The Closer – Tariffs, Office Weakness, Construction – 11/19/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start with commentary on tariffs (page 1). Next, we check in on the performance of office loans and CMBS (page 2) in addition to reviewing today’s residential construction figures (page 3). We finish with a rundown on Canadian inflation (page 4).
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Daily Sector Snapshot — 11/19/24
Health Care Weightloss
We discussed the hard fall in Health Care sector stocks in today’s Chart of the Day. While the drop has resulted in extreme underperformance versus the S&P 500, it has also resulted in the sector’s weight in the S&P 500 falling dramatically. At the end of 2022, the sector’s weight rose almost to 16%. At that time, it was the second-largest sector behind Tech, and relative to its history, it was one of the largest weights on record. The past couple of years have seen a dramatic weight loss that is now teetering on moving to a single-digit weighting. At 10.36%, the Health Care sector currently has its lowest weight since September 2000. Additionally, the 1.67 percentage point loss in weight over the past three months is one of the biggest declines on record.
Back at the recent highs in late 2022, Health Care was the second largest sector in the S&P 500. Today, it is only the fourth largest sector which is the lowest ranking it has had in more than a decade (2012). Of course, that smaller weight means that the Health Care sector won’t have the same pull on the broader market that has been typical over the past couple of decades.
Q3 2024 Earnings Conference Call Recaps: Cava (CAVA)
Bespoke’s Conference Call Recaps use AI to summarize lengthy earnings calls. The commentary below is AI-generated and then edited by Bespoke for quality control. As always, none of these summaries should be construed as recommendations to buy or sell any securities, and investors should do their own research and/or consult with a financial professional before making any investment decisions.
Our latest recap available to Bespoke subscribers covers Cava’s (CAVA) Q3 2024 earnings call.
Cava (CAVA) is a fast-casual restaurant chain known for its Mediterranean cuisine, meeting in the middle of taste, speed, and health. With 352 locations across the US and expanding rapidly, CAVA serves a diverse customer base seeking a convenient and healthier dining experience. This quarter, CAVA delivered revenue growth of 39% YoY with same-restaurant sales rising 18.1%, driven by 12.9% traffic growth. Key highlights include the launch of garlic ranch pita chips, driving 12 million social media impressions, and the successful nationwide rollout of a revamped loyalty program, boosting loyalty sales by 200 basis points. Expansion into South Florida and the Midwest in 2025, alongside new restaurants already exceeding expectations, provides confidence for management in its growth potential. AI was also mentioned as a tool being deployed in its kitchens to make operations more efficient. For the third consecutive quarter, CAVA beat estimates and the stock finished trading on 11/13 up 1.6% after opening 16% higher but erasing most of the gains intraday…
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Bespoke Stock Scores — 11/19/24
Can NVIDIA (NVDA) Live Up to Lofty Expectations?
This quarter’s “earnings season” unofficially comes to an end this week now that Walmart (WMT) has reported its numbers and NVIDIA (NVDA) is on tap to report tomorrow after the close. After NVDA, the number of earnings reports per day will slow to a trickle for the next six weeks before the next earnings season begins in early January.
As the largest company in the world, NVIDIA’s quarterly earnings release is now inspiring watch parties at bars in New York City! Needless to say, investors are on edge from both a micro and macro perspective about NVDA’s report tomorrow. NVDA is THE company driving the AI Boom, so any hints of caution or a slowdown will likely not be taken kindly by the market.
As shown in the chart from our website below, NVDA is heading into its report tomorrow down only slightly from all-time highs that were hit last week.
Our Earnings Explorer tool on our website lets users see historical sales trends for individual stocks like NVDA along with how sales came in compared to estimates each quarter. The chart for quarterly NVDA sales is one of the more remarkable ones you’ll ever see. Check out the absolute explosion in sales for NVDA beginning in 2023 (top chart) along with the massive beats versus expectations (lower chart). (You can find these charts for the stocks you follow most closely with a Bespoke Institutional membership.)
NVIDIA (NVDA) shares are up nearly 1,000% since the end of October 2022 just before ChatGPT was released.
Revenue growth has been astronomical for NVDA over the last couple of years, but with a market cap of more than $3.5 trillion and expected full-year sales of $127 billion in 2025, the company trades with an estimated 2025 price-to-sales ratio of 27.9x. That is not cheap!
And while revenue growth is expected to jump more than 100% YoY in 2025, estimates drop to 49% in 2026, 19.5% in 2027, ~18% in 2029 and 2029, and then 10% in 2030 and 2031.
Based on NVIDIA’s current market cap, below is a look at its forward price-to-sales multiple going out to 2031 based on estimates. At NVDA’s current valuation, it’s trading at 18.8x 2026 sales, 15.7x 2027 sales, and even 9.2x 2031 sales.
It’s undeniable: NVDA has a lot to live up to in the coming years.
Getting back to the here and now, investors and traders are focused on how NVDA will react in the immediate aftermath of its earnings report tomorrow night.
Bespoke Institutional subscribers have access to a treasure trove of historical earnings data that shows how stocks have typically traded in reaction to past reports. Below is a snapshot of NVDA’s historical earnings data pulled directly from our website. What you’ll notice with NVDA is just how often it reports an earnings triple play by beating EPS estimates, beating sales estimates, and raising guidance. Typically, an earnings triple play results in an upside share-price reaction, but as we saw last quarter with NVDA when a triple play becomes the norm, sometimes it’s not enough. Back in August following NVDA’s seventh earnings triple play in a row, the stock ended up falling more than 6% on the day.
