Market Snapshot
briefing.com
| Dow | 33847.40 | +545.62 | (1.64%) | | Nasdaq | 12140.98 | +286.65 | (2.42%) | | SP 500 | 4137.34 | +80.08 | (1.97%) | | 10-yr Note | -29/32 | 3.53 |
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| | NYSE | Adv 2271 | Dec 626 | Vol 819 mln | | Nasdaq | Adv 2781 | Dec 1598 | Vol 5.2 bln |
Industry Watch
| Strong: Communication Services, Real Estate, Consumer Discretionary, Financials |
| | Weak: -- |
Moving the Market
-- Meta Platforms (META) up big after pleasing earnings report and outlook
-- Better than expected earnings and/or guidance from several industrial companies, including Dow components Caterpillar (CAT) and Honeywell (HON)
-- Treasury yields sharply higher in response to this morning's economic data
-- Strength from mega cap stocks boosting index performance
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Closing Summary
27-Apr-23 16:30 ET
Dow +524.29 at 33826.07, Nasdaq +287.89 at 12142.22, S&P +79.36 at 4136.62
[BRIEFING.COM] The stock market had a decidedly strong showing today. The major indices recouped all of their losses from yesterday and then some, closing at their highs of the day. The broader market was boosted by a huge gain in Meta Platforms (META 238.56, +29.16, +13.9%) after its earnings report, which helped foster a sense of relief that the mega-cap leaders are still performing relatively well from an operational standpoint and maintaining their position as market leaders.
As a result, other mega cap stocks logged outsized gains, driving a 2.6% gain in the Vanguard Mega Cap Growth ETF (MGK). There was also likely some short-covering activity driving price action in the mega caps. The Invesco S&P 500 Equal Weight ETF (RSP) rose by 1.6% and the market-cap weighted S&P 500 rose 2.0%.
The positive price action was also stemming from an improved economic outlook. Favorable earnings and/or guidance from the industrials sector and other companies, along with the healthy 3.4% increase in real final sales in Q1 and initial jobless claims that continue to run well below recession-like levels, helped to calm concerns about the economy being at imminent risk of a hard landing.
Dow component Honeywell (HON 198.61, +7.71, +4.0%) was a standout from the industrials sector after it reported earnings. Notably, the S&P 500 industrial sector (+2.0%) closed near the middle of the pack despite sizable losses in Dow component Caterpillar (CAT 214.33, -1.86, -0.9%), which easily beat Q1 earnings estimates but said second half sales could see an adverse dealer inventory impact, and in Southwest Airlines (LUV 29.88, -1.02, -3.3%), which also reported earnings results.
Meanwhile, earnings-driven gains in META and Comcast (CMCSA 40.27, +3.75, +10.3%) propelled the communication services sector to first place on the leaderboard by a big margin. The consumer discretionary (+2.8%), real estate (+2.4%), and information technology (+2.2%) sectors were also among the outperformers.
The energy (+0.4%) and health care (+0.5%) sectors logged the slimmest gains.
Price action in the Treasury market reflected the improved view on the economy. The 2-yr note yield rose 17 basis points to 4.09% and the 10-yr note yield rose 10 basis points to 3.53%.
- Nasdaq Composite: +16.0% YTD
- S&P 500: +7.7% YTD
- Dow Jones Industrial Average: +2.1% YTD
- S&P Midcap 400: +1.5% YTD
- Russell 2000: -0.6% YTD
Reviewing today's economic data:
- The Advance Q1 GDP report wasn't as underwhelming as it appeared to be at first blush. Real GDP increased at an annualized rate of 1.1% (Briefing.com consensus 2.0%) after increasing 2.6% in the fourth quarter. The GDP Price Deflator increased to 4.0% (Briefing.com consensus 3.7%) from 3.9%.
- The key takeaway from the report is that the deceleration in growth wasn't because of weak consumer spending. On the contrary, personal consumption expenditure growth accelerated in the first quarter to 3.7% from 1.0% in the fourth quarter with spending on goods up 6.5% and spending on services up 2.3%. The hit to growth came from the change in private inventories. Real final sales of domestic product, which exclude the change in inventories, increased 3.4% from 1.1% in the fourth quarter.
- Initial jobless claims for the week ending April 22 declined by 16,000 to 230,000 (Briefing.com consensus 245,000) while continuing jobless claims for the week ending April decreased by 3,000 to 1.858 million.
