Target shares surge after company crushes earnings and raises forecast - CNBC

Target earnings and sales trounced analysts' estimates, marking a bright spot in retail after weak reports from department store chains J.C. Penney and Kohl's.

The big-box retailer also raised its profit outlook for the full year, ahead of the all-important holiday shopping season.

Its shares surged more than 10% in premarket trading on the news.

CEO Brian Cornell said the results are "further proof of the durability" of Target's investment strategy, as the retailer has an "unmatched suite of easy and convenient fulfillment options."

Here's what Target reported for its fiscal third quarter compared with what analysts were expecting, based on Refinitiv data:

• Earnings per share: $1.36, adjusted, vs. $1.19 expected
• Revenue: $18.67 billion vs. $18.49 billion expected
• Same-store sales: growth of 4.5% vs. up 3.6% expected

Target now expects full-year adjusted earnings per share to fall within a range of $6.25 to $6.45, compared with a prior estimate of $5.90 to $6.20. Analysts had been calling for earnings per share of $6.18.

Net income during the period ended Nov. 2 grew to $714 million, or $1.39 per share, compared with $622 million, or $1.17 per share, a year ago. Excluding one-time items, Target earned $1.36 per share, beating expectations for $1.19 a share, based on an analyst survey by Refinitiv.

Total revenue grew 4.7% during the quarter to $18.67 billion from $17.82 billion a year earlier, beating expectations for $18.49 billion.

Sales at Target stores open for at least 12 months and online were up 4.5%, better than expected growth of 3.6%.

The company said digital sales surged 31% during the quarter, with its same-day delivery options including buy online, pick up in store and curbside pickup accounting for 80% of digital sales growth.

Target said traffic during the third quarter was up 3.1%. The average transaction amount grew 1.4%.

For the fourth quarter, Target said it expects same-store sales to be up 3% to 4%.

Many analysts have been expecting Target to head into the holiday season with the wind at its back. The company has made investments to refresh its stores, open small-format locations in urban markets like New York and around college campuses, launch in-house brands — including a new grocery line — and add faster delivery options thanks to its Shipt platform for same-day shipments.

Cornell told CNBC's Becky Quick that when Target fulfills an online order from the back of its stores versus shipping from a distribution center, "about 40% of the cost goes away." He said when customers order online and pick up at a store, use curbside pickup or select shipping via Shipt, "about 90% of the cost goes away."

"When it's delivered by our stores ... those look a lot more like store economics," the CEO explained.

Meanwhile, Target has a partnership with Disney to open mini Disney shops in some Target stores. It also has teamed with the parent company of the Toys R Us brand, TRU Kids, to help relaunch and now run ToysRUs.com.

Target said in October it expected to spend $50 million more on payroll during the fourth quarter than it did a year earlier, in order to offer more overtime and increase the number of workers in stores at the busiest hours this holiday season. 2018 was Target's "most successful holiday in more than a decade," according to Cornell.

Big-box rival Walmart last week reported better-than-expected earnings and raised its profit outlook for the full year, building on the strength of its grocery business.

Target's stock has rallied more than 67% this year. The company has a market cap of $56.5 billion, compared with Walmart's $341 billion.

Read the full press release here.

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2019-11-20 11:19:00Z
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Lowe's shares jump after earnings top estimates despite revenue shortfall and 2019 forecast is boosted - CNBC

Lowe's on Wednesday reported quarterly earnings that beat analysts' expectations and raised its forecast for the year, but revenue fell short of projections.

The home improvement retailer also announced that it has restructured its Canadian leadership and plans to close 34 stores in Canada in the fourth quarter.

Shares of Lowe's were up more than 4% in premarket trading.

Here's what Lowe's reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $1.41, adjusted, vs. $1.35 expected
• Revenue: $17.39 billion vs. $17.68 billion expected
• Same-store sales growth: 2.2% vs. 3.1% expected

Lowe's now expects to earn $5.63 to $5.70 per share in fiscal 2019, on an adjusted basis, compared with a prior estimate of $5.67 per share.

In the third quarter ended Nov. 1, Lowe's said net income grew to $1.05 billion, or $1.36 per share, from $629 million, or 78 cents per share, a year earlier. Excluding items, the company earned $1.41 per share, topping estimates of $1.35 per share in the Refinitiv survey.

Sales grew $17.39 billion, just shy of analyst estimates of $17.68 billion.

