Market Snapshot
| Dow | 41298.48 | -18.09 | (-0.04%) | | Nasdaq | 17903.33 | -74.40 | (-0.41%) | | SP 500 | 5664.77 | -21.90 | (-0.39%) | | 10-yr Note |
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| | NYSE | Adv 1081 | Dec 1650 | Vol 414 mln | | Nasdaq | Adv 1781 | Dec 2580 | Vol 5.9 bln |
Industry Watch
| Strong: Industrials, Communication Services, Real Estate, Consumer Staples |
| | Weak: Energy, Consumer Discretionary, Utilities, Technology |
Moving the Market
-- Ongoing buy-the-dip interest after initial weakness
-- Losses in some mega caps
-- Mixed action in Treasuries
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Tuesday's calendar features more earnings, econ data
05-May-25 15:35 ET
Dow -18.09 at 41298.48, Nasdaq -74.40 at 17903.33, S&P -21.90 at 5664.77
[BRIEFING.COM] The market is holding steady ahead of the close.
Looking ahead to Tuesday, market participants receive the March Trade Deficit at 8:30 ET (Briefing.com consensus -$127.5 billion).
There's also another slate of earnings results from the likes of Marathon Petroleum (MPC 143.27, +1.72, +1.2%), ADM (ADM 46.50, -0.34, -0.7%), UBS (UBS 30.92, +0.21, +0.7%), and Marriott (MAR 247.84, -1.62, -0.7%).
Some stocks trade down ahead of earnings
05-May-25 15:05 ET
Dow +42.90 at 41359.47, Nasdaq -58.90 at 17918.83, S&P -15.22 at 5671.45
[BRIEFING.COM] The market moved lower in recent trading with no specific catalyst.
Many names reporting earnings after the close trade lower, including Ford (F 10.13, -0.15, -1.5%), Diamondback Energy (FANG 133.92, -2.92, -2.1%), Celanese (CE 45.30, -0.59, -1.3%), Coterra Energy (CTRA 25.51, -0.16, -0.6%), and Clorox (CLX 138.76, -0.32, -0.2%).
Vertex Pharma (VTRX 502.13, +0.98, +0.2%) and Palantir Technologies (PLTR 124.61, +0.33, +0.2%) trade up ahead of their earnings reports this afternoon.
S&P 500 slips as Zimmer Biomet and Tyson drop post-earnings; Charter Communications bucks trend
05-May-25 14:30 ET
Dow +115.43 at 41432.00, Nasdaq -32.75 at 17944.98, S&P -5.55 at 5681.12
[BRIEFING.COM] The S&P 500 (-0.10%) is in second place on Monday afternoon.
Briefly, S&P 500 constituents Zimmer Biomet (ZBH 91.22, -11.16, -10.90%), Tyson Foods (TSN), and Smurfit Westrock plc (SW 39.85, -1.43, -3.46%) pepper the bottom of the standings. ZBH and TSN slide after earnings, while SW slips a bit after Seaport Research Partners trimmed their tgts on peers IP and GPK citing macro headwinds.
Meanwhile, Charter Comm (CHTR 398.17, +13.17, +3.42%) finds solid gains to open the week despite a dearth of corporate news.
Nasdaq trims losses; gold surges 2.4% on dollar weakness and safe-haven demand
05-May-25 14:00 ET
Dow +103.59 at 41420.16, Nasdaq -46.43 at 17931.30, S&P -10.69 at 5675.98
[BRIEFING.COM] The Nasdaq Composite (-0.26%) is still in last place, albeit down only 46 points vs. being down 185 points at today's lows.
Gold futures settled $79 higher (+2.4%) at $3,322.30/oz, due in part to a weakening U.S. dollar and heightened safe-haven demand amid escalating global economic uncertainties.
Meanwhile, the U.S. Dollar Index is now down about -0.1% to $99.92.
Dow holds slim gain as UNH, AXP, and MSFT lift index; Apple drags, 3-year auction sees steady demand
05-May-25 13:25 ET
Dow +39.09 at 41355.66, Nasdaq -64.71 at 17913.02, S&P -18.79 at 5667.88
[BRIEFING.COM] The Dow Jones Industrial Average (+0.09%) remains narrowly above Friday's close, giving back some of its afternoon gains in the last half hour.
