The Canadian Investor - Snapchat’s Tumble & Canadian Inflation- Earnings Roundup

Episode Date: May 26, 2022

In this release of the Canadian Investor Podcast, we cover the following earnings releases and news: Snapchat revises its guidance and the stock takes a big hit Lightspeed earnings Canadian CPI is released for April Tencent earnings Walmart earnings Home depot earnings Mcdonalds exits Russia Canada Goose earnings Algonquin Power & Utilities earnings   Tickers of stocks discussed: SNAP, LSPD.TO, GOOS.TO, WMT, HD, AQN.TO, GOOG, TTD, FB, PINS   Our Website Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital   Check out our portfolio by going to Jointci.com Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense. Check out the Yes We are Open Podcast from sponsor MonerisSee omnystudio.com/listener for privacy information.

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Simon, let's get right into the action. No time to waste. We have to start with Snapchat, I think. That seems to be the story today. And who was that idiot? Oh, that was me, that said that this is probably a pretty good stock to own. Again, this is a reminder. One, none of this is financial advice. And two, when I say those things tongue in cheek and I don't own it, there's a pretty good chance that I don't have a whole lot of conviction. And so not one I own. However, the stock being down 40% today, Simone, after the company filed an 8K, has sent the ad tech market into a spiral. To me, oh, I'm going to get into the details here, but to me, Simon, what's happening today feels like this kind of thing would have

just never happened six, seven months ago. This is bear market type behavior and sentiment across the board. I'm curious on your thoughts there. Yeah, I totally agree with that because I'm also comparing this to what happened last week with retail. And we'll talk about retail in these earnings release and also have a segment next week on our regular release about retail and some potential value plays for the big retailers. But the reason why I'm mentioning that is last week, Target came out with their earnings release and Walmart does as well. And once they came out with their earnings release, all of retail started tanking. Right. Yeah. So Costco hasn't even come out with earnings yet.

As we're recording, this is going to be out later this week. And Costco tanked last week as well. We have no idea how well or how poorly Costco will do. I have a feeling it will be better than Walmart and Target, but it's like the market, as soon as there's a prominent player in a space that revises their outlook downwards, it's like the market, the whole sector has to be smashed at the same time, regardless if it's warranted or not for that business. Yeah. And the same way things moved on the upside with very little fundamentals is the same thing that happens in the opposite direction in bear markets. And momentum is a hell of a drug and can change the narrative pretty quickly with price sentiment. Okay. So back to Snapchat, the stock

is down more than 40% today. Let me just check right now. We are now after the close. What did it finish? It finished down 43%. Holy smokes. Okay. Here's Evan Spiegel quote, the founder CEO, today we filed an 8K sharing that the macro environment has deteriorated further and faster than we had anticipated when we issued our guidance last quarter. As a result, while our revenue continues to grow year over year, it's growing more slowly than we expected this time. Now, as I mentioned before, I hinted at before, you know it's a bear market when revised guidance of some social media camera company sends share prices off a cliff for the entire ad tech segment. Google down almost 7%, the trade desk down more than 20, Facebook down nine, Pinterest down more

than 20, and all of them across the board. If you're involved in online advertising, your stock got smashed today. And so I looked at Snapchat's revenue growth guidance for the second quarter and it was set for 20 to 25%. They grew quarter one revenue by 38% year over year. So in this 8K filing, they said that it's going to be lower than their lower band that they had set out even just a month ago. Okay. So lower than 20%, at least. What that means, like how much lower? I don't know. Regardless of what it ends up being, this is really, now we have entered officially a bear market, which is when the S&P, the NASDAQ has been well into it beyond a 20% drawdown, but now the S&P is officially in a more than 20% drawdown.

And the kind of data that gets extrapolated across all sectors or industries or recession fears, I haven't seen anything quite like it when there's been so much conflicting data. Now, as for Snapchat, just to round out Snapchat here, I don't know how durable the business is. I do think they have a really engaged young user base, but I've seen people grow off of it, stop using it. Not sure how powerful the network effect is, not sure how relevant it is long-term, but the business is growing quite quickly. It is a founder CEO running the business. All of ad tech moving on this move seems a bit insane to me. Now, where I'm going with the sentiment here is I've never seen so much conflicting data about the consumer in my life.