Consolidated same-store sales grew 2.2%. Analysts were expecting a 3.1% gain. Sales at U.S. stores open at least 12 months rose 3%.

"We were pleased with the performance of our U.S. home improvement stores, which reflects a solid macroeconomic backdrop and continued progress in our transformation driven by investments in customer experience, improved merchandise category performance, and continued growth of our Pro business," CEO Marvin Ellison said in the earnings release.

Despite the store closures in Canada, Ellison said the company is "committed" to its Canadian operations.

"While making decisions that impact our associates and their families is never easy, closing underperforming stores is a necessary step in our plan to ensure the long-term stability and growth of our Canadian business," said Tony Cioffi, interim president of Lowe's Canada.

Since Ellison arrived in July 2018, he has focused on sales to professional contractors. In the second quarter, Lowe's credited its ability to grow U.S. same-store sales at a faster pace than its competitor Home Depot to the effort. Lowe's said it added 35,000 new pro customers in the second quarter.

Home Depot, however, has always had its stronghold in the professional space. About 45% of Home Depot's business comes from its professional customers, according to Jonathan Matuszewski, an analyst at Jefferies. By comparison, Lowe's gets about 20% to 25% of its sales from this group, he said.

Home Depot on Tuesday reported weaker-than-expected fiscal third-quarter sales, and cut its 2019 sales forecast, because its latest investments are taking more time than expected to pay off.

The Atlanta-based company said Tuesday it is in the process of improving its B2B website, which was created mostly for the company's pro customers. The site still requires underlying technical work before the company can move forward with additional elements.

Read Lowe's full press release here.

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2019-11-20 11:12:00Z
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Target, Lowe's, Apple, Alibaba and Boeing - 5 Things You Must Know Wednesday - TheStreet

Here are five things you must know for Wednesday, Nov. 20: 

1. -- Stock Futures Tumble on Doubts Over U.S.-China Trade Negotiations

U.S. stock futures fell Wednesday after China condemned a U.S. Senate resolution supporting human rights in Hong Kong and Donald Trump again threatened to increase tariffs if Washington and Beijing aren't able to negotiate a near-term trade agreement.

China's displeasure with the Senate resolution, known as the "Hong Kong Human Rights and Democracy Act," comes at a sensitive juncture in the trade negotiations following reports from China-backed media that Beijing won't accept an agreement that doesn't include the cancellation of tariffs from Washington.

Chinese Foreign Ministry spokesman Geng Shuang said the Senate move was designed to "bolster anti-China, extremist and violent radicals who attempt to disrupt Hong Kong," and cautioned that "all those attempts to interfere in or impede China's development will be in vain."

Trump, meanwhile, told a cabinet meeting Tuesday that "if we don't make a deal with China, I'll just raise the tariffs even higher." The president added China would need to offer a deal "I like" in order to complete the first phase of the the negotiations.

Contracts tied to the Dow Jones Industrial Average fell 111 points, futures for the S&P 500 were down 12 points, and Nasdaq futures tumbled 43 points.

The Nasdaq closed at another record high Tuesday, the only one of the three major stock indexes to finish in positive territory, as disappointing sales forecasts from Home Depot (HD - Get Report) and Kohl's (KSS - Get Report) , along with ongoing concerns about a U.S.-China trade agreement, pulled shares lower.

The Nasdaq rose 20.72 points, or 0.24%, to close at 8,570.66. The Dow sank 102.20 points, or 0.36%, to 27,934.02, while the S&P 500 slipped 1.85 points, or 0.06%, to 3,120.18.

2. -- Target and Lowe's Report Earnings Wednesday

Target's (TGT - Get Report) third-quarter earnings came in better than expected and the retailer raised its full-year profit guidance, sending shares up 10% in premarket trading to $121.90.

Lowe's (LOW - Get Report) posted stronger-than-expected third-quarter earnings and lifted its full-year profit guidance, offering a stark contrast to its larger home- improvement rival Home Depot (HD - Get Report)  which but trimmed its full-year sales guidance on Tuesday. Lowe's rose 4.45% to $118.45.

The economic calendar in the U.S. Wednesday includes Oil Inventories for the week ended Nov. 15 at 10:30 a.m. ET, and minutes from the Federal Reserve's Oct. 30 meeting at 2 p.m. 

3. -- Trump Will Tour Apple Plant on Wednesday

Donald Trump is scheduled Wednesday to tour an Apple (AAPL - Get Report)  manufacturing plant in Austin, Texas, where Mac Pro computers are made.

