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Investigate Expedia Group (EXPE). Explain what is changing in the business, test whether B2B growth is improving earnings quality, and identify the evidence that challenges the investment case. Finish with the questions we still need to resolve.

Researching 4 steps 4 steps

Read the primary evidenceQ2 release, filing and guidance
Reconcile earnings qualityGrowth, mix and cash conversion
Test the variant viewAI distribution and thesis falsifiers
Develop the company assessmentFindings, evidence and open questions

Expedia Group — growth, earnings quality and the open questions

Research stance: positive earnings inflection; valuation still needs underwriting. Q2 shows broader growth, faster profit conversion and stronger cash generation, while AI distribution remains the key unresolved risk.

What is changing in the business

EXPE is beginning to look less like a mature OTA defending consumer traffic and more like a scaled travel platform whose B2B engine can compound through shifts in discovery. Q2 gross bookings grew 12%, revenue 14%, adjusted EBITDA 23% and free cash flow 39%.¹ The mix matters: B2B bookings grew 21% and B2B revenue 23%, while B2C bookings still grew 8%.² Management then raised FY26 revenue growth to 9–10% and adjusted EBITDA margin expansion to 1.5–1.75 points.³ The variant view is that B2B growth and operating discipline can expand earnings faster than bookings even if consumer search fragments. The thesis fails if AI-led acquisition weakens B2C economics faster than B2B can diversify them.

B2B revenue+23%

Free cash flow+39%

FY26 revenue guide+9–10%

Evidence and interpretation

Reported: B2B revenue grew 23%, adjusted EBITDA margin expanded 196 bps and free cash flow reached $1.28B.^{1, 2}

Interpretation: the near-term earnings algorithm is becoming less dependent on consumer booking growth alone. B2B distribution and cost discipline provide a second route to earnings growth while the company adapts to AI-led discovery.

What would change the view

Consumer deterioration: booked room nights or B2C bookings decelerate while direct marketing intensity rises.
B2B quality weakens: revenue growth remains strong but segment EBITDA fails to scale with it.
Guidance conversion misses: revenue or margin lands below the raised FY26 range without a clear macro explanation.

Open research questions

Bridge B2B and B2C growth to segment EBITDA, compare marketing intensity and room-night growth with BKNG and ABNB, and test the raised guide against consensus and the current valuation.

Evidence behind the call

Expedia Group raised FY26 revenue growth to 9–10% and adjusted EBITDA margin expansion to 1.5–1.75 points.3

3 · Expedia Group Q2 2026 Earnings Release · Business Outlook, p. 2

Pressure-test our Fastenal operating-leverage thesis using reported quarters from FY2023 through Q2 2026. Is SG&A leverage still offsetting mix pressure? Deliver a source-backed PNG with the margin trend, latest-quarter bridge and measurable thesis breakers.

Researching 4 steps 4 steps

Read 14 reported quartersFY2023 Q1–FY2026 Q2
Reconcile the margin bridgeGross margin, SG&A and operating income
Pressure-test the offsetManagement drivers and measurable falsifiers
Create the PNG exhibitQuarterly trend, bridge and source notes

Fastenal — can operating leverage keep offsetting mix?

Bottom line: The offset still works, but the cushion has narrowed. SG&A leverage absorbed gross-margin pressure in Q2 2026, leaving operating margin at 21.02% — just +6 bps YoY, versus +77 bps a year earlier. The thesis now depends on how much fixed-cost leverage survives as growth slows.¹

The latest-quarter bridge

Metric	Q2’25	Q2’26	YoY contribution
Gross margin	45.32%	44.56%	−76 bps
SG&A / sales	24.36%	23.54%	+82 bps leverage
Operating margin	20.96%	21.02%	+6 bps

−76 bps of gross-margin pressure + 82 bps of SG&A leverage = +6 bps of operating-margin expansion. Margins and changes are calculated from reported dollars; figures shown are rounded.¹

Why the cushion is thinning

Mix and price/cost both weigh on gross margin. Larger-account mix remains a structural drag. Price/cost added roughly 40 bps of pressure in Q2, and management did not expect the gap to close fully in the second half.
A masking tailwind has rolled off. Fastener-expansion and supplier initiatives had offset mix dilution through Q1’26; that benefit anniversaried early in Q2.
Productivity is carrying the bridge. Base-pay/FTE productivity and occupancy leverage absorbed the drag, partly offset by faster-growing bonuses and commissions.

