Earnings and Acquisition News Boost Splunk Stock

Data analysis software company Splunk (SPLK) rose after hours last night on higher-than-expected earnings and acquisition news of a pending deal with SignalFX.

After spiking over 9% to around $140 per share, Splunk eventually moved back down to $130 and change … But that’s still a gain of 1.3% from its value at the close of the market day.

Positive Earnings and Acquisition Report

The company reported Q2 earnings per share of 30 cents, beating estimates of 12 cents by a wide margin. The extent of the overshot is getting attention from both financial and tech media as the firm essentially doubled its projected EPS.

In addition to impressive earnings, revenue for Splunk grew 33% year over year, with license revenue the biggest portion at $279 million, beating estimates by about $29 million.

Splunk Will Acquire SignalFX

In addition to all of these good numbers, Splunk seems to be getting a one-two boost with the announcement that it’s acquiring cloud-monitoring firm SignalFX. The San Mateo firm has its own proprietary take on streaming analytics and a track record of innovation in cloud-vendor services as well as cloud-native app design. 

The deal is worth a reported $1.05 billion and can give SPLK control of a real-time monitoring solution on the vanguard of predictive analytics work. Specifically, SignalFX touts its NoSample tail-based distributed tracing as an exclusive part of a platform gaining attention in the world of cloud-vendor services and smart Enterprise Resource Planning architectures.

SignalFX also offers “lift and shift” services key in the world of legacy migration, where the goal to move traditional applications to the cloud requires considerable brainstorming, legwork, and an eye toward helping firms move toward a DevOps business process model.

SignalFX takes data from applications and cloud infrastructure to provide real-time monitoring and problem detection, with debugging, root cause analysis, service mapping, and more.

After raising $178.5 million in a Series E round of funding, SignalFX is now poised to become part of the Splunk organization.

Company Reactions

“I am excited by our strong quarter, tremendous cloud growth and our agreement to acquire SignalFx,” Splunk CEO Doug Merritt said in a statement, according to The Street, in response to the news of the acquisition. “I am particularly pleased with how quickly we are accelerating our business transformation to cloud, and the impact cloud is having on our customers.”

Looking at the longer-term chart analysis, yesterday’s values show a major improvement over most of the prices seen over the last month. SPLK started out August at under $125 per share. Over the last six months, the equity has hit similar highs no less than three times, once in late February, then again in mid-May and late July.

Realistically, the new numbers are all-time highs for the stock. And although Splunk traded down in pre-market trading to around $123, market analysts see potential in the recently released quarterly numbers and the acquisition.

According to reports, Splunk has risen 24% year over year. Now, the breaking news of positive earnings and the move to acquire SignalFX has this stock on the tech enthusiast’s radar.

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Lowe’s beats earnings and revenue estimates…

Lowe’s released its Q2 2019 earnings report on Wednesday, revealing promising numbers for the home improvement store. The press release caused the company’s stock price to jump by more than 12% in premarket trading.

Meanwhile, Lowe’s primary competitor, Home Depot, reported mixed results in its most recent earnings report.

Lowe’s reported adjusted earnings per share of $2.15, compared to an estimated $2.01, and total revenue of $20.99 billion versus an expected $20.94 billion.

In the earnings release, CEO Marvin R. Ellison stated, “We capitalized on spring demand, strong holiday event execution and growth in Paint and our Pro business to deliver strong second quarter results. Despite lumber deflation and difficult weather, we are pleased that we delivered positive comparable sales in all 15 geographic regions of the U.S.”

Lowe’s Q2 Earnings Highlights

Here are the key points for Lowe’s Q2 earnings report:

• EPS: $2.15
• Revenue: $20.99 billion
• Same-store sales: up 2.3%

The company also reported net earnings of $1.68 billion, a 10% increase from the same period last year. U.S. comparable sales also saw an increase of 3.2%.

Quarterly Dividend

On August 16, the Lowe’s Board of Directors declared a quarterly cash dividend. The dividend is 55 cents per share and payable on November 6 to shareholders of record as of October 23.

Furthermore, the company revealed in its earnings report that it had paid a total of $382 million in dividends in the second quarter.

Full-Year Guidance

Lowe’s also updated its guidance based on its Q2 financial results.

The company now expects its full-year sales to increase by 2%, comparable sales to increase by 3%, and adjusted earnings per share to fall between $5.45 and $5.65 for the fiscal year ending on January 31, 2020.

Stock Repurchasing

In an effort to return excess cash to shareholders, Lowe’s announced that it had repurchased $1.96 billion of stock under its share repurchase program in the second quarter.

Can Lowe’s Continue to Grow?

