Banks Gear Up To Release Earnings Results

[CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS]( Hello investor, Banks Gear Up To Release Earnings Results Today will be the new earnings quarter since the spectacular collapse of First Republic Bank at the beginning of May. Now, investors will watch whether banks can hold up their earnings in a rising rate environment. The single important metric is net interest margin. It is the difference between the yield banks earn on assets (such as loans and securities) and the rates they pay on liabilities (such as deposits and other borrowings). The bank is feeling the pressure of paying higher deposit rates since investors have more options in other places like money market funds. In the graphic below, you can see how net interest margin started to fall in the first quarter of 2023: (Source: WSJ) And of course, investors will watch which banks saw any outflow in deposits. In a fantastic graph by WSK, you can see which banks had the most outflows in the last few quarters: (Source: WSJ) Promising inflation data: June’s producer price index report rose less than expected, boosting the optimism from Wednesday’s consumer price index data. Some analysts consider the PPI to be a leading indicator because it is what wholesalers pay for goods. If they pay lower costs, it could mean the finished goods would be cheaper for the consumers. However, weekly jobless claims came in lower than expected. This paints a picture of a strong labor market. It’ll be difficult for the Fed Reserve to bring inflation down to its 2% target if the labor market remains this hot. - “The PPI confirmed the cooling inflation shown in yesterday’s CPI, but the lower-than-expected weekly jobless claims number was a reminder of continued labor market tightness,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. - “For now, the stage appears to be set: The Fed is still on track to raise interest rates in a couple of weeks, and investors will shift their focus to corporate balance sheets as earnings season kicks into gear,” Loewengart said.  This Stock May Be The Next Ten-Bagger – Buy It Immediately Today’s Stock Pick: Potbelly Corp ([PBPB]() A man named Peter Hastings and his wife owned an antique shop in the posh neighborhood of Lincoln Park in Chicago. Eventually, he thought of an idea. Why doesn’t he serve sandwiches to the customers browsing in his store? The sandwich joint of Potbelly was born. Bryant Keil, a regular at Potbelly, bought the shop from owner Peter Hastings, and he quickly transformed it into a nationwide restaurant. He exploded the number of locations from 1 to 250 shops over the next 12 years. Bryant Keil (Photo: Potbelly) Potbelly is a staple in downtown Chicago with 13 restaurants within an 8-block radius! That’s a “McDonald’s” type of number. This shows how popular the restaurant is, and the potential of its nationwide expansion. Potbelly restaurants within Chicago’s The Loop (Source: Google Maps) However, Potbelly was riddled with financial trouble since 2018. It lost money and struggled to control expenses during its growth years. You can see its incredible revenue growth since its IPO in 2012: (Source: MacroTrends) Clearly, you see the potential there. The company has a proven track record of growing fast, and it just needs a turnaround strategy to get back on track. A new CEO was installed in 2020, and it set the 5-Pillar Strategy to clean up the mess. And it is working. The company finally turned profitable again and its AUVs (average unit volume) hits a record level. (Source: Potbelly) Most importantly, it is executing its digital strategy. It’s “go digital or die”, right? Companies must be savvy with digital if they want to stay competitive in the future. Digital made up about 39% of its total revenue in the recent quarter. And the number actually grew from 33% in the 3rd quarter of 2021 – despite being out of the pandemic. (Source: Potbelly) Future expansion: Right now, there are 427 locations in the country. The company sets a goal of ~2,000 shops. We are talking about 5 times the current total if it achieves that number. Certainly, the company is set up for a monster decade. (Source: Potbelly) Turning profitable: Potbelly just reported an adjusted EBITDA of $5.6 million. This is when things become interesting. Potbelly has a current market cap of $261 million. Let’s say if Potbelly posts $6 million adjusted EBITDA for the next three quarters. That would total to $23.6 million. Meaning? Adjusted EBITDA would be about 10 times its market cap. And Potbelly is only scratching its surface to transform the company. It has a big growth ambition, as well. Bottom line: Potbelly is an intensely-loved restaurant that ran into financial troubles. With the new CEO at the helm, this stock looks prime for a major turnaround that can deliver phenomenal gains. [CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS](       © All Rights Reserved, Trade Alliance  If you no longer want to receive these messages, you may [click here]( to unsubscribe.