Week In Review: Trump Hits Stocks; Alibaba, Home Depot, Wal-Mart, Salesforce Strong

XAutoplay: On | OffPresident Trump’s political woes sent the S&P 500 index, Dow Jones industrial average and Nasdaq composite tumbling. But Alibaba (BABA[1]) and other China internet stocks rallied on generally upbeat reports. Dow retailers Wal-Mart (WMT[2]) and Home Depot (HD) had strong results, but many other retailers are struggling.

Dow tech giant Cisco Systems (CSCO[3]) sold off on its weak guidance.

D.C. Furor Hits Wall Street

An ongoing stream of damaging media reports took their toll on President Trump, raising concerns that he’ll be too distracted or too weak to push tax cuts through this year, if at all. The Dow industrials and S&P 500 fell 1.8% on Wednesday, undercutting their 50-day moving averages.

The Nasdaq composite tumbled 2.6%. Treasury yields tumbled and Federal Reserve rate hike odds fell. Stocks recouped some of those losses Thursday and early Friday, helped by Apple (AAPL[4]), Amazon (AMZN[5]) and the other FANG+ stocks. Alibaba (BABA[6]) and other Chinese internets were generally strong.

Alibaba, China Internet Earnings Strong

Alibaba’s Q1 EPS rose 37% to 63 cents, but missed the consensus by 3 cents as tax expenses and spending on its entertainment and cloud computing businesses ramped up.

Revenue jumped 60% to £5.61 billion, beating views. The Chinese e-commerce giant also OK’d a £6 billion buyback. Shares rose 0.5% Thursday after falling 5% early.

A day earlier, archrival Tencent (TCEHY[7]) reported EPS surged 57% in local currency to 22 cents, beating by a penny, as revenue popped 55% £7.18 billion. Tencent stock hit new highs. On Tuesday, internet portal Sina (SINA[8]) and its majority-owned social messaging site Weibo (WB) reported stronger than expected earnings.

Weibo reported daily active users of 154 million, up 28% vs the year earlier. Weibo shares soared 25%, Sina 18%. Specialty online retailer Vipshop (VIPS[9]) reported in-line earnings, better-than-expected revenue and solid guidance, but shares tumbled nearly 12% through Thursday. Baozun (BZUN[10]), an Alibaba-based firm provides e-commerce services for brand partners, reported EPS that just met views.

Shares dived 12% on Wednesday, but up 0.5% for the week.

Wal-Mart, Target Beat

Target (TGT[11]) earnings fell 6% while sales dipped 1% to £16.02 billion, but those were as bad as feared. Comps skidded 1.3% but better than the expected 3.7% tumble. Shares rose Wednesday but were essentially flat for the week as of Thursday and not far from recent five-year lows Meanwhile, Wal-Mart Q1 profit unexpectedly ticked up 2% to £1 a share, surprising Street estimates for a 2% dip, though 1.4% sales growth to £117.54 billion just missed.

Still, U.S. same-store sales rose, unlike Target and many other retailers. The megastore credited organic growth at Walmart.com for its 63% boost in U.S. online sales, although it also acquired two e-commerce properties, Moosejaw and ModCloth, during the quarter.

Cisco Guidance Sinks Stock

Cisco Systems (CSCO[12]) adjusted fiscal third-quarter earnings rose 5% to 60 cents, beating views by 2 cents. Revenue fell 1% to £11.94 billion, above estimates but the sixth straight year-over-year decline as the networking giant transitions from sluggish switch and router hardware to software and security.

Current-quarter revenue guidance was far short of forecasts, in part because of concerns that President Trump’s economic and tax agenda has stalled. Cisco shares fell 7.2% on Thursday.

Home Depot Bucks Retail

Home Depot (HD) reported first-quarter earnings that beat estimates, making it one of the few retailers that isn’t cracking under the weight of e-commerce, discounts, discounters, too many stores and not enough traffic. The home-improvement chain hiked its full-year EPS forecast, which was still below expectations.

Home Depot shares hit a record high Tuesday but turned slightly lower as of Thursday’s close. Rival Lowe’s (LOW[13]), which reports next week, fell nearly 1%, dropping just below a buy point.

