Health and wellness products company USANA Health Sciences (NYSE:USNA) announced better-than-expected revenue in Q2 CY2025, with sales up 10.8% year on year to $235.8 million. The company’s full-year revenue guidance of $960 million at the midpoint came in 1.4% above analysts’ estimates. Its non-GAAP profit of $0.74 per share was 37% above analysts’ consensus estimates.

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USANA (USNA) Q2 CY2025 Highlights:

Revenue: $235.8 million vs analyst estimates of $225.2 million (10.8% year-on-year growth, 4.7% beat)

Adjusted EPS: $0.74 vs analyst estimates of $0.54 (37% beat)

Adjusted EBITDA: $30 million vs analyst estimates of $24.9 million (12.7% margin, 20.5% beat)

The company reconfirmed its revenue guidance for the full year of $960 million at the midpoint

Management reiterated its full-year Adjusted EPS guidance of $2.68 at the midpoint

EBITDA guidance for the full year is $115 million at the midpoint, above analyst estimates of $112.6 million

Operating Margin: 7.1%, down from 8.4% in the same quarter last year

Market Capitalization: $597.6 million

StockStory’s Take

USANA’s second quarter results were met with a positive market reaction, driven by revenue and non-GAAP earnings that both exceeded Wall Street expectations. Management attributed this performance to the implementation of strategic initiatives, including a shift in sales terminology and compensation structure, and increased momentum in its recently acquired businesses. CEO Jim Brown highlighted that the company’s direct-to-consumer platform Hiya achieved strong growth and improved profitability, while the refreshed approach to brand partners and expanded product offerings contributed to higher engagement and sales activity.

Looking forward, USANA’s outlook is shaped by ongoing enhancements to its direct sales model and plans for additional product launches. Management emphasized that the new compensation plan and business tools are designed to accelerate customer acquisition and retention, with further rollouts scheduled for the third quarter. CEO Jim Brown stated that these updates, along with upcoming product introductions at the company’s global convention, are expected to boost brand partner engagement and support sustainable long-term growth. Management also noted that investments tied to these initiatives may lead to near-term margin pressure.

Key Insights from Management’s Remarks

Management pointed to several operational and strategic changes as key contributors to the quarter’s growth, with a focus on new sales infrastructure, compensation changes, and acquired business integration.

Real estate data provider CoStar Group (NASDAQ:CSGP) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 15.3% year on year to $781.3 million. The company expects next quarter’s revenue to be around $802.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.17 per share was 23.4% above analysts’ consensus estimates.

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CoStar (CSGP) Q2 CY2025 Highlights:

Revenue: $781.3 million vs analyst estimates of $772.2 million (15.3% year-on-year growth, 1.2% beat)

Adjusted EPS: $0.17 vs analyst estimates of $0.14 (23.4% beat)

Adjusted EBITDA: $85 million vs analyst estimates of $59.36 million (10.9% margin, 43.2% beat)

The company slightly lifted its revenue guidance for the full year to $3.15 billion at the midpoint from $3.14 billion

Adjusted EPS guidance for the full year is $0.78 at the midpoint, missing analyst estimates by 5%

EBITDA guidance for the full year is $380 million at the midpoint, below analyst estimates of $383.5 million

Operating Margin: -3.5%, down from -2.4% in the same quarter last year

Market Capitalization: $39.38 billion

StockStory’s Take

CoStar’s second quarter saw solid execution, with revenue and non-GAAP earnings both surpassing Wall Street expectations, prompting a positive reaction from the market. Management attributed this performance to strong growth across its core platforms—including Apartments.com, Homes.com, and LoopNet—driven by substantial investment in expanding sales capacity and ongoing product enhancements. CEO Andrew Florance highlighted the company’s ability to deliver “57 consecutive quarters of double-digit revenue growth,” pointing to record net new bookings and high customer renewal rates as evidence of sustained demand, despite ongoing challenges in some segments of the commercial real estate market.

Looking ahead, CoStar’s updated guidance is shaped by continued investment in its sales organization and product innovation, with management emphasizing the importance of capturing further share in large addressable markets. The company expects Homes.com and Apartments.com to benefit from expanded sales teams and new features, while integration of Matterport’s technology and the pending Domain acquisition are aimed at broadening its global footprint. CFO Christian Lown cautioned that some margin pressure may persist as “timing of investment spend” shifts into the second half of the year, but management remains focused on driving profitable growth through strategic expansion and operational efficiency.

International Business Machines Corp. (IBM) produced strong free cash flow guidance in its July 23 Q2 earnings release. Management said it now expects over $13.5 billion in FCF this year. That’s 8.8% higher than 2024 and implies IBM stock could be worth 13% more at $294 per share. This article will show why.

IBM closed at $260.51 on Thursday, July 24, down -7.6% for the day after its earnings release. IBM stock is well down from its recent peak of $294.78 on June 30.

