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Investors were hoping for a better full-year outlook for Home Depot.

This week, Home Depot reported its third-quarter earnings, and the results were somewhat mixed. The company barely beat earnings expectations but fell short on its revenue and same-store sales. 

And more importantly, the company’s full-year forecast was less than inspiring. Here is an overview of Home Depot’s third-quarter earnings results:

• Earnings: $3.53 per share, as opposed to $2.52 forecasted
• Revenue: $27.22 billion, as opposed to $27.53 billion forecasted
• Same-store sales: 3.6% growth, as opposed to 4.7% forecasted

Home Depot’s growth is slower than expected

Home Depot has been investing heavily in improving its stores over the past year. The company has been working on improving its stores, IT systems, and supply chain. 

But unfortunately, these investments haven’t paid off quite yet. These investments caused the company’s revenue to take a hit during the third quarter. And now, company management believes they will affect its full-year guidance. 

According to CEO Craig Menear, Home Depot is starting to see positive results from these investments, but the payoff is taking longer than anticipated. Menear added that the company needs to improve its digital channels as well. 

Home Depot has been working on improving its digital presence, but the process is “more complex” than company management expected. 

For instance, a big part of the company’s business is catering to professional contractors. 45% of Home Depot’s customers are contractors, which is much larger than its competitor Lowe’s. 

So Home Depot has been working on maintaining its stronghold in the professional contractor space. The company is currently working on updating its B2B website, but it has encountered a number of unexpected technical issues.    

Final thoughts

There was some good news for Home Depot during the third quarter. For instance, its average ticket price increased to $66.36 per customer. And its sales per square foot increased to $449.17.

And overall, analysts seem to be positive when it comes to Home Depot. A Jefferies analyst pointed to the strength of the home improvement industry as a good sign for Home Depot. More affordable housing and lower interest rates have given the industry a boost in recent years.

The company’s shares are trading slightly lower this week, but this could present a good buying opportunity for interested investors. 

During the third quarter, Macy’s revenue and same-store sales growth fell short.

Macy’s reported its third-quarter earnings results on Thursday before market open and heading into it, no one was feeling too optimistic. The retailer has struggled for the past couple of years, and its stock is currently down 54%.

And unfortunately, Macy’s lowered the bar even further with its latest earnings report. The company beat investors’ expectations on earnings, but it fell short on sales and cut its full-year guidance. 

Here is an overview of the company’s third-quarter earnings report:

• Earnings: 7 cents per share, investors expected the company to break even
• Revenue: $5.17 billion, as opposed to $5.32 billion forecasted
• Same-store sales: Sales dropped 3.5% whereas investors expected a 1% drop 

What happened during the third quarter?

Things went from bad to worse for Macy’s during the third quarter. The company fell short on nearly every goal post and didn’t really have a compelling reason for its latest earnings mishap.

Macy’s did manage to beat expectations when it came to earnings, but this isn’t saying too much. Investors were expecting the company to break even, and it’s earnings did come in at 7 cents per share. But a year earlier, the company’s earnings were 27 cents per share. 

And the company’s net sales fell 4.3% to $5.17 billion, and its comparable sales fell 3.9%. And Macy’s slashed its full-year guidance for same-store sales and earnings.

On a conference call with investors, CEO Jeff Gennette said an unusually warm fall was to blame for the company’s disappointing sales. He added that low international tourism and weak turnout at lower-tier malls contributed to the company’s poor performance as well. 

Can Macy’s turn things around?

A Macy’s turnaround is possible, but it’s unlikely if the company continues with its current strategy. Blaming warm weather for its poor sales is an odd strategy, especially considering that this wasn’t a problem experienced by other retailers. 
And Wall Street doesn’t seem to be too optimistic when it comes to the company. Not one analyst reviewing the stock recommends buying it. Macy’s is going to need to seriously re-evaluate its strategy if it hopes to turn things around in the future.

The company’s third-quarter earnings and full-year guidance beat investor expectations.

