Earnings Week Ahead: Advance Auto Parts, Home Depot, Nvidia and Ross Stores in Focus

Earnings Calendar For The Week Of November 15

Monday (November 15)

IN THE SPOTLIGHT: ADVANCE AUTO PARTS

The leading automotive aftermarket parts retailer Advance Auto Parts is expected to report its third-quarter earnings of $2.87 per share, which represents year-over-year growth of over 2% from $2.81 per share seen in the same period a year ago.

The Raleigh, North Carolina-based company would post revenue growth of nearly 2% to $2.6 billion up from $2.54 billion registered a year earlier. The company has beaten earnings per share (EPS) estimates three times in the last four quarters.

Advance Auto Parts (AAP) operates in a defensive (recession-resistant) category and has one of the largest long-term EBIT margin expansion opportunities in our coverage (we estimate 300-400 bps over time). COVID-19 slowed parts of AAP’s transformation but gross and EBIT margin upside from internal initiatives is still expected beginning in 2021,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“Significant and improving FCF generation plus share repurchases likely to enhance EPS growth. We think the combination of a defensive category, AAP’s progress generating stable top-line growth, and significant margin upside all make for an upside case. Slowing topline momentum and associated risk to margin trajectory balance the risk/reward skew.”

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Ticker Company EPS Forecast
AAP Advance Auto Parts $2.87
JJSF J&J Snack Foods $1.28
CMP Compass Minerals International $0.62

Tuesday (November 16)

IN THE SPOTLIGHT: HOME DEPOT

The largest home improvement retailer in the United States, Home Depot, is expected to report its third-quarter earnings of $3.39 per share, which represents year-over-year growth of about 7% from $3.18 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of over 4% to $34.942 billion from $33.54 billion a year earlier. In the last two years, the company has beaten earnings per share (EPS) estimates in most of the quarters with a surprise of over 5%.

Home Depot shares have gained nearly 40% so far this year. The stock closed 1.36% higher at $372.63 on Friday. Home Depot’s better-than-expected results, which will be announced on Nov 16, could help the stock hit new all-time highs.

“Shares of Home Depot have risen and outpaced the industry year to date. The company boasts a robust surprise trend with the fifth straight quarter of earnings and sales beat in second-quarter fiscal 2021. Results gained from continued demand for home improvement projects, the robust housing market and ongoing investments. The company is effectively adapting to the demand for renovations and construction activities, driven by prudent investments,” noted analysts at ZACKS Research.

“It is gaining from growth in Pro and DIY customer categories as well as digital momentum. However, in the second quarter, the company witnessed year-over-year moderation in its comparable-store sales growth. This was due to the lapping of the high demand environment for home-improvement projects seen last year. Soft gross margin, stemming from increased penetration of lumber, has also been a drag.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 16

Ticker Company EPS Forecast
ICP Intermediate Capital £32.70
HSV Homeserve £6.60
ARMK Aramark $0.19
HD Home Depot $3.35
DLB Dolby Laboratories $0.35
LAND Land Securities £18.78
IMB Imperial Brands PLC £138.10

Wednesday (November 17)

IN THE SPOTLIGHT: NVIDIA

The Santa Clara, California- based multinational technology company, Nvidia, is expected to report its third-quarter earnings of $1.11 per share, which represents a year-over-year decline of over 60% from $2.91 per share seen in the same period a year ago.

The company, which designs graphics processing units for the gaming and professional markets, as well as system on a chip unit for the mobile computing and automotive market would post year-over-year revenue growth of over 40% to $6.8 billion.

According to Oppenheimer analyst Rick Schafer, Nvidia will report above-consensus October quarter results, lifting its price target to $350 from $235 and rating the company “outperform”.

“Supply constraints continue to weigh on the group, though we see Nvidia (NVDA), a top semi-supplier, as better positioned to secure capacity. The company’s leading soup-to-nuts software/hardware platform solidifies its AI accelerator dominance,” Oppenheimer analyst Rick Schafer wrote in his report, reported by Reuters.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 17

Ticker Company EPS Forecast
BLND British Land Company £8.75
SGE The Sage Group £11.11
LOW Lowe’s Companies $2.33
CPRT Copart $0.99
NVDA Nvidia $1.11
CPA Copa -$0.19
KLIC Kulicke And Soffa Industries $2.07
TTEK Tetra Tech $1.00
HI Hillenbrand $0.91
SSE SSE £11.80

Thursday (November 18)

IN THE SPOTLIGHT: ROSS STORES

The second-largest off-price retailer in the U.S., Ross Stores, is expected to report its third-quarter earnings of $0.79 per share, which represents a year-over-year decline of over 24% from $1.02 per share seen in the same period a year ago.

The U.S. home fashion chain would post year-over-year revenue growth of nearly 16% to $4.4 billion. The company has beaten earnings per share (EPS) estimates three times in the last four quarters.