A look inside the DJIA shows that UnitedHealth (UNH 407.00, +7.08, +1.77%), American Express (AXP 280.73, +3.88, +1.40%), and Microsoft (MSFT 438.98, +3.70, +0.85%) hold solid gains to start the week.
Meanwhile, Apple (AAPL 200.29, -5.06, -2.46%) is underperforming.
The DJIA is now up about +13.0% off the early-April lows.
Elsewhere, the $58 bln 3-yr note auction was met with decent demand. The high yield of 3.824% stopped nearly on the screws of the when-issued yield of 3.826%. Indirect demand was a little light relative to the past 12 auctions, but that was made up for by a pickup in direct demand versus the prior 12 auctions. This was a decent start to this week's auctions, which will also include a $42 billion 10-yr note auction on Tuesday and a $25 billion 30-yr bond auction on Thursday.
onsemi's upside Q1 EPS overshadowed by steep revenue drop and weak demand signals (ON)
Bolstered by disciplined cost management, favorable product mix, and manufacturing footprint optimization, onsemi (ON) edged past 1Q25 EPS and revenue expectations amid challenging market conditions. However, the semiconductor manufacturer focused on power and signal management technology experienced a steep 22% yr/yr decline in revenue to $1.45 bln with each segment -- Power Solutions Group (PSG), Analog and Mixed-Signal Group (AMG), Intelligent Sensing Group (ISG) -- seeing significant revenue drops. The substantial revenue decrease, combined with a cautious Q2 outlook that was in-line with analysts' expectations, is clouding over the modest Q1 outperformance, dragging shares sharply lower.
- First, the good news. Structural cost reductions, including workforce adjustments and fab rationalization, preserved ON's margins, with non-GAAP gross margin remaining relatively stable at 45.2% compared to 46.8% in the year-earlier period. Also, ON generated strong free cash flow, up 72% yr/yr to $231.6 mln, and supported shareholder returns with 66% of free cash flow returned via share repurchases.
- From a demand standpoint, though, ON's results were discouraging. In PSG, revenue fell 26% yr/yr to $645.1 mln, reflecting significant demand weakness in automotive and industrial applications. More specifically, the segment is experiencing lower demand for power switching and circuit protection products as auto OEMs scale back production amid inventory corrections and macroeconomic uncertainty.
- PSG's focus on SiC-based power solutions for electric vehicles and renewable energy grids remain a key growth driver, but potential tariff impacts on automotive supply chains pose a significant risk to the segment's recovery.
- Turning to AMG, revenue dove by 19% to $566.4 mln, fueled by softer demand for analog and mixed-signal ICs in automotive and consumer electronics, coupled with destocking by distributors. Weakness in mobile and computing end-markets, where AMG’s sensor interfaces and power management ICs are prevalent, further dragged performance lower. Making matters worse, competitive pricing pressures in commoditized analog products also eroded revenue.
- Lastly, in ISG, revenue sank by 20% to $234.2 mln, stemming from lower demand for CMOS image sensors and single-photon detectors in ADAS and consumer applications. Furthermore, delays in new product ramps and inventory adjustments by customers impacted revenue.
ON's upside EPS was driven by rigorous cost discipline, strong free cash flow, and a strategic focus on high-margin SiC and automotive platforms. However, the steep revenue declines, cautious Q2 guidance, and broader semiconductor market concerns -- including trade and cyclical headwinds -- are overshadowing the EPS beat, triggering the stock's selloff.
Skechers USA to go private, 3G Capital smartly buys the company when tariffs are an overhang (SKX)
Skechers USA (SKX +24%) announced this morning that it has agreed to go private. With $9 bln in annual sales, Skechers is the third largest footwear company in the world. It has agreed to be acquired by 3G Capital, a global investment firm, for $63 per share in cash, a 28% premium to Friday's closing price.
- The stock has been struggling of late, mostly on concerns about tariffs. Just last week, SKX announced it was withdrawing guidance. SKX said the world is significantly more uncertain today than it was three months ago. SKX described tariffs as a similar level of uncertainty to what was observed during the initial phase of the COVID pandemic.
- International growth is a huge catalyst for SKX and China is a key growth area. As such, the trade war with China is causing great concern among investors. Europe is another key growth market, and the tariffs there are a concern as well. As such, the stock has fallen 37% from its January highs. And 3G Capital sees an opportunity to buy a great brand name when there is a tariff cloud overhang.
