A smaller post today, going through two companies’ earnings. Next week, I’ll return to a single Sunday post!
Today, I’ll be covering Target and Nvidia.
Target (TGT) – Q3 Earnings
Though the company reported a slight beat on revenue, it missed on earnings. It also announced an expected decline in Q4 year-over-year, emphasising the weakening consumer over this holiday season. The stock price fell around 13% today on the news.
Key Points:
- Revenue of $26,518m, up from $25,652m (+3.4%) a year ago
- Worth noting that this is a real-term decline in revenue when taking inflation into account
- Gross profit of $6,838m, down from $7,446m (-8.2%) a year ago
- Cost of sales increased to $19,680m, up from $18,206m (+8.1%) a year ago, illustrating inflationary pressures across the company
- Operating profit of $1,022m, down from $2,010m (-49.2%) a year ago
- Profit before tax of $909m
- Profit after tax of $712m
- Basic earnings per share of $1.55
- Dividend of $1.08 per share announced for Q3
- Q4 guidance estimating a low single-digit decline in revenue compared to Q4 2021, with a roughly 3% operating profit margin for the quarter (lower than this quarter’s 3.9%)
- The company stated: “Based on softening sales and profit trends that emerged late in the third quarter and persisted into November, the Company believes it is prudent to plan for a wide range of sales outcomes in the fourth quarter, centred around a low-single digit decline in comparable sales, consistent with those recent trends. Similarly, the Company is now planning a wide range for its fourth quarter operating margin rate centred around 3 percent.“
- With the softening of spending from the consumer and a shift in spending behaviour, the company will implement company-wide efficiencies. The estimate is that $2bn-$3bn will be saved over the next three years.
Nvidia (NVDA) – Q3 Earnings
Though beating on revenue, Nvidia missed on its bottom line. Revenues are significantly down, partly due to tough comparisons from last year’s supply chain woes pushing up prices, along with high inventories.
Some good news though; the data centre portion of the business is still growing (just about), saving the quarter for the company. Data centre revenue now brings in over half of the company’s total revenue.
Key Points:
- Revenue of $5,931m, down from $7,103m (-16.5%) a year ago
- The gaming segment’s revenue fell 51% YoY,
- The professional visualization segment’s revenue fell 65% YoY
- The data centre segment’s revenue rose by 31% YoY, but only up 1% quarter-over-quarter
- The automotive and embedded segment’s revenue rose 86% YoY
- Gross profit of $3,177m, down from $4,631m (-31.4%) a year ago
- Cost of sales increased to $2,754m, up from $2,472m (+11.4%) a year ago
- Operating profit of $601m, down from $2,671m (-77.5%) a year ago
- Profit before tax of $613m
- Profit after tax of $680m
- Earnings per share of $0.27
- Dividend of $0.04 to be paid on December 22nd, 2022
- Q4 revenue guidance of $6,000m, plus or minus 2%. Gross margins are expected to be above 63% once again (this quarter saw a 53.6% gross margin), while operating expenses are expected to stay flat compared to this quarter
Do you invest in any of these companies? Have these earnings changed your view about the company’s prospects in any way? Let me know in the comments!
