From Wall Street to Main Street
Highlights from the past week
Market / Macro Economic Summary
Markets closed out the month of February on a negative tilt as the tech-heavy Nasdaq turned negative (-2.4%) for the year while the Dow and S&P still hang on to a positive gain, 3% and 1.2% respectively. There are a myriad of things, positive and negative, that can sway investor thought processes on the economic direction for 2025. To the positive, we have strong earnings, AI remaining robust, labor market remaining resilient, and inflation (while stubborn) staying near lows. To the negative, one can point to political uncertainty, tariffs’ impacts on trade, and sentiment turning negative. While I remain steadfast in my optimism due to what I’m hearing on earnings calls, I do believe that markets will remain sloppy in the short term. As earnings season begins to wind down, investors need to remain patient and focused on the long term. When all is said and done for 2025, we will be higher than where we are today.
Company Specific / Micro Economic Summary
Home Depot (HD)
Shares of the home retailer were up 3.5% on the back of a mixed quarter. Revenue of $39.7 billion came in $600 million higher than Wall Street expectations of $39.1 billion. Earnings per share of $3.02, however, fell 2 cents short of estimates. Management did guide sales to be up 2.8% for year and same store sales finally turned positive for the first time in eight quarters.
Workday (WDAY)
Shares rose 6% as the AI-software/HR company reported another impressive quarter. Revenues of $2.21 billion beat the estimates of $2.1 billion. Earnings per share of $1.92 were way ahead of the analyst estimates of $1.78. CEO Carl Eschenbach highlighted the company’s ability to unlock value faster, reduce total costs, and its best-in-class finance and HR solutions as a main driver for its strong organic growth.
Lowe’s (LOW)
Shares rose 4% as the home improvement chain reported a top and bottom-line beat. Earnings per share of $1.93 were 5% higher than the calls for $1.84. Revenues of $18.6 billion were also ahead of the calls for $18.3 billion. CEO Marvin Ellison remains confident in the company’s ability to maintain growth despite persistently higher interest rates.
Nvidia (NVDA)
In the most anticipated earnings report of the season and probably the year, shares of the company initially traded up 2% but closed the following day down 8% despite yet another robust quarter. This is particularly frustrating as CEO Jensen Huang and team reported a 78% growth in sales from the same period a year ago. Sales of the latest chip, Blackwell, proved to be the strongest product launch in history as it reported $11 billion in revenue in the first quarter of its launch. Earnings per share of $0.89 cents were five cents ahead of Wall Street estimates. Revenues of $39.33 billion were also ahead of the calls for $38.05 billion. Guidance for the next quarter was also raised above estimates and the only negative to the quarter was gross margins which came in at 73%, down from last quarter.
Salesforce (CRM)
Shares were down 2% as the software company reported a mixed quarter. Earnings per share of $2.78 beat the Wall Street estimates of $2.61. Revenue of $9.99 billion just barely missed the analyst expectations of $10 billion. CEO Marc Benioff said the company reported the highest cash flow in history and remains optimistic that Salesforce is uniquely positioned to lead client’s through the upcoming digital labor revolution.
Parting Thoughts
We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week!
Regards,
Erick J. Palacios, MBA
Wealth/Fiduciary Advisor