All Good in the $HOOD Q4 Earnings Predictions
Thoughts 17Nov2024
Intro:
Good in the hood. Let play a game and try to guess the EPS and Revenue for Q4 2024. And yes, the share price too!
Guesstimations:
Hood contra revenue q4 is expected to be 54M, last quarter was 27M.
Rev from q2 to q3 was 4.1% increase. 506m rev in q3. Assuming same rate. 526.7m expected q4. Up 20.7m.
Note. Q3 was not a great quarter for compared to 1 and 2 based on trading volumes. Crypto was down big in sep.
HOOD made 5M on election contracts. This plus flat rev growth using weak q3 would be 25.7M, almost offsetting the additional 27m contra rev expected.
Right now. Analysts are expecting same eps in q4 as q3. 0.17. Imo. Based on above break down. That’s the baseline, worst case scenario.
Ask yourself. Their highest margins are in crypto. Which will be show to be way up in q4 v. q3. Plus the windfall from elections contracts. Do you really think this will miss? We will know more when they release the Nov numbers in mid Dec. But I expect it to be way up and Oct was already showing improvement.
The question is. How much is priced in? Well. The rev increase was 31% from q4 2023 to q1 2024. And 10.4% q1 to q2. Note. The March crypto bull run was in q1. So let’s choose the middle ground and say they do 20% this quarter. That would be 607m rev in q4 this year. Up 101m.
Now let’s add the 101m+5m elections. 106m increase in rev. Take out increase of 27m contra rev. That’s a 79m increase in rev over q3. Or 14% growth. Where they are currently projected for flat growth in the eps.
My prediction is an eps of 0.19 to 0.20. Which would be a beat on top and bottom line. And y/y growth of 633%. Note. This will be the last easy comp quarter for y/y as Jan 2024 will start to be the comp in q1.
But back to the priced in part. Let’s go with 0.20. Being an optimist. That’s 0.76 eps for the year. At the current price that is a PE of 42.5. A little rich. But not too crazy as SCHW is trading at a PE of 31.5 and isn’t anywhere near experiencing the same growth. It’s also worth noting that HOOD is trading at a PE of 55.7 at this moment.
Assuming a good guide in q4, as contra revenue is expected to decrease going forward. And a favorable macro at that time. I could see HOOD trading at a similar PE to now. Which would be a share price of $41.50 after earnings in Jan 2025.
Conclusion:
EPS of 0.20 v 0.17 expected
Rev of 607M v 526.7M expected
Stock Price of $41.50