Briefing.com has been writing about SKX for many years. Today's news is a bit of a wistful end of an era. Some positive things stand out to us. For example, an enviable feature about Skechers is that it seems to be appeal to all age groups, from older consumers, who really appreciate the comfort features, to parents to school-age children. It can be difficult for brands to do this, but Skechers seems to have that magic.
A big part of this is that Skechers really focuses on comfort and innovation, from slip-ins to Go Walk Max Cushioning Arch Fit etc. And it is able to achieve this while still keeping its price points pretty reasonable.
One area where we think they can improve is to cut back on all the celebrity endorsements. We think it is just too much. Maybe one is ok, but it's too many and we question how much value they bring. They can save money, they do not need it and it confuses the brand's message. People buy Skechers for the comfort and reasonable price points, not the celebrity endorsements. Maybe this will get curtailed when it goes private.
On a final note, we suspect we may see Skechers re-emerge as an IPO in a few years. Perhaps 3G Capital can make some changes on costs, cut the celebrities, and wait out the tariff overhang. We would like to see more consistent earnings performances from Skechers in the future, it has been too volatile for years and we think this has hurt the stock price.
Freshpet lowers FY25 guidance as price point is making it tough to add new customers (FRPT)
Freshpet (FRPT +3%) is trading higher following its Q1 earnings report this morning. This supplier of refrigerated, premium dog and cat food reported a surprise loss on a GAAP basis. However, there were some charges in there, so we are not sure what the clean EPS number is. Revenue rose a healthy 17.6% yr/yr to $263.2 mln, which was better than expected. However, FRPT lowered FY25 guidance for sales to +15-18% from +21-24% prior guidance. It also lowered FY25 adjusted EBITDA guidance.
- The company mentioned that the slowdown in its sales growth came on very quickly as the macroeconomic climate changed a few months ago. Freshpet says that historically it has been able to grow through all sorts of economic conditions. However, FRPT is seeing consumers become hesitant about getting a new dog and they are becoming more hesitant to try a more expensive pet food until they have greater clarity on their economic fortunes.
- In response, FRPT plans to increase its ad spend to attract more higher income consumers via digital social channels as well as linear TV. It also plans to launch a new entry price point bag product under the Freshpet Complete Nutrition label. The goal is that the Complete Nutrition brand attracts customers with its lower price point and ultimately those households trade up within the portfolio.
- Another strategy is to focus more on multi-packs to give consumers better value. FRPT has also expanded its small DTC business nationally so that consumers can sign up for subscription options, which saves them money. FRPT is also focusing more on value oriented retail stores, including warehouse clubs. FRPT announced today that it's now in its first Sam's Club store, and the early results are encouraging. FRPT is optimistic this will lead to a greater expansion over time.
- FRPT notes that it continues to grow and add new users across all income and age groups. However, those new consumers are just not a big enough group to support a growth rate above 20% right now. It is also important to note that FRPT does not see consumers trading down or out of Freshpet. The issue is more that it's not adding new consumers at the same rate given the macro uncertainty.
The common wisdom is that consumers tend to continue to spend on their pets even in times of economic hardship. Those sales are seen as pretty durable. However, that rule is clearly not absolute. Freshpet is on the high end of the pet food price spectrum. FRPT is doing ok with current customers, it's not seeing a trade down effect. However, attracting new customers is becoming more difficult given its position as a premium brand. We like the steps FRPT is taking in terms of value-packs and subscriptions. However, it sounds like the balance of 2025 is going to be a struggle.
Cummins crushes Q1 EPS expectations, but pulls FY25 guidance amid tariff uncertainty (CMI)
Cummins (CMI), a manufacturer of power generation and propulsion equipment and technologies, blew out 1Q25 EPS expectations, driven by record results in its Power Systems segment and strong operational execution. However, earnings and EBITDA still faced significant yr/yr declines, with net income plunging by nearly 59% to $824 mln and EBITDA margin contracting to 17.9% from 30.6%, reflecting softer demand in certain markets, higher costs, and the absence of one-time gains from the prior year. Also, CMI withdrew its FY25 guidance, citing growing economic uncertainty driven by tariffs, which could disrupt supply chains, increase input costs, and pressure margins.
Tariffs pose a significant risk to CMI, especially for its Components and Engine segments, where higher costs for imported materials or reduced demand from tariff-impacted customers could erode profitability.
