Good morning investors!

During the ever important earnings season, we publish our “Earnings Recap” — an in-depth summary of the earnings reports for stocks that we cover on a regular basis.

Earnings season may be winding down but the work never stops for us here — let’s dive in.

Alphabet (GOOG)

Alphabet $GOOGL ( ▲ 1.68% ) delivered a strong Q1, with revenue rising 12% YoY to $90.2B and EPS surging 49% to $2.81—comfortably beating estimates. Strength was broad-based across Search, YouTube, and Google Cloud, while margin expansion and investment gains amplified bottom-line performance. The company also announced an expanded $70B buyback authorization and raised its dividend by 5%.

🔑 Key Points

• Revenue rose +12% YoY to $90.2B, driven by strong results across Search (+10% YoY), YouTube (+10% YoY), and Cloud (+28% YoY).

• EPS surged +49% YoY to $2.81, helped by higher operating income (+$5.1B) and equity investment gains.

• Operating income climbed +20% YoY to $30.6B, with margin expanding 200 bps to 34%.

• Operating expenses increased +8% YoY to $59.6B, though growth was well-leveraged across AI and cloud investments.

• Free cash flow jumped +41% YoY to $19.0B, and Alphabet returned $15.1B to shareholders via buybacks.

👀 What You Need to Know

Alphabet’s Q1 results showed accelerating momentum in core and growth segments, notably in Google Cloud (+28% YoY) and Search, boosted by Gemini-powered AI integrations. Management's confidence was evident with a boosted dividend and buyback expansion. However, cost growth remains a watch item amid surging capex ($75B FY guide), and investors will be watching for sustainability in margin gains.

GOOG shares are +10.3% so far this week.

Tesla (TSLA)

Tesla $TSLA ( ▲ 9.8% ) reported disappointing Q1 results, missing both revenue and earnings expectations as automotive sales tumbled 20% YoY. The stock initially treaded water but bounced nearly 5% after Trump’s comments on tariffs and Powell—a signal investors interpreted as near-term market stability.

🔑 Key Points

• Automotive revenue dropped 20% YoY to $14.0B, with deliveries down 13%—a clear sign demand is softening globally.

• EPS fell 34% to $0.27, well below the $0.41 estimate, as margins compressed sharply.

• Operating income dropped 66% YoY to $399M, while gross margin slid to just 16.3%—a multiyear low.

• Free cash flow hit $664M (+126% YoY), driven by lower capex and a jump in regulatory credit sales to $595M.

• Tesla pulled its 2025 growth outlook, citing “uncertainty” in auto and energy demand—raising red flags on forward visibility.

👀 What You Need to Know

Tesla's Q1 print confirms what many feared—this isn't just a demand blip, it’s a structural slowdown compounded by macro shocks and internal distractions. With Elon Musk entangled in Trump’s administration/politics, and tariffs ratcheting up cost pressures, investor confidence is hanging by a thread. Until Tesla delivers a clear roadmap forward, especially on pricing, robotaxis, and global competitiveness, this remains a "show me" story.

TSLA shares are +7.6% so far this week.

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Procter & Gamble (PG)

Procter & Gamble $PG ( ▲ 0.93% ) reported Q3 FY2025 earnings that beat on EPS but missed on revenue as weak volumes and FX headwinds weighed on top-line performance. Gross margin came under pressure from commodity costs, but cost discipline and modest pricing power helped the company stay on track with profit delivery.

🔑 Key Points

• Net sales fell -2% YoY to $19.8B, while organic sales scratched out a +1% gain driven by pricing, with volumes flat.

• Operating income rose +2% to $4.56B, as operating expense efficiencies (-6% YoY) offset a -3% drop in gross profit.

• Free cash flow hit $2.85B (adj. FCF productivity 75%) and was used for $2.4B in dividends and $1.4B in buybacks.

• Segment cracks emerged: Beauty (-2%), Fabric & Home Care (-3%), and Baby Care (-4%) all saw declining revenue.

• FY25 guidance: core EPS was narrowed to +2% to +4% growth, despite weaker gross margin and FX pressure.

👀 What You Need to Know

P&G is walking a tightrope — holding the line on profitability with cost cuts and pricing while battling weakening volumes and FX drag. Despite organic sales eking out a 1% gain, the flat to negative growth in key segments like Beauty and Family Care hints at consumer strain. The real standout is their ability to protect margins through lower operating expenses and reinvestments even in a volatile environment. Investors should watch how commodity pressures evolve and whether demand rebounds in international markets.