You get like Home Depot coming out and saying, the consumer is strong. Housing remains strong. You get Visa and MasterCard saying, we've never seen this kind of spending. And it's continuing into the first month of the second quarter. If I'm going to trust anyone on consumer data, it's going to be Visa and MasterCard. And then you get, okay, tech is doing a bunch of layoffs. You go Walmart, okay, we're overstaffed. There's this inflation fear. There's kind of all these different conflicting opinions. And I don't think that anyone knows what to make of it. And you know what happens when, Simon, when investors don't

know what to make of it? Selling. Uncertainty is selling. And so right now it's a really interesting place. And for net buyers of stocks, I'm seeing some absolutely fantastic deals out there. We will look back, even if it drops a lot further from here, say all the bears are right and say, we got a long way to go on the downside, even if they're right. I think that net buyers of stocks are looking at pretty good point of entries for many names here. Yeah. Yeah. I mean, I couldn't agree more. And like I said, we'll be talking about retail more specifically a bit today, but also doing a deeper dive on our next recording. But now we'll move on to some earnings. We'll sprinkle some news in there as well. Lightspeed reported their Q4 fiscal year 2022. Revenues increased 78% to 147

million. Subscription revenues increased 77% to 71 million. Transaction base revenue increased 88% to 67 million. GTV, also known as gross transaction volume, increased 71% to $18.3 billion. Now on a full year basis, because it was their Q4 release, they were free cash flow negative for $98 million, which was in line with last year. Revenues increased 147% on a full year basis to $548 million. They had a net loss of $288 million for the full year, which is double that of last year. And then the share count, the last thing here, increased 15% year over year. I think it's really important to look at share count, especially for growth stocks. We probably

should do a stock-based compensation segment to do a deeper dive. They do compensate a lot of their employees and also their management with these share-based compensation, but it does dilute shareholders. So I think it's a fine balance to have, especially for growth stocks. It's important for them. I do understand why they do it, but I think it's also, you have to keep an eye on it, right? To make sure it does make sense and there is sufficient value provided beyond the share dilution. There's a balance, right? Exactly. As you hinted at here. And I think that investors and operators have realized that

maybe we got a little ahead of ourselves with share-based compensation. I mean, it works until it really doesn't work. And that's kind of what we're seeing right now. And we've seen explosive growth of share count in some of these high growth companies. And when the share price comes down and it's like, oh my God, I got diluted in the process. It doesn't feel good at all. No, it definitely doesn't. But now the outlook for fiscal year 2023 for Lightspeed, they're looking at the revenues in the range of $740 and $760 million. The high end would mean an increase of 39% in revenue for the full year compared to 2022 fiscal year.

It's actually pretty good, I think, considering that the stock has really had a big pullback here but they also had a section talking about their long-term outlook one key metric stood out for me is that they believe that their rpu so their average revenue per user would grow at a 10 clip a year or more in the long term so So that is very interesting. They had other metrics, but those are the ones that I zoned in on. Overall, it looks pretty encouraging for light speed. Definitely, it is an interesting play considering now that the valuation makes a lot more sense and the growth is still pretty solid if you ask me. The growth is really solid and it's looking a heck of a lot cheaper than it was before. Hey, these are some pretty good results for Lightspeed, given all their challenges.

I saw customer locations, 323,000, which was up 171% compared to the previous year. My God, this is a volatile stock to say maybe understatement of the absolute century. Stock moved up 55% in the past two weeks and then down more than 10% today. But it's really had a fall from its grace of nosebleed valuations. It's down more than 80% to really test your conviction if you own this one. It had no business touching $20 billion in market cap, but it sure does look interesting $4 billion, sub $4 billion like it's been. For me right now, I have the same thesis which I had six months ago, which I had a year ago, which is organic growth has been exceptional and far surpassed my expectations at this point.