The pressure was on for Target this week as it prepared to deliver its third-quarter earnings report. Walmart managed to exceed Wall Street expectations with its recent earnings report last week, and Target investors were looking for the company to do the same.

Fortunately, Target’s third-quarter earnings did not disappoint. The company’s earnings, revenue, and same-store sales were up, and the company raised its full-year guidance. As a result, Target’s share rose 10% in premarket trading.

Here is an overview of Target’s third-quarter earnings report:

• Earnings: $1.36 per share, as opposed to $1.19 forecasted
• Revenue: $18.67 billion, as opposed to $18.49 forecasted
• Same-store sales: Up 4.5%, as opposed to 3.6% forecasted

An overview of Target’s Q3 earnings

During the third quarter, Target’s revenue grew 4.7% to reach $18.67 billion, which exceeded investor expectations of $18.49 billion. Earnings and same-store sales growth also beat investor expectations.

And the good news didn’t end there; management also raised Target’s full-year earnings guidance. For 2019, Target expects its earnings to fall between $6.25 and $6.45, which is up from previous estimates of $5.90 to $6.20.

But the biggest news for Target may have been its same-store and digital sales growth. The company has been investing heavily in its stores and began offering the grocery delivery service Shipt.

And these investments seem to have paid off; the company’s sales-store sales grew by 4.5%, and digital sales grew by 31% during the third quarter. 80% of the company’s digital sales were either in-store pickups, curbside pickups, or same-day delivery.

Now the company is preparing to head into the holiday shopping season. In October, the company warned investors that it expects to spend an additional $50 million on hiring and increasing overtime hours during the holiday season.  

Intense retail competition lies ahead for Target

Target continues to increase its revenue and drive more customers to its website and stores. This growth is largely thanks to the company’s in-store improvements and focus on building out its digital presence. And the company’s stock is currently up 67% year to date. 

But as Target continues to improve its services, Walmart and Amazon are doing the same thing. Amazon is offering 2-hour delivery with Amazon Fresh, and Walmart continues to strengthen its grocery business as well. It remains to be seen how Target will be able to fight against the increasing retail competition in the coming years. 

Aurora Cannabis stock dropped for a third consecutive day.

Shares of Aurora Cannabis fell to a new all-time low after the company released a disappointing earnings report last week. During the fiscal first quarter, the company’s revenue fell by 24%. 

Its wholesale cannabis revenue was down by 49%, and Canadian sales of its recreational marijuana fell by 33%. And the company continues to burn through its free cash flow.

Aurora Cannabis blamed these recent losses on an insufficient number of retail cannabis stores in Canada. And there may be some truth in this since Canopy Growth, Cronos Group, and Tilray all shared disappointing earnings reports as well. 

But it’s getting harder for investors to make justifications for the flailing cannabis industry. Here are three things to know about Aurora Cannabis going forward.

1. The company’s medical cannabis sales are up

One of the few bright spots in the first-quarter earnings report is that the company’s net sales of medical cannabis increased by 3%. It wasn’t a huge increase, but it’s something. And the company’s active medical cannabis patients increased by 8% from the previous quarter.

And the company’s international medical cannabis sales grew 11% from the previous quarter. The demand for medical cannabis should continue to grow in the coming years, so this presents a significant opportunity for Aurora. 

2. Canada is still rolling out its second wave of cannabis regulations

Canada’s next wave of cannabis regulations is often referred to as “Cannabis 2.0.” Initially, Canadian cannabis sales were limited to dry flowers, capsules, and tinctures. As of Oct. 17, this list expanded to edibles, beverages, and vaping products.

However, sales of these products won’t start until at least mid-December. This delay is because Health Canada requires a 60-day notification period for all new products. The sales growth will be slow at first, but we should see things start to pick up midway through 2020. 

