Stocks in the news
Honeywell's 1Q23 earnings report shows a beat-and-raise performance, driven by strong demand in the aviation market. The Aerospace division saw sales grow by 14%, led by the commercial side, with aviation aftermarket parts revenue up by 20% and commercial original equipment increasing by 30%. The Performance Materials and Technologies segment also experienced healthy demand, particularly in UOP, which had sales up by 19% organically. Safety and Productivity Solutions was the only weak spot, with sales down by 11% organically. Honeywell exceeded its forecast and boosted its midpoints of EPS, organic growth, and segment margin forecasts, thanks to its backlog increasing to a record amount of $30.3 billion. Incoming CEO Vimal Kapur will inherit a business with good momentum behind it.
eBay's Q1 report shows earnings and sales upside, with revenue growth outpacing Gross Merchandise Volume growth due to advertising. The online auction platform's focused categories, which include automotive, refurbished, luxury, and collectibles, are the underlying factor behind its solid sales growth. Focused categories outgrew the rest of the eBay marketplace, expanding by low single digits year over year. The company's active buyer counts remained in decline year over year and sequentially but hovered around the same number as last quarter. The Q2 outlook projects adjusted earnings in line with consensus and revs ahead of consensus, with GMV forecasting a year-over-year decline. The report sets an upbeat tone ahead of competitor Etsy's Q1 earnings.
Meta Platforms, the parent company of Facebook, reported positive top-line growth in Q1 2023 and slashed costs, leading to a strong earnings report. The company's surge in share price is due to its pleasing outlook for Q2, including an upside 2Q23 revenue guidance of $29.5-$32.0 bln. The company's use of AI to identify the best short-form videos to distribute in its Reels platform is improving monetisation, and the technology has also powered a 24% increase in time spent on Instagram. Although the company is lapping easier year-on-year comparisons, business is clearly improving.
Meanwhile, Caterpillar, the world's largest construction equipment manufacturer, experienced lacklustre response from investors despite beating analysts' estimates in Q1. Although CAT expects sales to dealers to remain positive for its three core segments this year, the company assumes 2H23 sales will experience an adverse dealer inventory impact, while general concerns surrounding macroeconomic conditions have also impacted investor response.
O'Reilly Automotive (ORLY) reported strong Q1 earnings, beating EPS and revenue expectations, and maintaining its FY23 guidance. The most impressive metric was Q1 same store sales, which came in at +10.8%, well ahead of street estimates, despite facing a mild winter in the US. ORLY expects comps in 1H23 to be stronger than 2H23 due to inflation benefit and easier comparisons in professional ticket counts in 1H23. However, the stock is not up more because investors had already priced in a strong report and may be disappointed to see only reaffirmed guidance. ORLY is also hit-or-miss around earnings and tends to guide only on a full year basis, making it hard for analysts to predict quarter-to-quarter performance.