Can’t stop won’t stop? OK, you will never confuse me for a rapper, but those are the four words that describe this economy right now. And as we walk into retail earnings hell — a period where too many retailers report all at once and the comparisons become odiously confusing, starting with Walmart and Home Depot before the bell on Tuesday — I have to marvel that there is no discernible let-up in spending across most areas. There are a couple of ways to measure things. First, we can just look at some of the companies that reported late this past week: Applied Materials, DraftKings, DoorDash, Toast, and The Trade Desk. Second, we can examine the cacophony of 52-week highs that stick out like a dazzling neon shouting “Gangbusters.” So let’s do both. Let’s start with Toast , a remarkable company with a client roster of 106,000 restaurants, up 34% from a year ago, almost all providing annual recurring revenue. The cloud-based restaurant management software company is going after the big chains, like Caribou Coffee, and winning. It is also winning small- and medium-sized businesses — perhaps more than 30% of that market, although having been in this business I have no idea how that share is calculated. I have not been a fan of this company because of its losses and its inability to pivot to profit. Restaurants can also switch to a competitor pretty easily. But the company announced on Thursday that it will lay off 10% of its workforce, so the pivot is now here. Most surprising, however, is the strength of restaurant formation right now, which makes the ascent of Toast so obvious. When an economy is in full-blown retreat, this is a segment that gets decked. Now it’s easy to get a read-through when you consider the earnings progression of companies that support restaurants like Ecolab , Cintas , and Sysco (Cintas CEO Todd Schneider joined me on “Mad Money” in late December, while Sysco CEO Kevin Hourican was on in late January). Their results can tell you how much…
Read the full article here
