Analysts have a consensus EPS estimate of $1.61 for the third quarter, which was $0.01 higher than their predictions of $1.60 90 days ago. Disney will report its third quarter results after the market closes.
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Earnings
The consensus estimates calling for a net loss of $0.07 per share on $169.82 million in revenue for the quarter. Yelp posted a net loss of $0.02 per share on revenue of $133.91 million in the same period of last year.
Tesla (TSLA) will report Q2 results in shareholder letter on its website after the bell and host a call at 17:30.
Tesla is expected to report Q2 non-GAP EPS of ($0.65) vs. ($0.48) last year with non-GAAP rev up 38% to $1.65 bln.
- Tesla delivered 14,370 vehicles during Q2 vs. 17,000 guidance. Production came in 18,345 vehicles vs. 20,000 guidance.
- Tesla said it will produce and deliver 50,000 vehicles in the second half of the year, which effectively lowered 2016 delivery guidance to just under 80K (79.2K) from 80-90K previously.
- Prior FY16 guidance also called for 30% non-GAAP Model S gross margin and 25% Model X non-GAAP gross margin by year end, cap-ex $2.25 bln and non-GAAP op-ex +20-25%.
Tesla has consistently missed production and delivery targets.
- Still, Tesla investors look at the big picture as demand for its electric vehicles remains strong.
- There is a great deal of skepticism that Tesla will hit its increased (and seemingly impossible) production plan: 500K Model S, X & 3 vehicles by 2018.
- July 26: Mobileye (MBLY) announces its relationship with Tesla won't go beyond its current EyeQ3 chip.
The stock has been very resilient despite added risks as investors give Elon Musk the benefit of the doubt.
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First Solar (FSLR) is set to report earnings tonight after the close with a conference call to follow at 4:30pm ET. FSLR reports at 4:05pm.
Current Capital IQ consensus stands at EPS of $0.55 on Revenues of $862 mln.
The FSLR revenue recognition model makes it extremely difficult for analysts to provide accurate quarterly estimates. The company has been able to handily beat EPS expectations by an average of $1.03. Revenue has been a little less friendly with two big misses and three big beats over the past five quarters.
The annual projections remain the primary focus for the underlying health of the company and that is where we will be looking to judge the overall performance and outlook. Shares of FSLR have had a difficult 2016. The stock got out of the gates strong hitting a two year high of $74.29 on March 18. But the shares have tumbled 33% since that high water mark.
2016 Guidance
- Net Sales $3.8-4.0 bln was reaffirmed in Q1
- Gross Margin 18-19% (Prior 17-18%)
- Operating Expenses $380-400 mln (Reaffirmed)
- Operating Income $300-370 mln (Prior $260-330 mln)
- EPS $4.10-4.50 (Prior $4.00-4.50)
- Net Cash Balance $1.9-2.2 bln (Reaffirmed)
- Operating Cash Flow $500-700 mln (Prior $400-600 mln)
- CapEx $300-400 mln (Reaffirmed)
- Shipments 2.9-3.0 GW (Reaffirmed)
TECHS:
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Avis Budget (CAR) is set to report Q2 earnings tonight after the close with a conference call to follow tomorrow morning at 8:30am ET. CAR reported Q1 results at 4:15pm. Current Capital IQ consensus stands at EPS of
Shares of CAR have had a solid run since reporting Q1 results in early May. The co missed its EPS by 22 cents but revenues were in line and, most importantly, it guided FY16 revenue above the consensus. The primary driver, and what attracted investors, was commentary from the company that it was starting to see a turn around in the pricing environment for the troubled car rental business.
This stock fell from the $50 area in October of 2015 all the way to $22. So the recent upward trend allowed the stock to recapture approx 55% of its losses. But we are seeing the stock under pressure today as it has given up nearly 5% ahead of today's report. Shares are down approx 12% over the past week. This suggests that investors remain cautious on the name and are taking profits after buying low.
CAR will need to show a continued improvement in pricing to entice more investors into the name. It does have some solid support below at the 200-sma ($31.90) and the $33-34 area which both linger just below. Also we would keep an eye on Hertz (HTZ) which will trade closely with CAR on the news.
