Booz Allen Posts Upbeat Q3 Earnings, Joins Deckers Outdoor, Saia, Boyd Gaming And Other Big Stocks Moving Higher On Friday

US equity indexes traded mixed as the Dow Jones Industrial Average gave up gains after government bond yields turned the corner with a decisive move higher.

The Nasdaq Composite rose 0.7% to 18,539.7. Apple , Microsoft , Alphabet , Amazon.com , and Meta Platforms will be reporting quarterly results next week.

The S&P 500 was fractionally up at 5,811.3, with the Dow Jones Industrial Average down 0.7% to 42,067.4. Technology, communication services, and consumer discretionary were the only gainers intraday. Financials and utilities led the decliners.

US Treasury yields rose intraday, with the 10-year yield up 1.4 basis points to 4.22%, trading close to its highest since late July. The two-year rate advanced 1.3 basis points to 4.08%, hovering near its strongest since mid-August. Earlier in the session, most Treasury yields traded steady-to-down.

"Ongoing labor market softening suggests [US] monetary policy is restrictive at current levels and we think a Republican clean sweep in the US elections - resulting in greater inflationary pressures - would simply push [Federal Reserve] rate cuts further into the future rather than halting them altogether," Ryan Field, Global Macro Strategist at Oxford Economics, said in a note.

Meanwhile, gold rose 0.1% to $2,752.71 an ounce, bringing the yellow metal's year-to-date increase to 27%. Silver edged up 0.1% to $33.83, trading up 37% since the beginning of this year.

In economic news on Friday, the University of Michigan consumer sentiment index was revised upward to 70.5 for October from the 68.9 preliminary estimate and compared with expectations for 69.1 in a survey compiled by Bloomberg. The index is above the final 70.1 reading in September and is the highest since April 2024.

New orders for US durable goods fell 0.8% in September, in line with the previous month but versus a 1% decrease anticipated in a survey compiled by Bloomberg. Excluding a 3.1% drop in transportation orders, new orders would have been up 0.4% in September after a 0.6% gain in August. Expectations were for a 0.1% drop.

"Core orders, which are a clearer indication of future capital spending by companies, rose at a solid pace, defying our expectations for a moderate decline," Bernard Yaros, lead US economist at Oxford Economics, said in a separate note.

In company news, Tapestry said it plans to appeal a US federal court decision granting the Federal Trade Commission's request to block the acquisition of Capri Holdings (CPRI). Tapestry shares were up 13% intraday, the top gainer on the S&P 500.

The worst performer on the index was Mohawk Industries , down 12% intraday after reporting overnight adjusted earnings guidance for Q4 that missed the average analyst estimate compiled by Capital IQ.

West Texas Intermediate crude oil rose 2.1% to $71.68 a barrel.

Health care stocks were lower Friday afternoon, with the NYSE Health Care Index down 0.4% and the Health Care Select Sector SPDR Fund (XLV) easing 0.3%.

The iShares Biotechnology ETF (IBB) rose 0.4%.

In corporate news, HCA Healthcare shares tumbled past 10%. The company's Q3 results missed analyst estimates as Hurricane Helene impacted some of its facilities, while the hospital operator expects a further hurricane-related hit in the ongoing three-month period.

ImmunityBio shares soared 48% after the company reported Thursday dosing of the first patients in a phase 1 trial that will assess its CAR-NK cellular therapy as a potential treatment for non-Hodgkin's lymphoma.

Iterum Therapeutics shares surged 42% after the company said the US Food and Drug Administration has approved its new drug application for Orlynvah as a treatment for uncomplicated urinary tract infections in women.

Digital Realty Trust DLR reported third-quarter 2024 core funds from operations (FFO) per share of $1.67, in line with the Zacks Consensus Estimate. This compares favorably to an FFO of $1.62 per share reported a year ago.

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

Results reflect healthy leasing activity and an increase in rental rates. However, the company witnessed a rise in rental property expenses and interest expenses in the quarter. DLR revised its outlook for 2024.

The company registered operating revenues of $1.43 billion in the third quarter, which missed the Zacks Consensus Estimate of $1.44 billion. However, operating revenues increased by 2.1% year over year. DLR also reported a "Same-Capital" cash net operating income growth of 0.8%.

According to Digital Realty’s president & CEO, Andy Power, "In the third quarter, Digital Realty posted over $520 million of new leasing, more than double the record set in the first quarter. Record leasing across both the greater-than-a-megawatt and 0-1 MW plus interconnection segments drove the backlog up nearly 60% above our prior record. Our backlog now represents over 20% of annualized in-place data center revenue, enhancing our visibility and positioning Digital Realty for accelerating longer-term growth.”

Quarter in Detail

In the reported quarter, signed total bookings were estimated to generate $521 million of annualized GAAP rental revenue, including a $50 million contribution from the 0-1-megawatt category and a $16 million contribution from interconnection. The weighted average lag between the new leases signed in the third quarter and the contractual commencement date was 15 months.

