By Davit Kirakosyan
Investing.com -- As we enter the new trading week, here are 5 of the biggest earnings stories in the past few sessions, including Bed Bath & Beyond's "meme stock" surge amid disappointing earnings and reports it may sell its assets to a private equity firm. Get this news first by signing up for InvestingPro.
Bed Bath stock rockets
Bed Bath & Beyond (NASDAQ:BBBY) shares soared 180% last week despite EPS of ($3.65) coming in worse than the consensus estimate of ($2.38). Revenue was $1.26 billion, missing the consensus estimate of $1.33 billion. According to a report by the New York Times, the company is in discussions with Sycamore Partners, a private equity firm, to potentially sell its assets, including buybuy Baby stores, as part of a potential bankruptcy process.
S3 Partners Research stated that if the stock continues to increase in value, some short-sellers may choose to end their positions and take the profits they made in 2022. But, the analyst also warned that the possibility of bankruptcy for the company is a significant risk and may cause short-sellers to hold onto their positions and wait for a potential $0.00 stock value in the event of bankruptcy.
Shares lost 30% Friday from their Thursday peak closing at $3.66.
JPMorgan and Wells Fargo top consensus
JPMorgan (NYSE: NYSE:JPM) shares had a brief drop on the bank's earnings as CEO Jamie Dimon warns of headwinds, but still closed the week higher. Q4 EPS came in at $3.57, better than the consensus estimate of $3.11. Revenue was $34.5 billion, beating the consensus estimate of $34.17 billion.
The bank announced that it had set aside $1.4 billion as a precautionary measure for a potential mild recession, despite reporting better-than-expected quarterly profits due to the strong performance of its trading unit. Dimon stated during a conference call that the bank is facing increased competition for deposits as customers are opting for other investment opportunities with higher interest rates. He acknowledged that the bank will have to adjust its saving rates accordingly.
He also noted that consumers are still spending and businesses are still strong, but there are several uncertainties in the economy such as geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation, and the unprecedented quantitative tightening. The bank has also noted a slight decline in its overall economic outlook, with the possibility of a mild recession being the "central case." Shares closed more than 3% higher for the week.
Wells Fargo (NYSE: NYSE:WFC) shares closed up more than 3% Friday following the company’s reported Q4 results, with EPS of $1.37(ex-items) coming in better than the consensus estimate of $1.27. Revenue was $19.66 billion, compared to the consensus estimate of $19.99 billion.
Net interest income (NII) soared 45% to $13.43 billion, ahead of the consensus estimate of $12.99 billion."Rising interest rates drove strong net interest income growth, credit losses have continued to increase slowly but credit quality remained strong," CEO Charles Scharf said in a press release.
Rounding out last week's big earnings reports
KB Home (NYSE:KBH) shares fell nearly 3% on Thursday following the company’s reported Q4 results, with EPS of $2.47 missing the consensus estimate of $2.87. Revenue grew 16% year-over-year to $1.94 billion, coming in worse than the consensus estimate of $1.98 billion.
The company provided its outlook for Q1/23, expecting housing revenues in the range of $1.25-$1.40 billion and an average selling price in the range of $490,000-$500,000. Given significant uncertainty and limited forward visibility regarding the 2023 housing market, and challenging macroeconomic and geopolitical conditions, the company provided its guidance for fiscal 2023 only for housing revenues, which are expected to be in the range of $5.00-$6.00 billion. Shares closed higher for the week.
And Delta Air Lines (NYSE:DAL) beat Q4 estimates but shares fell more than 3% on Friday after the airline said it expects Q1 EPS to come in the range of $0.15-0.40, a big miss compared to the consensus of $0.54. Q4 EPS came in at $1.48, better than the consensus estimate of $1.32. Revenue was $13.4 billion, beating the consensus estimate of $12.26 billion.
“While we remain positive on DAL shares (Buy-rated), and there will be level setting across the industry this year for higher labor rates, we expect shares to react negatively initially as the market digests the higher cost outlook given recent outperformance,” Goldman Sachs said.
Delta shares were up 4.5% for the week.
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