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Boston Beer (SAM) Down Above 10% on Slashed 2021 Earnings View

Boston Beer (SAM) trims earnings view for 2021. Higher supply-chain expenses and reduced shipment volumes persist as headwinds. Shares of The Boston Beer Company, Inc. SAM have plunged more than 10% in after-hours trading on Jan 13, after the company slashed its earnings view for 2021. Management cited that stronger-than-anticipated supply-chain expenses, including costs of additional damaged and expired inventory stemming from reduced shipment volumes are persistent headwinds. These factors are likely to lower gross margins for 2021.Boston Beer now forecasts shipment growth for its products to be lower than its expectations. This is caused by a greater wholesaler inventory reduction, mainly hurting Truly. Nonetheless, consumer demand is robust and tracking at the upper end of management’s expectations. This has contributed to the depletion growth. SAM will report its 2021 results on Feb 16, 2022.2021 OutlookManagement updated 2021 view in response to the aforesaid factors. Boston Beer estimates depletion growth of 21-22%, shipment increase of 15-16% and the national price rise of 2-3%. Gross margin is projected between 38% and 40%. SAM further predicts higher investments in advertising, promotional and selling expenses of $85-$95 million. This expense excludes freight costs changes for shipping products to the distributors.Management had earlier predicted a depletion and shipment increase of 18-22%. SAM expected national price increase of 2-3% and a gross margin of 40-42%.We note that the adjusted effective tax rate is envisioned to be 43%, while capital expenditure is expected at $145-150 million for 2021. Considering these, management now forecasts 2021 earnings per share between a loss of $1 and a profit of $1, excluding the impact of ASU 2016-09. The revised view shows a decline from the earlier earnings guidance between $2 and $6 per share.Preliminary View for 2022Boston Beer reaffirmed its preliminary expectations for 2022. SAM continues to expect depletions and shipments to increase between a mid-single-digit and a low-double-digit percentage range. National price increases are still anticipated to be 3-6%. Gross margin is anticipated to be 45-48%.Management continues to estimate higher investments in advertising, promotional and selling expenses of $10-$30 million. The non-GAAP effective tax rate is likely to be 26%, excluding the impacts of ASU 2016-09. Boston Beer expects to incur capital expenditure of $140-$190 million for 2022.Wrapping UpA glance at this craft brewer’s price performance shows that it has declined 5.6% in the past three months against the industry’s 3.9% rise. Boston Beer witnesses a persistent slowdown in the hard seltzer category. The sluggish hard seltzer trends also hurt SAM’s bottom line in third-quarter 2021. Higher operating costs were added deterrents.This presently Zacks Rank #2 (Buy) player’s robust brand portfolio and strategic initiatives appear encouraging. Boston Beer remains committed to the three-point growth plan focused on reviving its Samuel Adams and Angry Orchard brands, cost-saving initiatives and long-term innovation.Other Key Picks in the Consumer Staples SpaceWe highlighted some other top-ranked stocks from the broader Consumer Staples space, namely Diageo DEO, The Duckhorn Portfolio NAPA and Hershey HSY.Diageo currently has a Zacks Rank #1 (Strong Buy) and an expected long-term earnings growth rate of 8.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Diageo’s current financial-year sales and earnings per share suggests growth of 31.1% and 14.2%, respectively, from the corresponding year-ago reported numbers.Duckhorn Portfolio currently has a Zacks Rank of 2. NAPA has an expected long-term earnings growth rate of 10.9%.The Zacks Consensus Estimate for Duckhorn Portfolio's current financial-year sales suggests growth of 7.9% from the prior-year reported number. The consensus mark for NAPA’s earnings per share is flat with the year-ago  reported figure.Hershey is currently Zacks #2 Ranked. HSY has a trailing four-quarter earnings surprise of 4.4%, on average.The Zacks Consensus Estimate for Hershey's current financial-year sales and earnings per share suggests growth of 8.9% and 12.7%, respectively, from the corresponding year-ago reported numbers. HSY has an expected long-term earnings growth rate of 7.7%. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hershey Company The (HSY): Free Stock Analysis Report Diageo plc (DEO): Free Stock Analysis Report The Boston Beer Company, Inc. (SAM): Free Stock Analysis Report The Duckhorn Portfolio, Inc. (NAPA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 14th, 2022

Constellation Brands" (STZ) Q3 Sales & Earnings Beat Estimates

Constellation Brands' (STZ) Q3 results reflect continued strength in the beer business, aided by strong demand. The company enters partnership with Coca-Cola for FRESCA Mixed cocktails. Constellation Brands Inc. STZ reported better-than-expected sales and earnings in third-quarter fiscal 2022. However, sales declined year over year while earnings improved. Results benefited from continued growth in the beer business and robust consumer demand. Driven by solid performance of the beer business, Constellation Brands raised its comparable earnings per share view for fiscal 2022. Concurrently, the company announced a partnership with The Coca-Cola Company KO to launch FRESCA Mixed cocktails in the United States.Constellation Brands posted fiscal third-quarter comparable earnings of $3.12 per share, which rose 1% year over year and surpassed the Zacks Consensus Estimate of $2.70. On a reported basis, the company’s earnings per share were $2.48, which included Canopy Growth equity losses of 31 cents. Excluding the impact of Canopy Growth, it posted comparable earnings of $3.42 per share, up 8% from the year-ago period. Net sales declined 5% to $2,320.6 million but beat the Zacks Consensus Estimate of $2,290.3 million. Organic net sales were up 4% year over year. Organic sales benefited from robust growth in the beer business, and organic sales growth in the wine and spirits business.Constellation Brands Inc Price and EPS Surprise Constellation Brands Inc price-eps-surprise | Constellation Brands Inc QuoteThe company’s beer business reported sales growth of 4.5% to $1,752.6 million, including a 3.1% increase in shipment volumes and an 8.4% depletion of volume growth. Sales growth at the segment was driven by robust consumer demand for its iconic brands. Depletion volume benefited from continued strength in Modelo Especial and extraordinary growth for Corona Extra.Depletion volume increased 13% for Modelo Especial and 11% for Corona Extra. Modelo Especial became the No. 1 beer brand, thus strengthening its leadership position in the high-end category. It was also the largest share gainer in dollar sales in the U.S. beer category in IRI channels. Meanwhile, Corona Extra was the second leading import share gainer and ranked the third brand in the high-end in IRI channels.Sales in the wine and spirits segment decreased 25% to $568 million in the fiscal third quarter. Organic net sales for the segment rose 3%. Organic net sales growth was driven by gains from consumer-driven innovation initiatives. Solid performances by The Prisoner Brand Family, Kim Crawford and Meiomi were key growth drivers.Shipment volume in the wine and spirits business slumped 38.6% while depletions fell 6.8%. Organic shipment volume was up 2.5%. In the United States, the shipment volume plunged 42.6% while organic shipment was up 1.4% compared with last year.In the past three months, shares of this Zacks Rank #3 (Hold) company have rallied 17% compared with the industry’s growth of 11.8%.Image Source: Zacks Investment ResearchMarginsAdjusted gross profit dropped 4% year over year to $1,227.7 million. Meanwhile, adjusted gross profit margin expanded 40 basis points (bps) to 52.9%.Constellation Brands' comparable operating income declined 1% to $823.8 million while comparable operating margin expanded 120 bps to 35.5%.The operating margin in the beer segment contracted 130 bps to 41.3% due to higher cost of goods sold (“COGS”) related to the higher material and brewery costs, as well as increased depreciation. This was somewhat negated by favorable pricing and timing of marketing spending.The wine and spirits segment’s operating margin expanded 140 bps to 25.4%, owing to favorable fixed-cost absorption, mix benefits from divestitures, and favorable pricing resulting in lower COGS. This was partly offset by increased marketing and SG&A expenses, as a percentage of sales, as well as unfavorable product mix from the existing portfolio.Financial PositionConstellation Brands ended the fiscal third quarter with cash and cash equivalent of $361.3 million. As of Nov 30, 2021, it had $10,083.8 million in long-term debt (excluding current maturities), along with total shareholders’ equity (excluding non-controlling interest) of $11,238.3 million.As of Nov 30, 2021, the company generated an operating cash flow of $2,444.1 million and adjusted free cash flow of $1,845.4 million.On Jan 5, 2022, the company announced a quarterly dividend of 76 cents per share for Class A stock and 69 cents for Class B stock. The dividend is payable on Feb 23 to its shareholders of record as of Feb 9.OutlookBacked by its strong core beer business results, Constellation Brands updated its earnings guidance for fiscal 2022. The company now expects net sales growth of 10-11% for the beer segment compared with 9-11% growth mentioned earlier. Operating income for the beer business is anticipated to increase 6-7% compared with 4-6% growth predicted previously. The raised beer business guidance is backed by solid performance of its core beer portfolio.The company now expects net sales for the wine and spirits business to decline 21-22% compared with 22-24% decline anticipated earlier. It continues to anticipate a 23-25% decline in operating income for the segment. Organic sales for the wine and spirits segment are likely to grow 4-6% compared with 2-4% growth mentioned earlier.The company now expects interest expenses of $360 million for fiscal 2022 compared with $355-$365 million expected earlier. It anticipates a reported tax rate of 88% and comparable tax rate of 19.5%, excluding Canopy equity earnings impact. Weighted average diluted shares outstanding are expected to be 192 million.Constellation Brands now estimates reported loss per share of 25-10 cents, down from 30-60 cents in earnings stated earlier. On a comparable basis, excluding the Canopy business, earnings per share are expected to be $10.50-$10.65, up from $10.15-$10.45 mentioned earlier. The company reported earnings per share of $10.23 on a reported basis and $10.44 on a comparable basis, excluding Canopy Growth in fiscal 2021.Constellation Brands expects to generate operating cash flow of $2.4-$2.6 billion for fiscal 2022, while free cash flow is estimated to be $1.4-$1.5 billion. The company plans to incur capital expenditure of $1-$1.1 billion in fiscal 2022, including $900 million targeted for the Mexican beer operations’ expansion activities.The company outlined plans for incremental capacity expansion in Mexico to support growth of its high-end Mexican beer portfolio. It anticipates total capital expenditures of $5-$5.5 billion for the beer business in the fiscal 2023 to fiscal 2026 time frame. This includes the earlier-stated annual capital expenditure guidance of $700-$900 million for the beer business for the fiscal 2023 to fiscal 2025 time frame. The latest expansion will support additional capacity of 25-30 million hectoliters and includes the construction of a new brewery in Southeast Mexico in Veracruz. It also targets continued expansion and optimization of the existing Nava and Obregon breweries.Other DevelopmentsIn a separate release, Constellation Brands signed a brand authorization agreement with Coca-Cola to manufacture, market and distribute the new FRESCA Mixed cocktails in the United States. Through the deal, the companies plan to bring Coca-Cola’s FRESCA brand, which currently is a grapefruit-flavored citrus soft drink, into alcoholic beverages line. The FRESCA Mixed cocktail(s) is expected to be launched later this year in the United States. The drink will be a spirit-based, ready-to-drink cocktail, in sync with the emerging consumer trends.Constellation Brands expects adult alternative beverages, including ready-to-drink cocktails, to grow at a 15-17% CAGR in the coming three years. The segment currently has an $8-billion share.The launch of FRESCA Mixed will fortify Coca-Cola’s plans to expand in the alcohol space. Coca-Cola remains committed to exploring new products to expand its portfolio through customer-centric innovation. Earlier, it had launched the Topo Chico Hard Seltzer in Latin America markets and the United States, in partnership with Molson Coors Beverage Company TAP.Per the earlier agreement, Molson Coors manufactured marketed and distributed Topo Chico Hard Seltzer. This marked Coca-Cola’s entry in the hard seltzer category.KO currently has a Zacks Rank #2 (Buy) and has surged 12.8% in the past three months. TAP has a Zacks Rank #3 and has gained 4.3% in the past three months. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.A better-ranked stock to consider from the broader Beverages – Alcohol industry is Diageo DEO. The company has a Zacks Rank #2 stock and has gained 13.6% in the past three months. DEO has an expected EPS growth rate of 9.2% for three-five years.The Zacks Consensus Estimate for Diageo’s current financial-year sales and earnings per share suggests growth of 30.7% and 13.5%, respectively, from the year-ago period's reported numbers. Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through November, the Zacks Top 10 Stocks gained an impressive +962.5% versus the S&P 500’s +329.4%. Now our Director of Research is combing through 4,000 companies covered by the Zacks Rank to handpick the best 10 tickers to buy and hold. Don’t miss your chance to get in on these stocks when they’re released on January 3.Be First To New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CocaCola Company The (KO): Free Stock Analysis Report Molson Coors Beverage Company (TAP): Free Stock Analysis Report Diageo plc (DEO): Free Stock Analysis Report Constellation Brands Inc (STZ): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 6th, 2022

Forget Gap (GPS), Buy These 3 Apparel Retail Stocks in 2022

Industry-wide supply-chain woes and port congestions are affecting retailers, including Gap. However, certain players are still benefiting from a unique omni-channel mantra. Gap Inc. GPS is likely to end 2021 on a bitter note. This renowned Zacks Rank #5 (Strong Sell) apparel and accessories retailer fell out of investors’ favor, thanks to supply-chain bottlenecks, elevated costs and pandemic-led disruptions. Soft third-quarter fiscal 2021 results due to the said headwinds and a tepid fiscal 2021 view took the sheen out of the stock. Consequently, the stock lost 14.9% in the past year, wider than the Zacks Retail – Apparel and Shoes industry’s 11.4% decline. The stock has decreased 29.7% in the past three months.Let’s delve deeper.Gap in Troubled WatersIndustry-wide global supply-chain disruptions, including factory closures and increased port congestions causing major product delays are persistently ruining GPS’s performance. Pandemic-led factory shutdowns, primarily in Vietnam where the company sources a significant amount of product, dampened results for the fiscal third quarter. Such limitations hurt Gap’s efficacy to fulfill robust customer demand in the reported quarter. Consequently, GPS reported weaker-than-expected top and bottom-line numbers for third-quarter fiscal 2021. Net sales also decreased year over year from the 2019 pre-COVID levels on unimpressive performances of Gap Global and Banana Republic brands.Additionally, Gap continues witnessing higher operating expenses due to increased advertising costs to accelerate new initiatives, elevated digital-innovation costs and a rise in performance-based compensation. Also, increased investments in demand generation like marketing are shooting up the costs. To efficiently meet customers’ needs, Gap chose airfreight for a major portion of assortment, which bore extreme transitory costs in the fiscal third quarter. Higher investments in airfreight to compete in the holiday period might escalate costs and hurt overall profitability.Image Source: Zacks Investment ResearchInduced by lackluster third-quarter results and anticipation of unrelenting supply-chain constraints, Gap slashed its view for fiscal 2021. It now envisions adjusted earnings of $1.25-$1.40, down from $2.10-$2.25 per share projected earlier. GAAP earnings per share are expected to be 45-60 cents, down from the earlier predicted $1.90-$2.05. GPS expects an adjusted operating margin of 5%, down from the 7% mentioned earlier. Management now expects fiscal 2021 revenue increase to be about 20% versus fiscal 2020. The same is down from 30% projected earlier. The latest view includes an expected $550-$650 million of lost sales from supply-chain challenges on available inventory and a roughly $450 million of total airfreight expenses for the fiscal year.The Zacks Consensus Estimate for Gap’s current and next-year earnings is currently pegged at $1.35 and $2.05, respectively. The consensus estimates have been revised 14% and 6.8% downward over the past 30 days, indicating analysts’ pessimism. Also, the consensus mark for the fourth quarter has been widened to a loss of 12 cents from 2 cents in 30 days. We note that GPS is focused on Power Plan 2023 strategy, and is leveraging higher airfreight expenses and port diversification to navigate delivery challenges. However, supply-chain concerns and cost pressures indicate that the stock is not likely to revert to growth anytime soon.A Glance at the IndustryPlayers in the Retail – Apparel and Shoes industry has been battling pandemic-led supply-chain woes at greater lengths. Although factory closures in Vietnam are affecting most players in the industry, some companies are giving a tough fight to these oppositions and standing firm to script success.The global economy is recovering from the deadly pandemic, so is the fashion world. Apparel and accessories companies are enhancing stores and omni-channel capabilities, reworking on assortments to meet the emerging trends and making logistical improvements. Industry players are opting for innovations in brands and products, scaling e-commerce operations, bettering warehouse and distribution center network, and adopting a more consumer-centric approach.In addition, initiatives like loyalty program and marketing endeavors coupled with expedite-delivery options, be it doorstep delivery, curbside pickup or buy online and pick up at store, are worth mentioning.Based on the aforesaid catalysts, we shortlisted three winners from the Retail – Apparel and Shoes industry that are performing outstandingly and appear well poised for growth amid these uncertain times. The industry currently carries a Zacks Industry Rank of 46 and is placed among the top 18% of more than 250 Zacks industries.Image Source: Zacks Investment ResearchProminent Stocks to Bank onBoot Barn Holdings, Inc.’s BOOT growth efforts including better price management, merchandising strategy and increasing penetration of e-commerce business have been contributing to its performance for a while. Thus, BOOT is able to cash in on robust consumer demand and grab a higher market share. Cumulatively, the aforesaid factors drove this lifestyle apparel and accessories retailer’s same-store sales for the last few quarters now. Boot Barn is rapidly adopting the omni-channel mantra to provide a seamless shopping experience. Over the past year, the stock has returned 169.8%.Boot Barn has a trailing four-quarter earnings surprise of 35.3%, on average. This presently Zacks Rank #1 (Strong Buy) player has an estimated long-term earnings growth rate of 20%. The Zacks Consensus Estimate for BOOT’s next financial year sales and EPS suggests growth of 0.9% and 1.5%, respectively, from the corresponding year-ago readings. You can see the complete list of today’s Zacks #1 Rank stocks here.Luxury accessories retailer Tapestry TPR has been deepening engagement with consumers, creating innovative and compelling products, venturing into under-penetrated markets and enhancing data-analytics capabilities. Impressively, sturdy customer engagement and higher demand for its brands are steadily yielding results. Tapestry’s Coach, Kate Spade and Stuart Weitzma brands have been standing out for a while. Management believes that strength in Digital and China remain the two key drivers. Solid team effort and transformational efforts to become a more consumer-centric firm through smooth progress on Acceleration Program are likely to retain the stock’s momentum ahead. Tapestry’s shares have surged 33.7% in the past year.Tapestry has a trailing four-quarter earnings surprise of 29%, on average. This presently Zacks Rank #1 stock has an estimated long-term earnings growth rate of 12.3%. The Zacks Consensus Estimate for TPR’s next financial year sales and EPS suggests growth of 4.8% and 12.2%, respectively, from the corresponding year-ago reported figures.Lastly, we have Capri Holdings Limited CPRI, which is consistently deploying resources to boost product offerings, deepen customer engagement and enhance omni-channel, including digital efforts. Robust execution of the strategic initiatives coupled with continued strength in its Versace, Jimmy Choo and Michael Kors brands are contributing to the stock rally on the bourses. Benefiting from these endeavors, the stock has jumped 43.2% in the past year.Capri Holdings has a significant average earnings surprise in the trailing four quarters. This currently Zacks Rank #2 (Buy) stock has an estimated long-term earnings growth rate of 32.5%. The Zacks Consensus Estimate for CPRI’s next financial-year sales and EPS implies growth of 9.5% and 14.1%, respectively, from the corresponding year-ago actuals. Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through November, the Zacks Top 10 Stocks gained an impressive +962.5% versus the S&P 500’s +329.4%. Now our Director of Research is combing through 4,000 companies covered by the Zacks Rank to handpick the best 10 tickers to buy and hold. Don’t miss your chance to get in on these stocks when they’re released on January 3.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Gap, Inc. (GPS): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report Tapestry, Inc. (TPR): Free Stock Analysis Report Capri Holdings Limited (CPRI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 27th, 2021

Why Is Gap (GPS) Down 3.6% Since Last Earnings Report?