- The key takeaway from the report is that initial jobless claims remain a long way from the levels that have been seen in past recessions since 1980, when they have averaged north of 375,000.
- Pending home sales dropped 5.2% in March (Briefing.com consensus 1.0%) following a 0.8% increase in February.
- The weekly EIA Natural Gas Inventories showed a bulid of 79 bcf versus a build of 75 bc last week.
Ahead of Friday's open, Exxon Mobil (XOM), Chevron (CVX), Colgate-Palmolive (CL), Newell Brands (NWL), and Aon (AON) are among the more notable companies reporting earnings.
Looking ahead to Friday, market participants will receive the following economic data:
- 8:30 ET: Q1 Employment Cost Index (Briefing.com consensus 1.1%; prior 1.0%), March Personal Income (Briefing.com consensus 0.2%; prior 0.3%), Personal Spending (Briefing.com consensus -0.1%; prior 0.2%), PCE Prices (Briefing.com consensus 0.1%; prior 0.3%), and core PCE Prices (Briefing.com consensus 0.3%; prior 0.3%)
- 9:45 ET: April Chicago PMI (Briefing.com consensus 43.4; prior 43.8)
- 10:00 ET: Final April University of Michigan Consumer Sentiment survey (Briefing.com consensus 63.5; prior 63.5)
Market continues to climb; earnings and econ data tomorrow morning
27-Apr-23 15:40 ET
Dow +520.32 at 33822.10, Nasdaq +287.89 at 12142.22, S&P +77.66 at 4134.92
[BRIEFING.COM] The major indices are moving sideways ahead of the close.
Amazon.com (AMZN) is the most influential company reporting earnings after the close. T-Mobile US (TMUS), Intel (INTC), Capital One (COF), Mondelez Int'l (MDLZ), Gilead Sciences (GILD), Amgen (AMGN), L3Harris (LHX), Mohawk (MHK), Snap (SNAP), Pinterest (PINS), and Cloudflare (NET) are also among the notable earnings reporters.
Ahead of Friday's open, Exxon Mobil (XOM), Chevron (CVX), Colgate-Palmolive (CL), Newell Brands (NWL), and Aon (AON) are among the more notable companies reporting earnings.
Looking ahead to Friday, market participants will receive the following economic data:
- 8:30 ET: Q1 Employment Cost Index (Briefing.com consensus 1.1%; prior 1.0%), March Personal Income (Briefing.com consensus 0.2%; prior 0.3%), Personal Spending (Briefing.com consensus -0.1%; prior 0.2%), PCE Prices (Briefing.com consensus 0.1%; prior 0.3%), and core PCE Prices (Briefing.com consensus 0.3%; prior 0.3%)
- 9:45 ET: April Chicago PMI (Briefing.com consensus 43.4; prior 43.8)
- 10:00 ET: Final April University of Michigan Consumer Sentiment survey (Briefing.com consensus 63.5; prior 63.5)
CBOE Volatility Index plunges; energy complex futures rise
27-Apr-23 15:00 ET
Dow +545.62 at 33847.40, Nasdaq +286.65 at 12140.98, S&P +80.08 at 4137.34
[BRIEFING.COM] The rally continues to build up strength. The S&P 500 is testing Friday's closing level now.
Energy complex futures settled the session higher. WTI crude oil futures rose 0.7% to $74.88/bbl and natural gas futures rose 2.7% to $2.56/mmbtu. On an energy related note, the S&P 500 energy sector (+0.6%) continues to underperform, but reached positive territory as the market climbed.
Separately, the CBOE Volatility Index has plunged 10% today, down 1.89 to 16.96.
Align Tech sinks as case volumes not up to snuff
27-Apr-23 14:30 ET
Dow +462.84 at 33764.62, Nasdaq +266.66 at 12120.99, S&P +69.34 at 4126.60
[BRIEFING.COM] The S&P 500 (+1.71%) has continued to move lockstep with its counterparts to session highs in the last half hour, now closing in on gains of 70 points on the day.
S&P 500 constituents Hasbro (HAS 58.24, +6.83, +13.30%), CBRE Group (CBRE 76.74, +6.80, +9.72%), and Pentair (PNR 57.41, +4.99, +9.53%) pepper the top of the standings, all following earnings.
Meanwhile, Arizona-based dental product firm Align Tech (ALGN 316.81, -37.74, -10.64%) is at the bottom of the S&P despite an earnings beat as case volumes came in under expectations.
