Keep an eye on PETQ tomorrow. They make pet medications and are growing at an impressive pace: 98% quarter-over-quarter sales growth and 39% earnings per share growth. PetIQ just absolutely crushed earnings estimates, reporting $0.64 while the market expected 0.38! They also raised their full-year guidance. More importantly, the stock is up 15% after the close and it is trading at new all-time highs near $32. 37% of its tiny 14-million-shares float is short. There’s a decent potential for a short squeeze in the next few days with a target 35-40.
Here are some interesting comments on Twitter that add a fresh perspective to PetIQ’s numbers:
Crazy $PETQ trades just 1.8X EV/Sales while other animal medication peer $HSKA trades 5.4X and w/ much slower growth!
While most emerging markets are under pressure, U.S. stock indexes are still trading near all-time highs. How long can this decoupling persist?
Can the record corporate earnings and sales growth alleviate the fear of emerging markets’ contagion? So far the answer is a resounding Yes as dip buyers continue to be active on the slightest pullbacks.
It’s not all sunshine and rainbows in the U.S. markets either. While retailers and software stocks are crushing estimates and breaking out, homebuilders are near 52-week lows. Maybe rising interest rates are finally starting to matter for some sectors or at least the market believes they will matter for future earnings.
Match Group, which owns Tinder and various other dating applications crushed earnings estimates again and it is trading near $44 per share in the after-hours session. They reported earnings per share of $0.41 vs $0.16 for the same quarter last year. Analysts expected $0.35. The surprise is not huge but it might be enough to fuel some upside momentum tomorrow.
Keep in mind that 50% of MTCH’s 62 million shares float is short. The short sellers are backed against the wall and they will try to fade MTCH tomorrow morning. If MTCH can stay above $45 after the market opens on Wednesday, we might see it attack its all-time highs near 48.65. Above it, there’s a potential for a monster short squeeze.
Here’s Tinder’s Chief Product Officer, Brian Norgard on the latest numbers:
-Tinder average subs were 3.8MM in Q2 2018, increasing 299,000 sequentially & 1.7 million YOY -Total Revenue grew 36% over the prior year quarter to $421MM -Operating income was $150MM, an increase of 81% over the prior year quarter
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Chinese tech stocks might be trouble but their U.S. counterparts are hitting of all cylinders. And there are good fundamental reasons: 75% of the S&P 500 companies reported earnings already. So far, the average year-over-year earnings growth is 30%, the average y/y sales growth is 10%. We haven’t seen such high growth rates since 2010.
We take a look at some new and some old ideas: SEND, DOCU, FIVE, NKE, DIS, BL, MELI, NVDA, AAPL, TWLO, ETSY, AMGN, SGEN, MYGN, and others.
Netflix reported a 467% earnings growth a couple weeks ago and it still sold off.
Amazon announced a 999% earnings growth and 39% sales growth. Its numbers were double the average analyst’s estimates and it still sold off.
Shopify just beat the estimates by 170%. They reported earnings per share of 2 cents while analysts expected a loss of 3 cents per share. SHOP gapped down and it is currently trading more than 20% below its all-time highs.
Reaction to earnings is a lot more relevant than the earnings themselves. A triple-digit growth or triple-digit earnings surprise is not essential if the market has already discounted it. What matters more from a practical point of view is the market reaction. If a company reports earnings and its stock gaps up to new 52-week highs and closes near the highs of its daily range, then the market was truly surprised and this stock probably has more upside ahead.
In its struggle to be forward-looking, the market can often act counter-intuitively to many. Short-term tops are often formed when a stock sells off on what appears to be great news on the surface. Short-term bottoms are often created when a stock rallies on bad news.