Nvidia’s Q2 Results Were Strong

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Aug. 11, 2017 11:44 p.m. ET

Insider Transactions

These reports, excerpted and edited by Barron’s, were issued recently by investment and research firms. The reports are a sampling of analysts’ thinking; they should not be considered the views or recommendations of Barron’s. Many of the reports may be obtained through Thomson Reuters at thomson.com/financial. Some of the reports’ issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.


Nvidia



NVDA -5.329610295010319%



NVIDIA Corp.


U.S.: Nasdaq


USD155.96


-8.78
-5.329610295010319%



/Date(1502485200161-0500)/


Volume (Delayed 15m)
:
37029516



AFTER HOURS



USD156.1


0.14
0.08976660682226212%


Volume (Delayed 15m)
:
401031




P/E Ratio
51.81395348837209

Market Cap
98020303268.4326


Dividend Yield
0.3590664272890485%

Rev. per Employee
810176









More quote details and news »




NVDA in







Your Value
Your Change









Short position




• NVDA-Nasdaq
Neutral • Price $164.74 on Aug. 8
by MKM Partners
For its fiscal third quarter, the chip maker expects revenue of $2.35 billion, plus or minus two percent, which compares favorably to the current consensus estimate of $2.14 billion. GAAP gross margin is expected to be 58.6, up slightly against the July quarter. GAAP operating expenses are expected to be roughly $672 million, an increase of 23% year over year, due to the timing of annual compensation increases, and the company’s move into new headquarters, as Nvidia continues to invest in growth opportunities. Based on its outlook, we are increasing our third-quarter revenue estimate to $2.35 billion from $2.05 billion. The current consensus revenue and EPS estimate for the third quarter are $2.14 billion and 79 cents.

Nvidia continues to execute well in taking advantage of numerous growth opportunities. Even with our estimate increases, though, its shares trade at a significant premium to the semiconductor peer group at 44.3 times our new fiscal-2019 (calendar 2018) EPS estimate of $3.59, versus the peer-group average of 18.6 times. While we believe that Nvidia’s positioning in multiple multi-billion-dollar growth markets should warrant a premium to its peer group, we think that the current valuation is at an extreme, particularly with slowing year-over-year growth rates in the high growth automotive and data center markets. With this in mind, we remain Neutral on Nvidia’s shares. Given our increased EPS estimates, we are raising our fair-value estimate to $120 from $106.


CBS



CBSA 0.5220763723150358%



CBS Corp. Cl A


U.S.: NYSE


USD67.39


0.35
0.5220763723150358%



/Date(1502482876266-0500)/


Volume (Delayed 15m)
:
6763




P/E Ratio
204.21212121212122

Market Cap
26617437782.9703


Dividend Yield
1.068407775634367%

Rev. per Employee
593794









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CBSA in







Your Value
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Short position




• CBS-NYSE
Outperform • Price $65.70 on Aug. 8
by Barrington Research
CBS’ over-the-top content is generating subscription levels in excess of management’s original expectations. CBS All Access and Showtime OTT have crossed the four-million-subscriber mark already, more than halfway to the goal of eight million combined subscribers by 2020, in just over a year. Emerging distribution services have historically been an important driver for further resetting the value of CBS content. The increasing array of new OTT services has added CBS content to their platforms, and these in turn provide multiple opportunities to reset the level of value at which CBS is compensated for content.

Revenue increased nearly 10% in the quarter, to $3.26 billion, outpacing our estimate of $3.14 billion by 3.6%, due to a strong advertising environment and continued progress in increasing consumer access to its content. Adjusted diluted earnings per share from continuing operations in the fourth quarter of $1.04 were above our estimate of 97 cents and more than 10% above year-ago EPS of 93 cents.

We reaffirm our Outperform rating and 2017-based price target of $77.


Zillow Group



ZG 1.1604938271604939%



Zillow Group Inc. Cl C


U.S.: Nasdaq


USD40.97


0.47
1.1604938271604939%



/Date(1502485200261-0500)/


Volume (Delayed 15m)
:
1661401



AFTER HOURS



USD41.1


0.13
0.31730534537466437%


Volume (Delayed 15m)
:





P/E Ratio
N/A

Market Cap
7440433034.55853


Dividend Yield
N/A

Rev. per Employee
347561









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ZG in







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Short position




• ZG-Nasdaq
Buy • Price $47.74 intraday on Aug. 7
by Canaccord Genuity
The provider of information on home renting, buying, selling, financing, and improvement reported strong second-quarter results with essentially all revenue segments above consensus and guidance. Third-quarter guidance was roughly in line with expectations, and full-year guidance was raised slightly at the low end of its range. The company once again benefited from solid top-line fundamentals, including website-visit growth of 17% and pricing expansion of 10%. The auction-based pricing platform is helping to drive Premier Agent revenue but also has a long runway, as it has time to mature more fully. This could lead to several more quarters of pricing strength. It also has the effect of leading to long-term operating-expense leverage, as the company can drive revenue upside off a more constant sales-force head count.

Our price target rises to $52 from $50, based on a 45-times (unchanged) multiple, applied to our higher 2021 EPS estimate of $1.86.

Ralph Lauren • RL-NYSE
Market Perform • Price $88.53 on Aug. 8
by Cowen
The company designs, markets, and distributes high-fashion products in four categories: apparel, home, accessories, and fragrances. It reported first-quarter gross margin up 200 basis points (two percentage points) and average units retail, or net sales divided by the number of units sold, is up 4%, driving the upside to consensus EPS again, as management continues to beat both the consensus and its own EPS guidance. Other positives: Inventory fell 31% and net cash built to about $12, as share buybacks could be a 2019 tailwind. Also, the stock was trading at a 30% discount to peers and was far too cheap.

Lauren’s stock performance for the specialty-retail sector remains robust, and as we approach second-quarter prints, sentiment on the shares has nowhere to go but up. EPS estimates, too, will very likely be revised higher. North America revenue, still very challenged, remains a sticking point with an inflection tough to call until better product and marketing data kick in. Still, we are raising our estimated price target to $89 from $80, reflecting 17 times fiscal 2018 estimated EPS.

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