Sure, there was some pulled forward stuff, but they're continuing this momentum. My question is, when does this thing make money? And the competition in point of sale is still super intense. That has not changed. Now, their product is excellent. I think it's actually really, really good product. And it does give these omni-channel retailers a good solution to run their business. Now, from here, it seems like there's some really wide ranges of outcomes. And analysts on the street seem to agree with me because there are price targets right now, ranging from $25 to over $100. And these are in USD, by the way. And so there's a gigantic range out there. It trades below even the smallest one in Canadian, let alone USD. I think that obviously it got way

ahead of itself. Dax left his role as the CEO, but you know what? He's been doing this. Still involved. Yeah. And he's been, the guy's been running it since like mid 2000s. I think he started 2005, 2006. I'll have to look this up right now, but regardless, you know,

he's been at it for well over a decade. Yeah. No, I think that's well put and definitely an interesting play. It'll be, it's an email we'll keep talking about because it'll be interesting to follow as they come out with their earnings release throughout the year. I'm sure we want to keep that Canadian content going, but this one is especially intriguing.

It touches on a couple of things, right? It's SaaS, it's payments, it's e-commerce, it's retail as well. It touches on a lot of themes. So it's definitely a good one for us to follow on the podcast here. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service.

Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Calling all DIY do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends. And there's other stuff like learning Duolingo

style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, Bloss in the app store, and I'll see you there. Now moving on to Canadian CPI. So I mean, the big macro, I don't think people in general and the media have been that interested in CPI in quite some time. I mean, it's everywhere, right? We just finished a long weekend, right? And I don't know how many conversations i had with random people who

are asking me about inflation like oh my god see everyone's a macro expert right now right oh yeah exactly while the figures came out for canada for april 2022 the headline number was an increase of 6.8 percent for april year over year that's after a March increase of 6.7 percent. So I think there's some people that are hoping that it's kind of peaking around that number. Obviously, I'm hoping as well. No one likes to see high inflation, but we're seeing some of the same items here continue increasing rapidly. For example, price of food was up 8.8 percent, up 7.4%, gasoline, surprise, surprise, up 36.3%, and energy 26.4%. On gasoline, that one was actually down 0.7% compared to March just of this year. So on a sequential basis, but I don't know about you, Brayden, but I think-

Bounce back up. Yeah, it's back up. In Ottawa, pretty hard to find anything under $2 a liter. Yeah. I don't know if about the same in Toronto. Yeah, same thing. And worse in Vancouver. Yeah. So prices were up pretty evenly across the board for all Canadian provinces.

So CPI as a whole. The lowest province was Saskatchewan at 5..9 and the highest pi at 8.9 the four more populous provinces bc ontario quebec alberta were all up between 6.3 and 6.9 so it makes sense that the overall figures were 6.8 here so i find that these cpi releases are a good reminder of why we invest. I know I do have money in this savings account, but I try not to have too much because I do know that I will lose purchasing power even if you have it in a high interest savings account, which is obviously probably the best option in terms of having cash on hand. It's just by investing. I know it might be bumpy for the short term, but medium to long

term, I should be able to increase my purchasing power, especially long term here. And of course, having an emergency fund is really important because you have that buffer where if you do need some cash, you have it in that savings account and you don't have to sell any of those investments that may be down right now, but could be big winners over long term. Yeah. Two thoughts there. One is the elusive number, painting what inflation is, is basically impossible. Now, the CPI is a guide for that. And whether you agree with it or not, what we do know is that it's rampant right now. And the fact that it's on top of mind for everyone, it's coming up in very, even the most

casual of conversations that I'm seeing anecdotally here. So people obviously are very top of mind, especially when they go to the pump. Especially when they go to the grocery store and the bill has changed quite a bit in a short timeframe. And who would have thought, you print all that money, shocker. Okay. So another point here is that you touched on the emergency fund. Bear markets is why you have these, you have to set yourself up so that you don't have to sell stocks. If you're in the mode of being a net buyer of stocks, okay, you're not like withdrawing. If you're withdrawing, don't listen to this conversation. Well, don't listen to what I'm going to say because it's not relevant. But if you're

not withdrawing, you're still in your acquiring assets mode of life. You don't want to be in a position where you have to interrupt compounding and sell stocks, especially in an inopportune time. So that's why you got to set yourself up with the ability to weather bear markets without withdrawing on your assets. And it's important that you mentioned that. Yeah, yeah, exactly. You minimize the risk of being forced to sell. It'll never be zero risk, you can never get it to zero completely, but you can make it pretty unlikely that you have sufficient padding that you can go in and use that emergency fund if an emergency does happen. Again, I think most experts will say three to six months worth of expenses. If you want to be super conservative, you can go up to a year, but again,

