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The Recreational Vehicles Giant Lost This Round But The Industry Is Strong

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Automotive stocks growing

No, we are not speaking of the powerful Marvel’s God of Thunder but the biggest maker of recreational vehicles around, Thor Industries (NYSE:THO) that has reported earnings for its fiscal 2020 second quarter before the opening bell on Monday. Over the last four quarters, the company has surpassed consensus EPS estimates two times but this wasn’t the case with its latest earnings. Earnings have lagged Wall Street estimates and only exacerbated the effects of a broad-based market sell-off, causing shares to hammer.

Quarter earnings:

Just one quarter ago, the RV maker surprised analysts by surpassing earnings of $1.23 per share by  delivering $1.50. But this time round, Zacks Consensus estimate was $0.76 per share, Thomson Reuters analysts were even more sceptic as they had expected adjusted earrings of $0.70 per share and yet Thor managed to generate  adjusted earnings per share of $0.67 in the quarter that ended on Jan. 31, up a bit from a year ago but short of Wall Street’s expectations.

The news wasn’t all bad, though. Revenues of $2 billion for the quarter ended January 2020, surpassed the Zacks Consensus Estimate by 11.83% and other Wall Street expectations of $1.82 billion.  This compares to year-ago revenues of $1.29 billion. The company has topped consensus revenue estimates just once over the last four quarters.Moreover, sales in North America improved 5.9% year over year, driving gains to gross margins, while dealer inventories were successfully reduced 16.5% and reached healthy levels.

Coronavirus

CEO Bob Martin is optimistic about this year’s peak selling season, but only when putting aside the uncertainties created by the Coronavirus so not all is bright. Although the company was not forced to reduce or shut down production due to shortages of parts from the lockdown areas, investors should be aware that a virus-induced recession could still create a severe blow. But until now, the company hasn’t yet seen any reductions in orders from dealers. Its shares have lost about 5.7% since the beginning of the year which is better than  S&P 500’s loss of 8%.

Things get worse if we look at the last 30 days during which they  dived 37%. And even longer term holders were hit already last year as the stock lost 21% . So we admit, these do seem more like Marvel’s Thor events – but “The Dark World” one…. Let’s hope that this Thor can also have its superhero ending!

Industry and competitors

Thor Industries’s P/E is 16.40 and that is fairly close for the average for the auto industry, which is 16.4. So other than expecting it to move in line with industry trends,  we must not forget that the recreational vehicle (RV) industry is extremely sensitive to overall strength of the economy, simply because buying an RV is a large discretionary purchase for the majority of customers.  The RV industry already took a massive hit during the 2008 recession but has recovered and even enjoyed exponential growth since then. It was helped by a strengthening economy and the fact this sort of lifestyle appealed to the millennials who are more into experiences than diamonds, too bad for Tiffany and Co. (NYSE:TIF).  Total RV shipments surged around 192% from 2009 to 2018 timeframe but this positive trend ended last year. Things did appear to be  a little encouraging as we headed into 2020 as we expected to witness a much lower year-over-year decline due to an improving U.S. economic growth and the easing of US-China trade wars. And both of the world’s two largest economies were doing better in terms of business growth. And technologies such as solar technology used by Franchise Holdings International’s Worksport (OTC:FNHI) that it incorporated in its tonneau covers for pickup trucks and similar patents can surely enhance this growth further as well as we move to a carbon free, automated and electric future. The question is- how much of a blow can the COVID-19 make, especially considering that the peak of pandemics is yet to come.

Meanwhile, Winnebago Industries Inc (NYSE:WGO) seems more than well-positioned to maintain its earnings-beat streak in its upcoming report as it recorded a strong streak of surpassing earnings estimates in its last two reports.

