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Takeaways From Earnings Calls Last Week: High Pent-Up Demand

Jun. 12, 2020 8:59 AM ETAAP, DAL, EXPE, GE, HD, HPE, LOW, NVDA, RCL, TCOM, URBN2 Comments
Erick Mokaya, CFA profile picture
Erick Mokaya, CFA


  • Growth is picking up in affected industries as the pent-up demand is slowly being released.
  • Airline stocks may be soaring but there is need to be cautious given the uncertain visibility in the sector.
  • There are still opportunities in the cloud which is expected to grow to a $1T market in a decade.

In earnings class last week, we learnt that there are some glimmers of hope across such industries like airlines, travel and retail as demand picks up from the April lows with significant pent-up demand being unleashed. The key pick was that despite there being many positive signs, we should still cautious in our investing.

Chart of the Week: Lowest quarterly earnings for the S&P 500 since Q1 2009


Growth is picking up in some industries

There is a recovery going on from the April lows. Things are picking up. Hard hit industries are seeing an increase in revenues and people are making bookings for holidays in the H2 2020. Cancellations have slowed down at Expedia. Here are others seeing recovery:

"I am pleased to say, but I would not get overly excited about it, that we have seen nice growth coming into May" - Expedia (EXPE) CEO Peter Kern

"We look daily at departures by region by platform, and we have seen some sequential improvements over the last three or four weeks." - General Electric (GE) CEO Larry Culp

"reservations for short-haul travel bookings have almost fully recovered compared to last year as more and more regions lift travel restrictions. Long-haul business and leisure travel demands are gradually increasing as well" - Trip.com (TCOM) Co-Founder James Liang

"Through the first four weeks of Q2, our comparable store sales are approximately in-line with the prior year" - Advance Auto Parts (AAP) CEO Tom Greco

"...in the states that are beginning to reopen, we are seeing our stores outperform the total company comp in those locations, which to us is a data point but it's a glimmer of hope" - Lowe's Companies (LOW) CEO, Marvin Ellison

"...we have seen a slight uptick in the sales-to-refunds ratio over what we were expecting in

This article was written by

Erick Mokaya, CFA profile picture
I research and write about good companies with solid fundamentals, a potential for growth, and the ability to generate healthy returns. I am also the author of the Transcript, a weekly capital markets newsletter focusing on earnings calls (https://thetranscript.substack.com/).

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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