Lowe's Q4 Earnings & Sales Beat Estimates, Comps Rise Y/Y

AST SpaceMobile ASTS is set to report its fourth-quarter 2024 results on March 3, after the closing bell. In the last reported quarter, the company's bottom line fell short of the Zacks Consensus Estimate by 6 cents. It is expected to report a top-line improvement year over year, backed by healthy momentum in both the government and private sector.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Factors at Play

During the quarter, ASTS has effectively deployed its initial set of five commercial satellites. The company highlighted that the BlueBird 1-5 satellites represent the largest commercial communications arrays to be sent into low Earth orbit. Utilizing large phased array antennas, AST SpaceMobile's technology is backed by more than 3,450 patents and patent-pending claims. This design aims to deliver worldwide cellular coverage by eradicating dead zones and providing space-based broadband to areas that lack service. By connecting directly to standard smartphones at broadband speeds, these advanced phased arrays eliminate the need for special equipment.

In the quarter under review, Space Development Agency has selected ASTS for various prototype demonstration projects under the Hybrid Acquisition for proliferated Low-earth Orbit program. The strategic collaboration with SDA will allow ASTS to develop cutting edge space based technologies for several government applications. 

ASTS has entered into a definitive agreement with Vodafone Group. The partnership, which extends through 2034, will allow Vodafone to provide space-based cellular broadband services in its home markets and across its Partner Markets program, helping to expand broadband coverage globally. The company is steadily extending its collaboration with major telecom players in the United States, such as AT&T and Verizon, to tap into a pre-existing pool of cell customers as well as avail funds to expedite the development of its worldwide satellite network. These developments will likely have a favorable impact on the company’s earnings.

The company inked a partnership with Cadence Design Systems to augment its cellular satellite service by leveraging the latter’s system tools, high-speed SerDes PHYs and controllers on the AST5000 ASIC chip. Utilizing Cadence’s specialized hardware components, ASTS aims to cater to the burgeoning bandwidth requirements straining the existing cloud data center server, storage and networking infrastructure. This will bolster ASTS’ portfolio and improve its prospects in the emerging market of direct-to-cell connectivity.

For the December quarter, the Zacks Consensus Estimate for total revenues is pegged at $3 million. The company didn’t generate any revenues in the fourth quarter of fiscal 2023. 

The consensus estimate for adjusted earnings per share indicates a loss of 15 cents per share. It incurred a loss of 35 cents per share in the year-ago quarter.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for AST SpaceMobile this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AST SpaceMobile, Inc. Price and EPS Surprise

AST SpaceMobile, Inc. price-eps-surprise | AST SpaceMobile, Inc. Quote

Zacks Rank: AST SpaceMobile currently has a Zacks Rank #3.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Marvell Technology MRVL is set to release quarterly numbers on March 5. It currently has an Earnings ESP of +2.77% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Gap GAP is scheduled to report quarterly numbers on March 6. It has an Earnings ESP of +11.55% and carries Zacks Rank of 3.

The Earnings ESP for Costco Wholesale COST is +0.14%, and it has a Zacks Rank of 2. The company is scheduled to report quarterly numbers on March 6.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

By Steve Goldstein

Fund manager says Magnificent 7 stocks are cheaper than Costco

The countdown to the latest Nvidia earnings - and the fate of the broader stock market - is just over 24 hours away.

Ahead of whatever Jensen Huang & Co. announces, let's look at another highflying stock: Costco Wholesale (COST).

Christopher Bloomstran, the president and chief investment officer St. Louis-based investment manager Semper Augustus Investments, is probably best known for his takes on Warren Buffett and Berkshire Hathaway (BRK.B), and Bloomstran did devote 65 pages in his 168-page annual letter to the Nebraska conglomerate, his top holding. Bloomstran's view is that Berkshire Hathaway's gigantic cash position gives it a war chest "to take advantage of certain volatility and disruption" in the future.