Outlook

Thor Industries will surely continue to  give us a lot of insight into the state of the consumer as their inventories tend to balloon when people are scared to death- and this is surely one of the effects of COVID-19. Thor’s P/E ratio suggests that its shareholders believe that the company will perform about the same as other companies in its industry. But people often underestimate remarkable growth — so investors can make money when fast growth is not fully appreciated. RV sales have slowed, no arguing there but they are still quite strong. The industry has a shot as millennials are willing to spend on experiences that RVs are able to deliver. So if the economy recovers quickly from this black swan event, RV sales can surely get a boost, thereby enhancing the performance of stocks within the industry. Moreover, people will surely be more inclined to travel at the comfort of their RV than pass through airports and train stations wearing masks and hoping for the best – as long as there’s no need for cities being on lockdown. So here’s to hoping that COVID19 won’t continue being that brutal.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

BenzingaEditorial

Working From Home Trend and Gaming Did The Trick for Microsoft

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On Tuesday, Microsoft (NASDAQ: MSFT) succeeded in beating forecasts far above expectations due to a boom in PC sales, increased demand for gaming and cloud services. The pandemic might have put a lot of constraints to its customers, but it also led to a structural change as businesses across the globe shifted to digital operations and saw it as key to increasing their resilience. Upon the results, Microsoft’s stock was up 5% in after-market trading.

Q2 2021 figures

Revenues increased 17percent as they amounted to $43.1 billion and exceeded $40.2 billion expected by Bloomberg. Earnings per share were $2.03, topping the expected $1.64.

The commercial cloud businesses which Wall Street sees as the main engine of Microsoft’s future growth is reaccelerating. These businesses that include Office 365 and Azure cloud platform, generated revenue of $16.7 billion in the latest quarter, which is 34 per cent up from a year before. At the same time, the launch of a new Xbox Series S and Xbox Series X lifted the gaming business as revenue of Xbox content and services was up a whopping 40% in the quarter. Personal Computing division was also up by 14 per cent as revenues amounted to $15.1 billion.

Meanwhile, the Productivity and Business Processes division reported revenue of $13.4 billion, which is a 13 percent increase. This growth was fueled by strong demand for Office 365 which grew 20 percent when adjusted for currency, which is line with the previous quarter.

Adding more fuel

Microsoft recently announced that it was investing $2 billion to be the preferred cloud provider of the General Motors (NYSE: GM) and Honda-backed (NYSE: HMC) autonomous vehicle firm Cruise. Under the agreement, Microsoft will provide cloud infrastructure for Cruise to better enable autonomous vehicles to navigate highways and surface streets in the future.

A sign of confidence

Microsoft also forecast revenue for the current quarter in the range between$40.35billion and $41.25bn. Themidpoint of the rangewould represent another quarter of 17 per cent growth, beating the 11 per cent that Wall Street forecasted.

Takeaway

Its strength in the cloud and personal computing enabled Microsoft to blow away Q2 expectations. As Mr. Nadella had put it, digital transformation is sweeping every company and every industry across the globe. Microsoft is powering this second wave of transformation that is even stronger than the first one as the world is now creating a new normal that will stay long after the COVID-19 pandemic becomes history.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

This Week’s IPOs

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This week has eight scheduled IPOs with three billion-dollar deals coming from bio tech, diagnostics, software and solar equipment, among others.

Biotech

The US biotechnology company that received emergency approval from the FDA for its COVID-19 antibody and antigen tests, Ortho Clinical Diagnostics (NASDAQ: OCDX), plans to raise $1.5 billion at a $4.9 billion market cap. This pure-play in vitro diagnostics business provides diagnostic testing solutions. It is profitable on an EBIT basis, with a revenue retention rate of 99% in 2019.

Customer-survey software

Qualtrics International (NASDAQ: XM) seeks to raise as much as $1.46 billion. It provides a customer and employee experience management platform to over 12,000 organizations. But, despite its sticky customers, it operates in a highly competitive environment with low barriers to entry.

Solar equipment supplier

Shoals Technologies Group (NASDAQ: SHLS) designs and manufactures products used in large solar energy projects. It is a profitable and growing company that plans to raise $1.0 billion at a $3.6 billion market cap. However, its growth depends on international growth and its track record abroad is not impressive.

Asset-light container liner shipping company

Israel-based ZIM Integrated Shipping Services (NYSE: ZIM) plans to raise $306 million at a $2.1 billion market cap. This company positions itself as a global leader in niche markets with competitive advantages that allow it to maximize its profitability.

Mortgage

Residential mortgage producer Home Point Capital (NASDAQ: HMPT) plans to raise $250 million at a $3.0 billion market cap. It utilizes a wholesale mortgage origination channel to connect with nearly broker partners, which allows it to serve roughly 300,000 customers.

Asset management

Brazilian asset manager Vinci Partners Investments (NASDAQ: VINP) plans to raise $236 million at a $944 million market cap. Its portfolio includes private equity, public equities, real estate, credit, infrastructure, hedge funds, and investment products.

