What To Watch In The Week Ahead And On Monday, November 25

Agilent Technologies A is set to report fourth-quarter fiscal 2024 results on Nov. 25.

For the fiscal fourth quarter, the company expects revenues of $1.641-$1.691 billion, suggesting a decline of 2.8-0.2% on a reported basis and 1.9-1.1% on a core basis from the year-ago quarter’s actuals.

The Zacks Consensus Estimate for revenues is pegged at $1.67 billion, indicating a marginal decline of 0.86% from the year-ago quarter’s reported figure.

Agilent’s non-GAAP earnings are expected to be $1.38-$1.42 per share.

Agilent Technologies, Inc. Price and Consensus

Agilent Technologies, Inc. price-consensus-chart | Agilent Technologies, Inc. Quote

The Zacks Consensus Estimate for earnings is pegged at $1.41 per share, unchanged over the past 30 days. The figure indicates 2.17% year-over-year growth.

Agilent’s earnings surpassed the Zacks Consensus Estimate in the four trailing quarters, averaging 4.43%.

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

Let us see how things have shaped up before this announcement.

Factors to Note for A’s Q4 Earnings

The company is expected to have gained from the growing momentum across the Agilent Cross Lab Group (“ACG”) segment in the fiscal fourth quarter.

The ACG segment has been a consistent growth driver. It continued its positive trajectory with 4% reported revenue growth and 5% core growth to $411 million in the fiscal third quarter. The segment's operating margin improved 130 basis points year over year to 34.0%, driven by productivity gains and a favorable product mix.

These trends suggest that ACG's momentum likely contributed positively to Agilent's fiscal fourth-quarter performance.

However, the declining momentum in the Life Sciences & Applied Markets Group, and Diagnostics and Genomics Group segments has likely posed significant challenges for Agilent. Macroeconomic uncertainties, coupled with weak market conditions in China and Hong Kong, are expected to have adversely impacted these segments in the quarter under review.

The Environmental and Forensics sectors demonstrated stronger performance, achieving 4% year-over-year growth and outpacing other segments within the end market. Still, declines across all regions other than Europe and most end markets raise concerns about broader performance challenges.

Agilent's commitment to sustainability is reflected in the launch of innovative solutions like the 8850 GC, which emphasizes environmental responsibility and cost efficiency. This approach appeals to environmentally conscious customers and strengthens the company’s alignment with green initiatives.

The acquisitions of BIOVECTRA and Sigsense signal a focus on expanding capabilities in biopharma and digital ecosystems. BIOVECTRA's contribution to revenue growth in cutting-edge modalities like CRISPR and microbial fermentation is particularly promising.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the exact case here.

A has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies worth considering, as, per our model, they possess the right combination of elements to exceed earnings estimates this time around:

Braze BRZE has an Earnings ESP of +100% and a Zacks Rank of #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Braze’s shares have lost 28.5% year to date. BRZE is set to report its third-quarter fiscal 2025 results on Dec. 09.

Hewlett Packard HPE currently has an Earnings ESP of +1.51% and a Zacks Rank #3.

Hewlett-Packard shares have gained 28% year to date. HPE is set to report its fourth-quarter 2024 results on Dec. 05.

Pure Storage PSTG has an Earnings ESP of +2.98% and a Zacks Rank #3 at present.

Pure Storage’s shares have gained 44.6% year to date. PSTG is set to report third-quarter fiscal 2025 results on Dec. 03.

Zacks Investment Research

The Gap, Inc. GAP reported third-quarter fiscal 2024 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and grew year over year. GAP posted earnings of 72 cents per share, which surpassed the Zacks Consensus Estimate of 56 cents and surged 22% from the prior-year quarter’s adjusted figure.

Quarterly results benefited from immense strength in brands and higher market share. The company gained market share for the seventh straight quarter. It has been smoothly progressing on the reinvigoration of its brands. The company has been actively managing costs. Management is focused on its four strategic priorities, such as driving financial and operational rigor, reinvigorating the brands, reinforcing its operating platform and energizing culture.

