Overview and Trends
According to the Labor Department release, U.S. initial jobless claims rose by 12 thousand to 1.43 million in the week ended July 25 vs. consensus-forecast for 1.51 million new unemployment claims. On top of that, the U.S. GDP shrank at an eye-popping 33% annually in Q2 2020 — by far the worst quarterly plunge ever. The important indicator fell 9.5% QoQ.
As a result, the Dow Jones Industrial Average closed more than 200 points down — though earlier it had seemed set for a much bigger fall.
Apple, Google-Alphabet, Amazon, and Facebook all reported their second-quarter earnings yesterday. All four tech companies reported better-than-expected numbers. Facebook beat Wall Street estimates for daily active users and reported double-digit revenue growth year-over-year, sending its stock soaring 8% in after-hours trading. Facebook’s GAAP EPS was $1.80 versus $1.39 expected.
Amazon blew our minds, with $88.9 billion in sales last quarter, but fell short on growth with Amazon Web Services. Amazon stock was up by as much as 6% in after-hours trading. Amazon’s GAAP EPS was $10.30 versus expectations of $1.50 per share.
Apple also exceeded Wall Street estimates for its fiscal third quarter. Apple's stock was up 5% and passed $400 per share for the first time in after-hours trading. Q3 earnings per share were $2.58 versus estimated $2.07.
It means so-called FAANG stocks will stay with us through these stormy times, and will lead stock market higher in the coming months intercepting the initiative from the more exposed to COVID-19 U.S. banks.
The Clorox Company (CLX) is scheduled to report fourth-quarter fiscal 2020 results on Aug 3rd, before market open. In the last reported quarter, this sanitary chemical manufacturer delivered an earnings surprise of almost 10%. Moreover, it has been securing an earnings surprise of average 6.6%, over the trailing four quarters.
What to expect this time around? Clorox has been gaining from increased demand for hand sanitizers, disinfecting wipes, and other floor and house-cleaning products on the back of rising awareness of the COVID-19 pandemic. Driven by this sudden spike in demand, management in its last earnings call raised its view for fiscal 2020. Notably, management had projected sales growth of 4-6%, with organic sales growth of 6-8%. Moreover, fiscal 2020 earnings per share are anticipated to be $6.70-$6.90.
We noted that consensus-estimate for EPS is just $1.99 versus $1.67 last quarter, while actual number came at $1.89 per share in the quarter when sanitary and hygiene sprays and liquids became hot items only in mid-March, just two-three weeks before the quarter end. So, will there be a feeling of dancing in the ceiling?
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