Systematic Credit and Equity G-255 Issuers Reporting Q3 Results and Trade Indicators for October 3-, 2025
Write - ups will be provided in this afternoon's earnings digest.
Of the reports reviewed this AM, AeroCap (BAA2/BBB) had the best result.
Fiserv (Baa2/BBB) results begs the question as to why they didn't warn prior to earnings?
And the report with the most optimism clearly was from Boeing. Adding 4 units a month with positively impact their internal cash flow.
Equinor (EQNR, Aa2/AA- attractive long credit/equity) 3Q ended September 30
Equinor reported operating revenue growth of 2% YoY in their third quarter. Operating income fell -24% YoY.
3Q Operating Metrics
Equity and liquid gas production rose +7% YoY
Entitlement liquid and gas generation rose 8% YoY
Electric power generation rose 4% YoY
Average liquid and gas price fell -13% YoY
Operating Cashflow fell -2% YoY to $6.34 billion
Free Cashflow fell -17% YoY to $2.1biln
Equinor reaffirmed its guidance for a 4% oil and gas production growth in 2025 and kept its 2025 capital expenditure forecast at $13 billion
Financial Position: Company continues to plan a $9 billion net distribution to shareholders and remains with virtually no net debt.
Credit Trading Model Indicator: There are currently 19 secondary Equinor USD bonds in circulation totaling $12.8 billion. The systematic trading model has 1 long trading indicator.
Recent USD supply: May 28, 2025, EQNR 5 â 06/03/35 sold +70/10Y and trades -16bp to NIP
Equity Trading Model Indicator: EQNR NO equity is a short indicator above NOK 260/shr.
Phillips 66 (PSX, Baa1/BBB+ attractive short credit/equity) 3Q ended September 30
Phillips 66 reported operating revenue decline -3% YoY in their third quarter. Operating income fell -47% YoY.
3Q Operating Metrics
Refined product revenue was flat YoY
Crude oil resale revenue fell -28% YoY
Liquids and natural gas revenue rose 18% YoY
Average liquid and gas price fell -13% YoY
9mos Operating Cashflow fell -22% YoY to $2.2 billion
9mos Free Cashflow fell after acquisitions was -$1.5 billion
The company expects a worldwide crude utilization rate in the low-to-mid 90% range for Q4, a decrease from the 99% achieved in Q3 2025. This reflects typical seasonal maintenance and operational planning.
Financial Position: PSX has returned $2.4 billion to shareholders while net debt on their balance sheet has grown over 10%.
Credit Trading Model Indicator: There are currently 26 secondary Equinor USD bonds in circulation totaling $15.8 billion. The systematic trading model has 1 short trading indicator and 3 overvalued indicators.
Recent supply: September 16, 2025, PSX 6.2% 3/15/56 Jr. Subordinated bond and trades at $101.
Equity Trading Model Indicator: PSX equity is a short indicator at its current price.
Airbus (AIRFP, A1/A attractive long credit / equity) 3Q ended September 30
Operations rose 7% YoY
3Q Operating Metrics
Commercial Aviation revenue rose 12% YoY.
Helicopter revenue rose 16% YoY.
Defense and Aerospace revenue rose 17% YoY.
9mos operating cash flow was flat YoY.
9mos free cash flow was negative after the Spirit Aerospace acquisition.
Airbus maintained its full-year guidance for around 820 commercial aircraft deliveries, an adjusted EBIT of approximately €7 billion, and free cash flow of about €4.5 billion before customer financing
Financial Position: Airbus has € 1 billion of net debt and total debt is now less than €13.5 billion.
Credit Trading Model Indicator: There are no AIRFP USD bonds to trade.
Recent new supply: 2017
Equity Trading Model Indicator: AIR FP equity is a long trade indicator below €195/shr.
Boeing (BA, Baa3/BBB+ attractive short credit / long equity) 3Q ended September 30
Boeing reported operating revenue growth of 7.7% YoY in their third quarter. Operating earnings before write
– down were materially improved.
3Q Operating Metrics
Commercial Aviation revenue rose 47% YoY.
Defense and Aerospace revenue rose 25% YoY.
Global Services revenue rose 10% YoY.
9mos operating cash flow improved to -$266 from -$8.36 bil.
