Thursday's Headlines: Trip.com Rebounds Pre-Market
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Stitch Fix (SFIX) +2.8%
StoneCo (STNE) +2.7%
Trupanion (TRUP) +2.3%
nCino (NCNO) +2.3%
Farfetch (FTCH) +1.2%
Moving Down ⬇️
Trip.com Group (TCOM) -8.5%
2U (TWOU) -5.8%
Wynn Resorts (WYNN) -5.6%
Here are the stories that you need to know ahead of market-open today, Thursday the 22nd of September.
Trip.com Rebounds Following Mixed Earnings Call ✈️
Shares in online travel company Trip.com (TCOM) were taking a beating yesterday in anticipation of the firm’s second-quarter earnings call. Shares dropped by 8.5% as investors expected the worst, but this morning the stock is up over 2% and climbing at time of writing.
The Chinese multinational posted a quarterly loss per share of $0.05 on revenue of $598 million. These figures are a long way off the earnings of $0.18 per share and revenue of $912 million seen in the year-ago quarter. Analysts had been expecting this dip, with this quarter's revenue actually beating expectations, but earnings just missed the analysts' mark of a $0.04 loss per share.
COVID-19 and the continued rolling lockdowns across China have wreaked havoc on Trip.com’s business, but there are some signs of recovery. According to CFO Cindy Xiaofan Wang, “overall our domestic China hotel reservations on our platform quickly rebounded and surpassed pre-Covid levels from late June.” She also added that “we continued to grow over the 2019 level in August and achieved hyper-growth versus 2021.”
The company is also seeing revitalized business outside of its own domestic market, with revenue from both European and American markets surpassing that of pre-COVID levels. International travel is expected to continue to grow throughout the year which should be a considerable headwind for the firm.
Trip.com has managed to avoid the fate of many companies this year, with its stock currently only down close to 3% year-to-date. This massively outpaces the S&P 500, which is down 21% in the same period. However, Trip.com remains almost 60% off all-time highs seen in 2017, so investors might well be worried about declining revenue should it continue.
Salesforce Eyes More Efficient Spending 👀
Salesforce (CRM) stock is up in pre-market trading after an announcement from management of long-term profitability goals. The company has targeted a 25% operating margin by 2026 that will see it spend more efficiently. The plan follows a previous announcement in which Salesforce said it would be more careful in its hiring processes back in May.
The plans were announced at the company’s Dreamforce conference and are well-timed, with the stock reaching its 52-week lows on Wednesday. CFO Amy Weaver outlines that it is targeting a 25% adjusted operating margin by its fiscal year 2026 — the company just completed its second quarter of the fiscal year 2023. That figure will include acquisitions and will be an improvement on its most recent performance of 19.9%.
This improvement will be achieved through a reduction in overall expenses, with the goal of reducing sales and marketing expenses below 35% of revenue in the same time frame — it is currently at 44%. The company will also look at reducing its office space in reaction to remote and hybrid working.
Investors welcomed the news, especially considering that it does not affect the company’s $50 billion revenue target for the same time period, from a roughly $30 billion run rate this year.
General Mills Raises Outlook as Home Cooking Surges 🍳
General Mills beat analyst estimates and raised its full-year guidance on Wednesday, citing increased demand for at-home cooking. The news lifted other packaged food brands like Kellogg and Kraft Heinz, who have been slowly increasing prices to blunt the impact of rising costs.
Those price increases don’t appear to have put off consumers, as households continue to find value in home cooking — a trend that developed during the pandemic and shows no sign of slowing down.
General Mills saw non-GAAP EPS of $1.11 — $0.11 cents higher than expected. Revenue of $4.72 billion was in line with analyst estimates. However, the real news was in the company’s guidance, with management anticipating organic revenue growth of between 6% and 7%. They also believe they could see growth in adjusted operating profit on a constant currency basis. Analysts had expected a 1-2% decrease for the year.
"Significant inflation and reduced consumer spending power has led to an increase in at-home eating and other value-seeking behaviors," noted Chief Executive Officer, Jeff Harmening.
General Mills is one of the oldest companies on the U.S. exchanges. Founded 156 years ago, the company is now a multinational conglomerate that manufactures and markets over 100 food brands around the world. Popular brands include Cheerios, Betty Crocker, Old El Paso, and Lucky Charms.
General Mills and other consumer packaged goods companies have shown resilience in the face of a broader market sell-off as investors turn to more defensive stocks. General Mills is currently at an all-time high.