Net sales inched up 2% year over year to $3.829 billion and beat the consensus estimate of $3.796 billion. The metric grew for the fourth straight quarter. Comparable sales (comps) rose 1% year over year. The company saw sturdy results at Old Navy, momentum at Gap, progress at Banana Republic and revert to growth at Athleta. Online sales grew 7% year over year, accounting for 40% of the total sales. However, store sales dipped 2% year over year.

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

Impressively, Gap’s shares jumped 15.7% in the after-hours session yesterday, following robust third-quarter results and a raised outlook for fiscal 2024. Shares of this Zacks Rank #3 (Hold) company have gained 7.1%, outperforming the industry’s 2.5% drop over the past six months.

GAP’s Brand-Wise Sales & Comps Performance

Old Navy: Net sales at Old Navy Global edged up 1% year over year to $2.2 billion. Comps were flat year over year, gaining from its focus on operational rigor and brand reinvigoration, aided performance in the quarter, in spite of the lapping tough comparisons and weather-related headwinds. Sales for Old Navy Global beat our model’s estimate of $2.1 billion.

Gap Global: Net sales grew 1% year over year at $899 million, while comps increased 3%, highlighting the fourth straight quarter of positive comps. Gap's strong product and solid marketing execution aided the brand’s performance. Sales for Gap Global surpassed our model’s estimate of $896.1 million.

Banana Republic: Net sales grew 2% year over year at $469 million, with comps declining 1%. Sales exceeded our estimate of $457.9 million. Strength in its men's business and focus on fixing the fundamentals drove the results.

Athleta: Net sales increased 4% year over year to $290 million and comps also grew 5%. Net sales came above our estimate of $283.9 million. The brand reverted to positive comps in the reported quarter, as the brand’s latest product and marketing resonated well with customers.

The Gap, Inc. Price, Consensus and EPS Surprise

The Gap, Inc. price-consensus-eps-surprise-chart | The Gap, Inc. Quote

GAP’s Margins & Costs

The gross margin of 42.7% expanded 140 basis points (bps) from the prior-year period’s reported figure. Meanwhile, we estimated the adjusted gross margin to be 41.8%.

The merchandise margin grew 90 bps, benefiting from inventory-management efforts. Rent, occupancy and depreciation (ROD), as a percentage of sales, leveraged 50 bps year over year.

Further, the operating margin of 9.3% grew 250 bps in the reported quarter from last year’s adjusted operating margin. This marked the highest Q3 operating margin over the last seven years.

Our model anticipated an adjusted operating margin of 7.2%.

Operating expenses came in at $1.3 billion, almost flat year over year.

GAP’s Financial Health Snapshot

Gap ended the fiscal third quarter with cash and cash equivalents of $2 billion, up 45.7% from the year-ago period. As of Nov. 2, 2024, it had a total stockholders’ equity of $3.1 billion and a long-term debt of $1.5 billion.

The company is focused on disciplined inventory, ending the fiscal third-quarter levels down 2% year over year. Management expects ending inventory to be similar to the last-year’s levels, depending on the present macroeconomic landscape.

As of Nov. 2, 2024, the company generated $870 million in cash from operating activities and had a free cash flow of $540 million. It paid cash dividends of $169 million in the 39 weeks ended Nov. 2, 2024. The company’s board has approved a dividend of 15 cents per share for the fiscal fourth quarter. Capital expenditure was $330 million in the nine months of fiscal 2024. For fiscal 2024, capital expenditure is expected to be $500 million.

As of the aforementioned date, Gap had 3,603 stores in nearly 40 countries, of which 2,544 were company-operated.

What to Expect From GAP in Fiscal 2024?

Owing to the robust fiscal third-quarter results, GAP raised its outlook for sales, gross margin and operating income growth for fiscal 2024. Entering the fiscal fourth quarter, the company is excited about its holiday collection, and is focused on enriching the customer experience both online and in-store. GAP has refreshed the product imagery on its website and remodeled 15% of its store fleet.