9mos free cash flow improved to -$2.5 bil from -$10.1 bil
Boeing lowered its full-year 2025 guidance due to a significant charge related to the delayed 777X program, but maintained its production targets for the 737 and 787
Financial Position: Boeing's business does not necessarily require large amounts of borrowed funds. The improved delivery schedule should help the company return to positive cash flow in its fourth quarter even after the $4.9 billion pre-tax charge after reassessing the 777-9 certification timeline to 2027. Post Boeing's capital raise in 1Q 2025, the company's net debt is again rising by almost $1 billion per quarter, but cash burn has declined sequentially.
Credit Trading Model Indicator: There are currently 24 Boeing secondary USD bonds in circulation totaling $45.3 billion of market capital. 1 bond has an undervalued trade indicator.
Recent new supply: the last new Boeing bond sold was in November 2024.
Equity Trading Model Indicator: BA equity is a long trade indicator at current levels
Canadian Pacific (CP, Baa1/BBB+ attractive short credit / long equity) 3Q ended September 30
Canadian Pacific reported operating revenue growth of 3% YoY in Q3 2025. Operating income rose
11% YoY
3Q Operating Metrics
Overall revenue ton miles (RTM) rose 5% YoY.
Revenue/RTM fell -1% YoY.
Carloads rose 4% YoY.
Revenue/carload was flat.
Fuel costs fell – 2%
9mos operating cash flow rose +6% to $3.8 bill.
9mos free cash flow fell -7% to $1.4 billion
Company did not raise 4Q revenue or earnings guidance with 4%+ organic net revenue growth and approximately 15% EPS decline on a constant currency basis.
Financial Position: 9 mos. return to CP shareholders in 2025 has been $C4.137 billion or more than the company's cashflow from operations. Net debt is up 13% to $C20 billion.
Credit Trading Model Indicator: There are currently 18 Canadian Pacific secondary USD bonds in circulation totaling $9.6 billion of market capital. 1 bond has an overvalued and 1 a short trade indicator.
Recent new supply: March 12, 2025, CP 5.2 03/30/35 +95/10Y currently trades -31bp to NIP.
Equity Trading Model Indicator: CP equity is a long trade indicator at its current price.
AerCap (AER, Baa1/BBB+ attractive long credit /equity) 3Q ended September 30
AerCap reported operating revenue growth of 3% YoY in Q3 2025. Operating income rose 11% YoY
3Q Operating Metrics
Basic lease rents rose 5% YoY.
Maintenance revenue rose 26% YoY.
Aircraft sale profit tripled to $332mm.
9mos operating cash flow rose +1% to $4.17 bill.
9mos free cash flow rose to $3.4 billion from $1.15 billion
Company raised full year guidance for earnings based on higher aircraft sales in 4Q.
Financial Position: 9 mos. return to AER shareholders in 2025 has been $2.2 billion and net debt on the AER balance sheet continues to decline.
Credit Trading Model Indicator: There are currently 26 AerCap secondary USD bonds in circulation totaling $31 billion of market capital. 1 bond has an undervalued indicator.
Recent new supply: September 22, 2025, AER 5 11/15/35 +97/10Y currently trades +5bp to NIP.
Equity Trading Model Indicator: AER equity is a long trade indicator below $117 per share.
Kraft Heinz (KHC, Baa2/BBB attractive long credit/equity) 3Q ended September 30
KHC reported operating revenue decline of -2.5% YoY in the third quarter. Operating income fell -16.9%.
Kraft Heinz plans to split into two independent, publicly traded companies through a tax-free spin-off. The two
Resulting companies, whose names will be determined at a later date, are referred to as:
"Global Taste Elevation Co.," a global leader in Taste Elevation and shelf-stable meals with three billion-dollar brands including Heinz, Philadelphia, and Kraft Mac & Cheese.
"North American Grocery Co.," a scaled portfolio of North America staples with three billion-dollar
brands including Oscar Mayer, Kraft Singles, and Lunchables.
Financial Position: Kraft Heinz has returned $1.8 billion to shareholders in 2025. Given the planned separation management will continue investing while ensuring Net Leverage stays near 3.0x. Consistent with its capital
allocation priorities, the Company will actively consider deploying excess cash to pay down debt before
completion of the separation which is expected to occur in 2026. Thus far net debt remains unchanged.
Credit Trading Model Indicator: There are currently 15 secondary USD KHC bonds in circulation totaling $19.9 billion. The systematic trading model has 8 overvalued trading indicators and 1 short trading indicator.
