US FINANCIAL MARKET

U.S. Stocks Rise With Earnings in Focus – Wall Street Journal, 10/28/2021

• U.S. stocks rose Thursday, buoyed by a string of solid earnings reports.
• The S&P 500 advanced 0.6%. The Dow Jones Industrial Average added 0.5%, and the Nasdaq Composite gained 0.6%.
• Forecast-beating results have helped ease investors’ worries that supply-chain difficulties would dent profits, sending stocks higher throughout the month of October.
• So far this reporting season, with nearly half of S&P 500 companies having posted results, about 82% of companies have managed to beat analysts’ expectations for earnings, according to FactSet.
• Shares of Ford Motor jumped 13%. The car maker late Wednesday restored its dividend and raised guidance for profits in 2021.
• Caterpillar shares added 2.5% after the manufacturing giant reported better-than-expected earnings, as well as a jump in sales of construction machinery and mining and energy-related equipment.
• Twilio, the acquisitive communications software firm, slid 19% after projecting a wider loss for the fourth quarter than analysts had expected.
• Anheuser-Busch InBev, the world’s largest brewer, reported a rise in revenue and profits, boosting shares by 6.7%.
• In energy markets, benchmark European gas futures fell more than 7% after Russian President Vladimir Putin told state energy giant Gazprom to fill its storage sites in Europe from early November.
• The instruction eased fears among traders that Europe will run short of gas this winter.
• Japan’s Nikkei 225 fell 1%, China’s Shanghai Composite Index lost 1.2% and Hong Kong’s Hang Seng slipped 0.3%.

Ford Jumps After Raising Annual Profit View, Restoring Dividend – Bloomberg, 10/27/2021

• Ford Motor, charging forward with big investments in electric vehicles, raised its full-year profit forecast and said it will restore its dividend, sending the stock ahead as much as 9.2% in late trading.
• Revenue amounted to $35.7 billion, compared with projections of $31.6 billion.
• Ford, which suffered more than most from the chip crisis in the year’s first half, managed to increase the number of cars on dealer lots in September, ending the quarter with 236,000 vehicles in inventory.
• In North America, Ford had earnings before interest and taxes of $2.42 billion, down from $3.2 billion in last year’s third quarter.
• U.S. vehicle sales fell 27% in the quarter on the chip crisis, but that was less than the 33% decline GM experienced.
• The company’s average selling price rose to $51,460 in the third quarter, from $45,599 a year earlier, according to Edmunds.
• Third-quarter profit came to 51 cents a share excluding some items, beating 27-cent average of analysts’ estimates, the automaker said.
• The automaker on Wednesday raised its 2021 profit forecast for the second time in as many quarters, and is now projecting $10.5 billion to $11.5 billion in earnings before interest and taxes.
• The reinstated quarterly dividend of 10 cents a share will be paid on Dec. 1, the company said.
• While Ford sees the chip shortage easing next year, CFO John Lawler told reporters it could likely extend into 2023.

Shopify Stock Is Rising Despite Soft Third-Quarter Earnings – Barron’s, 10/28/2021

• Shopify posted weaker-than-expected adjusted earnings in the third quarter, the first time it has disappointed analysts since its 2015 initial public offering, as merchants did less business across its platform than expected.
• For the quarter, Shopify posted revenue of $1.12 billion, up 46% from a year ago, but below the Street consensus estimate of $1.15 billion.
• Revenue growth has slowed from 57% in the June quarter and 110% in the March quarter.
• Adjusted profits were 81 cents a share, falling short of the consensus estimate for $1.23.
• Under generally accepted accounting principles, the company earned $1.1 billion, or $9 a share, reflecting a $1.34 billion unrealized gain on equity investments.
• Gross merchandise value was $41.8 billion, up 35% from a year ago, but below the Street consensus at $43.4 billion, slowing from 40% growth in the June quarter and 114% growth in the March quarter.
• The company said “Subscription Solutions” revenue was $336.3 million, up 37% from a year ago, while “Merchant Solutions” revenue was $787.5 million, up 51%.