Gold higher despite stronger treasury, equity markets
27-Apr-23 14:00 ET
Dow +415.74 at 33717.52, Nasdaq +259.53 at 12113.86, S&P +64.24 at 4121.50
[BRIEFING.COM] We've continued to march higher in the major averages over the last half hour, the tech-heavy Nasdaq Composite (+2.19%) still holding a solid lead.
Gold futures settled $3.00 higher (+0.2%) to $1,999.00/oz, rebounding off morning lows even as the treasury and equity markets made decent gains.
Meanwhile, the U.S. Dollar Index is up a modest +0.1% to $101.51.
Market to show some life at the open
Thus far, the better-than-expected (but not necessarily "good") Q1 earnings reporting period has failed to move the stock market in a positive direction. The S&P 500, at 4,146 on April 13, closed yesterday at 4,056.
Things are primed for a positive start today, however, as Meta Platforms (META) is up 14% following its report and outlook, and several industrial companies, including Dow components Caterpillar (CAT) and Honeywell (HON), have helped temper concerns about a hard landing with their results and/or guidance.
Currently, the S&P 500 futures are up 23 points and are trading 0.6% above fair value, the Nasdaq 100 futures are up 137 points and are trading 1.1% above fair value, and the Dow Jones Industrial Average futures are up 137 points and are trading 0.4% above fair value.
There has been a lot of earnings news since yesterday's close and the vast majority of companies reporting exceeded analysts' consensus earnings estimates. That is good news, but here is the rub on why the Q1 reporting period hasn't been necessarily "good."
With nearly 50% of the S&P 500 having reported March quarter results, and approximately 76% of those companies beating earnings estimates, the blended earnings growth rate for the first quarter is still -4.2%, according to FactSet. That is better than the -6.7% expected on March 31, but it is still negative, as in no growth.
For a market trading at a premium valuation in front of the reporting period, it is tough to justify multiple expansion when there is no earnings growth and when many economic indicators are stacking up to suggest earnings estimates for future quarters are likely to be revised lower while Fed officials are lining up suggesting rates still need to go higher to tame inflation.
So, it makes sense that this better-than-expected Q1 reporting period hasn't translated into a better-than-expected stock market performance. If anything, the stock market's underperformance, so to speak, aligns well with earnings that, quite frankly, are underwhelming.
The Advance Q1 GDP report, meanwhile, wasn't as underwhelming as it appeared to be at first blush. Real GDP increased at an annualized rate of 1.1% (Briefing.com consensus 2.0%) after increasing 2.6% in the fourth quarter. The GDP Price Deflator increased to 4.0% (Briefing.com consensus 3.7%) from 3.9%.
The key takeaway from the report is that the deceleration in growth wasn't because of weak consumer spending. On the contrary, personal consumption expenditure growth accelerated in the first quarter to 3.7% from 1.0% in the fourth quarter with spending on goods up 6.5% and spending on services up 2.3%. The hit to growth came from the change in private inventories. Real final sales of domestic product, which exclude the change in inventories, increased 3.4% from 1.1% in the fourth quarter.
The recognition that spending growth remained strong and that inflation remained high in the first quarter (the PCE Price Index increased to 4.2% from 3.7% while the core-PCE Price Index rose to 4.9% from 4.4%) sent Treasury yields in a northerly direction after the release of the GDP report.
The 2-yr note yield is up 11 basis points to 4.03% and the 10-yr note yield is up five basis points to 3.48%.
An improvement in weekly initial jobless claims -- a leading indicator -- likely contributed to the pop in market rates as well. Initial claims for the week ending April 22 declined by 16,000 to 230,000 (Briefing.com consensus 245,000) while continuing jobless claims for the week ending April 15 decreased by 3,000 to 1.858 million.
The key takeaway from the report is that initial jobless claims remain a long way from the levels that have been seen in past recessions since 1980, when they have averaged north of 375,000.
Separately, the House, by a slim 217-215 majority, passed the GOP's debt ceiling bill, which calls for cuts in spending in exchange for lifting the debt limit by $1.5 trillion or until March 31, 2024, whichever comes first. That bill is reportedly dead on arrival in the Senate; and the president has threatened to veto any legislation on the debt ceiling that has strings attached to it.
The stock market, for now, won't be dead on the open's arrival like it has been in past sessions. It will show some life following the latest earnings reports and economic data that suggest the U.S. economy is not dying yet.