For fiscal 2024, management projects sales to grow 1.5-2% on a 52-week basis versus $14.9 billion recorded in fiscal 2023. Earlier, it anticipated sales to rise slightly on a 52-week basis. The company expects gross margin expansion of at least 220 bps from gross margin of 38.8% seen in fiscal 2023 versus a minimum of 200 bps expected earlier. This includes 100 bps of commodity cost gains realized in the first half of the fiscal year. The balance will be mainly backed by improved inventory management. ROD, as a percentage of sales, is likely to be relatively neutral year over year.

For fiscal 2024, operating income is now projected to grow in the mid to high 60% range versus the prior year’s adjusted operating income of $606 million. Operating expenses are still forecast to be around $5.1 billion, and the effective tax rate is estimated to be 26.5%. GAP predicts SG&A of roughly $5.1 billion for the fiscal year, reflecting reduced spending and leveraged year-over-year substantial savings.

For the fiscal fourth quarter, gross margin is predicted to be similar year over year, excluding roughly one percentage point of deleverage ROD from soft sales in the quarter owing to the absence of the 53rd week.

Key Picks

We have highlighted three better-ranked stocks, namely Deckers DECK, Boot Barn BOOT and Abercombie ANF.

Deckers, a footwear and accessories dealer, 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 Deckers’ current financial-year sales indicates growth of 13.6% from the year-ago figure. DECK delivered an average earnings surprise of 41.1% in the trailing four quarters.

Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 6.8%, on average.

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 13.4% from the year-ago figure.

Abercrombie, a leading casual apparel retailer, currently carries a Zacks Rank of 2. ANF delivered an earnings surprise of 16.8% in the last reported quarter.

The consensus estimate for Abercrombie’s current financial-year sales indicates growth of 13% from the year-ago figure.

Zacks Investment Research

Matthews International Corporation MATW reported the fourth-quarter 2024 result, wherein both top and bottom lines surpassed the Zacks Consensus Estimate. However, both metrics declined year over year.

The performance was impacted by continued customer delays in MATW’s energy business. Nonetheless, the company’s cost-cutting program did provide some cushion.

MATW’s Quarterly Performance: Key Insights

Matthews International posted adjusted quarterly earnings of 55 cents per share, which beat the Zacks Consensus Estimate of 41 cents. The same decreased 42.7% from earnings of 96 cents per share reported in the prior-year period.

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

Matthews International Corporation Price, Consensus and EPS Surprise

Matthews International Corporation price-consensus-eps-surprise-chart | Matthews International Corporation Quote

The company reported consolidated net sales of $446.7 million, which beat the Zacks Consensus Estimate of $439 million. However, the metric decreased 7% from $480.2 million posted in the year-ago period.

Gross profit fell 22.2% year over year to $117.3 million. We note that the gross margin contracted 510 basis points (bps) to 26.3%.

Matthews International reported an adjusted EBITDA of $58.1 million, down 6.1% from the prior-year quarter. However, the adjusted EBITDA margin increased 10 bps to 13%.

MATW’s Segment Wise Performance Details

Revenues for the Memorialization decreased 3.9% year over year to $196.8 million. Despite lower unit volumes, caused by a decline in the number of U.S. deaths compared with the prior year, the segment's adjusted EBITDA grew 9.8% to $40.5 million. Ongoing cost containment initiatives, coupled with improved price realization, aided improved operating margins.

Industrial Technologies revenues decreased 19% to $113.9 million, primarily due to ongoing customer delays in the energy business. The quarter also indicated continued softness in the warehouse automation market. However, improving order rates implies the potential for a strong recovery in the next fiscal year. The segment’s adjusted EBITDA declined 32.4% to $15.9 million.

SGK Brand Solutions revenues inched up 0.9% to $135.9 million, primarily indicating improved pricing to offset inflationary cost increases, elevated sales for the merchandising and private label businesses, and expansion in the Asia-Pacific market. The segment’s adjusted EBITDA fell 1.2% to $17.3 million.

