It’s earnings season – and you know what that means!
As we head into the final weeks of June, a plethora of firms large and small are preparing to – or already have – post their quarterly financial reports. Whether you invest ahead of time on expectations of good news or buy the dip after less-than-stellar results, earnings season is an opportunity to capitalize on your beliefs about a company’s performance and worth.
A number of companies have already posted their results, as JPMorgan Chase
And while the markets endure a precipitous balancing act between its own historic rise and investor fears over spreading coronavirus variants and red-hot inflation, our artificial intelligence unit has gathered up some of the hottest trending stocks on the market for your perusal.
Q.ai runs daily factor models to get the most up-to-date reading on stocks and ETFs. Our deep-learning algorithms use Artificial Intelligence (AI) technology to provide an in-depth, intelligence-based look at a company – so you don’t have to do the digging yourself.
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Netflix, Inc (NFLX)
Netflix’s sudden fall can be attributed to its Q2 earnings report, first posted late Tuesday, which saw the company miss – or barely meet – most analyst estimates. Diluted per-share earnings came in at $2.97 for the quarter, falling short of expectations, with $7.34 billion in revenue falling right on target at 19% growth YOY. That said, global paid net subscriber additions outpaced expectations at 1.54 million compared to 1 million.
Netflix also took the opportunity to reaffirm its breakthrough into the gaming market after hiring videogame executive Mike Verdu, fresh from Facebook’s augmented and virtual reality division. COO Greg Peters noted in the call that Facebook plans to step apart from gaming competitors using its vast library of intellectual property – its infamous Netflix-branded entertainment – to stamp its mark on the market.
Netflix’s Q2 earnings put the company on track to potentially top its last fiscal year’s performance, which saw Netflix pull in revenue of $25 billion – almost 75% growth from its $15.8 billion revenue three years prior. In the same 36-month period, operating income climbed 279% to $4.585 billion, while per-share earnings leapt from $2.68 to $6.08. The streaming media giant also experienced ROE growth from 27.5% to 29.6%.
Going forward, Netflix is expected to see revenue growth around 6.5% in the next 12 months. Due to its incredible pandemic-era performance, as well as its ongoing potential and increasing profit potential, our AI rates Netflix A in Growth and B in Technicals, Low Volatility Momentum, and Quality Value.
Chipotle Mexican Grill, Inc (CMG)
Chipotle Mexican Grill, Inc
Chipotle’s sudden price hike followed the fast-casual Mexican restaurant’s Q2 earnings for the period ending on 30 June. As the company recovers from its still-respectable pandemic performance, it raked in a 38.7% revenue increase YOY to hit $1.9 billion, with comparable restaurant sales up 31.2% and adjusted per-share earnings coming in at $7.46. These numbers far and wide topped analyst estimates of $1.88 billion in revenue and $6.52 in per-share earnings.
And while Chipotle is now raking in record-high profits, the company didn’t exactly perform poorly last year. For instance, revenue grew almost 14.4% in the prior fiscal year to $5.98 billion compared to $4.86 billion three years before, while annual EPS soared from $6.31 to $12.52 and return on equity climbed from 12.6% to 19.2%. That said, operating income did slip slightly from $352 million to $327 million.
In the coming 12 months, Chipotle Mexican Grill is expected to pull in around 6.6% revenue gains. Our AI rates this stock just above average, with an A in Growth, B in Low Volatility Momentum, and Cs in Technicals and Quality Value.
International Business Machines Corporation (IBM)
International Business Machines Corporation nudged up almost 1% on Wednesday to close out hump day at $141.30 per share on volume over 4.8 million trades. The stock is up 12.3% for the year and trading at a forward 12-month P/E of 12x.
IBM is trending this week after it, too, surpassed Wall Street expectations with its Q2 earnings report – albeit marginally. The tech corporation posted $18.75 billion in revenue compared to $18.29 billion expected as adjusted EPS hit $2.33, outpacing estimates by just four cents. The company noted that its biggest segment was its Global Technology Services, which accounts for managed services, outsourcing, and support, at $6.34 billion. Cloud & Cognitive Software snagged second, with revenue for this segment up 6% to $6.1 billion.
But whether or not IBM can surpass its last year’s earnings – let alone catch up to its hefty profits three years prior – remains to be seen. While revenue grew 1% in the last year, it still tumbled by over $6 billion in the last three, coming in at $73.6 billion against $79.6 billion. Operating income saw substantial losses, too, slipping from $13.2 billion to $8.58 billion, while per-share earnings slid to $6.23 compared to $9.52. Meanwhile, return on equity nearly halved from 50.3% to 26.4%.
All told, IBM is expected to see minimal revenue growth of 0.72% in the next 12 months. Our AI rates this tech behemoth about average overall, with a B in Quality Value and Cs in Technicals, Growth, and Low Volatility Momentum.
Johnson & Johnson (JNJ)
Johnson & Johnson is one of the world’s largest pharmaceutical and medical device companies in the world. The stock is trending this week after reporting better-than-expected second quarter earnings on Wednesday, with revenues coming in at $2.48 per share, or total sales growth of $23.3 billion. Management also noted that the company expects to sell $2.5 billion in Covid vaccines this year – even as concerns mount over its effectiveness against the delta variant.
Unfortunately, that brings us to the second reason J&J is trending this week, after a new NYU study dropped suggesting that people who got Janssen vaccine should get a booster – or a shot of Pfizer
Either way, the fact remains that Johnson & Johnson had a fairly profitable fiscal year last year as revenue grew 8% from $81.58 billion compared to $82.58 billion three years prior. Operating income slipped slightly from $21 billion to $20 billion in the period as EPS fell ten cents to $5.51 and return on equity slipped from 25.5% to 24%.
Currently, Johnson & Johnson is expected to see around 2.3% revenue growth in the next 12 months. Q.ai’s artificial intelligence program rates this company A in Low Volatility Momentum and Quality Value and C in Technicals and Growth.
Intel Corporation (INTC)
The semiconductor giant is trending this week after releasing its second quarter earnings on Thursday, which saw the company’s stock slip over a quarter per share after revealing that GAAP revenue fell flat YOY at $19.6 billion. However, GAAP ESP did exceed guidance by around 20 cents at $1.24 per share.
Moreover, management raised full-year 2021 guidance of GAAP revenue to $77.6 billion thanks to promising strength – and recovery – in Intel’s Client Computing Group, Internet of Things Group, and enterprise-level Data Center Group. At the same time, Intel reported on a number of upcoming highlights, including a $3.5 billion investment to equip the company’s New Mexico packaging technologies, as well as a partnership with Sweden-based Ericsson to expand 5G cloud radio network access.
Over the last three fiscal years, Intel’s revenue grew almost 9.7% from $70.8 billion to nearly $77.9 billion. Meanwhile, operating income grew incrementally from $23.24 billion to $23.88 billion, while EPS jumped from $4.48 to $4.94. However, return on equity slipped from 29.3% to 26.4% in the three-year period.
All told, Intel Corporation is rated around average by our AI, with a B in Technicals, Cs in Low Volatility Momentum and Quality Value, and a D in Growth.
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