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Omar Venerio
Omar Venerio
Articles (1657) 

3 Stocks to Watch Friday

Deere, Foot Locker and Nvidia post quarterly financial results

May 22, 2020 | About:

Shares of Deere & Co. (NYSE:DE) gained more than 1% on Friday after reporting second-quarter revenue of $8.22 billion and earnings of $2.11 per share. The company beat analysts' earnings estimates by 53 cents and revenue expectations by $540 million.

“John Deere’s foremost priority in confronting the coronavirus crisis has been to safeguard the health and well-being of employees while fulfilling its obligation as an essential business serving customers throughout the world,” CEO John C. May said. “We’ve had good success in these areas thanks to the proactive measures we have taken to keep employees safe and our production facilities and parts distribution centers operational. At the same time, the company has reached out to our local communities to help those in need as a result of the pandemic. Deere and its employees have provided generous support to area food banks and other organizations offering assistance during this difficult time.”

Worldwide net sales were down 18% year over year to $9.253 billion. By segment, Equipment was down 20%; Agriculture & Turf declined 18% and Construction & Forestry fell 25%.

Looking ahead to the full year, the company expects net income to be between $1.6 billion and $2 billion, down from previous outlook of $2.7 billion to $3.1 billion.

At the end of March, Ken Fisher (Trades, Portfolio) reduced his holding by 8% to 71,659 shares, while Steven Cohen (Trades, Portfolio) boosted his position 15% to 287,290 shares. Al Gore (Trades, Portfolio), Philippe Laffont and Diamond Hill Capital (Trades, Portfolio) sold out of the stock.

Shares of Foot Locker Inc. (NYSE:FL) fell more than 12% on Friday after the company posted first-quarter results. Revenue declined 43.3% from the prior-year quarter to $1.18 billion, falling $130 million short of expectations.The company posted a loss of 67 cents per share, 44 cents short of estimates.

"As the severity of Covid-19's impact on the global retail industry became more evident, we took actions across our organization to control costs, bolster our financial position and increase our liquidity," Executive Vice President and Chief Financial Officer Lauren Peters said. "We believe the operational and financial actions we have taken will enable us to create a safe environment in our stores and protect the health of our business to ensure that we emerge even stronger." 

The gross margin rate declined 1,000 basis points from a year ago to 23%, while the selling, general and administrative expense rate rose to 26.9% from 20% in the first quarter of 2019.

Despite the company's solid financial position, the board of directors decided to temporarily suspend the cash dividend in the second quarter, and will monitor the situation on a quarterly basis. It also suspended the share repurchase program.

During the quarter ended March 31, John Rogers (Trades, Portfolio) boosted his stake by 135% to 1,015,346 shares and Jim Simons (Trades, Portfolio)' Renaissance Technologies reduced its holding 47% to 202,900 shares. Joel Greenblatt (Trades, Portfolio) and Cohen opened new positions with 307,022 and 96,939 shares respectively.

Nvidia Corp. (NASDAQ:NVDA) announced its results for the first quarter of fiscal 2021. Non-GAAP earnings per share of $1.80 beat estimates by 12 cents, while revenue of $3.08 billion surpassed expectations by $80 million.

For the quarter, the gross margin was 65.1%, up from 58.4% in the prior-year quarter. The operating expenses were up 10% from a year ago to $1.03 billion.

The company completed its acquisition of Mellanox Technologies Ltd. on April 27 for a total value of $7 billion.

Looking ahead to the second quarter of fiscal 2021, the company expects revenue to be $3.65 billion, plus or minus 2%. It also projects GAAP and non-GAAP gross margins between 58.6% and 66.0%, respectively, plus or minus 50 basis points.

Fisher boosted his stake 12% to 1,073,586 shares, while Laffont trimmed his holdings by 47% to 897,254 shares.

Disclosure: The author holds no position in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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