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Omar Venerio
Articles (1681) 

3 Stocks to Watch Friday

Salesforce and Costco fall, Williams-Sonoma rises

May 29, 2020 | About:

Shares of Salesforce.com Inc. (NYSE:CRM) fell almost 5% on Friday after reporting first-quarter revenue of $4.87 billion and earnings of 70 cents per share. It beat analysts' earnings estimations by one cent and revenue expectations by $20 million.

"Our results, amidst this global crisis, demonstrated our ability to execute at speed, innovate at scale and the strength of our business model," CEO Marc Benioff said. "We made long-term investments in keeping our employees safe, supporting our customers, delivering crucial innovation like Work.com, and helping our communities with PPE, grants, and technology. The pandemic showed us that digital is an imperative for every company, and we're confident Salesforce will continue to accelerate as we bring our customers into the new normal."

Total revenue was $4.87 billion, up 30% year over year. Subscription and support sales were $4.58 billion, an increase of 31%. Professional services and other revenues were $290 million, an increase of 20%.

The company had cash, cash equivalents and marketable securities of $9.80 billion, while the cash generated from operations was $1.86 billion, a decrease of 5% year over year.

Looking ahead to the second quarter, the company expects revenue to be between $4.89 billion and $4.90 billion, with non-GAAP earnings per share in the range of 66 cents to 67 cents.

At the end of March, Ken Fisher (Trades, Portfolio) boosted his stake by 50% to 10,873,498 shares, while Al Gore (Trades, Portfolio) cut his holding by 14% to 1,896,482 shares. Philippe Laffont sold out of the stock. Julian Robertson (Trades, Portfolio) initiated a new position of 57,500 shares.

Shares of Williams-Sonoma Inc. (NYSE:WSM) jumped more than 14% after reporting first-quarter revenue of $1.24 billion and earnings of 74 cents per share. The company beat revenue projections by $140 million and earnings estimates of 67 cents.

Net revenue was flat when compared to last year despite stores temporarily being closed, but it registered an acceleration in e-commerce sales growth. Further, the occupancy costs were also relatively flat from last year, totaling $175 million.

Total comparable brand revenue growth was 2.6%, with positive comparable revenue growth in almost all brands, including Pottery Barn Kids and Teen at 8.5%, Williams Sonoma at 5.4% and West Elm at 3.3%.

The GAAP operating margin reached 3.9%, while the non-GAAP operating margin was 6.4%.

Looking at the financial position, the company had more than $860 million in cash, and it negotiated an extension of the $300 million term loan and $200 million unsecured revolving facility.

Ray Dalio (Trades, Portfolio) trimmed his holding by 33% to 18,993 shares, but Jim Simons' Renaissance Technologies initiated a new position of 514,454 shares and Paul Tudor Jones (Trades, Portfolio) did the same with 23,187 shares. Joel Greenblatt (Trades, Portfolio) boosted has holding by 1,777% to 99,886 shares.

Shares of Costco Wholesale Corp. (NASDAQ:COST) fell almost 1% on Friday after the company posted third-quarter results. Revenue grew 7.3% from the prior-year quarter to $37.27 billion, beating forecasts of $610 million. The company posted earnings of $1.89 per share, which was in line with estimates.

Net income was $838 million, or $1.89 per share. This figure was negatively impacted by a $283 million pretax charge, or 47 cents per diluted share, from costs related to Covid-19.

During the quarter ended March 31, Jeremy Grantham (Trades, Portfolio) reduced his holding by 54% to 156,495 shares, but Simons' firm boosted its stake by 345% to 1,275,218 shares. Laffont sold out the stock, as did Steven Cohen (Trades, Portfolio).

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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