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Thursday November 30, 2023



Zoom Posts Earnings

Zoom Video Communications, Inc. (ZM) released its fourth quarter and full-year earnings on Monday, February 27. The videoconferencing company reported increased revenue, boosting the company's shares 8% following the release.

The company reported revenue of $1.12 billion for the quarter, exceeding analysts' expectations of $1.10 billion. This was up 4% from $1.07 billion during the same quarter last year. Revenue for the full year was $4.39 billion, up 7% from $4.10 billion one year ago.

"FY23 was truly a pivotal period in our evolution into a full collaboration platform. We launched multiple innovations to help transform work and expanded our product portfolio to open new markets," said Zoom CEO, Eric Yuan. "There is a tremendous opportunity in front of us, and we are confident that our strong foundation, ambitious vision and customer-centric culture will enable us to seize this opportunity and continue to lead the way in the unified communications and collaboration space."

Zoom posted net losses of $104.05 million for the quarter or $0.36 per adjusted share. This was down from net income of $490.53 million or $1.60 per adjusted share during the same quarter last year. For the full year, the company reported net income of $103.70 million.

Zoom's Enterprise customers, those who subscribe directly through Zoom's sales team or partners, now number approximately 213,000, an increase of 12% from 191,000 one year ago. By the end of the fourth quarter, the company saw an increase of 27% to 3,471 of its customers driving more than $100,000 in revenue compared to the same time last year. For fiscal year 2024, Zoom expects revenue to be in the range of $4.44 to $4.46 billion.

Zoom Video Communications, Inc. (ZM) ended the week at $70.81, down 5% for the week.

Target Reports Quarterly and Full-Year Earnings

Target Corporation (TGT) released its fourth quarter and full-year earnings report on Tuesday, February 28. The retailer delivered better-than-expected earnings and its stock price rose by more than 2% following the report's release.

Target reported quarterly revenue of $31.40 billion, above the $30.72 billion expected by analysts. This was a slight increase from revenue of $31 billion in the same quarter last year. For the full year, the company reported $109.12 billion in revenue.

"We are pleased that our business delivered comparable sales growth in the fourth quarter, in what continues to be a very challenging environment," said Target CEO, Brian Cornell. "This performance highlights the benefit of our multi-category merchandise assortment, which drives relevance with our guests in any environment, and is a key reason we grew traffic every quarter last year. As we plan for the year ahead, we will continue to make robust capital investments and pursue efficiency opportunities in support of our long-term growth."

The company reported net income of $876 million for the quarter or $1.89 per adjusted share. This is down from net income of $1.54 billion or $3.21 per adjusted share in the same quarter last year. For the full year, net income was $2.78 billion.

The Minneapolis-based retailer saw comparable sales growth of less than 1% in the fourth quarter which was attributed to an increase in guest traffic. Target's digital comparable sales declined by 3.6% for the quarter. Same-day services, which encompasses more than 10% of the company's total sales increased by 4.3% in the quarter. For the first quarter of fiscal 2023, Target expects operating income margin rates to be between 4% and 5% and adjusted earnings per share to be between $1.50 and $1.90.

Target Corporation (TGT) shares ended the week at $166.00, down 2% for the week.

AutoZone Posts Earnings Report

AutoZone, Inc. (AZO) released its second quarter earnings report on Tuesday, February 28. The auto parts company's shares dropped by almost 1% despite the company reporting higher profits.

The company reported net sales of $3.69 billion during the quarter, falling short of analysts' expectations of $4.07 billion. This was up 9.5% from $3.37 billion in sales during the same quarter last year.

"We are proud to report solid same store sales growth on top of last year's 13.8%," said AutoZone CEO, Bill Rhodes. "Once again, our AutoZoners' efforts generated double digit domestic Commercial growth and single digit domestic Retail sales growth. We continue to believe the initiatives we have in place position us well for the remainder of our fiscal year."

AutoZone reported net income of $476.54 million for the quarter or $24.64 per adjusted share. This was up from $471.76 million or $22.30 per adjusted share in the same quarter last year.

The Memphis, Tennessee-based company saw a 5.3% increase in their domestic same store sales for the quarter. During the quarter, AutoZone opened 30 new stores in the U.S., one in Mexico and five in Brazil. Currently, the company has a combined total of 7,014 globally. The company's growth initiatives resulted in the company's inventory increasing 13.9% over the same period last year.

AutoZone, Inc. (AZO) shares ended the week at $2,497.34, down 2% for the week.

The Dow started the week of 2/27 at 32,906 and closed at 33,391 on 3/3. The S&P 500 started the week at 3,992 and closed at 4,046. The NASDAQ started the week at 11,517 and closed at 11,689.

Treasury Yields Vary

U.S. Treasury yields rose throughout the week as investors monitored for signs of further tightening financial conditions. Yields retreated at the end of the week as initial filings for unemployment fell for the third straight week and U.S. manufacturing data fueled concerns of climbing interest rates.

On Wednesday, the Institute for Supply Management (ISM) released its purchasing managers' index (PMI) for February indicating a contraction in manufacturing. The PMI measures the change in production levels across the U.S. and is used as an indicator of the U.S. economic activity. The PMI read at 47.7 in February relatively unchanged from a PMI of 47.4 in January.

"This is a potential concern to the extent that it signals that recent economic resilience is putting renewed upward pressure on inflation," said deputy chief economist at Capital Economics, Andrew Hunter. "But that index is still consistent with a sharp fall in the headline CPI rate."

The benchmark 10-year Treasury note yield opened the week of February 27 at 3.95% and traded as high as 4.01% on Wednesday. The 30-year Treasury bond opened the week at 3.93% and traded as high as 3.99% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment dropped by 2,000 to 190,000 for the week ending February 25. Continuing unemployment claims decreased 5,000, reaching 1.65 million.

"The labor market shows no fresh signs of deterioration with minimal job layoffs despite the news of big tech firings the last several months, and this will harden the resolve of Fed officials to slow economic demand down with higher interest rates," said chief economist at FWDBONDS, Christopher Rupkey.

The 10-year Treasury note yield finished the week of 2/27 at 3.96%, while the 30-year Treasury note yield finished the week at 3.89%.

Mortgage Rates Rise Again

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, March 2. Mortgage rates rose again for the fourth consecutive week amid continuing inflation.

This week, the 30-year fixed rate mortgage averaged 6.65%, up from last week's average of 6.50%. Last year at this time, the 30-year fixed rate mortgage averaged 3.76%.

The 15-year fixed rate mortgage averaged 5.89% this week, up from 5.76% last week. During the same week last year, the 15-year fixed rate mortgage averaged 3.01%.

"As we started the year, the 30-year fixed-rate mortgage decreased with expectations of lower economic growth, inflation and a loosening of monetary policy," said Freddie Mac's Chief Economist, Sam Khater. "However, given sustained economic growth and continued inflation, mortgage rates boomeranged and are inching up toward seven percent. Lower mortgage rates back in January brought buyers back into the market. Now that rates are moving up, affordability is hindered and making it difficult for potential buyers to act, particularly for repeat buyers with existing mortgages at less than half of current rates."

Based on published national averages, the savings rate was 0.35% as of 2/21. The one-year CD averaged 1.36%.

Editor's Note: The publicly available financial information is offered as a helpful and informative service to our friends. This article is not an endorsement of any company, product or service.

Published March 3, 2023
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