This week’s newsletter will be relatively short. Unfortunately, I was sidelined with the worst flu I can remember having, which didn’t allow me to put as much time into creating something I’d be confident sending out.
This marks the first newsletter I’ve ever had to cut short in the 6+ year existence of Stocktrades Premium, or around 312 issues, to be exact.
Fortunately, I’m recovering now, and next week will be business as usual.
However, I do still have some content inside this week’s newsletter, including a couple of earnings reports from Premium featured companies, along with some significant changes to our Bull List reports.
The changing of our Bull List reports
A quick highlight for members, but a notable one:
We’ve decided to move back to a web-based report for our Bull Lists due to many issues brought up over the last while as to how difficult the PDFs are to navigate on a mobile device.
Below is a snapshot of a new Aritzia report.
We’ve vastly improved the reports, and when I go over Aritzia’s earnings below, please make sure to click through to the actual report and see what the new structure is like.
We will be rolling out the changes to the web-based report as we move through this quarter’s earnings. The companies are not all done reporting yet, but as they come through, our new reports will be updated and linked to the Premium membership pages. So, you may still see some old PDFs as we work through the quarter’s end.
Most importantly: I welcome any feedback and additional change requests for the reports. So just hit the reply button and let me know if you have any thoughts.
Aritzia Earnings (TSE:ATZ)
Aritzia topped expectations on both the top and bottom lines. The stock soared nearly 20% on earnings day as my main thesis of a turnaround for the company is coming to fruition in the latter part of 2024 and now 2025. The company’s results on Black Friday were the best in the company’s history.
Revenue increased by 11.5% on a year-over-year basis, and comparable sales growth came in at 6.6% (see the chart above). Although the company doesn’t isolate this out and report it, I’m willing to bet the vast majority of that comparable sales growth came from the United States.
Margins continued to expand as well, with gross margins coming in at 45.8%. Throughout the last few years, Aritzia has been under a lot of pressure from a margin standpoint due to the inopportune increases in inventory. It was forced to mark many products down to avoid high storage costs and fears of products becoming outdated and not selling at all. As a result, gross margins fell.
The recovery in gross margins is leading to an extensive recovery in earnings growth as well, with EPS growing by over 50% on a year-over-year basis.
US revenue growth increased by 27% year-over-year, and the company’s US revenue now makes up more than 55% of revenue. When we first added Aritzia to the Bull List in early 2019, US revenue made up around 35%~ of sales. This is outstanding to see, given that my primary thesis for Aritzia is outsized growth in the United States, a country that has 10x the population and a healthier consumer.
Although Canadian boutique additions have somewhat flatlined, the company continues to strategically place new US boutiques in high-popularity areas, which is ultimately fueling growth.
Additionally, the company’s e-commerce sales continue to grow at a mid-double-digit pace. The fact it can still continue to grow at this level over and above pandemic-fueled digital sales is a strong sign. Ultimately, e-commerce sales are a more margin-efficient way to sell goods, and the more it can sell without needing storefronts, the better.
It was a great quarter, and the company’s increase to its Q4 guidance, now expecting 23%-25% revenue growth to close out the year, no doubt fueled some of the 20%~ gain it had post-earnings.
If there was ever a company that highlights the fact you need to ignore short-term news and pricing action on the markets, it is Aritzia. After undergoing a sharp 60% drawdown in 2022, the company is now up 210% off its lows. While many panicked, savvy investors saw it as a golden opportunity add, myself included.
You can see my fully updated report on Aritzia here, with the brand new web-based format
Blackrock (BLK)
It was another strong quarter for Blackrock. Surging equity markets are no doubt fueling results as revenue of $5.7B and earnings per share of $11.93 both increased by 23% year-over-year.
The company’s revenue and earnings growth primarily came from growth in base fees and securities lending, which also grew 23% year-over-year. Assets under management came in at $11.55 trillion, which is a 15.41% increase from the fourth quarter of 2023.
One of the key things investors should be focusing on is just how popular the company’s ETFs are becoming. When we look to quarterly inflows of $281B, more than half of those came from exchange-traded funds.
It is also important to note that those inflows smashed through expectations, as many analysts only expected Blackrock to have around $198B in inflows on the quarter. The company achieved a 6% organic growth rate in total inflows, a strong sign that the company is still growing its internal businesses and is not solely relying on acquisitions. Many bears for Blackrock believe the company has simply become too big to grow organically, but this has not been the case yet.
One of my main theses with Blackrock is the fact that it is a market leader when it comes to exchange-traded funds. The rising popularity of ETFs among retail investors over picking individual stocks is no doubt being felt. Just look to the chart below highlighting the trailing twelve-month inflows to iShares ETFs.
It is important to remember that 76% of Blackrock’s revenue stream comes from fees. Although this is not all generated through ETFs, as they also offer mutual funds and institutional investments, the bulk of it will be. After having one of the most successful ETF launches in history with its IBIT Bitcoin ETF, the company has expanded this ETF to Canada and has also offered some of the lowest fees in the country in terms of getting Bitcoin exposure through an ETF.
Continued innovation and product development like this will ultimately be a tailwind for future earnings growth. In combination with this, continued interest in the equity markets will likely fuel future earnings growth. However, it will be important to keep an eye on policy rates in the United States. Delayed cuts in interest rates could put some pressure on riskier assets like equities. As such, we may see inflows scale back.
Overall, it was an outstanding quarter from the company.
