When logistics meet trucking, we get XPO along with its spectacular growth
Earnings reported on Monday, May 3, after market close
Source: XPO Logistics
XPO Logistics (XPO) is a company pushing the boundaries of its industry. Their company generates revenue through two primary businesses, transportation and logistics. Recently they announced a spin-off called GXO, Game-Changing Opportunity, which will be the second-largest logistics company in the world. Bill Fraine will lead GXO as Chief Commercial Officer (CCO). Fraine spent 23 years with FedEx before joining XPO in 2011. He is well suited to lead GXO in the new stages of logistics, including the capitalization of growing sectors such as e-commerce. XPO is already using automation on a colossal scale to help cut costs and drive quicker and better results for their clients. They look to expand on this growing industry with the introduction of GXO, which has already filed to go public with the SEC.
XPO announced Q4 revenue of $4.67 billion as compared to the estimates of $4.25 billion. $1.76 billion was from the logistics side of their business. These numbers are expected to bounce even higher as demand for products grows, and e-commerce continues to boom. With the housing market on fire of late, orders for large appliances and household goods should also see an increase. This is a particular sector that XPO has an advantage in compared to most trucking services because they deliver these goods directly to the consumer. JB Hunt is in the same business, but speaking first hand from my experiences working in the industry, they do not provide nearly the same service offered by XPO’s team. XPO is currently trading at 7.6x EBITDA, which is low compared to some companies from the same industry trading near 10x EBITDA. XPO should capitalize in the first quarter of 2021 as e-commerce and deliveries continue to pick up. Expect good earnings and potentially a tiny jump in their stock price.
T-mobile, the best earnings telecom has to offer
Earnings reported on Tuesday, May 4th, after market close
Source: Getty Images / SOPA
The fight between the best telecom service provider has been a long discussion and a well-marketed battle. I remember in middle school, and still to this day, fighting with people about who was the best mobile provider. I’ve never used any other provider besides T-Mobile ($TMUS), so of course, I always argued for magenta. Back then, there was still an argument to be had, but recently it seems like my middle school self was proper. T-Mobile was the biggest and best mobile provider. Yes, I am incredibly biased, I think I even bleed magenta at this point, but it’s still true that TMUS has added the most post-paid subscribers since 2016. With the merger of Sprint and the rebranding of Metro by T-Mobile, we should continue to see a similar trend.
Recent years show a considerable, including new plans that take full advantage of this coverage. They also introduced new entry-level lines to compete with the aggressive programs offered by AT&T. As for their numbers; analysts expect EPS of $0.81, which is a modest increase from the $0.79 TMUS reported this quarter a year ago. Over previous quarters, TMUS reported over 100% over the analyst expectation. Even though their estimates are somewhat modest, in reality, many investors will want to see a similar or even better beat. The company has set itself up to have the ability to smash this number yet again, but if it doesn’t, watch for a minor adjustment in their price on the downside.
Voltswagen, from April fools joke to lawsuit, to great earnings
Earnings reported on Thursday, May 6th, after market close
Source: Bloomberg
Over the past month, Volkswagen ($VWAGY), a brilliant ticker symbol, must I say, has seen a significant drop in its stock price. From $37.16 as a high down to $31.71, where it closed on Friday. This was a good move for investors interested in buying shares of VWAGY because previously, they were selling at a premium to the industry. According to the $11.53 forward PE, they are still selling at a slight premium compared to the rest of the market (forward PE averaging $10.37). This pullback in the price makes VWAGY an exciting consideration. Recently the company has released great news about the outlook of the business, and many analysts are revisiting their earnings expectations.
According to Yahoo Finance, analysts have changed their estimates on the upcoming earnings report for VWAGY; they state, “we can consider positive estimate revisions a sign of optimism about the company's business outlook.” Along with this, Bloomberg reported that talks are finalizing with Ford about licensing Volkswagen’s modular electric drive matrix (MEB) to build another eclectic vehicle. One last piece of news issued this week were reports of VWAGY’s plans to develop their self-driving chips that would compete with Tesla.