-- Patrick J. O'Hare, Briefing.com
Honeywell delivers a sweet beat-and-raise report driven by robust demand in aviation market (HON)
Macroeconomic concerns have weighed on the highly-cyclical industrial giant Honeywell (HON) this year with shares down by nearly 11% prior to this morning's 1Q23 earnings report, but its beat-and-raise performance has the stock in rally mode today.
- Like General Electric (GE), which posted its own beat-and-raise report on Tuesday, HON is capitalizing on continuing strength in the aviation industry as robust travel demand drives strong orders from its commercial airline customers.
- HON's Aerospace division, which makes aircraft engines, avionics systems, power systems, among many other products, saw sales grow by 14% on an organic basis. Unsurprisingly, the growth was led by the commercial side with aviation aftermarket parts revenue up by 20% and commercial original equipment increasing by 30%.
- However, defense and space also returned to growth in Q1, providingr an extra boost.
The company's exposure to the oil and gas industry also worked in its favor as exploration and production companies ramp up production.
- Within the Performance Materials and Technologies segment, UOP -- formerly known as Universal Oil Products -- was a standout performer with sales up by 19% organically.
- Gas processing equipment and refining catalyst shipments were particularly strong.
- Staying in this segment, HON also experienced healthy demand in HPS (Honeywell Process Solutions), driven by smart energy products. HPS provides connected end-to-end solutions for OEMs to securely connect, monitor, and manage their assets.
One weak spot was the Safety and Productivity Solutions segment.
- Sales in this unit slid by 11% organically due to lower volumes in warehouse and workforce solutions. However, the better-than-expected results in Aerospace and Performance Materials and Technologies more than offset the weakness here.
- In fact, HON exceeded its forecast across the board, including on revenue, EPS, and operating margin, which expanded by 390 bps, despite ongoing inflationary pressures.
Looking ahead, HON is in great shape with its backlog increasing to record amount of $30.3 bln, up 6% yr/yr. The robust backlog provided HON with the confidence to boost the midpoints of its EPS, organic growth, and segment margin forecasts. Incoming CEO Vimal Kapur, who will take the reins on June 1, 2023, should be inheriting a business with some good momentum behind it.
eBay's Q1 report garners plenty of bidders, helping shares break out of recent consolidation (EBAY)
eBay (EBAY +4%) breaks out of its recent consolidation after posting earnings and sales upside in Q1. The online auction platform also topped its prior Gross Merchandise Volume (GMV) target and showed further signs of active buyer stabilization. Meanwhile, although EBAY has not yet returned to providing full-year guidance, its Q2 outlook was reasonably cheerful, projecting adjusted earnings in line with consensus and revs ahead of consensus.
- Revenue growth of 1.1% yr/yr to $2.51% outpaced GMV growth by roughly 5 pts primarily due to advertising; first-party ad products grew 27% yr/yr. Adjusted EPS of $1.11 represented a solid 9.9% jump yr/yr and marked a wider beat than EBAY posted last quarter.
- EBAY's attention to its "focused categories," which include a host of products, ranging from automotive, refurbished, luxury, and collectibles, remains the underlying factor behind its solid sales growth. During Q1, focused categories outgrew the rest of the eBay marketplace by around 8 pts, expanding by low single digits yr/yr. Focused categories will remain a core component of EBAY's long-term playbook, outlining during its 2022 Investor Day that by the end of 2024, these categories will cover half of its business.
- An interesting side note, EBAY's refurbished GMV accelerated notably during Q1, delivering double-digit yr/yr growth. Given the stubborn inflationary pressures, consumers may turn to refurbished alternatives instead of buying new products, benefiting EBAY -- which offers a robust refurbished program with money-back guarantees -- over the near term.
- Although EBAY's active buyer counts remained in decline yr/yr and sequentially, slipping 7.0% and 0.7%, respectively, the metric hovered around the same number as last quarter, falling just 1.0 mln to 133 mln in total. This was a similar theme that played out in Q4, signaling that after five-straight quarters of sequential declines, active buyers may finally be finding a bottom.
- EBAY's Q2 guidance was decent, carrying over much of the positive momentum from Q1. The company expects adjusted EPS of $0.96-1.01, meeting analyst expectations, and revs of $2.47-2.54 bln, exceeding estimates. EBAY's GMV outlook was slightly more deflating, forecasting $17.8-18.2 bln, translating to another yr/yr decline.
