We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
As the Q3 earnings season gathers momentum, investors appear to be handsomely rewarding the companies that improve their revenue and earnings, provided there are also signs of improved visibility.
Here is a group of companies that were rewarded yesterday: Netflix (NFLX - Free Report) shares jumped 13.8%, Intuitive Surgical (ISRG - Free Report) 12.1%, Lockheed Martin (LMT - Free Report) 8.7%, and United Airlines (UAL - Free Report) 7.0%. Let’s see why-
Netflix
Netflix reported earnings of $3.10 per share that came in higher than the $2.11 estimated. Revenue came in about 1% higher than estimated.
The results may have been much better if it wasn’t for the strong dollar, which significantly impacted inflows from its international business. Investors cheered the fact that memberships continued to grow even if it was mainly driven by Asia, signaling that the pandemic-related disruption was probably over.
In the earnings release, management highlighted how Amazon and Disney lagged Netflix in engagement, both in the UK and the U.S. But competition is clearly heating up across geographies. Some on the street are saying that the lower-priced ad-supported plan is designed to target an increasingly competitive market. Others have argued the lack of sense in paying for a plan that comes with ads. But management remains optimistic about the launch next month. We’ll have to see how it goes.
Netflix is clearly better positioned than its peers today because they are in the initial investment phase and management is probably right in guessing that they’re making huge losses.
Intuitive Surgical
Intuitive Surgical’s earnings missed estimates by 1.1% but its sales beat by 2.2%.
Investors piled into the shares after management stated that the company’s business fundamentals strengthened in the third quarter, as reflected by the growth in its installed base, increases in utilization per system per year and solid performance across geographies.
General surgery was the strongest in the U.S.; Europe continued to grow and diversify with particular strength in Germany, the U.K. and Ireland, Italy, and Spain. Asia was also very strong. Despite the COVID-related shut-downs in China, procedure growth in the region did slightly better than the global average. Japan and South Korea also grew strongly.
Lockheed Martin
Lockheed Martin’s reported earnings of $6.87 beat the Zacks Consensus Estimate by 4.1%. Revenue missed by 1.4%.
The Aeronautics segment was the biggest driver of profit, along with the Space segment. Management attributed the increase in cash flows to the “timing of production and billing cycles (primarily the F-35 program” ($325 million of sales from the previous quarter was recognized in the last quarter). Demand remains strong but revenue continues to be impacted by supply chain issues.
Lockheed returns value to investors through dividends and share repurchases. The quarterly dividend was increased substantially (by $0.20 to $3.00 per share). Including the increase, the dividend yields 2.7%.
Management expects 2023 sales to be consistent with 2022 with growth returning in 2024.
United Airlines
United Airlines’ earnings beat the Zacks Consensus Estimate by 27.2% on sales that beat by 1.3%.
Better still, management said that Q4 revenue grew 13.2% over 2019 levels, total revenue per available seat mile (TRASM) grew 25.5% and even costs came in lower than expected. Additionally, holiday demand in the current quarter is expected to exceed 2019 levels as well.
General industry commentary was very positive, and similar to Delta, which reported earlier: “air travel is still in the COVID recovery phase, hybrid work gives customers the freedom and flexibility to travel for leisure more often, and external supply challenges will limit industry supply for years to come.” Management believes these trends will offset the effects of economic headwinds.
Netflix, Intuitive Surgical and Lockheed Martin carry #3 Zacks Ranks, which translates to a Hold Rating. United Airlines is ranked #2 (Buy).
One-Month Price Movement
Image Source: Zacks Investment Research
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
These Stocks Have Popped: Here's Why
As the Q3 earnings season gathers momentum, investors appear to be handsomely rewarding the companies that improve their revenue and earnings, provided there are also signs of improved visibility.
Here is a group of companies that were rewarded yesterday: Netflix (NFLX - Free Report) shares jumped 13.8%, Intuitive Surgical (ISRG - Free Report) 12.1%, Lockheed Martin (LMT - Free Report) 8.7%, and United Airlines (UAL - Free Report) 7.0%. Let’s see why-
Netflix
Netflix reported earnings of $3.10 per share that came in higher than the $2.11 estimated. Revenue came in about 1% higher than estimated.
The results may have been much better if it wasn’t for the strong dollar, which significantly impacted inflows from its international business. Investors cheered the fact that memberships continued to grow even if it was mainly driven by Asia, signaling that the pandemic-related disruption was probably over.
In the earnings release, management highlighted how Amazon and Disney lagged Netflix in engagement, both in the UK and the U.S. But competition is clearly heating up across geographies. Some on the street are saying that the lower-priced ad-supported plan is designed to target an increasingly competitive market. Others have argued the lack of sense in paying for a plan that comes with ads. But management remains optimistic about the launch next month. We’ll have to see how it goes.
Netflix is clearly better positioned than its peers today because they are in the initial investment phase and management is probably right in guessing that they’re making huge losses.
Intuitive Surgical
Intuitive Surgical’s earnings missed estimates by 1.1% but its sales beat by 2.2%.
Investors piled into the shares after management stated that the company’s business fundamentals strengthened in the third quarter, as reflected by the growth in its installed base, increases in utilization per system per year and solid performance across geographies.
General surgery was the strongest in the U.S.; Europe continued to grow and diversify with particular strength in Germany, the U.K. and Ireland, Italy, and Spain. Asia was also very strong. Despite the COVID-related shut-downs in China, procedure growth in the region did slightly better than the global average. Japan and South Korea also grew strongly.
Lockheed Martin
Lockheed Martin’s reported earnings of $6.87 beat the Zacks Consensus Estimate by 4.1%. Revenue missed by 1.4%.
The Aeronautics segment was the biggest driver of profit, along with the Space segment. Management attributed the increase in cash flows to the “timing of production and billing cycles (primarily the F-35 program” ($325 million of sales from the previous quarter was recognized in the last quarter). Demand remains strong but revenue continues to be impacted by supply chain issues.
Lockheed returns value to investors through dividends and share repurchases. The quarterly dividend was increased substantially (by $0.20 to $3.00 per share). Including the increase, the dividend yields 2.7%.
Management expects 2023 sales to be consistent with 2022 with growth returning in 2024.
United Airlines
United Airlines’ earnings beat the Zacks Consensus Estimate by 27.2% on sales that beat by 1.3%.
Better still, management said that Q4 revenue grew 13.2% over 2019 levels, total revenue per available seat mile (TRASM) grew 25.5% and even costs came in lower than expected. Additionally, holiday demand in the current quarter is expected to exceed 2019 levels as well.
General industry commentary was very positive, and similar to Delta, which reported earlier: “air travel is still in the COVID recovery phase, hybrid work gives customers the freedom and flexibility to travel for leisure more often, and external supply challenges will limit industry supply for years to come.” Management believes these trends will offset the effects of economic headwinds.
Netflix, Intuitive Surgical and Lockheed Martin carry #3 Zacks Ranks, which translates to a Hold Rating. United Airlines is ranked #2 (Buy).
One-Month Price Movement
Image Source: Zacks Investment Research