MATW’s Financial Health Snapshot

Matthews International ended the reported quarter with cash and cash equivalents of $40.8 million, long-term debt, current maturities of $6.9 million and stockholders’ equity of $437.2 million. During the fourth quarter of fiscal 2024, MATW reduced outstanding debt by $53.8 million. For the year ended Sept. 30, 2024, net cash provided by operating activities was $79.3 million.

Recently, the company’s board of directors raised the quarterly dividend by one cent to 25 cents per share. This increase marks the 31st consecutive annual dividend increase. The dividend payment is scheduled for Dec. 16, 2024, for its shareholders on record as of Dec. 2.

MATW’s 2025 Outlook

For fiscal 2025, Matthews International faces continued uncertainty regarding project timing in the Industrial Technologies segment, particularly within the energy business. While the company anticipates completing deliveries during the year, it did not provide any quarterly timing. However, it believes that the cost reduction programs should mitigate some of the impacts.

MATW anticipates another strong performance from the Memorialization business in fiscal 2025, as U.S. death rates have largely normalized following the COVID-19 pandemic. The company expects continued growth in sales of cremation-related products.

Management foresees sustained progress in the SGK Brand Solutions segment, indicating improving conditions in the U.S. market, greater stability in Europe and further expansion in the Asia-Pacific region.

In the Industrial Technologies segment, the product identification business is expected to grow next year and the company anticipates reaping benefits from the launch of a new printhead product, scheduled for the latter half of the fiscal year. Additionally, improving order rates for warehouse automation solutions should support the recovery in this business.

Considering aforementioned factors, MATW remains cautious and guided adjusted EBITDA for fiscal 2025 in the range of $205 million to $215 million compared with $205.2 million reported in fiscal 2024.

The Zacks Rank #5 (Strong Sell) stock has lost 1.2% in the three months against the industry’s growth of 9.5%.

We’re about to put a wrap on this trading week, which took a nice step forward yesterday after remaining relatively flat for most of the week. Again we see flatness in pre-market futures in all but the small-cap Russell 2000, which is +0.24% at this hour.

The Dow is coming off its single-best trading day since September 6th, and is about as flat as can be: +0.01%. The S&P 500 and the Nasdaq are incrementally lower, -0.08% and -0.19%, respectively. Bond yields are reclining a tad but staying within range, +4.406% on the 10-year and +4.341% on the 2-year.

We’re also tying a bow on Q3 earnings season overall, with most of the S&P 500 already having reported. Only a few companies, like Macy’s M, report earnings in the coming week; mostly what’s left are retailers whose Q3 is technically for 2025 and end on Halloween instead of the end of September. We haven’t had 100+ companies report earnings since Tuesday, and the Magnificent 7 concluded with NVIDIA’s NVDA report on Wednesday.

What to Expect in the Stock Market Today

After the opening bell this Friday, S&P flash PMI for Services and Manufacturing come out for November. The Services side is comfortably above the 50-level, which determines growth or loss: 54.1 was last month’s print, and expectations are for this month to reach 55.0. Manufacturing is a different story: 48.5 was registered last month, which is expected to tick up to 48.8 today. Both are still below the 50 demarcation point.

Consumer Sentiment results are also expected today after the opening bell rings, also for November. This is expected to improve incrementally as well: to 73.5 estimated from 73.0 reported a month ago. We’ve seen a lot of positive sentiment in the market regarding a Republican sweep of the federal government from Election Day, but only time will tell if this will directly translate into lower prices for consumers.

What’s in the Cards for Next Week?

Aside from the final sweep-up of Q3 earnings season, we have a shortened trading week starting Monday, accounting for Thursday’s Thanksgiving holiday in the U.S. and a half-day of trading on Friday. The holiday shopping season will officially be upon us, as will important economic prints such as home prices and home sales, Durable Goods Orders, Retail/Wholesale Inventories and the latest PCE report — the Fed’s preferred gauge for inflation in the economy.

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