eBay revenue outlook disappoints as pandemic-led boom fades – Reuters, 10/27/2021

• EBay on Wednesday projected holiday-quarter revenue below market expectations, another sign that the online shopping boom fueled by the pandemic was tapering as consumers returned to stores.
• Gross merchandise volume, the total dollar value of sales on eBay from which the company takes a percentage, fell 10%.
• The company also reported a 5% decline in the number of active buyers on its marketplace in the third quarter.
• But a strong showing by its payment services and the expansion of its advertising portfolio drove a 11% jump in revenue that was better expectations.
• It earned 90 cents per share on an adjusted basis, a cent above estimates.
• EBay said it expected fourth-quarter revenue between $2.57 billion and $2.62 billion, well below analysts’ average estimate of $2.65 billion, according to Refinitiv IBES data.
• For the current quarter, it expects adjusted profit between 97 cents and $1.01 per share.
• Analysts expected $1 per share.

Caterpillar’s Profit Doubles on Construction Project Strength – Wall Street Journal, 10/28/2021

• Caterpillar’s quarterly profit more than doubled as construction and industrial equipment customers placed new orders in a growing global economy, though supply-chain problems held user sales below the company’s expectations.
• The Deerfield, Ill.-based maker of mining trucks and construction bulldozers said revenue grew 25% to $12.4 billion in its third quarter, driven by higher prices and volumes.
• Caterpillar’s sales to equipment users grew 14% in the quarter ended Sept. 30, below its expectations of at least 15%, driven by constraints to the company’s supply chain, Mr. Bonfield said.
• Construction sales climbed 30% to $5.26 billion while mining sales grew by 32% to $2.41 billion.
• The company’s energy-and-transportation sales rose 22% to $5.08 billion.
• Higher manufacturing costs offset price increases Caterpillar implemented for customers. Higher prices added $256 million to operating profit while higher manufacturing costs reduced it by $267 million, the company said.
• The company earned a profit of $2.60 a share, compared with $1.22 a share a year earlier. Total profit was $1.43 billion, up from $668 million.

Comcast’s Profit Doubles, Boosted by Tokyo Olympics, Theme Parks – Wall Street Journal, 10/28/2021

• Comcast said its third-quarter net profit doubled, boosted by strong revenue growth at its NBCUniversal media empire, which benefited from the Tokyo Olympics and an influx of returning visitors to its Universal Studios theme parks.
• Revenue rose 19% to $30.3 billion.
• Comcast said it added 300,000 broadband subscribers, less than half as many as it did in the same period last year.
• Its cell-phone business, Xfinity Mobile, had its best quarterly result since it launched in 2017, adding 285,000 customers.
• Comcast’s pay-TV business, meanwhile, continued to lose subscribers.
• The 408,000 cable-TV customers it lost during the quarter were nearly 50% more than what it lost a year earlier.
• Overall, the company’s cable communications unit, which comprises its pay-TV, broadband and mobile-phone business, was still Comcast’s largest revenue contributor, accounting for $16.12 billion of the company’s $30.3 billion in revenue.
• NBCUniversal’s revenue increased about 58% to $10 billion.
• Theme parks generated $1.45 billion in revenue, driven by the Universal Orlando location.
• The quarter was the most profitable for theme parks since the beginning of 2020.
• NBCUniversal’s revenue for its media segment, which includes broadcast and cable TV, rose 48% to $6.8 billion, greatly benefiting from the Olympics, which draws a lot of advertising revenue for the company.
• The film and TV studio unit reported revenue of $2.41 billion, up 27% from a year earlier.
• The Philadelphia-based company reported third-quarter net profit of $4.04 billion, or 86 cents a share, compared with $2.02 billion, or 44 cents a share, a year earlier, surpassing FactSet analysts’ estimates.

