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Peloton (PTON) Misses Big, Gap (GPS) Beats & Raises

Peloton (PTON) Misses Big, Gap (GPS) Beats &
Raises

The Gap had its best Q2 for more than 10 years, but Peloton’s bottom line and guidance declined.

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This story originally appeared on Zacks

This Thursday was a day of giveback in the market, as it began to shape up ahead jobless claims and Q2 GDP revision data. Both the S&P 500 (Nadaq) and the S&P 500 were coming off five-day winning streaks, multiple record-high closing price closing prices and the Dow was up four straight and within 1% its record closing high. All three indexes saw stocks close to session lows.

The Dow fell -0.54% from the opening bell to fall to a negative. Analysts might consider today’s lower trading, due to lighter trading volumes in the last weeks of summer, as a caution ahead of tomorrow’s Jackson Hole Summit address by Fed Chair Jerome Powell. Before the bell, Nasdaq reached an intra-day new high. S&P gained 20% over the past year; now it was time to harvest a little.

Peloton PTONToday’s shares are being hit very hard by the aftermarket. The company is missing its fiscal Q4 bottomline by a large margin. It paid -$1.05 per share instead of -46 Cents as expected and -27 Cents for the quarter prior to that. The Zacks consensus revenue estimate of $937million was exceeded by revenues of $925.2 million. The 27% Gross Margin was less than 35% expected.

Late trading saw shares fall by more than 13%, mainly due to a new price reduction for its bicycle. Many investors have walked away from the stock due to shrinking gross margins, which are currently guided lower for full-year fiscal year. Connected Fitness Subscriptions increased by +114% to 2.33 Million, but paid digital subscriptions fell below expectations.

Zacks rank #2 (Buy).The Gap GPSOn the other side, surpassed all expectations in its Q2 top- and bottom line Thursday afternoon with earnings of 70c per share well exceeding the 47 cent estimate. The quarter’s sales of $4.21billion were up approximately 30% year-over-year over $4.17billion. This Q2 was The Gap’s best in over a decade.

Comps are also up by 12% compared to the same-store sales in 2019, which was the most comparable quarter. The Gross Margin was 43.3% higher than anticipated, and second-half guidance is strong due to Old Navy’s performance. The Zacks consensus estimate of $1.81 per share is revised to include guidance for full year earnings. Revenues are expected to increase by +30% over the year.

These are the last days of Q2 calendar earnings season. It is highly unlikely that any companies’ numbers will impact the market as much tomorrow’s Jackson Hole speech by Fed Chair Powell. Our final five-day trading session before Labor Day is next week, and it will be a week away. Based on tomorrow’s Fed policy announcements, we hope that markets will maintain or surpass current levels.

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Publited Fri, 27 August 2021 at 00:06.04 +0000

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