The stock market rally rebounded from Monday lows, as the S&P 500 index hit a record high Friday while the Dow Jones and Nasdaq composite are getting close. A number of leading stocks flashed buy signals. Twitter (TWTR), Snap (SNAP), Chipotle (CMG), Domino’s (DPZ), Crocs (CROX), AutoNation (AN) and ASML (ASML) were among the earnings winners, while Netflix (NFLX) fell on an earnings miss and weak subscriber outlook. Zoom Video (ZM) will buy Five9 (FIVN).
Stock Market Rally Back To Highs
The Dow Jones and Nasdaq composite rebounded from key levels Monday and back toward all-time levels, with the S&P 500 index hitting a new record on Friday. Many top stocks, especially in software, flashed buy signals. Trading volume was lackluster, at best. Twitter, Snap, ASML, Crocs and Chipotle rallied on earnings, while Netflix fell. Crude oil prices and Treasury yields tumbled early in the week, but then bounced back.
Netflix Falls On Earnings Miss, Subscriber Outlook
Netflix (NFLX) added 1.54 million subscribers in the second quarter, vs. Wall Street’s 1.15 million target, though North America users fell by 430,000. For Q3, the stream giant expects to add 3.5 million new streaming subscribers, well below views for 5.63 million. Netflix earnings jumped 87%, but missed views. Revenue climbed 19% to $7.34 billion, just beating.
Twitter, Snap Spike On Earnings
Twitter (TWTR) jumped and Snap (SNAP) surged on Q2 results and bullish Q3 revenue guidance. Snap revenue more than doubled to $982 million, with EPS of 10 cents, smashing estimates of a 1-cent loss. Daily active users jumped 23%, or 55 million, to 293 million. Twitter revenue jumped 74% to $1.19 billion on EPS of 20 cents vs. estimates of 7 cents. It reported 206 million active daily users, in line with estimates.
Intel, ASML Offer Mixed Results
Chipmakers Intel (INTC) and Texas Instruments (TXN) and semiconductor equipment supplier ASML (ASML) delivered mixed second-quarter reports. Intel and TI beat Q2 views but Q3 sales guidance was a little light. ASML beat EPS estimates but revenue came up short. However, it guided higher for sales in the current quarter and full year. Intel and TI fell while ASML popped.
Blue Origin, Jeff Bezos Have Successful Flight
Blue Origin launched founder Jeff Bezos along with his brother and a paying customer on the first crewed flight of a New Shepard rocket on Tuesday. After the flight, the company said that it has nearly $100 million in commercial sales for future flights on the rocket. Two more commercial flights are expected this year. Amazon founder Bezos said he’s not sure how many will happen in 2022 but that “demand is very, very high.”
Zoom Video To Buy Five9
Zoom Video Communications (ZM) agreed to buy Five9 (FIVN) for $14.7 billion, pushing into the business call center market. Started in 2001, Five9 automates call center services with website chatbots, or virtual assistants. Five9 stockholders will receive 0.5533 share of ZM stock, initially equal to $200.28 per share. Zoom Video fell modestly while FIVN jumped. Five9 competes with RingCentral (RNG) and others.
HCA Fuels Hospital Stocks
HCA Healthcare (HCA) throttled Q2 earnings on Tuesday and sharply raised full-year guidance. A rebound in demand for healthcare services as pandemic restrictions eased helped fuel 38% EPS growth to $4.36 a share, beating Wall Street estimates by $1.20. Revenue grew 30% to $14.4 billion. HCA boosted full-year EPS guidance to a range of $16.30-$17.10, up from the prior range of $13.30-$14.30, signaling that the earnings strength has staying power.
HCA surged out of a base, lifting other hospital stocks. Tenet Healthcare (THC) earnings rose 26% to $1.59 a share. Revenue climbed 36% to $4.95 billion. Tenet’s full-year earnings and revenue guidance looked soft after Q2’s 50-cent EPS beat. Yet analysts said that merely reflected Tenet’s sale of five hospitals last month for $900 million, which will finance growth of its ambulatory surgery center division. THC stock fell after earnings, but soon reclaimed a buy point.
Verizon, AT&T Beat Views
Verizon (VZ) reported Q2 EPS rose 16% as revenue climbed nearly 11% to $33.8 billion. AT&T (T) delivered a 7% EPS gain while revenue grew nearly 8% to $44 billion. Verizon added 275,000 postpaid wireless phone subscribers while AT&T added 789,000, both easily beating. AT&T said it added 2.8 million HBO and HBO Max streaming video subscribers, ending the quarter with 47 million, up nearly 11 million subscribers from a year earlier. But shares of the telecom giants fell modestly.
Rail Operators Mixed
CSX (CSX) posted an 85% EPS increase as sales rose 33% to $2.99 billion, an overall beat. Union Pacific (UNP) also came in ahead of profit views, while Canadian National Railway (CNI), which outbid Canadian Pacific (CP) for Kansas City Southern (KSU), narrowly missed. The railroad giants lapped a severe hit from the pandemic in the year-ago quarter. They touted rebounding volumes and pricing gains, offset by challenges tied to the chip shortage and global supply chain disruptions. However, CSX sees “pent-up demand” in markets for metals and plastics, which are used to make automobiles, providing a tailwind into 2022.