Apple CEO Tim Cook has established a strong relationship with the president as the tech giant faces U.S. tariffs on imports from China.

The Trump administration is currently considering whether to exempt Apple goods from a 15% tariff that took effect Sept. 1, covering about $110 billion in Chinese imports including the Apple Watch, AirPods and parts for the iPhone, according to Bloomberg.

Trump will visit the Austin factory where Apple contractor Flex Ltd. assembles some of the company's laptops. Treasury Secretary Steven Mnuchin and White House economic adviser Larry Kudlow are expected to accompany Trump.

"We're building the Mac Pro - Apple's most powerful computer ever - right here in Austin because we believe in the power of American innovation," Cook said in a statement released by the White House.

Apple is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.

4. -- Alibaba Raises More Than $11 Billion in Hong Kong Offering

E-commerce giant Alibaba (BABA - Get Report) said its roughly $11.3 billion offering on the Hong Kong Stock Exchange for institutional investors will be priced at HK$176 a share ($22.48), or about $HK88 billion.

An over-allotment clause in the sale of the 500 million shares could bring the total to $12.9 billion, just shy of the $13.4 billion first expected when it launched the offering earlier this month. The offering is likely to be the biggest of 2019.

"The company plans to use the proceeds from the Global Offering for the implementation of its strategies to drive user growth and engagement, empower businesses to facilitate digital transformation, and continue to innovate and invest for the long term," Alibaba said in a statement.

American depositary receipts of Alibaba traded in the U.S. fell 1.66% in premarket trading to $182.18.

5. -- Boeing Receives Order for 30 Dreamliners From Emirates

Boeing (BA - Get Report) received a firm order for 30 787 Dreamliners from Emirates, the Middle East's biggest carrier, in a deal valued at $8.8 billion.

The order replaces an agreement for 150 777x jets to 126 of that aircraft, and adds 30 of the 787-9 Dreamliners, said Emirates CEO and Chairman Sheikh Ahmed bin Saeed Al Maktoum, who spoke to reporters at the Dubai Airshow, the Associated Press reported.

Emirates on Monday announced it would be buying 20 additional wide-body Airbus A350s, bringing its total order for the aircraft to 50 in an agreement worth $16 billion at list price. The order replaces one that Emirates announced in February for 30 Airbus A350s and 40 A330Neos.

 

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2019-11-20 10:41:35Z
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As Oil Prices Drop And Money Dries Up, Is The U.S. Shale Boom Going Bust? - NPR

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Oil prices are down amid weak demand and investors no longer seem willing to write the industry a blank check. Spencer Platt/Getty Images hide caption

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Spencer Platt/Getty Images

The shale oil boom that catapulted the U.S. into the world's largest oil producer may be going bust. As oil prices drop amid weakening demand, bankruptcies and layoffs are up and drilling is down, signs of a crisis that's quietly roiling the industry.

Some of the most successful companies in the oil business are household names — think Exxon Mobil or Chevron. But the boom in shale drilling has been driven by smaller, independent operators. These companies have pushed the limits of drilling technology and taken big risks on unproven oil fields.

Today, shale accounts for about two-thirds of U.S. oil production and nearly all of the industry's growth, but many of the companies that made that growth possible are now struggling to stay afloat.

That has a lot to do with the business model of U.S. shale, says David Deckelbaum, an analyst at investment bank Cowen. "This is an industry that for every dollar that they brought in, they would spend two," he says.

For years operators focused on drilling lots of new wells very fast, prioritizing explosive growth over profitability. Until now they've been able to rely on deep-pocketed investors who were willing to pour fresh capital into the industry, despite years of lackluster returns.

It's a story that may be familiar to anyone who's been following the tech industry in recent years. Deckelbaum compares it to a kind of a prospector mentality.

"There's always this idea of this brand new play that's going to have billions of barrels of upside and if you can just get in early, then it'll pay off in the long run," he says.

Oil has always been a boom-and-bust industry. In 2014, for instance, a catastrophic price crash left the industry reeling. But even then, billions in new investment flowed into U.S. shale.

Today, shrinking global demand for oil is driving the price down once again. What's different this time around? Investors no longer seem willing to write the industry a blank check.

"I think now you've seen a lot of pressure of, 'We want you to be a real business. Your cost structure's too high, you have too much debt, I'm not funding your drilling anymore with external capital. You have to live within your own means,' " Deckelbaum says.