3. Aurora’s headwinds will end eventually — but when? 

And finally, many of the headwinds Aurora Cannabis is facing are temporary. These issues will take time to work out, as the company acknowledged on the earnings call. But the question is, when will they be resolved? And will investors still be on board if and when that happens? 

Wall Street is currently divided on the stock, with about half of analysts recommending to buy the stock. The other half recommend selling or holding the shares. What Aurora Cannabis needs now is to find a way to show investors that it has a realistic path to profitability.

Disney is riding high after the successful launch of its streaming service.

Last week, Disney + launched in the U.S., Canada, and the Netherlands, and the early numbers were impressive. The streaming service landed over 10 million subscribers on its first day. And the service still has yet to launch in Australia, New Zealand, and Western Europe.

Many users did complain about technical glitches, but overall, the launch was a huge success, and Disney’s stock rose more than 7%. Here are four things you should know about the Disney+ launch and what this means for the company’s stock going forward.

1. The company expects to gain 60 to 90 million subscribers

Disney has big plans for its subscription service, and last April, the company stated it expects to add 60 to 90 million new subscribers by 2024. The company anticipates that one-third of those subscribers will be located in the U.S.

The company’s strong early numbers put it on track to reach its goal. If anything, Disney management underestimated how successful the streaming service will be. 

2. Disney will lose some of its early subscribers

Of course, Disney will lose some of the early subscribers that signed up on promotional plans. Over the summer, the company ran a discounted three-year promotion. 

And the company offered Verizon customers a free seven-day trial. So some of those customers will probably jump ship when the free trial is over. 

3. Disney’s legacy content is the real draw

Disney+ launched with a variety of original content, including the series The Mandalorian, which is based on the Star Wars franchise. Disney’s original content was well-received by customers, but when it comes to Disney+, the real draw is the company’s legacy content. 

Its current subscribers want access to Marvel, Star Wars, and Pixar movies. But at some point, Disney will need a way to expand its service beyond its current customers, so it will need to grow its library of original content. 

4. Wall Street is optimistic about Disney+

In spite of the successful launch, Disney has stated that it doesn’t expect the service to be profitable until 2024. And the company will likely take some heavy losses in the meantime.  

But right now, Wall Street is very optimistic when it comes to Disney+, and the stock is considered a strong buy. According to a Bank of America analyst, the new streaming service’s growth could cause the company’s stock to rise by 20% over the next year.

The company’s first post-IPO earnings report disappointed investors.

This week, SmileDirectClub released its third-quarter earnings report, which is its first earnings report as a publicly-traded company. However, the results failed to excite investors, and the company’s shares fell more than 20%. 

SmileDirectClub fell short on earnings, revenue, and its fourth-quarter guidance. Here is an overview of what happened during the third quarter, and what this means for SmileDirectClub going forward.

An overview of SDC’s earnings report

During the third quarter, SmileDirectClub earned $180.2 million in revenue, falling short of the $207.6 million analysts were expecting. And the company reported net losses of $0.89 per share. Analysts were expecting the company to lose money, but they were only anticipating losses of $0.04 per share.

SmileDirectClub’s fourth-quarter guidance also fell short of Wall Street’s expectations. And the company’s legal expenses doubled from a year earlier due to stronger regulations on online dental companies.

However, it wasn’t all bad news for SmileDirectClub. Although revenue wasn’t as high as Wall Street had forecasted, it is up more than 60% from a year earlier. Shipments for the company’s clear dental aligners grew by 47% year over year. And the company’s average sale per item is up from a year earlier, from $1,773 to $1,788.

SmileDirectClub expects its full-year revenue to fall between $750 million and $755 million. This is slightly higher than what analysts were calling for and would represent growth of more than 70% from a year earlier. 

What’s next for the company?

A huge part of being a publicly-traded company is learning how to manage investor expectations. And this was where SmileDirectClub really fell short this month. Often, earnings reports are less about what’s being said and more about how management delivers the news. 

SmileDirectClub went public in September, and its share fell by 28% within its first day of trading. This made the company’s public debut the worst IPO of 2019 for a company valued at over $1 billion. 

