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3 Large Caps Announce Earnings

- By Alberto Abaterusso

These large-cap stocks released quarterly earnings results on Wednesday.

The share price of Paychex Inc. (PAYX) declined 1.05% to $79.26 on March 27 after the Rochester, New York-based business services company released results for the third quarter of fiscal 2019.

Paychex beat consensus estimates by 1 cent on non-GAAP earnings, posting 89 cents per share or 3% higher year-over-year on revenue of $1.07 billion, which reflected 14.3% growth and was in line with expectations.


Other important numbers for the third quarter were a 7% increase in operating income to $429.3 million and a 1% increase in total expenses excluding Oasis Outsourcing Group Holdings LP's acquisition.

The operating income as a percentage of total revenue was 40.1% in the third quarter of fiscal 2019 versus 39.4% in the third quarter of fiscal 2018.

For full fiscal 2019, Paychex Inc. forecast non-GAAP earnings per share would increase by 11-12%, revenue would grow at 6-7% and operating income margin would reach 37% of total revenue.

The share price increased 29% for the past year through March 27 and is above the 200-, 100, and 50-day simple moving average lines. The 52-week range is $59.40 to $80.74. The market capitalization is $28.46 billion.

The company is paying a cash quarterly dividend of 56 cents for a forward dividend yield of 2.8% versus the S&P 500 index dividend yield of 1.92% as of Wednesday.

Wall Street issued a hold recommendation rating with an average target price of $74.41 per share of Paychex.

Surprisingly, shares of Lennar Corp. (LEN) jumped 3.94% to $51.67 on March 27 following the posting of results for the first quarter of 2019. The homebuilder missed expectations on GAAP earnings by 2 cents, posting 74 cents per share. GAAP earnings were 43.4% higher year-over-year.

Lennar also missed analysts' expectations on revenue by $230 million, posting $3.87 billion or nearly 30% higher.

In the first quarter of 2019, the company delivered 8,802 new homes versus 6,734 new homes in the same quarter of 2018.

Lennar noted a 4.3% year-over-year increase in the homes' average sales price to $410,000 mainly thanks to the significant increase in volume following the acquisition of CalAtlantic Group Inc., which was completed in February 2018.

Lennar also recorded 13.5% growth in sales incentives offered to homebuyers to $25,300 per home delivered.

The earnings before interest increased 20% to $384.2 million.

The balance sheet of the company had $852.6 million in cash and cash equivalents and $9.26 billion in homebuilding debt as of Feb. 28, 2019. The stockholders' equity was worth $14.79 billion.

The share price declined 12% for the 52 weeks through March 27 and is slightly above the 50- and 200-day simple moving average lines, and substantially above the 100-day SMA line. The share price at close Wednesday was slightly over the midst of the 52-week range of $37.29 to $64.90. The market capitalization of the stock was roughly $16.32 billion at close on March 27.

Lennar Corp. has paid a dividend since 1984. The cash quarterly dividend is currently 4 cents per share for a forward dividend yield of 0.32% versus an industry median of 2.62% and versus the S&P 500 index dividend yield of 1.92% as of Wednesday.

Wall Street issued a buy recommendation rating with an average target price of $56.61 per share of Lennar Corp.

The share price of Lululemon Athletica Inc. (LULU) soared 10.26% to $161.81 in after-hours trading on March 27 on the heels of the posting of a strong sales report for the final quarter of 2018.

The Vancouver, Canada-based apparel stores company beat consensus estimates on non-GAAP earnings by 10 cents, posting $1.85 per share or 39.1% higher year-over-year.

The GAAP earnings were $1.65 per share soaring 87.5% from the prior-year quarter.

Earnings were from revenue of $1.17 billion, up 26% year-over-year, topping consensus estimates by $20 million.

The company also reported figures for the full year of fiscal 2018. Year-over-year, the most significant changes were a 24% increase in net revenue to $3.3 billion, a 7% increase in comparable store sales, a 240 basis-points increase in the gross margin to 55.2% and 430 basis points in the operating margin to 21.5%.

Non-GAAP earnings grew 48.3% to $3.84 per share. Looking to full 2019, the retailer forecast non-GAAP earnings per share would range between $4.48 and $4.55 versus expectations of $4.4, and revenue would range between $3.70 billion and $3.74 billion versus consensus estimates for $3.72 billion.

In addition, during the year Lululemon repurchased 4.9 million of its ordinary outstanding shares, paying an average price of $121.10.

The share price surged 65% over the past year through Wednesday closing at $146.8. The share price is slightly above the 50-day simple moving average line and substantially above the 100- and 200-day SMA lines. The 52-week range is $83.06 to $164.79. The market capitalization at close on Wednesday was around $19.44 billion.

The retailer doesn't pay a dividend.

Wall Street issued an overweight recommendation rating, meaning the stock is foreseen to outperform either the industry or the overall market within 52 weeks with an average target price of $162.86.

Disclosure: I have no positions in any securities mentioned.

This article first appeared on GuruFocus.