Top US stocks: Robinhood, NVIDIA and Cisco

Robinhood, NVIDIA and Cisco all report after the closing bell today, with investors digesting earnings out from Lowe’s, Target, TJ Maxx, Tencent and Krispy Kreme in the meantime, while T-Mobile reveals the extent of the recent data hack.

USA (1)

Robinhood

Robinhood is set to release second quarter results after the markets close today, giving it the first opportunity to engage with shareholders since completing its IPO last month.

The company has invited its horde of retail investors to submit questions to management, which touch on everything from how the platform will be improved to what new products will be released and remind us that many are also customers. In terms of the financials, analysts are expecting Robinhood to report revenue of $521.8 million and a net loss of $514.1 million. One topline figure that will be closely-watched is the amount of revenue coming from payment-for-order-flow, which is coming under increasing scrutiny in the US, where there are proposals to ban it outright.

The results will undoubtedly inject more volatility into an already volatile stock – something that will only gain momentum the more individual investors pile-in. Robinhood has become known for being the platform of choice for retail traders looking to speculate on so-called meme stocks such as GameStop and AMC, but there are fears that Robinhood could itself undergo the meme stock experience that delivers sharp and unpredictable share price movements. 

NVIDIA

NVIDIA will also publish second quarter earnings later today, with Wall Street expecting the company to continue gaining momentum after reporting record revenue in the first thanks to strong demand for its chips in gaming devices and data centres.

Analysts are expecting second quarter revenue of $6.33 billion and GAAP net income of $2.09 billion, up from $3.86 billion in revenue and $622 million in profits the year before. That would also be an uplift from the first quarter of 2021 when it reported record revenue of $5.66 billion and profit of $1.91 billion.

Markets will also be expecting an update on the company’s pending $40 billion acquisition of UK semiconductor company ARM. UK regulators have expressed some national security concerns over the merger, but if and when those concerns are addressed, it would be a bullish sign for NVIDIA’s stock.

Read our full earnings preview ahead of the NVIDIA earnings here.

Cisco

Cisco is set to release fourth quarter and annual results later today, with markets expecting the company to beat its earnings guidance.

Analysts are expecting fourth quarter revenue to rise 7.2% to $13.02 billion from $12.15 billion the year before, at the top-end of its 6% to 8% growth target range. Wall Street expect GAAP EPS to rise to $0.72 from $0.62, ahead of the $0.64 to $0.69 guidance range. For the full year, analysts anticipate revenue will rise to $49.70 billion from $49.30 billion and for lower EPS of $2.55 from $2.64.

Its enterprise division could return to growth as demand strengthens but its commercial segment is set to drive results as Cisco continues to shift more toward software and subscription-based income.

Lowe’s

Lowe’s raised its full year guidance today after posting higher earnings as a slowdown in DIY was offset by growth in demand from its professional customers and for its installation services.

Net sales rose to $27.57 billion in the second quarter from $27.30 billion the year before and net earnings jumped to $3.02 billion from $2.82 billion, or to $4.25 from $3.74 on a per share basis. That beat the $26.85 billion in revenue expected by analysts while the 1.6% fall in same-store sales was also better than 2.2% decline forecast by Wall Street. DIY sales in the US were down 2.2% but was comfortably offset by 21% growth in sales to professional customers and 10% growth for its installation services. Online sales were up 7%, having grown over 135% the year before when the pandemic started.

Lowe’s said it is now expecting annual revenue of around $92 billion and an operating margin of 12.2%. That would compare to the $89.59 billion in revenue and margin of 7.5% in the year to January 29, 2021.

Target

Target delivered strong growth at the top and bottom line during the second quarter, beating Wall Street estimates as shoppers flocked back to stores and prompting it to launch a new $15 billion share buyback programme.

Comparable sales were up 8.9% in the second quarter, slightly better than the 8.68% forecast by analysts. That compared to the 10.9% growth booked the year before. Meanwhile, online sales growth slowed to 10% after soaring 195% last year and 50% in the first quarter of 2021. Total revenue rose 9.4% to $24.82 billion and diluted EPS edged up 8.9% to $3.65, coming in ahead of the $3.49 expected by Wall Street.