then you start seeing that purchasing power eroding. So I think it's a fine line between having sufficient amount of money in that emergency fund and too much. Yeah. It's like the concept of there's an inherent return in the insurance policy of that emergency fund. You know that it might be just in a HISA gaining what X percent, You know that it might be just an Ahisa gaining X percent, probably losing to inflation, but there's an inherent return and you not having to withdraw on your investment portfolio. It's incalculable. Yeah, I don't have anything more to say than that, other than there's an inherent return in that cash pile. All right, let's talk about Tencent. They reported their first quarter. I'm going to do all the figures in USD because it's just easier. 21.3 billion in revs for the quarter, which was flat. It was up 0.12%. So flat. Operating profit was down 15%. Operating profit was down 15%. Operating margin decreased from 27% from 32%.

Not good so far. Mobile device QQ. So this is their monthly active users on the QQ platform down 7% compared to last year. This is a bit concerning given MAUs is everything for them. Combined MAU of Wixen and WeChat. So this is their biggest segment, was up 3.8%. So that's good. There's a bright spot there. Yeah. So 1.3 billion MAUs of the WeChat brand, which is insane, right? The scale is incredible. If you look at the segments, the gaming was basically flat. Online advertising was down quite a bit,

pointing at more regulatory challenges. FinTech was pretty much one of the only double-digit growth spots. Free cash flow was down 54% year over year. So really not a great set of numbers here. They are reaching saturation point in users. It's very similar to like a Facebook blue situation where there's like, everyone who's going to be on it is already on it. And they're having a really tough time growing with a set of regulatory impacts. And you can kind of read between the lines in their press releases that they're facing a lot of challenges from the CCP. And we already knew that that was the case, especially in the gaming segment. There's been huge regulatory changes.

In the education segment, huge regulatory changes. And there's been more lockdowns. So the macro is not great there either. I don't really have anything more to say. There's so many challenges here. The business is obviously still gigantic. MAUs of WeChat is still growing a couple points. Anything to add?

Yeah, the only thing I would add is just an example of the restrictions they've put on that affects a company like Tencent would be the Chinese government limiting to an hour a day for minors to play video games. So there's an actual limit and I don't know how they go about, I guess it just stops working after an hour or something like that. But those are the type of things that would affect a company like Tencent. Yeah, especially when they are the largest video gaming company on the planet and the users are being restricted inside of China. Now they have a presence outside of

China in that gaming segment, for sure. But many of them exist in that ecosystem inside China. And so this is becoming a tricky story. It's still a great business that generates an obscene amount of top line revs and lots of money, lots of profit. But looking forward, does this get better or worse? And it's a question that I'm struggling with myself right now. Flip a coin. That's pretty much it. I think the mistake that I have made with this name is not recognizing that maybe me underestimating their ability to... I can't can't just point to look at the US try to regulate big tech. It's a failure. And extrapolating that to a country and a culture that I don't understand well enough. And I think that that's been my mistake.

No, that's fair. Now moving on to retail earnings. So Walmart released their quarterly earnings. We haven't really talked about them, but I thought it was fitting to go over them because it's not been good for retail as a whole. But like we've mentioned early on in this episode, I think it's a case by case basis. I think the market's just throwing out the baby with the bathwater here because of some bad results. And Walmart was not great.

Revenues were up 2.4% to $142 billion. Walmart International took a big hit with sales down 13% to $23.8 billion. Sam's Club sales were up 17.5%. For those not familiar with it, Sam's Club is the equivalent to Costco if you'd like, but it's all in that. Have you been in one? Yeah, years ago, like 15 one yeah years ago like 15 20 years do they feel a lot because i've actually never i go to the states very often but i was i think 13 oh okay so it's been a while yeah like 20 years ago so but the feel at the time is i thought it was a costco okay just to give you an idea so i don't know if it's changed yeah i don't

know if it's changed like that's quite a time. It's been quite a while. No, it's the exact same for 20 years. Yeah. It feels like from what I've read, it's very similar to Costco still. Here is where it doesn't get very good for Walmart. So cost of goods sold expenses were up 3.5% and SG&E was up 4.5%. So that was in excess of the revenues as a whole that only increased 2.4%. So that's not something you want to see because expenses are increasing faster than revenues. So that's why it's putting some pressure on the margins here for Walmart. And as a result, operating income was down 23%. Earnings per share was down 24% to 74 cents. They were free cash flow negative for $7.3 billion compared to free cash flow positive for $600 million last year.