Chip Gear Maker Applied Materials Beats Q2 Views

The semiconductor equipment manufacturer’s second-quarter profit rose 132% while sales climbed 45% to £3.55 billion, both better than expected. It was the third straight quarter of triple-digit earnings growth for Applied Materials (AMAT[14]).

For the current quarter, Applied gave EPS and sales targets above the consensus. Applied Materials rose nearly 3% early Friday. RELATED:

Applied Materials Hails ‘Tremendous Momentum’; EPS Growth Tops 100% Again[15]

Salesforce Earnings Strong

Salesforce.com said fiscal Q1 adjusted earnings were 28 cents a share, up 17% vs. a year earlier, with revenue rising 25% to £2.39 billion. Its July quarter billings outlook was light but the cloud-based, on-demand business software pioneer raised its full-year fiscal 2018 revenue outlook by about £100 million. Salesforce shares rose early Friday.

RELATED: Salesforce.com Beats Profit, Revenue Views, Tweaks Full-Year Outlook[16]

Off-Price TJX, Ross Report

T.J. Maxx, Marshalls and HomeGoods parent TJX (TJX[17]) turned in mixed results, missing on revenue, as same-store sales grew 1%.

Guidance was soft. The off-price chain said it is introducing a home-fashions concept to the U.S. this year. Ross Stores (ROST[18]) pulled ahead of estimates with 82 cents in per-share profit and £3.3 billion in sales. Comps grew 3%.

But Q2 profit guidance missed, and full-year EPS outlook was a little light. Off-price retailers have typically been gems, but both TJX and Ross are trading below their 50-day moving averages amid a greater retail shudder. Shares of both retailers fell for the week, though Ross climbed early Friday on its reports.

CAD Software Firm Autodesk Jumps On Q1 Beat

Computer-aided design software firm Autodesk (ADSK[19]) saw its stock surge to record levels after it beat Wall Street’s targets for its fiscal first quarter ended April 30.

Autodesk lost 16 cents a share excluding items on revenue of £486 million, when analysts were looking for it to lose 24 cents a share ex items on sales of £470.4 million. The San Rafael, Calif.-based company is taking a revenue hit as it continues its business model transition from licensed software to cloud computing services. Another design software firm, Synopsys (SNPS[20]), also posted better-than-expected fiscal second-quarter sales and earnings.

It earned 88 cents a share excluding items, up 9%, on sales of £680 million, up 12%. Wall Street was expecting 86 cents and £672 million.

Jack Eyes Qdoba ‘Alternatives’

Jack in the Box (JACK[21]) earnings beat Q1 forecasts, and the burger chain said it was looking at “potential alternatives” with regards to Qdoba, its fast-casual Mexican chain. CEO Lenny Comma said that over the past year it “has become apparent” that the company’s valuation “is being impacted by having two different business models.” Shares nearly hit a record high intraday Wednesday, but pared gains Thursday.

As Jack in the Box expands delivery services, so has McDonald’s (MCD[22]). The Golden Arches announced the expansion of its delivery service to Los Angeles, Phoenix, Chicago and Columbus, Ohio.

Sears Feuds With Supplier

Sears Holdings (SHLD[23]) CEO Eddie Lampert said on the corporate blog that speculations on the ailing retailer’s potential demise had hurt business. Lampert also said that tool supplier One World, seeking to get out of its contract with Sears, had threatened to sue the retailer and had sought to embarrass them.

The CEO said Sears “has paid and continues to make all payments to One World” and that it would defend itself against any legal action. Sears shares sank nearly 19% through Thursday.

Will Amazon Target Drug Stores, Wireless?

The pharmacy and wireless markets could be the next Amazon (AMZN[24]) next targets. An unconfirmed report that the online giant is seeking to break into the drug-dispensing business weighed on Walgreens Boots Alliance (WBA[25]), CVS Health (CVS[26]) midweek.

But it may not be smooth sailing for the online giant in this competitive space, Mizuho Securities analyst Ann Hynes wrote that the established players have access to discounted drugs that Amazon is unlikely to beat and already offer drug delivery by mail. Plus, the regulatory and infrastructure hurdles to building out a pharmacy business are high. Amazon is also said to be in talks with Dish Network (DISH[27]) over a wireless partnership.

