The trade war and the eternal back-and-forth over a deal or no deal may be dragging down economic data, while brick-and-mortar retail was already getting by on life support in the U.S., but that doesn’t rule out earnings surprises--it just makes the playing field much more logical.
Here are 5 earnings surprises of note so far this month:
#1 Target (NYSE:TGT) +14.29% Earnings Surprise
Target hasn’t only escaped the retail culling, it delivered an earnings surprise on November 20th giving the stock a 14% bump in Wednesday trading, which translated into an all-time intraday high for the retailer.
Target beat Wall Street estimates by a long shot with Q3 earnings of $1.36 per share against a consensus estimate of $1.19 per share. The $1.36 per share earnings represented a 24.77% increase over earnings from the same period last year.
Quarterly sales hit $18.7 billion, beating analyst estimates of $18.49 billion and representing a 4.93% increase over the same period last year. Net income hit $714 million, up from $622 million, and total revenue grew 4.7% for the quarter. Target also raised 2019 adjusted EPS guidance from $5.90-$6.20 to $6.25-$6.45.
Digital sales are killing it, with a 31% surge for the quarter thanks to same-day delivery options that account for 80% of that growth. And we can expect more good news next quarter, with Target expecting more sales growth of around 4%.
#2 JD.com (NASDAQ:JD) +70.59% Earnings Surprise
As far as earnings surprises go, it doesn’t get much better than this. If you don’t know what JD.com is, it’s time to familiarize yourself. This is a Chinese tech-driven e-commerce giant that serves as the Amazon of Asia.
Buying into JD.com is a direct play on the Chinese economy, but consider this: JD isn’t just one of the largest retailers in the world, it’s also got massive growth potential because it behaves like a startup, even though it’s not. Throughout, it pays close attention to the fact that technology is driving everything.
Headquartered in Beijing, JD.com is a $46-billion-market-cap company that has managed to more than double its Q3 earnings and beat every Wall Street expectation out there.
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Active customer accounts were up 4%, to 334 million, while merchants were up 25% year-over-year, to 250,000. Soe 56% of total sales were accounted for my electronics and home appliances, while advertising saw a 29% revenue increase, general merchandise sales saw a 36% boost and logistics doubled sales.
Fourth-quarter guidance is also alluring, with JD expecting $23.2 billion in revenues, or a 23% increase in revenues year-over-year. It will depend on a stable dollar-to-yuan exchange rate.
#3 Activision Blizzard (NYSE:ATVI) +39.13% Earnings Surprise
The darling of the gaming industry, ATVI beat Wall Street Q3 earnings expectations this month, generating $1.28 billion in sales, up from $1.5 billion in the same quarter a year ago. The company reported net income of $204 million, for non-adjusted earnings per share of $0.38, against analyst expectations of $0.23.
ATVI shares didn’t respond as much as one would think on the earnings surprise because of investor backlash over the controversial move to cut ties with one of its key developers, Bungie, responsible for “Destiny”. There has also been backlash over ATVI’s decision to cut a gamer for publicly supporting the protesters in Hong Kong, which resulted in criticism that the company is getting political over financial ties to China.
#4 Dish Network +8.22% Earnings Surprise
In addition to an earnings surprise, DISH is also getting traction on very vague reports about talks with Amazon. No one even knows what these talks are about, but the market seems to like it, anyway.
But back to earnings: DISH released Q3 earnings in early November, reporting quarterly revenues of $3.17 billion. While those revenues were down from $3.40 billion in the same quarter a year ago, they still beat expectations with the consensus at $3.16 billion. While overall, this wasn’t an amazing showing, it still beat expectations pretty much across the board. And one note of particular interest is that total costs and expenses dropped $1 billion from a year ago.
#5 Lowes (NYSE:LOW) +4.44% Earnings Surprise
Lowe’s Q3 earnings came in at $1.41 per share, up from $1.04 per share a year ago this quarter. That beat Zacks consensus estimate of $1.35 per share. But Lowe’s also surprised the market last quarter, again beating consensus.
Revenues, however, did not beat estimates, with Lowes posting revenues of $17.39 billion for the quarter, missing the Zacks estimate by 1.70%, and down from a year ago revenue at $17.40 billion.
Analysts are overall bullish on Low’s since a new CEO, Marvin Ellison, took over last year. Of note, Lowe’s is restructuring is Canadian operations, updating its e-commerce business and putting more effort into its professional contractor customer base.
By Anes Alic for SafeHaven.com
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