In today’s briefing:
- Tarjay: Legendary Retailer on Markdown
- NVIDIA Corporation: Supporting The Metaverse
- LULU: Revisiting Lululemon
- Lululemon Athletica: Expansion In Spain & Other Drivers
- IRDM: Smartphone Validation
- Marathon Oil: Enhancement of Retail Operations & Other Drivers
- Cummins Inc: The Meritor Acquisition & Other Drivers
- Ross Stores: New Store Additions & Other Drivers
- Gap Inc: New Experience Centre & Other Updates
Tarjay: Legendary Retailer on Markdown
- Summary: Resilience and Growth Through Turmoil, Asymmetric Opportunity Today
- Target TGT 4.54%↑ has been a highly controversial retailer for years.
- Recall that in 2007, Bill Ackman’s Pershing Square invested in the business, ultimately building a 10% stake and launching an activist campaign to get on the board and force a sale-leaseback of Target’s extraordinarily valuable real estate.
NVIDIA Corporation: Supporting The Metaverse
- Nvidia has been among the priciest semiconductor stocks for a while now.
- The company matched market expectations and delivered an earnings beat though the stock is still very expensive.
- We provide the stock of Nvidia with a ‘Hold’ rating with a revision in the target price.
LULU: Revisiting Lululemon
- The last time I penned my thoughts about Lululemon was December 2021 during a period when the core business shined and Lulu’s Mirror acquisition began to show the early signs of wilting in the face of declining demand.
- I was grateful that management’s commentary implied they would avoid throwing everything at an attempt to make Mirror, a business which comprised <3% of Lulu’s revenue at the time, work.
- They have since repurposed the business into a two-tiered subscription offering, branded under the parent’s more reputable name.
Lululemon Athletica: Expansion In Spain & Other Drivers
- Throughout the second quarter, Lululemon’s momentum remained strong.
- The company’s total revenue accelerated by 29% compared to last year and 28% on a 3-year CAGR basis, helping the company surpass Wall Street expectations.
- It has been benefitting heavily from this launch as hiking has become increasingly popular among visitors since the pandemic.
IRDM: Smartphone Validation
- The announcement of Apple (AAPL) embedding satellite communications into its latest iPhone opens the door for Iridium Communications (IRDM) to benefit from competing handset makers in doing the same
- The AAPL news establishes a business plan where service providers would not be threatened by phones bypassing their network.
- IRDM has already been embedded in personal communication devices that have been widely popular the last couple of years
Marathon Oil: Enhancement of Retail Operations & Other Drivers
- Marathon’s previous quarter was one of its best financial performances since transitioning to an independent E&P company.
- Despite these factors, the company delivered an all-around beat and continues to reward its shareholders with capital returns.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
Cummins Inc: The Meritor Acquisition & Other Drivers
- Cummins delivered a third consecutive all-around beat in a quarter that was marked by a number of significant developments including many ke partnerships.
- The company announced partnerships with Daimler Truck, Scania, and North America for delivering fuel cell electric powertrains for heavy-duty truck applications, with Komatsu on developing haulage equipment zero-emission which includes hydrogen fuel cell solutions for the large mining haul truck applications.
- It also achieved a significant milestone in the quarter related to two acquisitions, namely Meritor and Jacobs Vehicle Systems.
Ross Stores: New Store Additions & Other Drivers
- Ross Stores had quite a disappointing quarter where its revenues were well below Wall Street expectations.
- Comparable store sales were low in comparison to a strong increase in the second quarter of the last year.
- We provide the stock of Ross Stores with a ‘Hold’ rating with a revision in the market price.
Gap Inc: New Experience Centre & Other Updates
- Gap saw a decline in its overall revenues in the past quarter but its results were still above analyst expectations.
- The company’s overall revenues of $3.86 billion were down 8% from the prior year or 7% when measured in constant currency but it did deliver an earnings beat.
- Further, they anticipate the near-term downturn in demand at Gap outlets, which they attribute to the persistent backlash from lower-income consumers.
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