- Also, since Q4, EBAY has not seen any discernible change in the underlying macro environment.
EBAY's solid Q1 results reflect a moderately healthy end consumer and a viable alternative to the many retail and e-commerce giants competing for a share of consumers' increasingly squeezed wallets. EBAY's report also sets an upbeat tone ahead of competitor Etsy's (ETSY) Q1 earnings slated May 3.
Meta Platforms checks off all the boxes in Q1 as growth resumes and cost cuts take hold (META)
After three consecutive quarters of yr/yr revenue declines, Meta Platforms (META) returned to positive top-line growth in 1Q23 while it slashed costs, leading to a strong earnings report that's catapulting shares to their highest levels since early February of 2022. The stock's surge, which is also bolstering the broader stock market's gains, is also a function of META's pleasing outlook for Q2.
- Over the past six quarters, META either issued inline or downside revenue guidance for the quarter ahead, but META ended that losing streak last night with its upside 2Q23 revenue guidance.
- Importantly, that revenue forecast of $29.5-$32.0 bln suggests that growth could accelerate to as high as 10% following this quarter's 2.6% increase, indicating that advertising demand is thawing, and that META has slowed or halted TikTok's momentum.
- When Google (GOOG) posted better-than-expected Q1 results on Tuesday night that included flat advertising revenue after back-to-back yr/yr declines, a significant piece of evidence pointing to a stabilization of demand was provided. META's results offered some confirmation of that assertion as its ad impressions jumped by 26% in Q1.
It's not only the healthier digital advertising environment that's fueling META's return to growth.
- During the earnings call, CEO Mark Zuckerberg called out the company's emerging AI capabilities as a key factor behind the rebound. Specifically, META is using AI to identify the best short-form videos to distribute in its Reels platform, which is improving monetization.
- He added that Reels monetization efficiency is up by more than 30% on Instagram and up over 40% on Facebook on a sequential basis. Furthermore, AI has powered a 24% increase in time spend on Instagram.
These are encouraging data points that really ease the competitive and sinking ad demand concerns, but there is a caveat: namely, META is lapping easier yr/yr comparisons. In the year-earlier period, revenue was up by only 6.5%, and it gets even easier over the rest of the year as META laps a 0.9% decrease in Q2, followed by declines of 4.5% in Q3 and Q4.
Still, it's clear that business is improving for META in this "year of efficiency."
- That moniker, which was coined by Mr. Zuckerberg, has essentially equated to mass layoffs across the company. Following a round of 11,000 layoffs that were announced last year, META disclosed that it was planning to layoff 10,000 more employees in March.
- As of March 31, 2023, META had completed most of the 2022 layoffs, but there are more cuts on the horizon. There is one more wave of layoffs coming, which should be completed in April and May.
- Perhaps as important as the upside revenue guidance, META also once again lowered its FY23 expense guidance, forecasting $86-$90 bln in expenses vs. its prior guidance of $86-$92 bln. For some perspective on META's cost-cutting efforts, the company originally planned on expenses of $94-$100 bln when it issued 3Q22 results last October.
The main takeaway is that META delivered exactly what investors wanted to see. It checked off all the boxes: stabilizing/improving digital ad space; significant progress in its AI development, another reduction in expense guidance, and improving monetization of Reels.
Caterpillar drops on lingering recession fears and expected 2H23 dealer destocking (CAT)
Caterpillar (CAT -4%) is inching lower quickly today despite bulldozing analysts' earnings and sales estimates in Q1. As a Dow component and the world's largest construction equipment manufacturer, CAT's massive quarter pushes back against the rising tide of recession fears lingering over the global economy.
So why are shares not soaring on today's results, especially given their nearly 10% decline YTD? Two factors are likely spurring today's lackluster response. Although CAT expects sales to dealers to remain positive for its three core segments this year, the company assumes 2H23 sales will experience an adverse dealer inventory impact. Recall 2H22 included a dealer inventory build of $1.4 bln as dealers started restocking. CAT is not anticipating this trend to repeat this year due to varying levels of improving availability across certain regions.
Secondly, CAT's measured price action boils down to general concerns surrounding macroeconomic conditions. Countless firms have expressed their bearish views on the near term lately, taking a conservative approach with full-year projections. Even though, given CAT's global footprint, its upbeat report should douse rising recession fears, investors are waiting for more clarity, especially given rising interest rates, the recent cracks in the regional banking sector, and tightening lending conditions.
