Dick's Sporting Goods Shines, Dollar Tree Falls, & Small-Cap Highlights

What Happened In The Stock Market This Week?

This week in the stock market saw sports and apparel retailer, Dick's Sporting Goods ($DKS) release their latest earnings report and the company absolutely crushed it. We also saw the earnings releases of two large dollar-store chains in Dollar Tree ($DLTR) and Dollar General ($DG), in which both chains forecasted trouble ahead, and Dollar Tree even announcing the shutting down of a portion of their stores.

We saw tech giants, Oracle Corporation ($ORCL), and Adobe, Inc. ($ADBE) release their latest earnings report, in which one company performed extremely well and gained in share value on the news, and the other did the opposite.

Other large companies such as On Holding a.ka. OnCloud ($ONON), Petco Health & Wellness Company ($WOOF), Ulta Beauty ($ULTA), and Lennar Corporation ($LEN) released earnings reports with some doing better than others.

In the emerging brands sector, we'll discuss up-and-coming hopeful in the jewelry retailer industry, Brilliant Earth ($BRLT), who released their latest earnings report, and is projecting optimism for the year to come.

Last, we'll discuss the much anticipated and staple of the Traders' Recap presented by Lightspeed Financial; the Small-Cap Highlights of the week, including Regulus Therapeutics ($RGLS), Gaxos.ai ($GXAI), and SoundHound AI ($SOUN).

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Dick's Sporting Goods ($DKS):

It's only fitting we kick things off with the headliner, Dick's Sporting Goods ($DKS), who crushed their latest earnings report and sent shares soaring because of it. In what may be considered the move of the week in the large-cap sector, Dick's Sporting Goods shares jumped nearly 15% in the morning session alone on Thursday after the release of the company's latest earnings report. The company posted its largest sales quarter in history, projected another year of growth, and announced they would be raising their dividend by 10% to $1.10 per share. The company posted EPS (earnings per share) of $3.85 vs. analyst expectations of $3.35 per share. They also posted revenue of $3.88B vs. analyst expectations of $3.8B. The company reported net income for the latest quarter at $296 million, equivalent to $3.57 per share. This compared to $236 million or $2.60 per share, during the same period from the prior year. Sales also rose for the company to $3.88B, up roughly 8% from the the previous year when they posted sales of $3.6B. The company is also expecting a massive year for EPS. They are expecting to post EPS between $12.85 and $13.25 per share, compared to analyst estimates of $12.90 per share. Company CEO, Lauren Hobart said on the most recent earnings call that the company's sales growth came from bigger tickets-higher prices and more expensive items- as its transactions were flat. Another good sign for investors to show just how well the company performed in 2023, was that many retailers reported benefiting from the extra week in 2023, but Dicks' said it still broke records even without those extra days. Company CFO, Navdeep Gupta said the company anticipates an "unfavorable" trend in gross margin relative to the prior-year period due to higher rates of shrink. Shrink is defined as lost inventory due to factors such as internal and external theft, as well as damage to inventory. Hobart said on the earnings call that the company is "working with loss prevention, local law enforcement, and moving products to the back of the store that are high shrink items.". Shares of $DKS are up roughly 56% over the last 52 weeks as of Thursday morning.?

Dollar Tree, Inc. ($DLTR):

Wednesday was a terrible morning for investors of Dollar Tree as shares tumbled more than 14% after the release of the company's latest earnings report in which the company missed holiday-quarter estimates for both sales and profit and announced plans to shut down nearly 1,000 stores. Dollar stores have struggled with the recent shift in consumer spending behavior away from higher-margin discretionary goods and towards lower-margin essentials. They are also facing increasing competition from rivals Walmart and up-and-coming hopeful, Temu, a Chinese e-commerce platform. Company CEO, Rick Dreiling said about the terrible earnings release, that the company was "continuing to be hurt by macroeconomic uncertainties" and that "Our (Dollar Tree) biggest problem right now is getting enough merchandise into the stores fast enough so the consumer can respond.". The company, which currently operates 16,774 stores will close nearly 6% of its entire storefront operation throughout fiscal 2024. Dollar Tree reported a net loss of $1.71B, equivalent to $7.85 per share in the most recent quarter, compared to the same period a year ago when they reported a profit of $452.2 million, or $2.04 per share. The company expects its 2024 sales outlook to fall between $31B and $32B, the mid-point of which is below analyst expectations of $31.65B. Dollar Tree also projects annual profit to be between $6.70 and $7.30 per share, the mid-point of which would still fall below analyst expectations of $7.04 per share.?