Ellison took over as president and CEO of Lowe’s in 2018. Since then, investors have been watching closely to see if he can turn things around for the home improvement company.

Last year, the company announced several store closures in the U.S. and Canada in an effort to reduce costs. Earlier this month, Lowe’s laid off thousands of maintenance and assembly workers. And like its competitor Home Depot, Lowe’s is battling difficult weather and deflation in lumber prices.

Despite these difficulties, though, Lowe’s managed to beat Wall Street expectations with its earnings results and plans to continue to grow its business operations.

New Initiatives

Though the company recently laid off thousands of employees at its retail locations, Lowe’s has plans to add more jobs outside of its retail centers. One of Ellison’s newest initiatives is the creation of a global technology center in Charlotte, North Carolina.

In the press release, Ellison said, “We’re excited to stand up our new global technology center here in North Carolina to continue to drive our company’s growth.”

With the creation of this new technology hub, Lowe’s plans to hire as many as 2,000 tech associates to “accelerate [its] commitment to becoming a best-in-class, omni-channel retailer and strengthen [its] associate and customer experiences.”

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Walmart claims Tesla solar panels caused multiple fires at its stores…

Tesla, Elon Musk’s vehicle and renewable energy company, is now the subject of a lawsuit as Walmart alleges Tesla solar panels are responsible for fires at several Walmart locations across the country.

The suit claims breach of contract as Walmart says Tesla failed to meet industry standards in the installation of its solar panels atop hundreds of Walmart stores across the U.S. Walmart is now asking that Tesla remove solar panels from over 240 Walmart locations and that the company pay for all damages caused by the fires.

After news of the suit dropped, Tesla stock dropped over 1% in after-hours trading. Both Walmart and Tesla have yet to comment on the news.

Lawsuit Details

In the suit, Walmart states, “As of November 2018, no fewer than seven Walmart stores had experienced fires due to Tesla’s solar systems-including the four fires described above and three others that had occurred earlier.”

Walmart claims the fires destroyed a large amount of merchandise and required significant repairs, causing hundreds of thousands of dollars in losses.

The complaint filed in New York State court on Tuesday states that Walmart inspectors discovered that Tesla “engaged in widespread, systemic negligence and had failed to abide by prudent industry practices in installing, operating and maintaining its solar systems.”

Walmart claims that many of the solar panels installed by Tesla had noticeable defects, indicating that Tesla did not perform sufficient inspection procedures. The company also alleges that “Tesla’s predecessor-in-interest — SolarCity — had adopted an ill-considered business model that required it to install solar panel systems haphazardly and as quickly as possible in order to turn a profit.”

Tesla is also currently under investigation by the U.S. National Transportation Safety Board due to claims from consumers that many Model X and Model S vehicles have burst into flames.

Tesla Solar Business Growth Initiatives

Recently, Tesla is pushing to revive its solar energy segment. Tesla acquired SolarCity in 2016 and began offering Tesla-branded solar panels. However, these solar panels weren’t viable for most consumers due to their high cost.

On Sunday, Elon Musk announced via Twitter that homeowners can now rent Tesla solar panels, starting at $50 per month.

The Rent Solar program is currently available in six states, and the monthly rental cost includes maintenance and installation. Tesla claims that there are no other additional costs or long-term agreements other than a $1,500 fee to remove the panels once service is canceled. Musk also revealed that this rental program will be available in Europe starting next year.

According to CNBC, Tesla installed just 29 megawatts of solar in the second quarter of 2019 — a record low. The company hopes that initiatives like the rental program and its new solar roof tiles will revive its solar division.

Walmart Plans to Purchase Trucks From Tesla

It’s yet to be seen how this lawsuit will affect the partnership between Walmart and Tesla.

In 2017, Walmart announced that it pre-ordered 15 Tesla electric semi-trucks for testing. At the time of the announcement, a Walmart spokesperson stated, “We have a long history of testing new technology — including alternative-fuel trucks — and we are excited to be among the first to pilot this new heavy-duty electric vehicle.”

More recently, Walmart pre-ordered at least 45 of these electric semi-trucks to add to its fleet.

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Shares of Beyond Meat have fallen 40% from their 52-week high.

This month, shares of Beyond Meat hit their first big slump since the company’s May IPO. The stock dropped from its 52-week high of $239.71 per share and fell as low as $144 per share. 

This was mostly due to the company’s second-quarter losses and a secondary stock offering that rattled investors. But on Tuesday, Beyond Meat’s shares were up more than 6% after the company was upgraded by JP Morgan Chase. 

Analyst Ken Goldman upgraded the company from neutral to overweight and raised its price target to $189 per share. In a note to clients, Goldman outlined his reasoning for upgrading the company. 