Gap (GPS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. A month has gone by since the last earnings report for Gap (GPS). Shares have lost about 3.6% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Gap due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Gap Misses Q3 Earnings and Sales Estimates, Cuts ViewGap reported lower-than-expected top and bottom-line numbers for third-quarter fiscal 2021. Supply chain headwinds, including factory closures and port congestion, led to product delays, making it difficult for the company to fulfill the strong customer demand. Lower inventory levels during the quarter hurt the top line. Management expects supply chain issues to persist in the days ahead. Nevertheless, it is progressing well with the Power Plan 2023 strategy.For the fiscal third quarter, the company’s earnings of 27 cents per share missed the Zacks Consensus Estimate of 49 cents. Yet, the metric improved 8% from 25 cents per share in the year-ago quarter.Net sales fell 1.3% year over year and 1.4% from the 2019 pre-COVID level to $3,943 million. The figure also lagged the Zacks Consensus Estimate of $4,453 million. This was mainly due to industry-wide supply chain issues.Despite store openings, the company continued to witness strength in the online business, with digital sales increasing 48% from third-quarter fiscal 2019, accounting for 38% of total sales for the reported quarter.Comparable sales (comps) advanced 5% from third-quarter fiscal 2019. Comps included online sales and the comparable sales days for stores that were open on the same days in both 2020 and 2019 comparable periods.Brand-Wise Sales & CompsOld Navy: Net sales at Old Navy Global improved 8% from third-quarter fiscal 2019, driven by higher sales in the back-to-school season. Comps fell 6% from the pre-pandemic levels and declined 9% year over year. The launch of BODEQUALITY, Old Navy brand’s inclusive sizing launch and higher average transaction value aided results.Gap Global: For third-quarter fiscal 2021, net sales declined 10% ona  two-year basis at Gap Global due to store closures. Comps for Gap Global rose 3% from third-quarter fiscal 2019 and 7% year over year. The Gap brand’s Partner to Amplify strategy, solid sales of its newly launched Yeezy Gap Hoodie, and expansion of its second home collection at Walmart.com to include furniture and rugs contributed to growth.Banana Republic: Net sales declined 18% and comps were down 10% on a two-year basis. On a year-over-year basis, comps rose 28%. The relaunch of the Banana Republic brand in September along with an increased focus on enhancing customers’ shopping experience via improved products, omnichannel capabilities and marketing efforts act as growth drivers.Athleta: Net sales improved 48% for the Athleta brand while comps increased 41% from the 2019 comparable period. Comps improved 2% on a year-over-year basis. Segment results gained from continued strength in activewear and the launch of its online fitness and wellness platform namely, Athleta. The launch of its Canadian online business, the first company-operated Canadian store in Vancouver and its second store in Toronto also bode well. It is making efforts to expand base internationally with franchise partnerships in Costa Rica and Europe.Margins & CostsGross profit of $1,661 million reflected a 2.5% increase from $1,620 million in the prior-year quarter and improved 6.5% on a two-year basis. Adjusted gross margin of 41.9% expanded 430 basis points (bps) from third-quarter fiscal 2019, backed by a 290-bps improvement in leverage from lower rent and occupancy costs, stemming from online growth, store closures and negotiated rent.Operating expense rose 4.4% year over year. Adjusted operating expenses increased 17.5% to $1,482 million while adjusted operating expense rate of 37.6% increased 610 bps from third-quarter fiscal 2019. The increase in operating expenses can be attributed to higher investments in marketing and technology, and a rise in compensation and fulfillment costs, which somewhat offset lower store expenses.Operating income grew 12.6% year over year. Adjusted operating income of $170 million increased 43.1%, but adjusted operating margin of 4.3% contracted 320 bps from third-quarter fiscal 2019.Other FinancialsGap ended the fiscal third quarter with cash, cash equivalents, and short-term investments of $1,076 million, representing a significant decline from $2,649 million in the year-ago period. As of Oct 30, 2021, it had total stockholders’ equity of $2,787 million and long-term debt of $1,484 million.For the nine months ended Oct 30, 2021, the company generated an adjusted free cash flow of $196 million. Gap bought back 2.9 million shares worth $73 million and approved a quarterly dividend of 12 cents during the quarter under review. For fiscal 2021, the company anticipates a capital expenditure of $800 million.Store UpdateAs of Oct 30, 2021, Gap had 3,459 stores in more than 40 countries, out of which 2,873 were company-operated and 586 were franchise outlets. In fiscal 2021, GPS plans to close 75 Gap and Banana Republic stores in North America. It also expects to open 30-40 Old Navy and 20-30 Athleta stores.Fiscal 2021 GuidanceDriven by drab quarterly results and the expectation of persistent supply-chain woes, Gap slashed its view for fiscal 2021. It envisions adjusted earnings of $1.25-$1.40, down from $2.10-$2.25 per share mentioned earlier. GAAP earnings per share are expected to be 45-60 cents, down from the earlier mentioned $1.90-$2.05. The company expects an adjusted operating margin of 5%, down from the 7% mentioned earlier. GPS expects year-over-year sales growth of 20% compared with 30% stated earlier.How Have Estimates Been Moving Since Then?It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -122.89% due to these changes.VGM ScoresCurrently, Gap has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Gap has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months. Zacks’ Top Picks to Cash in on Artificial Intelligence This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Gap, Inc. (GPS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 23rd, 2021

Kimberly-Clark (KMB) Looks Troubled on Escalated Input Costs

Kimberly-Clark (KMB) has been encountering escalated input costs. Key input costs are estimated to escalate in the range of $1,400-$1,500 million in 2021. Kimberly-Clark Corporation KMB has been in trouble due to high input costs, which are expected to persist. Also, volumes in the company’s Consumer Tissue unit have been witnessing tough comparisons with the year-ago period’s pandemic-led demand spike. On its third-quarter earnings call, management slashed its guidance for 2021.The Zacks Consensus Estimate for its 2021 bottom line has declined from $6.65 per share to $6.16 over the past 60 days. It also suggests a decline of 20.4% from the figure reported in the year-ago period. Let’s take a closer look at the factors weighing on this Zacks Rank #5 (Strong Sell) company.Escalated Input CostsKimberly-Clark has been battling high input costs for the past few quarters. In the third quarter, adjusted operating profit came in at $745 million, down from the year-ago quarter’s $806 million due to a rise in input costs to the tune of $480 million. An increase in pulp and polymer-based materials, distribution as well as energy costs led to a rise in input costs. Key input costs are now estimated to escalate in the range of $1,400-$1,500 million in 2021 compared with the $1,200-$1,300-million range projected before. The updated input cost guidance is accountable to higher polymer-based materials, distribution costs and energy rates.Image Source: Zacks Investment ResearchOther Hurdles & Lowered ViewIn Kimberly-Clark’s Consumer Tissue segment, sales of $1,541 million fell 5% year over year in the third quarter. Volumes fell 7%, reflecting a tough comparison stemming from higher shipments in North America and the developed markets in the year-ago quarter. This was the result of a spike in demand amid the pandemic.Net sales in 2021 are now expected to rise 1-2% year over year. Earlier, management had anticipated the metric to increase 1-4%. Organic sales are now expected to decline 1-2% compared with the flat 2% decrease forecast before. Management now expects adjusted operating profit to decrease 20-22% compared with the 11-14% decline anticipated earlier. KMB now envisions 2021 adjusted earnings per share in the range of $6.05-$6.25, down from the previously expected range of $6.65-$6.90. The updated earnings view reflects significant escalated input cost inflation. The metric came in at $7.74 in 2020.Bottom LineKimberly-Clark has been taking robust steps to lower costs, such as the 2018 Global Restructuring Program as well as the Focus on Reducing Costs Everywhere or FORCE Program.  During the third quarter, the company generated cost savings of $115 million and $35 million from the FORCE Program and the 2018 Global Restructuring Program, respectively. While input costs are expected to flare up in 2021, management is focused on undertaking relevant pricing actions to counter inflation and efficiently manage costs. Management expects total cost savings in the band of $520-$540 million in 2021, including the $390-$400-million range from the FORCE program and the $130-$140-million range from the 2018 Global Restructuring Program.However, the abovementioned cost hurdles cannot be ignored in the near term.Shares of Kimberly-Clark have rallied 8% in the past six months against the industry’s fall of 12%.3 Consumer Staple PicksSome better-ranked stocks from the Consumer Staples sector are MGP Ingredients MGPI, The Hain Celestial Group HAIN and Inter Parfums, Inc. IPAR.MGP Ingredients, the producer and supplier of distilled spirits and specialty wheat proteins and starch food ingredients, currently sports a Zacks Rank #1 (Strong Buy). Shares of the company have rallied 34.9% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and earnings per share (EPS) suggests growth of 55.5% and 61.4%, respectively, from the year-ago period’s figures. MGPI has a trailing four-quarter earnings surprise of 117.6%, on average.Inter Parfums develops, manufactures and distributes prestige perfumes and cosmetics. It currently sports a Zacks Rank #1. Inter Parfums has a trailing four-quarter earnings surprise of 29.7%, on average.The Zacks Consensus Estimate for IPAR’s current financial-year sales and EPS suggests growth of 55.9% and 100%, respectively, from the year-ago period’s figures. Shares of the company have surged 38.5% in the past six months.The Hain Celestial, which provides various natural and organic foods as well as personal care products in North America and Europe, carries a Zacks Rank #2 (Buy) at present. It has a trailing four-quarter earnings surprise of 9.7%, on average. Shares of The Hain Celestial have moved up 4.1% in the past six months.The Zacks Consensus Estimate for HAlN’s current financial-year EPS suggests growth of 14.5% from the year-ago period’s reported number. Zacks’ Top Picks to Cash in on Artificial Intelligence This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report KimberlyClark Corporation (KMB): Free Stock Analysis Report The Hain Celestial Group, Inc. (HAIN): Free Stock Analysis Report Inter Parfums, Inc. (IPAR): Free Stock Analysis Report MGP Ingredients, Inc. (MGPI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 23rd, 2021

TreeHouse Foods (THS) Looks Troubled: High Costs a Key Concern

TreeHouse Foods (THS) has been battling escalated cost inflation. Management lowered its earnings guidance for 2021 on its last earnings call. TreeHouse Foods, Inc. THS appears to be in trouble. The company has been struggling with elevated cost headwinds, which are likely to persist. Although management is undertaking prudent pricing actions to combat the cost headwinds, on its third-quarter earnings call, it slashed adjusted earnings expectations for 2021. Also, the Zacks Rank #5 (Strong Sell) company lowered the upper limit of its sales view.The Zacks Consensus Estimate for 2021 earnings per share (EPS) has declined from $2.11 to $1.17 over the past 60 days. Shares of this manufacturer and distributor of private label packaged foods and beverages have declined 12.1% in the past six months compared with the industry’s fall of 4.1%.Let’s take a closer look.Image Source: Zacks Investment ResearchElevated Costs – a Major ConcernDuring the third quarter of 2021, TreeHouse Foods’ gross margin came in at 16.3%, contracting 170 basis points from the year-ago quarter’s figure. The downside was caused by commodity inflation. Gross margin was also adversely impacted by supply-chain disruptions leading to higher labor costs, supply shortages and an unfavorable channel mix. Adjusted EBITDA from continuing operations decreased  20.5% to $108.6 million due to commodity and freight cost inflation. It was also affected by supply chain disruptions leading to higher labor costs, supply shortages and an unfavorable channel mix.Management, on its third-quarter earnings call, stated that it expects a further increase in input costs. The company predicts additional cost inflation of $125 million in 2021. Although THS is undertaking pricing actions to battle elevated input costs, it might not be sufficient to fully offset the rise in input costs.Unimpressive 2021 ViewFor 2021, net sales are anticipated in the range of $4.20-$4.325 billion compared with $4.20-$4.45 billion expected earlier. Management, on its last earnings call, stated that it expects the current operating constraints to limit TreeHouse Food’s ability to meet high demand conditions. Adjusted earnings from continuing operations are expected in the band of $1.08-$1.28 per share, down from the previous guidance of $2.00-$2.50. The bottom line is likely to be affected by the escalating inflationary trends as well as higher costs related to labor and supply-chain disruptions.TreeHouse Foods also provided guidance for the fourth quarter. Fourth-quarter net sales are expected in the range of $1.04-$1.16 billion. This suggests a decline from $1.18 million reported in the year-ago quarter.While THS is on track with solid pricing actions, one cannot ignore the above-mentioned headwinds in the near term.3 Consumer Staple PicksSome top-ranked stocks from the Consumer Staples sector are MGP Ingredients MGPI, The Hain Celestial Group HAIN and Inter Parfums, Inc. IPAR.MGP Ingredients, the producer and supplier of distilled spirits, and specialty wheat proteins and starch food ingredients, currently sports a Zacks Rank #1 (Strong Buy). Shares of the company have rallied 33.3% in the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and EPS suggests growth of 55.5% and 61.4%, respectively, from the year-ago period’s figures. MGPI has a trailing four-quarter earnings surprise of 117.6%, on average.Inter Parfums develops, manufactures and distributes prestige perfumes and cosmetics. It currently sports a Zacks Rank #1. Inter Parfums has a trailing four-quarter earnings surprise of 29.7%, on average.The Zacks Consensus Estimate for IPAR’s current financial-year sales and EPS suggests growth of 55.9% and 100%, respectively, from the year-ago period’s figures. Shares of the company have moved up 32% in the past six months.The Hain Celestial, which provides various natural and organic foods as well as personal care products in North America and Europe, carries a Zacks Rank #2 (Buy) at present. It has a trailing four-quarter earnings surprise of 9.7%, on average. Shares of The Hain Celestial have moved up 2.5% in the past six months.The Zacks Consensus Estimate for HAlN’s current financial-year EPS suggests growth of 14.5% from the year-ago period’s reported number. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Hain Celestial Group, Inc. (HAIN): Free Stock Analysis Report TreeHouse Foods, Inc. (THS): Free Stock Analysis Report Inter Parfums, Inc. (IPAR): Free Stock Analysis Report MGP Ingredients, Inc. (MGPI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 20th, 2021

lululemon (LULU) Beats Q3 Earnings & Sales Estimates, Ups View

lululemon (LULU) gains from robust responses to its products, improved store productivity and continued e-commerce momentum in Q3. Management raises the fiscal 2021 view. lululemon athletica inc. LULU reported robust third-quarter fiscal 2021 results, with the top and bottom lines surpassing the Zacks Consensus Estimate as well as improving year over year. Despite industry-wide supply-chain issues, including higher air freight expenses, results were driven by the robust response to the company’s products, particularly the athletic and leisurewear brands as well productivity above the pre-pandemic levels. Also, a solid start to the holiday season contributed to the performance. That said, management remains on track with its Power of Three growth plan.However, headwinds related to its recently acquired Mirror remain concerning. As a result, it slashed the Mirror revenue guidance to $125 million from the previously mentioned $130 million for fiscal 2021. The company also expects uncertainty from the new COVID-19 variant to affect its performance.Despite the headwinds related to COVID-19, including supply-chain disruptions, management raised its top and bottom-line guidance for fiscal 2021. We note that shares of this Zacks Rank #3 (Hold) company have gained 19.8% year to date compared with the industry’s 18.1% growth. Image Source: Zacks Investment Research Q3 Numberslululemon’s adjusted earnings of $1.62 per share in the fiscal third quarter beat the Zacks Consensus Estimate of $1.39 and increased 39.6% year over year from $1.16 reported in the year-ago quarter. It also came ahead of 96 cents reported in third-quarter fiscal 2019.The Vancouver, Canada-based company’s quarterly revenues advanced 30% year over year to $1,450 million and surpassed the Zacks Consensus Estimate of $1,431 million. On a constant-dollar basis, revenues increased 28%. Compared with the third quarter of fiscal 2019, net revenues improved 58% on a reported basis. On a two-year compounded annual growth rate basis, revenues rose 26%. The top line gained from strength across the majority of regions, with each region posting double-digit sales growth on a two-year CAGR basis.Comparable sales grew 27% year over year and 26% on a cc basis. Comparable store sales also advanced 32% on a reported and 31% on a cc basis.Direct-to-consumer sales rose 23% to $586.5 million and were up 21% in constant currency. Direct-to-consumer revenues represented 40.4% of the company’s total revenues compared with 42.8% in third-quarter fiscal 2020. The company’s revenues improved 28% in North America and 40% in international markets on a year-over-year basis. On a two-year CAGR basis, North America and international revenues increased 23% and 42%, respectively.In the digital channel, revenues increased 21% year over year and 54% on a two-year CAGR basis, driven by its expanded omnichannel capabilities as well as strength in websites and apps. Digital comps were up 21% in the fiscal third quarter. Meanwhile, store revenues rose 38% year over year and 10% on a two-year CAGR basis. This can be attributable to robust year-over-year traffic growth of more than 50%.MarginsGross profit advanced 32% year over year to $829.4 million in third-quarter fiscal 2021. The gross margin expanded 110 basis points (bps) year over year to 57.2%.  On a two-year basis, the gross margin increased 210 bps, driven by a 230-bps leverage in occupancy, product team costs and depreciation, and 30 bps of favorable foreign exchange, offset by a 50-bps decline in product margin.SG&A expenses of $545.1 million increased 32.4% year over year and 66% on a two-year basis. SG&A expenses, as a percentage of sales, expanded 80 bps year over year and 170 bps on a two-year basis to 37.6% due to increased investments.Adjusted income from operations rose 32% year over year to $282.1 million in the fiscal third quarter. Adjusted operating margin of 19.4% expanded 30 bps year over year and 20 bps on a two-year basis.Store UpdatesIn the fiscal third quarter, the company opened 18 stores. As of Oct 31, 2021, it operated 552 stores. In fiscal 2021, the company expects to open 50-55 company-operated stores, including 40-45 stores in the international markets.Financialslululemon exited the fiscal third quarter with total liquidity of $1.4 billion, which indicates a strong financial position. This included $993.6 million of cash and cash equivalents, and $396.9 million available under its revolving credit facility. Its stockholders’ equity was $2,658.5 million as of Oct 31, 2021.Inventories were up 22% year over year to $943.9 million at the end of the fiscal third quarter. It repurchased 0.6 million shares for $236.4 million in the quarter, with $509 million remaining under its current share repurchase authorization.In the first three quarters of fiscal 2021, the company generated an operating cash flow of $658.1 million. It incurred a capital expenditure of $122 million in the fiscal third quarter compared with $66 million in third-quarter fiscal 2020. The capital spending is mainly related to store capital for new locations, relocation and renovations, supply-chain investment, and technology spend to support business growth.At the end of fourth-quarter fiscal 2021, the company expects inventory levels to increase 20-25% from that reported in fourth-quarter fiscal 2020. For fiscal 2021, it anticipates incurring a capital expenditure of $375-$385 million.lululemon athletica inc. Price, Consensus and EPS Surprise   lululemon athletica inc. price-consensus-eps-surprise-chart | lululemon athletica inc. QuoteOutlookManagement expects fourth-quarter fiscal 2021 revenues between $2.125 billion and $2.165 billion, with revenue growth of 23-24% on a two-year CAGR basis. Adjusted earnings are projected to be $3.25-$3.32, with a flat gross margin on a two-year basis. The view includes negative impacts of 450 basis points from airfreight costs due to congestion and capacity constraints. SG&A expenses for the fourth quarter are envisioned to deleverage 200-250 bps on a two-year basis.For fiscal 2021, the company anticipates revenues of $6.25-$629 billion, up from the earlier mentioned $6.19-$6.26 billion. The current view suggests witnessing a two-year CAGR of 25-26%. The e-commerce business is forecast to see mid-teen growth. The gross margin is likely to expand 100-150 bps, down from the earlier mentioned 150-200 bps due to higher airfreight expenses. However, the gross margin view surpasses the modest annual gross margin expansion target under the Power of Three growth plan. SG&A for fiscal 2021 is expected to leverage 50-100 bps. Adjusted earnings are predicted to be $7.69-$7.76, up from the prior mentioned $7.38-$7.48.Here’s How Other Stocks FaredWe have highlighted some better-ranked stocks from the broader Consumer Discretionary space, namely Steven Madden SHOO, Gildan Activewear GIL and PVH Corp PVH.Gildan Activewear currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 85%, on average. Shares of GIL have gained 48.3% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Gildan’s current financial-year sales and earnings per share suggests growth of 4.5% and 24.4%, respectively, from the year-ago period’s reported numbers. The Zacks Consensus Estimate for GIL’s 2021 earnings is pegged at $2.38 per share, which has increased 12.3% in the past 30 days.Steven Madden presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 41.9%, on average. Shares of SHOO have rallied 37.4% year to date.The Zacks Consensus Estimate for Steven Madden’s current financial-year sales and earnings suggests growth of 50% and 170.4% from the year-ago period’s reported numbers, respectively. The Zacks Consensus Estimate for SHOO’s 2021 earnings is pegged at $2.35 per share, which has increased 11.9% in the past 30 days.PVH Corp, a Zacks Rank #2 stock at present, has a trailing four-quarter earnings surprise of 72.3%, on average. The PVH stock has gained 9.3% year to date.The Zacks Consensus Estimate for PVH Corp’s current financial-year sales and earnings per share suggests growth of 27.6% and 571.6%, from the year-ago period’s reported figure. However, the Zacks Consensus Estimate for PVH’s 2021 earnings is pegged at $9.29 per share, which has increased 7.3% in the past 30 days. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report lululemon athletica inc. (LULU): Free Stock Analysis Report PVH Corp. (PVH): Free Stock Analysis Report Gildan Activewear, Inc. (GIL): Free Stock Analysis Report Steven Madden, Ltd. (SHOO): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksDec 10th, 2021

Will Bed Bath & Beyond (BBBY) Keep Going Amid Cost Headwinds?