Target said it is expecting to deliver high single-digit growth in comparable sales in the second half and is targeting full year operating margin of above 8%. ‘In the second quarter, our business generated continued growth on top of record increases a year ago, reinforcing Target's leadership position in retail,’ said CEO Brian Cornell. ‘Even after unprecedented growth over the last two years, we see much more opportunity ahead of us, and we're leaning into opportunities to invest in the long-term growth and resiliency of our business.’

Tencent

Chinese giant Tencent continued to power ahead in the latest quarter as it beat expectations, helping install confidence after being shaken this year by the regulatory crackdown happening in China.

Revenue climbed 20% in the second quarter to RMB138.3 billion, just below the RMB139.0 billion expected by analysts. Diluted EPS of RMB3.50 improved from RMB3.44 and was better than the RMB3.38 forecast. Tencent said it was particularly pleased with revenue growth in business services and advertising, which grew 40% and 23%, respectively. Gaming revenue was up 12%.

There was little update regarding the clampdown in China that poses a risk to Tencent’s sprawling business empire and has ultimately increased the risk attached to the stock, which has plunged over 43% since peaking earlier this year. Just today we found out Tencent’s WeChat was one of 43 apps identified as breaking rules by regulators.

TJ Maxx

TJ Maxx said it performed better than expected during the latest quarter as it continued to reopen stores and welcome back customers and said the momentum has continued into the latest quarter.

Net sales rose 23% to $12.1 billion, coming in well ahead of the $11.04 billion expected by analysts and flattered by weak comparatives from the year before when stores were closed for almost one-third of the period. Comparable sales at stores that were open in the period, having lost around $300 million of sales due to store closures in the second quarter, rose 20%. TJ Maxx said it had started the third quarter well, with comparable sales at open stores by a ‘mid-teens’ percentage. Net income of $785.7 million turned from the $214.2 million loss the year before.

‘The performance of our home businesses across all of our divisions continued to be phenomenal, and apparel continued to trend higher, with open-only comp sales increasing low-teens for the quarter. Our US and international divisions delivered outstanding double-digit open-only comp store sales increases, as our exciting and eclectic mix of merchandise, great brands and values, and treasure-hunt shopping experience continued to draw customers into our stores around the world,’ said chief executive Ernie Herrman.

Krispy Kreme

Krispy Kreme released second quarter earnings after the markets closed yesterday, stating it performed better than anticipated as its omni-channel offering continues to gain momentum in the US, Canada and overseas.

The donut maker said net revenue rose 42.6% to $349.2 million while its net loss widened to $15.0 million from $11.7 million. Revenue has continued to power ahead and was almost 50% higher than pre-pandemic levels seen in 2019. Although revenue came in ahead of the $333.4 million expected by analysts, the loss was disappointing compared to the expected $1.9 million profit.

Krispy Kreme signalled that topline growth will slow going forward by introducing full year guidance targeting net revenue of $1.34 to $1.38 billion, marking 19.4% to 23% growth from 2020. Adjusted net income, which trebled in the second quarter, is expected to rise by up to 60% in 2021. It also said it is targeting double-digit earnings growth over the long-term.

T-Mobile

T-Mobile divulged further information on the recent data breach, stating around 7.8 million customers and over 40 million prospective customers have had their data stolen.

Claims surfaced earlier this week that data of up to 100 million T-Mobile customers had been stolen and were for sale online. T-Mobile said all of the data stolen on existing customers are all on prepaid deals, while the 40 million prospective customers had applied for credit. T-Mobile said it was encouraging affected customers to enhance their security and offering all of them two years of free identity protection services from McAfee. It is also introducing a new layer of protection.

It said ‘no phone numbers, account numbers, PINs, passwords, or financial information were compromised in any of these files of customers or prospective customers.’ However, it said the names, phone numbers and account PINs for around 850,000 prepaid customers were exposed, but the PINs have since been reset.

Philip Morris

Philip Morris International said shareholders in Vectura Group have tendered over 22.6% of their shares to the tobacco company as part of the US company’s controversial $1.5 billion takeover of the London-listed firm.

The company changed its offer to a takeover offer from a scheme of arrangement last week in order to boost its chances of approval after concerns were raised about a tobacco giant acquiring a company that provides treatments for people with respiratory conditions. This means it needs to acquire at least 50% of Vectura shares for the deal to be given the go ahead by investors.

Vectura shareholders have until September 15 to decide whether to tender their shares to Philip Morris.

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