The Wrap: Talking Modine, GFL, UPS
Also, Vital's Humpty Dumpty moment, how ESAB is telling me to f*ck off, and analysts in "partnership" with companies they cover.
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▶In last week’s Wrap, I said that in all likelihood there would be no Wrap this week, though I reserved my right to change my mind.
I’m changing my mind, starting with a few ICYMI’s…
▶If you missed my latest Red Flag Alert on Modine Manufacturing MOD 0.00%↑, you can read it here…
▶Also during the week, this one was my absolute favorite – my take on how GFL Environmental GFL 0.00%↑ is, in broad daylight for everybody to see, is saying out loud how it’s gaming he market. It’s quite a story, if I don’t say so myself. You can read it here…
▶Also, in what was likely an otherwise busy week of earnings for many of you, it’s quite possible you missed my take on the surprise that really shouldn’t have been, but based on the stock of UPS UPS 0.00%↑, was: Amazon’s formal entry as a serious UPS competitor. You can read it here…
▶Speaking of which… Is UPS Next?
Just sayin’, especially since, under a new CFO, the company’s tone and commentary around the dividend has subtly changed. After 16 consecutive years of raising the dividend, CFO Brian Dykes told investors in March…
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▶Turning to Vital - this is no yoke… After I first red-flagged Vital Farms VITL 0.00%↑ in “The Shell Game” in September 2024, as is too often the case, the stock had other ideas. Within a year, it had spiked by 65%. But all along, I’ve been pointing out cracks in the story, which split wide open with Q1 results this past week, highlighted by an earnings miss and a slice in guidance. What’s more, the company, which once crowed about extending its brand throughout the supermarket, is now pulling back from those grandiose plans – including ending its foray into butter – to focus on eggs. And by the way, as I’ve pointed out multiple times, you could see all of this play out in real time just by checking the prices and growing competition in the egg case at your local supermarket. The full story can be seen in its stock, since my first salvo…
The truth is, as good a job as Vital did building a brand from scratch, no matter how it was spun, or as good as pasture-raised eggs may taste, eggs are still eggs… competition and all.
▶Moving on, I guess ESAB will surely show me… I had chided the company’s claim to be a compounder when I recently red-flagged it over what I dubbed a “false narrative.” With its Q1 report this past week, ESAB ESAB 0.00%↑ leaned into the thesis, peppering its earnings call and corresponding slides with a sharp increase in the word “compounder,” per the chart below…
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I repeat what I said when I red-flagged the company: Companies that are compounders don’t have to tell you they are. Or that they want to be. It’s something they become, and even then, usually don’t draw attention to it. Probably because doing so has all the hallmarks of also becoming the ultimate jinx.
Finally, from The More Things Change dept: On CoreWeave’s CRWV 0.00%↑ earnings call the other day, an analyst gave big congrats to management for “a really great quarter.” Management noted that it’s the analyst’s last call and said,
We would like to thank you for your partnership and the support that you’ve shown for us since our IPO to this day.
Partnership?
As always, interpret at will.
DISCLAIMER: This is solely my opinion based on my observations and interpretations of events, based on published facts and filings, and should not be construed as personal investment advice. (Because it isn’t!) I have no investment of any kind in any company mentioned in this report.
I can be reached at herb@herbgreenberg.com.