Bed Bath & Beyond's (BBBY) transformation plan, store initiatives and digital momentum keep it on track to offset the ongoing supply-chain woes and cost headwinds. Bed Bath & Beyond Inc. BBBY has been witnessing mixed stock trends, with its transformation plan, digital momentum and store rationalization efforts keeping it in good stride. The company has been on track with its planned rollout of Owned Brands as part of its three-year transformation plan.However, the ongoing supply-chain challenges, cost inflation, and a drop in store traffic due to the rising COVID-19 Delta cases have been hurting sentiment. The challenges hurt the company's top and bottom lines in second-quarter fiscal 2021.Net sales declined 26% year over year and missed the Zacks Consensus Estimate. In the fiscal second quarter, total enterprise comparable sales (comps) inched down 1% year over year as traffic slowed in August. Core banner sales fell 11% year over year due to the drab performance in the Bed Bath & Beyond banner and the impact of fleet optimization. Adjusted earnings were 4 cents per share for the fiscal second quarter, down from 50 cents in the year-ago quarter due to dismal margins stemming from higher freight costs.Management expects the headwinds to persist during part of the holiday season, thus, crushing hopes of a swift economic recovery.Driven by the drab fiscal second-quarter results, management slashed the fiscal 2021 view. Bed Bath & Beyond envisions net sales of $8.1-$8.3 billion for fiscal 2021, down from the previously mentioned $8.2-$8.4 billion. It expects comps to be flat to marginally up for the remaining quarters versus the previously communicated low-single-digit range. It also expects adjusted earnings of 7-10 cents per share, down from the earlier stated $1.40-$1.55 for fiscal 2021.For third-quarter fiscal 2021, the company anticipates sales of $1.96-$2 billion, including core sales and planned sales reduction as part of its store fleet optimization program. Comps are likely to remain flat year over year. Adjusted earnings between break-even and 5 cents for the fiscal third quarter. Image Source: Zacks Investment Research Factors to Keep the Stock GoingAs part of its three-year transformation plan, Bed Bath & Beyond is on an assortment expansion spree. It plans to introduce at least 10 Owned Brands in the next two years. The company highlighted that the new Owned Brands would cater to consumer needs across segments such as bed, bath, kitchen and dining, storage and organization, and home decor. The products will form part of the company's key category that contributes more than 60% to its revenues.In the first half of fiscal 2021, Bed Bath & Beyond launched private-label brands (Owned Brands), including Nestwell, Haven and Simply Essential, Wild Sage, Our Table, and Squared Away. In third-quarter fiscal 2021, it launched its seventh and eighth owned brands, namely Studio 3B and H for Happy, respectively. Studio 3B offers contemporary home décor products, including décor, bedding, bath and accent furniture. The H for Happy collection includes many affordable products that bring a light-hearted and contemporary approach to seasonal and everyday celebrations. The company's high-margin Owned Brands have been performing beyond expectation.Management expects the sales penetration of Owned Brands to grow from 10% to 30% in the first three years. The company expects to boost the gross margin by strategically managing costs and sourcing. Another major step in its comprehensive growth strategy includes launching thousands of products exclusively at Bed Bath & Beyond.Bed Bath & Beyond continues to gain from its enhanced omnichannel capabilities, including buy online and pick up in store, and same-day delivery services. Management continues to bank on the robust digital channel and is making efforts to offer an improved customer experience. In doing so, it has entered the next phase of its supply-chain modernization via the partnership with Ryder and expanded its same-day delivery facility via a partnership with Roadie. Earlier, it partnered with DoorDash to expand its same-day delivery services across the United States and Canada. The company is also on track with enabling cross-banner browsing across Bed Bath & Beyond, buybuy BABY, and Harmon brands.Bed Bath & Beyond is in the process of strategically expanding its store count apart from increasing the productivity of existing stores by adjusting the breadth and depth of its merchandise offerings to suit customer preferences. In 2019, the company announced its Store Network Optimization project, which is likely to generate savings of $100 million on an annual basis. This three-year-long plan will be executed across more than 450 stores, accounting for nearly 60% of its sales. Under its store remodel program, Bed Bath & Beyond remodeled roughly 70 stores in the reported quarter and is on track to remodel 130-150 stores in fiscal 2021.The Zacks Rank #3 (Hold) company has a market capitalization of $1.9 billion. Year to date, BBBY has gained 7.8% compared with the industry's growth of 1%. It also compares favorably against the Retail-Wholesale sector's decline of 8.5%.In the past 30 days, the company's estimates for fiscal 2021 earnings per share have been unchanged. For fiscal 2021, its earnings estimates are pegged at 84 cents per share, suggesting 183.2% growth from the year-ago period's reported figure.Stocks to WatchWe have highlighted some better-ranked stocks from the broader industry, namely Build-A-Bear Workshop BBW, Tractor Supply Co. TSCO and MarineMax HZO.Build-A-Bear Workshop currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 261.4%, on average. Shares of BBW have surged 412% year to date.You can see the complete list of today's Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Build-A-Bear Workshop's current financial-year sales suggests growth of 54.1%. The same for earnings per share indicates growth of 298.1% from the year-ago period's reported figure.Tractor Supply, a Zacks Rank #1 stock, has a trailing four-quarter earnings surprise of 22.8%, on average. The TSCO stock has gained 66% year to date.The Zacks Consensus Estimate for Tractor Supply's current financial-year sales and earnings per share suggests growth of 19% and 23.9%, respectively, from the year-ago period's reported numbers. TSCO has an expected long-term earnings growth rate of 10.2%.MarineMax currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 61.2%, on average. Shares of the company have gained 60.1% in the year-to-date period.The Zacks Consensus Estimate for MarineMax's current financial-year sales and earnings per share suggests growth of 6.4% and 9.6%, respectively, from the year-ago period. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tractor Supply Company (TSCO): Free Stock Analysis Report Bed Bath & Beyond Inc. (BBBY): Free Stock Analysis Report BuildABear Workshop, Inc. (BBW): Free Stock Analysis Report MarineMax, Inc. (HZO): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 9th, 2021

Aaron"s (AAN) Up 7.4% Since Last Earnings Report: Can It Continue?

Aaron's (AAN) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues. It has been about a month since the last earnings report for Aaron's Company, Inc. (AAN). Shares have added about 7.4% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Aaron's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Aaron's Tops Q3 Earnings & Revenues Estimates, Ups ViewAaron's reported impressive third-quarter 2021 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. The company has strengthened its position in the direct-to-consumer lease-to-own market. The solid e-commerce business and sturdy performance in GenNext stores also aided quarterly results. Management raised its 2021 view.It remains on track with its GenNext real estate strategy, which is performing well. As of Sep 30, 2021, Aaron’s boasts 86 GenNext stores. The company expects to open more than 100 such stores by 2021.Q3 HighlightsAaron's delivered adjusted earnings of 83 cents per share, which surpassed the Zacks Consensus Estimate of 53 cents. However, the bottom line declined 25% year over year from $1.10 per share reported in the prior-year quarter. On a GAAP basis, the company recorded earnings of 73 cents per share, down 24% year over year from 96 cents reported in the year-ago quarter.Consolidated revenues rose 2.5% to $452.2 million and beat the Zacks Consensus Estimate of $434 million. The uptick is mainly due to improved quality and the size of its lease portfolio, which somewhat offset reduced customer payment activities, and the impact of the net closure of 79 franchised stores in 15 months ended Sep 30, 2021.Same-store revenues rose 4.6% in the third quarter, driven by a robust lease portfolio, which somewhat offset reduced payment activities. E-commerce lease revenues were up 13.3%, accounting for 14.3% of total revenues.Breaking up the components of consolidated revenues, we note that lease and retail revenues grew 4% in the reported quarter to $413.7 million. Non-retail sales, which mainly include merchandise sales to franchisees, fell 7.6% year over year. Franchise royalties and fees in the quarter slumped 24.7% to $6.3 million from the year-ago quarter.Aaron’s franchisee revenues decreased 21.2% year over year to $79.8 million on reduced franchised locations. Meanwhile, same-store revenues for franchised stores grew 2.1% year over year. Revenues and customers of franchisees are not deemed as revenues and customers of the company.Aaron’s adjusted EBITDA declined 16.6% year over year to $53.6 million from $64.3 million reported in the year-ago quarter. Adjusted EBITDA margin contracted 270 basis points (bps) to 11.9% in the reported quarter due to reduced customer payment activity and a potential rise in write-offs.Financial PositionThe company ended the quarter with cash and cash equivalents of $14.8 million, and shareholders’ equity of $721.5 million. As of Sep 30, 2021, it generated cash from operations of $30.2 million. It had total available liquidity of $247.5 million as of Sep 30, 2021. Capital expenditure is expected to be $90-$100 million for 2021.The company bought back 1,333,264 shares of Aaron's common stock, worth $37.5 million. From the start of the year till Oct 22, it repurchased 3,034,097 shares for $90.4 million. Currently, the company has shares worth $59.6 million remaining to be bought back under its existing share repurchase program of $150 million. The board also approved a quarterly dividend of 10 cents per share, which was paid out on Oct 5.OutlookDriven by solid results, management raised its 2021 view. For 2021, the company anticipates revenues of $1.82-$1.83 billion, up from the earlier mentioned $1.775-$1.8 billion. Same-store revenues are forecast to grow 7.5-8.5% compared with 6-8% growth stated previously.Adjusted EBITDA is likely to be $225-$230 million, reflecting an improvement from the previously mentioned $215-$225 million. However, it slashed its free cash flow view from $90-$100 million to $30-$40 million for 2021 due to the higher sale of lease merchandise in the third quarter. Management expects customer payment activity to remain drab for the coming few quarters.For fourth-quarter 2021, write-offs and lease payment activities are likely to be lower than the year-ago quarter but above the pre-pandemic levels.How Have Estimates Been Moving Since Then?It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -9.42% due to these changes.VGM ScoresAt this time, Aaron's has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Aaron's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Aaron's Company, Inc. (AAN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 25th, 2021

Gap (GPS) Q3 Earnings and Sales Miss Estimates, View Cut

Supply chain headwinds including factory closures and port congestion hurt Gap's (GPS) fiscal Q3 results. The company slashes its fiscal 2021 view. The Gap Inc. GPS reported lower-than-expected top and bottom-line numbers for third-quarter fiscal 2021. Supply chain headwinds including factory closures and port congestion led to product delays, which made it difficult for the company to fulfill the strong customer demand. Lower inventory levels during the quarter hurt the top line. Management expects supply chain issues to persist in the days ahead. Nevertheless, it is progressing well with the Power Plan 2023 strategy.For the fiscal third quarter, the company’s earnings of 27 cents per share missed the Zacks Consensus Estimate of 49 cents. Yet, the metric improved 8% from 25 cents per share in the year-ago quarter.Net sales fell 1.3% year over year and 1.4% from the 2019 pre-COVID level to $3,943 million. The figure also lagged the Zacks Consensus Estimate of $4,453 million. This was mainly due to industry-wide supply chain issues.Despite store openings, the company continued to witness strength in the online business, with digital sales increasing 48% from third-quarter fiscal 2019, accounting for 38% of total sales for the reported quarter.Comparable sales (comps) advanced 5% from third-quarter fiscal 2019. Comps included online sales and the comparable sales days for stores that were open on the same days in both 2020 and 2019 comparable periods.In the past three months, shares of this Zacks Rank #3 (Hold) company have declined 18.5% compared with the industry’s 8.8% fall.Image Source: Zacks Investment ResearchBrand-Wise Sales & CompsOld Navy: Net sales at Old Navy Global improved 8% from third-quarter fiscal 2019, driven by higher sales in the back-to-school season, particularly in the women’s category. Comps fell 6% from the pre-pandemic levels and declined 9% year over year. The launch of BODEQUALITY, Old Navy brand’s inclusive sizing launch and higher average transaction value aided results.Gap Global: For third-quarter fiscal 2021, net sales declined 10% ona  two-year basis at Gap Global due to store closures. Comps for Gap Global rose 3% from third-quarter fiscal 2019 and 7% year over year. The Gap brand’s Partner to Amplify strategy, solid sales of its newly launched Yeezy Gap Hoodie, and expansion of its second home collection at Walmart.com to include furniture and rugs contributed to growth.Banana Republic: Net sales declined 18% and comps were down 10% on a two-year basis. On a year-over-year basis, comps rose 28%. The relaunch of the Banana Republic brand in September along with an increased focus on enhancing customers’ shopping experience via improved products, omnichannel capabilities and marketing efforts act as growth drivers.Athleta: Net sales improved 48% for the Athleta brand while comps increased 41% from the 2019 comparable period. Comps improved 2% on a year-over-year basis. Segment results gained from continued strength in activewear and the launch of its online fitness and wellness platform namely, Athleta. The launch of its Canadian online business, the first company-operated Canadian store in Vancouver and its second store in Toronto also bode well. It is making efforts to expand base internationally with franchise partnerships in Costa Rica and Europe.Margins & CostsGross profit of $1,661 million reflected a 2.5% increase from $1,620 million in the prior-year quarter and improved 6.5% on a two-year basis. Adjusted gross margin of 41.9% expanded 430 basis points (bps) from third-quarter fiscal 2019, backed by a 290-bps improvement in leverage from lower rent and occupancy costs, stemming from online growth, store closures and negotiated rent.Operating expense rose 4.4% year over year. Adjusted operating expenses increased 17.5% to $1,482 million while adjusted operating expense rate of 37.6% increased 610 bps from third-quarter fiscal 2019. The increase in operating expenses can be attributed to higher investments in marketing and technology, and a rise in compensation and fulfillment costs, which somewhat offset lower store expenses.Operating income grew 12.6% year over year. Adjusted operating income of $170 million increased 43.1%, but adjusted operating margin of 4.3% contracted 320 bps from third-quarter fiscal 2019.Other FinancialsGap ended the fiscal third quarter with cash, cash equivalents, and short-term investments of $1,076 million, representing a significant decline from $2,649 million in the year-ago period. As of Oct 30, 2021, it had total stockholders’ equity of $2,787 million and long-term debt of $1,484 million.For the nine months ended Oct 30, 2021, the company generated an adjusted free cash flow of $196 million. Gap bought back 2.9 million shares worth $73 million and approved a quarterly dividend of 12 cents during the quarter under review.For fiscal 2021, the company anticipates a capital expenditure of $800 million.Store UpdateAs of Oct 30, 2021, Gap had 3,459 stores in more than 40 countries, out of which 2,873 were company-operated and 586 were franchise outlets.In fiscal 2021, GPS plans to close 75 Gap and Banana Republic stores in North America. It also expects to open 30-40 Old Navy and 20-30 Athleta stores.The Gap, Inc. Price, Consensus and EPS Surprise The Gap, Inc. price-consensus-eps-surprise-chart | The Gap, Inc. QuoteFiscal 2021 GuidanceDriven by drab quarterly results and the expectation of persistent supply chain woes, Gap slashed its view for fiscal 2021. It now envisions adjusted earnings of $1.25-$1.40, down from $2.10-$2.25 per share mentioned earlier. GAAP earnings per share are now expected to be 45-60 cents, down from the earlier mentioned $1.90-$2.05. The company expects an adjusted operating margin of 5%, down from 7% mentioned earlier.GPS expects year-over-year sales growth of 20% compared with 30% stated earlier.Here's How Other Stocks FaredWe have highlighted three top-ranked stocks in the Retail - Wholesale sector, namely, Boot Barn Holdings BOOT, Tractor Supply Company TSCO and Costco COST.Boot Barn Holdings — the lifestyle retailer of western and work-related footwear, apparel and accessories — sports a Zacks Rank #1 (Strong Buy). Shares of the company have rallied 48.5% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Boot Barn Holdings’ sales and earnings per share (EPS) for the current financial year suggests growth of 54.4% and 183.3%, respectively, from the year-ago period. BOOT has a trailing four-quarter earnings surprise of 35.3%, on average.Tractor Supply Company, a rural lifestyle retailer in the United States, carries a Zacks Rank #1 at present. The company has a trailing four-quarter earnings surprise of 22.8%, on average. Shares of the company have gained 18.6% in the past three months.The Zacks Consensus Estimate for Tractor Supply Company’s sales and EPS for the current financial year suggests growth of 19% and 23.9%, respectively, from the year-ago period. TSCO has an expected EPS growth rate of 9.6% for three-five years.Costco, which operates membership warehouses, presently carries a Zacks Rank #3. The company has a trailing four-quarter earnings surprise of 7.7%, on average. Shares of Costco have gained 19.6% in the past three months.The Zacks Consensus Estimate for Costco’s sales and EPS for the current financial year suggests growth of 9.6% and 9.7%, respectively, from the year-ago period. COST has an expected EPS growth rate of 8.7% for three-five years. Zacks’ Top Picks to Cash in on Artificial Intelligence This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tractor Supply Company (TSCO): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report The Gap, Inc. (GPS): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 24th, 2021