PG shares are -5.9% so far this week.

AbbVie (ABBV)

AbbVie $ABBV ( ▲ 3.16% ) kicked off 2025 with a solid beat, posting Q1 revenue of $13.34B (+8% YoY) and adjusted EPS of $2.46, up 7% YoY and ahead of estimates. Strength in immunology, particularly from Skyrizi and Rinvoq, helped absorb the steep Humira decline, while management raised full-year EPS guidance.

🔑 Key Points

• Revenue: $13.34B (vs. $12.93B est.) — Beat by 3.2%, driven by +16.6% immunology growth

• EPS: $2.46 (vs. $2.38 est.) — Beat by 3.4%, adjusted EPS up 6.5% YoY

• Skyrizi & Rinvoq: $3.4B and $1.7B in revenue respectively — up 71% and 57% YoY

• Humira: Down 51% YoY to $1.1B as biosimilar erosion deepens

• FY25 EPS Guidance Raised: Now $12.09–$12.29, up from $11.99–$12.19 prior

👀 What You Need to Know

AbbVie continues to thread the needle post-Humira, with growth engines Skyrizi and Rinvoq exceeding expectations and expanding globally. The company is also moving into obesity therapeutics via a Gubra partnership and expanding its neuroscience pipeline. Despite aesthetics softness and a structurally lower margin from portfolio shifts, this quarter reaffirms AbbVie’s ability to defend and grow earnings. Investors got the clarity they were hoping for.

ABBV shares are +8.2% so far this week.

IBM (IBM)

IBM $IBM ( ▲ 1.34% ) kicked off fiscal 2025 with mixed signals. The company delivered revenue of $14.54B, slightly ahead of estimates (+1% YoY), and crushed EPS expectations at $1.60 (vs. $1.42 est). However, earnings were still down -5% YoY, and net income dropped a steep -34% as margins remained under pressure. Software was the clear bright spot, growing 7% YoY, but declines in Consulting (-2%) and Infrastructure (-6%) underscore persistent weakness in traditional segments.

🔑 Key Points

• Revenue was flat YoY at $14.5B, with consulting revenue down -2% offset by modest +1% growth in software.

• Operating income rose +2% to $1.7B, but expenses also climbed +3% YoY, reflecting reinvestment in AI.

• Free cash flow improved to $2.2B, with IBM returning $1.5B via dividends and buybacks, signaling capital discipline.

• Growth concerns remain: Red Hat revenue was weak, and infrastructure sales declined -4% YoY.

• FY25 guidance was reaffirmed, maintaining expectations for mid-single-digit revenue growth and $12B+ FCF.

👀 What You Need to Know

IBM’s Gen AI push remains central to its growth narrative, with more than $6B deployed so far and tangible progress in strategic acquisitions. But despite the upbeat software results, declining consulting and infrastructure revenue signal headwinds in legacy operations. The flat FY revenue guidance (+5%) and steady FCF projection ($13.5B) show consistency, but not acceleration. Investors will want to see consulting stabilize and margins recover to keep this rebound story alive.

IBM shares are -4.1% so far this week.

PepsiCo (PEP)

PepsiCo $PEP ( ▼ 1.43% ) delivered a mixed Q1 2025, with revenue of $17.92B slightly beating expectations (+0.90%) but EPS of $1.48 falling short of consensus (-0.67%). Revenue declined 2% YoY, marking the first top-line contraction in nearly two years as the company faced macro headwinds and continued weakness in international markets. Net income dropped 10%, and EPS was down 8% YoY, reflecting rising costs and softening demand across regions.

🔑 Key Points

• Operating income fell 5% to $2.6B, while expenses rose 2% to $7.4B, pressuring margins.

• Free cash flow came in at -$1.6B (still +5% YoY), but $1.0B in stock buybacks and $7.6B in dividends signal a commitment to capital returns.

• Organic revenue grew +1.2%, but geographic cracks are forming: Europe sales fell 2%, and Latin America was down 12% YoY.

• EPS guidance was downgraded to “flat” growth for FY25, citing a weaker pricing environment and FX volatility.

• PepsiCo maintains its outlook for low single-digit revenue growth and $8.6B in total shareholder returns.