That makes today’s price a great buy-in opportunity for value investors. Moreover, it makes sense to sell out-of-the-money (OTM) put options for an even lower buy-in price (more on that below).

First, let’s look at IBM’s results and the strong free cash flow (FCF) guidance.

Strong Free Cash Flow (FCF) Outlook

On July 23, IBM reported +7.6% higher Q2 revenue at $16.977 billion, compared to $15.77 billion last year. This was driven by its software (+10% YoY) and infrastructure (cloud storage) segments, up 14%, while its consulting division sales were up 3%.

In addition, IBM’s operating income before taxes grew +17% to $2.597 billion, with a strong operating margin of 15.3%, vs. 14.1% a year ago.

Moreover, the company’s first half free cash flow (FCF), adjusted by excluding financing receivables, was $4.8 billion, representing over 15.2% of sales. Its Q2 FCF adjusted margin was higher at 16.5% (i.e., $4.8 billion/$17b sales), as can be seen from the company’s earnings presentation deck:

IBM Q2 FCF margin – IBM Q2 deck and Hake FCF margin analysis

As a result, management projected a strong free cash flow outlook. Here is what the CEO, Arvind Krishna, said:

“With our strong first-half performance, we are raising our full-year outlook for free cash flow, which we expect to exceed $13.5 billion.”

Since the company also expects over 5% revenue growth (i.e., from $62.753 billion last year to $65.89 billion), this FCF represents a 20.5% FCF margin:

$13.5 billion FCF est. / $65.89 billion revenue = 0.2049 = 20.5% FCF margin

In other words, management expects FCF margins to rise substantially in the next 2 quarters from 16.5% in Q2 and 15.2% in H1. As a result, we can project higher FCF over the next 12 months (NTM).

Projecting FCF and Target Price

Analysts are even more ebullient about IBM’s revenue prospects. The average of 21 analysts surveyed by Seeking Alpha is $66.6 billion for 2025, and $69.51 billion next year. That works out to an average next 12 months (NTM) revenue forecast of $68.06 billion.

Therefore, if IBM makes a 20.5% FCF margin, as management expects in 2025, its FCF could rise to almost $14 billion over the next 12 months:

$68.06 billion NTM sales x 0.205 = $13.95 billion NTM FCF

That would be +3.3% higher than management’s expectation for 2025 and +13% over the $12.34 billion it made over the trailing 12 months (TTM), according to Stock Analysis. (That TTM FCF figure may not have added back financing receivables as the company does).

How will the market value this? One method is to use an FCF yield metric. That assumes that 100% of its FCF is paid out to shareholders in dividends. The resulting dividend yield is also equal to its FCF yield.

For example, the $12.34 billion TTM FCF represents 5.1% of its existing market value of $242.1 billion (Yahoo! Finance).

Therefore, it’s reasonable to assume the market will value IBM with at least a 5.1% FCF yield over the next 12 months. That is the same as multiplying FCF by 19.6x (i.e., 1/0.051 =19.6):

$13.95 billion NTM FCF x 19.6 = $273.4 billion target

That is +12.9% over Thursday’s market cap of $242.1 billion. In other words, IBM stock is worth at least 12.9% more or $294 per share:

$260.51 p/sh x 1.129 = $294.11 target price

Analysts Agree IBM is Undervalued

For example, Yahoo! Finance’s survey shows an average analyst survey price target of $277.01, and Barchart’s mean survey price is $269.95.

In addition, Stock Analysis says that 14 analysts have an average of $277.36. However, AnaChart.com, which tracks recent analysts’ reports and recommendations, says that the average is $311.18.

As a result, the mean survey price target is $283.88 per share, which is close to our price target of $294.11.

However, there is no guarantee this will occur over the next 12 months. It could stay flat. As a result, it makes sense to set a lower buy-in target and get paid in the process.

Shorting OTM Puts

This is what happens when you enter an order to “Sell to Open” out-of-the-money (OTM) put options in nearby expiry periods – i.e., shorting OTM puts.

For example, look at the Aug. 22 expiration period, which is 29 days to expiry (DTE). The $250.00 exercise price in the put option chain shows that the midpoint premium is $2.80 per put contract.

So, the short-seller of these puts makes an immediate yield of 1.12% (i.e., $2.80/$250.00).

The reason is that the investor must secure $25,000 with their brokerage firm to do this trade. In return, the $2.80 put price represents $280 received (i.e., $2.80 x 100 shares per contract):

$280 / $25,000 = 0.0112 = 1.12% over 29 days

Note that this strike price is 4% below the trading price, i.e., out-of-the-money (OTM). However, the chance of IBM falling to this strike price is low, as the delta ratio is just 25.8%.

Moreover, the breakeven point, even if IBM stock falls to $250.00 on or before Aug. 22, is low at $247.20 (i.e., $250-$2.80). That is 5.1% below Thursday’s closing price.

An investor willing to take on more risk could short the $255.00 strike price, i.e., 2% below the trading price. However, the short-put yield is higher at 1.68% (i.e., $4.28/$255.0).