Futures Slide As Dollar Jumps, Yields Rebound Ahead Of Massive Data Dump

Futures Slide As Dollar Jumps, Yields Rebound Ahead Of Massive Data Dump For the third day in a row, US equity futures have been weighed down by rising (real) rates even as traders moderated their expectations for monetary-policy tightening after New Zealand’s measured approach to rate hikes where the central banks hiked rates but not as much as some had expected. Traders also braced for an epic data dump in the US, which includes is an epic data dump which includes an update to Q3 GDP, advance trade balance, initial jobless claims, wholesale and retail inventories, durable goods, personal income and spending, UMich consumer sentiment, new home sales, and the FOMC Minutes The two-year U.S. yield shed two basis points. The dollar extended its rising streak against a basket of peers to a fourth day. At 730am, S&P 500 e-mini futures dropped 0.3%, just off session lows, while Nasdaq futures dropping 0.34%. In premarket trading, Nordstrom sank 27% after the Seattle-based retailer posted third-quarter results featuring what Citi called a big earnings per share miss. The company reported higher labor and fulfillment costs in the third quarter while sales remained stubbornly below pre-pandemic levels and profit missed analyst estimates. Telecom Italia SpA surged in Europe on enhanced takeover interest. Oil prices fluctuated as producers and major consuming nations headed for a confrontation. Other notable premarket movers: Gap (GPS US) sank 20% premarket after the clothing retailer reported quarterly results that missed estimates and cut its net sales forecast for the full year. Analysts lowered their price targets. Nordstrom (JWN US) tumbles 27% in premarket after the Seattle-based retailer posted third-quarter results featuring what Citi called a big earnings per share miss. Jefferies, meanwhile, downgrades the stock to hold from buy as transformation costs are rising. Guess (GES US) posted quarterly results which analysts say included impressive sales and margins, and showed the company navigating supply-chain issues successfully. The shares closed 9.2% higher in U.S. postmarket trading. HP (HPQ US) shares are up 8.4% in premarket after quarterly results. Analysts note strong demand and pricing in the personal computer market. Meme stocks were mixed in premarket after tumbling the most since June on Tuesday as investors bailed out of riskier assets. Anaplan (PLAN US) slides 18% in premarket as a narrower-than-expected quarterly loss wasn’t enough to stem a downward trend. Analysts slashed price targets. Autodesk (ADSK US) shares slump 14% in premarket after the building software maker narrowed its full-year outlook. Analysts are concerned that issues with supply chains and the pandemic could impact its targets for 2023. GoHealth (GOCO US) gained 8.4% in postmarket trading after the insurer’s CEO and chief strategy officer added to their holdings. As Bloomberg notes, investors are on the edge as they face a wall of worry from a resurgence of Covid-19 in Europe to signs of persistent consumer-price growth. Damping inflation is now center-stage for policy makers, with ultra-loose, pandemic-era stimulus set to be wound down. The slew of U.S. data as well as Federal Reserve minutes due today may provide the next catalysts for market moves. In Europe, the Stoxx 600 Index erased earlier gains of up to 0.4% to trade down -0.1%, with tech and travel and leisure leading declines. Miners gained 0.8%, tracking higher copper prices on easing concerns over Chinese demand, while travel stocks slid over 1% on prospects of harsher travel curbs: Italy and France are debating new measures to cope with Covid’s resurgence while Germany isn’t ruling out fresh curbs. Oil stocks rose 1.2%, set for their biggest jump in over a month, with crude prices inching higher as investors remained sceptical about the effectiveness of a U.S.-led release of oil from strategic reserves. Here are some of the most notable European equity movers: Mulberry shares surge as much as 24%, the most since March 12, after the U.K. luxury company swung to a 1H profit from a year earlier and reported an increase in sales. Telecom Italia shares rise as much as 10% following a Bloomberg report that KKR is considering to raise its offer for the company after top investor Vivendi said the bid was too low. However, the stock is still trading below the initial non-binding offer from KKR. Golden Ocean gains as much as 9.6%, most since Feb., after earnings. DNB says “Golden Ocean delivered solid Q3 results” and adds “Furthermore, guidance for Q4 should lift consensus estimates and solidify further dividend potential in our view.” Intertek shares gain as much as 6.7%, the most since May 2020, after the company issued a trading update. UBS says the company’s accelerating momentum and reiterated targets are “reassuring.” Aegon shares rise as much as 5.5% after Credit Suisse upgraded its recommendation to outperform from neutral and raised the PT to EU5.30 from EU4.00. IQE shares slump as much as 21% for the biggest intraday drop since March 2020, falling to their lowest level since June 2020 after the semiconductor company said it sees softening demand in 4Q. Genus shares fall as much 15% after the animal genetics firm lowered its FY22 earnings guidance, leading Peel Hunt and Liberum to cut estimates. European stocks are on course for weekly losses, as the return of COVID-19 curbs, rate hike and inflation concerns sparked fears of a weaker economic growth outlook. "There's a two-way pull between macro concerns and what's happening bottoms-up in terms of corporate profits," said Nick Nelson, head of European equity strategy at UBS, adding that while the third quarter has been one of the decade's best reporting seasons for Europe, macro concerns such as a rise in U.S. bond yields and COVID-19 cases have been holding stocks back. Earlier in the session, Asian equities declined, on track for a third-straight session of losses, as higher U.S. Treasury yields continued to weigh on technology stocks in the region. The MSCI Asia Pacific Index slid as much as 0.6%, with Japan stocks leading losses as traders returned from a holiday to access the prospect of tighter U.S. monetary policy to curb inflation. TSMC and Tencent were among the biggest drags on the regional gauge. READ: Samsung Plans $17 Billion Texas Chip Plant, Creating 2,000 Jobs The renomination of Jerome Powell as Federal Reserve chair earlier this week has sent U.S. 10-year Treasury yields to about levels near 1.65%, implying higher borrowing costs. That’s adding to concerns about weak earnings growth in Asia as well as ongoing supply-chain constraints. Investors will now turn their attention to U.S. gross domestic product data and FOMC minutes due out after Asian markets close Wednesday.  “A cautious tone may still seem to prevail for now,” Jun Rong Yeap, a market strategist at IG Asia, said in a note. “Markets continue to shift their expectations towards a tighter Fed monetary policy.” New Zealand’s stock gauge added 0.6% after the central bank raised interest rates by 25 basis points, less than the 50 points that some economists had predicted. Singapore authorities, meanwhile, expect gross domestic product to expand 3% to 5% next year, a slower pace than this year as the country rebounds from the pandemic. Indian stocks fell ahead of the November monthly expiry on Thursday, led by technology companies. The S&P BSE Sensex slipped 0.6% to 58,340.99 in Mumbai to close at its lowest level in two months. The gauge gained 0.3% on Tuesday, snapping four sessions of selloff.   The NSE Nifty 50 Index declined 0.5% on Wednesday, reversing intraday gains of as much as 0.6%. Software exporter Infosys Ltd. was the biggest drag on both gauges and slipped more than 2%. Of the 30 shares in the Sensex, 21 dropped and nine rose.  Investors roll over positions ahead of the expiry of derivatives contracts on the last Thursday of every month. Fourteen of 19 sub-indexes compiled by BSE Ltd. fell, led by a measure of IT companies. “The scheduled monthly expiry would keep the traders busy on Thursday,” Ajit Mishra, vice president research at Religare Broking Ltd. wrote in a note. “We suggest continuing with negative bias on the index while keeping a check on leveraged positions.” In Fx, the most notable movers was the drop in the kiwi: New Zealand’s currency ironically slid to the weakest in nearly two months and the nation’s bond rallied as the central bank’s 25 basis-point rate hike disappointed traders betting on a bigger increase. The central bank projected 2% benchmark borrowing costs by the end of 2022. The Bloomberg Dollar Spot Index advanced a fourth consecutive day as the greenback gained versus all Group-of-10 peers apart from the yen, which reversed its losses after falling to the lowest since March 2017. The euro underperformed, nearing the $1.12 handle amid broad dollar strength even before data showing German business confidence took another hit in November and amid renewed fears that Germany may be considering a full lockdown and mandatory vaccines. RBNZ Governor Adrian Orr said policy makers considered a 50bps move before deciding on 25bps, and he sees the OCR climbing to around 2.5% by end-2023.  Elsewhere, Turkey’s lira stabilized after Tuesday’s plunge. MSCI’s gauge of emerging-market stocks edged lower for a sixth session.   In rates, Treasuries were richer by 1bp to 2bp across the curve, paced by European bonds ahead of a raft of U.S. data preceding Thursday’s market close. 10-year Treasury yields were richer by ~1bp on the day at around 1.655%, slightly trailing bunds; most curve spreads are within a basis point of Tuesday’s close with comparable shifts across tenors. During Asia session, Treasuries were supported by wider gains across Kiwi bonds after RBNZ hiked policy rates, but still erred on the dovish side. Bunds remain supported during European morning as haven demand stems from prospect of a nationwide German lockdown. Italian bonds snapped a two-day decline. In commodities, oil futures in New York swung between gains and losses following an announcement by the U.S. and other nations of a coordinated release of strategic reserves. Focus now turns to OPEC+ on how the group will respond to the moves. The alliance has already said that such releases were unjustified by market conditions and it may reconsider plans to add more supply at a meeting next week. Base metals are well bid with LME nickel adding over 2% to outperform peers. LME copper rises over 1% to best levels for the week. Crude futures fade a modest push higher fading after a brief push through Tuesday’s best levels. WTI trades flat, having briefly printed above $79; Brent prints highs of $83 before fading. Spot gold holds a narrow range close to $1,790/oz To the day ahead now, and there’s a significant amount of US data ahead of tomorrow’s Thanksgiving holiday. That includes the weekly initial jobless claims, the second estimate of Q3 GDP, October’s personal income and personal spending, new home sales, and the preliminary October readings for durable goods orders and core capital goods orders. Over in Germany, there’s also the Ifo’s business climate indicator for November. Finally on the central bank side, there’s the release of the FOMC’s November meeting minutes, and speakers include the ECB’s Panetta and Schnabel, and the BoE’s Tenreyro. Market Snapshot S&P 500 futures down 0.1% to 4,683.50 STOXX Europe 600 up 0.3% to 480.66 MXAP down 0.5% to 196.76 MXAPJ down 0.1% to 643.18 Nikkei down 1.6% to 29,302.66 Topix down 1.2% to 2,019.12 Hang Seng Index up 0.1% to 24,685.50 Shanghai Composite up 0.1% to 3,592.70 Sensex down 0.3% to 58,499.84 Australia S&P/ASX 200 down 0.2% to 7,399.44 Kospi down 0.1% to 2,994.29 Brent Futures up 0.4% to $82.63/bbl Gold spot up 0.1% to $1,791.37 U.S. Dollar Index little changed at 96.57 German 10Y yield little changed at -0.22% Euro down 0.2% to $1.1231 Top Overnight News from Bloomberg Olaf Scholz is set to succeed Angela Merkel as German chancellor after forging an unprecedented alliance that aims to revamp Europe’s largest economy by tackling climate change and promoting digital technologies The European Commission is set to announce the recommendations for the entire EU as soon as Thursday, Politico’s Playbook newsletter reported, citing three unidentified officials and diplomats Italy’s government is debating tough new measures to stem an increase in coronavirus cases, which could include restrictions on unvaccinated people and be approved as soon as Wednesday The ECB’s pandemic purchasing program may enter a “waiting room” rather than be abolished completely once net purchases are set to end in March, Governing Council member Robert Holzmann said at briefing in Vienna The U.K.’s biggest business lobby group has urged Prime Minister Boris Johnson to back down in its dispute with the European Union over Northern Ireland and not follow through with threats to suspend parts of the Brexit divorce deal Polish central bank Governor Adam Glapinski said further weakening of the zloty wouldn’t be consistent with the country’s economic fundamentals, helping lift the embattled currency from 12-year lows The supply crunch that’s helped drive inflation to multi- decade highs shows some signs of easing in the U.S. -- but it’s still getting worse in Europe. That’s the takeaway from the latest readings on Bloomberg Economics’ new set of supply indicators The unraveling of the Turkish lira threatens to erode Recep Tayyip Erdogan’s grasp on the economy and is already emboldening his political opponents. Small protests erupted in Istanbul and Ankara overnight, calling for an end to economic mismanagement that’s unleashed rapid inflation and triggered the currency’s longest losing streak in two decades A more detailed breakdown of global news courtesy of newsquawk Asia-Pac equity indices were mixed following the choppy performance of their US counterparts where energy rallied despite the SPR announcement and tech lagged as yields continued to gain, with the latest RBNZ rate hike, as well as looming FOMC Minutes and US data releases adding to the tentative mood. ASX 200 (-0.2%) was rangebound with the index subdued by losses in tech and gold miners which suffered from the rising yield environment, but with downside cushioned by strength in the largest weighted financials sector and with outperformance in energy after oil prices rallied in the aftermath of the widely anticipated SPR announcement. The strength in oil was attributed to several reasons including a “sell the rumour/buy the news” play and expectations of a response from OPEC+, while an administration official kept the prospect of an oil export ban on the table which is seen as bullish as it would remove US supply from the global market. Nikkei 225 (-1.6%) was the laggard on return from holiday amid flows into the local currency and with reports also suggesting the BoJ is considering tweaking its pandemic relief program. Hang Seng (+0.1%) and Shanghai Comp. (+0.1%) swung between gains and losses with early indecision due to the broad tech weakness tech which was not helped by reports that Chinese cyberspace regulators and police summoned Alibaba (9988 HK) and Baidu’s (9888 HK) cloud unit for telecoms network fraud, although the losses for Chinese bourses were eventually reversed amid gains in the energy heavyweights and after a mild PBoC liquidity injection. Finally, 10yr JGBs opened lower on spillover selling from global peers but gradually pared some of the losses after rebounding from support at 151.50 and with the BoJ in the market for nearly JPY 1.5tln of JGBs with up to 10yr maturities. Top Asian News Shinsei Drops Poison Pill Against SBI in Japan Takeover Saga Morgan Stanley to Repay Hong Kong Staff $5,100 for Quarantine KKR, Equinix Among Suitors for $11 Billion Global Switch Japan to Issue $192 Billion in Debt for Stimulus: Nikkei European equities attempted to claw back some of the week’s losses (Euro Stoxx 50 -0.2%; Stoxx 600 -0.2%) at the open with Monday and Tuesday’s session dominated by ongoing COVID angst in the region. Lockdown measures were enough to see investors shrug off yesterday’s better-than-expected PMI metrics for the Eurozone with today’s slightly softer than hoped for German Ifo report having little sway on price action. Despite the upside seen at the open, optimism has faded throughout the session as speculation mounts over whether the announcement of the German coalition deal (set to be unveiled at 14:00GMT) could prompt further lockdown measures for the nation. Furthermore, reports note that the Italian government is debating potential restrictions on the unvaccinated; measures could be approved as soon as today. On a more positive footing French Finance Minister Le Maire says at the moment he does not see any need for further COVID-related restrictions in France. However, it remains to be seen how long this viewpoint can be sustained. Stateside, futures are a touch softer with losses across the majors of a relatively equal magnitude (ES -0.1%) in the final full session of the week ahead of the Thanksgiving Holiday. Given the shortened week, today sees a deluge of data from the US with releases including key personal income, spending and PCE data for October, a second look at Q3 GDP, final Michigan consumer sentiment data, as well as weekly jobless claims and energy inventory data. All of which is followed by the FOMC minutes from the November meeting. In a recent note, BNP Paribas stated it is of the view that equities will go on to provide the highest returns across asset classes in 2022 with the French bank targeting 5100 (currently 4690) for the S&P 500 by the end of next year. From a European perspective, BNP expects the Euro Stoxx 50 to close 2022 out at 4500 (currently 4300) with the market “too pessimistic” on margins; albeit the Bank concedes that the resurgence of COVID presents a risk to its view. Sectors in Europe are mostly constructive with Oil & Gas and Basic Resources underpinned by gains in the underlying commodities with the former continuing to garner support post-yesterday’s SPR announcement. The Travel & Leisure sector lags peers with the Travel element of the group hampered by reports that the European Commission is preparing new COVID travel recommendations for the whole of the EU. For Leisure names, Entain (-5.0%) and Flutter Entertainment (-3.0%) have been hit by news that over 160 UK MPs and peers are said to be demanding that online gambling limits are lowered. Finally, Telecom Italia (+9.7%) is the best performer in the Stoxx 600 after source reports suggesting that KKR is considering a higher bid for the Co. in an attempt to win over support from Vivendi.   Top European News Scholz Seals Coalition Deal to Become Next German Chancellor Italy Readies Curbs on the Unvaccinated as Covid Cases Rise Booking Agrees to Buy CVC’s Etraveli for About EU1.63b Orange CEO Convicted in $453 Million Arbitration Fraud Case In FX, the Dollar index has gained traction and continued its gains above 96.500+ status in early European hours before eclipsing resistance at 96.700 to a fresh YTD peak at 96.758, with US players also preparing to wind down for the long weekend. Before that, the Buck will be facing a plethora of Tier 1 US data, including Prelim GDP (Q3), weekly Jobless Claims, and monthly PCE in the run-up to the FOMC Minutes – which will be eyed for clues on what could warrant an adjustment of the pace of tapering (Full preview available in the Newsquawk Research Suite). On the downside, immediate support will likely be at yesterday’s 96.308 low before this week’s current 96.035 trough. In terms of early month-end FX flows (on account of the holiday-shortened week), Morgan Stanley’s model points towards USD weakness against most G10 peers. EUR, GBP - The single currency dipped a 16-month low just before the release of the German Ifo survey, which unsurprisingly voiced cautiousness against the backdrop of COVID and supply chain issues – with Ifo forecasting a growth stagnation this current quarter, whilst ING believe that today’s Ifo signals that “The risk of stagnation or even recession in the German economy at the turn of the year has clearly increased.” The currency came under further pressure in what coincided with reports that Germany is mulling a full COVID lockdown and mandatory vaccinations, although the piece failed to cite any sources nor officials and seemed to be more an extrapolation of recent remarks from the German Health Minister. EUR/USD fell through pivotal support at 1.1210 to a current low at 1.1206 ahead of 1.1200. Traders should also be cognizant of several chunky OpEx clips including EUR 1.3bln between 1.1195-1.1200. Ahead, the SPD, Greens and FDP set to unveil their coalition deal at 14:00GMT. ECB speak today include from the likes Schnabel after Panetta and Holzmann failed to spur action across EU assets. Elsewhere, the GBP/USD is flat intraday and saw little reaction to BoE Governor Bailey yesterday, suggesting he does not think the MPC will go back to a hard form of guidance and stated that it is not off the table that they give no guidance at all on rates. Bailey also stated that decisions are made meeting by meeting and that they have a very tight labour market. From a political standpoint, European Commission VP Sefcovic said EU-UK talks on Northern Ireland trade rules will probably drag into 2022. Cable remains within a 1.3353-89 range whilst EUR/GBP trades on either side of 0.8400. Looking ahead, BoE’s Tenreyro speaking at the Oxford Economics Society – with early-Nov commentary from the MPC member suggesting that monetary policy will have to bite if there are signs of second-round inflation effects, but policy cannot fix energy price spikes. NZD, AUD - The Kiwi stands as the G10 laggard following a dovish 25bps hike by the RBNZ, with the board citing optionality. Desks suggest that FX was clearly gearing for a hawkish surprise from the central bank, with markets pricing some 35% of a 50bps hike heading into the meeting given the inflation survey earlier this month. Money markets were also disappointed, with participants flagging that the 2yr swap fell over 15bps despite the RBNZ upping its 2023 OCR forecast to 2.3% (prev. 1.7%). NZD/USD fell further beneath the 0.7000 mark to a current 0.6957 low. AUD meanwhile sees its losses cushioned from another day of firm gains in iron ore, whilst cross-currency flows help the AUD/NZD test 1.0450 to the upside. Nonetheless, the cautious market mood keeps AUD/USD around the flat mark after the pair found support at 0.7200. JPY - The traditional haven outperforms as risk aversion creeps into the market. USD/JPY pivots the 115.00 market after hitting an overnight high of 115.23. Some desks suggest that offers are seen from 115.30 on Wednesday, with more around the 115.50 area, according to IFR citing Tokyo sources. In terms of notable OpEx, USD/JPY sees USD 1.7bln between 115.00-10. In commodities, WTI and Brent Jan futures consolidate following yesterday’s gains post-SPR announcement. The release disappointed the oil bears given the widely telegraphed nature of the announcement coupled with relatively small contributions from members. Desks have also highlighted that the reserves will need to be replenished at some time in the future, and thus, analysts have passed the effects from the SPR release as temporary; although, cautioning that if the desired impact is not achieved, then further action can be taken – with a temporary export ban still on the table. Meanwhile, on the demand side, futures dipped after CNBC reported that Germany could head into a full lockdown, but the piece did not make a mention of officials nor sources but seemed to be more an extrapolation of recent comments from the Germany Health Minister, with an announcement on this matter potentially to come today. Further, tomorrow could see revised travel guidance for the whole of the EU, according to Politico sources, although "The biggest overall change will be a move away from a country-based approach and to a person-based one, which takes into account a citizen’s individual COVID status." Despite this month’s European COVID developments, JPMorgan sees global oil demand growing by another 3.5mln BPD next year to reach 99.8mln BPD (280k BPD above 2019 level); 2023 demand is expected to average around 101.5mln BPD (1.9mln BPD above pre-COVID levels) and suggested that global oil demand is on track to exceed 2019 levels by March 2022 and strengthen further. As a reminder, next week also sees the OPEC+ meeting whereby the group is expected to continue with plans of monthly output increases of 400k BPD, with a risk of a more dovish decision and/or commentary. WTI Jan trades around USD 78.50/bbl (vs high 79.23/bbl) and Brent Jan around USD 82.25/bbl (vs high 83.00/bbl). Elsewhere, spot gold is interestingly unfazed by the rampant Dollar as prices remain caged within a cluster of DMAs (100 around 1,793, 200 around 1,791 and 50 around 1,788). Copper prices are again on the grind higher with LME around USD 9,800/t at the time of writing – with participants citing underlying demand, particularly from China. US Event Calendar 8:30am: 3Q GDP Annualized QoQ, est. 2.2%, prior 2.0% 8:30am: 3Q GDP Price Index, est. 5.7%, prior 5.7% 8:30am: 3Q PCE Core QoQ, est. 4.5%, prior 4.5% 8:30am: 3Q Personal Consumption, est. 1.6%, prior 1.6% 8:30am: Oct. Durable Goods Orders, est. 0.2%, prior -0.3% 8:30am: Oct. Cap Goods Orders Nondef Ex Air, est. 0.5%, prior 0.8%; - Less Transportation, est. 0.5%, prior 0.5% 8:30am: Oct. Cap Goods Ship Nondef Ex Air, est. 0.5%, prior 1.4% 8:30am: Oct. Retail Inventories MoM, est. 0.3%, prior -0.2%; Wholesale Inventories MoM, est. 1.0%, prior 1.4% 8:30am: Oct. Advance Goods Trade Balance, est. - $95b, prior -$96.3b 8:30am: Nov. Initial Jobless Claims, est. 260,000, prior 268,000; Continuing Claims, est. 2.03m, prior 2.08m 9:45am: Nov. Langer Consumer Comfort, prior 50.7 10am: Oct. Personal Income, est. 0.2%, prior -1.0%; 10am: Oct. Personal Spending, est. 1.0%, prior 0.6% 10am: Oct. Real Personal Spending, est. 0.6%, prior 0.3% 10am: Oct. New Home Sales, est. 800,000, prior 800,000 10am: Oct. New Home Sales MoM, est. 0%, prior 14.0% 10am: Oct. PCE Deflator MoM, est. 0.7%, prior 0.3% 10am: Oct. PCE Core Deflator MoM, est. 0.4%, prior 0.2% 10am: Oct. PCE Deflator YoY, est. 5.1%, prior 4.4% 10am: Oct. PCE Core Deflator YoY, est. 4.1%, prior 3.6% 10am: Nov. U. of Mich. Sentiment, est. 67.0, prior 66.8 10am: Nov. U. of Mich. 5-10 Yr Inflation, prior 2.9% 10am: Nov. U. of Mich. 1 Yr Inflation, prior 4.9% 10am: Nov. U. of Mich. Current Conditions, prior 73.2 10am: Nov. U. of Mich. Expectations, prior 62.8 2pm: Nov. FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap We’ve had a number of requests to bring back our Covid tables in the EMR. At the moment I’m resisting as they take a considerable amount of time. While we work out an efficient form of articulating the current wave on a daily basis, in today’s EMR we show graphs of the daily rolling 7-day cases and fatalities per million in the population for the G7. We’ve also included Austria, given how topical that is, and also The Netherlands, given mounting problems there. These act as a useful reference point for some of the more stressed countries. The cases chart should be in the text below and the fatalities one visible when you click “view report”. Germany is probably the main one to watch in the G7 at the moment and overnight reported 66,884 new cases (a record) compared with 45,362 the day before. A reminder that yesterday we published our 2022 credit strategy outlook. See here for the full report. Craig has also put out a more detailed HY 2022 strategy document here and Karthik a more detailed IG equivalent here. Basically we think spreads will widen as much as 30-40bps in IG and 120-160bps in HY due to a response to a more dramatic appreciation of the Fed being well behind the curve. This sort of move is consistent with typical mid-cycle ranges through history. We do expect this to mostly retrace in H2 as markets recover from the shock and growth remains decent and liquidity still high. We also published the results of our ESG issuer and investor survey where around 530 responded. Please see the results here. As we hit Thanksgiving Eve and a US data dump of a day given the holiday tomorrow, the big story over the last 2-3 business days has been real rates in the US. As recently as Friday, after the Austria lockdown news, 10yr real rates hit -1.2%. Yesterday they traded above -0.95% before closing at -0.97%, +4.0bps higher than the previous close. Our view in the 2022 credit strategy document is that credit is more tied to real rates than nominal rates and if the market attacks the Fed as we expect, then they should go up. However, note that I’ve also said I suspect they’ll stay negative for the rest of my career so while higher real yields are likely, I suspect that this is a trade rather than a structural long-term journey given likely long-term financial repression. Anyway, rising real yields, a fresh covid wave and belief over a less dovish Fed post the Powell reappointment saw a tough day for equities, especially in Europe, before the US managed to eke out a gain into the close. The S&P 500 (+0.17%) was up for the first time in 3 days, whilst Europe’s STOXX 600 (-1.28%) posted its worst daily performance in nearly 2 months. On a sector level, it was the same story in the US, where energy (+3.04%) shares benefitted from climbing oil prices and financials (+1.55%) gained on steeper and higher yields. Larger tech firms retreated on the higher discount rates, with the Nasdaq declining -0.50%. Meanwhile the VIX index of volatility was back above the 20-mark for the first time in over a month, coinciding with a broader tightening of financial conditions. However, we dipped back below 20 into the stronger close. Honing in on bonds now and there was a major selloff yesterday that hit a number of European countries in particular. By the close of trade, yields on 10yr bunds were up +8.1bps, which is their single-biggest daily increase in over a year, actually since the day we found out that the Pfizer/BioNTech vaccine had proven successful in trials and was set to be rolled out. The move came about entirely due to higher real rates, with Germany 10yr inflation breakevens actually down -2.0bps on the day. Similar moves were seen elsewhere on the continent, with yields on 10yr OATs (+8.6bps) and BTPs (+10.5bps) seeing sharp rises of their own, which occurred in part on the back of stronger than expected flash PMI data raising the prospect of a quicker drawdown in monetary stimulus, not least with inflation still running some way ahead of the ECB’s target. For US Treasuries, yields were a touch more subdued, and the yield curve twist steepened. 2yr yields declined -1.8bp whilst every other maturity increased, and all tenors out to 7 years are at post-pandemic highs. The 5yr nominal yield increased +2.2bps to 1.34%. The 10yr was up +4.1bps to 1.67% due, as we discussed above, to real yields. 10yr breakevens were flat (+0.2bp) at 2.63%. The 10 year is 7.5bps off of 2021 closing highs and in the 430 plus business days since the pandemic started there have only been 14 days with a higher close than last nights. Elsewhere yesterday, we had an important piece of news on the energy front, as the US announced that it would be releasing 50m barrels of oil from the Strategic Petroleum Reserve, with the move occurring alongside similar decisions in China, India, Japan, South Korea and the UK. 32m of those 50m will be an exchange, whereby oil is released over the next few months that is then returned over the coming years, while another 18m are coming from an acceleration of an oil sale that Congress had already authorised. Oil prices rose following the release however, with Brent crude (+3.27%) and WTI (+2.28%) both seeing decent advances, in part because the contribution from other nations was smaller than many had anticipated, but also because the potential release from the SPR had been widely reported in advance, thus sending prices lower from their peak around a month ago. Even with the news, there’s no sign that inflationary pressures will be going away just yet, since much of what happens next will depend on the reaction of the OPEC+ group. If they move to cancel plans to increase production, then that could put upward pressure on prices again and help counter the impact of the move from the various energy consumers. And as we’ve been discussing, inflationary pressures have been widening for some time now, stretching beyond specific categories like energy and used cars to an array of other areas. Overnight in Asia stocks are trading mostly in the red with the CSI (-0.03%), Hang Seng (-0.06%), Shanghai Composite (-0.10%), KOSPI (-0.48%) and the Nikkei (-1.35%) all lower. The Reserve Bank of New Zealand has raised interest rates for the second consecutive month and lifted the official cash rate 25bps to 0.75%. There was some who expected 50bps so bonds are rallying with 2yr and 10yrs -5.5bps and -7.5bps lower, respectively. The central bank were pretty hawkish in their comments though. US Treasuries are 2-4bps lower across the curve overnight as well. Staying on New Zealand, the country eased its travel restrictions by allowing fully vaccinated travellers (and other eligible travellers) from Australia without any isolation from Jan 17 and those from the rest of the world from February 14. Elsewhere, South Korea reported its highest ever daily new cases of 4,115 with 586 critical cases with the PM announcing the situation is "more serious than expected". Futures are indicating a slightly weaker start in the US and Europe with the S&P 500 (-0.24%) and DAX (-0.09%) lower. Over in Europe, there’s no sign of the pandemic letting up just yet, with French health minister Veran saying in parliament that “we are sadly well and truly in a fifth wave of the epidemic” as France announced 30,454 new cases yesterday. Austria has been the main country in the headlines recently as it moved into a nationwide lockdown, but the reality is that the trend lines have been moving higher across the continent, raising the prospect of fresh restrictions. In terms of yesterday’s developments, the Netherlands announced that social distancing would be reintroduced on a mandatory basis, and that people should stay 1.5m apart, and Poland saw the biggest daily increase in hospitalisations since April. Elsewhere, Slovakia’s PM said that he was considering following the steps adopted in Austria, and the outgoing Czech PM said that mandatory vaccines for the over-60s were being considered. In spite of the growing Covid wave across Europe, the flash PMIs released yesterday actually proved better than the consensus was expecting, and even saw something of an uptick from the October readings. The Euro Area composite PMI ended a run of 3 successive declines as it rose to 55.8 (vs. 53.0 expected), with both manufacturing (58.6) and services (56.6) rising relative to a month ago. And both the German (52.8) and the French (56.3) composite PMIs were also better than expected. On the other hand, the US had somewhat underwhelming readings, with the flash services PMI down to 57.0 (vs. 59.0 expected), as the composite PMI fell to 56.5. To the day ahead now, and there’s a significant amount of US data ahead of tomorrow’s Thanksgiving holiday. That includes the weekly initial jobless claims, the second estimate of Q3 GDP, October’s personal income and personal spending, new home sales, and the preliminary October readings for durable goods orders and core capital goods orders. Over in Germany, there’s also the Ifo’s business climate indicator for November. Finally on the central bank side, there’s the release of the FOMC’s November meeting minutes, and speakers include the ECB’s Panetta and Schnabel, and the BoE’s Tenreyro. Tyler Durden Wed, 11/24/2021 - 08:07.....»»