👀 What You Need to Know

This wasn't a disaster, but it wasn't encouraging either. PepsiCo’s core business is holding up, but margin compression and slowing international momentum are red flags. EPS guidance was cut to flat for FY25, signaling Pepsi’s pricing power is fading. With consumer sentiment softening and inflationary inputs stabilizing a bit, the bull thesis needs volume growth to step up. Until then, near-term upside looks limited without a pickup in global consumer demand.

PEP shares are -4.9% so far this week.

Merck (MRK)

Merck $MRK ( ▲ 3.63% ) posted a mixed Q1 as stronger-than-expected earnings were offset by top-line declines and a downward revision to full-year EPS guidance. While revenue of $15.53B beat by 1.17%, it fell -2% YoY, dragged down by a 41% collapse in Gardasil sales. EPS, however, came in strong at $2.22 (+7% YoY), helped by lower operating expenses and expanding gross margins.

🔑 Key Points

• Operating income rose +4% to $5.9B, while expenses fell -5% to $9.7B, boosting profitability.

• Pharmaceutical revenue fell -3% to $13.6B, driven by a -41% plunge in Gardasil sales ($1.3B), while Keytruda rose +4% to $7.2B.

• Free cash flow and segment breakdowns were not provided, but Animal Health posted solid +5% growth to $1.6B.

• FY EPS guidance was cut to $8.82–$8.97 (from $8.88–$9.03), due in part to a newly anticipated $200M cost from tariffs and licensing deals.

• FY revenue guidance of $64.1B–$65.6B was maintained.

👀 What You Need to Know

Merck’s quarter showed solid execution beneath the surface, but the earnings downgrade and Gardasil’s collapse raise questions about growth drivers. The Edge Score of 67 reflects decent valuation and financial health, but future growth and past performance rank poorly. Until Gardasil stabilizes or pipeline updates reignite investor optimism, shares may tread water despite attractive metrics like a 78% gross margin and improving expense discipline.

MRK shares are +2.4% so far this week.

Verizon (VZ)

Verizon $VZ ( ▼ 2.1% ) delivered a stable Q1 2025, posting EPS of $1.19 (up 4% YoY) and revenue of $33.49B (+2% YoY), both slightly ahead of expectations. Strength in wireless service and disciplined cost control helped the telecom giant offset soft business segment revenue and subscriber losses.

🔑 Key Points

• Operating income rose +6% to $8.0B, with flat YoY expenses improving margin leverage.

• Free cash flow surged +33% to $3.6B, contributing to a robust $7.8B in operating cash flow (+10% YoY).

• Wireless service revenue climbed +3% YoY to $17.2B, but business revenue dipped -1% and retail postpaid phone losses hit -289K.

• Verizon reaffirmed full-year guidance: FY EPS growth of 0% to +3% and $17.5B–$18.5B in free cash flow.

• Debt was reduced by $11.1B YoY, supporting balance sheet improvement alongside broadband subscriber growth (+339K).

👀 What You Need to Know

This was a relatively clean quarter for Verizon. Cash flow strength, cost discipline, and broadband additions are all positives, but the postpaid phone losses — a key industry metric — suggest consumer churn remains a challenge. With a 6.5%+ dividend yield and consistent FCF guidance, the story remains one of yield and stability rather than growth.

VZ shares are -3.0% so far this week.

Lockheed Martin (LMT)

Lockheed Martin $LMT ( ▲ 2.32% ) delivered a solid beat in Q1 2025, with revenue of $17.96B (+4% YoY) edging past estimates and EPS surging to $7.28 (+15% YoY), blowing past the $6.34 consensus. Growth was well-rounded, with double-digit gains in the Missiles segment (+13% YoY) and strong contributions from Aeronautics and Rotary/Mission Systems. But below the surface, signs of deceleration appeared: operating cash flow declined 14%, and total backlog fell 2% to $173.0B.

🔑 Key Points

• Operating income rose +17% YoY to $2.4B, while expenses climbed 3% to $15.6B, reflecting good margin control.

• Free cash flow dropped -24% YoY to $955M, even as Lockheed returned $750M via buybacks.

• Backlog declined -2% YoY to $173B, a subtle but important signal on long-term visibility.

• Missiles (+13%) and Rotary (+6%) led segment growth, while Space and Aeronautics remained solid.

• Guidance was reaffirmed, with full-year revenue expected between $73.75B–$74.75B and EPS between $27.00–$27.30.

👀 What You Need to Know

Lockheed Martin continues to execute well operationally, but defense investors will want to watch free cash flow trends and the shrinking backlog closely. While the company reaffirmed its full-year targets, deteriorating cash metrics amid heightened capex (+$850M) may limit upside unless new contract wins reaccelerate.

