From Wall Street to Main Street
Highlights from the past week
Market / Macro Economic Summary The number is now at four. That is, four consecutive weeks that the markets have performed positively. The S&P 500 was up 1%, the Dow Jones notched 1.3% higher and the Nasdaq ticked .9% up as well. Here is an interesting tidbit, historically, returns for the month of December are roughly 1%. Additionally, as is important in terms of optimism, when the markets are positive from Thanksgiving to year-end, one can expect an 11% return the following year the majority of the time. There is something to be said for precedent, however you know my opinions are based on facts and more credible evidence. As such, I will soon be doing a deep dive into the year end of 2023 as well as a forecast for 2024 in December. Finally, on the market aspect of things, we continue to see inflation down and earnings for the third quarter are quickly coming to an end. Of the 483 companies in the S&P500 that have reported, 83% are beating earnings per share estimates and 60% are beating revenue estimates. We’re doing well and I believe this will continue for quarters to come. Company Specific / Micro Economic Summary Kohl’s (KSS) Shares traded lower 5.43% on top and bottom line beat largely due to decline in sales. Earnings per share of $0.53 beat the consensus estimates of $0.34. Revenue of $4.05 billion was also higher than the Wall Street estimates of $3.92 billion. Net sales decreased 5.2% and comparable sales decreased 5.5%. CEO Tom Kingsbury, said “Kohl’s third quarter earnings reflect strong gross margin and expense management as well as additional progress against our strategic priorities. I am pleased with our store performance driven by strong growth in Sephora and the newness in our home and gifting initiatives.” Lowe’s (LOW) Shares are trading lower by 3% on a mixed quarter and weak guidance for home improvement trends which echoed the sentiments of Home Depot. Earnings of $3.06 per share on revenue of $20.47 billion for the third quarter did beat the earnings estimates of $3.05 per share but fell short of the revenue of $21.07 billion. CEO Marvin Ellison said the given their 75% DIY mix, the DIY pressure disproportionately impacted their third quarter comp performance. John Deere (DE) Shares traded 6% lower despite a top and bottom-line beat. Earnings of $8.26 per share was well ahead of the estimates for $7.49. Revenues of $15.41 billion for their fiscal quarter was also atop the Wall Street estimates of $12.91 billion. CEO John May said, “"While our end markets will fluctuate, we remain focused on disciplined execution and strategically investing in solutions that drive customer value," May said. "As evidenced by our guidance for 2024, we are demonstrating higher levels of through-cycle structural profitability while making our company more resilient and better equipped for the future." To start, most of my readers know that I am partial to one company, of which I’ll spend a considerable amount of time on their earnings report…. something that I’ve never done before. Nvidia (NVDA) Shares were relatively flat, which is OK considering it had been up 20% the month leading into its earnings report. Earnings of $4.02 per share were a mammoth beat on the estimates of $3.18. Revenue of $18.12 billion for the fiscal third quarter was also much higher than the Wall Street estimates of $16.12 billion. The company beat expectations by 15.85% while revenue grew 205.51% on a year-over-year basis. That record revenue in the quarter was a 34% increase from last quarter and up a mere 206% from year ago! Data Center revenue hit a record as well to $14.51 billion, up 41% from last quarter and up 279% from year ago. GAAP earnings per diluted share for the quarter were $3.71, up more than 12 times from a year ago and up 50% from the previous quarter. Non-GAAP earnings per diluted share were $4.02, up nearly 6x from a year ago and up 49% from the previous quarter. CEO Jensen Huang said “Our strong growth reflects the broad industry platform transition from general-purpose to accelerated computing and generative AI.” He also said that large language model startups, consumer internet companies and global cloud service providers were the first movers, and the next waves are starting to build. What I found most interesting is that Jensen said, “Nations and regional CSPs are investing in AI clouds to serve local demand, enterprise software companies are adding AI copilots and assistants to their platforms, and enterprises are creating custom AI to automate the world’s largest industries. The era of generative AI is taking off.” This shows the multifaceted demand for their products and that we are in the early stages of the movement. Parting Thoughts We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, E.Palacios Erick J. Palacios, MBA Wealth/Financial AdvisorPlan to Prosper Wealth Management’s clients & employees will from time-to-time hold securities mentioned above. Commentary is not endorsements or recommendations of any securities.