Home Depot shares slid on Tuesday, even after the retailer’s first-quarter earnings jumped 86% from a year ago on strong demand for supplies as customers worked on DIY projects during the COVID-19 pandemic.
Earnings came in at $3.86 a share, higher than the $3.02 a share estimated in a FactSet survey of analysts. A year ago, earnings were $2.08 a share.
Revenue for the quarter ended May 2 was $37.5 billion, above the anticipated $34.82 billion and 33% higher than $28.3 billion a year earlier.
Home Depot shares fell as much as 1%, but are still up roughly 20% year-to-date.
“Fiscal 2021 is off to a strong start as we continue to build on the momentum from our strategic investments and effectively manage the unprecedented demand for home improvement projects,” Craig Menear, Home Depot’s CEO, said in the earnings release.
Worldwide comparable sales rose 31% from a year and US same-store sales increased by 29.9%. Home Depot has been considered an essential retailer during the pandemic, allowing homeowners and builders access to supplies and equipment such as hot water heaters, propane, and plumbing fixtures.
Jefferies in a note said the company presented a “solid quarter” with strong expansion in operating margins. Jefferies has a buy rating on Home Depot with a price target of $374.
Shares of Google parent Alphabet hit record intraday highs on Wednesday after the company posted first-quarter earnings and revenue that beat Wall Street expectations. The tech giant was also authorized by its board to repurchase up to an additional $50 billion of its own stock.
A 34% rise in revenue supported by stronger advertising sales helped the company blow past analyst estimates.
Earnings were $26.29 per share, well above the Refinitiv estimate of $15.82 per share and earnings of $9.87 per share a year earlier.
Total revenue of $55.31 billion was ahead of the $51.70 billion estimate from Refinitiv. A year ago, revenue was $44.16 billion. The increase reflected consumer activity online and broad-based ad revenue growth, the company said.
Traffic acquisition costs came in at $9.71 billion, up from $7.45 billion a year earlier.
The stock climbed as much as 5% to $2,397 per share. It’s gained 31% year-to-date, driven in part by investors expecting the company to benefit from increased use of search services amid the pandemic.
“Over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained. We’ve continued our focus on delivering trusted services to help people around the world,” said Sundar Pichai, Alphabet’s CEO, in a statement.
Revenue from Google Search rose to $31.9 billion from $24.5 billion and YouTube ads drew in $6 billion, up from $4 billion in the prior period.
“We see a permanent shift to digital drawing ever more ad dollars, with particular strength in YouTube as it is the new TV of this decade. Further, we see real momentum across Google as the global economy re-opens in stages and marketing budgets ramp up,” said Brent Thill, an equity analyst at Jefferies, in a note.
Snap shares were propelled higher Friday after the social media site turned in first-quarter financial results that surpassed Wall Street’s targets and set its sight on a jump in revenue.
The company late Thursday posted breakeven earnings per share on an adjusted basis compared with a loss of $0.06 per share in a consensus estimate from Refinitiv. A year ago, Snap lost $0.08 per share.
Revenue leapt by 66% to $769.6 million from $462.5 million a year earlier, beating analyst expectations of $743.8 million. The company said its active advertiser base about doubled from the year-ago period and that it delivered positive free cash flow for the first time as a public company.
Shares rose 6.6% to $60.80 early Friday. The stock has picked up about 14% this year and has more than tripled from $16 over the past 12 months.
Snap forecast second-quarter revenue of $820 million to $840 million, which would represent growth of 81% to 85% from $454 million in the year-ago period. Analysts, on average, currently anticipate $827 million.
In the first quarter, global daily active users rose by 51% to 280 million, higher than the Refinitiv estimate of 274.6 million users. Snap also said for the first time that the majority of its daily active users for the quarter were on the Android version of its app.
“We have a large opportunity to gain share of the global digital ad market, which is $340 billion and growing,” said Jeremi Gorman, Snap’s chief business officer, during the company’s earnings call. She said the company is focused on three priorities: investing in its ad platform, scaling its sales and marketing functions to support advertising partners worldwide, and building ad experiences through video and augmented reality.
Social platforms, especially over the past year, have been increasing focus on e-commerce, said Scott Kessler, global sector lead for technology, media and telecommunications at Third Bridge, in a note.
“The recent acquisition of Fit Analytics could help Snap in the fashion area, and ultimately challenge Pinterest, where the latter has had success with its “try on” feature in the beauty category,” he said.
Bed Bath & Beyond shares were knocked sharply lower Wednesday after first-quarter sales results from the housewares retailer fell short of Wall Street’s target.