Category: blogSource: zerohedgeNov 24th, 2021

Wolverine"s (WWW) Q3 Earnings Beat, Sales Miss Estimates

Wolverine's (WWW) Q3 results reflect gains from strong demand, and direct-to-consumer and in-store sales. Supply-chain issues stemming from Vietnam factory closures and global logistic delays hurt. Wolverine World Wide, Inc. WWW reported mixed third-quarter 2021 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. However, both the top and bottom lines improved year over year. Strong demand for its brands, robust direct-to-consumer sales and solid performance at stores primarily contributed to year-over-year growth. Results also benefited from the sale contribution of the Sweaty Betty brand, which was acquired on Aug 2. The company's underlying results in the quarter represented revenues and earnings, excluding the Sweaty Betty contributions.However, results partly reflected the negative impacts of the ongoing supply-chain disruption caused by Vietnam factory closures and global logistic delays due to port congestions. The company's Merrell brand was the most impacted by the factory closures in Vietnam, while the Saucony and Sperry brands performed well. To accommodate the recent supply-chain challenges, management slashed its 2021 view.Other companies in the industry also witnessed similar significant impacts of factory closures in Vietnam, with NIKE NKE, carrying a Zacks Rank #5 (Strong Sell), witnessing pronounced impacts. NIKE reported lower-than-expected revenues in first-quarter fiscal 2022, attributable to the ongoing supply-chain challenges and factory closures due to COVID-19, which resulted in product shortages. While the digital and NIKE-owned businesses reflected gains from strong demand and improved traffic, its Wholesale business witnessed impacts of the supply constraints.NIKE lowered its fiscal 2022 guidance to reflect the impacts of 10 weeks of lost production in Vietnam since mid-July and expectations of the elevated transit times to remain consistent with the current levels. For fiscal 2022, the company anticipates revenue growth in the mid-single digits compared with low-double-digit growth mentioned earlier. NIKE expects revenue growth to be flat to down in low-single digits, particularly in second-quarter fiscal 2022, owing to the impacts of the lost production due to factory closures and delayed delivery times for the holiday and spring seasons.Another company on the list is Deckers DECK. While Deckers' production remained largely unaffected due to lower exposure of factories located in Southern Vietnam, the company has been experiencing disruption and delays within its sourcing network — which includes material vendors and third-party manufacturers — related to COVID-19 outbreaks. The impacts of the same were visible in its second-quarter fiscal 2022 performance, wherein results lagged analysts' expectations.Deckers has been witnessing extended transit lead times and cost pressures, owing to container shortages, port congestion, and trucking scarcity, which have led to shipping delays and greater use of air freight. These are likely to continue impacting the company's operations. We note that management trimmed its fiscal 2022 revenue projection for the UGG brand, owing to shipment disruption. The company expects the metric to grow in the high-single digits versus the previously discussed high-single-digit to low-double-digit range.Wolverine's Q3 InsightsWolverine posted third-quarter adjusted earnings of 62 cents per share, beating the Zacks Consensus Estimate of 61 cents. Adjusted earnings also increased significantly from 35 cents earned in the year-ago quarter. On a constant-currency (cc) basis, adjusted earnings were 61 cents per share. Higher sales and margins fueled the bottom-line performance, offset by supply-chain disruptions. Excluding the Sweaty Betty contribution, underlying adjusted earnings were 60 cents per share.Revenues of $636.7 million lagged the Zacks Consensus Estimate of $654 million but improved 29.1% year over year and 11% from third-quarter 2019. At cc, revenues grew 28.2% year over year. Strength in the direct-to-consumer platforms and robust sell-through at retail aided the top line. Factory closures and logistics delays hurt the company's top line by at least $60 million. The top line also benefited from the inclusion of revenues from the recently acquired Sweaty Betty brand to its portfolio. Underlying revenues were $597.6 million, reflecting year-over-year growth of 21.2% and an increase of 4% from the comparable 2019 period.Shares of Wolverine declined 10.9% yesterday, following the lower-than-expected sales performance in third-quarter 2021 and the updated 2021 view in response to the ongoing supply-chain issues. Over the past three months, shares of the Zacks Rank #2 (Buy) company have declined 10.3% against the industry's 1.6% growth. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Image Source: Zacks Investment Research In third-quarter 2021, Wolverine's total direct-to-consumer e-commerce revenues, including Sweaty Betty, more than doubled from the third-quarter 2019 level. Direct-to-consumer store revenues increased more than 35% from the 2019 level.E-commerce revenues rose 45% year over year and 129% from the 2019 figure. Underlying e-commerce revenues were up 13.3% year over year and 77.3% from third-quarter 2019.Wolverine's Merrell brand reported mid-single-digit revenue growth, including significant impacts of Vietnam factory closures. Meanwhile, the Saucony and Sperry brands drove more than 40% revenue growth each.Margins & CostsAdjusted gross profit was $284 million, up 39.4% year over year. Adjusted gross margin expanded 330 basis points (bps) year over year to 44.6%, with adjusted underlying gross margin expanding 190 bps year over year to 43.2%. Gross margin benefited from higher average selling prices, favorable product mix and the inclusion of Sweaty Betty for nearly two months of the quarter.However, air freight costs partly offset gross margin. The company incurred total air freight costs of $10 million in the third quarter. Of this, about $7 million were excluded from its adjusted results. Including the total air freight costs, the adjusted gross margin would have been 43.5%, reflecting a 220-bps increase from the prior year.Adjusted selling, general and administrative expenses jumped 37.1% to $207.7 million. The increase was driven by higher revenues, the addition of Sweaty Betty and increased marketing investments.Adjusted operating profit significantly surged to $76.3 million from $10.6 million in the prior year, with the adjusted operating margin increasing 140 bps to 12%. The adjusted operating margin was aided by strong revenue growth, gross margin expansion and balanced operating expense management. Adjusted underlying operating margin of 12.5% expanded 190 bps year over year.Wolverine World Wide, Inc. Price, Consensus and EPS Surprise  Wolverine World Wide, Inc. price-consensus-eps-surprise-chart | Wolverine World Wide, Inc. QuoteSegmental PerformancesRevenues at Wolverine Michigan Group increased 13.1% year over year to $324.8 million. At cc, the segment's revenues jumped 12.1%.Wolverine Boston Group's revenues rose 33.5% to $258.8 million from the year-ago quarter's number. At cc, the segment's revenues rose 32.5%.Other FinancialsWolverine ended the quarter with cash and cash equivalents of $183.6 million, long-term debt of $704.4 million, and stockholders' equity of $641.9 million. Net inventories at the end of the third quarter decreased 26.5% year over year to $412 million.The company delivered $17 million of cash flow from operating activities at the end of the third quarter. Net interest expenses declined 25% to $9.6 million.OutlookManagement anticipates the demand for its brands to remain strong, as evident from the strong order book, which extends into third-quarter 2022. It also remains optimistic about the composition of its portfolio, with performance categories like hiking, running, and work expected to do well. Also, it is encouraged by the addition of the Sweaty Betty brand to its portfolio, which is likely to enhance its digital capabilities and apparel offerings.However, the company slashed its 2021 revenue and earnings guidance to reflect the impacts of the ongoing supply-chain headwinds. Wolverine notes that the unexpected factory closures and a volatile logistic environment have been hurting its performance for the last four months of 2021. It expects the volatility to continue in the near term.For 2021, Wolverine projects revenues of $2.4 billion compared with $2,340-$2,400 million mentioned earlier. The latest revenue projection suggests growth of 35% from that reported in 2020 and 28% underlying growth. The revenue outlook represents mid-single-digit growth (including Sweaty Betty) and low-single-digit growth (excluding Sweaty Betty) from the 2019 reported level.Reported earnings per share are forecast to be $1.16-$1.21 for 2021, down from the $1.85-to $1.95 mentioned earlier. Adjusted earnings per share are envisioned to be $2.05-$2.10 for 2021 compared with the previously discussed $2.20-$2.30. For fourth-quarter 2021, management anticipates adjusted earnings per share of 38-43 cents, with the higher end of the range suggesting 100% growth from the 2020 reported level.On the flip side, Steven Madden SHOO, with a Zacks Rank #2 at present, raised its view for 2021 despite the global supply-chain disruptions. The company is confident about its brands. It is focused on creating trend-right merchandise assortment, deepening relations with customers via marketing, enhancing digital commerce agenda, expanding international markets, and efficiently controlling expenses. A robust business model positions it well to cash in on market-growth opportunities and boosts stakeholders' value in the long run.For 2021, Steven Madden projects revenue growth of 50-52% from the 2020 reported level. The view is also higher than the earlier mentioned 43-47% increase. Adjusted earnings per share are envisioned to be $2.30-$2.35, up from the previously stated $2-$2.10. Notably, Steven Madden reported adjusted earnings of 64 cents in 2020. Tech IPOs With Massive Profit Potential: Last years top IPOs surged as much as 299% within the first two months. With record amounts of cash flooding into IPOs and a record-setting stock market, this year could be even more lucrative. See Zacks’ Hottest Tech IPOs Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIKE, Inc. (NKE): Free Stock Analysis Report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Wolverine World Wide, Inc. (WWW): Free Stock Analysis Report Steven Madden, Ltd. (SHOO): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 11th, 2021

Boston Pizza Royalties Income Fund Announces 2021 Third Quarter Results

Toronto Stock Exchange: BPF.UN Easing of COVID-19 related restrictions resulted in Same Restaurant Sales ofpositive 13.3% for the Period. HIGHLIGHTS By the end of the Period, approximately 380 or 98% of Boston Pizza restaurants were providing on-premises dining services and take-out and delivery. System-Wide Gross Sales1 of $266.4 million for the Period and $586.0 million YTD, representing an increase of 12.3% and a decrease of 1.0%, respectively, versus the same periods one year ago. Franchise Sales2 from royalty pool restaurants of $213.0 million for the Period and $476.9 million YTD, representing an increase of 14.9% and 2.2%, respectively, versus the same periods one year ago. Same Restaurant Sales3 of positive 13.3% for the Period and positive 0.3% YTD. As COVID-19 began to adversely affect sales in Boston Pizza restaurants in March of 2020, the Fund believes that it is also useful to calculate and report SRS comparing 2021 gross sales to 2019 gross sales. If SRS were calculated comparing gross sales in the Period and YTD to gross sales in the same periods in 2019, SRS would be negative 3.8% and negative 28.1%, respectively. SRS on a Franchise Sales basis of positive 15.1% for the Period and positive 3.1% YTD. If SRS were calculated comparing Franchise Sales in the Period and YTD to Franchise Sales in the same periods in 2019, SRS would be negative 1.5% and negative 24.7%, respectively. Distributable Cash4 per Unit increased 22.5% for the Period and 32.0% YTD. Payout Ratio5 of 62.9% for the Period and 117.6% YTD, and 106.8% on a trailing 12-month basis. Cash balance at the end of the Period was $4.5 million. The monthly distribution rate was increased from $0.065 per Unit to $0.085 per Unit beginning with the September 2021 distribution that was paid in October 2021. On November 10, 2021, the trustees of the Fund declared the October 2021 distribution to unitholders of the Fund ("Unitholders") of $0.085 per Unit. VANCOUVER, BC, Nov. 11, 2021 /CNW/ - Boston Pizza Royalties Income Fund (the "Fund") and Boston Pizza International Inc. ("BPI") reported financial results today for the third quarter period from July 1, 2021 to September 30, 2021 (the "Period") and January 1, 2021 to September 30, 2021 ("YTD"). A copy of this press release, the condensed consolidated interim financial statements and related management's discussion and analysis ("MD&A") of the Fund and BPI are available at www.sedar.com and www.bpincomefund.com. The Fund will host a conference call to discuss the results on November 11, 2021 at 8:30 am Pacific Time (11:30 am Eastern Time). The call can be accessed by dialling 1-800-319-4610 or 604-638-5340. A replay will be available until December 11, 2021 by dialling 1-800-319-6413 or 604-638-9010 and entering the access code: 7769 followed by the # sign.  The replay will also be available at www.bpincomefund.com. "Boston Pizza restaurants across the country benefitted from the easing of regional operating restrictions due to improved COVID-19 conditions during the quarter. We are pleased that the improved sales performance at our restaurants have supported an increase to the Fund's distribution rate." said Jordan Holm, President of BPI. "However, we anticipate that COVID-19 will continue to have a negative impact on our restaurants during the remainder of the year.  We continue to focus on the safety of guests and staff in Boston Pizza restaurants and serving our communities with take-out, delivery and on-premise dining." ONGOING EFFECTS OF COVID-19 COVID-19 had significant adverse effects on the business of the Fund, BPI and Boston Pizza Canada Limited Partnership ("BP Canada LP") during the Period and YTD. Various governmental authorities across Canada had imposed assorted restrictions on the operations of restaurants in an attempt to control the spread of COVID-19. The restrictions ranged from limiting operating hours, reductions in permitted hours to serve alcohol, closures of indoor dining rooms and closures of patio dining depending upon the particular regions and times within the Period and YTD. During the Period, restrictions eased in all provinces to allow dine-in services which resulted in increased Franchise Sales. However, by the end of the Period, various governmental authorities across Canada implemented vaccine card or vaccine passport systems that required guests to show proof of vaccination when dining in restaurants. See the "Operating Results" section in the Fund's MD&A for the Period and YTD. COVID-19 continues to impact the business of the Fund, BPI and BP Canada LP, and the operation of Boston Pizza restaurants. After the end of the Period, the vaccine card or vaccine passport systems referenced above resulted in a decrease in customer traffic to restaurants and a decrease in sales. Franchise Sales, and the resulting Royalty and Distribution Income, for October 2021 were approximately 109% of the level they were in October 2020 and approximately 88% of the level they were in October 2019. SRS for October 2021 was approximately positive 8% when compared to the same period in 2020 and approximately negative 15% when compared to the same period in 2019. PERIOD RESULTS SRS, a key driver of distribution growth for Unitholders, was positive 13.3% for the Period and postive 0.3% YTD compared to negative 15.2% and negative 28.2%, respectively, versus the same periods one year ago. If SRS were calculated comparing gross sales in the Period and YTD to gross sales for the same periods in 2019, SRS would be negative 3.8% and negative 28.1%, respectively. Franchise Sales, the basis upon which Royalty and Distribution Income are paid by BPI and BP Canada LP respectively, indirectly to the Fund, excludes revenue from sales of liquor, beer, wine and approved national promotions and discounts. On a Franchise Sales basis, SRS was positive 15.1% for the Period and postive 3.1% YTD compared to negative 14.6% and negative 27.0%, respectively, for the same periods in 2020.  If SRS on a Franchise Sales basis were calculated comparing Franchise Sales in the Period and YTD to Franchise Sales for the same periods in 2019, SRS would be negative 1.5% and negative 24.7%, respectively. The increase in SRS for the Period and YTD was principally due to increases in restaurant guest traffic due to the easing of dining restrictions and increased take-out and delivery sales.  Franchise Sales of Boston Pizza restaurants in the Royalty Pool were $213.0 million for the Period and $476.9 million YTD compared to $185.4 million and $466.6 million, respectively for the same periods in 2020. The increase in Franchise Sales for the Period and YTD was primarialy due to positive SRS on a Franchise Sales basis. The Fund's net and comprehensive income was $5.4 million for the Period and $24.8 million YTD compared to net and comprehensive loss of $0.7 million and $10.0 million, respectively, for the same periods in 2020. The Fund's basic earnings per unit of the fund ("Unit") was $0.25 for the Period and $1.15 YTD compared to basic loss per Unit of $0.03 and $0.46, respectively, for the same periods in 2020. The Fund's diluted earnings per Unit was $0.13 for the Period and $1.15 YTD compared to diluted loss per Unit of $0.30 and $1.19, respectively, for the same periods in 2020. The $6.1 million increase in the Fund's net and comprehensive income for the Period compared to the third quarter of 2020 was primarily due to a $5.5 million decrease in fair value loss and higher Royalty and Distribution Income of $1.5 million, partially offset by higher interest expense on the Class B general partner units ("Class B Units") of Boston Pizza Royalties Limited Partnership ("Royalties LP") of $0.5 million and higher income tax expense of $0.4 million. The $34.8 million increase in the Fund's net and comprehensive income YTD compared to the same period in 2020 was primarily due to a $35.6 million increase in fair value gain and higher Royalty and Distribution Income of $0.6 million, partially offset by higher interest expense on Class B Units of $0.8 million and higher interest expense on long-term debt of $0.5 million. For a detailed discussion on the Fund's net and comprehensive income, please see the "Operating Results – Net and Comprehensive Income (Loss) / Basic and Diluted Earnings (Loss)" section in the Fund's MD&A for the Period and YTD. The Fund's net income or loss under International Financial Reporting Standards ("IFRS") contains non-cash items, such as the fair value adjustments on financial instruments and deferred income taxes, that do not affect the Fund's business operations or its ability to pay distributions to Unitholders. In the Fund's view, net income or loss is not the only or most meaningful measurement of the Fund's ability to pay distributions. Consequently, the Fund reports the non-IFRS metrics of Distributable Cash and Payout Ratio to provide investors with more meaningful information regarding the amount of cash that the Fund has generated to pay distributions and the extent to which the Fund has distributed that cash. The Fund also reports the non-IFRS metric of SRS to provide investors useful information regarding the change in gross sales of Boston Pizza restaurants. Readers are cautioned that Distributable Cash, Payout Ratio and SRS are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. For a reconciliation between cash flow from operating activities (the most directly comparable IFRS measure) and Distributable Cash see the "Financial Summary" section of this press release. For a detailed discussion on the Fund's Distributable Cash and Payout Ratio, please see the "Operating Results – Distributable Cash / Payout Ratio" section in the Fund's MD&A for the Period and YTD. A reconciliation of SRS and Payout Ratio to an IFRS measure is not possible. The Fund generated Distributable Cash of $6.7 million for the Period, compared to $5.5 million for the third quarter of 2020. The increase in Distributable Cash of $1.2 million or 22.5% was primarily due to an increase in cash flow generated from operating activities of $3.4 million and lower entitlement for BPI's Class B Units of $0.1 million, partially offset by an adjustment to SIFT Tax on Units of $1.1 million, a contractually required debt repayment of $1.0 million for which there is no comparable repayment in the third quarter of 2020 and an increase of interest paid on long-term debt of $0.1 million. The Fund generated Distributable Cash of $14.4 million YTD compared to $10.9 million year-to-date in 2020. The increase in Distributable Cash of $3.5 million or 31.7% was primarily due to an increase in cash flow generated from operating activities of $7.0 million and an adjustment to SIFT Tax on Units of $0.4 million, partially offset by contractually required debt repayments of $3.1 million for which there are no comparable repayments in 2020, an increase of interest paid on long-term debt of $0.6 million and increased entitlement for ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzingaNov 11th, 2021