Dollar General Corporation ($DG):

Shares of $DG fell roughly 5% during the morning session on Thursday after the release of the company's latest earnings report. The company forecasted annual sales above analyst expectations, attributing the projection to more inflation-affected customers buying its cheaper groceries and essentials. Due to the shift in consumer behavior to cook more meals at home throughout the week, Dollar General has seen more shoppers visiting its stores to browse for lower-margin, needs-based goods, over pricier general merchandise. Company CEO, Todd Vasos said the strategy for the company was to focus on the "basics", such as more employee presence at its stores, increased customer engagement, and expanding private-label brands, which has helped to stabilize Dollar General's struggling business. Just as Dollar Tree noted earlier this week, when they also released earnings, dollar-store chains are facing increased competition from Walmart and Chinese e-commerce platform, Temu. The dollar-store retailer posted holiday-quarter net sales of $9.86B for Q4, which topped analyst expectations of $9.78B. The company did, however, project annual profit to fall below estimates, attributing this to margin pressures from higher costs linked to supply chain, labor, and raw materials. Gross profit for Q4 came in at 29.5%, which is down from 30.9% from the same quarter during the previous year. The company expects profit to fall between $6.80 and $7.55 per share, the mid-point of which would fall below analyst expectations of $7.55 per share. The company is now down roughly 30% over the last 52 weeks as of Thursday morning.?

Oracle Corporation ($ORCL):

Shifting to the technology sector we'll discuss two large companies who released earnings this week, in which one company performed extremely well and gained in share value on the news, and the other did the opposite. We'll begin our discussion with Oracle Corporation ($ORCL). Shares of $ORCL soared more than 10% during the morning session on Tuesday, after the release of the company's latest earnings report during the post-market session from the previous day.?The Austin, TX based company actually posted their largest intraday gain nearly two years after the stellar earnings report, in which the company reported a spike in bookings for its cloud computing business. One key metric that was a catalyst for the bull-run on the stock during the morning session on Tuesday was the the figure regarding what the company calls "Remaining Performance Obligation". This figure is a measure of Oracle's sales backlog. The company reported this figure at $80B for the most recent quarter, coming in way above estimates of $59B. Company CEO, Safra Catz, said that this was driven by "large new cloud infrastructure contracts signed in the third quarter.". The company operates in a highly-competitive market in which they have to stack up against tech giants like Amazon, Microsoft, and Google. The company reported that cloud revenue jumped 25% to $5.1B in the most recent quarter, beating analyst expectations of $5.06B. Total sales in the most recent quarter also increased by a rate of 7.1% to $13.3B, virtually matching analyst expectations. The company is also facing what many would consider a "good problem" as they are having to build new data centers to meet demand, with some analysts unsure if the company will be able to do so in time. Guggenheim analyst, john DiFucci said "We believe Oracle continues to face a situation in which Oracle demand is outpacing the ability to meet it.". The company said they will spend roughly $10B in capital expenditures for fiscal 2025 in order to meet consumer demand.?