AutoNation (AN) delivered EPS growth of 243% as sales swelled 54% to $6.978 billion. Lithia & Driveway (LAD) posted 199% EPS growth as sales leapt 118% to $6.01 billion. Both auto retailers handily beat earnings views for a second quarter that lapped a severe year-earlier pandemic hit. Demand for vehicles will exceed supply into 2022, AutoNation said.
Steel, Mining Earnings
Steelmakers Nucor (NUE) and Cleveland-Cliffs (CLF) and copper miner Freeport-McMoRan (FCX) reported booming earnings but some were mixed relative to bullish Wall Street expectations. Still, their stocks bounced off recent lows, as the companies signaled that business strength should continue. Nucor posted a solid 30-cent EPS beat, as Q2 profit rocketed to $5.04 from 36 cents a year ago, while revenue doubled to $8.79 billion. The steelmaker said Q3 profit is on track to beat Q2’s record. Cleveland-Cliffs fell slightly short of EPS estimates, though profit boomed to $1.46 a share vs. a year-ago 31-cent loss. Revenue ballooned to $5.045 billion from $1.093 billion a year ago, boosted by acquisitions. Cleveland-Cliffs noted the impact of the chip shortage on auto customers, but said it’s seeing “substantially higher contract prices” for later in 2021 and into 2022. Freeport-McMoRan edged past estimates as EPS surged to 77 cents from 3 cents a year ago. Revenue slightly missed some views, though it grew 88% to $5.75 billion.
Crocs, Skechers Soar On Earnings
Crocs (CROX) earnings shot up 121%. Sales jumped 93% to $641 million, the fourth straight quarter of accelerating growth. It sees Q3 revenue up 60%-70%, with full-year sales up 60%-65%, both above consensus. Skechers (SKX) beat analysts’ second-quarter estimates with earnings of 88 cents on revenue of $1.66 billion, far above views. Skechers also guided higher for Q3.
Chipotle EPS Up 1,765%
Chipotle Mexican Grill (CMG) reported 1,765% EPS growth in Q2 as revenue rose 39% to $1.89 billion. Digital sales grew even as the economy reopened. Higher prices charged to customers helped offset rising costs for labor and other operations. Chipotle expects third-quarter same-store sales growth in the “low to mid double-digits,” above estimates, while second-quarter results also beat expectations.
Domino’s Pizza (DPZ) reported second-quarter results that beat expectations, and the pizza chain approved a $1 billion buyback plan. Shares spiked.
Airline Metrics Improve
United Airlines (UAL) and American Airlines (UAL) reported second-quarter earnings that beat estimates, as travel demand recovers despite worries over a resurgence in coronavirus cases. United said it expected a “full recovery in demand” by 2023. American said it expected domestic business travel to fully recover by 2022, but said international business, a highly profitable segment, is still a ways off from a similar rebound. Results from Southwest (LUV) were mixed, and the carrier said it would focus on “improving our operations as we restore our network to meet demand.”
American Express EPS Soars 866%
Earnings spiked 866% to $2.80 a share with revenue up 33% to $10.24 billion, both easily beating. American Express (AXP) released $866 million from credit-loss reserves, giving a big boost to EPS. A year earlier, AmEx added $1.6 billion to loss reserves.
Meanwhile, Capital One (COF) comfortably topped EPS views, reversing a year-earlier loss. Revenue climbed 5%, ending a string of declines.
News In Brief
Pool (POOL), reported 66% EPS growth as revenue climbed 40% to $1.79 billion, as the pandemic boosted demand for outdoor amenities. The swimming-pool supplies distributor also raised its full-year profit outlook. But shares fell modestly.
Dow (DOW), the chemical, plastics and materials giant, reported second-quarter results that beat estimates. Dow stock rose.
Peloton (PTON) is teaming up with insurer UnitedHealth (UNH) to offer fitness classes to nearly 4 million UnitedHealth members. The on-demand classes include yoga, meditation, running and of course cycling. This is the first time the upscale fitness bike maker has teamed up with a health insurer and comes as sales of its bike fall from pandemic highs. PTON stock rose
Lyft (LYFT) announced hat it will have a fleet of self-driving cars from Ford (F) and Argo AI in service in Miami by the end of the year. The ride-hailing service, with a human safety driver, plans to expand its autonomous vehicle offerings to Austin, Texas, in 2022 and hopes to have 1,000 self-driving cars across multiple cities by 2026. Argo is controlled by Ford and Volkswagen (VWAGY).
Novartis (NVS) reported core EPS grew 22% in Q2 while sales rose 14% to $12.96 billion, beating expectations for the Swiss drug giant.
Johnson & Johnson (JNJ) reported adjusted EPS leapt 48.5% while revenue swelled 27% to $23.31 billion, both topping second-quarter forecasts. J&J also inked a $5 billion settlement regarding claims it helped perpetuate the nation’s opioid epidemic. Several drug distributors also settled opioid claims.
Intuitive Surgical (ISRG) topped second-quarter estimates with adjusted profit up 253% as sales leapt 72% to $1.46 billion.
Biogen (BIIB) reported adjusted profit fell 42% per share as sales slid 25% to $2.78 billion, but both exceeded estimates.
IBM (IBM) beat Q2 views with 3% revenue growth, the best in three years.
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