Looking ahead to tomorrow, it’s hard to envision NVDA shares performing well if it doesn’t manage to report yet another triple play.
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Q3 2024 Earnings Conference Call Recaps: Instacart (CART)
Bespoke’s Conference Call Recaps use AI to summarize lengthy earnings calls. The commentary below is AI-generated and then edited by Bespoke for quality control. As always, none of these summaries should be construed as recommendations to buy or sell any securities, and investors should do their own research and/or consult with a financial professional before making any investment decisions.
Our latest recap available to Bespoke subscribers covers Instacart‘s (CART) Q3 2024 earnings call.
Instacart (CART) is an online grocery marketplace that connects consumers with a wide range of retailers for same-day delivery and pickup services. The company serves millions of customers across North America and is expanding into adjacent categories like restaurant delivery. What sets CART apart is its deep technological integrations with retail partners, including loyalty programs, in-store innovations like smart carts (Caper Carts, AI-powered that use sensors, cameras, and built-in scales that display purchases and allow checkout directly on the cart to bypass checkout lines), and its growing retail media business. Instacart provides valuable insights into consumer spending habits and grocery e-commerce. In Q3, CART reported 11% YoY growth in gross transaction value (GTV). Technological advancements, including an upgrade to Storefront Pro and expanded Caper Cart deployments, were highlights this quarter. Affordability initiatives like Super Saver delivery and Kroger flyer integration drove an 18% increase in order savings. The advertising business also gained some momentum as emerging brands now span 220 banners. Guidance for Q4 reflects 8-10% GTV growth amid seasonal pressures and tough comps. The stock fell 11% on 11/13 in reaction but had more than doubled YTD leading up to the report…
Continue reading our Conference Call Recap for CART by becoming a Bespoke Institutional subscriber. You can sign up for Bespoke Institutional now and receive a 14-day trial to read our newest Conference Call Recap. To sign up, choose either the monthly or annual checkout link below:
Chart of the Day – Health Care in the Infirmary
Q3 2024 Earnings Conference Call Recaps: Walmart (WMT)
Bespoke’s Conference Call Recaps use AI to summarize lengthy earnings calls. The commentary below is AI-generated and then edited by Bespoke for quality control. As always, none of these summaries should be construed as recommendations to buy or sell any securities, and investors should do their own research and/or consult with a financial professional before making any investment decisions.
Our latest recap available to Bespoke subscribers covers Walmart‘s (WMT) Q3 2025 earnings call.
Walmart (WMT) is the world’s largest retailer, operating over 10,500 stores and numerous e-commerce platforms across 20+ countries. Known for its low prices and extensive product assortment across groceries, general merchandise, pharmacy services, and e-commerce, WMT serves cost-conscious households of all income ranges. This quarter, WMT posted global sales up 6.1% with e-commerce as the standout performer, growing 27% globally, with marketplace sales surging 42% in the US. Membership programs, including Walmart+ and Sam’s Club, delivered double-digit growth, strengthened by higher-income households. The company reported resilient consumer spending despite low inflation, with 75% of US market share gains coming from households earning over $100,000. Internationally, markets like China and Mexico drove impressive results, and management noted improved delivery and digital developments in those markets. In reaction to earnings results that were stronger than estimates, WMT shares rose about 4% through midday on 11/19…
Continue reading our Conference Call Recap for WMT by becoming a Bespoke Institutional subscriber. You can sign up for Bespoke Institutional now and receive a 14-day trial to read our newest Conference Call Recap. To sign up, choose either the monthly or annual checkout link below:
Bespoke’s Morning Lineup – 11/19/24 – Ten in a Row For Walmart
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“And like most other overnight successes, it was about twenty years in the making.” – Sam Walton
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
What was looking like a positive morning for equities turned murkier in the last few hours as Russian President Vladimir Putin updated the country’s nuclear doctrine in response to President Biden’s move giving Ukraine the go-ahead to launch attacks on Russian targets deep inside the border. Under the new policy, a spokesperson for the Kremlin said that Russia now “reserves the right to use nuclear weapons in the event of aggression using conventional weapons against it and/or the Republic of Belarus.”
Before the comments, Asian stocks were higher, with fractional gains across the board overnight. European stocks also opened flat to slightly higher but then steadily sold off in the wake of the updated doctrine. The STOXX 600 currently sits down about 0.75%, as even a small increase, however unlikely, of an escalating conflict can understandably cause investors to become more risk averse. It’s also worth highlighting that Putin made similar comments over the weekend that supplying Ukraine with long-range missiles would cross a red line.
Given the tensions, Treasury yields are lower as the 10-year yield is back below 3.4%, crude oil is fractionally lower, and gold and bitcoin are up nearly 1% each with the latter trading firmly above $92K. In terms of economic data, Building Permits and Housing Starts for October were just released and both headline readings came in modestly lower than expected.
Shifting from macro to the micro, Walmart (WMT) marked the unofficial end to earnings season this morning reporting better-than-expected EPS and sales and reiterating its full-year guidance. This was the tenth straight quarter that the company reported better than expected EPS and sales, and in response, the stock is poised to gap up 3.5% which would be the fourth time in a row that the stock gapped up in reaction to earnings. Shares of WMT have already been on a monster run for the last year after dropping below $50 late last year, but this morning the stock is at record highs around $87. One thing to be aware of is that on each of its last six earnings reaction days, the stock has traded down from the open to close.
