Wednesday’s session saw both the S&P 500 and Nasdaq Composite close at new record highs. Meanwhile, the Dow Jones Industrial Average marked its fourth straight positive session on the day – though it has yet to breach the record it set for itself last week.
By Thursday, the Department of Labor’s new weekly jobless report claimed a total of 353,000 new claims for the week ending August 21. That brings the most recent week’s claims up 5,000 from the previous report. Meanwhile, a second look at the second quarter’s GDP found that growth was actually slightly faster than estimates, with an annual increase of 6.6%.
And as investors remain cautiously bullish on the market, many look toward the Federal Reserve’s Friday remarks to guide their optimism.
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Salesforce.com, Inc (CRM)
Salesforce.com, Inc nicked up 0.5% Wednesday to $260.85 per share, closing out the day with 9.7 million trades on the docket. On Thursday, the stock rose an additional 2.7%, adding $6.94 to its per-share price and nearly doubling its daily trade volume to 19 million. By the bell, Salesforce had climbed up 20.3% YTD to trade at 70x forward earnings.
Salesforce is trending this week after the enterprise software marker blew analyst expectations out of the water with its Q2 2022 earnings and updated forward guidance. The company reported 23% revenue growth YOY for a total of $6.34 billion, with an operating cash flow of $386 million and diluted earnings per share of 56 cents.
The results led management to raise FY2022 guidance to $26.2 billion in revenue, with a full-year operating cash flow between 14-15% YOY growth. For the upcoming quarter, Salesforce expected revenue up to $6.79 billion, or a 25% increase YOY.
Over the last three fiscal years, Salesforce has seen revenue growth over 68%, climbing from $13.3 billion to over $21.2 billion. In the same period, per-share earnings have soared 232% to $4.38 compared to $1.43, while return on equity grew from 8.5% to 10.8%. That said, operating income fell substantially in the period from $535 million to $455 million.
At this time, Salesforce is expected to see around 10.5% revenue growth in the next year. Our AI rates this tech company B in Quality Value, C in Technicals and Growth, and D in Low Volatility Momentum.
Western Digital Corporation (WDC)
Western Digital Corporation closed up 7.8% on Wednesday, trading 17.78 million shares to a final price of $65.50, before falling almost $3 per share by Thursday’s bell. The stock sits up around 18% for the year and trades at 6.2x forward earnings.
Western Digital Corporation is a tech company that primarily manufactures computer hard disk drives and operates within the data storage space. The company is trending this week – alongside rivals Seagate Technology
Kioxia, a privately-owned company, is reported to have been in talks with Western Digital to arrange an all-stock deal worth upwards of $20 billion. Should the merger go through, the combination would create a powerful data storage competitor while also reducing relative costs and increasing total scale.
However, the news should be regarded lightly at this time, as neither Kioxia nor Western Digital have publicly commented on the rumors.
Over the last three fiscal years, Western Digital’s revenue has grown from $16.57 billion to more than $16.92 billion for total growth of 2.1%. In the same period, operating income surged over 428% to $1.17 billion compared to $222 million, while per-share earnings rose from $2.58 to $2.66. Additionally, return on equity inched up from 7% to 8%.
All told, our AI rates Western Digital as a poor investment at this time, with an A in Growth, C in Technicals, and Ds in Low Volatility Momentum and Quality Value.
Wells Fargo & Company (WFC)
Wells Fargo & Company jumped 1.9% Wednesday, trading 21.36 million shares in the session to close out the day at $49.29 per share. Currently, the stock sits around $1 over the 22-day price average and trends up 63.3% for the year. Wells Fargo is trading at 14.3x forward earnings.
Wells Fargo continues trending this week after last week declaring that no, the bank won’t be closing customers’ personal lines of credit after all. The revolving credit lines, which were marketed to customers as a way to pay down high-interest debt or renovate their homes, had limits up to $100,000 and could be readily accessed at any time.
However, last month, the bank sent letters to customers announcing the closure of all personal lines of credit and warned that the move could impact users’ credit scores. But following scathing consumer and senatorial backlash, the bank decided to keep credit lines open for customers who actively use them or want to reactive old lines. However, Wells Fargo won’t offer the product to new customers going forward.
Over the last three fiscal years, Wells Fargo’s revenue plummeted from $84.7 billion to $58.3 billion, while operating income plunged from $28.5 billion to $2.1 billion. Meanwhile, per-share earnings fell from $4.28 to just 41 cents as return on equity dipped from 11.3% to 1.9%.
At this time, our AI rates Wells Fargo as a mixed bag, with a B in Technicals, C in Growth and Low Volatility Momentum, and D in Quality Value.
Delta Air Lines, Inc (DAL)
Delta Air Lines, Inc popped 1.9% Wednesday to $41.30 per share, closing out the day on volume of 12.45 million trades. The stock sits up almost $2 over the 10-day price average and 2.7% for the year. Currently, Delta trades at 16.8x forward earnings.
Delta Air Lines is trending this week after making an unusual (and slightly controversial) declaration. Employees on Delta’s health plans who aren’t vaccinated against Covid-19 will face a $200 surcharge on their monthly premiums beginning 1 November, while weekly Covid tests for unvaccinated individuals will start on 12 September.
Additionally, starting 30 September, Covid-19 pay protection will “only be provided to fully vaccinated individuals who are experiencing a breakthrough infection.” Employees who refuse the vaccine (without applicable exemptions) will be required to use their sick days.
Delta – which self-insures its employees – has taken these steps instead of outright mandating vaccines like some of its rivals.
When it comes to financials, Delta – like all airline carriers – was hard-hit by the pandemic. Over the last three fiscal years, Delta’s revenue has plunged from $44.4 billion to just $17.1 billion. However, thanks to federal stimulus, the company’s operating income actually rose from $5.5 billion to $9.2 billion. Meanwhile, per-share earnings soared from $5.67 to $19.49, with return on equity surging to 147% from 30% three years prior.
Currently, Delta Air Lines is expected to see around 29.4% revenue growth in the coming year. Our AI rates this airliner B in Technicals, C in Low Volatility Momentum, D in Growth, and F in Quality Value.
Dell Technologies, Inc (DELL)
Dell Technologies, Inc. closed up 1.3% Wednesday to $102.06 per share, ending the session with 1.76 million trades on the docket. The stock is trading above its 10- and 22-day price averages of $99.26 and $98.38, respectively. Currently, Dell Technologies sits up 39.3% YTD and trades at 12.3x forward earnings.
Dell is trending this week after its Q2 2022 earnings report topped expectations. The company’s second quarter revenue came in at $26.1 billion, driven primarily by commercial client solutions and enterprise sales. Operating income grew 21% YOY to a quarterly record of $1.4 billion. All told, diluted EPS grew 17% to top the quarter at $2.24.
Management also announced that the company had paid down $5.5 billion in debt YTD, including $1 billion in margin loans. The tech giant also reported itself as the #1 competitor in multiple markets by revenue and market share, including software and external enterprise storage, client business, and converged systems.
Over the last three fiscal years, Dell’s revenue has grown by over 6.8%, coming in at $94.2 billion in the most recent year compared to $90.6 billion three years prior. Operating income soared more than 2,500% in the same period from $212 million to $4.9 billion. Meanwhile, per-share earnings jumped nearly 22% from $3 even to $4.22, while return on equity well over doubled from 26.4% to 65.5%.
At this time, our AI rates Dell Technologies as average to mixed, with a B in Quality Value, Cs in Growth and Low Volatility Momentum, and an F in Technicals.
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