Mastercard profit beats as easing pandemic curbs lift cross-border spending – Reuters, 10/28/2021

• Mastercard reported better-than-expected profit for the fourth consecutive quarter on Thursday, as easing of pandemic-era restrictions drove a healthy recovery in cross-border spending and lifted domestic spending.
• Net revenue rose 30% to $5 billion in the quarter.
• The company said gross dollar volumes, the dollar value of the transactions processed, jumped 20% to nearly $2 trillion.
• Cross-border volumes, a metric that tracks spending on its cards beyond the country of issue, were up 52% from last year when the pandemic hit travel demand.
• On an adjusted basis, Mastercard earned $2.37 per share, shattering analyst estimates of $2.19 per share on average, according to IBES data from Refinitiv.

Merck sees up to $7 billion in sales of COVID-19 drug through end of 2022 – Reuters, 10/28/2021

• Merck on Thursday said its experimental COVID-19 drug could bring in between $5 billion and $7 billion in sales through the end of next year, assuming it gains U.S. authorization in December.
• Merck Chief Executive Robert Davis said in an interview the $5 billion to $7 billion forecast for the pill is based on signed contracts and regions where the company has high confidence that they will reach a deal, and that the estimate could move higher.
• Sales of Keytruda, which is on track to become the world’s biggest-selling medicine by 2023, rose 22% to $4.53 billion in the quarter, topping analysts’ lofty estimates of $4.31 billion.
• Merck now expects full-year adjusted profit of $5.65 to $5.70 per share, up from its prior view of $5.47 to $5.57. The forecasts did not include any potential contribution from molnupiravir.

ServiceNow stock slips as earnings forecast fails to wow Wall Street – MarketWatch, 10/28/2021

• ServiceNow shares fell in late trading Wednesday despite an earnings beat, as the software company’s holiday-season guidance did not handily beat expectations as some analysts expected.
• In the third quarter, ServiceNow reported subscription revenue of $1.43 billion and subscription billings of roughly $1.38 billion, while analysts were expecting $1.41 billion and $1.32 billion, respectively.
• This quarter, the company reported 63 new deals of more than $1 million in annual contract value, up 50% year-over-year.
• More important, all of the company’s top 20 deals in the third quarter included four or more products.
• ServiceNow reported third-quarter earnings of $63 million, or 31 cents a share, on sales of $1.51 billion, up from $1.15 billion a year ago. After adjusting for stock compensation and other effects, the cloud-software company reported earnings of $1.55 a share, up from $1.21 a share a year ago.
• ServiceNow guided for fourth-quarter subscription revenue of roughly $1.52 billion and billings of roughly $2.31 billion, while analysts an average were expecting $1.51 billion and $2.31 billion respectively, according to FactSet.

Northrop beats profit estimates on strong demand in space unit; raises forecast – Reuters, 10/28/2021

• Northrop Grumman on Thursday reported a better-than-expected quarterly profit, driven by strong demand in its fast-growing space unit, prompting the U.S. defense contractor to raise its full-year adjusted profit forecast.
• The company’s total sales, however, fell 4% to $8.72 billion, missing estimates $8.94 billion.
• Northrop’s space unit, which makes satellites and missile systems, reported a 22% jump in sales to $2.68 billion for the third quarter ended Sept. 30.
• Excluding items, Northrop earned $6.63 per share, topping Street estimates of $5.99, according to Refinitiv IBES.
• Northrop said it now expects full-year adjusted earnings per share of $25.20 to $25.60, up from its prior range of $24.40 to $24.80.

Taco Bell parent earnings beat, fueled by strong demand for KFC – CNBC, 10/28/2021

• Yum Brands on Thursday reported quarterly earnings and revenue that topped analysts’ expectations, fueled by strong demand for KFC’s fried chicken.
• Net sales rose 11% to $1.61 billion, topping expectations of $1.59 billion. Across all of its chains, same-store sales increased by 5%. Wall Street was expecting same-store sales growth of 5.8%, according to StreetAccount estimates.
• KFC’s same-store sales climbed 6% after falling 4% a year ago. While growth in China, its largest market, was muted during the quarter, its home market saw same-store sales climb 4%.
• Pizza Hut reported same-store sales growth of 4% as international markets bounced back. In the United States, its same-store sales rose by just 2% as it faced tough comparisons to a year ago and staffing challenges.
• Taco Bell’s same-store sales rose 5% in the quarter and 8% on a two-year basis.
• The company reported fiscal third-quarter net income of $528 million, or $1.75 per share, up from $283 million, or 92 cents per share, a year earlier.