Without access to new cash, many producers are pulling back on exploration. The number of rigs drilling for new oil is at its lowest point in two years.

That's bad news for people like Ron Fountain, who works on a drilling rig in the Bakken shale of North Dakota. He thinks back to a few years ago, when the price of oil was over $100 a barrel and companies were drilling with abandon.

"That's when we were still booming," Fountain says. "There was rigs coming out every month. We couldn't keep up, there was so much work going on."

Today though, with more and more rigs sitting idle, life has become uncertain for Fountain and his fellow drillers.

"We went from having 3-year contracts to well-to-well contracts, which means you drill one hole and if you did a good job, then they'll give you another. Or they drop you and you gotta figure it out from there," Fountain says.

He's not the only one feeling the pinch. Halliburton, one of the biggest players in U.S. shale drilling, has laid off nearly 3,000 workers. In the Permian Basin, the country's most prolific oil field, employment has almost completely stalled out — after growing more than 11% last year.

Meanwhile, many of the smaller producers who piled up debt are struggling to pay it back. That has led to a wave of bankruptcies — nearly three-dozen so far this year.

All of this is adding up to slower oil output. Production was flat in the first half of 2019, after growing more than 20% last year, according to Department of Energy data. In theory, as production slows and supply shrinks, the price of oil should go back up, which could provide a much-needed boost. The question, Fountain says, is how many companies will be able to survive until then.

"I think as an industry we're going to be OK," he says. "But I think there's a lot of people that are kinda holding their breath."

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2019-11-20 10:01:00Z
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Alibaba on track to raise $12.9 billion in Hong Kong listing - CNN

China's largest e-commerce company is expected to price its shares at 176 Hong Kong dollars ($22.50) each, a person familiar with the matter told CNN Business. That's a roughly 3% discount to Alibaba (BABA) stock's closing price in New York, where it has traded since 2014.

The price falls short of the 188 Hong Kong dollars Alibaba had set as a ceiling last week, but it will still raise up to $12.9 billion, making it by far the largest public offering of the year.

"Secondary listings are an art form, not an exact science," said Jeffrey Halley, senior market analyst for Asia Pacific at Oanda.

Alibaba wants to make sure its Hong Kong listing generates a lot of interest, so "they're pricing at a level where I'm 100% sure those shares are going to be a lot higher on the day," he added.

The company declined to comment.

Alibaba stopped taking orders from retail investors a half day earlier than planned, after seeing stronger-than-expected demand for the secondary listing.

The enthusiasm is a vote of confidence in the Asian financial hub, which has been rocked by months of civil unrest. The Hang Seng Index (HSI) fell 4.8% last week as the city grappled with escalating levels of violence. So far this week, the index has gained around 2.2% despite a further escalation in violence centered around the siege of a university.

The company founded by billionaire entrepreneur Jack Ma raised $25 billion in an initial public offering on the New York Stock Exchange that shattered records as the largest IPO in history.

In the secondary listing, eight Hong Kong shares will be equal to one of Alibaba's New York-listed shares, the company said in a US regulatory filing last week.

The listing will surpass AB InBev's (BUD) roughly $5 billion IPO of its Asia business in Hong Kong earlier this year as well as Uber's (UBER) $8.1 billion debut in New York, the year's biggest so far. It could also cement the Hong Kong stock exchange's status as this year's largest venue for public offerings.

The offering is the latest sign that investors and companies have not been scared away by months of protests in Hong Kong, which recently sank into its first recession in a decade.

Alibaba is scheduled to list shares on November 26.

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2019-11-20 06:53:00Z
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US housing starts rebound; building permits at highest level in over 12 years - CNBC

A worker measures wood for a house under construction at the KB Home Vineyard Crossing Community in Livermore, California.

David Paul Morris | Bloomberg | Getty Images

U.S. homebuilding rebounded in October and permits for future home construction jumped to a more than 12-year high, pointing to strength in the housing market amid lower mortgage rates.

Housing starts increased 3.8% to a seasonally adjusted annual rate of 1.314 million units last month, with single-family construction rising for a fifth straight month and activity in the volatile multi-family sector rebounding solidly, the Commerce Department said on Tuesday.

Data for September was revised to show homebuilding declining to a pace of 1.266 million units, instead of decreasing to a rate of 1.256 million units as previously reported.

Economists polled by Reuters had forecast housing starts increasing to a pace of 1.320 million units in October.

