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The Week of Detroit’s Big Three

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Stock Market Tumble

Although all eyes are on Tesla (NASDAQ:TSLA) who now achieved its last milestone so it can be considered for inclusion in the S&P index, we cannot forget about Detroit’s Big Three. Starting Wednesday, General Motors (NYSE:GM) will open the earnings lineup, followed by Ford Motor (NYSE:F) on Thursday with Fiat Chrysler Automobiles (NYSE:FCAU) closing the week on Friday. The second quarter is expected to be the worst of the year as it has been most severely hit by the pandemic.

GM

Although it has experienced significant disruptions with plant closures, GM learned the lesson back in 2018. It has plenty of liquidity to survive the short-term difficulties. During the second quarter, GM burned $8 billion in cash, but it previously announced it expected to spend between $7 billion and $9 billion. Its core business is strong and well-positioned for an electric future. Throughout 2025, GM plans to invest 15% of its 2019 revenue, amounting to $20 billion, in its electric future. Moreover, its CFO Dhivya Suryadevara notified investors that the automaker is aggressively reducing costs and using “a zero-based budgeting approach”. The company already exited unprofitable markets such as Europe and it keeps fortifying its balance sheet.

Unlike Ford and Fiat Chrysler, it did report a $294 million profit in the first quarter. This figure includes a pandemic-induced cost of $1.4 billion before interest and taxes. But as for this quarter, all three automakers are in for a loss. But GM’s was at least less than what Wall Street feared as it lost 50 cents a share on an adjusted basis while analysts expected the automaker to lose $1.77 a share. These results drove its shares up by almost 4% in premarket trading so a loss of about $800 million wasn’t that bad!

Ford

After the markets close on Thursday, analysts expect Ford Motor to report it lost $4.9 billion. In the first quarter, Ford lost $2 billion. But, it ended the quarter with $35.1 billion in liquidity. Like GM, it doubled its debt during the first quarter. But according to Reuters, Ford extended the maturity of at least 90% of $5.35 billion of its revolving loans for one year. Ford is undergoing severe restructuring and is reportedly on track with its $11 billion plan.

Fiat Chrysler Automobiles

On Friday, analysts expect Fiat Chrysler to report a loss of $2.3 billion. The company spent about $5.5 billion in cash during the first quarter. It ended up losing $1.8 billion and finished the quarter with a debt of $16.7 billion. But, it did identify about $2.2 billion in operational cuts for this year, in addition to reducing capital expenditures by about $1.1 billion. With the planned 50-50 merger with Peugeot’s (OTC:PUGOY) owner PSA Group which will open its new “Stellantis” chapter, it will become the world’s fourth largest automaker when the deal gets finalized in early 2021.

Takeaway- it will take a while before stars can realign

The pandemic has literally pressed a pause button on the U.S. automotive industry. This didn’t happen since World War II. Factories didn’t reopen before mid-May so no wonder the second quarter has been written off. It could easily be the toughest in modern history for majority of industries, excluding big tech that thrived as people were forced to stay home. As for automakers, investors will be looking less at earnings and more at cost cutting measures, inventory levels and debt. They will look for any insight that will help us assess how long it might take for the industry to recover. One thing is only certain: cash remains king – and automotive industry is no exception. However, a second wave of the pandemics could be fatal for the automotive industry.

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

The Media Sector Fighting for Survival Through Streaming

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Roku Streaming

Media companies produce and distribute the content we ended up consuming more than ever before when COVID-19 started its relentless march across the globe. Whether it is in the form of film, television series, music, books or radio programming, these companies provided the world with the much-needed therapy during the lockdown.

Due to intense streaming wars ran by services a la Netflix (NASDAQ:NFLX), much of the media industry’s power has been consolidated in just a few names such as Walt Disney (NYSE:DIS), Discovery (NASDAQ:DISCA), and ViacomCBS (NASDAQ:VIAC). Some have been acquired by telecom companies such as AT&T (NYSE:T), owner of WarnerMedia, and Comcast (NASDAQ:CMCSA), owner of NBCUniversal. By joining forces, they integrated quality content with powerful distribution. The competitive pressure is intense as even radio producers have turned to podcasts to capitalize on this opportunity.

Clear winners

As more people cut the cord and more advertisers shift their ad budgets away from TV towards direct-to-consumer platforms, Roku (NASDAQ:ROKU) and Amazon (NASDAQ:AMZN) are set to benefit from these trends. These two growing players will only get stronger as competition in the streaming space grows. As media companies need to stand out, this trend will directly support their long-term revenue growth.

Discovery – Olympics

Discovery (NASDAQ:DISCA) owns strong content and brands, including HGTV, the Food Network, and its namesake channel. But the main asset of the communications giant is its portfolio of sports rights that allows it to span all over the globe. Its main jewel are the Olympic Games. Over the last five years, yearly sales growth amounted to 12.20%. When it reported its latest quarter in June, earnings per share amounted to $0.77 exceeding consensus estimates by $0.07.

