Earnings season off to a mixed start; HelloFresh sees much stronger outlook Earnings season off to a mixed start; HelloFresh sees much stronger outlook Earnings season off to a mixed start; HelloFresh sees much stronger outlook

Earnings season off to a mixed start; HelloFresh sees much stronger outlook

Equities 5 minutes to read
Picture of Peter Garnry
Peter Garnry

Head of Equity Strategy

Summary:  Earnings releases in the US have mostly beat expectations but many of the banking earnings have done so because of release of loan loss reserves. Delta Air Lines is the only US earnings release that has disappointed again expectations. In general investor response has been mixed with a tilt to the negative side. In Europe, there has only been a few earnings releases but a couple of heavyweights have lifted their guidance for the year including HelloFresh which we also take a look at in today's equity update.


The Q1 earnings season started this week with mostly US financials on the menu and next week promises around 90 earnings releases before the big show starts in 10 days with technology earnings.

Most companies in the S&P 500 reporting this week have beat on both revenue and earnings, with only Delta Air Lines as the real disappointment missing on both revenue and earnings. The initial reaction has been mixed with most reactions to banking earnings being negative as earnings beats have been driven by loan loss releases (reserves set aside for future losses not needed) which goes back into earnings. One of the key reasons US equities are higher this week is likely due to yesterday’s strong economic data and lower interest rates boosting sentiment. So while the earnings season looks good at the surface the reaction to it has been more mixed.

In Europe earnings releases have so far also been mixed but with heavyweights such as SAP and ABB lifting guidance. Forward estimates on earnings are up 10-11% this year across STOXX 600, S&P 500 and Nasdaq 100 with Europe trailing a bit despite European equities should have higher beta to the global economic rebound through more index weight in cyclical stocks. The theme over the past two quarters have been that of earnings rebounding faster in the MSCI World Index compared to S&P 500 suggesting earnings outside the US have rebounded faster. Whether this trend continues and whether the rest of the equity market can close the earnings growth gap to Nasdaq 100 will be key observations to monitor.

16_PG_1
16_PG_2

Food service company HelloFresh shows stunning growth

HelloFresh shares jumped 6.5% higher on the open as the online fresh food service company increased its guidance. The company expects Q1 revenue at €1.44bn vs est. €1.17bn expected by analysts according to the company continuing the strong business momentum from 2020 where annual revenue grew to €3.75bn from €1.81bn in 2019. For the fiscal year HelloFresh is increasing its previously communicated revenue growth target from 20-25% to 35-45% indicating continued strong uptick in demand for the company’s food service. The company is part of our E-commerce theme basket which has done quite well in April up 6.3% as of yesterday and with guidance like this from HelloFresh we could see momentum extend in e-commerce stocks during the earnings season. HelloFresh is currently valued at a free cash flow yield of around 4% which looks like a quite high yield given 40% growth expected this year. One potential risk this year is the continuing rise in food prices and whether these rising input costs will and can be passed on to consumers.

16_PG_3
Source: Saxo Group
16_PG_4

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.