“Market share capture from competitor bankruptcies & store closures, favourable customer fundamentals, and high exposure to Hispanics, the fastest-growing US population segment, support 6-8% long-term revenue growth and 10%+ annual EPS. Upward EPS revisions appear an ongoing positive share price catalyst. Profit flow-through is magnified when comps exceed the 1-2% plan in a typical year,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

“The ‘everyday value’ proposition fosters comp outperformance, while recessions accelerate customer acquisition. Low average selling prices ($8-10/unit) and narrow gross margin render selling online unprofitable at this price point.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 18

Ticker Company EPS Forecast
NG National Grid £15.70
HLMA Halma £21.19
RMG Royal Mail -£6.30
NJR New Jersey Resources $0.08
KSS Kohl’s $0.69
HP Helmerich & Payne -$0.50
MMS Maximus $0.87
BJ BJs Wholesale Club Holdings Inc $0.79
M Macy’s $0.29
BERY Berry Plastics $1.53
NUAN Nuance Communications $0.20
BRC Brady $0.76
ROST Ross Stores $0.79
INTU Intuit $0.97
FTCH Farfetch -$0.24
ESE ESCO Technologies $0.78

Friday (November 19)

Ticker Company EPS Forecast
BKE Buckle $0.80
FL Foot Locker $1.34

 

Royal Mail Says UK Parcel Volumes Slide as Restrictions Ease

The company, one of the oldest postal firms, said parcel volumes in its UK business fell 13% in the three months ended June 30, as compared with a year earlier, but were up 19% from the corresponding quarter in 2019.

“We continue to expect fluctuations in volumes as we emerge from COVID restrictions, which we will need to manage accordingly,” Chairman Keith Williams said in a statement.

Royal Mail said in a statement that the rate at which UK parcel volumes were falling was increasing across the quarter.

The company refrained from providing an annual forecast for its UK business, citing uncertainties as it starts to “unwind from the impact of the pandemic”. It maintained its full-year forecast for GLS, its worldwide ground-based parcel network.

(Reporting by Yadarisa Shabong in Bengaluru, Editing by Sherry Jacob-Phillips)

Royal Mail, Real Estate Stocks Pull Ftse 250 Higher; Amigo Sinks

By Devik Jain

The domestically focussed mid-cap FTSE 250 index advanced 0.3% with Royal Mail climbing 5.9% to the top of the index after Peel Hunt upgraded the stock to “buy” from “hold”.

Real estate stocks and real estate investment trusts also jumped, providing the biggest boost to the index.

The blue-chip FTSE 100 index edged 0.1% lower as a stronger pound weighed on large dollar-earning consumer staples companies including British American Tobacco, Diageo and Imperial Brands. [GBP=]

However, losses on the index were limited by industrial software company Aveva, which gained 5% after saying it was confident about the year ahead as the business environment had improved in most of its major markets.

“We’re in a kind of sideways pattern since April and looking sort of beyond company results in the UK, and at the macro picture as the driving force,” said Neil Wilson, chief market analyst at Markets.com.

“The risk for the FTSE 100 would be that even if Europe and America emerge from the pandemic this summer, it’s going to take longer in emerging markets. There’s a decent amount of growth element in some of these UK names like miners, oil, consumer staples, which rely on emerging markets for further growth.”

After rising 9.1% in the first four months of this year on recovery optimism, the FTSE 100 has traded in a tight range in the past few sessions on concerns that a resurgence of COVID-19 cases across parts of Asia might delay a global economic recovery.

Subprime lender Amigo tumbled 51.7% after a court refused to sanction a proposed rescue plan to manage its large backlog of redress claims.

Among other stocks, AstraZeneca fell 0.7% after Britain’s competition regulator said it was reviewing the drugmaker’s $39 billion buyout of U.S.-based Alexion.

(Reporting by Devik Jain in Bengaluru; Editing by Subhranshu Sahu)

Royal Mail Withholds Forecast as Parcel Demand Tapers after Strong Year

While annual revenue topped expectations, the postal company’s profit slightly missed estimates as it dealt with higher costs to cater to the surge in parcel volumes.

Royal Mail said its parcel volumes in the UK were down 2% last month, compared with the surge in online shopping in April 2020 when the first lockdown was in place.

The British company witnessed its fortunes turn last year as the pandemic, which forced shut brick-and-mortar stores and caused a surge in online shopping, came as a boon to its home delivery service and struggling UK business.

“As the outlook for 2021-22 contains a number of uncertainties that could significantly influence volumes and costs it is difficult to provide specific guidance for 2021-22 for Royal Mail,” Chairman Keith Williams said.

The company, one of the world’s oldest postal firms, reported a 116% surge in adjusted operating profit to 702 million pounds ($990.59 million), and a 17% jump in revenue to 12.64 billion pounds.

Analysts on average had estimated adjusted group operating profit of 704 million pounds and revenue of 12.58 billion pounds, according to a company-compiled consensus.

($1 = 0.7087 pounds)

(Reporting by Yadarisa Shabong in Bengaluru, Editing by Sherry Jacob-Phillips)