Digital Realty signed renewal leases, marking $258 million of annualized cash rental revenues during the July-September quarter. Rental rates on renewal leases signed during the quarter rose 15.2% on a cash basis and 27.5% on a GAAP basis.

Adjusted EBITDA of $758.3 million in the quarter marked a 10.5% increase year over year.

In the third quarter, rental property operating expenses increased by 12% to $249.8 million year over year, and interest expenses jumped by 11.8% to $123.8 million.

Balance Sheet

Digital Realty exited the third quarter with cash and cash equivalents of $2.18 billion, down from $2.28 billion recorded as of June 30, 2024.

As of Sept. 30, 2024, this data center REIT had $17 billion of total debt outstanding, of which $16.2 billion was unsecured debt and $0.8 billion was secured debt and other. As of the same date, its net debt-to-adjusted EBITDA was 5.4X, while the fixed charge coverage was 4.1X.

Its debt maturity schedule is well-laddered with modest near-term maturities. It has a weighted average maturity (assuming the exercise of extension options) of 4.5 years and a 2.86% weighted average interest rate as of Sept. 30, 2024.

2024 Guidance Revised

Digital Realty raised its guidance for 2024 core FFO per share in the range of $6.65-$6.75, from the previous guidance of $6.60-$6.75. The Zacks Consensus Estimate is currently pegged at $6.65, which is within the guided range.

However, the company lowered its expectations for total revenues in the band of $5.55-$5.60 billion, from the prior guidance of $5.55-$5.65 billion. The consensus mark is pegged at $5.58 billion, which is within the guided range.

Currently, DLR carries a Zacks Rank #3 (Hold).

Digital Realty Trust, Inc. Price, Consensus and EPS Surprise

Digital Realty Trust, Inc. price-consensus-eps-surprise-chart | Digital Realty Trust, Inc. Quote

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs like Equinix EQIX and Iron Mountain IRM, slated to report on Oct. 30 and Nov. 6, respectively.

The Zacks Consensus Estimate for Equinix’s third-quarter 2024 FFO per share stands at $8.70, indicating a 6.2% rise year over year. EQIX currently has a Zacks Rank #3.

The Zacks Consensus Estimate for Iron Mountain’s third-quarter 2024 FFO per share is pegged at $1.11, implying a 12.1% year-over-year increase. IRM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

Zacks Investment Research

Stocks are ending the week on a high note, with tech leading the charge as investors position ahead of next week’s pivotal earnings releases from five of the “Magnificent Seven” stocks.

Microsoft Corp. , Apple Inc. , Meta Platforms Inc. , Amazon.com Inc. , and Alphabet Inc. will all report quarterly earnings between Oct. 29 and Oct. 31.

Combined, nearly 45% of the S&P 500 by market cap is set to report results next week, with other heavyweights including McDonald’s Corp. , Visa Inc. , Eli Lilly and Co. , Mastercard Inc. , Chevron Corp. and Exxon Mobil Corp. .

Tesla Inc. continued its upward trajectory on Friday, rising 2.7% following a massive 21% jump on Thursday — its biggest one-day gain since May 2013.

The S&P 500 was up 0.5% at midday trading in New York, while the Nasdaq 100 surged by 1.5%, fueled by semiconductor stocks.

The Dow Jones Industrial Average fell 0.3%, on track to end a six-week winning streak. The U.S. dollar strengthened further, with the DXY Index rising past the 104 mark, setting up for a fourth straight week of gains. Meanwhile, Treasury yields were steady.

WTI crude rose 1.8%, driven by concerns over geopolitical tensions in the Middle East. Bitcoin is up slightly at $67,695.

Friday’s Performance In Major U.S. Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust rose 0.5% to $582.19.
• The SPDR Dow Jones Industrial Average eased 0.2% to $423.18.
• The tech-heavy Invesco QQQ Trust Series rallied 1.3% to $498.83.
• The iShares Russell 2000 ETF inched 0.2% up to $220.09.
• The Technology Select Sector SPDR Fund outperformed, up by 1.4%. The Utilities Select Sector SPDR Fund lagged, down 0.9%.

Thursday’s Stock Movers

• Capital One Financial Corp. rallied 7% to levels last seen in October 2021 on better-than-expected quarterly results.
• Digital Realty Trust rallied over 10% after reporting record new lease bookings.

Other stocks reacting to earnings included:

• Ameriprise Financial Inc. , down 0.13%
• DexCom Inc. , down 1%
• ResMed Inc. up 7.6%,
• Skechers U.S.A. Inc. down 0.2%,
• Western Digital Corp. up 7.6%,
• Deckers Outdoor Corp. , up 11%
• Edward Lifesciences Corp. , down by 0.6%
• HCA Healthcare Inc. , down 10%,
• Aon plc , up 6%,
• Colgate-Palmolive Company , down 3.4%,
• Centene Corp. , up 6.7%,
• Saia Inc. , up 9.2%.