Management commentary: Q2 2026 earnings call and recent earnings releases.²

What would break the thesis

These are research tests, not company guidance:

Operating margin contracts YoY for at least two consecutive quarters. SG&A gains no longer cover gross-margin losses.
Gross-margin compression exceeds 75–80 bps YoY without a price/cost recovery.
SG&A leverage stalls or reverses as growth slows. Q4’24, when operating margin fell to 18.9%, is the reference case.
Incremental operating margin stays below roughly 20%. That would challenge management’s ability to deliver the roughly 24% it targeted in Q2’26.

Prepared the exhibit: 14 quarters of margin history, the Q2’26 bridge, and the drivers and thesis breakers, with reported figures separated from interpretation.

Exhibit (PNG): Fastenal Operating-Leverage Exhibit.png

1 · Fastenal earnings releases, FY2023 Q1–FY2026 Q2. 2 · Q2 2026 earnings call and Q1 2026 / Q4 2025 earnings releases.

Compare Fastenal’s earnings and cash flow under Bear, Base and Bull assumptions through FY2030. Start with reported financials, separate assumptions from facts, and show the impact of margins and working capital in an Excel workbook.

Researching 4 steps 4 steps

Establish the reported baseFY2025 annual report and H1 2026 results
Build the three operating casesRevenue, margins, working capital and capex
Calculate earnings and cash flowAnnual projections and two-variable sensitivities
Deliver the Excel modelLinked formulas, source inputs and 25 reconciliations

Fastenal earnings and cash-flow scenarios

Built the workbook. The Base case reaches $1.82 EPS and $1.79bn of annual free cash flow in FY2030. But cash does not grow in step with earnings: receivables, inventory and reinvestment absorb part of the operating improvement.

The three scenarios

FY2030 output	Bear	Base	Bull
Revenue	$11.06bn	$13.07bn	$14.57bn
Operating margin	19.4%	21.3%	22.9%
Diluted EPS	$1.41	$1.82	$2.19
Free cash flow	$1.36bn	$1.79bn	$2.14bn
Cumulative FCF, FY2026–30	$5.78bn	$7.18bn	$8.09bn

These are illustrative analyst scenarios, not company guidance. Reported FY2025 figures anchor the model; H1 2026 results expose what the FY2026 forecast requires in the second half.

What you are underwriting

Bear: revenue compounds at 6.2% through FY2030. Gross margin falls to 43.5%, SG&A remains 24.1% of sales, and slower collections and inventory turns weigh on cash.
Base: 9.8% revenue growth compounds with modest expense leverage. Gross margin settles at 44.4%; SG&A falls to 23.1% of sales. Improving inventory turns release part of the cash needed to grow.
Bull: 12.2% revenue growth combines with a 45.1% gross margin and stronger SG&A leverage. Better collections, inventory turns and supplier terms support cash conversion.

The cash cost of growth

In FY2030, five extra receivable days cost the Base case $179m of cash. Ten extra inventory days cost $199m. Neither change reduces EPS. By comparison, a 100-bp gross-margin improvement adds $135m of FCF, including its effect on inventory and payables.

The sensitivity sheet varies FY2030 growth and operating margin while holding FY2029 fixed. Faster growth can reduce that year’s cash flow because the incremental working-capital requirement arrives immediately; the earnings benefit and the cash benefit are different questions.

All three cases recalculate from editable annual assumptions. The six sheets include the operating build, cash-flow bridge, sensitivity matrices, reported source inputs and reconciliation checks. FCF is operating cash flow less gross capex plus disposal proceeds, before dividends, buybacks and debt flows.

The model is ready to inspect: Fastenal Scenario Model.xlsx

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Vertiv IC Brief.docx

Vertiv Investment Committee Brief: investment case, reported evidence, valuation assumptions and questions for the committee.

Work through the financials in a spreadsheet.

Compare peers, reconcile reported results and organize the numbers behind your analysis in a spreadsheet you can build on.

