China-based financial stock Futu Holdings is Tuesday's pick for IBD 50 Growth Stocks To Watch. Shares are taking a break ahead of the company's rare Thanksgiving Day earnings release.
Futu is scheduled to report its earnings early on Thursday, although the U.S. stock market is closed on Thanksgiving. That's because Futu is based in Hong Kong, where there is no holiday Thursday.
The holding company operates an online brokerage and wealth management platform. The fintech offers market data, financial news, interactive social features and investor education on its digital platforms: Futubull and moomoo.
Its subsidiaries provide trading and clearing services for U.S., Hong Kong, China, Singapore and Australia stocks.
Futu ranks No. 1 out of 33 stocks in the investment banking and brokers industry group. The group is a moderate No. 69 out of the 197 IBD industry groups, according to MarketSmith data.
Financial Stock Prepares For Thanksgiving Earnings
Futu stock pulled back on Tuesday and gave back a good portion of Monday's 5% gain. The financial stock is close to forming a cup base with a 67.49 buy point. It found support at its 50-day moving average while forming the base.
The stock jumped Nov. 6 following news that its moomoo platform was collaborating with the Chicago Board of Options Exchange (Cboe) to offer index options products to its U.S. moomoo customers. Moomoo began offering trading in six index options on the Cboe in November, according to Dow Jones Newswires.
Futu handily beat its second-quarter adjusted earnings and sales estimates on Aug. 24. The fintech stock rallied six out of seven days following the report.
The stock is up around 67% from its May lows, even after China pulled Futu and competitor Tiger Brokers' online apps that month. The online brokers were allowing clients to trade overseas stocks, which is a violation of the country's laws.
The financial stock recovered from the midyear lows as it benefited from higher U.S. interest rates this year. Brokerage companies can pay lower interest rates on clients' cash balances while investing the funds at higher rates.
Futu started trading on the Nasdaq on March 8, 2019, at an initial offering price of $12 per share.
Big Earnings Growth Expected To Continue
Analysts have high hopes for the earnings report on Thanksgiving. Third-quarter earnings are estimated at 99 cents vs. 68 cents in last year's quarter, or a 45.6% increase, according to FactSet. Full-year EPS is forecast at $4.07 vs. $2.77 in 2022, for a 46.9% pop. Profit is estimated to climb to $4.39 per share in 2024.
FactSet's third-quarter sales projections show $296.2 million vs. $249.4 in last year's quarter. Full-year sales are forecast at $1.221 billion vs. $970 million in 2022, then expanding to $1.354 billion in 2024.
Futu Beat Q2 Expectations
Futu beat second-quarter earnings estimates by a modest 2.6%, after strong beats of 30.2% and 24.8% in the two prior quarter. Its quarterly earnings have exploded in the last three quarters. Second-quarter EPS grew 78% over last year, but eased from 114% and 109% in the prior two quarters.
Futu's sales growth has also improved in the last several quarters, going from 11% to 42%, 52% and 42%.
Its total number of clients increased 14.3% in Q2 over last year's quarter, while daily average client assets rose 18.3%. Total trading volume dropped 28.7% and daily average revenue trades declined 32.1%.
The financial stock holds best-possible 99 IBD Composite and EPS Ratings.
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