However, it’s too soon to rule out the company’s chances for success after just one earnings report. The company is still considered a strong buy on Wall Street, with an average price target of $21.11. This represents a potential upside of more than 133%. 

Netflix is dealing with increased competition and the loss of some of its licensed content.

It’s a tough time to be in the streaming business, especially if you’re Netflix. The company has been under fire for the past six months, ever since Disney and Apple announced they were launching streaming services. 

This week, Disney+ launched amidst major fanfare from Wall Street, though not without some technical difficulties. And many people are wondering how Netflix will deal with this competition in the coming months.   

Significant headwinds lie ahead for Netflix

Netflix certainly isn’t without its challenges. One of the biggest challenges the company faces is its reliance on pricing. Periodically, the company needs to raise its prices to continue to appease investors and grow its revenue. But this is a delicate balance because if it raises prices too high, many of its customers could jump ship.

Netflix did raise its prices earlier this year in the U.S. and internationally, and it experienced minimal customer churn. But it’s unclear how long the company will be able to continue raising its prices without losing customers.

Another challenge Netflix will need to deal with is that it continues to lose its most popular shows. Some of the company’s most popular shows are not content created by Netflix. Instead, they are licensed content that Netflix was permitted to broadcast.

But now, many of the networks that created these shows are launching streaming services of their own. So Netflix continues to lose some of its most popular content, like The Office and Friends. In all, Vox reported that Netflix could lose up to one-fifth of its content. 

And this is where Disney has a substantial advantage over Netflix. Disney doesn’t have to rely on licensed content because it has a huge archive of movies. And Disney plans to have a library of over 7,500 television shows. 

What is Wall Street saying about the streaming wars?

One advantage Netflix does have is that it has already been in the streaming market for over 20 years. This gives the company a dominant position over companies like Apple and Disney.

And overall, Wall Street seems to be optimistic about the company’s prospects. For instance, a Raymond James analyst said he believes that the streaming wars are overblown and that analysts will get more comfortable with the increased competition. 

Netflix is considered a moderate buy, and the average price target is $373.69. This price target gives the company a potential upside of more than 28%. 

Wall Street has high hopes for Disney+.

Disney recently released its fourth-quarter earnings report, which largely missed Wall Street’s guidance. The company’s earnings were down 28% from a year earlier, but analysts seemed more than willing to overlook this fact.

The reason? Disney’s new streaming service launches in the U.S. today. 

Here is an overview of the new service, what Wall Street is saying about it, and what this could mean for Disney going forward.

An overview of Disney+

Disney+ is Disney’s highly anticipated streaming service, and it launches this week. The service will be released across the U.S., Canada, and the Netherlands on Nov. 12. 

It will roll out across the rest of the world through the remainder of November. This mostly depends on how quickly the company was able to gain access to its library across various countries.

The service will cost $6.99 per month and is expected to be a hit with consumers. When the service launches, it will offer classic Disney movies as well as tons of original content. The company is launching a TV series called “The Mandalorian,” which will be based on the Star Wars universe. 

Analysts have high expectations for Disney+ and are already singing the company’s praises. One Goldman Sachs analyst believes the draw for Star Wars fans alone will be enough to build Disney’s subscriber base.

A MoffettNathanson analyst expects the service to reach eight million subscribers by the end of 2019. Another analyst from Wells Fargo agrees and believes the company will reach 21 million subscribers by the end of fiscal 2020.

The stakes are high for Disney

The anticipation over the pending “streaming wars” has been building over the past six months. Disney has a lot riding on its new streaming service, and it needs this service to transition away from cable successfully.

Fortunately, the company seems to be off to a good start. Disney snagged distribution deals with both Verizon and Amazon customers, which should help the company add millions of additional subscribers. 

Plus, the company has seen significant demand from consumers for this service. Disney CEO Bob Iger has stated that the company is feeling positive that consumers will embrace the new streaming channel. And one analyst agreed and stated that, “We might be underestimating the size of the first year of launch.

