Report by Paragon Intel

Paragon’s latest offering on their ManagementTrack platform highlights evasive answers near real-time during earnings seasons. Their model can also flag abnormally high evasiveness % and if past instances have led to underperformance. Recent examples include 1) Lamb Weston - management's evasiveness increased significantly to 60% from 25% and 33% the prior 2 quarters. 2) McCormick - evasiveness increased to 36% from sub-10% the prior 2 quarters. 3) Disney - last quarter executives answered 78% of questions evasively. 4) Click here to access a report Paragon created overlaying their earnings call analysis with a recent note a short seller published on Roblox.

Consumer Staples

Report by Hedgeye

It is déjà vu all over again - questioning the secular growth of French fries is back. Following LW's recent earnings miss, the stock is trading at its lowest valuation since being spun off from Conagra. However, Hedgeye’s analysis points to an asymmetric risk/reward from current levels. Out year EPS power is between $7-8, meaning the stock can double from here over the next 1-2 years. They believe the current price underestimates the industry’s pricing discipline, underestimates the returns from capacity expansions and overestimates the pricing impact from capacity growth.

Materials

The can-maker’s equity is expected to come under further pressure - the main concerns cited in Gradient’s 13-page report include: 1) Volume and profitability headwinds. 2) Inventory growth higher than targeted and has outpaced forward sales estimates. 3) Growth in receivables suggests a pull-forward of revenue. 4) Accrued compensation fell to a five-year low relative to adjusted operating expenses. 5) Despite the recent share-price correction, BALL still appears expensive. Other active shorts Gradient have initiated coverage on this year include ADT, Cerence, Lamb Weston, Owen’s & Minor and RingCentral.