The market is trying to make a comeback
The market is posting a slight comeback from yesterday’s sell-off with the S&P 500 Index (SPY) up about 0.5% and the Nasdaq Composite Index (QQQ) up just over 1% in early trading. Let’s take a quick look at three stocks making outsized moves, so you can determine if you should be a buyer or seller of one of them today.
PayPal Holdings Inc. (Nasdaq: PYPL) is roaring over 9% higher in early trading following its release of better-than-expected third-quarter earnings results after the market closed yesterday. The digital payments giant posted revenue of $3.68 billion and adjusted EPS of $0.58, which beat analysts’ expectations of $3.67 billion in revenue and $0.54 in adjusted EPS. It also raised its full-year outlook, now calling for revenue in the range of $15.42 billion-$15.5 billion and adjusted EPS in the range of $2.39-$2.40, and provided very strong outlook on the fourth quarter, calling for revenue in the range of $4.195 billion-$4.275 billion and adjusted EPS in the range of $0.65-$0.67.
A beat and raise is all investors can ask for during earnings season, so I think the post-earnings pop is only the start of a sustained rally higher.
eBay Inc. (Nasdaq: EBAY) is also on the move due to PayPal’s earnings release, but to the downside. Its stock is down over 7% in early trading because PayPal’s earnings release stated that “eBay Marketplaces volume grew 3% on an FX-neutral basis, and represented 11% of overall TPV for the quarter versus approximately 13% a year ago.” Analysts were expecting to see much higher volume growth out of eBay Marketplace, so this led to an analyst downgrade earlier this morning as well.
While the weakness in eBay’s stock makes sense, it now trades more than 37% below its 52-week high and trades at very attractive valuations, so I think the reward far outweighs the risk at this point and I would consider buying the stock today.
Skechers USA Inc. (NYSE: SKX) is soaring over 20% following the release of its third-quarter earnings results after the market closed yesterday. The global footwear company reported sales of $1.18 billion and diluted EPS of $0.58, which came in mixed compared with analysts’ expectations of $1.22 billion in revenue and $0.51 in EPS.
While mixed results are not ideal, the sentiment turned very positive when Skechers provided its outlook on the fourth quarter. The company stated that it expects fourth-quarter revenue in the range of $1.10 billion-$1.125 billion and diluted EPS in the range of $0.20-$0.25, both of which beat analysts’ expectations of $1.08 billion in revenue and $0.18 in EPS.
While the rally appears to be warranted, especially with how badly Skechers’ stock has performed year-to-date, I would wait for the stock to pull back before considering opening a position.