Fastenal Scenario Model.xlsx

	C	D	E	F	G	H	I	J	K
95	Line item	Unit	FY2024 A	FY2025 A	FY2026 E	FY2027 E	FY2028 E	FY2029 E	FY2030 E
96	Fastenal · Base case USD millions · A: actual · E: estimate
97	Revenue	$m	7,546.0	8,200.5	9,348.6	10,283.4	11,208.9	12,105.7	13,074.1
98	Revenue growth	%	—	8.7%	14.0%	10.0%	9.0%	8.0%	8.0%
99	Cost of sales	$m	4,144.1	4,509.3	5,188.5	5,717.6	6,232.2	6,730.7	7,269.2
100	Gross profit	$m	3,401.9	3,691.2	4,160.1	4,565.8	4,976.8	5,374.9	5,804.9
101
102	Gross margin	%	45.1%	45.0%	44.5%	44.4%	44.4%	44.4%	44.4%
103	SG&A	$m	1,891.9	2,035.5	2,234.3	2,426.9	2,622.9	2,808.5	3,020.1
104	SG&A / revenue	%	25.1%	24.8%	23.9%	23.6%	23.4%	23.2%	23.1%
105	Operating income	$m	1,510.0	1,655.7	1,925.8	2,139.0	2,353.9	2,566.4	2,784.8
106	Net interest income / (expense)	$m	(1.9)	(0.7)	–	–	–	–	–
107	Income before taxes	$m	1,508.1	1,655.0	1,925.8	2,139.0	2,353.9	2,566.4	2,784.8
108	Income tax expense	$m	357.5	396.6	473.7	526.2	579.1	631.3	685.1
109	Net income	$m	1,150.6	1,258.4	1,452.1	1,612.8	1,774.8	1,935.1	2,099.7
110	Effective tax rate	%	23.7%	24.0%	24.6%	24.6%	24.6%	24.6%	24.6%
111	Diluted weighted-average shares	m	1,148.6	1,150.3	1,150.6	1,150.6	1,150.6	1,150.6	1,150.6
112	Diluted EPS	$/share	$1.00	$1.09	$1.26	$1.40	$1.54	$1.68	$1.82
113	Operating margin	%	20.0%	20.2%	20.6%	20.8%	21.0%	21.2%	21.3%

Explore financial trends and comparisons through charts.

Chart growth, margins, valuations and estimate revisions to examine how a business is changing and how it compares with its peers.

Fastenal Operating-Leverage Exhibit.png

Fastenal operating-leverage PNG exhibit: quarterly gross, SG&A and operating margins, an operating-margin bridge and year-on-year changes, from Q1 2023 to Q2 2026.

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# research

Amelia Ruiz9:41 AM

@Portrait Give me the key debates around ATMU and its direct competitors. Put the bull and bear case side by side for each.

PortraitAgent9:42 AM

I’ve framed the work around three decision questions: OE demand durability, aftermarket mix, and pricing versus the peer set. Each debate separates the bull case, bear case, supporting evidence, and the signal that would change the view. ATMU debate map · Portrait Review

Amelia Ruiz9:45 AM

@Portrait Separate the company-specific evidence from the sector signals. Which part of the argument still needs testing?

PortraitAgent9:46 AM

Keep two evidence tracks. Atmus’s filings and calls address its aftermarket mix, pricing and execution. Peer results and industry disclosures test whether demand is moving across the sector. The open question is attribution: do margin gains persist after separating mix and pricing from the cycle? The next step is to reconcile each driver against the company’s reported bridge.

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9:41

New Message

To:easel@portraitresearch.com

Subject:Management question packs

Put together management question packs for PENG, AMAT and T ahead of the Goldman Sachs Communacopia + Technology Conference next week.

Read the last 12 months of news, transcripts and filings, and organise by near-term earnings, market demand, pricing and competition, medium term / 2027 planning, and capital allocation.

Sent to Easel

Preparing your question packs…

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Easel · Portrait Research 9:52 AM

Management question packs — PENG, AMAT, T

Three packs, five categories each. Every question carries the call, filing or news item behind it.

Management Question Packs.pdf

Monitors · Portrait8:04 AM

Daily brief — your watchlist

Four thesis updates overnight. Two touch positions you own.

IR — Penguin SolutionsYesterday

Re: Communacopia 1x1 confirmation

Confirming Wednesday 2:30pm with the CFO.

Applied Materials, Inc. (AMAT)

Management Question Pack

Communacopia + Technology · September 2026

Near-term earnings

Q4 guidance: $10.25B ± $500M revenue; about 50.4% non-GAAP gross margin. [1, 2]

What share of manufacturing and customer-support hiring costs is temporary?
When should those ramp costs stop weighing on gross margin?
For the 14-week Q1 FY2027, what is the operating-expense impact of the extra week? [2]

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Easel research workflows

What is changing in the business

Evidence and interpretation

What would change the view

Open research questions

Evidence behind the call

The latest-quarter bridge

Why the cushion is thinning

What would break the thesis

Fastenal earnings and cash-flow scenarios

The three scenarios

What you are underwriting

The cash cost of growth

Draw on Portrait’s financial intelligence.

Delegate multi-step investigations.

Review the evidence behind findings.

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Apply your research methods.

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Work through the financials in a spreadsheet.

Explore financial trends and comparisons through charts.

Delegate research in Slack or Microsoft Teams.

Give Easel the brief by email.

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