Yahoo Finance Earnings Season: 3 Companies Lifting Outlooks
The Q3 earnings cycle is winding down, with most notable companies already delivering quarterly results. The period has been primarily positive, helping to keep sentiment in check and drive the market higher.
One sector standing out is Technology, whose growth has returned in a big way and is expected to continue in the coming periods.
Three companies, including Dick's Sporting Goods DKS, Zoom Video ZM, and The TJX Companies TJX, all posted positive results.
All three lifted their outlooks following better-than-expected results, undoubtedly a positive for investors. Companies raise their outlooks when business is fruitful, sending a bullish message to shareholders.
Guidance lifts also commonly inject positivity into shares, with investors scrambling to get in and ride the momentum. For those interested in riding the recent earnings momentum, let’s take a closer look at each.
Dick’s Sporting Goods
DICK'S Sporting Goods operates as a major omnichannel sporting goods retailer, offering athletic shoes, apparel, accessories, and a broad selection of outdoor and athletic equipment.
Concerning headline figures, DKS exceeded the Zacks Consensus EPS Estimate handily and posted revenue above expectations, reflecting growth rates of 10% and 3%, respectively. The company benefited from a strong back-to-school season and continued market share gains.
Dick’s comparable store sales grew 1.1% year-over-year to $3.4 billion, and the company purchased 3.5 million shares throughout the period, undoubtedly what shareholders like to hear. The better-than-expected results caused DKS to raise its FY23 comparable store sales outlook into a growth band of 0.5% - 2% (0% - 2% previously).
Dick’s also now expects FY23 non-GAAP earnings per diluted share in a band of $12.00 - $12.60 ($11.50 - $12.30 previously). Investors took the better-than-expected results in stride, with DKS shares moving higher following the release.
Image Source: Zacks Investment Research
Zoom Video Communications
Zoom Video Communications’ cloud-native unified communications platform combines video, audio, phone, screen sharing, and chat functionalities. Zoom raised its full-year sales and free cash flow outlook given strong results, now expecting sales in a band of $4.50 - $4.51 billion and free cash flow of $1.34 - $1.35 billion.
The company posted a sizable 20% beat relative to the Zacks Consensus EPS Estimate and posted revenue 2% ahead of expectations, with both items higher than year-ago figures.
Zoom’s operating cash flow improved 67% year-over-year to $493.2 million, and its number of customers contributing more than $100k in the trailing 12 months of revenue was up 13.5% from the same period last year.
Still, despite consistently exceeding expectations, shares have had a poor showing over the last two years, losing nearly 75% in value and widely underperforming.
Image Source: Zacks Investment Research
The sell-off has led to more attractive valuation levels relative to historic values; ZM shares presently trade at a 4.4X forward price-to-sales ratio, undoubtedly expensive but nowhere near the 24.0X five-year median and highs of 72.3X during 2020.
Image Source: Zacks Investment Research
The TJX Companies
The TJX Companies is a leading off-price retailer of apparel and home fashions in the U.S. and worldwide. TJX posted a 6% beat relative to the Zacks Consensus EPS Estimate and posted revenue modestly ahead of the consensus, with both items higher than year-ago values.
TJX’s comparable store sales grew 6% from the year-ago period, above prior views and exclusively driven by higher customer traffic. In addition, the company returned more than $1 billion to shareholders throughout the period through buybacks and dividends.
Results above the company’s initial views caused TJX to raise its FY24 comparable store sales and diluted EPS outlook, expecting comp store sales to grow 4% - 5% in its current year and diluted EPS in a band of $3.71 - $3.74.
The company’s revenue has rebounded nicely from pandemic lows, as we can see illustrated below.
Image Source: Zacks Investment Research
Bottom Line
Earnings season continues to wind down, with many notable companies already delivering their quarterly results.
So far, the period has primarily been positive, especially when including recent results from Dick's Sporting Goods DKS, Zoom Video ZM, and The TJX Companies TJX.
All three raised their outlooks following better-than-expected results.
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 TJX Companies, Inc. (TJX) : Free Stock Analysis Report
DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
