By: Scott Davis
Overall, results this quarter have contained few surprises and almost every company we cover has “beat” consensus estimates. Though everyone beats guidance nowadays, so guidance itself has become nearly useless. At best it’s a framework, at worst it can be used to make weaker management teams appear effective. So counting beats/misses is a long gone tool. What we can measure, however, is a company’s ability to manage costs in a downcycle, limit decrementals, take out structural costs, then… manage the upcycle by staying disciplined on fixed costs. All while reinvesting capital to a longer-term vision. Pivoting where needed, and delivering a high return on that capital. This is where we spend our time and attention nowadays, and what we wrote about extensively in our book, Lessons from the Titans.