What adjustment is in there for $7.3 billion in free cash flow negative? What do you mean? What caused it or? Yeah. I mean, as a whole, yeah, it's just those increased expenses. They talked about, obviously, supply chain issues. They also didn't do a very good job of inventory management. I think they overordered some things and now they're stuck with having to do discounting. They also overhired, thinking that a lot of people, for example,

would go off on COVID leave, stay off for a while. Then people started returning earlier. So a lot of things that didn't go well for Walmart as a whole. But they did say that it'll be challenging, but they'll be trying to improve the business based on that. But because of it, they are reviewing their guidance. They're now guiding for sales to increase 3% versus a 4% that was previously stated. They revised their operating income guidance from 3% down to 1%. And they revised their earnings per share guidance from an increase in the mid-single digits to a decrease of 1%. So overall, not great.

And these are revised guidance for the year. So people can probably understand why retail kind of tanked after that. But again, I think people saw this, they also saw Target, and then all of retail started going down. Yeah, so they overhired with the buffer of expecting that they would need extra staff for COVID. Okay, fair enough. I think the thing that people are really extrapolating here is their largest employer. The largest employer is going to be doing- It is the largest retailer.

Yeah. Well, it's both, I guess, right? I'm saying the same thing. It's the largest retailer and the largest employer is going to be doing some pretty excessive layoffs, right? And I think that a lot of companies are saying that. So again, this is back on the theme of extrapolating a few indicators in an aggressive way. And whether it's correct or not, I think we'll have to see. I don't know. And no one knows for sure, but there's definitely some extrapolation going on that is very apparent in the sentiment lately, which is very bearish,

very, very bearish. Yeah. And one last thing they obviously mentioned is that inflation is just putting pressure on their business. And I think a lot of people are looking at retailers from that lens, seeing those CPI figures that we just saw in Canada and the states around the world. And they're extrapolating that to other retailers where some retailers may have better pricing power than Walmart. So we'll have to see. But it wasn't great. And especially with the reputation that Walmart has as being a very efficient business. In terms of retailer, there's a reason why they've gotten this big. I think it's scaring a lot of people. Fair enough. Speaking of another large American corporation, the good old Golden Arches,

McDonald's is exiting Russia. Back in 1990, McDonald's opened their first restaurant in the Soviet Union. And the iconic American chain, McDonald's will be leaving Russia and its 62,000 employees as there's hundreds of different Western brands exit the country following their invasion of Ukraine. And so there are a bunch of different brands that are doing a divestiture of their Russian operations. And now McDonald's is making the move as well. I know you listed a couple other names before we started recording if you have those offhand, but this is a theme among a string of many companies doing a very similar move. And it's made somewhat material impacts on results depending on which company's reporting

as well. If you take the impact of this, and that makes a big difference on the top line, it makes sense. A lot of people live in Russia. And so it's not a huge company by GDP, but it's a big market. And so yeah, there's some impacts here as well. Yes. Starbucks is one that was saying, I don't think they're selling their business. I think they're just closing their stores. They're shutting down their operations. I think it sounds like it's for good. And I think we'll probably be seeing more and more of that, especially we had a slew of companies that were stopping temporarily doing business in Russia when the war started. But now that it's been what what, three months, I think, about that the invasion has

been ongoing and the war is still ongoing, I think now businesses have to take the decision, do we want to keep this in limbo or just be done with it, shut down those operations and not have to deal with that? I don't understand the point of a lot of these US corporations just shutting off their operations there when the workforce that this affects is like lower class Russians, not people who are making decisions over there. And so a lot of this like woke virtue signaling that I've seen here is alive and well in corporate America. And it just doesn't make a whole lot of sense to my brain why they would do that because the actual impacts are not the intended outcome that I would expect that people actually want.