Related: Warren Buffett's waiting for a 'wild swing' to the downside for stocks, says veteran Berkshire watcher

But it's Bloomstran's discussion of Costco that we'll focus on here. It's not often you have a fund manager explaining why his own investment is overvalued, as he also expressed regret at his periodic sales of the stock.

"The stock compounded at 19.7% annually over our 21 3/4-year holding period," he says. "That's turning each $1 million into $50 million. By comparison our stocks in aggregate earned 11.4% annually over 26 years, turning each $1 million into $16 million. Any Costco share sold in retrospect was a monumental error of commission," he says.

Granted, he didn't expect Costco's price-to-earnings multiple to grow from 18.7 to 56.9, for a company with what he calls a "lowly" 2.9% profit margin.

"Capitalizing a 2.9% margin at 56.9x equates to 165% of sales, very rich for a 2.9% margin. By contrast, the aggregate of the Mag 7 trades for 8.7 times sales. Oddly the Mag 7 at a 33.1x P/E is less expensive than Costco," he says.

Since square footage grows at about 2.5% per year, total sales growth ranging from 6% to 7.5% sounds reasonable, he says. Even assuming it makes another special dividend - the last one came in December 2023 - its dividend yield is 0.99%. And its margin improvement will likely be modest.

He put together three five-year scenarios - a bear case with 6% sales growth and 3% margins, a base case with 6.5% sales growth and 3.2% margins and a bull case with 7.5% sales growth and a 3.5% margin. In those scenarios, expected returns range from a 2.4% annual loss to earning 5.6% per year.

Other than hyperinflation, there isn't a scenario where Costco is deserving of a 56.9x multiple, he says. "In the short term all bets are off, but in the long term, Mr. Market will exact rationality on price," he said.

His broader message is that there are parallels between now and the 1998-to-2000 period, and not just in the megacap tech stocks, pointing to Eli Lilly (LLY) and Walmart (WMT) as other expensive large-cap stocks. "Atop the market are several very expensive companies, mostly large U.S.-based; and much of everything else, from mid- and small-capitalization shares to international and emerging markets are at much more reasonable levels," says Bloomstran.

The market

U.S. stock futures (ES00) (NQ00) weakened after the S&P 500 SPX finished at its lowest level since mid-January. Bitcoin (BTCUSD) traded below $90,000, and the yield on the 10-year Treasury declined.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              5983.25    -2.15%  -0.48%  1.73%   18.02% 
   Nasdaq Composite                                                     19,286.92  -3.69%  -0.28%  -0.12%  20.72% 
   10-year Treasury                                                     4.347      -20.90  -19.10  -22.90  4.58 
   Gold                                                                 2955.6     2.14%   7.75%   11.98%  44.81% 
   Oil                                                                  70.8       0.33%   -3.15%  -1.49%  -8.76% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Home Depot (HD) reported stronger-than-forecast fiscal fourth-quarter earnings. Super Micro Computer (SMCI) faces a deadline to file updated financials.

Hims and Hers Health (HIMS), whose stock plunged last week after Novo Nordisk said there was no longer a shortage of Ozempic, again faced shareholder wrath despite a sales outlook ahead of Wall Street expectations. Novo Nordisk (NVO) shares jumped 4% in premarket trade.

Zoom Communications (ZM) late Monday narrowly missed Wall Street sales estimates.

The Case-Shiller home-price is due for release along with consumer confidence data.

Best of the web

The U.S. economy depends more than ever on rich people.

Earnings estimates are flatlining. This strategist says stop buying stocks.

Why AI spending reminds Jim Chanos of the fracking bubble.

The chart

Every day the U.S. Treasury reports not just on the size of the debt, but also the revenue coming in. One internet user - @wabuffo - put together this table, on just the average withheld income and employment taxes from federal employment. The growth rate does tend to be erratic but at 3% year-over-year, there's no discernible deterioration from the highly publicized job cuts.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   PLTR    Palantir Technologies 
   SMCI    Super Micro Computer 
   GME     GameStop 
   TSM     Taiwan Semiconductor Manufacturing 
   BABA    Alibaba 
   AAPL    Apple 
   MSTR    Strategy 
   HOLO    MicroCloud Hologram 

Random reads

A court hears the case of the stolen gold toilet from Winston Churchill's childhood home.