Alibaba broke sales records in the world’s largest one-day shopping event.

Alibaba is known for breaking sales records during Singles Day, its annual 24-hour e-commerce shopping event. And this year is no exception, with the company surpassing its previous record of more than $30 billion.

This event comes at a time when the Chinese economy is starting to slow down, and trade war tensions still exist between the U.S. and China. Let’s look at what happened during the sale, and what this means for the Chinese economy going forward. 

What is Singles Day?

Most American consumers are familiar with Black Friday, Cyber Monday, or even Prime Day. But these three retail events actually pale in comparison to China’s Singles Day, the world’s biggest shopping event. 

The Chinese e-commerce company Alibaba created the retail event in 2009. It takes place every year on Nov. 11, begins at midnight across Singapore and Hong Kong, and lasts for 24 hours. 

As of yet, not many U.S. retailers participate in Singles Day. But that may be a mistake, since the one-day event earns more than Black Friday and Cyber Monday combined.

In 2018, Black Friday brought in $6.2 billion in sales, and Cyber Monday brought in $7.9 billion. But Singles Day 2018 brought in a record of more than $30 billion. 

And this year, the event’s sales surpassed $13 billion within the first hour. After an hour and a half, the event brought in more money than it earned in 2016.  

What does this mean for the Chinese economy?

This blowout sale comes at a time when the Chinese economy is starting to slow down. Alibaba is also facing stronger competition from rivals like JD.com and Pinduoduo. However, neither factor seemed to hinder the company during this annual event.

Many U.S. companies don’t participate in Singles Day, but some do, like Amazon, Bed Bath & Beyond, and Apple. In spite of ongoing trade war tensions, it doesn’t appear that Chinese consumers snubbed any U.S. companies. 

We can expect to see the final Singles Day numbers shortly after the event ends. These figures could have a substantial impact on both Alibaba and smaller companies that use its platforms.

The company blamed its Q3 earnings miss on poor Google search visibility.

On Thursday, shares of Expedia took a beating after the company released its third-quarter earnings report. The company’s earnings, revenue, and full-year guidance fell short of Wall Street’s forecasts. 

Overall, it was a bad day for the travel industry as a whole. The online travel company TripAdvisor saw its shares fall by more than 20% as well, thanks to poor third-quarter earnings.

In fact, the two companies experienced many of the same problems. Here is an overview of Expedia’s third-quarter earnings report and what we can expect from the company going forward.  

What happened during the third quarter?

During the third quarter, Expedia earned $3.56 billion in revenue, which slightly missed forecasts of $3.58 billion. The company’s non-GAAP earnings were $3.38 per share, whereas investors were expecting earnings to hit $3.80 per share. 

However, it wasn’t all bad news for Expedia. The company’s gross bookings increased by 9% to reach $26.9 billion. And the company’s lodging revenue increased by 11%. 

But Expedia’s air travel revenue was down by 3%, and the company saw a 10% decrease in revenue per ticket. According to the company, this was caused by a reclassification of partner fees.

Ultimately, it was the company’s full-year guidance that put the final nail in the coffin. For 2019, investors were expecting earnings to increase by 12% to 15%. But because of the company’s third-quarter miss, it only expects its earnings to increase by 5% to 8%. 

What’s next for Expedia?

Both Expedia and TripAdvisor said that recent changes in Google’s algorithm contributed to decreased earnings. Both companies saw a drop in organic search results since the new Google algorithm favors paid advertising. 

After the earnings call, many Wall Street analysts downgraded the company or lowered its price target. A JMP Securities analyst said he believes the company’s SEO headwinds will persist well into the fourth quarter, affecting the company’s profitability.

The company is considered a moderate buy, with an average price target of $135.93. The drop in Expedia’s shares could present a good buying opportunity, but investors may want to wait and see how the company fairs during the final few months of the year.