During Thursday’s noon session, earnings reports remained a major focus. Southwest Airlines (NYSE:LUV), Stanley Black & Decker (NYSE:SWK), and ServiceNow (NYSE:NOW) all fell after their respective quarterly results were released. Meanwhile, Etsy stock rose following the release of financial results (NYSE:ETSY).
Decliners: Southwest Airlines (LUV) Among Others
Southwest Airlines (NYSE:LUV) lost ground after its quarterly earnings presentation, falling by 8%. The company’s quarterly earnings exceeded forecasts, and revenue increased by 68% over the previous year. Investors were more concerned about cost and capacity issues, with LUV warning about “cost headwinds” and capacity levels likely to stay “roughly in line with third quarter 2019.”
The publication of quarterly results put more pressure on Stanley Black & Decker (NYSE:SWK). Earnings and revenue for the toolmaker fell short of analyst expectations. Simultaneously, the corporation announced a cost-cutting effort aimed at saving $1 billion by the end of 2023.
Stanley Black & Decker (NYSE:SWK) fell 15.2% in pre-market trading Thursday after posting Q2 adjusted earnings and revenues that fell significantly short of forecasts, reducing the full-year outlook and instituting a cost-cutting program targeted at saving $1 billion by the end of 2023. Q2 net income fell to $87.6 million, or $0.57 per share, from $459.5 million, or $2.75 per share, in the previous quarter, but sales increased 16% year on year to $4.4 billion, with all of the increase due to outdoor power equipment acquisitions.
Gross margin declined 800 basis points (bps) to 27.9% in the second quarter, as price realization was more than offset by commodity inflation, increased supply chain expenses, and reduced volume. Inventory climbed $400M Q/Q to $6.6B at the end of Q2, above estimates and a year earlier, due to the impact of lower demand and the fading impacts of supply chain restrictions.
“As the weakening of the demand situation progressed fast in the fourth quarter, we began taking early corrective cost steps, which we are now implementing,” CEO Donald Allan Jr. stated. SWK fell 12% in intraday trade as a result of the results report. Another stock that experienced selling pressure in response to its quarterly release was ServiceNow (NOW). Shares fell about 2% after the company reduced its subscription revenue outlook for 2022.
The cloud computing platform outperformed expectations in the second quarter, with revenue increasing by 30% over the previous year. However, the corporation has reduced its forecast for 2022 subscription revenue to between $6.915B and $6.925B. Previously, the firm forecasted a range of $7.03B to $7.04B.
Gainers
Earnings news drove purchases on Etsy (NASDAQ:ETSY). The eCommerce platform posted a quarterly profit that was above analysts’ estimates, with revenue up 11% yearly.
“We anticipate various scenarios for the rest of 2022 that all point to extremely solid profitability throughout,” Etsy CEO Josh Silverman said. The quarterly report prompted a 10% increase in intraday trade.
Etsy (NASDAQ:ETSY) shares jumped by a double-digit percentage after exceeding analyst expectations for second-quarter earnings.
The Brooklyn-based eCommerce company posted GAAP EPS of $0.51 for the second quarter, with revenue of $585.14M. Analysts had predicted $0.32 and $556.85 million, respectively. Furthermore, total product sales exceeded the $3 billion predicted by Wall Street. This figure had been under examination prior to the release. The corporation also stated that it acquired 6 million new buyers during the quarter, alleviating concerns about post-pandemic slowing.
Moving on to the third quarter, the projection was slightly lighter, with gross merchandise sales expected to be flat from $2.8 billion to $3 billion. Meanwhile, revenue is expected to be in the $540M to $575M range, towards the lower end of consensus estimates of $569.96M. The adjusted EBITDA margin is also forecast to fall by 200 basis points in the third quarter.
Despite the weak forecast, shares of the battered eCommerce player rose 11.32% in after-hours trade.
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