Housing starts advanced 8.5% on a year-on-year basis in October. Building permits surged 5.0% to a rate of 1.461 million units in October, the highest level since May 2007. Permits were driven by the single-family housing segment, which increased 3.2% to the highest level since August 2007.

The housing market, the most sensitive sector to interest rates, has perked up in recent months, catching up to the Federal Reserve's monetary policy easing, which has pushed down mortgage rates from last year's multi-year highs.

The sector, which accounts for about 3.1% of the economy, however, continues to be hobbled by land and labor shortages. A survey on Monday showed confidence among homebuilders hovering near a more than 1-1/2-year high in November.

Builders, however, complained about "a lack of labor and regulatory constraints," adding that "lot shortages remain a serious problem, particularly among custom builders."

Housing starts shot up to a more than 12-year high in August. But momentum could slow, with mortgage rates backing up in the last two months.

The Fed last month cut rates for the third time this year and signaled a pause in the easing cycle that started in July when it reduced borrowing costs for the first time since 2008.

While fears of a recession have ebbed in recent months amid a de-escalation in trade tensions between the United States and China, the economy is still slowing amid a deceleration in consumer spending and persistent weakness in business investment and manufacturing.

The 30-year fixed mortgage rate is currently at 3.75%, still below its peak of 4.94% in November 2018, according to data from mortgage finance agency Freddie Mac.

Residential investment rebounded in the third quarter after contracting for six straight quarters, the longest such stretch since the 2007-2009 recession.

Single-family homebuilding, which accounts for the largest share of the housing market, increased 2.0% to a rate of 936,000 units in October, the highest in 9 months. Single-family housing starts rose in the West, Midwest and the populous South last month. They fell in the Northeast.

Starts for the volatile multi-family housing segment soared 8.6% to a rate of 378,000 units in October. Permits for the construction of multi-family homes increased 8.2% to a rate of 552,000 units last month.

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2019-11-19 13:30:00Z
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Stocks making the biggest moves premarket: Home Depot, Kohl's, Disney, Broadcom & more - CNBC

Check out the companies making headlines in the premarket Tuesday:

Home Depot — Home Depot shares dropped more than 5% in the premarket after the home improvement retailer reported disappointing same-store sales. The company said global same-store sales rose 3.6% in the previous quarter. Analysts polled by Refinitiv expected growth of 4.7%.

Kohl's — Shares of the retailer tanked more than 10% on the back of disappointing quarterly results. Kohl's reported earnings per share of 74 cents on revenue of $4.358 billion. Analysts polled by Refinitiv expected a profit of 86 cents per share on revenue of $4.399 billion. Same-store sales, a key metric for retailers, also missed expectations.

Boeing — The aerospace giant wrangled up 50 bids for its embattled 737 Max jet at the Dubai Air show. Air Astana, a carrier based in Kazakhstan, announced a letter of intent for 30 of the planes while an undisclosed buyer ordered 20 more.

MSG Networks — An analyst at Guggenheim downgraded MSG Networks to "sell" from "neutral," citing a "challenged negotiating position as it approaches contract renewals covering ~40% of its subscriber base." The stock fell more than 3% in light trading before the bell.

Broadcom — The chipmaker was upgraded to "overweight" from "equal weight" by an analyst at Morgan Stanley. The analyst also raised his price target on Broadcom to $367 per share from $298 a share, and noted he sees "possible value creation as it extends into software and builds on a current strong position in semis."

Disney — Multiple reports said hackers have stolen thousands of Disney+ accounts and put them up for sale on the dark web. News site ZDNet said prices for those accounts ranged from $3 to $11.

PG&E — The embattled California electric company is nearing a settlement of more than $1.7 billion with state regulators for maintenance failure of equipment involved in the 2017 wildfires, Bloomberg News reported, citing people familiar with the matter.

Alibaba — Alibaba will stop taking orders for its Hong Kong initial public offering earlier than expected amid strong demand, sources with direct knowledge of the matter told CNBC.

Medtronic — Medtronic shares gained 2% in the premarket on the back of better-than-expected quarterly numbers. The company posted earnings per share of $1.31 on revenue of $7.706 billion. Wall Street expected a profit of $1.28 per share on sales of $7.657 billion. The company also raised its fiscal 2020 earnings outlook.

—CNBC's Michael Bloom contributed to this report.

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2019-11-19 12:50:00Z
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