A lot of great news came out this week, but it wasn’t all good. There are now reports that The Rosen Law Firm has opened a class-action lawsuit against the car manufacturer for their April fools marketing scheme “Volkswagen.” The case against them is that they mislead investors, which increased their stock price by almost 12% in a matter of days. It’s in the early stages of the lawsuit, but it did get the attention of the SEC, which recently fined Tesla CEO Elon Musk $40 million for similar actions. Does the good news outweigh the bad? One thing is certain Volkswagen can push the lawsuit under the rug if they can produce extraordinary numbers this quarter. It won’t be easy as the world is still undergoing a chip shortage, but we’ll find out on May 6th.
The war on cash: Paypal vs. Square
Earnings reported after market close on Wednesday, May 5th for PayPal and Thursday, May 6th for Square
Source: FM
Paypal ($PYPL) and Square ($SQ) both have many similarities, including the fact that they both release earnings this week. Paypal was founded in 1998, while Square was founded in 2009. PYPL AND SQ have seen similar growth trends, especially in revenue. Square is still in the earlier stages of the business, so its revenue isn’t as hefty as compared to PayPal. SQ has offered more willingness to take chances as they can purchase cryptocurrencies through their app. So while Square seems to be behind in total revenue, they seem to be making up for it through their ability to assume risks. In addition, their company generates almost all of their profits from North America, which allows them to expand to other countries and capture more revenue.
According to Zacks Consensus, PayPal looks to have another great year as estimates expect an improvement of 28% from a quarter last year. This 28% increase would put revenue for the quarter at $5.9 billion. For SQ, the Zack Consensus Estimate expects revenue to be $3.37 billion, which indicates a 144% increase for the same quarter a year ago. SQ is in a tough spot as they will have to continue this ultra-fast growth rate to keep pace with PayPal. If Square can beat their estimates, their stock should support them, but if they cannot beat these numbers, there’s a long drop ahead.
Who else is reporting earnings
Source: Chegg
There are many companies to keep an eye out for this coming week. Some of these businesses include Chegg ($CHGG), Estée Lauder Companies ($EL), CVS Health ($CVS), Twilio ($TWLO), Zillow ($ZG), and Wayfair. For CHGG, keep an eye on their total subscriber’s growth. In Q4, Chegg reported a 67% increase in users, but schools are reopening. Keep an eye out here to see if these new users realize the capabilities of the services Chegg offers or if this was a trend due to online schooling. EL has a lot of room for growth if they could post great numbers as their PE is almost $35 less than their peers. This means they are trading at a pretty significant discount when compared to their industry. CVS has been beating earnings reports very modestly for a few consecutive quarters now. Watch to see if they could continue this modest hot streak in EPS and top-line revenue. Doing this will see the stock continue its uptrend. TWLO has seen a significant drop in its share price recently due to a volatile tech sector. Perhaps many stocks are overvalued right now, but the pandemic must have opened many eyes to delivery services which are where Twilio thrives. If the stock cant beat earnings, we may see a massive drop. As we saw with VWAGY estimates being revisited, so have TWLO’s estimates. This may hint at earnings beats that can carry this stock right back to where they were before the recent losses. ZG has recently seen a correction in their price. This is a highly speculative stock as it isn’t profitable yet. Anything but extraordinary numbers will see this stock continue its correction. 1 Main Capital released their Q1 investor’s letter not too long ago where they highlighted the potential for Wayfair ($W) to grow at an extraordinary rate. Keep an eye out for revenue beats for W, and be sure to follow their path as houses continue to sell.
The week’s earnings wrapped up
This will be an exciting week for many investors to keep track of some of their favorite stocks. We pointed out some of our favorite choices this week, such as VWAGY, TMUS, and XPO. With many other large-cap companies reporting this week, expect those that don’t exceed earnings by an excellent amount to fall and companies with huge beats to gain massively.
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