Recent New Supply: February 19, 2025, KHC 5.4 03/15/35 sold +87/10Y and trades +3bp to NIP
Equity Trading Model Indicator: KHC equity is a long indicator at its current price.
Starbucks (SBUX, Baa1/BBB+ attractive short credit/equity) 4Q ended September 30
SBUX reported operating revenues rose5% YoY in their third quarter. Operating income fell -16.9%.
3Q Operating Metrics
Comparable store sales rose 1% YoY.
North American comparable store sales were flat with 1% YoY pricing.
Company closed 107 stores (net) leaving just under 41,000.
12 mos. operating cash flow fell -23% to $4.7 bill.
12 mos. free cash flow fell from $3.4 billion to $2.3 billion
The company anticipates a rebound in earnings per share (EPS) in 2026, with an independent analyst suggesting it could exceed 20%
Financial Position: Starbucks suspended share repurchase at the end of F 2024 and continues to be a net user of cash. Net debt rose 10% in f2025 and now stands above $14 billion.
Credit Trading Model Indicator: There are currently 18 secondary USD Starbucks bonds in circulation totaling $14.35 billion. The systematic trading model has 2 overvalued trading indicators and 6 short trading indicators.
Recent New Supply: May 6, 2025, SBUX 5.4 05/15/35 +110/10Y and trades -35bp to NIP
Equity Trading Model Indicator: SBUX equity is a short trade indicator above $93/shr.
Entergy (ETR, Baa2/BBB attractive short credit/long equity) reports 3Q results
3Q 2025 revenue growth was 12% YoY and operating earnings that rose 2%YoY.
3Q Operating Metrics
Residential electric generation rose 2.7%.
Commercial electric generation rose 1.9% YoY.
• Operating cash flow rose 30% YoY to $2.1 billion
• Free cash flow fell by 44% to $235mm
Management narrowed (did not raise) 4Q earnings guidance.
Financial Position: Similar to most Utilities ETR net debt continues to grow and is almost $29 billion. ETR's financial statements are not the easiest to navigate. However, ETR cashflow and balance sheet data is straightforward. This management is extremely careful about balance sheet management.
Credit Trading Model Indicator: There are 51 ETR secondary ETR bonds in circulation ($33.5 billion of overall market capital), and 2 EIX bonds carry overvalued, 5 have short credit trading indicators.
Recent new supply: March 10, 2025, ETR 5.8 04/15/55 (1st Mort) 125/30Y bond trades -38bp to NIP
Equity Indicator: ETR equity is a long trade below $88/shr.
Fiserv (FI, Baa2/BBB attractive short credit and equity) 3Q ended September 30
Fiserv reported operating revenue growth of 1% YoY in their third quarter. Operating income fell
-10% YoY
3Q Operating Metrics
We aren't showing Fiserv's operating metrics – the words "Adjusted" and "Organic" appear so frequently that the numbers they published do not add up to the reported revenue or operating income data in the financial press release.
9 Mos Operating cashflow fell – 8.8% YoY to $4.11 billion
9 Mos Free cashflow fell 8% to $2.9 billion
Fiserv revised its full-year 2025 guidance to 3.5% to 4% organic revenue growth and $8.50 to $8.60 in adjusted earnings per share. This is a significant reduction from the previous guidance of approximately 10% organic revenue growth and $10.15 to $10.30 adjusted EPS
Financial Position: During 2025 repurchased $5 billion of equity at prices significantly higher than where the stock trades today. Net debt is now @ $29 billion or 5x trailing 12 months operating cashflow
Credit Trading Model Indicator: There are currently 24 secondary Fiserv (FI) bonds in circulation totaling $26 billion of market capital. 5 bonds have overvalued indicators, and no FI bonds have short indicators.
New supply: August 4, 2025, FI 5 ¼ 08/11/35 + 107/10Y and currently trades +5 bp to NIP
Equity Trading Model Indicator: FI Equity is a short indicator at $151/shr.
Disclaimer - This report is not intended as, and does not constitute an offer, or a solicitation to buy or sell any securities or financial instruments. All data, levels, opinions, and representations herein are provided for informational purposes only and should not be relied upon for making investment decisions. Past performance is not indicative of future results. The authors of this report assume no liability for losses or damages arising from the use of this information. Investors should consult with a qualified financial advisor before making any investment decisions. The information in this report is based on sources believed to be reliable, but no guarantee is made as to its accuracy, completeness, or timeliness.