Before the Bell: One Retail Stock Is Not Like the Other

Dollar Tree jumps 14%, Costco drops 3% and Kroger loses 4.6%. Fan mail for Ackermans & van Haaren, and UCB will report even better results than expected.

Major European indices gained between 0.3% and 0.9%, while Wall Street barely moved from Thursday’s closing levels. The autos sector rallied in Europe as restrictions on CO₂ emissions may be relaxed both in Europe and the U.S. On Wall Street, investors were reasonably satisfied with Salesforce’s results (+3.7%). Retailers Dollar Tree (+14%) and Costco (-3%) both reported solid earnings, but the market reaction differed sharply. Dollar Tree impressed thanks to aggressive discount pricing, while Costco investors were disappointed by November sales—even though they still grew 6.9%. But at a valuation of roughly 50 times earnings, strict judgement is understandable. Shares of Kroger, another American supermarket chain, fell 4.6% as revenue growth is now expected to come in at 2.8%–3%, below earlier guidance. Meta added 3.4% after signalling that investments in the metaverse will be scaled back.

In Tokyo, the Topix index was down 1% around 8 a.m. local time, while Chinese markets were trading half to one percent higher. In Brussels, UCB announced that its 2025 results will be even better than expected, with revenue exceeding 7.6 billion euro, compared with analysts’ estimates of 7.2 billion. Profit guidance was also raised. Later today on Wall Street, we will receive U.S. inflation data based on the Federal Reserve’s preferred gauges—crucial information for interest-rate expectations and highly relevant to equity markets as well.

Strong Growth, Even Higher Valuation

Snowflake, the American cloud and data analytics specialist, dropped 11.4%. Revenue grew 29% last quarter, but is expected to slow to 27% in the current quarter. Some investors were hoping the company could maintain 30% growth. Instead, attention is shifting to potential margin pressure from investments in artificial intelligence. Even so, analysts still expect earnings growth of 47% this year and around 35% in the coming fiscal years. The problem? The stock already trades at 161 times expected earnings.

More Fans for the Antwerp Holding

Jim Stukken is not the only Spaarvarken who is a fan of holding company Ackermans & van Haaren through the 5G portfolio. Brokerage house Kepler Cheuvreux sharply raised its price target on Thursday morning, from 219 to 315 euro, maintaining its Buy recommendation. The share gained 4.9% to 227 euro. Kepler’s analyst notes that AvH’s private banking division—which accounts for more than half of the holding’s value—is valued at only 8.6 times expected 2027 earnings, while listed peers trade at around 13 times earnings. As Spaarvarkens know, AvH’s second-largest holding is DEME, the marine engineering and dredging group. According to Spaarvarken Jan Reyns, DEME is a world-class company with strong long-term prospects and an attractive valuation.

Did you know…

Tesla is the only major U.S. technology stock (investors no longer see it as a car company) that has not yet reached a new high this year? It’s not far off, though—just another 6% to go.

This article was translated from Dutch and was originally published on Spaarvarkens.be.