Still, CAT could see the buy-the-dip crowd step in sooner than later, given its buoyant Q1 numbers and general positivity regarding the near future.
- For the third-straight quarter, CAT delivered double-digit sales growth yr/yr across its core segments: Construction industries (+10%), Resource Industries (+21%), and Energy & Transportation (+24%). As a result, sales jumped 16.7% yr/yr to $15.86 bln. Meanwhile, adjusted operating margins of 21.1%, a 740 bp expansion yr/yr, tracked ahead of CAT's 18-21% FY23 projection, assisting its over 70% spike in adjusted EPS to $4.91.
- Residential construction did soften in the quarter. However, this was mostly expected after multiple homebuilders' recent Q1 reports. Also, CAT noted that the growth rate of its residential construction equipment remained positive as supply chain pressures diminished.
- CAT's excellent Q1 margins were primarily driven by better-than-expected manufacturing costs, including improving efficiencies, stronger price realization, and volume growth. Although manufacturing costs, the leading component of CAT's margin growth, still climbed higher in Q1, it was by much less than the company initially forecasted. Meanwhile, volume sales to customers outpaced expectations due to healthy demand and improving supply chains.
- Aside from the downbeat 2H23 commentary, CAT was mainly upbeat when discussing its FY23 outlook. It expects its top and bottom lines to see more pronounced benefits in FY23 than initially anticipated after its robust Q1 numbers. Also, after the considerable margin gains in Q1, CAT is now targeting the upper end of its FY23 adjusted operating margin forecast.
Bottom line, CAT dug itself out of the hole it created last quarter by delivering outstanding headline numbers in Q1. Nevertheless, lingering recession fears and dealer destocking occurring during 2H23 are weighing on shares today. It is important to note that CAT's margins came under pronounced pressure during previous dealer destocking events. Therefore, even though CAT may have positioned itself much better to withstand the margin pressure it endured in the past, it is still an uncertainty clouding over shares today.
O'Reilly Auto trades flat despite nice Q1 upside; we think a good report was priced in already(ORLY)
O'Reilly Automotive (ORLY) is trading roughly flat despite the auto parts retail giant surprising investors with nice upside with its Q1 earnings report last night. ORLY beat handily on EPS and revs. It also reaffirmed FY23 EPS and revenue guidance. And it reaffirmed FY23 same store comp guidance at +4-6%.
- Probably the most impressive metric was Q1 same store sales coming in at a robust +10.8%, well ahead of street estimates and despite facing a mild winter in the US, which is usually bad for companies like ORLY. It was also a nice acceleration from +9.0% comps in Q4 and a good result despite lapping decent +4.8% comps in the year ago period. Comps were driven by another quarter of double-digit comps in its professional business, while also generating growth in DIY sales.
- ORLY made the point on its last call that industry prospects remain very favorable. In particular, the scarcity of vehicles since the pandemic has forced many consumers to keep their vehicles longer. Low unemployment and robust growth in wages are also favorable trends. Miles driven still remain below pre-pandemic levels as people work from home more and higher gas prices are not helping. However, this metric has been improving.
- Looking ahead, ORLY has said previously that it expects comps in 1H23 to be stronger than 2H23 as a result of the yr/yr same-SKU inflation benefit as well as easier comparisons in professional ticket counts in 1H23. Also, DIY ticket counts faced more pronounced pressure in the first half of last year.
ORLY can be hit-or-miss around earnings. It has now reported three large EPS beats in Q3, Q4 and now Q1, but that followed two EPS misses in Q1 and Q2 of last year. Part of the problem is that ORLY guides only on a full year basis, not by quarter. So analyst models are a bit in the dark in terms of what to expect quarter-to-quarter. But right now, analysts seem to be underestimating ORLY.
So, why is the stock not up more given the strong upside? For one thing, the stock had run 12% over the past month or so. As such, we think investors went into this report with high expectations and had already priced in a strong report. We also think investors may be disappointed to see ORLY only reaffirm FY23 guidance, including comp guidance. With the nice upside in Q1, we would like to have seen raised guidance, at least by the amount of the Q1 beat. However, maybe ORLY is just being cautious given the macro environment. Also, it sounds like the comp hurdles get tougher in 2H23, so maybe they are giving themselves a little wiggle room to prepare for that.
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