The one guy who likes pennies.

Croon with a view: Bing Crosby's $40 million mansion goes on sale.

-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

Hormel Foods Corporation HRL is likely to register a decline in its top and bottom lines when it reports first-quarter fiscal 2025 earnings on Feb. 27. The Zacks Consensus Estimate for quarterly earnings has moved down by a penny in the last 30 days to 38 cents per share, indicating a decrease of 7.3% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.9 billion, which indicates an almost 2% decrease from the year-ago quarter. HRL has a trailing four-quarter earnings surprise of 7.4%, on average.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Things to Know About HRL’s Upcoming Results

Hormel Foods has been facing rising selling, general and administrative (SG&A) expenses for some time now. The company is dealing with increased employee-related costs and expenses linked to its Transform and Modernize (T&M) initiative. Looking ahead, management has projected a further rise in SG&A expenses and an increase in advertising spending for fiscal 2025, which is likely to have impacted the company’s profitability in the to-be-reported quarter.

In addition, the production disruption at Hormel Foods’ Planters facility in Suffolk, VA, has posed a significant challenge, affecting the company’s ability to meet demand for its snack nuts portfolio. Although the company has made progress in addressing the disruption, it anticipates some near-term commercial impacts and increased costs, particularly in the fiscal first quarter. Management expects a negative earnings per share (EPS) impact of 4-5 cents in the quarter, primarily due to lower year-over-year whole bird prices and the Suffolk production disruption.

Hormel Foods Corporation Price and EPS Surprise

Hormel Foods Corporation price-eps-surprise | Hormel Foods Corporation Quote

Despite these challenges, Hormel Foods' commitment to innovation has bolstered its market position, while the T&M initiative is aimed at enhancing production efficiency and supply-chain management. Growing demand for Foodservice products has been offering respite.

Earnings Whispers for HRL

Our proven model predicts an earnings beat for Hormel Foods this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Hormel Foods carries a Zacks Rank #3 and has an Earnings ESP of +0.66%.

Other Stocks With the Favorable Combination

Here are some other companies worth considering, as our model shows that these too have the right combination of elements to beat on earnings this reporting cycle.

Costco Wholesale COST currently has an Earnings ESP of +0.14% and a Zacks Rank of 2. The company is likely to register growth in its top and bottom lines when it reports second-quarter fiscal 2025 numbers. The Zacks Consensus Estimate for Costco’s quarterly revenues is pegged at $63.2 billion, which suggests 8.2% growth from the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Costco’s quarterly earnings per share is pegged at $4.09, indicating a 10.2% increase from the year-ago period. COST has a trailing four-quarter earnings surprise of 2%, on average.

Home Depot HD currently has an Earnings ESP of +1.29% and a Zacks Rank of 3. The company is likely to register growth in its top and bottom lines when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Home Depot’s quarterly revenues is pegged at $39.14 billion, which suggests an increase of 12.5% from the prior-year quarter.

The Zacks Consensus Estimate for Home Depot’s quarterly earnings per share is pegged at $3.04, indicating 7.8% growth from the year-ago period. HD has a trailing four-quarter earnings surprise of 2.3%, on average.

Grocery Outlet Holding GO currently has an Earnings ESP of +1.32% and a Zacks Rank of 3. The company is likely to register a decrease in the bottom line when it reports fourth-quarter 2024 numbers. The Zacks Consensus Estimate for the quarterly earnings per share is pegged at 17 cents, down 5.6% from the year-ago period. GO has a trailing four-quarter negative earnings surprise of 2.2%, on average.

Grocery Outlet's top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.09 billion, which suggests an increase of 9.7% from the prior-year quarter.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Costco Wholesale has an average rating of overweight and mean price target of $1,065.14, according to analysts polled by FactSet.