Earnings Review May 2026

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We’re in the middle of earnings season. Whilst most aren’t updateworthy (i.e. no real news) there are companies that just closed Q4 and provided guidance - some of which are worth going over. Otherwise I’m also discussing earnings from some of my newer ideas. (And yes, including the stupid AI DC idea that’s on my watchlist).

Overwhelmingly, how I’m feeling about this earnings season - especially given that many are reporting Q4 results, is that management is conservative and it feels like their guidance is more cautious than usual. Especially for semi-stocks. This is not surprising given just how much capex is going into the space. Whats interesting to see is that the market is dumping these stocks completely on these guidances which might create some opportunity.

On the othe rhand what I’m noticing is that despite all the excitement around Japanese Semi's and AI/DC stocks (I am too), I want to be a little cautious. I’ve been looking at quite a few earnings in this space and for some of them the earnings aren’t even that good, but you wouldn’t think that if you looked at the stock price. I’m not excited about these because in the end, both narrative and fundamentals need to align for me. A chief issue for many of these players is simply their inability to raise prices despite the high demand, supply constraints and increasing input costs. The question being, if you can’t raise prices now… then when? Again I don’t have in depth knowledge for all theses companies but that was the impression I was left with. I’ll discuss one such example.

Another thing to be cautious is just how volatile these stocks have been - the good days are extremely strong and the bad days just as much. It seems to me that many of these names are traded on leverage and causes a pronounced move both up/down. All I’m trying to say is, please be careful out there…!

Anyways, I’ll also be discussing my positioning about these names as well. To keep it short and digestable I’m breaking it down into parts.

Alpha purchase

Strong improvement in MRO margins masked by the slow revenue recovery post Askul incident and underperforming FM segment.

I re-entered AP a couple months ago. (Wrote about it here) AP came out with Q1 numbers, which were kinda slow tbh. Group rev +6.2% and EBIT +6.9%. Both revenue/EBIT had separate causes.

On the revenue side, this was mainly impacted by the MRO segment, which grew +4.3%. It is still recovering from the ransomware hack on Askul. Whilst now up and running for the most part, the January/March period did see an impact no less. The silver lining is that it is seeing a QoQ improvement in growth here. Despite the sluggish revenue growth, I found operating margins to be strong. Coming in at 3.1% vs 2.7% YoY, meaning +18.8% OP growth YoY. There’s been successful cost controls and improved terms of procurement that helped, so this also sounds structural.

The FM segment was a mirror image; it was actually seeing some growth! +14.2%, but the margins were just terrible due to lower margin projects. OP margin at just 1.1% versus 2.4% a year ago, drove a -47.7% in OP for FM. So whilst this is increasingly becoming a less relevant segment, margins were much better until Q1 last year, so this dragged down overall profitability. The comp base will ease significantly from Q2 where margins were at similar levels today. FM could still surprise us to the upside but I still don’t expect much from here. (They also seem to have some new customers come in this year)

All in all, the setbacks in MRO (i.e. the slow revenue) seem temporary, whilst the positive improvements (i.e. margins) seem structural - AP believes they’re on track and have not changed guidance. I also think that, as the Askul issue is now behind them, this should also lead to a gradual improvement on the growth front. So overall as revenues reaccelerate, we could see a fundamentally better MRO business.

MRO’s Mugen Catalogue also released the new “upload’ feature on the platform end of April. This helps companies to upload in bulk all their orders as a ‘shopping list’ instead of having to enter each item individually. This could also drive higher AOV (Average order value) and contribute to revenues. AP expects a staggered rollout of this feature through the year.

Overall whilst It continues to be mired in some short term setbacks, I continue to hold as I still like the long term fundamentals.

Ebrains

Q4 operating profit was strong, starting to see early signs of a strong growth inflection in their Measurement and control (read Semiconductors). Defense segment +97% in Q4. Ebrains continues to benefit from several tailwinds. Guidance may be conservative.

I’m overall pleased with their Q4 earnings and I think off to a good start.

With the caveat here that revenue can be very bumpy for Ebrains, the company finally saw a return to growth to +6% in its Measurement and control segment, which services mostly Semiconductor Manufacturing Equipment.

Another big surprise was defense, which was up +97%.

What’s more interesting this time was guidance:

What I see as their biggest revenue driver, namely the Measurement and control segment is expected to grow +25.8% which confirms my initial view that they should be finally seeing some of the capex from other semi players flow into their PnL.