Adobe, Inc. ($ADBE):

Shares of $ADBE fell nearly 15% during the morning session on Friday after the release of the company's latest earnings report during the post-market from the previous day. The digital media software provider reported Q11 earnings that beat estimates but fell after issuing light quarterly revenue guidance. The company posted adjusted earnings per share of $4.48, beating analyst expectations of $4.38. Their revenue figures also beat analyst expectations, coming in at $5.18B when estimates had that figure at $5.14B. For the current quarter, however, the company expects adjusted EPS (earnings per share) to fall bewteen $4.35 and $4.40, when analysts had that figure pegged at $4.38. The company is also expecting quarterly revenue to fall below analyst expectation, in which analysts had that figure set at $5.31B, while Adboe is projecting to generate between $5.25B and %.30B. The company also announced a $25B share buyback. More bad news for the company was that Bank of America had lowered their price target for the company from $700 per share to $640 per share. Barclay's also dropped its price target for Adobe to $630 per share, down from $700 per share, and placed an overweight rating on the stock. Adobe did recently launch an AI assistant for its Reader and Acrobat applications that can help users digest information from long PDF documents. Company CEO, Shantanu Narayen, said regarding the latest earnings report, "Adobe drove record Q1 revenue demonstrating strong momentum across Creative Cloud, Document Cloud, and Experience Cloud...We've done an incredible job harnessing the power of generative AI to deliver groundbreaking innovation across our product portfolio."

On Holding AG ($ONON):

Shifting our discussion to other large companies that released earnings this week, we'll begin our discussion with the apparel producer, On Holding AG ($ONON). Shares of $ONON fell by more than 15% during the morning session on Tuesday after the release of the company's latest earnings report. The Swiss shoemaker reported a quarterly loss of $0.06 per share, decreasing from the previous year mark of $0.02 per share. This was well below analyst expectations that the company would actually turn a profit of nearly $0.12 per share. Revenue growth also slowed for the most recent quarter. This marks the fourth consecutive quarter with declining revenue. Plus sales came up short of the estimates that analysts had set at $516.8 million. The company still states that it is a in a good position to perform well in 2024, as the company said they expect to achieve a net sales growth rate of 30%, equal to $2.57B, driven by strong demand for the brand and its product pipeline. The company said that they plan to add less additional wholesale doors going forward and will instead focus on existing wholesale partners and its own e-commerce, retail, and direct-to-consumer channels.?

Petco Health & Wellness Company, Inc. ($WOOF):

Shares of $WOOF fell roughly 1.5% after the release of the company's latest earnings report. The pet supply retailer has lost more than 70% of it's share price value over the last 52 weeks, and the trend continued Wednesday morning. The company faired relatively weel in terms of earnings as they reported EPS (earnings per share) of roughly $0.02 per share, matching analyst expectations, and reported revenue of $1.67B, exceeding analyst expectations of $1.62B. Sales also rose about 6% from the previous year to $1.67B. One major negative from the earnings report was that the company reported a net loss of $22.6 million for the most recent quarter, equivalent to a loss of $0.08 per share. This is compared to a year earlier when the company reported a net income of $32.7 million, equivalent to roughly $0.12 per share. The company also announced major news Wednesday morning, stating that their current CEO, Ron Coughlin is stepping down, and said that board member and BestBuy executive, Michael Mohan will preside as interim CEO as the company searches for a permanent replacement. Petco's decline in value has been a puzzling one as the company has continued to report consistent sales growth and comparable sales gains over the past year. Departing CEO, Ron Coughlin, played a massive role in transforming Petco into a health and wellness company since he took over as company CEO in 2018. Under his leadership, the company only sells healthy pet food, removed products like shock collars from its offering, and began expanding its services and veterinary business line. The company is now one of the largest pet health providers in the nation, operating 282 full-service veterinary hospitals as of the end of 2023.?