Key Metrics
- Pricing- CAR expects it to decline 1% in FY16. Pricing in Q1 declined by 5% so investors are looking for a deceleration in the price decline.
- Rental Days- FY16 guidance is for this to increase 2-4%. Rental Days increased by a healthy 8% in Q1.
- Per Unit Fleet Costs- Expected to be $280-290 per month in 2016. This figure ran hot in Q1 as it came in at $312 per month, up 6% y/y.
Guidance
- Co expects FY16 EPS in the range of $2.70-3.30, excluding non-recurring items, vs. then-$2.97 Capital IQ Consensus Estimate. Revenue is expected to come in the range of $8.75-8.90 bln which was an upgrade from the prior outlook of $8.70-8.85 bln vs. then-$8.7 bln Capital IQ Consensus.
- Car reaffirmed its FY16 EBITDA expectations of $820-900 mln.
- The Company also expects that it will generate $450 to $500 million of free cash flow in 2016, and that it will repurchase $300 to $400 million of common stock in 2016.
Q1 Recap
- CAR reported Q1 (Mar) loss of $0.28 per share, excluding non-recurring items, $0.22 worse than the Capital IQ Consensus of ($0.06). Revenues rose 1.7% year/year to $1.88 bln vs the $1.88 bln Capital IQ Consensus, +3% in constant currency, primarily due to an 8% increase in rental days (5% excluding the acquisition of Maggiore).
- First quarter Adjusted EBITDA was $44 million.
- Results benefited from increased rental volumes, offset by reduced pricing, higher per-unit fleet costs and a $33 million negative impact from currency movements, including losses on currency hedges.
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Current Quarter Expectations: As usual, operating income and revenues estimates are near the upper end of AMZN's prior guidance.
Alphabet (GOOG, GOOGL) is set to report Q2 results tonight after the close with a conference call to follow at 4:30pm ET.
Current Capital IQ consensus stands at EPS of $8.04 on Revenue of $20.77 bln.
- Q1 GOOGL saw one of the top and bottom line misses (GOOGL does not guide) but the strength of its core business remained evident and a pick up in revenue at some of its 'Other' business units was encouraging for investors. Growth trends remain positive in mobile search, YouTube, and programmatic which should help drive results. Investors would like to see GOOGL produce a beat similar to FB.
- The stock has been trying to break out ahead of the report as expectations are high. GOOGL will need to meet these expectations in order to rally back to the $800 level for the first time since February.
- With regards to FB it should be noted that GOOGL's forward P/E stand at 19.3x compared to 25.2x for FB. As arguably the two best tech companies on the planet at the moment these valuations will be watched closely
Key Things to Watch
- Revenue Growth
- Operating Margins
- Aggregate Paid Clicks- Q1 was down 3% q/q and up 29% y/y; Q4 increased 22% on Google Sites.
- Q4 Aggregate Cost-Per-Click-
- U.K. Exposure
TECHS:
Click here to listen to my podcast and learn about my theory on the similarities between relationships and the stock market.
Capital IQ consensus calls for Q3 adj. EPS of $0.37 on revs +3% to $3.72 bln.
Capital IQ Consensus calls for 2Q16 EPS of $1.39 & revenue growth of 18.9%, compared to 2Q15 EPS of $1.23 on revenue of $2.28 bln.
Facebook (FB) is set to report Q2 results tonight after the close with a conference call to follow at 5pm ET.
Current Capital IQ consensus stands at EPS of $0.82 on Revenue of $6.00 bln.
- Revenue Growth- Q1 revenue growth was 51.8%; Q4 saw revenue accelerate to 52% compared to 40% in Q3 and 39% in Q2.
- Advertising Revenue- Q1 increased 57% y/y to $5.2 bln; Q4 came in at $5.637 bln which was also up 57% y/y.
- Mobile Advertising Revenue- Mobile advertising revenue represented approximately 82% of revenue in Q1 compared to 80% in Q4. This is expected to see a small uptick.
Q1 Recap
- FB reported Q1 (Mar) earnings of $0.77 per share, $0.15 better than the Capital IQ Consensus of $0.62; revenues rose 51.8% year/year to $5.38 bln vs the $5.26 bln Capital IQ Consensus.