Netflix isn’t scared of competitors

Although Disney+ achieved a record pace of new subscribers, Netflix (NASDAQ:NFLX) remained as the largest direct-to-consumer video service in the world. As of 2013, it even started its original production to be less reliant on others for content. Despite fears, it is doing more than fine. In the last quarter reported in July, Netlix delivered a profit of $2.5 billion on increasing revenues of $6.15 billion. It blew estimates and eased concern it could be crushed by upcoming competitors with free cash flow of $1.06 billion, EBITDA at $9.77 billion, profit margins of 11.90%, ROE of 33.30% and ROA of 7.80%.

Netflix’s massive scale provides it with a lot of data it can use to improve the user experience and optimize its content production. While it fuelled its content library expansion through increased debt, the company’s growing recurring revenue and improved operating margin should lead to improved cash flow and give the streaming giant the ability to self-fund content investments in the future.

Disney

When it acquired 21st Century Fox, Walt Disney (NYSE:DIS) became one of the biggest media companies in the world. The iconic House of Mouse has a portfolio of intellectual properties that goes beyond legacy Disney Brands as it now includes Star Wars, Marvel and Pixar. Moreover, it has strong television brands such as ESPN with long-term contracts to broadcast premium sporting events. Its push into direct-to-consumer streaming has gone well since it acquired operational control of Hulu and launched its streaming star, Disney+. Both are bolstered by its acquisition of BAMTech, a streaming technology provider. Although its theme-park and cruise business slumped during the pandemic, streaming was a rare bright spot. Unfortunately, it will take a while before this segment reaches profitability. Theme parks produce a much higher operating margin and therefore, play a much significant role in company’s performance which was nearly wiped out.

But, its fiscal fourth quarter is about to end and with it, this brutal fiscal year. The figures won’t be pretty but there should be an improvement over the vicious 42% decline in revenue that it posted for its fiscal third quarter. After all, the current quarter is the period when theme parks reopened, sports programming returned to ESPN, and movie theaters started opening their doors. Fiscal 2021 can’t start soon enough for Disney.

Viacom

ViacomCBS (NASDAQ:VIAC) ensures a broad distribution and large audiences as its cable networks are well diversified across audience demographics. After all, it operates one of the four broadcast networks in the U.S. which has its perks. Although the company had many  carriage disputes with distributors, adding the CBS broadcast network should strengthen its negotiating power. Meanwhile, joining CBS and Paramount should result in sufficient content to feed its own networks, including direct-to-consumer services. During its second quarter, VIAC showed it was able to absorb the blow to its advertising business by reporting a profit of $2.79 billion with revenues increasing to $6.28 billion. With free cash flow of $1.02 billion from June, EBITDA at $1.41 billion which compares well with its peers, ViacomCBS Inc has strong fundamentals that helped it deal with a 27% drop in advertising and lack of sports. With a market cap of $18.15 billion, it is increasing its credibility in this sector as its digital revenue jumped 25%, boosted by a 52% increase in streaming subscription revenue.

Outlook

The COVID-19 pandemic was double trouble for pay-TV industry because advertisers reduced their budgets and consumers started cancelling subscriptions as sport events and TV series productions were delayed or annuled. eMarketer forecasted that around 6.6 million U.S. households will cut the cord in 2020 with ad spending dropping 15%, forcing media companies to focus on direct-to-consumer content. As more consumers cut the cord and advertisers move to digital platforms, streaming players are set to thrive. Moreover, Roku is well-positioned to benefit from them all.

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

Nike Just Did It

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Nike

The sports apparel titan announced its fiscal first quarter last week. Nike (NYSE: NKE) had one big questions to answer as investors were waiting to see progress towards a return to growth. Nike delivered.

But the biggest concern is Nike’s future price-sensitive environment this holiday season. The big picture trend is not favorable for retail. But let’s see the micro trends Nike confirmed with its latest report.

Rebound

Nike’s previous quarter saw the worst impact from pandemic-induced closures. Metrics were brutal as sales plummeted 38%.  If we were to look at the recent results of its competitor Lululemon Athletica (NASDAQ: LULU), its physical sales halved in July, but this drop was partially offset by booming digital sales.

Over the last 2 years, Nike has constantly beaten revenue estimates. It has even beaten EPS estimates 88% of the time. This time, it crushed both earnings and revenue estimates, causing its stock to jump 12%. Revenue easily exceeded the $9.11 billion estimate as it amounted to $10.59 billion. The boost in revenue largely came from 82% growth in online sales. Moreover, top lines made their way to bottom as earnings per share were more than twice the expectation of $0.46 as they amounted to $0.95.

