for its products and services.

  Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories.

  Customer Acquisition Efficiency

  The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.

  Zeta is extremely efficient at acquiring new customers, and its CAC payback period checked in at 1.4 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Zeta more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.

  Key Takeaways from Zeta’s Q4 Results

  We were impressed by Zeta’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also glad its full-year EBITDA guidance trumped Wall Street’s estimates. On the other hand, its revenue guidance for next year suggests a significant slowdown in demand and its revenue guidance for next quarter fell slightly short of Wall Street’s estimates. Overall, we think this was still a decent quarter with some key metrics above expectations. The market seemed to focus on the negatives, and the stock traded down 7.3% to $19.10 immediately after reporting.

  Is Zeta an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

UnitedHealth Group (NYSE:UNH) experienced a share price decline of 11% over the past week, amid a mixed landscape for major U.S. stock indexes grappling with a broader market downturn. The announcement of a $2.10 cash dividend, set to be paid in March 2025, was among the key events during this period, potentially impacting investor sentiment due to its financial implications. As the Dow Jones recorded its worst week since October last year and tech stocks faced significant pressure, UnitedHealth Group was not immune to these market forces. Notably, the Dow managed a slight recovery of 0.2%, but the overall tech and healthcare segments remained under stress, influencing UNH’s recent performance. The decline aligns with a period where investors are keeping a keen eye on upcoming economic indicators, possibly fueling volatility and affecting risk assessment across various sectors.

Despite the recent week’s challenges, UnitedHealth Group (NYSE:UNH) has shown resilient growth over the last five years, achieving a total shareholder return of 83.80%. Even so, over the past year, the company underperformed against the US Healthcare industry and the broader US market. A key influencer was an $8.3 billion one-off loss reported in December 2024, impacting earnings. Additionally, legal challenges, including a class action lawsuit in January 2024 over their acquisition of Change Healthcare, may have affected investor confidence.

In September 2022, UnitedHealth’s partnership with Walmart to expand healthcare services highlighted a proactive expansion strategy, which could have positively influenced its longer-term returns. Despite these efforts, the company’s high price-to-earnings ratio compared to peers suggests a relative overvaluation within the industry, possibly weighing on investor sentiment. These elements collectively paint a comprehensive picture of UnitedHealth’s share performance over recent years, reflecting both growth initiatives and challenges faced in the marketplace.