As Q4 earnings seasons draws to an end, here are some of the most notable company results of the period, including Tesla, Lululemon and Zoom’s, and their respective share price performances.
The fourth quarter was largely positive for both major firms, including companies like Lululemon, and up-and-coming listed companies such as Zoom, with, according to Zacks, an above-average proportion of them beating top-line expectations, but did post-earnings share price bounces follow?
Of the 266 S&P 500 members which reported fourth-quarter results through 4 February, total earnings were up 0.4% year-on-year, on 3% higher revenues as 70.7% of companies beat EPS estimates and 67.3% beat revenue estimates.
of the 266 S&P 500 companies that have reported which beat revenue estimates
The best performing sectors were technology and finance, in which total earnings were up 6.2% and 6.3% respectively. This was, however, the calm before the storm, prior to when the coronavirus pandemic rocked the markets. It is more than likely that, as a result of the disruption, results in the first and second quarters of 2020 could come in worse than expected. Indeed, FactSet believes there will be a 3.9% drop in net income for the S&P 500 in the first quarter, followed by a second-quarter 7% drop.
So, how did companies like Tesla, Lululemon and Zoom perform, and will their share price outlooks reflect earnings euphoria, or pandemic pain?
The electric car maker reported stellar fourth-quarter results at the end of January, with earnings per share of $2.14 compared with expectations of $1.72. Its revenue came in at $7.38bn, beating expectations of $7.02bn. Tesla’s share price spiked by around 13% following the news, rising as high as $917 in mid-February before coronavirus wobbles rocked the market.
Tesla has been boosted by ramping up vehicle production in China, thanks to the opening of its Gigafactory in Shanghai, as well as growth in the solar side of its business.
The apparel maker reported earnings of $2.28 a share in the fourth quarter, a rise of 38% on last year’s result of $1.65 a share, thanks to surging consumer demand. Sales climbed 20% to $1.4bn, with menswear sales, in particular, seeing a sharp uplift.
However, Lululemon, which closed its stores in China in February due to the coronavirus outbreak — later shutting outlets in the US and Europe in March — failed to give a full-year forecast due to the current uncertainty. Following a lull in mid-March, where the share price sunk to $138, its shares are currently hovering around $200.
Zoom Video Communications reported a 78% year-on-year fourth-quarter revenue rise to $188m. This beat analysts’ expectation of $177m. Its non-GAAP earnings per share came in at $0.15, more than double forecasts of $0.07.
The company, which is expected to benefit from employees resorting to its technology to contact each other during the pandemic-related lockdowns, has guided for first-quarter revenue to be between $199m and $201m. Analysts polled by Refinitiv are not as confident, expecting revenues to come in at around $186m.
Zoom’s share price has risen 105% year-to-date up to 26 March.
The payments processing firm posted adjusted net income of $0.23 per diluted share for its fourth quarter, beating analyst expectations of $0.21. Its net revenue jumped by 40% year-on-year to $1.31bn from $932.5m. Strong demand for products such as Cash App and The Cash Card drove gains.
In February, Square’s share price climbed 11.2% to end the month at $83, but it has fallen since to $54, battered by challenges posed by COVID-19.
For 2019, Barclays recorded a 9% increase in pre-tax profits to £6.2bn, with total income up 2% to £21.6bn
Investment and corporate banking revenues rose 5% year-on-year to £10.2bn, while pre-tax profits rose 15% to £3.1bn. The bank’s share price has dropped from 181.32p in mid-February to 98.47p on 27 March, falling 46% as concerns over the coronavirus pandemic have rocked the markets and the global economy. The cut in UK interest rates on 11 March has added to the bank’s difficulties.