Aaron"s (AAN) Tops Q3 Earnings & Revenues Estimates, Ups View

Aaron's (AAN) Q3 results gain from a robust lease portfolio, a solid online show, and strength in GenNext stores. It also raises the 2021 view. The Aaron's Company, Inc. AAN reported impressive third-quarter 2021 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. The company has strengthened its position in the direct-to-consumer lease-to-own market. The solid e-commerce business and sturdy performance in GenNext stores also aided quarterly results. Management raised its 2021 view.It remains on track with its GenNext real estate strategy, which is performing well. As of Sep 30, 2021, Aaron’s boasts 86 GenNext stores. The company expects to open more than 100 such stores by 2021.Shares of the Zacks Rank #2 (Buy) company have rallied 29.1% year to date against the industry’s decline of 13.5%. However, shares of Aaron’s fell 21.9% on Oct 26, which might be attributable to reduced franchised locations and expectations of drab customer payment activity in the coming few quarters. Image Source: Zacks Investment Research Q3 HighlightsAaron's delivered adjusted earnings of 83 cents per share, which surpassed the Zacks Consensus Estimate of 53 cents. However, the bottom line declined 25% year over year from $1.10 per share reported in the prior-year quarter. On a GAAP basis, the company recorded earnings of 73 cents per share, down 24% year over year from 96 cents reported in the year-ago quarter.Consolidated revenues rose 2.5% to $452.2 million and beat the Zacks Consensus Estimate of $434 million. The uptick is mainly due to improved quality and the size of its lease portfolio, which somewhat offset reduced customer payment activities, and the impact of the net closure of 79 franchised stores in 15 months ended Sep 30, 2021.Same-store revenues rose 4.6% in the third quarter, driven by a robust lease portfolio, which somewhat offset reduced payment activities. E-commerce lease revenues were up 13.3%, accounting for 14.3% of total revenues.Breaking up the components of consolidated revenues, we note that lease and retail revenues grew 4% in the reported quarter to $413.7 million. Non-retail sales, which mainly include merchandise sales to franchisees, fell 7.6% year over year. Franchise royalties and fees in the quarter slumped 24.7% to $6.3 million from the year-ago quarter.Aaron’s franchisee revenues decreased 21.2% year over year to $79.8 million on reduced franchised locations. Meanwhile, same-store revenues for franchised stores grew 2.1% year over year. Revenues and customers of franchisees are not deemed as revenues and customers of the company.Aaron’s adjusted EBITDA declined 16.6% year over year to $53.6 million from $64.3 million reported in the year-ago quarter. Adjusted EBITDA margin contracted 270 basis points (bps) to 11.9% in the reported quarter due to reduced customer payment activity and a potential rise in write-offs.Financial PositionThe company ended the quarter with cash and cash equivalents of $14.8 million, and shareholders’ equity of $721.5 million. As of Sep 30, 2021, it generated cash from operations of $30.2 million. It had total available liquidity of $247.5 million as of Sep 30, 2021. Capital expenditure is expected to be $90-$100 million for 2021.The company bought back 1,333,264 shares of Aaron's common stock, worth $37.5 million. From the start of the year till Oct 22, it repurchased 3,034,097 shares for $90.4 million. Currently, the company has shares worth $59.6 million remaining to be bought back under its existing share repurchase program of $150 million. The board also approved a quarterly dividend of 10 cents per share, which was paid out on Oct 5.The Aaron's Company, Inc. Price, Consensus and EPS Surprise   The Aaron's Company, Inc. price-consensus-eps-surprise-chart | The Aaron's Company, Inc. QuoteOutlookDriven by solid results, management raised its 2021 view. For 2021, the company anticipates revenues of $1.82-$1.83 billion, up from the earlier mentioned $1.775-$1.8 billion. Same-store revenues are forecast to grow 7.5-8.5% compared with 6-8% growth stated previously.Adjusted EBITDA is likely to be $225-$230 million, reflecting an improvement from the previously mentioned $215-$225 million. However, it slashed its free cash flow view from $90-$100 million to $30-$40 million for 2021 due to the higher sale of lease merchandise in the third quarter. Management expects customer payment activity to remain drab for the coming few quarters.For fourth-quarter 2021, write-offs and lease payment activities are likely to be lower than the year-ago quarter but above the pre-pandemic levels.3 Better-Ranked Stocks to ConsiderPVH Corp PVH currently sports a Zacks Rank #1 (Strong Buy) and has a long-term earnings growth rate of 59.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.Carter’s CRI presently has an impressive long-term earnings growth rate of 21.1% and a Zacks Rank #2.Lululemon Athletica LULU has a long-term earnings growth rate of 20%. The company has a Zacks Rank #2 at present. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Aaron's Company, Inc. (AAN): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report PVH Corp. (PVH): Free Stock Analysis Report Carter's, Inc. (CRI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 27th, 2021

Auto Stock Roundup: AN Inks Deal to Buy Priority 1, MGA Trims "21 View & More

AutoNation's (AN) deal to acquire Priority 1 is set to add $420 million in annualized revenues. Meanwhile, Magna (MGA) slashes 2021 revenues and EBIT margin forecast amid chip woes. Last week, the third-quarter earnings season for the Auto-Tires-Trucks sector kicked off, with Tesla TSLA, Lithia Motors LAD, Genuine Parts GPC, AutoNation AN, Gentex Corp GNTX and Autoliv ALV reporting their numbers. AutoNation also made headlines with the acquisition announcement of Priority 1 Automotive, as a new era of dealership consolidation is underway. Meanwhile, chip-related disruptions forced Volkswagen VWAGY and Renault RNLSY to halt operations and slash output targets, respectively. Magna International MGA was prompted to trim 2021 view amid microchip shortage.Key Q3 Earnings ReleasesTesla reported third-quarter 2021 earnings of $1.86, which surpassed the Zacks Consensus Estimate of $1.39 and rose from 76 cents a share recorded in the year-ago period. Total revenues came in at $13,757 million, beating the consensus mark of $13,163 million. The top line also witnessed year-over-year growth of 56.8%. Tesla currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Lithia Motors reported third-quarter adjusted earnings of $11.21 per share, beating the Zacks Consensus Estimate of $9.82. The bottom line also increased 63% from the prior-year quarter’s $6.89 per share. Total revenues jumped 70.4% year over year to $6,169.8 million and surpassed the Zacks Consensus Estimate of $6,086 million.Genuine Parts reported third-quarter 2021 adjusted earnings of $1.88 per share, increasing 15% year over year and surpassing the Zacks Consensus Estimate of $1.64. Net sales of $4,818.8 million topped the Zacks Consensus Estimate of $4,697 million and increased from the year-ago quarter’s $4,370 million.Autoliv came out with third-quarter 2021 earnings of 73 cents per share, missing the Zacks Consensus Estimate of $1.02. This compares unfavorably with earnings of $1.48 per share a year ago. The company posted revenues of $1,847 million, missing the Zacks Consensus Estimate of $1,889 million and declining from the year-ago figure of $2,037 million. AutoNation reported third-quarter 2021 adjusted earnings of $5.12 per share, skyrocketing 115% year over year and topping the Zacks Consensus Estimate of $4.35.For the reported quarter, revenues amounted to $6,379.5 million, up 18% year over year. However, the top line missed the Zacks Consensus Estimate of $6,494 million.Gentex reported third-quarter 2021 earnings of 32 cents per share, missing the Zacks Consensus Estimate of 36 cents. The reported figure compares unfavorably with prior-year quarter’s earnings of 48 cents per share. Net sales of $399.6 million lagged the Zacks Consensus Estimate of $423 million and fell 15.8% year over year.Chip-Related DisruptionsVolkswagen’s Skoda Auto announced early last week that it has halted most of its operations at its Czech plants for two weeks amid the global shortage of microchip supply. The company has kept only one production line operational at the Kvasiny plant and intends to complete 10,000 work-in-progress vehicles. The auto biggie expects semiconductor issues to gradually abate only within second-half 2022.Renault notified that it would trim output by 500,000 cars this year, more than double its prior forecast of 220,000 units amid persistent supply chain disruptions. The firm’s CFO Delbos is of the view that the chip shortage should ease a bit by 2021-end but would remain constrained for much of 2022. Amid chip woes, Renault’s inventory fell to 340,000 cars at third quarter-end from 470,000 in the year-ago period.As a result of lower-than-expected light vehicle production amid the shortage of semiconductor supply, auto equipment manufacturer Magna has trimmed sales projection. It now expects 2021 revenues in the band of $35.4-$36.4 billion, down from the previous guided range of $38.0-$39.5 billion. Amid higher commodity costs and operational efficiencies, Renault has also slashed margin forecast. The company now expects EBIT margin within 5.1-5.4%, down from the previous projection of 7-7.4%.Auto Dealerships’ M&A UpdatesAutoNation inked a deal to acquire Priority 1 Automotive. Subject to satisfactory closing conditions, the deal is expected to close in fourth-quarter 2021. The deal would add approximately $420 million in annualized revenues. Together with the previously announced acquisition of Peacock Automotive Group, AutoNation’s total annualized revenues acquired in 2021 so far total $800 million.Sonic Automotive announced the acquisition of Bobby Ford Chrysler Dodge Jeep RAM in Sealy, TX. The auto retailer will operate the dealership as Momentum Chrysler Dodge Jeep RAM of Sealy. This marks the firm’s 88th franchised dealership, 17th in Texas and first Chrysler Dodge Jeep RAM dealership.Group 1 Automotive announced the acquisition of Capital City Honda in California. The buyout is likely to help the former generate $85 million in annualized revenues. Group 1 has completed $655 million of acquired revenues so far this year. The latest acquisition brings Group 1's U.S. dealership count to 120.Price PerformanceThe following table shows the price movement of some of the major auto players over the past week and six-month period.Image Source: Zacks Investment ResearchIn the past six months, all stocks but General Motors, Honda and Harley-Davidson have registered gains. The past week also displayed a mixed performance, with Tesla registering the maximum gains and Honda losing the most.What’s Next in the Auto Space?Industry watchers will keep a tab on September commercial vehicle registrations, to be released by the European Automobile Manufacturers Association this week. Meanwhile, investors are awaiting third-quarter earnings releases of auto giants including General Motors, Ford, Harley-Davidson and PACCAR, which are scheduled for this week. Also, stay tuned for updates on how automakers will tackle the semiconductor shortage and make changes in business operations. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Genuine Parts Company (GPC): Free Stock Analysis Report Autoliv, Inc. (ALV): Free Stock Analysis Report AutoNation, Inc. (AN): Free Stock Analysis Report Magna International Inc. (MGA): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report Lithia Motors, Inc. (LAD): Free Stock Analysis Report Gentex Corporation (GNTX): Free Stock Analysis Report RENAULT (RNLSY): Free Stock Analysis Report Volkswagen AG (VWAGY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 25th, 2021

Kimberly-Clark (KMB) Q3 Earnings Miss Estimates, Sales Up Y/Y

Kimberly-Clark's (KMB) third-quarter 2021 results reflect lower earnings due to higher input costs. Management cuts 2021 view for sales, earnings and adjusted operating profit. Kimberly-Clark Corporation KMB reported third-quarter 2021 results, with the top line increasing year over year and beating the Zacks Consensus Estimate. The bottom line declined from the year-ago quarter’s reported figure and lagged the consensus mark. The company is encountering significant input cost inflation, which hurt earnings. Management also slashed its sales, adjusted operating profit and earnings per share guidance for 2021.Quarter in DetailAdjusted earnings came in at $1.62 per share, which fell short of the Zacks Consensus Estimate of $1.66. The bottom line declined from $1.72 per share in the year-ago quarter. Quarterly earnings were hurt by escalated inflation and supply chain disruptions leading to higher-than-anticipated increase in costs.Kimberly-Clark’s sales came in at $5,010 million, which surpassed the Zacks Consensus Estimate of $5,002.8 million. The metric advanced 7% year over year. Favorable currency movements lifted sales by 1%. The net effect of the Softex Indonesia buyout and business exits related to the company’s 2018 Global Restructuring Program boosted the top line by 2%. Organic sales rose 4%, with net selling prices rising 3% and product mix increasing sales 1%.In North America, organic sales in consumer products increased 3%, while it jumped 16% in the K-C Professional segment. Outside North America, organic sales went up 6% in developing and emerging (D&E) markets. The metric was in line with the year-ago quarter’s levels across the developed markets.KimberlyClark Corporation Price, Consensus and EPS Surprise  KimberlyClark Corporation price-consensus-eps-surprise-chart | KimberlyClark Corporation Quote Adjusted operating profit came in at $745 million, down from $806 million in the year-ago quarter, thanks to a rise in input costs to the tune of $480 million. Increase in pulp and polymer-based materials, distribution as well as energy costs led to a rise in input costs. These were somewhat offset by organic sales growth, reduced marketing, research and general expense as well as cost savings of $115 million and $35 million from the FORCE (Focused On Reducing Costs Everywhere) program and the 2018 Global Restructuring Program, respectively.Segment DetailsPersonal Care: Sales of $2,656 million increased 14% year over year. Net selling prices improved 4%, volumes grew 3% while product mix increased 2 points. The net effect of the Softex Indonesia buyout and business exits related to the company’s 2018 Global Restructuring Program aided sales by nearly 3%. Also, favorable currency rates fueled sales by 1%. Sales advanced 11% in North America and 18% in D&E markets. The metric grew 11% across developed markets outside North America, including Australia, South Korea and Western/Central Europe.Consumer Tissue: Segment sales of $1,541 million fell 5% year over year, including a 1% positive impact from currency rates. Volumes fell 7% reflecting tough comparison stemming from escalated shipments in North America and developed markets in the year-ago quarter owing to spike in demand amid the pandemic. Nevertheless, net selling prices inched up 1%. Sales fell 8% in North America, while it increased 5% in D&E markets. The metric fell 6% in developed markets outside North America.K-C Professional (KCP): Segment sales gained 13% to $797 million. Volumes were up 6%. Net selling prices rose 5%, while product mix rose slightly. Also, favorable currency rates contributed 1% to sales. Sales jumped 16% in North America, while it grew 14% in D&E markets. The metric increased 3% in developed markets outside North America.Other Financial UpdatesThe company ended the quarter with cash and cash equivalents of $286 million, long-term debt of $7,555 million and total stockholders’ equity of $707 million. Kimberly-Clark generated cash from operating activities of $782 million during three months ended Sep 30, 2021. Management incurred capital expenditures of $235 million. In 2021, the company now expects capital spending of $1,000-$1,100 million compared with $1,100-$1,200 million expected earlier.Kimberly-Clark repurchased 0.4 million shares for $58 million in the third quarter. In 2021, the company plans to buy back shares worth nearly $400 million at the lower end of the previously-provided guidance of $400-$450 million.The company is on track with the 2018 Global Restructuring Program, which is focused on lowering its structural costs and improving financial flexibility. As part of this initiative, the company plans to sell or exit some low-margin businesses that deliver about 1% of net sales. Notably, Kimberly-Clark generated cumulative savings of $525 million from this program, until the third quarter of 2021. Management anticipates annual pre-tax cost savings of $550-$560 million from this program by 2021-end.Image Source: Zacks Investment Research2021 OutlookNet sales in 2021 are now expected to grow 1-2% year over year. Earlier, management had anticipated the metric to increase 1-4%. Organic sales are now expected to decline 1-2% compared with flat to 2% down forecasted before. Combined gains from foreign currency translations and the Softex Indonesia buyout net of exited businesses related to the 2018 Global Restructuring Program is likely to improve sales by 3%.Management now expects adjusted operating profit to decrease 20-22% compared with a 11-14% decline anticipated earlier. Key input costs are now estimated to escalate $1,400-$1,500 million compared with $1,200-$1,300 million projected before. The updated input cost guidance is accountable to higher polymer-based materials, distribution costs and energy rates. On the savings front, management now expects total cost savings of $520-$540 million in 2021, including $390-$400 million from the FORCE program and $130-$140 million from the 2018 Global Restructuring Program. Earlier, Kimberly-Clark expected total savings of $520-$560 million.Finally, the company now envisions 2021 adjusted earnings per share of $6.05-$6.25, down from the previous expectation of $6.65-$6.90. The updated earnings view reflects significant escalated input cost inflation. The metric came in at $7.74 in 2020.This Zacks Rank #3 (Hold) stock has lost 1.3% so far this year compared with the industry’s decline of 5.9%.Top 3 PicksAlbertsons Companies, Inc. ACI, currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 37.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.Edgewell Personal Care Company EPC, currently carrying a Zacks Rank of 2 (Buy), has a trailing four-quarter earnings surprise of 31.2%, on average.General Mills, Inc. GIS, currently carrying a Zacks Rank of 2, has a trailing four-quarter earnings surprise of 7.3%, on average. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report General Mills, Inc. (GIS): Free Stock Analysis Report KimberlyClark Corporation (KMB): Free Stock Analysis Report Albertsons Companies, Inc. (ACI): Free Stock Analysis Report Edgewell Personal Care Company (EPC): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksOct 25th, 2021