Teladoc Stock Rebounds From an Initial Drop After Earnings. We’ve Been Here Before. – Barrons, 10/28/2021

• Teladoc Health stock rebounded from a post-earnings drop shortly after the market opened on Thursday.
• The stock was rising after the virtual healthcare company’s third-quarter results beat expectations.
• Teladoc reported a third-quarter net loss of $84.3 million, or 53 cents a share, Wednesday after the market close.
• Revenue jumped 81% year over year to $522 million.
• Wall Street’s consensus estimates called for a net loss of 67 cents a share and revenue of $516.63 million, according to FactSet.
• Teladoc reported 52.5 million U.S. paid memberships, up 2% year over year and in line with Wall Street’s consensus estimates.
• Total visits increased 37% year over year to 3.9 million, exceeding analysts’ estimates of 3.5 million.
• For the fourth quarter, the company expects revenue between $536 million and $546 million, compared with the consensus call of $540 million among analysts tracked by FactSet.
• Teladoc expects total U.S. paid memberships to be between 52.5 million and 53.5 million, with between 3.9 million and 4.1 million total visits.

Twilio stock dives 13% after weak earnings guidance, COO’s announced departure – Marketwatch, 10/28/2021

• Twilio shares plunged late Wednesday after it projected a holiday loss double what analysts expected and announced the departure of its chief operating officer, even as the software company continued to post strong sales gains.
• Twilio reported a loss of $224.1 million, or $1.26 a share, on sales of $740.2 million, up from $448 million a year ago.
• Analysts on average were expecting an adjusted loss of 14 cents a share on sales of $681 million, according to FactSet.
• Shares plunged 13% in after-hours trading following the announcement, after closing with a 2.3% loss at $345.77.
• For the fiscal fourth quarter, Twilio, projected an adjusted loss of between 23 cents and 26 cents a share on sales of $760 million to $770 million.
• Analysts on average were projecting an adjusted loss of 10 cents a share on sales of $745 million, according to FactSet.
• The company also announced COO George Hu is leaving. Khozema Shipchandler, who has served as chief financial officer since late 2018, will add the COO role to his duties.

Hertz Posts Quarterly Profit on Travel Rebound – Wall Street Journal, 10/28/2021

• Hertz said it turned a profit for the third quarter as a continued rebound in leisure travel pushed its revenue higher.
• The car-rental company Thursday posted net income attributable to Hertz of $605 million, compared with a loss of $222 million in the same period last year. Revenue rose about 76% to $2.23 billion.
• Hertz said its corporate liquidity was $3.8 billion as of Sept. 30.
• The company said it expects liquidity of $3.9 billion to $4.1 billion at the end of the year.
• The company is seeing what it deems as strong bookings for the holiday season and is also betting on international travel returning, finance chief Kenny Cheung said.

MKS Instruments Q3 Earnings and Revenues Top Estimates – NASDAQ, 10/28/2021

• MKS Instruments came out with quarterly earnings of $2.79 per share, beating the Zacks Consensus Estimate of $2.75 per share.
• This compares to earnings of $1.93 per share a year ago. These figures are adjusted for non-recurring items.
• MKS Instruments posted revenues of $741.9 million for the quarter ended September 2021, surpassing the Zacks Consensus Estimate by 2.87%.
• This compares to year-ago revenues of $589.8 million.

Linde raises 2021 earnings guidance for third time – Reuters, 10/28/2021

• Linde, the world’s largest industrial gas company, on Thursday increased its 2021 earnings guidance for the third time, citing growth across all geographic segments and markets.
• The company reported quarterly adjusted earnings per share up 27% at $2.73, against a $2.66 forecast from analysts polled by Refinitiv.
• The U.S.-German company, which supplies gases such as oxygen, nitrogen and hydrogen to factories and hospitals, now expects adjusted earnings per share (EPS) growth of 28% to 29% growth. It had previously expected adjusted EPS to rise by 23-25%.