The biggest reason? The fact that the stock is down 40% since July.

3 Things Going Well for Beyond Meat

JP Morgan downgraded shares of Beyond Meat in June due to its high valuation. So the upgrade was something of an about-face for the company.

Goldman said that the company’s reasonable valuation, market potential, and strong data tracking were his primary reasons for the upgrade and made the stock “appealing once again.” He was largely dismissive of the second stock offering that rattled investors.

Most things have gone right for Beyond Meat since its public offering, especially considering that the company isn’t yet profitable. Here are three reasons Beyond Meat is still worth investing in. 

Positive growth drivers

One of the biggest reasons for Beyond Meat’s strong start is its partnerships with restaurants. National food chains continue to pick up the company’s meatless products. During the second quarter, the company’s restaurant sales came to $33 million, up from $5.7 million just a year earlier. A year ago, the company’s retail revenue was far outweighing its revenue from restaurants. Now, these two figures are pretty evenly matched.

Improved products

The company recently upgraded its main product, the Beyond Burger. The new burger is has a meatier texture and is available in supermarkets across the country. And the company is taking steps to improve its manufacturing process and lower its margins.   

Low competition

Beyond Meat doesn’t have too much in the way of competition right now. Its main competitor is Impossible Foods, which hasn’t yet gone public. And the meatless market is so large, it can easily accommodate the two companies.

However, this will change and it will probably happen sooner rather than later. There are a number of meatless startups in the works, which could affect the company’s pricing and margins in the years to come.  

Summary

Beyond Meat is bouncing back from its first real obstacle as a public company. After going public with an IPO price of $25 per share, the company has stood out as the best-performing IPO of 2019.

Without a doubt, there will be challenges ahead for the company but significant gains are probably in its future as well. And with a lower valuation, this may be a good opportunity for new investors. 

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Will higher Home Depot earnings per share be a recurring trend or a lucky fluke?

A mixed financial report yesterday from retailer Home Depot had shares rising 4% in pre-market trading this morning.

On one hand, reported earnings of $3.17 per share beat analyst projections of $3.05 per share.

However, overall sales came in at $30.8 billion, less than analysts had expected at $31.02 billion. And same-store sales rose 3% instead of the projected 3.4%.

Leadership cites lumber prices as having a significant impact, with CEO Craig Menear reportedly stating that some of the pressure on Home Depot is caused by “continued lumber price deflation, as well as potential impacts to the U.S. consumer arising from recently announced tariffs.”

Market Activity Holds Steady for HD

In the early market day, Home Depot held onto its gains of around $216 per share. That represents a rise of about $10 per share from prices last Wednesday, and about 5% higher than the stock was a month ago.

Home Depot stock is up over the last six months. It hit a value of around $190 in February and is now currently trading at around $217 per share as of midday.

In fact, the 4% increase puts Home Depot at all-time highs, and positions it competitively with its rivals, like Lowe’s.

What About Tariffs?

For the longer term, though, many point to increased tariff activity as something that could decrease Home Depot’s sales further in the quarters to come. The U.S.-China trade war could have an effect…

A spate of recent tweets shows financial experts looking at how tariffs could affect suppliers and potentially diminish consumer activity at the hardware store’s chain … According to some analysis, it’s not so much that tariffs would be put on Home Depot’s products.

The concern is that tariffs could place a general burden on the consumer — and that could lead to lower sales overall.

However, Menear sounds a positive note: “We are encouraged by the momentum we are seeing from our strategic investments and believe that the current health of the U.S. consumer and a stable housing environment continue to support our business,” Menear said after the release of the financial data, according to The Street.

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Kohl’s beats profit expectations, but misses on sales…

Kohl’s released its second-quarter earnings report early on Tuesday. The results caused the stock to spike early before falling into the red shortly after.

Kohl’s reported adjusted earnings per share of $1.55 against an estimated $1.53. However, the company failed to meet sales expectations, reporting $4.17 billion in net sales versus an expected $4.2 billion.

CEO Michelle Gass stated in the press release, “We are pleased to report that our business strengthened as we progressed through the second quarter. Comparable sales were better than the first quarter and improved during the period, turning positive during the last six weeks of the second quarter with 1% growth.”

Gass credited a new partnership with Amazon and a strong start to the back-to-school season for the company’s earnings beat.

Kohl’s Q2 Earnings Highlights

Here are the key numbers from Kohl’s Q2 earnings release:

• Adjusted EPS: $1.55
• Net Sales: $4.17 billion
• Total Revenue: $4.43 billion
• Gross Margin: 38.8%

The company’s earnings per share are down 11.93% while total revenue is down 3.06% from the same period last year. Kohl’s also reported its net income as $241 million, down 17% from last year.