Ulta Beauty, Inc. ($ULTA):

Shares of $ULTA fell more than 10% in extended trading on Thursday and during the pre-market on Friday after the release of the company's latest earnings report during the post-market session on Thursday. Shares have since recovered Friday morning to a roughly 5% decline. The company beat expectations during Q4 , but shares fell after the company issued weak guidance on margins for 2024. Ulta reported $394.4 million in net income and EPS (earnings per share) of $8.08, both topping analyst expectations. The company also issued projection of net sales and EPS that are expected to top analyst expectations for 2024. However, share fell on guidance that the company projected to underperform in terms of profit margin for 2024, compared with the previous year. Ulta is projecting a profit margin of 14% to 14.3% compared to 15% from the previous year. The company attributed the decline in profit margin to higher costs and increased promotions. Company CEO, Dave Kimbell, said in a letter to shareholders, "We enter 2024 well-positioned to drive strong top and bottom-line growth, build on our foundational capabilities, and unlock further advantages of our differentiated model. While we are mindful the near-term macro environment remains dynamic, we are optimistic about the resiliency of the beauty category, energized by the growth opportunities ahead of us, and confident in our ability to deliver for our guests and our shareholders."

Lennar Corporation ($LEN):

Shares of $LEN fell roughly 5% during the morning session on Thursday after the release of the company's latest earnings report during the post-market session from the previous day. Lennar Corporation operates as a homebuilder in the United States. The company's homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land; and development, construction, and management of multifamily rental properties. The company also offers residential mortgage financing, title, insurance, and closing services for home buyers and others, and additionally, originates and sells securitization commercial mortgage loans, and is headquartered in Miami, Florida. The company reported earnings that topped analyst expectations, however, missed on revenue expectations. According to Zacks Investment Research, "On a year-over-year basis, both the top and bottom lines increased, given the company's emphasis on maintaining a steady production rate to drive sales momentum. Lennar strategically utilized pricing, incentives, marketing expenditure and dynamic pricing insights to ensure steady sales volume despite fluctuations in interest rates." Homebuilding revenues totaled $6.93B, falling short of analyst expectations of $7.13B, however, still up 12.6% from the same quarter in the prior year. The ASP (average sale price) of homes delivered was $413,000, down 8% from the previous year. In terms of guidance, Executive Chairman and Co-CEO, Stuart Miller said, "We continue to remain enthusiastic about our current execution and future. We have remained focused on our operating strategies, while at the same time being observant of current economic and market trends. This has positioned us particularly well as the economic environment continues to define itself throughout the complicated election year in 2024...We will continue to fortify our balance sheet with significant liquidity and operate from a position of strength, thus enabling us to continue to execute on our core strategies to drive strong cash flow and higher returns."

Brilliant Earth Group, Inc. ($BRLT):

Shifting our focus to the emerging brands sector, we'll discuss up-and-coming hopeful in the jewelry retailer industry, Brilliant Earth ($BRLT), who released their latest earnings report, and is projecting optimism for the year to come. Shares of $BRLT rose more than 5% during the market session on Friday. This came after the release of the company's latest earnings report during the post-market from the previous day. Brilliant Earth designs, procures, and sells diamonds, gemstones, and jewelry in the United States and internationally. The company sells direct-to-consumer through its omnichannel sales platform, including e-commerce and showrooms, and is headquartered in San Francisco, California. The up-and-coming hopeful jewelry giant reported stellar financial performance for Q4 and full-year 2023. The company reported significant growth in net sales and gross margins. The company realized a new sales increase of 4% year-over-year, increasing to $124.3 million. The biggest takeaway, however, from the latest earnings report, was that company achieved its highest gross margins in its history, coming in at 587.7% for Q4, and 57.6% for full-year 2023. Also, the company outperformed industry growth with a 750 basis point increase in revenue and reported positive adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for the fourth consecutive year. Looking to 2024, the company expects flat net sales in Q1, but anticipates a turning point in profitability in the years to come. Company CEO and Co-Founder, Beth Gerstein said in a letter to shareholders, "We see significant opportunities in 2024 to gain share, drive near and long-term profitable growth, and deliver long-term shareholder value."