Supermarket portfolio

Southeastern Grocers (NYSE: SEGR) plans to raise $134 million (100% secondary) at a $725 million market cap. The company itself won’t sell any shares as part of the offering and will not receive any net proceeds from its public debut.

Agriculture

Agricultural technology company Agrify (NASDAQ: AGFY) plans to raise $25 million at a $115 million market cap. This company is highly unprofitable but fast growing. It aims to differentiate itself with a bundled solution of equipment, software, and services that is optimized for growth.

By the looks of it, the 2021 IPO market seems to be continuing 2020’s momentum.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

This Earnings Week Will Be a Busy One

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Apply (NASDAQ: AAPL), Facebook (NASDAQ: FB), Microsoft (NASDAQ: MSFT) and Tesla (NASDAQ: TSLA) are ready to report record sales this week, along with nearly a quarter of S&P 500 companies scheduled to release their earnings reports. It will also be a busy week, or more precisely a busy Tuesday, for the Dow with 3M (NYSE: MMM), Johnson & Johnson (NYSE: JNJ), American Express (NYSE: AXP) and Verizon (NYSE: VZ) joining Microsoft as fourth-quarter earnings season gets into full swing.

Tuesday

The chip saga continues with Advanced Micro Devices (NASDAQ: AMD) whose shares rose about 5% over the past week and are now up 1.2% year to date. Expectations are high due to its strong fourth quarter results and Intel Corporation’s (NASDAQ: INTC) upside guidance that was issued last week. Wall Street expects earnings of47 cents per share on revenue of $3.02 billion as it assumes the pandemic made a minimal disruption to its business with positive trends in the datacenter business and PC sales. AMD has steadily gained market share from Intel in both of these categories.

Microsoft will also report after the close with Wall Street expecting earnings of $1.64 per share on revenue of $40.18 billion. The trends of working and learning from home continue to intensify demands for Microsoft’s offerings, as evidenced by the strong Q4 demand. But its biggest strength over the past year has been the commercial cloud business and Wall Street remains strongly positive about the company’s outlook for fiscal 2021 due to Azure’s momentum as it’s revenue was up 48% on a YoY basis in the previous quarter. But, this is a slight deceleration from the 50% growth in Q4 and investors will want some evidence that both Azure and Microsoft’s Teams that competes against Zoom (NASDAQ: ZM) can continue fueling its revenues to new heights.

Wednesday

Apple will report after the close and Wall Street expects earnings of$1.40 per share on revenue of $102.76 billion. Holiday quarter is the quarter for Apple and it needs to meet these high expectations as last year’s quarter saw earnings of $1.25 per share on revenue of $88.5 billion. This quarter will be all about sales of the iPhone 12 that has been lauded as revolutionary. The iPhone 12 came with 5G capabilities and features such as its world-facing LIDAR sensor. However, Apple is about more than the iPhone as its services business now accounts for almost 22% of total revenue. Last quarter, its revenue surged to a new record of $14.5 billion.

Facebook will also report after the close with Wall Street expecting earnings of $3.19 per share on revenue of $26.34 billion. Facebook shares had an impressive run over the past week, suggesting that the concerns over digital advertising due to the pandemic have vanished. The social media giant topped consensus earnings expectations in each of the past eleven quarters and has missed earnings estimates just once over the past half of a decade. Yet, over the past year, its shares have been under-performing due to fears of regulatory and political risk. But if it shows a strong surge in daily and monthly active users with an upbeat revenue guidance, its stock should be just fine.

Tesla (NASDAQ: TSLA) will report its first quarter since it became part of the S&P 500 after the close. Wall Street expects earnings of$1.00 per share on revenue of $10.32 billion. Tesla’s shares are up 20% year to date and 99.9% since the company last reported earnings on October 21st, confirming that it is not showing any signs of slowing down. Elon Musk’s focus has been on executing the strategy that brought top and bottom-line improvements, while delivering almost half a million vehicles in 2020. Now, the electric vehicle pioneer has to show it intends to keep pressing the gas pedal.

Takeaway

A number of Republicans don’t support President Joe Biden’s $1.9 trillion new round of fiscal stimulus and have even criticized the price tag. Fortunately, mega tech companies that are reporting this week don’t depend on fiscal stimulus that much, as dar revenue and earnings growth is concerned.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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