The company on Wednesday posted quarterly adjusted earnings of $0.40 per share, higher than the analyst consensus estimate of $0.41 per share from Refinitiv and up from $0.38 per share a year earlier.
Sales for the quarter ended Feb. 29 fell by 16% to $2.62 billion from $3.11 billion a year ago, slightly missing the $2.63 billion that Wall Street had anticipated.
Shares fell as much as 15% to $23.68 in heavy volume before the losses were pared to 10% during the session. The company’s stock has soared over the past year from about $4 each.
Bed Bath & Beyond, which is executing a turnaround plan, said quarterly sales were hurt in part by divestitures and permanent store closures. Bed Bath & Beyond in January sold Cost Plus World Market to private equity firm Kingswood Capital Management and in November completed the sale of Christmas Tree Shops and its institutional Linen Holdings business.
First-quarter comparable store sales decreased 20%, the company said. Total enterprise same-store sales rose by 4% while online sales surged by 86%. The company said its strongest categories during the period included bedding, bath and kitchen food preparation.
The company reaffirmed its fiscal 2021 outlook for net sales of $8 billion to $8.2 billion and its adjusted EBITDA guidance of $500 billion to $525 million.
“As our transformation continues to take hold, we will show up differently for our customers with enhanced omnichannel experiences and modern stores,” among other actions, said Mark Tritton, Bed Bath & Beyond’s president and CEO, in the earnings statement.
A light economic calendar will “leave plenty of time for investors to watch the debut of Coinbase to the public markets. The listing couldn’t come at a better time for the company as crypto-currencies have been on absolute fire with both bitcoin and ether trading at record highs and riding what looks to be their seventh straight day of gains,” said Paul Hickey, co-founder of equity research firm Bespoke in a note.
Expectations for quarterly earnings growth are at their strongest in about two decades as analysts pencil in the impact of the US economy’s acceleration out of recession, led by projections for earnings in the energy sector to more than double.
A big wave of financial reports should hit Wall Street in mid-April, with big banks including JPMorgan Chase, Goldman Sachs and Wells Fargo among the companies that will kick off the first-quarter earnings season for 2021.
Ahead of that, Wall Street analysts are looking for S&P 500 500 companies overall to post a 6% increase in bottom-up per-share earnings, according to FactSet. A 6% rise would represent the largest increase since the financial-data firm began tracking the earnings estimate in the second quarter of 2002. Earnings, on average, are currently expected to come in at $39.86 per share.
The bottom-up EPS estimate is an aggregation of the median first-quarter earnings-per-share estimates for all of the companies in the S&P 500, FactSet said in a note published Thursday.
The projected 6% increase stands out in part because a bottom-up EPS estimate usually decreases during a quarter. FactSet said during the past five years, the estimate has recorded a decline of 4.2% during a quarter, and during the past 15 years, it has tended to post a decrease of 5.1%.
Analysts “may have been too aggressive in their downward revisions to EPS estimates during the first half of 2020 at the height of the COVID-19 lockdowns,” wrote John Butters, senior earnings analyst at FactSet, in looking at the factors behind the boost in first-quarter projections.
The global economy sunk into recession last year as the coronavirus pandemic forced businesses worldwide to close or reduce operations to curb the spread of the respiratory disease. The US economy contracted by 33% in the second quarter of 2020.
But analysts in the third quarter of 2020 began raising their earnings expectations for that quarter and beyond. FactSet foresees US gross domestic product expanding by 5.7% in 2021, higher than the projected 4% rate on December 31.
Rising commodity prices and interest rates also appear to be fueling upward revisions. Oil prices have jumped by more than 20% to top $59 a barrel during the first quarter and the yield on the 10-year Treasury note quickly scaled up above 1.7% during the first three months of this year from 0.92%.
The highest percentage increases in bottom-up EPS estimates are for the energy, materials, and financials sectors as they are “likely benefitting from either higher commodity prices (Energy and Materials) or higher interest rates (Financials),” said Butters.
Per-share earnings estimates for the energy sector have shot up by 123%, to $2.55 from $1.14, the largest boost in projections among the 11 sectors tracked on the S&P 500 index. The financial sector is forecast to post a collective earnings increase of about 13% for the first quarter.
“Finally, companies in the S&P 500 have been much more optimistic in their EPS guidance than normal,” said Butters, noting that 61 companies have issued positive first-quarter guidance, well above the five-year average of 35.
“If 61 is the final number for the quarter, it will mark the highest number of S&P 500 companies issuing positive EPS guidance for a quarter since FactSet began tracking this metric in 2006,” he said.