LMT shares are +1.1% so far this week.

Intel (INTC)

Intel’s $INTC ( ▼ 6.7% ) Q1 2025 results came in above expectations on both revenue and earnings, delivering $12.7B in revenue (flat YoY) and EPS of $0.13 (vs. est. $0.01). Operational improvements and aggressive cost-cutting efforts helped turn a tough quarter into a modest win, but the company still reported a steep GAAP net loss of -$821M and is guiding to breakeven EPS for Q2.

🔑 Key Points

• Operating expenses were cut by 21% YoY, driving a 72% improvement in operating income (still a -$301M loss), as Intel continues executing on its cost-reduction and restructuring plan.

• Free cash flow came in at -$3.7B, a 40% YoY improvement, while operating cash flow flipped positive at $813M.

• Revenue from Data Center grew +8% to $4.1B, while Foundry rose +7% to $4.7B, offsetting a -8% decline in Client Computing.

• Q2 guidance is weak, with revenue expected between $11.2B–$12.4B and EPS at $0.00, reinforcing a choppy road ahead as macro headwinds and internal execution risks linger.

• Intel sold a 51% stake in Altera, aiming to focus more tightly on core operations while still participating in the upside of the FPGA business.

👀 What You Need to Know

Intel’s turnaround story is still in its early innings. The quarter showed progress—better execution, stronger cost control, and traction in the foundry and data center units. But flat revenue and continued net losses highlight the uphill battle it faces. The stock remains speculative in the near term, but with improving free cash flow trends, there’s longer-term potential if management can sustain momentum.

INTC shares are +8.2% so far this week.

Lam Research (LRCX)

Lam Research $LRCX ( ▲ 0.73% ) posted an impressive Q3 2025, with revenue rising 25% YoY to $4.72B and EPS climbing 33% to $1.04, both topping estimates. Margin expansion was driven by strong Systems (+27% YoY) and Support (+21% YoY) revenue, while operating income surged 48% on just a 1% increase in expenses. Despite the beat, China revenue declined 8% YoY—a potential concern amid rising geopolitical and export-control pressures.

🔑 Key Points

• Operating income jumped +48% to $1.6B, showing strong leverage on just +1% opex growth.

• Free cash flow came in at $1.02B (+19% YoY), with $435M returned to shareholders via buybacks.

• China revenue fell -8% YoY, a key risk given it now accounts for over 30% of total revenue.

• Strong revenue gains in Systems and Support segments, up +27% and +21% YoY respectively.

• Q4 guidance calls for revenue of $4.70B–$5.30B and EPS of $1.10–$1.30, with gross margin improving to 48.4%–50.4%.

👀 What You Need to Know

Lam’s Q3 results show the company is executing well across core segments, supported by margin discipline and robust cash generation. But geopolitical exposure in China looms large and could limit valuation expansion despite impressive growth. With a cash balance of $5.5B and inventories up 6% YoY, Lam is positioning for demand—but watch for volatility in export-sensitive markets.

LRCX shares are +11.2% so far this week.

Chipotle (CMG)

Chipotle $CMG ( ▲ 4.52% ) delivered solid Q1 2025 earnings with revenue of $2.88B (+7% YoY) and EPS of $0.29 (+7% YoY), but missed revenue expectations by 2% as comparable sales dipped -0.4%—a key concern for a brand known for consistent comp growth. The earnings beat was driven by disciplined cost control, as operating income rose 9% YoY despite a 6% increase in expenses. Store count grew 9% YoY, with total locations now at 3,781.

🔑 Key Points

• Comparable sales fell -0.4% YoY, missing expectations and reflecting demand softness.

• Operating income rose +9% to $479M, with food and labor costs totaling over 54% of revenue.

• Free cash flow was $412M (-6% YoY), as cost inflation and investment spend weighed.

• The company bought back $554M in stock during Q1, with $875M remaining under authorization.

• FY25 guidance calls for low-single-digit comp sales growth and 315–345 new restaurant openings.

👀 What You Need to Know

Chipotle continues to grow its footprint and defend margins in a tough environment, but the drop in comparable sales is a yellow flag. Cost controls and buybacks offer support, yet until traffic trends improve, investors may be cautious. A 16.7% operating margin and steady restaurant expansion show execution strength, but valuation needs to be backed by accelerating comps, not just new units.

CMG shares are +2.7% so far this week.

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Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.