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earnings season is underway we are back doing earnings reaction videos today I have three for you at T American Express and Taiwan semiconductor so we're going to go through them we're going to go through what they did we're gonna go through their press releases and for one of these I still haven't decided yet let's see what we pay for it so first one at T earnings per share came in 60 cents beating expectations of 58 cents Revenue came in at 30.1 billion missing 30.24 billion you can see this has been a dramatic price reaction and I'll tell you what guys this is a big price reaction for what I consider a dinosaur stock it doesn't really move very much you can see here going back to I mean let's just say let's say 1996.
you really just draw a line across here it's pretty much where we're sitting right now at about 17 the high was up here somewhere around 35 Max but mostly it kind of just sat right in here around this 25 range really doesn't move very much and that's why I consider it a dinosaur that's why a lot of people that have a dividend account and just love to collect that dividend love at T because the price doesn't move much there's not very much fluctuation and you can collect Yourself A 5.6 dividend it's been upward of eight percent over uh the last couple of years so I have I'm looking at this for the first time with you guys let's see what we have here so they already did their earnings call that was at 8 30 this morning 424 000 post-paid phone net ads 11 straight quarters with 400 000 net ads I like that at T for me they got too big for their own britches they started diversifying into everywhere they could go and they were taking massive losses the DirecTV deal that was a big loss they were just getting too big for their own good trying to spread their tentacles too far in too many places I like that they've come back I like that they've just focused on their Core Business and now that they're focusing on it it's working 11 straight quarters of 400 000 net ads per quarter that's awesome fiber 272 000 at T fibernet adds 13 quarters with 200 000 plus fiber is going to be a big thing for them lightning fast internet for those of you that have it I'm very jealous of you I don't have it in my area yet let's see what else we have here mid band 5G Spectrum covering more than 160 million people that's great let's see what else we have let's get into some numbers uh let's see let's see cash from operations operating activities of 6.7 billion capex 4.3 billion we'll see what that is in relation to in a little bit now let's see their forward guidance okay because that's going to be interesting especially in this environment we're in not only that but this earnings season has not been as good as I was expecting it to be I thought we were going to be seeing a little bit better earnings they've been pretty lackluster not we're not having these dramatic beats that we've seen uh in the past let's see if they if they wrote about it in here maybe they didn't write about it in here okay well I think if I had to guess based on this people are not liking their forward guidance but the big thing for me with atnt is they did that big spin-off and for me we need to you need to be patient you need to be patient because this big drop in Revenue something to do with the spin-off but not only that let's look at the eight pillars real quick this debt is outrageous now the good thing going for atnt is that if you look at Verizon and T-Mobile kind of in the same boat this is kind of an industry based thing but this is an insane amount of debt I don't like that they have that much debt and they're paying that big of a dividend I that just doesn't make sense to me uh let's see what they're doing with their shares they're buying back well I couldn't I should no they're they are buying back shares this was probably I don't know what that was I had that probably had to do with an acquisition let's see I wonder if that was the DirecTV acquisition or something let's see yeah so in 2018 they did a 41 billion dollar acquisition that was that was a big one they've since uh wrote A lot of that down spun off into Warner Brothers so for me ATT is a pass even though I'm seeing a nine percent drop today and yes if we were running through stock analyzer tool I am sure this would be getting a lot of green on our uh what to pay for it but for me there's a lot of unknowns and we're not doing Warner Brothers in this video but for Warner Brothers it's the same thing it's a lot of unknowns I want to see more quarters of data before I make a decision on that next one American Express earnings per share big miss here two dollars and forty cents versus 2.66 Revenue 14.28 billion beating 13.98 billion let's see what the stock price is doing it's down four percent just about four percent let's see what they said in their report so American Express first quarter Revenue increased 22 percent to a record of 14.3 billion primarily due to strong card member spending now that's great for American Express right here but I obviously it triggers in me saying okay now you have to think about what's happening in the economy is this because people actually have cash or is it because they're so cash strapped now that they're relying on credit card debt it's just something that that I think about I don't know the answer to that but um it's something to think about first quarter earnings came in two thousand forty cents let's see here uh wow look at that jump in Revenue revenue's net of interest expense right here 14.28 versus 11.73 that was in the same quarter ending in 2022.