But that's a whole nother podcast episode. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense, and with them, you can buy all North American ETFs, not just a few select ones, all commission free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself,

I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Calling all DIY, do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then

once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store, and I'll see you there. Now moving on to another retailer, we did mention them at the beginning, Home Depot. Sales increased for the quarter 3.8% to $39 billion. Cost of goods sold increased 4.1%

and SG&A increased 3.7%. But you can see the difference here. It's very close to the sales increase compared to Walmart, which there was a pretty big gap between the increases of the two. So they're kind of in line. So they're definitely encouraging for Home Depot. They seem to be able to at least pass that on to consumers a little bit and keep those margins pretty stable, which they stayed around 33%. Net income increased 2.1% to $4.2 billion. EPS increased 6% to $4.09. The total transaction decrease, I think I have this wrong, but I think it was 8.2%. I put my point at the wrong place, but I'm going on memory. I'm pretty sure it's 8.2%. And the average ticket or the sales per transaction increased 11.4%. So this just means

there was less total sales, but the price for each sale increased 11.4%. And you'll see that average ticket metric. It's pretty common for retailers. For those of you who are interested in retailers, that's a metric that you'll see for a large retailer. They will mention that quite a bit. And free cash flow at $3 billion, which was about half of their free cash flow from last year in the same quarter. $3 billion, which was about half of their free cash flow from last year in the same quarter. The one thing management did say is that sales were impacted by a slower start to the spring, so it's possible that they'll see their sales pick up in the current quarter right now because

some people may have delayed some of those spring purchases to right now when the weather is a bit nicer. The 2022 guidance was raised by Home Depot. They now expect sales growth of approximately 3%. They had previously stated it would be slightly positive. And then earnings per share to grow in the middle single digits. They had previously stated that it would be in the low single digits. So contrasting this with Walmart, it's pretty good. I mean, it's not blown out of the water, but it's definitely much better than Walmart. They're free cash flow positive. You can tell that they are facing a little bit of headwinds,

but overall, I think it evens out pretty well for Home Depot. So that's why I was a bit surprised last week. Even when Home Depot released their earnings, the stock started the day up and I think it finished the day down. And on the week, I'm pretty sure it was down if I remember correctly. So it's kind of funny to look at that when people seem to just be putting all in the same category. Any comment on how the smell has changed year over year? Or did they say it still smells fantastic here in Home Depot? I mean, I don't think they commented that, but I did go at Home Depot last weekend, and the smell was definitely fine. And like you mentioned, actually, last thing for Home Depot here, I almost forgot is that, like you said, a lot of people, they're seeing people wanting to

renovate their homes. That's continuing. I don't know if it's because home prices have gone so high where people are just figuring, okay, I won't sell. It'll be too expensive. It's not worth the transaction costs and so on. I might as well just do a renovation with my current home and make it the way I love it, which would be a big tailwind for Home Depot. Yeah. Never doubt people's hunger for more home renovations. The Home Depot has made a killing off that. And it's not a trend that I see going away. I think that that is one of those ones that maybe got pulled forward, but has lasting impacts that are positive for the business net-net, if you look at it on the long view. But I'm disappointed to see that they

didn't comment on the smell you know those um you know those tree things that people hang in their cars yeah the new car smell thing they need one that just smells like home depot that's a new business line for them it's a mix of like fresh two by fours and industrial appliances. A strange combination and I'm all over it. With a side of fresh plants. Yeah, with a side of the garden center. It's all in thirds and it's beautiful. All right, Algonquin Power and Utilities Corp, ticker AQN, the Canadian utility,

which most of their business is in the US, but they're a Canadian name. They're actually from Oakville, I believe. They announced their first quarter of the year revenue of 735 mil, which was up 16%. Nice. Adjusted EBITDA was 330 million, up 17%. Nice. Customer connections of 1.232 million, which was up 13%. They did announce a 6% increase on the dividend as they usually do. I think in their IR, it says that they aim for 10% every year. So this is a 6% and they had a recent increase as well. So I think they're above that on an annual basis. They're on track for their 12.4 capital plan through 2026, as mentioned by CEO Arun Banskoda. I don't know, who knows if I'm saying that right. But that capital

plan is important for these utilities and is important that they're able to keep deploying it and have their project pipeline solid as well as their capital plan for existing assets, really important for these utilities. And you know what? There's not really much more to talk about. It's a steady as she goes utility. They do power and water for the most part. And that customer connections number continues to tick up. They continue to raise the dividend and they continue to do a healthy amount of M&A through the years. They've done some do a healthy amount of M&A through the years. They've done some actually really, really excellent M&A through the years. So,