Futures Slide As Soaring Oil Nears $85

Futures Slide As Soaring Oil Nears $85 While cash bonds may be closed today for Columbus Day, which may or may not be a holiday - it's difficult to know anymore with SJW snowflakes opinions changing by the day - US equity futures are open and they are sliding as soaring oil prices add to worries over growing stagflation (Goldman and Morgan Stanley both slashed their GDP estimates over the weekend even as they both see rising inflation), fueling concern that a spreading energy crisis could hamper economic recovery (as a reminder, yesterday we had one, two, three posts on stagflation, showing just how freaked out Wall Street suddenly is). Rising raw material costs, labor shortages and other supply chain bottlenecks have raised concerns of elevated prices hammering corporate profits while rising rates are suggesting that a tidal wave of inflation is coming. And while cash bonds may be closed, one can easily extrapolate where they would be trading based on TSY futures which are currently trading at a 1.65% equivalent. But while cash bonds may be closed, the big mover on Monday was oil, with WTI surging nearly 3% and touched a seven-year high as an energy crisis gripping the major economies showed no sign of easing. Meanwhile, Brent rose just shy of $85, rising to the highest since late 2018 when the Fed abruptly reversed tightening course. Over in China, coal futures reached a record as flooding shuttered mines. The surge in oil lifted shares of Chevron Corp, Exxon Mobil Corp and APA Corp between 1.2% and 3% in premarket trading. At the same time, rising rates hit FAAMGs, with Apple, Microsoft and Amazon all falling between 0.6% and 0.8%. The surge above 1.6% for 10-year Treasury yields is intensifying debate among strategists over how to position investor portfolios amid anxiety over whether transitory inflation is transitioning into stagflation. Lucid Group rose 2.2% and Occidental Petroleum climbed 3.1%, leading gains in the U.S. premarket session. Here are some of the biggest movers and stocks to watch today: U.S.-listed Chinese tech stocks soar 2% to 5% in premarket trading, extending their recent rebound. Rally supported by Beijing slapping a smaller-than-expected fine on food delivery giant Meituan and last week’s news that U.S. President Joe Biden was planning to meet with Xi Jinping before the end of the year. Alibaba (BABA US +5%) leads gains, while JD.com (JD US) and Baidu (BIDU US) rise 2% apiece Watch U.S. energy stocks as oil surges past $80 a barrel as the global power crunch rattled a market in which OPEC+ has only been restoring output at a modest pace. Exxon Mobil (XOM US +1.1%), Chevron (CVX US +1%) and Occidental (OXY US +3.1%) among top risers in premarket trading. Robinhood (HOOD US) dropped 2%; the company was under pressure in U.S. premarket trading as a looming share sale by early investors and a toughening regulatory environment for cryptocurrencies are adding to the headwinds in the stock market for the darling of the U.S. retail trading mania. ChemoCentryx (CCXI US) up 2% in U.S. premarket trading, adding to Friday’s massive gains after the drug developer won U.S. approval for Tavneos as a treatment for a rare autoimmune disorder Cloudflare (NET US) slides 1.8% in U.S. premarket trading after Piper Sandler downgraded stock to neutral Akerna Corp. (KERN US) gained in Friday postmarket trading after Matthew Ryan Kane, a board member, bought $346,032 of shares, according to a filing with the U.S. Securities & Exchange Commission. “We see rising risks to global growth and evidence of more persistent inflation, which makes us more cautious on the outlook for global markets overall,” Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, wrote in a note to clients. In Europe, the Stoxx 600 Index fell 0.2%, led by declines in travel and property firms. Miners and energy stocks were the two strongest-performing sectors in Europe on Monday on rising prices for iron ore and oil. The Stoxx 600 Basic Resources Index climbed as much as 2.4%, while the Energy Index gains as much as 1.5% to the highest since Feb. 24, 2020. European banking stocks also advanced on Monday, following four weeks of gains, and traded about 1.3% below pre-pandemic high. The sector has gained 36% ytd, is the best performer among 20 European sectors in 2021. Up 0.7% today, outperforming a slightly weaker broader Stoxx 600 Index and as investors tilt toward cyclical sectors. Earlier in the session, Asian stocks jumped, buoyed by Hong Kong-listed technology shares including Meituan, which was consigned a lower-than-expected regulatory fine. The MSCI Asia Pacific Index climbed as much as 0.9%, driven by the consumer-discretionary and communication sectors. Alibaba and Meituan were the top contributors to the gauge, each surging about 8% in the first trading in Hong Kong after the food-delivery giant was handed a $533 million fine for violating anti-monopolistic practices.  The result of the investigation into Meituan is “a relief and likely to provide closure to the share price overhang,” Citigroup analysts wrote in a note Friday, when the penalty was announced.  Hong Kong’s stock gauge was among the top performing in the region. Japan’s benchmarks also climbed as the yen weakened to an almost three-year low against the dollar and new Prime Minister Fumio Kishida said he’s not considering changes to the country’s capital-gains tax at present. Improved sentiment in China is providing much-needed support to Asian equities, which declined for four straight weeks amid uncertainty circling global markets. Power shortages in China and India, supply-chain woes, inflation risks and rising bond yields are all on the radar as the earnings season kicks off. “We are still in a market that is very, very concerned about the growth outlook,” said Kyle Rodda, market analyst at IG Markets. These sort of rallies that appear almost inexplicable are “symptomatic of the market still trying to piece together all pieces of the puzzle,” he added. Australia The S&P/ASX 200 index fell 0.3% to close at 7,299.80, with most subgauges taking a hit. Miners advanced, posting gains for a third session, offsetting losses in healthcare and consumer discretionary stocks.  Star Entertainment was the worst performer after a report saying the company had enabled suspected money laundering, organized crime and fraud at its Australian casinos for years. Fortescue surged after the company said it plans to build a green energy factory to rival China.  In New Zealand, the S&P/NZX 50 index dropped 0.5% to 13,019.37. In FX, the pound crept higher to touch an almost 2-week high versus the dollar and the Gilt curve shifted higher, led by the front-end, after the Bank of England’s Michael Saunders, one of the most hawkish members of the Monetary Policy Committee, suggested in remarks published Saturday that investors were right to bring forward bets on rate hikes. Hours earlier, Governor Andrew Bailey warned of a potentially “very damaging” period of inflation unless policy makers take action. Australia’s dollar led gains among G-10 currencies on the back of increases in oil, natural gas and iron ore prices and as Sydney emerges from a 15- week lockdown on Monday. Iron ore futures extended gains as improved rebar margins at Chinese steel mills buoyed demand prospects. The yen dropped against the dollar, with analysts forecasting more weakness ahead as the nation’s yield differentials widen. As noted above, treasury futures slumped in U.S. trading Monday, with the cash market closed for Columbus Day; they implied a yield of 1.65% on the 10Y. 10-year note futures price is down 8+/32, a price change equivalent to a yield increase of about 3bp. Benchmark 10-year yield ended Friday at 1.615%, its highest closing level since June, as investors focused on the inflationary aspects in mixed September employment data. China's10-year government bond futures declined to a three-month low while the yuan advanced as the central bank’s latest liquidity draining weakened expectations of fresh monetary policy easing. Futures contracts on 10-year notes fall 0.4% to 99.14, the lowest level since July 12. It dropped 0.4% on Friday. 10-year sovereign bond yields rose 5bps, the biggest gains in two months, to 2.96%. Looking ahead, upcoming reports on third-quarter company profits which start this week are seen as the next potential pressure point in a market already under siege from slowing global growth, sticky inflation and tighter monetary policies. Global earnings revisions are sliding - an omen for U.S. stocks that have taken their cue from rising earnings estimates all year. “The coming earnings’ season in the U.S. will be heavily scrutinized for pricing power, margins and clues on the shortage situation, as well as wage pressures,” according to Geraldine Sundstrom, a portfolio manager at  Pacific Investment Management Co. in London. “Already a number of large multinationals have issued warnings about production cuts and downgraded their Q3 outlook due to supply chain and labor shortages.” Market Snapshot S&P 500 futures down 0.3% to 4,371.25 STOXX Europe 600 down 0.2% to 456.41 German 10Y yield up 1.5 bps to -0.135% Euro little changed at $1.1568 MXAP up 0.8% to 196.45 MXAPJ up 0.7% to 642.13 Nikkei up 1.6% to 28,498.20 Topix up 1.8% to 1,996.58 Hang Seng Index up 2.0% to 25,325.09 Shanghai Composite little changed at 3,591.71 Sensex up 0.5% to 60,358.30 Australia S&P/ASX 200 down 0.3% to 7,299.79 Kospi down 0.1% to 2,956.30 Brent Futures up 1.9% to $83.98/bbl Gold spot down 0.1% to $1,755.02 U.S. Dollar Index up 0.11% to 94.17 Top Overnight News from Bloomberg The U.S. labor market will see “ups and downs” as the pandemic lingers, but it’s premature to judge that the recovery is in peril, said San Francisco Federal Reserve President Mary Daly Treasury Secretary Janet Yellen said she expects Congress to take action soon to bring the U.S. into line with a global minimum tax agreed on last week by 136 countries Chinese builders are looking to payment extensions or debt exchanges to avoid default on imminent bond obligations as liquidity conditions tighten for the real estate sector Austria will get a new chancellor, though the career diplomat stepping into Sebastian Kurz’s shoes is a close ally of the departing conservative leader who resigned over a corruption scandal Just because pandemic inflation is transitory doesn’t mean it’s going away anytime soon. That’s the awkward conclusion that policy makers and investors are arriving at, as prices accelerate all over the world. European natural gas has climbed 25% in two weeks, and oil topped $80 for the first time since 2014. Fertilizers hit a record on Friday, which means food prices -- already at a 10- year peak -- will likely rise even higher A more detailed summary of overnight news from Newsquawk Asia-Pac stocks traded mostly positive but ended the day somewhat mixed after having shrugged off the early weakness stemming from last Friday’s lacklustre performance stateside and disappointing NFP jobs data. Note, markets in Taiwan and South Korea were closed. ASX 200 (-0.3%) was the laggard with underperformance in tech, consumer stocks and defensives overshadowing the gains in commodities and with Star Entertainment the worst hit with losses of more than 20% after media outlets alleged that it enabled suspected money laundering, organised crime, fraud and foreign interference which the Co. said were misleading reports. However, downside for the index was limited as New South Wales businesses reopened from the lockdown that lasted for over three months. Nikkei 225 (+1.6%) reversed opening losses as exporters cheered a weaker currency and with the government mulling over JPY 100bln financial support for chip factory construction. Hang Seng (+2.0%) and Shanghai Comp. (Unch) were both positive following talks between China's Vice Premier Liu He and USTR Tai on Saturday in which China was said to be negotiating for a cancellation of tariffs and sanctions. The advances in Hong Kong were led by tech stocks including Meituan despite the Co. being fined CNY 3.4bln by China’s market regulator for monopolistic behaviour, as the amount was seen to be a slap on the wrist, while the gains in the mainland were only mild as participants also reflected on the substantial liquidity drains by the PBoC totalling a net CNY 510bln since Saturday. Finally, 10yr JGBs were pressured amid the gains in Japanese stocks and lack of BoJ purchases in the market, while price action was also not helped by the continued weakness in T-note futures amid the semi-holiday conditions in US for Columbus Day in which the NYSE and the Nasdaq will open but bonds trading will remain shut. Top Asian News Australian IPOs Heading for Biggest Haul Since 2014: ECM Watch Syngenta’s Shanghai IPO Proposal Suspended For Earnings Update China Junk-Rated Dollar Bond Rout Deepens Amid Builder Worries China’s 10-Year Bond Yield Jumps By The Most Since August Bourses in Europe are mostly but modestly lower (Euro Stoxx 50 -0.1%, Stoxx 600 -0.2%) whilst the FTSE 100 (+0.2%) bucks the trend, owing to firm performances in its heavyweight sectors. US equity futures meanwhile trade within tight ranges with broad-based losses of some 0.3-0.4%. Fresh fundamental catalysts have remained light, although inflation and stagflation remain on traders' minds heading into this week's US and Chinese inflation metrics and against the backdrop of rising energy prices. Thus, the sector configuration sees Basic Resources, Oil & Gas and Banks at the top of the bunch, whilst the downside sees Travel & Leisure, Real Estate and Retail, with no overarching theme to be derived. Basic Resources is the marked outperformer as base metals are bolstered in what seems to be a function of the coal shortage in Asia, with iron ore contracts also surging overnight and copper following suit, in turn boosting the likes of Rio Tino (+3.2%), Antofagasta (+3.1%), Glencore (+3.1%), BHP (+2.8%). The top of the Stoxx 600 is dominated by metal names. In terms of individual movers, Carrefour (-2.2%) is softer after sources stated that exploratory talks over a Carrefour-Auchan tie-up ended due to the complexity of the deal. Evotec (+0.7%) holds onto gains as it seeks a Nasdaq listing. Roche (+0.6%) and Morphosys (+3.7%) underpin the health sector after the Cos received Breakthrough Therapy Designation from the US FDA for gantenerumab for the treatment of Alzheimer's disease. Top European News BOE Officials Double Down on Signals of Imminent Rate Hike Brexit Clash on Northern Ireland Means Headaches for Johnson Asos CEO Beighton Steps Down as Sales Growth Slows Adler Shares Flounder After Asset Disposal Plan, Past M&A Report In FX, the Aussie has secured a considerably firmer grip of the 0.7300 handle vs its US rival as COVID-19 restrictions are relaxed in NSW and base metals tread water after a mostly positive APAC equity session overnight. However, Aud/Usd is also firmer on the back of ongoing Greenback weakness and long liquidation from what some are calling ‘stretched’ levels of IMM positioning going in to Friday’s NFP release, while the Aud/Nzd cross has rebounded further above 1.0550 in wake of a rise in NZ virus cases that has prompted the PM to keep Auckland on level 3 alert for another week pending review. Hence, Nzd/Usd is capped around 0.6950 and continues to lag on the unwinding of Kiwi longs built up in advance of last week’s universally anticipated 25 bp RBNZ hike. Back to the Buck, but looking at the index in relation to where it was before and after the latest BLS report, 94.000 is providing some underlying support on Columbus Day that is not a full US market holiday, but will see cash Treasuries remain closed. Moreover, the DXY is gleaning momentum within a narrow 94.028-214 range via marked Yen underperformance amidst the latest rout in bonds and more pronounced technical impulses as Usd/Jpy extends beyond 112.50 and sets yet another 2021 peak around 112.95. GBP - Sterling is taking up post-payrolls Dollar slack as well, but firmer in its own right too as comments from BoE Governor Bailey and MPC member Saunders add to the growing expectation that rate hikes may be delivered sooner than had been expected before the former revealed that policy-setters were evenly divided at 4-4 in August on the subject of minimum criteria being achieved for tightening. Cable is hovering under 1.3650 and Eur/Gbp is sub-0.8500 in response, with the latter not really fazed by the UK-EU rift on NI protocol. CAD/NOK - The Loonie remains firm against its US peer after the stellar Canadian jobs data and Usd/Cad continues to probe support/bids at 1.2450 against the backdrop of strength in oil prices that is also keeping the Norwegian Krona afloat and Eur/Nok eyeing deeper sub-10.0000 lows irrespective of marginally mixed vs consensus inflation metrics. CHF/EUR/SEK - All rather rangy, aimless and looking for inspiration or clearer direction as the Franc straddles 0.9275 vs the Greenback, but remains firmer against the Euro above 1.0750 following only a faint rise in Swiss domestic bank sight deposits. Meanwhile, the Euro is pivoting 1.1575 vs the Buck and looks hemmed in by decent option expiry interest just outside the range given.1 bn rolling off between 1.1540-50 and 1.6 bn from 1.1590-1.1600 at the NY cut. Elsewhere, the Swedish Crown is slipping on risk-off grounds towards 10.1250 having tested resistance circa 10.1000. In commodities, WTI and Brent front-month futures continue the upward trajectory seen during the APAC session, with the complex underpinned heading into the winter period and against the backdrop of higher gas prices. The gains have been more pronounced in the US counterpart vs the global benchmark with no clear catalysts behind the outperformance, although this may be a continuation of the unwind seen after reports suggested a release of the US SPR (Strategic Petroleum Reserve) is unlikely. For context, reports of such a release last week took the WTI-Brent arb to almost USD 4.2/bbl vs USD 2.7/bbl at the time of writing. Furthermore, there have also been reports of lower US production under President Biden's "build back better" initiative, which puts more weight on renewable energy, with some energy analysts also suggesting that OPEC+ sees less of a threat from a "shale boom" as a result. Back to price action, WTI has been in the limelight after topping the USD 80/bbl overnight and extending gains to levels north of USD 81.50/bbl (vs low 79.55/bbl), whilst the Brent Dec contract topped USD 84.00/bbl (vs low USD 82.50/bbl). In terms of other news flow, sources suggested the fire at Lebanon's Zahrani fuel tank has been put out after the energy minister suggested the fire was contained – the cause of the fire is not yet known. Gas prices also remain elevated with UK nat gas futures relatively flat on the day but still north of GBP 2/Thm vs GBP 1/Thm mid-August and vs GBP 4/Thm last week, whilst the Qatari Energy Minister said he is unhappy about gas prices being high amid negative follow-through to customers. Over to metals, spot gold and silver are somewhat lacklustre, but with magnitudes of price action contained, with the former meandering just north of USD 1,750/oz and the latter above USD 22.50/oz heading into this week's key risk events. Overnight, iron ore futures were bolstered some 10% in Dalian and Singapore Exchanges amid fears of coking coal supply shortages - coking coal is an essential input to produce iron and steel. Traders should also be cognizant of the Chinese metrics released this week as another elevated PPI metric could see the release of more state reserves, as had been the case over the recent months. Using the Caixin PMIs as a proxy for the release, the PMI suggested sharp increases in both input costs and output prices – largely owed to supply chain delays, with the "rate of inflation was the quickest seen for four months, amid reports of greater energy and raw material costs. This, in turn, led to a solid increase in prices charged". The measure for output prices its highest in three months, whilst "the pressure of rising costs was partly transmitted downstream to consumers, as the demand was not weak." US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap A reminder that it’s Columbus Day today where US bond markets are closed. Equity markets are open but expect it to be quiet. Ahead of this, this morning we have published our latest monthly survey results covering over 600 global market participants. See here for more. For the first time since June, the biggest perceived risk to markets is now higher yields and inflation, whilst direct Covid-19 risks are out of the top 3 for the first time. A further equity correction before YE remains the consensus now. 71% expect at least another 5% off equities at some point before YE (68% correctly suggested that last month). A very overwhelming 84% thought the next 25bps move in 10yr US Treasury yields would be up. Of some additional interest is that the definition of stagflation is varied but that the majority think it’s a high or very high risk for the next 12 months. The extreme of this view surprised me. While I’ve long thought the market has underestimated the inflation risks I would still say there is enough of a growth cushion for 2022. However it’s clear the risks have built. Anyway, lots more in the survey. Thanks for filling it in and see the results for details. The week ahead will centre around the US CPI release on Wednesday but it might be a touch backward looking given that energy has spiked more recently and that used car prices are again on the march after a late summer fall that will likely be captured in this week’s release. Elsewhere, we’ve got a potentially more challenging US earnings season than that seen over the last year will commence with the big financials from Wednesday. In addition minutes from the last FOMC will give clues to the latest taper thinking on Wednesday as well. The IMF/World Bank meetings will generate plenty of headlines this week with their latest world outlook update tomorrow the highlight. The best of the rest data wise consists of JOLTS (Tuesday),which we think is a better labour market indicator than payrolls albeit a month behind, US PPI (Thursday) which will give a scale of building pipeline price pressures, US retail sales and UoM consumer sentiment (Friday), and China’s CPI and PPI (Thursday). With all that to look forward to, markets have started the week on a strong note, with equity indices including the Hang Seng (+2.02%), Nikkei (+1.57%), CSI (+0.32%) and Shanghai Composite (+0.32%) all moving higher, whilst the Kospi (-0.11%) has seen a slight decline. Japanese stocks have been buoyed by comments from new PM Kishida over the weekend that he isn’t currently considering changes to the country’s capital-gains tax. That comes with just 20 days remaining until the country’s general election. Separately in China, the country’s energy woes continue with 60 of 682 coal mines closed in the Shanxi province due to heavy floods, with Chinese coal futures up +8.00% this morning. And the property market issues are continuing to persist, with a new Chinese developer Modern Land seeking a 3 month extension to a $250 million dollar bond due to mature on October 25. By the end of last week, a Bloomberg index of Chinese junk-rated dollar bonds had seen yields climb to a decade-high above 17%, so clearly one to still look out for. Unlike in Asia, equity futures are pointing lower in the US and Europe this morning, with those on the S&P 500 down -0.21%. In terms of the main highlight it’s clearly US CPI mid-week. Given my views that inflation risks have been massively understated this year I’ve been saying for months that these reports have potentially been the most important monthly data we have seen for years. But since they mostly come and go with a “meh… mostly transitory” and a relative whimper, I’ve clearly been wrong to over hype them. So ignore me when I say that this month’s report might not be that interesting. With energy soaring over the last month and signs of inflation pressures continuing to build elsewhere then I’m not sure we can read too much into this month’s figures. Take used cars. Given the 2-3 month lag between actual prices and their CPI impact, this month will more than likely reflect a softening of prices in the summer. However September saw prices rise +5.4% so this will probably show up towards the end of the year along with the recent rise in energy costs. Our economists expect a +0.41% headline (vs. +0.27% previously) and +0.27% core (vs. +0.10%) mom rate. This is a bit above consensus and would take the yoy rate to 5.4% (up a tenth) and 4.1% (unch) respectively. Speaking of inflationary pressures, this morning has seen energy prices take a further leg higher, with WTI oil (+1.90%) moving back above $80/bbl for the first time since late 2014, whilst Brent crude (+1.42%) has moved above $83/bbl. European natural gas prices will continue to be an important one to follow amidst the astonishing price surge there, but the declines at the end of last week mean prices finished the week down by more than -45% since their intraday peak on Wednesday, before the comments from Russian President Putin that brought down prices. The rest of the day-by-day calendar is at the end as usual but although it’s a second tier release normally, tomorrow’s JOLTS will be interesting in as far as it might confirm that the main labour problems in August were a lack of supply rather than demand. The report’s full value is reduced by it being a number of weeks out of date but there’s a reasonable argument for saying that this is a better gauge of the state of the labour market than the payroll release. We go through Friday’s mixed report at the end when looking back at last week. Outside of data, it’s that time again as earnings season gets going, with a number of US financials kicking things off from mid-week. In terms of the highlights, we’ll hear from JPMorgan Chase, BlackRock and Delta Air Lines on Wednesday. Then on Thursday, we’ll get UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Finally on Friday, we’ll hear from Charles Schwab and Goldman Sachs. For more info on the upcoming earnings season, you can read DB’s equity strategists Q3 S&P 500 preview here. Back to markets, it was interesting over the weekend that the BoE’s Saunders chose to endorse market expectation of an earlier start to the hiking cycle in the UK rather than push back against it. He is on the more hawkish end of the spectrum but it was an important statement. Earlier, Governor Bailey suggested that there could potentially be a very damaging period of higher inflation ahead if policy makers didn’t react. Interestingly our survey showed that the market thinks the BoE is likely to make a policy error by being too hawkish so a battle seems likely to commence over policy here in the UK over the coming weeks and months. The November meeting appears live. Those comments have helped to support the pound this morning, which is up by +0.16% against the US Dollar. Looking back to last week now, risk sentiment was supported in the first full week of Q4 by easing European energy prices and a cease fire on the debt ceiling that avoided disaster and bought Washington lawmakers 8 weeks to find a more permanent solution. Global equity indices thus gained on the week: the S&P 500 picked up +0.79%, with a slight -0.19% pullback on Friday, and European equities kept pace with the STOXX 600 rallying +0.97% (-0.28% on Friday). Cyclical stocks led the way on both sides of the Atlantic; energy stocks were among the best performers whist financials benefitted from higher yields and a steeper curve. Speaking of which, US 10yr Treasury yields gained a punchy +14.1bps to close the week at 1.603%, their highest levels since early June. The benchmark gradually increased 3.0bps after Friday’s employment data. Inflation compensation continued to drive rate increases, as US 10yr breakevens gained +13.5 bps to finish the week at 2.515%. We need to go back to May to find higher levels. The sovereign yield increases were global in nature, with German bunds gaining +7.3bps and UK gilts +15.6bps higher. German 10yr breakevens gained +3.9bps while UK breakevens were +12.0bps higher. US nonfarm payrolls increased +194k in September, well below consensus expectations of a +500k gain, though private payrolls increased +317k and net two month revisions were up +169k. The unemployment rate ticked down to a post-pandemic low of 4.8% on the back of a declining labour force participation rate. Average hourly earnings were robust, increasing +0.6% mom (+0.4% expected). Taken in concert, the print likely cleared the (admittedly low) bar to enable the FOMC to announce tapering at the November meeting, whilst also feeding the creeping stagflation narrative (see survey results). Elsewhere, building on a preliminary July deal, the OECD said 136 nations have signed up to implement a 15% minimum global tax rate to address adequate taxation of multinational tech firms. As part of the deal, countries agreed not to impose any additional digital services taxes.       Tyler Durden Mon, 10/11/2021 - 08:12.....»»

