Big Dips that Could be Big Opportunities (DLTR, PANW, HPE)

Dollar Tree, Inc. (NASDAQ:DLTR) just reported Q3 EPS of $1.08 vs. the $1.13 consensus and revenue of $5.75 bln compared to the $5.74 bln estimate. The company has now missed analysts’ EPS expectations in back-to-back quarters. A big driver for this underperformance is tariffs on Chinese imports, which impact about 40% of the company’s product margins.

For Q4, the company guided for EPS of $1.70-1.80 vs. the $2.03 consensus. This Q3 miss and weak guidance caused DLTR to cut its FY20 EPS guidance to $4.66-4.76 from $4.90-5.11, below the $5.11 consensus.

The company anticipates that tariffs will increase cost of goods by $19 mln in Q4, with most of the impact resulting from upcoming List 4 tariffs.

The stock was pounded in Tuesday’s action as a result.

Dollar Tree, Inc. (NASDAQ:DLTR) frames itself as a company that operates discount variety retail stores. It operates through two segments, Dollar Tree and Family Dollar.

The Dollar Tree segment offers merchandise at the fixed price of $1.00. It provides consumable merchandise, including candy and food, and health and beauty care, as well as everyday consumables, such as household paper and chemicals, and frozen and refrigerated food; variety merchandise comprising toys, durable housewares, gifts, stationery, party goods, greeting cards, softlines, and other items; and seasonal goods that include Valentine’s Day, Easter, Halloween, and Christmas merchandise.

This segment operates 7,001 stores under the Dollar Tree and Dollar Tree Canada brands, as well as 12 distribution centers in the United States and 2 in Canada; and a store support center in Chesapeake, Virginia.

The Family Dollar segment operates general merchandise discount retail stores that offer consumable merchandise, which comprise food and beverages, tobacco, health and beauty aids, household chemicals, paper products, hardware and automotive supplies, diapers, batteries, and pet food and supplies; and home products, including housewares, home décor, and giftware, as well as domestics, such as comforters, sheets, and towels. Its stores also provides apparel and accessories merchandise comprising clothing, fashion accessories, and shoes; and seasonal and electronics merchandise that include Valentine’s Day, Easter, Halloween, and Christmas merchandise, as well as personal electronics, which comprise pre-paid cellular phones and services, stationery and school supplies, and toys.

This segment operates stores under the Family Dollar brand; and 11 distribution centers, as well as a store support center in Matthews, North Carolina.

As noted, the stock has suffered this week, with shares of DLTR taking a hit in recent action, down about -11% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -15%.

Dollar Tree, Inc. (NASDAQ:DLTR) generated sales of $5.7B, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -1.2% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($623.4M against $4.1B, respectively).

 

 

Palo Alto Networks Inc (NYSE:PANW) shares were shattered on Tuesday after strong billings were offset by a big 10% miss on product revenue (down 4% yr/yr). Shares of the stock are now testing key support at the confluence of the major moving averages.

In all, the company reported Q1 results, topping consensus for EPS on in-line revs (+17.7% yr/yr to $772 mln). Billings increased +18% yr/yr, surpassing co’s guidance. The company commented that its product category did not meet its expectations in the quarter, weighing on Firewall as a Platform. Product revs declined 4% yr/yr to $231.2 mln.

PANW also announced that it will acquire machine identity-based microsegmentation company Aporeto for $150 mln in cash.

Palo Alto Networks Inc (NYSE:PANW) promulgates itself as a security platform solutions worldwide.

The company provides firewall appliances and software; Panorama, a security management solution for the control of appliances deployed on an end-customer’s network as a virtual or a physical appliance; and Virtual System Upgrades, which are available as extensions to the virtual system capacity that ships with physical appliances.

It also offers subscription services covering the areas of threat prevention, uniform resource locator filtering, malware and persistent threat, laptop and mobile device protection, and firewall, as well as cyber-attack, threat intelligence, and content control.

In addition, the company provides support services; and professional services, including application traffic management, solution design and planning, configuration, and firewall migration, as well as online and classroom-style education training services.

Palo Alto Networks, Inc. sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. The company was founded in 2005 and is headquartered in Santa Clara, California.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action PANW shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -11% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.

 

 

Hewlett Packard Enterprise Co (NYSE:HPE) closed out its fiscal year on a decidedly poor note. While it reported a $0.03 EPS beat, revenue for Q4 (Oct) was light again. The top line fell by 9.2% yr/yr to $7.21 bln. Shares also fell… a lot. The stock is now testing key levels where traders will be hunting for a possible dip buying opportunity.

Analysts expected revenue to decline on a yr/yr basis, but this was a bigger decline than expected. It’s not all bad news as HPE guided to in-line non-GAAP EPS for Q1 (Jan) at $0.42-0.46 and FY20 at $1.78-1.94. HPE does not guide for revenue, which may help to explain why it’s been light of late, as analysts are left in the dark to some degree.

On the call, Neri said HPE’s macro view on the economy had not materially changed. “Ongoing global trade tensions and other geopolitical factors have created uncertainty that contributes to an uneven demand environment. The elongation of sales cycles we experienced since Q2 continues, particularly in larger deals.”

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action HPE shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -8% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.

Hewlett Packard Enterprise Co (NYSE:HPE) managed to rope in revenues totaling $7.2B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -7.3%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($4B against $17.2B, respectively).

Hewlett Packard Enterprise Co (NYSE:HPE) frames itself as a technology company.

The company operates through four segments: Hybrid IT, Intelligent Edge, Financial Services, and Corporate Investments. The Hybrid IT segment provides industry standard servers for multi-workload computing; mission-critical servers; converged storage solutions, including all-flash arrays and hybrid storage solutions; and traditional storage solutions comprising tape, storage networking, and disk products, such as HPE MSA and HPE XP. It also offers data center networking products, such as top-of-rack switches, core switches, and open networking switches; and operational services, advisory and professional services, and communications and media solutions.

The Intelligent Edge segment provides solutions for mobility and Internet of Things, as well as enterprise networking and security solutions for businesses campus and branch environments under the Aruba brand. This segment also offers wired and wireless local area network products, such as Wi-Fi access points, switches, and routers; and software products, including network management, network access control, analytics and assurance, and location services software.

The Financial Services segment offers various flexible investment solutions, which comprise leasing, financing, IT consumption, and utility programs and asset management services for customers to enable the creation of unique technology deployment models and acquire complete IT solutions. The Corporate Investments segment is involved in Hewlett Packard labs and various business incubation activities.

The company serves small and medium-sized businesses and large enterprises. It has strategic alliance with ABB Ltd. Hewlett Packard Enterprise Company was founded in 1939 and is headquartered in San Jose, California.

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