Will Wednesday’s Hedges Pay Off Following Late-Week Data?
Once again stocks were relatively flat on the day, with the major market averages ultimately ending split. Both the economic and earnings news was mixed as well, so a relatively flat day seems appropriate. We also think the market is hedging its bets before the jobs and retail data that will be released Thursday and Friday.
Stocks ended mixed, with the Dow down -9 points to 10,397. The S&P was up fractionally, while the Nasdaq was down fractionally. Gold climbed $6.60 to $1,144.00 an ounce, while oil rose $1.28 to $80.96 a barrel.
The private sector jobs report from ADP Employer Services topped today’s economic news, with the payroll company reporting that the private sector shed -20,000 jobs last month, in line with economist estimates. However, the January number was revised downward to -60,000 job losses from -22,000. Elsewhere, the Fed in its Beige Book said economic activity strengthened in February although snowstorms took a toll. Meanwhile, the Institute for Supply Management service industry index rose to 53 in February from 50.5 in January, topping the 51.0 reading economists had expected.
In earnings news, shares of Costco (COST) fell -1.1% after the warehouse club operator missed analyst EPS estimates when it reported fiscal Q2 earnings. For the period ended February 14th, the company earned $299 million, or 67 cents per share, up 25% from $239 million, or 55 cents per share, a year ago. Adjusted EPS came in at 70 cents, -2 cents below expectations. Revenue grew 11% to $18.74 billion, topping Wall Street estimates of $18.56 billion, as same-store sales excluding gas sales and currency climbed 2% in the U.S. and 10% overseas. Fifty-nine Pro investors counted the stock among their top-15 holdings at the start of Q1, while nearly 650 tickerspy members included the stock in their portfolios.
Big Lots (BIG) shares climbed 1.9% after the closeout retailer’s Q4 EPS topped Wall Street views. For the period ended January 30th, the company posted a profit of $105.4 million, or $1.29 per share, up 34% from $78.8 million, or 97 cents per share, a year earlier. Excluding items, adjusted EPS was $1.31. Revenue rose 7% to $1.46 billion, as comparable-store sales jumped 5.1%. The Wall Street consensus was for EPS of $1.28 on sales of $1.45 billion. Looking ahead, Big Lots guided for Q1 EPS of between 60-65 cents versus estimates of 53 cents.
Mining equipment maker Joy Global (JOYG) saw its fiscal Q1 profit dip -11% to $76.2 million, or 73 cents per share, from $85.7 million, or 83 cents per share, last year. Sales fell -3% percent to $729.2 million. The results easily topped the Wall Street outlook for EPS of 64 cents on revenue of $663.4 million. The stock rose 5.9%. Twenty-three Pro investors counted the stock among their top-15 holdings at the start of Q1, while 440 tickerspy members included the stock in their portfolios.
Shares of DineEquity (DIN), the owner of Applebee’s and IHOP, jumped 12.4% after the restaurant owner’s adjusted EPS soared past estimates. For Q4, the company lost -$48.2 million, or -$2.84 per share, compared to a loss of -$136.9 million, or -$8.15 cents per share, a year earlier. Adjusted EPS rose to 76 cents from 37 cents a year ago, and easily topped the 15-cent EPS consensus. Revenue inched down -0.1% to $355.2 million, as domestic same-store sales fell -3.1% at IHOP and -4.5% at Applebee’s.
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