- See key metrics above.
- FB also announced its proposal of a new class of stock so look for some updates on this on the call.
- Why it's important
- Ad spending drives Facebook's top line, accounting for 97% of the company's revenue in the first quarter. Facebook, therefore, is watched closely as a barometer for how advertisers are spending and where they are allocating their advertising budgets.
- Facebook is a leadership stock for the Nasdaq and Nasdaq 100
- The company and its stock serve as guides for the enthusiasm surrounding the growth of social media
- What Facebook said after its first quarter earnings report in April
- Daily active users (DAUs) were 1.09 billion on average for March 2016 (+16% year-over-year); mobile DAUs were 989 million on average for March 2016 (+24% year-over-year)
- Monthly active users (MAUs) were 1.65 billion as of March 31, 2016 (+15% year-over-year); mobile MAUs were 1.51 billion (+21% year-over-year)
- The average price per ad increased 5% in the first quarter while total ad impressions increased 50% (strong growth in mobile ad impressions)
- Will face tougher comparisons in 2016 given the acceleration of ad growth in 2015
- Guidance
- Non-GAAP expense growth of ~45-55% year-over-year
- Amortization will be $700 million to $800 million
- Stock-based compensation to be $1.1 billion to $1.3 billion in 2016
- Sees capex at the high end of $4.0 billion to $4.5 billion range previously provided
- Second quarter and FY16 tax rates should be similar to first quarter
- Other Stocks to Watch
- FB
- Alphabet (GOOG/GOOGL)
- LinkedIn (LNKD)
- Yelp (YELP)
- PowerShares QQQ Trust (QQQ)
- Global X Social Media Index ETF (SOCL)
- FB is third largest holding at 9.37% of assets
- S&P futures
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RESULTS:
Match Group (MTCH) will report Q2 results after the bell and host a call at 8:30am tomorrow.
Analysts are looking for Q2 adj. EPS of $0.16 with adj. EBITDA +37% to $88.8 mln and sales +16.5% Y/Y to $296.8 mln.
Match guided for Q2 dating rev +4-5% Q/Q to ~$270.8-273.4 mln with a dating EBITDA margin in the low to mid-30% range vs. 26% in Q1.
- MTCH flirted with all-time highs last week and is up almost 50% since reporting strong Q1 results after its first public quarter disappointed investors in early February.
- Match dominates the online dating market in the US (with Match, OK Cupid and Plentyoffish) but Tinder is the real gem.
- The total dating business (91% rev mix) generates sales through premium (paid) members (direct revenue) and advertising (indirect rev).
- Total direct Q1 rev was up 23% as total paid member rose 36% to 5.08 mln.
- Last quarter, Tinder added 219K paid members to hit 1.02 mln (+27% Q/Q) and said it was on pace to double paid member count (PMC) this year (to 1.6 mln).
- Tinder continues to add features to its matching app to drive engagement and monetization.
- Indirect (advertising) rev accounted for just $11.4 mln (4%) of dating revenue.
- In March, Match hired an advertising veteran to run the nascent indirect revenue (advertising) business.
- Match will be careful to roll out an advertising product that does not disrupt engagement at Tinder.
- Roughly 27% of the float is sold short and IAC (IAC) still owns 84.7% of the company after floating it (IPO) in November of last year.
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Twitter (TWTR) is set to report Q2 earnings tonight after the close with a conference call to follow at 5pm ET. Current Capital IQ consensus stands at EPS of $0.09 on Revenues of $607.4 mln.
Q3 Capital IQ consensus calls for EPS of $1.39 (versus $1.85 last year) on revenue of $42.126 bln (-27% YoY). The current consensus is near the mid-point of the company's guidance of $41-43 bln.
The current Capital IQ Consensus Estimates call for Q2 EPS of $0.94 and revenues of $3.09 bln. VZ expects full year 2016 adjusted earnings to be comparable to the co's full year 2015 adjusted earnings of $3.99 EPS
Freeport-McMoRan (FCX) is expected to report Q2 results tomorrow before the market opens with a conference call to follow at 10am ET.
Gilead Sciences is scheduled to report 2Q16 earnings on July 25 after the market closes.