The bottom line is that investors can set a lower buy-in price shorting OTM puts. Given that the stock is worth +13% more, based on FCF projections, that might work out well for investors over the next 12 months.

Trucking company PACCAR (NASDAQ:PCAR) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, but sales fell by 15.7% year on year to $6.96 billion. Its non-GAAP profit of $1.37 per share was 7% above analysts’ consensus estimates.

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PACCAR (PCAR) Q2 CY2025 Highlights:

Revenue: $6.96 billion vs analyst estimates of $6.79 billion (15.7% year-on-year decline, 2.6% beat)

Adjusted EPS: $1.37 vs analyst estimates of $1.28 (7% beat)

Adjusted EBITDA: $815.1 million vs analyst estimates of $740.3 million (11.7% margin, 10.1% beat)

Operating Margin: 10.3%, down from 14.9% in the same quarter last year

Organic Revenue fell 13.4% year on year (-1.8% in the same quarter last year)

Market Capitalization: $53.26 billion

StockStory’s Take

PACCAR’s Q2 results were met with a positive market response, as the company surpassed Wall Street revenue and profit expectations despite a notable decline in year-over-year sales. Management attributed the quarter’s performance to record revenues in the PACCAR Parts division, solid execution across truck operations, and robust results from PACCAR Financial Services. CEO Preston Feight highlighted the company’s ability to grow parts sales in a flat market and noted that strong demand in less-than-truckload and vocational segments helped offset broader softness. Feight also pointed to healthy contributions from new aerodynamic truck models in Europe and ongoing investments in advanced driver assistance systems as key operational highlights.

Looking forward, PACCAR’s outlook is shaped by several external factors, including ongoing tariff uncertainty, evolving environmental regulations, and anticipated shifts in North American truck demand. Management is watching for clarity on Section 232 tariffs and the upcoming NOx emission standards, suggesting these could spur pre-buy activity as fleets look to avoid higher costs. CFO Brice Poplawski emphasized that recent U.S. legislation supporting accelerated R&D expensing could benefit both PACCAR and its customers, providing additional incentive for capital purchases. Feight stated, “We anticipate the North American market will strengthen as tariff policies become certain, the truckload market gains momentum, and customers begin to anticipate the 2027 NOx Emission standards.”

Key Insights from Management’s Remarks

Management attributed Q2’s results to record performance in the parts segment, effective cost control, and resilience in key truck markets. Strategic investments in technology and operational efficiency helped the company outperform consensus expectations.

Adhesive manufacturing company Avery Dennison (NYSE:AVY) fell short of the market’s revenue expectations in Q2 CY2025, with sales flat year on year at $2.22 billion. Its non-GAAP profit of $2.42 per share was in line with analysts’ consensus estimates.

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Avery Dennison (AVY) Q2 CY2025 Highlights:

Revenue: $2.22 billion vs analyst estimates of $2.24 billion (flat year on year, 0.9% miss)

Adjusted EPS: $2.42 vs analyst expectations of $2.43 (in line)

Adjusted EBITDA: $367.5 million vs analyst estimates of $362.2 million (16.6% margin, 1.5% beat)

Adjusted EPS guidance for Q3 CY2025 is $2.32 at the midpoint, below analyst estimates of $2.42

Operating Margin: 12.9%, up from 11.7% in the same quarter last year

Organic Revenue was flat year on year (7.1% in the same quarter last year)

Market Capitalization: $13.95 billion

StockStory’s Take

Avery Dennison’s second quarter results largely reflected the effects of shifting trade policy and segment-specific demand fluctuations, as the company navigated a complex economic backdrop. While revenue was flat year over year and missed Wall Street’s expectations, earnings per share came in slightly ahead of consensus. Management pointed to resilient execution in the Materials Group, where enhanced product mix and operational productivity supported margins, even as volume growth remained modest. CEO Deon Stander explained that “changes in trade policy throughout the quarter had both direct and indirect impacts on our business,” particularly in apparel and general retail categories. Meanwhile, growth in high-value categories, especially in graphics and reflective solutions, partially offset declines in base business lines.

Looking forward, Avery Dennison’s guidance for the next quarter reflects caution amid ongoing trade uncertainty, muted apparel demand, and continued inflationary pressure. The company expects earnings to remain comparable to the prior year but highlighted productivity efforts, innovation in Intelligent Labels, and expansion in food and logistics as key levers for eventual growth acceleration. CFO Greg Lovins emphasized, “the outlook remains uncertain and customer feedback and sentiment remains muted,” particularly in the apparel segment, while Stander reiterated the company’s focus on network efficiency and innovation to drive competitive differentiation. Management is aiming to return to earnings growth by the end of the year, assuming no significant deterioration in macroeconomic trends.

Key Insights from Management’s Remarks

Management attributed second quarter performance to a combination of resilient execution in core operations and targeted innovation in high-value categories, while ongoing trade policy shifts and muted apparel demand weighed on segment results.