Last week saw a number of stocks make our trending lists, from tech giants like AT&T to financial behemoths like Morgan Stanley
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Foot Locker, Inc (FL)
Foot Locker, Inc
Foot Locker’s abrupt slide – followed by a sudden upturn – came as the athletic footwear giant beat Wall Street estimates far and wide in its quarterly results. The company reported EPS of $1.96 for the quarter, blowing the analyst consensus of $1.06 out of the water. They also beat revenue significantly, pulling in $2.15 billion compared to the $1.86 billion estimate, with revenue up 83% YOY.
Foot Locker’s impressive quarter follows a substantial 2020, as everyone and their grandmother suddenly had time to get in a daily walk. The retailer pulled in 13% revenue gains to $7.55 billion in fiscal 2020 – though this is still down from the company’s $7.9 billion revenue three years ago.
Foot Locker’s operating income jumped, too, up almost 102% for the year to $368 million (though, again, this is half of their $734 million operating income in the three-year-ago period). These gains saw the retailer’s EPS skyrocket 95.4% to $3.08 in per-share earnings, compared to $4.66 three years ago. Foot Locker is currently trading with forward earnings of nearly 12x.
All told, Foot Locker’s story is one of comeback success – while the footwear giant has a lot of ground to make up, 2020 provided them ample time to claw back some of their gains. That said, our AI rates them just above midgrade; Foot Locker earned a B in Technicals and C’s in Growth, Low Volatility Momentum, and Quality Value.
AT&T, Inc (T)
AT&T, Inc. has made the news a lot lately, with several weighty announcements in the last week dragging their stock back down to 2020 peaks. From their merger with Discovery to the announcement that they would be slashing their dividends (notably as a result of their merger with Discovery) to CEO John Stankey purchasing an additional $1 million in shares (probably due to depressed stock prices as a result of their merger), AT&T has a lot of reasons to be trending – not all of them positive.
Still, AT&T managed to start reviving their stock prices on Friday, trading up 1.25% to $30.01 with 74.59 million trades on the books. This brings their stock a bit below their 22-day price average of $31.32, though still up 4.35% YTD.
Despite the notable increase in internet use in the last year, not to mention streaming television, AT&T’s previous financial success proved difficult to overcome in fiscal 2020. As such, revenue only grew 0.68% – though “only” is subjective when total revenues topped $171.76 billion. Operating income saw significantly more gains, up 12% to $25.66 billion, though this is actually down from AT&T’s three-year-ago operating income of $31.6 billion.
At the same time, EPS is down from $2.85 to $0.75, with ROE bottoming out at 2%, compared to 11.9% three years ago. Still, AT&T is expected to see some growth in the next twelve months, with projected revenue growth of 0.74%. Currently, AT&T is trading at 9.7x earnings.
That said, our AI sees AT&T as a mixed bag for investors. Though the company is massive and known for paying out dividends, its merger with Discovery will see those dividends cut in the next few months. Not to mention, AT&T has little room for forward growth on the back of enormous annual revenues. As such, our AI rates AT&T A in Low Volatility Momentum, C in Growth and Quality Value, and D in Technicals.
The Home Depot, Inc (HD)
The Home Depot
Following Home Depot’s good news, Home Depot saw trade volume of 3.9 million on Friday, ticking just barely down 0.04% to $315.77 per share. While the stock is up 18.9% YTD, Friday saw the stock slip further down from its 22-day, $324.88 price average.
Home Depot’s last fiscal year saw slower growth than the previous three in terms of its balance sheet, though its stock is substantially higher than in the past five years. Revenue expanded 7% to $132.1 billion in the last year and 30.6% growth from $108 billion three years ago. At the same time, operating income grew by 12% in fiscal 2020 compared to 46.6% over the last three years, from $15.78 billion to $20.63 billion.
All in all, EPS is up almost 41% in the last three fiscal years, seeing per-share earnings jump from $9.73 to $11.94. But the biggest leap of all was Home Depot’s ROE, which skyrocketed 14,061% in the last year alone. Currently, Home Depot is trading at 22.8x forward earnings.
All this is rather impressive on paper – and in fact, Home Depot has plenty of wiggle room to improve in the midst of the current housing boom. Our AI has rated Home Depot as a better than average investment, with A in Low Volatility Momentum, B’s in Growth and Quality Value, and C in Technicals.
Morgan Stanley (MS)
Morgan Stanley had a decent day on Friday, trading up over 2% to $88.34 with 9.3 million trades on the books. This brought the stock to 28.9% gains YTD, and up almost $4 over the 22-day price average.
The stock trended upward in the middle of the week as the company announced last Wednesday that CEO James Gorman tapped two co-presidents and a list of inner circle executives to take bigger roles in the company, as the Morgan Stanley veteran looks to the company’s future following his assumed retirement in the next few years.
Morgan Stanley’s upper echelon shakeup last week followed a year of substantial gains, spurred on by months of increased trading (and the handout of a fiscal stimulus check or three). The investment and financial firm saw revenue up 13.4% to $48.2 billion, with operating income growth of almost 19% bringing the company to $17.9 billion.
All told, per-share earnings swelled 18.3% to $6.46 in the last fiscal year, marking 61.6% growth over three-year earnings of $4.73. The only slow growth of significance is Morgan Stanley’s ROE, which grew from 11% three years ago to 12% in the last fiscal year. Currently, the investment firm is enjoying forward earnings of 13.5x.
Despite a year of escalating growth, Morgan Stanley still has plenty of room yet to expand, as noted by our AI’s rating system. Morgan Stanley earned mid- to high marks of A in Growth, B in Low Volatility Momentum, and C in Technicals and Quality Value.
Ethan Allen Interiors, Inc (ETH)
Ethan Allen Interiors, Inc
Ethan Allen is a designer, manufacturer, and distributer of home furnishings and other interior home design elements. And while the company is certainly recovering in part due to growing housing demand, the last few weeks saw the stock trend for another reason entirely: its stock ticker (ETH) is very similar to the famous cryptocurrency Ethereum’s ticker (ETH-USD). This caused confusion for some traders and has seen Ethan Allen trending in recent trading periods – though we’re sure the company didn’t mind the mix-up too much, if the stock chart is any indication.
Amusingly confused investors aside, Ethan Allen took a significant hit at the start of the pandemic, with fiscal 2020 sales plummeting 21% by June 30th. That said, the last fiscal year still saw revenue growth of almost 1.5%, up to $589.8 million, with operating income exploding 198% to $17 million. However, operating income is still down substantially from its $48.9 million operating income three years ago.
But despite taking a hit to its balance sheet, EPS still boomed in the last fiscal year, up 243.6%. And there’s more growth yet to come: Ethan Allen is trading at almost 11x earnings, with forward 12-month revenue expected to grow over 9.6%.
Additionally, our AI views Ethan Allen as a favorable investment as the pandemic market (tentatively) becomes a reality of the past. Q.ai’s deep learning algorithms rate Ethan Allen highly across the board, with A’s in Technicals, Low Volatility Momentum, and Quality Value, and B in Growth.
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