uh let's see what else we have I'm reading this for the first time with you guys Revenue grew 22 from a year earlier card spending was uh out of control travel and entertainment spending was particularly robust growing 39 percent wow see what else we have oh in March we saw record level so those of you that don't know there's an app out there called Rezi just like uh OpenTable something like that it's run by American Express you do get some types of discounts uh you get for if you have like the platinum card or something you get preferred um they save seats for you inside the restaurant or whatnot so just a little Pro tip for you rezzy's pretty good let's see American Express Consolidated expenses were 11.1 billion up 22 okay the increase primarily reflected higher customer engagement costs driven by higher Network volumes and increased use of travel related benefits travel is back I actually used American Express Travel for the first time in this previous quarter so it was pretty useful I think that they have a pretty good customer service I find there are some better ones out there but not bad not bad definitely getting better than it was in the past International Card Services in the first quarter uh reported pre-tax income of 189 million compared with pre-tax income of 244 million a year ago results for this segment were impacted by the strength of the US dollar okay okay let's see if we have any forward guidance in here um no no forward guidance so again that's one where you listen to the earnings call unless it's down here at the bottom let me keep scrolling let me keep scrolling let me keep scrolling quarter one results okay so that's something that you're going to want to listen for in the earnings call if you're interested in it but let's go back to American Express and check out the eight pillars so because it's a credit card company and the way they do things it's hard to calculate roic it's hard to calculate that that's the very difficult part about companies like this discover financials Visa Etc before I continue on guys we do reactions videos like this we're going to have next week is going to be jam-packed we have Google Microsoft Apple's actually the following week we we are always looking at these types of companies and their dramatic reactions to earnings so subscribe to the channel you're going to enjoy them repetition this is the stuff that I'm going through it's just repetition I don't necessarily care that this is up or down three or four percent today at T's it could be up nine percent I'm happy it's down nine percent because I want to buy these types of stocks at much cheaper prices we're going to run through a stock analyzer in a little bit see what price we pay for something but the point of this is the repetition go through it over and over and over this will make a lot more sense to you if you're new so don't get don't get flustered if you're seeing something uh that you don't understand all right so they do pay a dividend gross profit margins 100 uh okay let's see now here's the thing here's the tough part about companies like this you have a market cap of a hundred call it 120 billion you come down here and you have an Enterprise value of just about 289 billion difference is the debt that's what makes this a very difficult company to look at for me they are the luxury brand of credit cards they have that going for them but understanding actually what money comes in what money comes out Etc is something very important if you are going to start looking into credit card companies like them let's see what the analysts say going forward for AMEX okay not a lot of actually let's see yeah not a lot of uh earnings growth I would expect a lot more and on the revenue side that's pretty bad I mean I was expecting it's probably mid single digits I was honestly expecting a little bit more but you notice going out to 2026 here there's only two analysts left why because I think we're in a very uncertain market and they don't want to put their neck on the line and frankly they have career career risk and I don't blame them last one Taiwan semiconductors only one that's up today only one that's up today out of the three that we're doing they reported a dollar 31 versus an expectation of a dollar twenty one that's a beat on the earnings per share side and on the revenue side we have a Miss 16.4 versus 17 billion okay but forward guidance let's check it out let's go here Taiwan semiconductors announced Consolidated revenue of 500 Messes in their currency 508.3 billion that incomes okay in the US Dollars the first quarter Revenue decreased 4.8 percent year over year and decreased 16.1 percent from the previous quarter gross margin for the quarter was 56.3 percent operating margin was 45 net profit margin was 40 point seven percent now here's expectations for the second quarter revenues are expected to be between 15.2 and 16 billion I wonder what uh I wonder what Wall Street is expecting let's see here gross margins between 52 and 54 so that is a decrease because they they hit 54 56.3 operating margin of 39.5 to 41.5 that's a decrease from this quarter interesting that sales came in better than uh the previous quarter a year ago gross profit better than the previous quarter so I mean they had a pretty nice quarter outside of missing on their revenue expectation let's look at their eight pillars this is something that people are interested in and I believe Warren Buffett is buying this one aside from free cash flow we'll check that out everything else is green what is their return on invested Capital that's a very high return on invested Capital they pay a dividend of oh they pay a dividend of 9.33 billion their five-year average free cash flow is 9.83 billion um let's look at a cash flow statement and just see what's going on there because I don't necessarily love that but unless if there's some type of change big drastic change oh yeah I don't like that so their five-year average is 9.83 billion that's with doing 17 billion in free cash flow last year was there anything that changed huge did they do some type of acquisition that I'm missing no so I would want to find out what exactly that change is see up here that was lessened two big changes here in working capital in the last two years but I wouldn't expect a big jump like that out of nowhere unless I'm completely missing something right here other cash items 15 billion aha probably something to do with this right here operating gains in law okay so there's something this is where I would say go do more research pull out the 10K and start searching this would it'll explain it to you very quickly because I'm looking at this saying all right they pay a dividend of nine point three three billion their five year average free cash flow including the 17 billion dollars last year it was for 9.83 billion so you're basically taking all your free cash flow and giving it to investors I don't think that's the most intelligent idea for them to do now you can see previously and why I'm concerned about that let's go back to 2016.
6.75 billion 8 billion 8.35 5 billion 9.96 8.75 and they want to pay out 9.33 billion they're not going to be able to afford that based on that now based on this one year they can but what was that one year is it going to sustain itself around 17 and next year are we going to do 18 and 19 and 21 and so on and so forth that's a question that needs to be answered all right so let's go look at stock analyzer and put a price on taiwan's semiconductor so Revenue growth you can see that in the last year their revenue growth has been incredible absolutely incredible that's a huge jump so for me I look at that and say well that's not sustainable that's still factored into the 10-year number there is a lot of growth in this industry no doubt so I'm going to come in here and I'm going to do I'm going to go low middle and high I'm going to go 6 9 and 12.
six is probably very low but let's get a range all right profit margin let's go with 30 let's go 36 40 and 44. say they crush it free cash flow is much lower I'm going to go with 18 21 and 24. PE I will go 15 17 and 19. if they can do 44 profit margin with 12 growth over the next decade okay I'll reward them with that type of uh PE and for my return I'm going to go 10 12 and 14.
that's my margin of safety and why am I going so high on this end because this is high all of these expectations are high these this side is very low I could probably go lower than 10 but I'm going to keep it at 10 for now so let's analyze let's scroll down and see so you're going to get a big Range current price is about ninety dollars 47 to 95 on your low end 85 to 157 on your high end and middle ground 64 to 123.
now it's a big range because we have such a big difference between profit margin and free cash flow you can see it's on my watch list at 80. I think that's about right I think it's about right so guys subscribe to the channel we're going to be doing these videos all week all next week have a great day thank you
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