buying up water utilities in New York is one that I could think of that closed last year. These kinds of tack-on deals. Didn't they buy a coal plant or a few coal plants last year? They could have. I know that they do have lots of fossil in their fleet. Yeah. They could have. I know that they do have lots of fossil in their fleet. Now, I've touched on this many times on the podcast, which is just actually do some research on the generation supply mix for these power utilities, because their investor relations site can look awfully fancy and green and windmills and solar panels all over the place. And then you look into the actual generation profile and there's a lot of fossil. And so, it's really easy to find out. It's on their filings. It's really easy to find out. And so, just do that, right? Because a lot of these utilities are doing a bit of greenwashing. They've been doing greenwashing for a while and they're going to keep doing it because it's what's hot right now in terms of attracting cheap cost of capital

is green power. And whether it's true or not is irrelevant as long as you have a couple solar panels and windmills on your investor relations website. Yeah, exactly. Now we'll go to the last name on our list here, Canada Goose. They reported Q4 2022 and full year results, all the figures here and Canadian dollars. Just a quick refresher, Canada Goose had a rough time at the beginning of the year because they had to revise their guidance due to Omicron. At the time, I remember saying, look, I think you could give management a pass there, which is because obviously they had raised their guidance and then Omicron and the lockdowns basically started

happening within a month after that. They had revised their guidance for the full year between $1 billion and $1.1 billion. Well, they actually hit the high end of that revised guidance, which was almost the low end of the previous raise guidance. So it's pretty good news overall here. Sales were up 21% to $1.1 billion. Direct-to-consumer sales, which continues to be a bright spot for them, was $740 million, which represents 67.4% of all sales. Gross margins for the year were up 500 basis points to 66%. Earning per share was

up 38% to 87 cents. They generated 117 million in free cash flow. It was down, however, compared to last year by 55%. Their 2023 full year guidance, they say revenues between $1.3 and $1.4 billion. That would represent an increase of 18% to 27%, depending where they fall within that range. 70% to 73% sales now coming from direct to consumer. That's what they're aiming for for this year. Again, pretty amazing if they can reach that, which I don't really doubt it at 66%. I think it's realistic. And gross margins in the high 60s. Again, that's where they're trending. I mean, for me, I've said it before and I don't know, this name is starting to look more and more attractive. It's down 10% today. I have no idea why. Nothing really has come out. It's just down

10%. Welcome to a bear market. Yeah, and call me crazy, but what I just mentioned, it looks pretty good to me. Their P is now around mid to high 20s. They are trading at slightly more than two times sales for the year that just ended, and they're really guided for solid growth. And it sounds like they have really good pricing power we've talked about them before it's a luxury market people love to wear the Canada Goose brand obviously their earnings are always kind of the same it's a bit slower at the beginning of the year for obvious reason warm weather and then it picks up fall and winter but it's just growing at a good clip they seem to be executing yes they had to revise their

guidance like i mentioned a little bit earlier in the year but i think management it was something they couldn't really foresee i really like this name honestly i may just shut up and buy it at some point inside a position we keep touching on it and they keep impressing. I mean, the D2C sales mix, which is over 67.4%. So yeah, it's over two thirds of the sales mix. And that's already a high margin product, but even higher margin when it's done D2C. It's kind of crazy how much they're doing. And when these clothing companies do this much D2C in that percentage of over two thirds, that means it has brand power. And it means that the customers know that that is what they want. They don't need to try it on. I don't care. I'm buying that goose and it's going to fit me. It's going to do this. It's going to do that. I'm going to look cool in front of all my friends because I spent $14 million on a jacket. And so this is the bread and butter, man. Yeah. And I don't own a Canada Goose jacket, but I've known people who have done for years and it seems to be good quality as well. So I think there's something to say there. But if there's

any fashion-based retailer that can weather these inflationary times, I think Canada Goose is probably up there because people are just willing to fork out the money for it. Yep. Yeah. No, it's high-ticket luxury goods. I know LVMH has still had great results through this, and I've seen charts about how that luxury market continues to perform exceptionally

well, better than others. And I'm not really surprised, man. It's just more and more wealth transfer over time, I think in the most part, which is not necessarily a good thing, but these high-end retailers continue to benefit from that luxury market being so hot. Yeah. I mean, their share price I think is down to almost their IPO price. That's how crazy it's been. You know, it's funny because I look at these numbers. And they're growing at a good clip too. That's the thing. I know. I look at these numbers and I just kind of assume that the stock's done well, but you're right. It hasn't. It's done nothing. It's up. It hasn't. It's done nothing. It's up.