Read Now:

• Goldman Sachs Analyst Remains Bullish On Boeing Despite Weak Q3: ‘Long-Term Deep-Value Opportunity‘

Photo: Shutterstock

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Newell Brands Inc. NWL posted third-quarter 2024 results, wherein sales missed the Zacks Consensus Estimate and fell year over year. Nevertheless, earnings met the consensus mark. The company is making progress in its turnaround efforts. Its front-end commercial capabilities, appear encouraging.

The company’s normalized earnings per share (EPS) were 16 cents, down from 37 cents in the year-ago quarter. The bottom-line figure met the Zacks Consensus Estimate.

Net sales dipped 4.9% year over year to $1,947 million on lower core sales, as well as the impacts of business exits and adverse foreign exchange. The metric missed the consensus estimate of $1,962 million. Core sales fell 1.7% year over year. However, pricing across the international markets to offset inflation and currency was a significant contributor to core sales.

The normalized gross margin expanded 470 basis points (bps) year over year to 35.4%. The normalized operating margin increased 210 bps year over year to 9.5%.

In the past three months, shares of this Zacks Rank #3 (Hold) company have risen 6.1% compared with the industry’s 8.2% growth.

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

NWL’s Segmental Details

Net sales in the Home & Commercial Solutions segment were $1 billion, down 9.1% from the year-ago period. The metric missed our estimate of $1.1 billion. Core sales slipped 2.3% year over year, due to decreases in the Kitchen and Home Fragrance businesses, somewhat offset by rise in the Commercial business. Also, the impacts of a few business exits acted as deterrents.

The Learning and Development segment recorded net sales of $717 million, up 3.3% from the year-ago quarter. The metric beat our consensus mark of $694.6 million. Core sales grew 4.4%, which was offset by the adverse impacts of foreign exchange. While core sales grew in the Baby business, it fell in Writing.

The Outdoor and Recreation segment’s net sales of $183 million declined 20.8% from the year-ago quarter. Also, the metric lagged our estimate of $202.2 million. Core sales fell 16.8%.

Newell Brands Inc. Price, Consensus and EPS Surprise

Newell Brands Inc. price-consensus-eps-surprise-chart | Newell Brands Inc. Quote

Other Financial Details of Newell

Newell ended the quarter with cash and cash equivalents of $494 million, long-term debt of $4.1 billion, outstanding debt of $5 billion and shareholders’ equity of $2.9 billion. NWL also provided $346 million in cash for operating activities during the nine months through the second quarter.

Updates on NWL’s Organizational Realignment

Newell’s organizational realignment is likely to strengthen its front-end commercial capabilities, including consumer understanding and brand communication. Apart from improving accountability, the Realignment Plan will unlock operational efficiencies and cost savings, lower complexity and free up funds for reinvestment.

As part of this realignment, NWL made several organizational design changes, including setting up a cross-functional brand-management organization, realigning business unit finance to wholly aid the new global brand management model and simplifying the regional go-to-market organizations, as well as unifying the domestic retail sales teams, business-aligned accounting personnel, the manufacturing quality team and the human resources functions into the center-led teams to boost standardization and scale with a One Newell approach.

It looks to optimize its real-estate footprint and take other cost reduction efforts. Such actions are likely to be implemented by this year. After the execution of the organizational design changes , management estimates realizing annualized pretax savings in the range of $65-$90 million, net of reinvestment, with $55-$70 million in 2024. Restructuring and related costs are likely to be in the range of $75-$90 million. NWL incurred restructuring and related charges of $42 million in the first nine months of 2024.

NWL’s Outlook for Q4 & 2024

Management issued guidance for the fourth quarter and raised view for normalized operating margin and normalized EPS in 2024. The company anticipates 2024 sales to decline 6-7% year over year, with a core sales dip of 3-4%. The normalized operating margin is likely to be 8.1-8.3% compared with the prior mentioned 8-8.2%. Normalized EPS is predicted to be 63-66 cents compared with the prior stated 60-65 cents, whereas it reported 79 cents last year.

The company envisions operating cash flow of $500-$600 million. This includes $150 million in cash payments related to restructuring efforts.

For the fourth quarter, net sales are envisioned to dip 4-7%, with core sales anticipated to drop 2-5%. The company expects a normalized operating margin of 7-7.7% and normalized EPS of 11-14 cents.

Key Picks

Freshpet, Inc. FRPT, a pet food company, has a trailing four-quarter average earnings surprise of 132.9%. FRPT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 26.1% and 202.9%, respectively, from the prior-year reported levels.

Vital Farms VITL, which provides pasture-raised products, presently flaunts a Zacks Rank of 1. The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 26.4% and 88.1%, respectively, from the prior-year reported levels.

VITL has a trailing four-quarter average earnings surprise of 82.5%.

Flower Foods FLO, which offers high-quality baked items, currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for FLO’s current financial-year sales and EPS indicates growth of 1% and 5%, respectively, from the year-ago figures. FLO has a trailing four-quarter average earnings surprise of 1.9%.

Zacks Investment Research