Word of a deal is awaited.

Autonomous Drive Partnerships Expand

The race toward an autonomous driving future continues to heat up. On Tuesday, BMW Group, Intel (INTC[28]) and Mobileye (MBLY[29]) announced a partnership with Delphi Automotive (DLPH[30]) to bring self-driving kits to multiple automakers. BMW, Intel and Mobileye were already working on a self-driving vehicle and Mobileye, being acquired by Intel, had an autonomous system pact with Delphi.

On May 14, Alphabet (GOOGL[31]) autonomous driving unit Waymo teamed up with ride-sharing service Lyft.

In Brief

Ford Motor (F) announced it would cut 1,400, or 10%, of white collar workers in North America and Asia to rein in costs amid slumping demand. General Motors (GM) will stop selling cars in India, South Africa and East Africa. Shares of Ford and GM hit 52-week lows during the week. Urban Outfitters’ (URBN[32]) first-quarter earnings per share fell to 13 cents with revenue of £761 million, both below views on weak same-store sales. American Eagle (AEO[33]) had mixed results with EPS of 16 cents missing analyst views by a penny while sales rose 1.7% to £761.8 million, above views.

But the teen retailer sees Q2 EPS of only 15 to 17 cents, below views for 23 cents, and continuing gross margin pressures. Both stocks hit multi-year lows. Dick’s Sporting Goods’ (DKS[34]) first-quarter earnings rose 8% to meet expectations of 54 cents per share but sales rose 10% to £1.83 billion, short of views.

Same-store sales only grew 2.4%. Dick’s shares tumbled. Hibbett Sporting Goods (HIBB[35]) topped EPS views, though same-store sales fell. Foot Locker missed on earnings, sales and same-store sales early Friday, sending its shares sharply lower.

Stratasys (SSYS[36]) reported first-quarter earnings that met forecasts, as shares of the 3D printer maker proceeded to go on a roller-coaster ride on a wobbly outlook.

Hotel search platform Trivago (TRVG[37]) posted better-than-expected sales and earnings for the first quarter, sending the recent IPO into record high territory.


  1. ^ BABA (www.investors.com)
  2. ^ WMT (www.investors.com)
  3. ^ CSCO (www.investors.com)
  4. ^ AAPL (www.investors.com)
  5. ^ AMZN (www.investors.com)
  6. ^ BABA (www.investors.com)
  7. ^ TCEHY (www.investors.com)
  8. ^ SINA (www.investors.com)
  9. ^ VIPS (www.investors.com)
  10. ^ BZUN (www.investors.com)
  11. ^ TGT (www.investors.com)
  12. ^ CSCO (www.investors.com)
  13. ^ LOW (www.investors.com)
  14. ^ AMAT (www.investors.com)
  15. ^ Applied Materials Hails ‘Tremendous Momentum’; EPS Growth Tops 100% Again (www.investors.com)
  16. ^ Salesforce.com Beats Profit, Revenue Views, Tweaks Full-Year Outlook (www.investors.com)
  17. ^ TJX (www.investors.com)
  18. ^ ROST (www.investors.com)
  19. ^ ADSK (www.investors.com)
  20. ^ SNPS (www.investors.com)
  21. ^ JACK (www.investors.com)
  22. ^ MCD (www.investors.com)
  23. ^ SHLD (www.investors.com)
  24. ^ AMZN (www.investors.com)
  25. ^ WBA (www.investors.com)
  26. ^ CVS (www.investors.com)
  27. ^ DISH (www.investors.com)
  28. ^ INTC (www.investors.com)
  29. ^ MBLY (www.investors.com)
  30. ^ DLPH (www.investors.com)
  31. ^ GOOGL (www.investors.com)
  32. ^ URBN (www.investors.com)
  33. ^ AEO (www.investors.com)
  34. ^ DKS (www.investors.com)
  35. ^ HIBB (www.investors.com)
  36. ^ SSYS (www.investors.com)
  37. ^ TRVG (www.investors.com)

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