- The Power Systems segment emerged as the clear standout in Q1, with revenue surging by 19% yr/yr to a quarterly record of $1.6 bln, propelled by robust demand in global power generation markets. Geographically, North America and Europe were particularly strong, led by sustained investments in data centers, where CMI's power solutions are critical. CMI also saw resilient aftermarket demand for rebuilds in industrial applications like mining.
- CMI's smaller Accelera segment, which posted an 11% yr/yr sales increase to $414 mln, was another area of strength. Accelera focuses on zero-emissions technologies, making it a key component of CMI's Destination Zero strategy -- an initiative that emphasizes sustainability and supports customers' transition to clean energy. In Q1, growth was fueled by rising electrolyzer sales and progress in its hydrogen production technologies.
- On the other end of the spectrum, the Components segment experienced a sharp 20% yr/yr revenue drop to $2.7 bln, primarily due to the divestiture of Atmus Filtration in March 2024, which significantly reduced the segment's scope. Further weighing on the segment's growth was weaker demand in heavy-duty truck markets, supply chain disruptions exacerbated by hurricanes, and competitive pricing pressures in North America.
- CMI's Engine segment experienced a 5% yr/yr sales decrease to $2.8 bln, driven by declines in light-duty automotive and heavy-duty truck sales. The segment faced challenges from reduced pickup truck engine production and a broader slowdown in freight activity. The good news, though, is that segment EBITDA margin improved to 16.5% from 14.1% in the year-earlier period, bolstered by stratetic pricing initiatives and operational efficiencies.
CMI's 1Q25 earnings showcased much better-than-expected earnings, underpinned by exceptional Power Systems performance and solid Accelera growth. However, the withdrawal of 2025 guidance amid tariff-driven uncertainty has heightened investor concerns as potential cost pressures and demand disruptions could challenge the company's profitability and growth in the near-term.
Instacart's Q1 order boom drives strong EBITDA growth with Q2 outlook signaling more gains (CART)
Instacart (CART) is delivering some big gains today, despite falling just short of 1Q25 EPS estimates, as solid Gross Transaction Value (GTV) growth and encouraging Q2 guidance fuel optimism for solid results moving forward. CART's revenue grew by about 9% to $897 mln, matching analysts' expectations, driven by a 14% surge in orders -- the fastest growth in 10 quarters -- and a 14% increase in high margin advertising revenue to $247 mln. This performance follows a disappointing 4Q24, where CART missed revenue estimates and issued soft Q1 guidance, causing a steep decline in the stock. Last night's Q1 beat and solid Q2 outlook, particularly in GTV and adjusted EBITDA, signal a recovery from Q4's softness, with initiatives like the $10 minimum basket for Instacart+ members and expanded restaurant orders driving the momentum.
- GTV grew 10%, slightly above the $9.11 bln estimate, accelerating from 8% in 4Q24, supported by new customer cohorts achieving higher basket sizes and a higher mix of club orders. This growth, though, was tempered by a slight decline in average order value (AOV), which fell to $110 from $111 last quarter and from $113 in 3Q24. The downtrend is due to a higher mix of restaurant orders and the $10 minimum basket feature, which promotes smaller baskets.
- A standout metric in Q1 was adjusted EBITDA, showcasing CART's improving profitability. Bolstered by disciplined cost management and a focus on higher margin advertising revenue, adjusted EBITDA rose 23% yr/yr to $244 mln, exceeding CART's guidance of $220-$230 mln. Operational efficiencies, such as improved shopper logistics and payment processing optimizations, further bolstered margins. The company’s reinvestment in consumer incentives, like Super Saver and Free Pickup, has not materially pressured profitability, supporting EBITDA expansion.
- CART's Q2 GTV guidance implies growth of 8-10%, while its adjusted EBITDA forecast of $240-$250 mln surpassed analysts' expectations. The outlook reflects confidence in sustained order growth (expected to outpace GTV growth) and continued advertising revenue strength, driven by AI-powered ad tools and high return-on-ad-spend performance.
CART's Q2 performance, marked by 14% order growth and a 23% jump in adjusted EBITDA, reflects robust demand and operational discipline, rebounding from a disappointing Q4. The solid Q2 guidance, buoyed by growth initiatives like Instacart+ and advertising, positions CART well for FY25, with prospects for continued market share gains in the under-penetrated online grocery space.
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