Though Kohl’s managed to beat Wall Street’s profit expectations, the company’s misses in other areas, like sales, have left many investors feeling down on the stock.

Quarterly Dividend

The company’s board of directors also declared a quarterly cash dividend on its common stock of $0.67 per share on August 13. This dividend is payable on September 25 to shareholders of record at close on September 11.

Guidance

Kohl’s also affirmed its guidance for the full fiscal year. The company is calling for earnings per share of between $5.15 and $5.45. Meanwhile, analysts expect Kohl’s earnings per share to be $5.23 and revenue to be $19.05 billion for the full fiscal year.

New Business Partnerships

One of Kohl’s most successful recent initiatives is its partnership with Amazon. Earlier this year, it was reported that Kohl’s would start accepting Amazon returns in all of its stores starting in July 2019.

With this new service, Kohl’s now accepts “eligible” Amazon items, which customers can return through Kohl’s at no additional cost. The items are then sent to an Amazon return center.

This program is an extension of a partnership that already existed between Amazon and Kohl’s. Kohl’s began selling Amazon products at its stores in 2017. The department store now sells Amazon items, like the Fire TV and Echo Dot, in more than 200 of its locations.

The company also recently announced a deal with sports retailer Fanatics. This partnership will allow Kohl’s to sell licensed NFL and NBA apparel online. This deal also makes Fanatics the sole distributor of licensed sports apparel at Kohl’s.

Partnerships like these are part of Kohl’s initiative to increase traffic and revenue while competing with the likes of Macy’s and J.C. Penney.

Regarding partnerships like these, Gass stated in the earnings report, “We are confident that our upcoming brand launches, program expansions, and increased traffic from the Amazon returns program will incrementally contribute to our performance during the balance of the year and beyond.”

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Microsoft shifts focus to emerging technologies and services…

Since Satya Nadella took over as CEO of Microsoft in 2014, he has consistently emphasized Microsoft’s dedication to thriving in a mobile- and cloud-based world.

This strategy has been very successful for the tech giant in recent years. Microsoft has excelled by collaborating with other companies and platforms to deliver its products and services. This change in strategy has helped the company’s stock increase by more than 275% since 2014.

However, last year, Microsoft announced a new focus.

In Microsoft’s 2017 annual report, the company stated that its mission “is to empower every person and every organization on the planet to achieve more,” and to accomplish this mission, Microsoft’s strategy “is to build best-in-class platforms and productivity services for an intelligent cloud and an intelligent edge infused with artificial intelligence.”

While Microsoft is still working on the continued development of Azure, its commercial cloud segment, the company has made it clear that it is shifting its focus away from mobile technologies and toward AI.

Microsoft Hires Apple’s Former Head of Siri

In a move that emphasizes its dedication to AI, Microsoft hired Bill Stasior, the former head of Siri at Apple.

The hiring was announced via an update to Stasior’s resume, which can be found on his personal website. His official title is Corporate Vice President of Technology.

Per CNBC, a Microsoft spokesperson confirmed the hiring. The spokesperson wrote, “Starting in August, he will work to help align technology strategies across the company.”

According to Stasior’s resume, he was the VP of AI at Apple. During his time there, he led the team responsible for Siri, from 70 to over 1,100 people, and helped bring modern machine learning to Apple and Siri. Under Stasior’s direction, Siri grew from five languages and one platform to seven platforms and more than 30 languages.

Though neither Microsoft nor Stasior has made a statement on the hiring, it’s likely that Microsoft will utilize Stasior’s expertise to improve its own AI technologies like Cortana, the company’s own virtual assistant.

Focusing on AI

This hiring is only one of many moves Microsoft has made as part of its efforts to focus on AI.

Over the past year, Microsoft has made a number of AI-related acquisitions, including Bonsai, Lobe, and Semantic Machines. Each of which can help Microsoft advance the current state of AI development.

And more recently, Microsoft invested in and partnered with Elon Musk’s OpenAI project.

In a press release, OpenAI stated, “Microsoft is investing $1 billion in OpenAI to support us building artificial general intelligence (AGI) with widely distributed economic benefits.” The company continued, “We’re partnering to develop a hardware and software platform within Microsoft Azure which will scale to AGI. We’ll jointly develop new Azure AI supercomputing technologies, and Microsoft will become our exclusive cloud provider.”

The two companies believe that, together, they’ll be able to develop technology that is much more complex and powerful than current artificial intelligence.

Through hirings, acquisitions, and partnerships like these, it seems that Microsoft’s current priority is to be at the forefront of the future technology landscape.

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