Expenses

Fortunately for Nike, its efficient supply chain and premium consumers helped it avoid massive inventory writedown charges due to stale merchandise that Walmart (NYSE: WMT) and TJX Companies (NYSE: TJX) underwent earlier this year.

Uncertain environment – sharp recession

Despite leading the way through the pandemic, Nike will have to face an uncertain macro-environment just like every other retailer. The calendar has been redefined this year with an everything-but-ordinary back-to-school season. Demand is being hampered by sharp recession, continued COVID-19 outbreak, fear of a second lockdown as well as reduced government fiscal support spending. However, unlike its peers which refrained from giving any form of outlook due to the pandemic, Nike issued fiscal 2021 guidance of high single-digit to low double-digit revenue growth from the year-ago period.

Outlook

Over the last three months, Nike’s stock went up 18%. Like all other apparel and shoe sellers, Nike has been impacted by the coronavirus pandemic. Yet, analysts believe Nike has what it takes to continue being a winner. After all, it took control of its own destiny by pulling its products from nine multi-branded wholesale accounts such as the almighty Amazon (NASDAQ: AMZN) and focusing on its own direct-to-consumer offerings. With its latest earnings report, analysts expect to see progress ahead of plan, ongoing digital transformation, and business evolution to a higher margin, higher return model. Thanks to its hyper-digital strategy, Nike is one of the few firms uniquely positioned to weather retail turbulence. The bottom line is that despite a short-term disruption,  Nike is poised for long-term dominance because it is strong in the places that matter most.

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

Four Shining Solar Stars

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Alternative Solar Stocks

According to Solar Industry Magazine, solar accounted for 37% all new electric generating capacity added in the U.S. in the first half of the year, led by Texas and Florida. Wood Mackenzie forecasts 37% annual growth this year. This is a 6% decrease from pre-pandemic forecasts. From 2021-2025, the U.S. solar market is expected to see a 42% increase in installations compared to the prior five years.

The demand is expected to accelerate as the global economy recovers. These four shinning stars are well positioned to benefit from that momentum.

JinkoSolar delivered a solid quarter

On September 23, JinkoSolar Holding Co Ltd (NYSE:JKS) has reported solid second quarter results from April to June. Shanghai-based solar manufacturer delivered a profit of $47 million as it shipped 4.46 GW of modules covering 91 countries and resulting in a turnover of $1.2 billion. It expects to move 20 GW of panels this year as supply and demand have restabilized to keep sales going until the fourth quarter. Gross margin expanded from 16.5% in the same quarter last year to 17.9%. The year-over-year increase was a direct result from increase in self-produced production volume and an integrated high-efficiency-products capacity and optimisation of cost structure.

At the beginning of this unprecedented year,  the pandemic caused a shortage of supply in the Chinese market, increasing supply chain prices. Fortunately, prices have stabilized and JinkoSolar expected for strong market demand to continue until the end of the year.

SPI Energy is entering the EV playfield

SPI Energy CO Ltd (NASDAQ:SPI) soared 54% in premarket trading, but that is nothing compared to the prior session’s 1,200% rocket ride. The company that offers photovoltaic solutions for business, residential, government and utility customers, said it was starting an electric-vehicle subsidiary that will compete with Nikola (NASDAQ: NKLA) and Tesla (NASDAQ: TSLA).

Sunworks also had a crazy ride

Meanwhile, shares of Sunworks Inc. (NASDAQ:SUNW) which is in the same photovoltaic model, skyrocketed 353% during Thursday’s premarket hours. They already climbed 50.4% on Wednesday, but ended up rallying more than 500 percent on Thursday, setting a new yearly high. Although it has nothing to do with electric vehicles, SPI Energy was an energy company very similar to Sunworks,  so this is what could have excited investors and short-term traders.

Daqo – impressive earnings growth

Daqo New Energy Corp (NYSE: DQ) has an average Strong Buy rating from Wall Street with good reason. Over the past 12 months, the stock has risen 164%. Also pleasing for shareholders is that the stock is up over 70% over the last three months. If we look at ROE to assess how efficiently a company’s management is utilizing the company’s capital, given that Daqo New Energy doesn’t pay any dividend, it is to be assumed that the company has been reinvesting all of its profits to grow its business. But despite the low rate of return, this enabled the company to post impressive earnings growth. With that said, the latest industry analyst forecasts reveal that the company’s earnings are expected to accelerate.

As for the savvy investors who held on to Daqo shares for the last five years, they ended up gaining 642% which certainly justified their investment.

Outlook

Overall, the combined shipment volumes of the top five solar module manufacturers are expected to account for 65% to 70% of the industry for the year as major players have been consolidating. Experts project that the whole Solar Energy Storage market is to grow at a CAGR of 43.92% between 2020 and 2023. Pandemic or no pandemic, the future of solar is bright.

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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