SoundHound AI, Inc. ($SOUN):

Capping off our Traders' Recap presented by Lightspeed Financial we'll discuss the small-cap stock that was actually covered a few weeks ago that hasn't fallen back to share prices it was at before its initial spike in February; SoundHound AI, Inc. ($SOUN). This stock is up more than 400% since the beginning of February and hasn't fallen even close to pre-spike levels, even though the company has questionable fundamentals to say the least. The company, based in Santa Clara, California, is a voice and audio AI platform providing end-to-end voice AI solutions, including automatic speech recognition, text-to-speech, multiple languages, and branded wake words. On February 1st of this year the company opened at $1.70 per share, and as of Friday afternoon was trading at roughly $8.50 per share. At the beginning of March, analysts at DA Davidson raised their price target for $SOUN to $7.50 per share, up from $5, equivalent to a 50% increase in share value, and maintained a buy rating on the stock. The firm told investors and prospective investors that demand for the company remains high, especially as it had won a new deal with a U.S.-based EV manufacturer, and signed a contract with a large OEM that increases its unit volumes through 20237. The firm went on to say "SoundHound is winning market share and has customers knocking on its doors." However, not all may be as it seems, and as analysts at Navellier put it, SoundHound AI is "obviously a pump and dump stock". Even though the company's Q1 sales are forecasted to grow more than 50%, its EPS (earnings per share) are expected to be down $0.09 per share, actually decreasing from -$0.07 a few months ago. Navellier went on to state "When the analyst community is lowering their consensus earnings estimate, that is not a good sign.". The firm also noted that the company posted a 16.7% earnings miss for Q4, and even though it has a market cap of $2.67B, it only is expected to generate revenue of $69.5 million in 2024, putting its market cap at 38.4X its forecasted revenue for 2024.

Regulus Therapeutics Inc. ($RGLS):

Continuing with our small-cap highlights of the week, we'll discuss Regulus Therapeutics Inc. ($RGLS). Shares of $RGLS sky-rocketed by more than 100% in the morning session alone on Tuesday. The spike in share price came after news broke that the company released topline results from the second cohort of patients in its Phase 1b multiple-ascending dose study of RGLS8429 for Autosomal Dominant Polycystic Kidney Disease (ADPKD). Regulus Therapeutics is a clinical stage biopharmaceutical company, focused on discovery and development of drugs that targets microRNA's to treat a range of diseases in the United States. The study evaluates RGLS8429 treatment across three different weight-based dose levels, including measuring changes in urinary polycystins 1 and 2 (PC1 and PC2), height-adjusted total kidney volume (htTKV), cyst architecture, and overall kidney function. PC1 and PC2 have been shown to correlate with disease severity intensity. RGLS8429 was well tolerated, with no safety findings of concern. Clear evidence of a mechanistic dose response at 2mg/kg dose levels was observed. The company also announced a private placement of $100 million. Under the securities purchase agreement, the investors have agreed to purchase shares at $1.60 per share.?The company's share prices fell to roughly $2.10 per share as of Friday afternoon.

Gaxos.ai Inc. ($GXAI):

Concluding our small-cap highlights of the week and the Traders' Recap presented by Lightspeed Financial, we'll discuss Gaxos.ai Inc. ($GXAI). Shares of $GXAI soared more than 100% to more than $10 per share during the morning session alone on Wednesday. The spike in share prices came after news broke that the company had acquired the rights to use certain AI-enabled technology from a top biohacking app, Ultiself, in order to facilitate the development of its tech for Gaxos Health. Gaxos AI, develops artificial intelligence applications for various sectors including mental and physical wellbeing, coaching, and gaming, and is headquartered in Roseland, New Jersey. The company has been moving higher since 02/16 of this year, and even traded as high $19.70 per share during this time period. The integration of Ultiself's proprietary technology?is expected to accelerate Gaxos Health's development and help solidify its position in the health and wellness industry, and the integration itself is set to commence immediately.?Shares fell to roughly $7.00 per share as of Friday afternoon.

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