Category: blogSource: zerohedgeOct 11th, 2021

Big Tech Q3 Earnings

Big Tech Q3 Earnings By Nick Colas of DataTrek US corporate earnings season is fast approaching, and Big Tech’s announcements will be key to the market’s direction. Wall Street has been cutting numbers for some names (GOOG, AMZN) and not raising estimates for AAPL, MSFT or FB. The good news is that the Street expects every Big Tech company to print Q3 results that are BELOW Q2 actuals. That’s likely too pessimistic; 2019, for example, saw no seasonality between Q2 and Q3. Big Tech may not be Q4 leadership (cyclicals should be), but they should be no impediment to a market rally later in the quarter. We have been saying Q3 US corporate earnings season should be a bright spot that counteracts an otherwise troubled equity market narrative, so today we will discuss upcoming Big Tech earnings. Add up the S&P 500 weightings for Apple (6.0 percent), Microsoft (5.8 pct), Google (4.3 pct), Amazon (3.8 pct) and Facebook (2.1 pct) and you have 22 percent of the index. How markets respond to earnings reports from these 5 companies matters just about as much as the combined impact of announcements from the Industrials, Consumer Staples, Energy, Real Estate, Materials and Utilities sectors (a combined 24 pct of the S&P). Let’s start with the most important point: Big Tech has not been immune from the recent trend of Wall Street analysts cutting their Q3 earnings estimates that we’ve been talking about every Sunday for the last month. Numbers have come down for Amazon and Google, and have remained only constant for Apple, Microsoft, and Facebook. As the following 30/60-day earnings revision trends show, Amazon has seen its Q3 expectations slashed over the last 2 months, Facebook’s Q3 estimates actually rose, and Q3 estimates for Google, Apple and Microsoft are basically unchanged: Apple: $1.23/share expected, +$0.01 over the last 60 days, flat over the last 30 days Microsoft: $2.07/share expected, +$0.01 over the last 60 days, flat over the last 30 days Google: $23.40/share expected, +$0.07 over the last 60 days, but -$0.08 over the last 30 days Amazon: $8.92/share expected, -$4.02/share over the last 60 days, -$0.09 over the last 30 days Facebook: $3.17/share expected, +$0.22 over the last 60 days, flat over the last 30 days Now, the funny thing about all these estimates is that in every single case they are lower than what these companies reported in Q2 2021. That fits the oddity we’ve also been mentioning in our weekly earnings updates: Wall Street analysts are expecting the S&P 500 to print lower aggregate Q3 earnings ($49/share) than actual Q2 results ($53/share). That has struck us as excessively pessimistic in a cyclical recovery (even if it has been slowing through Q3), and Big Tech’s Q3 2021 earnings expectations when compared to how quarterly earnings typically trend between Q2 and Q3 supports that view: Apple’s $1.23 Q3 estimate is lower than Q2’s actual $1.30. In 2019, the company reported $0.55/share (split adjusted) in Q2 and $0.76/share in Q3, so seasonality doesn’t seem to be an issue for Apple’s quarterly earnings progression. Microsoft’s $2.07 Q3 estimate is lower than Q2’s actual $2.17/share. As with Apple’s 2019 results, MSFT saw no drop from Q2 ($1.37/share) to Q3 ($1.38) in that year. Google’s $23.40 Q3 estimate is meaningfully lower than Q2’s actual $27.26. In 2019 the company took a charge for a regulatory fine, but its operating earnings were essentially unchanged from Q2 to Q3 ($9.9 billion in each quarter). Amazon’s $8.92 Q3 estimate is well below Q2’s actual of $15.21. That is a 41 percent drop, and perhaps correct given the incremental costs the company faces. But the Q2 to Q3 2019 earnings progression was $5.22 to $4.23, only a 19 percent decline. Facebook’s $3.17 Q3 estimate is also far below Q2’s actual of $3.61. In 2019, Q3 saw earnings increase, to $2.12, from $1.99 in Q2. Takeaway (1): you can see why US Big Tech has had a tough slog in the last month (flat/down Q3 earnings expectations), but estimates seem too low just based on what these companies reported for Q2. Seasonality doesn’t explain the expected drop, nor do economic factors. Now, that doesn’t mean Big Tech can be market leaders over the balance of the year; our “Pandemic Peacetime” paradigm points to other, more cyclical, groups playing that role. But nor should they embarrass themselves when they report Q3 results and take the market down with them. Takeaway (2): going from the “micro” of 5 companies’ earnings reports to the “macro” of what this says about US large cap stocks, we think markets broadly agree with our point that Q3 earnings reports will surprise meaningfully to the upside. That’s why the S&P 500 is only off 4 percent from its early September highs despite cuts to earnings estimates, a slowing US economy, a de facto announcement of Fed bond purchase tapering and 2022 rate hikes, not to mention DC’s recent debt limit wrangling. That’s good and bad news, because it put all the market’s eggs in one basket. For that reason, we expect market volatility to continue at least until more than half the S&P 500 has reported (i.e., late in the month). Tyler Durden Thu, 10/07/2021 - 22:40.....»»

Category: worldSource: nytOct 8th, 2021

Constellation Brands (STZ) Q2 Earnings Lag Estimates, Sales Beat

Constellation Brands (STZ) Q2 results reflect gains from robust consumer demand, strength in the beer business. and organic sales growth in the wine and spirits business. Constellation Brands Inc. STZ reported lower-than-expected earnings in second-quarter fiscal 2022 results, while the top line beat the Zacks Consensus Estimate. Sales also improved year over year driven by continued growth in the beer business and robust consumer demand. Constellation Brands raised its comparable earnings per share view for fiscal 2022.Constellation Brands posted fiscal second-quarter comparable earnings of $2.38 per share, which declined 14% year over year and missed the Zacks Consensus Estimate of $2.78. On a reported basis, the company’s earnings per share was 1 cent, which included Canopy Growth equity losses of 13 cents. Excluding the impact of Canopy Growth, it posted comparable earnings of $2.52 per share, down 13% from the year-ago period.Net sales improved 5% to $2,371.1 million and beat the Zacks Consensus Estimate of $2,316.4 million. Organic net sales advanced 14% year over year. Sales benefited from double-digit net sales growth at the beer business, and organic sales growth in the wine and spirits business.Constellation Brands Inc Price, Consensus and EPS Surprise Constellation Brands Inc price-consensus-eps-surprise-chart | Constellation Brands Inc QuoteAt the company’s beer business, sales climbed 14% to $1,861.3 million, including an 11.7% increase in shipment volumes and 7.3% depletion volume growth. Sales growth at the segment was driven by robust consumer demand for its     iconic brands. Depletion volume benefited from continued strength in Modelo Especial and Corona Extra.Depletion volume increased 16% for the Modelo Especial and nearly 5% for Corona Extra. The Modelo Especial became the No. 1 beer brand, thus strengthening its leadership position in the high-end category. It was also the largest share gainer in dollar sales in the U.S. beer category in IRI channels. Meanwhile, Corona Extra was the No. 2 share gainer and No. 3 in the high-end in IRI channels.Sales in the wine and spirits segment decreased 18% to $509.8 million in the fiscal second quarter. Organic net sales for the segment advanced 15%. Organic net sales were driven by gains from consumer-driven innovation initiatives. Solid performances by The Prisoner Brand Family, Kim Crawford, and Meiomi were key growth drivers.Shipment volume in the wine and spirits business slumped 36.2%, while depletions fell 2.3%. Organic shipment volume was up 5.7%. In the United States, the shipment volume plunged 41.1%, while organic shipment was flat with last year.In the past three months, shares of this Zacks Rank #3 (Hold) company declined 6.1% compared with the industry’s fall of 11.4%.Image Source: Zacks Investment ResearchMarginsAdjusted gross profit rose 2% year over year to $1,214.5 million. Meanwhile, adjusted gross profit margin contracted 130 basis points (bps) to 51.2%.Constellation Brands' comparable operating income declined 8% to $730.3 million, while comparable operating margin contracted 450 bps to 30.8%.The operating margin in the beer segment contracted 530 bps to 37.2% due to higher cost of goods sold (COGS), marketing investments and SG&A expense, which more than offset gains from favorable pricing, mix and positive currency translations. This was somewhat negated by a rise in marketing spend and a higher cost of goods sold. Increased COGS primarily stemmed from obsolescence of $66 million associated with excess inventory of hard seltzers, due to a slowdown in the overall category in the United States.The wine and spirits segment’s operating margin contracted 620 bps to 19.7% on the bulk sales of smoke-tainted wine, which was margin-dilutive, and higher SG&A and marketing expenses and increased COGS. This was partly offset by gains from improved mix stemming from the existing portfolio and divestitures.Financial PositionConstellation Brands ended the fiscal second quarter with cash and cash equivalent of $103.4 million. As of Aug 31, 2021, it had $10,081.7 million in long-term debt (excluding current maturities) along with total shareholders’ equity (excluding non-controlling interest) of $11,192.7 million.On Aug 31, 2021, the company generated an operating cash flow of $1,525.9 million and adjusted free cash flow of $1,172.5 million. It has repurchased 6.2 million shares for $1.4 billion through September of fiscal 2022.On Oct 5, 2021, the company announced a quarterly dividend of 76 cents per share for Class A stock and 69 cents for Class B stock. The dividend is payable on Nov 19 to its shareholders of record as of Nov 5.OutlookBacked by its strong core beer business results and ongoing share repurchase activity, Constellation Brands updated its earnings guidance for fiscal 2022. The company now expects net sales growth of 9-11% for the beer segment compared with 7-9% growth mentioned earlier. Operating income for the beer business is anticipated to increase 4-6%, compared with 3-5% growth predicted previously. The raised beer business guidance is backed by solid performance of its core beer portfolio.The company continues to predict net sales and operating income for the wine and spirits business to decline 22-24% and 23-25%, respectively. Organic sales for the wine and spirits segment are likely to grow 2-4%.The company now expects interest expenses of $355-$365 million for fiscal 2022 compared with $360-$370 million expected earlier. It anticipates a reported tax rate of 83% and comparable tax rate of 20%, excluding Canopy equity earnings impact. Weighted average diluted shares outstanding is expected to be 192 million. The company expects share repurchases worth $1.4 billion in fiscal 2022.Including the share repurchases through September only, Constellation Brands now estimates reported earnings per share of 30-60 cents, down from $2.70-$3.00 stated earlier. On a comparable basis, excluding the Canopy business, earnings per share are expected to be $10.15-$10.45, up from $10-$10.30 mentioned earlier. The company reported earnings per share of $10.23 on a reported basis and $10.44 on a comparable basis, excluding Canopy Growth in fiscal 2021.Constellation Brands expects to generate an operating cash flow of $2.4-$2.6 billion for fiscal 2022, while free cash flow is estimated to be $1.4-$1.5 billion. The company plans to incur capital expenditure of $1-$1.1 billion in fiscal 2022, excluding $900 targeted for the Mexican beer operations’ expansion activities.Better-Ranked Stocks to ConsiderAlbertsons Companies, Inc. ACI has a long-term earnings growth rate of 12%. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Coca-Cola FEMSA S.A.B. de C.V. KOF, with a Zacks Rank #2 at present, has a long-term earnings growth rate of 14.3%.Coca-Cola Europacific Partners CCEP, a Zacks Rank #2 stock, has a long-term earnings growth rate of 21.1%. Zacks’ Top Picks to Cash in on Artificial Intelligence This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Albertsons Companies, Inc. (ACI): Free Stock Analysis Report Constellation Brands Inc (STZ): Free Stock Analysis Report Coca Cola Femsa S.A.B. de C.V. (KOF): Free Stock Analysis Report CocaCola Europacific Partners (CCEP): Get Free Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 6th, 2021

Bed Bath & Beyond (BBBY) Dips on Q2 Earnings Miss, View Cut

Bed Bath & Beyond's (BBBY) Q2 results have been affected by supply-chain issues, cost inflation and drab store traffic on rising COVID-19 Delta cases. Management slashes the fiscal 2021 view. Shares of Bed Bath & Beyond Inc. BBBY plunged more than 22% on Sep 30, following the sluggish second-quarter fiscal 2021 results. Both top and bottom lines declined year over year. The stock’s dismal performance can be attributable to supply-chain challenges, higher-than-expected cost inflation and a drop in store traffic stemming from rising COVID-19 Delta cases, particularly in key markets like Florida, Texas and California. It also faced delays in bringing items to stores.All these factors occurred in the normally strong August month, which led to a sharp decline in sales from the prior year. Industry-wide concerns, including port congestions and elevated transportation costs, further dampened the quarterly results. Management noted these headwinds are likely to persist during part of the holiday season, thus, crushing hopes of a swift economic recovery.The company remains on track with its multi-year transformation plan. It witnessed continued strength in its buybuy BABY banner, driven by double-digit growth in apparel and travel gear. Bed Bath & Beyond reopened its flagship store in Chelsea, NY, as part of its store remodel plan.The company’s other high-margin Owned Brands have been performing beyond expectations. It is likely to launch its seventh and eighth Owned Brands in October and November. Management continues to bank on the enhanced digital channel, which has already reached the pre-pandemic levels. It has entered the next phase of its supply-chain modernization via the partnership with Ryder.The Zacks Rank #3 (Hold) stock has plunged 47.1% in the past three months against the industry’s 0.4% growth. Image Source: Zacks Investment Research Q2 in DetailBed Bath & Beyond reported adjusted earnings of 4 cents per share for the fiscal second quarter against earnings of 50 cents in the year-ago quarter. The figure also missed the Zacks Consensus Estimate of 53 cents. The decline is mainly attributed to dismal margins, stemming from higher freight costs.Net sales of $1,985 million declined 26% year over year and missed the Zacks Consensus Estimate of $2,064 million. Core banner sales fell 11% year over year due to drab performance in the Bed Bath & Beyond banner and the impact of fleet optimization. However, comparable store sales rose 3% year over year.Bed Bath & Beyond banner sales fell 4% year over year, owing to weakness in key categories, including Bedding, Bath, Kitchen Food Prep, Indoor Decor and Home Organization, which represents two-thirds of total Bed Bath & Beyond banner sales. On the flip side, the company’s buybuy BABY banner sales grew in high-teens, marking the third successive quarter of positive growth. This was mainly driven by double-digit growth in both stores and online.Digital sales declined 9% in the quarter under review, accounting for 34% of total net sales. The company expanded its same-day delivery reach via a partnership with Roadie in the fiscal second quarter.In the quarter, total enterprise comparable sales (comps) inched down 1% year over year, as traffic slowed down in August.Adjusted gross profit slumped 30% to $674.4 million in the fiscal second quarter. Adjusted gross margin contracted 190 basis points (bps) to 34% due to higher freight costs, which more than offset higher merchandise margin.SG&A expenses slumped 23% to $653 million in the reported quarter, driven by reduced costs stemming from the sale of non-core assets along with lower rent and occupancy expenses. Adjusted SG&A expenses, as a percentage of sales, increased 150 bps to 33% in the quarter under review.Adjusted EBITDA was $84.6 million, down 57% from $199 million in the year-ago period. The decline is mainly due to drab sales and dismal gross margins. Adjusted EBITDA margin contracted 310 bps to 4.3%.Financial PositionBed Bath & Beyond ended the fiscal second quarter with cash and investments of $1.1 billion. Long-term debt totaled $1,179.6 million and total shareholders' equity was $934.2 million as of Aug 28, 2021. In the fiscal second quarter, cash used in operating activities was $75 million and capital expenditure was nearly $76 million.The company repurchased shares worth nearly $100 million in the quarter under review. It also boasts strong liquidity of $2 billion. It estimates share repurchases worth $325 million for fiscal 2021 or nearly $100 million for the rest of the fiscal year.Store UpdatesIn the reported quarter, Bed Bath & Beyond did not open any stores, while it shut down 5 stores. The company expects to remodel 130-150 stores in fiscal 2021, out of which approximately 70 stores have been remodeled in the quarter under review.Bed Bath & Beyond Inc. Price, Consensus and EPS Surprise  Bed Bath & Beyond Inc. price-consensus-eps-surprise-chart | Bed Bath & Beyond Inc. QuoteLooking AheadFor third-quarter fiscal 2021, the company anticipates sales of $1.96-$2 billion, inclusive of core sales and planned sales reduction as part of its store fleet optimization program. Comps is likely to remain flat year over year. The adjusted gross margin is envisioned to be 34-35%, reflecting the adverse impacts of global supply-chain challenges. Adjusted EBITDA is expected to be $80-$85 million, with adjusted earnings between break-even and 5 cents for the said quarter.Driven by drab fiscal second-quarter results and bleak third-quarter expectations, management slashed the fiscal 2021 view. The company now envisions net sales of $8.1-$8.3 billion for fiscal 2021, down from the previously mentioned $8.2-$8.4 billion. It now foresees comps to remain flat to marginally up for the remaining quarters versus the previously communicated low-single-digit range. Adjusted EBITDA is projected to be $425-$465 million, down from the earlier mentioned $500-$525 million.Bed Bath & Beyond also expects adjusted earnings guidance of 7-10 cents, down from the earlier stated $1.40-$1.55 per share for fiscal 2021. The adjusted gross margin is likely to be 34-35% as compared with the previously mentioned 35%.Better-Ranked Stocks in the Retail SpaceAbercrombie & Fitch ANF presently sports a Zacks Rank #1 (Strong Buy). It has an expected long-term earnings growth rate of 18%. You can see the complete list of today’s Zacks #1 Rank stocks here.The Children’s Place PLCE has a long-term expected earnings growth rate of 8% and it currently flaunts a Zacks Rank #1.Foot Locker FL, a Zacks Rank #1 stock at present, has an expected long-term earnings growth rate of 4%. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Foot Locker, Inc. (FL): Free Stock Analysis Report Bed Bath & Beyond Inc. (BBBY): Free Stock Analysis Report The Childrens Place, Inc. (PLCE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 1st, 2021

Dollar Tree (DLTR) to Expand Multi Pricing at Dollar Tree Plus!

Dollar Tree (DLTR) is on track to introduce additional multi-price points to Dollar Tree Plus stores. It will also expand Combo and Dollar Tree Plus stores in the years ahead. Post the roaring success of Dollar Tree, Inc.’s DLTR new Combo and Dollar Tree Plus! store formats, driven by strong customer response; the company is gearing up to launch its multi-price evolution strategy. It will test the addition of price points above $1 in certain Dollar Tree Plus! stores before expanding it to all stores.The company also highlighted that it is progressing well with the target of opening 500 Dollar Tree Plus! stores by fiscal 2021 and 1,500 stores by fiscal 2022. It also plans to expand the Dollar Tree Plus! format to 5,000 stores by fiscal 2024. The stores will offer product assortments priced at $1, $3 and $5. The move comes after some customers demanded a broader product assortment.The newly launched store format, namely the Combo Store, which features multi-price assortments, is also doing well. Driven by the positive response, it expects the Combo Store to be the key strategic format, anticipating 85% of the newly opened Family Dollar stores to be Combo Stores in fiscal 2022. Dollar Tree currently has 105 Combo Stores and is likely to add 400 more by fiscal 2022, with a long-term target of opening up to 3,000 stores.The latest development, which is part of its Key Real Estate Initiatives, will help the company to expand its assortments, release products, increase the customer base and improve the shopping experience.Dollar Tree remains focused on optimizing its store portfolio through store openings, renovations, re-banners and closings. In doing so, it is expanding the footprint of the H2 besides Dollar Tree Plus! and Combo Stores. About 435 Family Dollar stores have been renovated to the H2 format in the second quarter of fiscal 2021. It currently has 3,300 Family Dollar H2 stores. In fiscal 2022, the company expects to complete 800 Family Dollar H2 Renovations as part of the Key Real Estate Initiative. Alongside these, its Crafter’s Square offerings have been performing well. The company is expanding its Crafter’s Square offerings by bringing in essential and seasonal products.However, the company is witnessing elevated freight costs, which are predicted to persist in fiscal 2021. Freight costs are anticipated to be $1.50-$1.60 per share in fiscal 2021. Additional freight expenses of 60-65 cents per share are also expected, as regular ocean carriers are likely to only fulfill 60-65% of their commitments. Dollar Tree also noted that the spot market rates for ocean freight from China have been significantly greater than the all-time highs.Driven by the expectations of a further increase in freight costs, the company slashed its earnings per share view for fiscal 2021 on its last reported quarter’s earnings call. Management envisioned earnings of $5.40-$5.60 per share, down from $5.80-$6.05 per share mentioned earlier. The company expected net sales of $26.19-$26.44 billion for fiscal 2021, with low-single-digit comp growth.We note that shares of this Zacks Rank #5 (Strong Sell) company have declined 20.2% year to date against the industry’s growth of 15.2%. Image Source: Zacks Investment Research Wrapping UpWe believe that the volatility in the ocean carriers’ ability to fulfill commitments is not a permanent scenario and the company is taking several steps to mitigate the impacts of freight costs. Continued strength in one-dollar price products and the expansion of Combo and Dollar Tree Plus! store formats are likely to aid Dollar Tree in the near term.Better-Ranked Stocks in the Retail SpaceAbercrombie & Fitch ANF presently sports a Zacks Rank #1 (Strong Buy). It has an expected long-term earnings growth rate of 18%. You can see the complete list of today’s Zacks #1 Rank stocks here.The Children’s Place PLCE has a long-term expected earnings growth rate of 8% and it currently flaunts a Zacks Rank #1.Foot Locker FL, a Zacks Rank #1 stock at present, has an expected long-term earnings growth rate of 4%. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dollar Tree, Inc. (DLTR): Free Stock Analysis Report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Foot Locker, Inc. (FL): Free Stock Analysis Report The Childrens Place, Inc. (PLCE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 29th, 2021