It's been up at some point, but it's gone very down. Oh my God. So it IPO'd in May of 2017. A year later, it was up 300% almost, which is crazy. And it currently trades for its almost exact IPO price. It IPO'd at 1723 and it trades for 18. And clearly the company is much bigger than like in sales. Yeah, just show you how different the market is. Yeah. Okay. I'm looking at the New York Stock Exchange listing here.

I guess they probably IPO at the same time. Wow. Okay. Interesting. One to keep following. be IPO at the same time. Wow. Okay. Interesting. One to keep following. You won't catch me buying clothing stocks, but hey, I mean, something's working if more than two thirds of your sales are DTC. Something is going right. Yeah. And the market didn't like that they're guiding 18 to 27% increase in revenue. That's a big range though. That is a pretty big range.

Yeah. But even then, I mean, even if you're on the low end, there's not that many companies that have pricing power and are increasing 18%. No. If that's the worst you can do, then you're doing all right. All right, guys. Thanks so much for listening. I hope you guys all had a good long weekend as well.

That was Victoria Day weekend. People in my neighborhood thought it would be a good idea to launch fireworks until about 2 a.m. on the Monday night, which was very, very nice of them. Very thoughtful of them, I think. Maybe do that on Sunday. I don't know. Long weekend. Who knows? Just my opinion. Yeah, I hope. On a more sober note, I would say I definitely hope that everyone in Ottawa got no region that's without power. By the time you hear this on Thursday, hopefully you have power again and hopefully it's resolved quickly. I think there's over 100,000 households still without power here. Oh, really? Oh, yeah. It went up. Ottawa only without the Quebec side.

It was up to, I think, 200,000 household without power. We got really lucky. I mean, we were in a little pocket that pretty much was fine. But yeah, there was hydro lines, like the massive aluminum towers that went down in the suburbs. So big chunks of the city are still without power. What was it like for you, like weather-wise? It was pretty intense. Yeah, I think winds over 100 kilometers an hour. so big chunks of the city are still without power what was it like for you like weather-wise was it

pretty it was pretty intense yeah i think winds over 100 kilometers an hour i was doing work outside got this alert from environment canada i'm like oh whatever you know i'll continue and then at some point i'm in my shed and there's like a chair flying away i'm like oh maybe i should run back inside yeah it happened pretty quick too right yeah it was kind of spooky yeah my buddies were at the golf course and they're on like about to tee off and it's like the ontario alarm goes off environment canada has issued an extreme whatever and they're like whatever with golf clubs yeah you have to be careful ah whatever we'll see what happens nope there was like no trees left on the hole they were playing

that's how intense it was yeah well i went mountain biking yesterday and we had to pick up our bikes about 20 times because trees were down in the trails oh gosh yeah no it's been uh it's been quite the weekend but uh you know i tried to relax a little bit nonetheless yeah there you go well you're still here to deliver the news here. Thanks so much for listening, guys. Really appreciate it. If you have not gone to our Patreon support page, join tci.com, baby. Join tci.com.

That's the URL. And it'll go right to our portfolio updates that we do every month. We got to do one here in the next couple of days and you can be ready for that on the June release, June 1st. So that is join tci.com. If you're looking for historical financial data, 10 years of beautiful data visualizations for the companies that you want to research in your stock portfolio, go to stratosphereinvesting.com. We'll see you in a few days. Thank you so much. Bye-bye and stay safe out there because that was quite the weekend of weather. Looking forward though,

Simone. Yeah. We have gone through, like we've made through the winter now. Canadians rejoice. We're officially on the other side. Yeah, it's the fun season, that's for sure. That's right. Get the barbecue out if you haven't already. Do that tonight. If you're listening, do that tonight.

If you're thinking about it, get the barbecue out tonight. Come on, you deserve it. Take care, bye-bye. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.