Consensus calls for 2Q16 EPS of $3.01 (vs. $3.15 last year) with revenue down 4.9% to $7.8 bln.
- The stock trades at just 7.3x FY16 EPS estimates as investors demand growth (similar story to that of AAPL). Sales and earnings are expected to fall ~4% this year. Earnings are expected to grow ~2% next year with sales down 1% as the co aggressively buys back shares.
- Investors want the co to acquire its next blockbuster drug. Last month, the CFO said it has the balance sheet to acquire a large oncology asset. Gilead bought back $15 bln shares in FY15 and commenced a $12 bln share buyback in FY16, purchasing $8 bln worth of shares in 1Q16.
FY16 Guidance
The co reiterated FY16 guidance below Consensus on April 28 when they reported 1Q16 earnings. Capital IQ Consensus calls for a 2.5% decrease in FY16 rev to ~$31.8 bln, compared to $32.6 bln in FY15.
- Net product sales: $30-31 bln
- Adj Product gross margin: 88-90%
- Adj R & D expenses: $3.2-3.5 bln
- Adj SG & A expenses: $3.3-3.6 bln
- Adj Effective tax rate: 18%-20%
1Q16 Recap
- The co reported 1Q16 earnings of $3.03/share, $0.10 worse than the Capital IQ Consensus of $3.13, rev rose 2.6% y/y to $7.79 bln vs the $8.07 bln Consensus.
Technical Analysis
Technically, GILD has been an under-performer since its last earnings report in April had its selling back down to its early Jan/Feb lows around the $82 area. Buyers will want to clear this 87/88 resistance and lift price back into the late-April bearish gap between the 92/96 zone.
The 200-day moving averages are also in play around 91/92. Sellers will simply want to keep the pressure on by dropping the stock back towards this year's lows in the 78/82 range.
Implied Vol
Based on GILD options, the current implied volatility stands at ~ 29%, which is 14% higher than historical volatility (over the past 30 days). Based on the GILD Weekly Jul29 $86.5 straddle, the options market is currently pricing in a move of ~5% in either direction by weekly expiration (Friday).
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Under Armour (UA) reports Q2 results tomorrow July 26 followed by conference call at 8:30am ET.
Current consensus is for Q2 EPS of $0.02, operating income of ~$19 mln on revs +28% to $1.00 bln (guided for revenues in high 20s, operating income of ~$17-19 mln and flat gross margin). Since becoming a publicly traded company, UA has never missed earnings estimates.
Last quarter, Under Armour beat Q1 EPS estimate by $0.02, reported revs in-line, guided Q2 operating income / revenues in-line and slightly raised FY16 guidance / reaffirmed margin guidance.
Headed into the print: UA has held onto these recent gains and is back near pre-Q1 levels.
Based on UA options, the current implied volatility is 14% higher than the historical volatility (over the past 30 days). UA Weekly Jul29 $42.5 straddle is currently pricing in a move of ~8% in either direction by weekly expiration (Friday).
Key metrics and areas of interest:
- Current Quarter: Following the decision of the bankruptcy court to approve the liquidation of The Sport Authority's business rather than a restructuring or sale, Under Armour determined to recognize a Q2 impairment charge of ~ $23 mln and updated its Q2 and FY16 outlook. The company reaffirmed Q2 revenue growth in the high 20s but revised operating income to $17-19 mln (prior $40-42 mln) as a result of the impairment.
- Guidance: The Sport Authority mid-quarter update included revised 2016 guidance for operating income to ~$440 -445 mln (prior +23-24% to $503-507 mln) on net revenues +24% to $4.925 bln (prior +26% to $5.0 bln). Updated outlook will be included in the earnings press release - estimates are tracking slightly ahead of the this prior outlook with operating income of +11% to ~$453 mln estimate and revenues +25% to $4.96 bln.
Techs:
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Close to 40% of the S&P 500 will report their quarterly results this week. That includes McDonald's, which will report before the open on Tuesday.
Current Consensus is calling for adj EPS of $1.40 on revenues +6% Y/Y to $13.2 bln.
Q1 Expectations: EPS of $0.37 vs $0.56 year ago on sales -4.3% y/y to $5.96 bln.