Late Trading Higher on Big Quarterly Reports: CSCO, SHOP & More
Markets closed the regular trading session this Hump Day flat-to-up, finishing at session highs with small-caps starting the day lowest and finishing highest. The Dow fought back from down -256 points this morning to +39 at the close, +0.11%. The S&P 500 performed better, +0.28%. The Nasdaq gained an impressive +110 points, +0.92% on the day, and the small-cap Russell 2000 gained a healthy +1.09%.
This came on a day when the economy refuses to take its medicine, not only from a big positive surprise on January Retail Sales and a less-bad Empire State Index, but in a new North American Home Builders (NAHB) survey which saw its biggest gain in almost 10 years. Also, after the close, we see quarterly earnings results that are sending stocks steeply higher in late trading.
None of this is going to convince the Fed to turn around its interest rate policy anytime soon, but I suppose we’ll worry about that sometime later. We did see Industrial Production and Capacity Utilization that came in weaker than anticipated earlier today — 0.0% on headline and 78.3%, respectively, versus expectations of +0.4% and 79.0% — but the NAHB index reached 42, the highest figure since last September (although it remains sub-50 for now, the demarkation point between contraction and expansion).
Year to date, the tech-heavy Nasdaq — granted, the underperformer of 2022 — is already up more than +16%, with the Russell currently +12%. Even the S&P is currently riding +8.5% since the start of the year, with the blue-chip Dow pulling up the rear, +3%. Market bullishness is running counter to what analysts know we should expect for the rest of 2023 — including a possible recession, which no one has completely discounted. Is the market getting ahead of itself? Is it currently “fighting the Fed”? Perhaps. Right now, market participants are shrugging their shoulders.
Cisco Systems CSCO predictably beat earnings expectations by 2 cents to 88 cents per share in its fiscal Q2 after Wednesday’s closing bell, on revenues of $13.59 billion which surpassed the $13.43 billion in the Zacks consensus. Earnings guidance for the full year were raised substantially, to $3.73-3.78 per share from $3.54 analysts had asserted previously. The tech giant outperformed expectations on gross margins by a solid half a point, and shares are up +7.5% in late trading.
Roku ROKU shares initially shot up +19% immediately following its Q4 earnings release this afternoon, beating on the bottom line by 4 cents per share to a loss of -$1.70 on a big sales beat for the quarter: $867 million versus $803.2 million expected. Active accounts grew nearly 10 million in the quarter, and the video streaming firm also bumped up next-quarter revenue estimates to $700 million. The company’s stock has since simmered down to +12% in the after-market.
Communication tech firm Twilio TWLO swung to a very nice positive earnings tally after the close, landing at +22 cents per share from -$0.09 expected. Revenues of $1.02 billion outpaced the $999 million anticipated. The company had previously announced a plan to lay off 17% of its workforce, and now the company is planning a $1 billion share buyback program, and shares are trading +13% on the news in the late session.
Breaking this trend today is Shopify SHOP, down -6% on its Q4 beats on both top and bottom lines: +$0.07 per share improved over the $0.00 expected, on $1.73 billion in sales which surpassed the $1.64 billion analysts had projected, +26% year over year. The company expects high-teens growth percentage for next-quarter revenues, on higher-than-expected Gross Merchandise Volume. But after gaining over +40% year to date, this is a “sell the news” thing.
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Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report
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