After-Market Earnings Bonanza: Palo Alto, Gap, Ross, AMAT Beat

Markets closed modestly lower again today, despite weaker housing and manufacturing numbers ahead of the opening bell and solid earnings numbers from retailers Macy’s M and Kohl’s KSS. More hawkish talk from Fed President James Bullard doused the sentiment that appeared to keep heating up as investors look for the end of the Fed’s interest-rate-hike tunnel. The Dow slipped -0.02% on the day, the S&P 500 was -0.30%, the Nasdaq -0.35% and the small-cap Russell 2000 -0.76%.

St Louis Fed President Bullard said the proper zone for the Fed funds rate may be between 5-7% — a really big jump from the 4.5% analysts had baked into the cake only a month or so ago. Currently, we’re within a range of 3.75-4.00%, with another 50-75 basis-point (bps) rise coming in four weeks; Bullard today suggests this is still as much as 250 bps below where it needs to be. For a little context, Bullard does have a record of being among the most hawkish of voting members; that said, his outlook has most often borne out over the past year or so.

Today is also one of the last big days of afternoon earnings reports in this season cycle, and this includes a fiscal Q1 beat and raise at cybersecurity firm Palo Alto Networks PANW, whose shares are +5% in late trading (after an initial selloff). Earnings of 83 cents per share easily surpassed the 68 cents expected and the 55 cents per share in the year-ago quarter. Revenues of $1.56 billion came in a smidge ahead of the $1.55 billion in the Zacks consensus, +24% year over year.

Palo Alto kept revenue guidance for Q2 in-line and raised on earnings. Free cash flow in the quarter was stronger than expected. And although Silicon Valley tech companies have been taking it in the chin in general, the cybersecurity space looks to be among the most secure; even with a tighter economy forcing enterprises to spend less on services, Palo Alto’s offerings expect to remain in demand.

Semiconductor maker Applied Materials AMAT also posted strong beats on both top and bottom lines in its fiscal Q4 report after today’s close, with $2.03 per share in earnings on $6.75 billion in sales outperforming the $1.72 per share and $6.38 billion expected, respectively. Guidance for next quarter was raised to a high end of $2.11 per share on $6.7 billion in sales, both up nicely. Shares are up +3% in the after-market.

The Gap GPS well outperformed lowered expectations in its Q3 report issued after the regular trading session. swinging to a big positive of +71 cents per share in earnings from -$0.02 expected. Revenues came in hotter at $4.04 billion, nicely above the $3.81 billion in the Zacks consensus. This marks the third earnings beat in the last four quarters, and shares are +8% in late trading.

Williams-Sonoma WSM, on the other hand, is trading down -9% following its Q3 results this afternoon, which show misses on both top and bottom lines: earnings of $3.72 per share, while +12% year over year, come in below the $3.78 analysts were expecting. Revenues of $2.06 billion were notably below the $2.16 billion predicted. Gross margins came in light at +41.5% for the high-end home products retailer.

The big winner this afternoon was discount apparel retailer Ross Stores ROST, which is +13% following its Q3 beat on earnings and sales: a reported $1.00 per share beat the Zacks consensus of 81 cents, while revenues of $4.6 billion outpaced the $4.36 billion expected. While comps were -3% from the very strong year-ago quarter, the company has raised earnings guidance notably for both Q4 and its full year forecast.

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Macy's, Inc. (M) : Free Stock Analysis Report
 
Kohl's Corporation (KSS) : Free Stock Analysis Report
 
The Gap, Inc. (GPS) : Free Stock Analysis Report
 
Ross Stores, Inc. (ROST) : Free Stock Analysis Report
 
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
 
WilliamsSonoma, Inc. (WSM) : Free Stock Analysis Report
 
Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report
 
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