The Market Catches Its Breath (COST, KFY, HRB, HBC, JNJ, CRXL, PNC)
After briefly dipping into the red, stocks managed to post slim gains on day in which there wasn’t really any significant news to move the market in either direction. There was posturing from some liberal Democrats on Capitol Hill likely to oppose the tax cut compromise the President reached with Republicans, but investors seem to have shrugged that off as mostly talk. There will be opposition, but the expectation is the deal will pass. Today was likely one of those days when the market simply paused to catch its breath. With many money managers still underinvested or trailing their benchmarks, we expect them to keep putting money to work, especially on any dips and pauses.
The major stock averages ended the day higher. The Dow added 13 points to close at 11,372. The S&P 500 was up 5 points to 1,228, while the Nasdaq finished the day up 11 points to 2,609. Gold slid by $25.80 per ounce to $1,383.20. Oil was also lower, down 41 cents per barrel to close at $88.28.
In earnings news, shares of Costco Wholesale (COST) edged down -0.6% despite the wholesale club operator announcing that its first quarter profit jumped 18% on higher sales. For the period ended November 21st, Costco earned $312 million, or 71 cents a share, up from $266 million, or 60 cents a share, last year. Wall Street was expecting EPS of 69 cents. Revenue climbed 11% to $19.24 billion, while same-store sales moved up 7%. 61 Pros held the stock in their top-15 U.S.-listed equity positions at the end of Q3, and 772 tickerspy members hold the stock in their portfolios.
Executive recruitment company Korn/Ferry International (KFY) said that its Q2 net income beat expectations. The stock climbed 16%. For the quarter, net income rose to $13.7 million, or 30 cents per share, from $2.8 million, or 6 cents per share, a year earlier. Adjusted EPS came in at 33 cents, which easily topped the 24-cent consensus. Fee revenue soared 32% to $185 million. For Q3, the company guided for EPS of 25-32 cents on revenue of $175-$190 million. Analysts have projected Q3 EPS of 24 cents on revenue of $179.5 million.
Shares of H&R Block (HRB) dropped -6% on news the tax preparation company might not be able to offer “rapid refunds” this upcoming tax season due to an ongoing lawsuit with bank HSBC Holdings (HBC). For Q2, the company lost -$109 million, or -36 cents a share, compared with a loss of -$128.6 million, or -38 cents a share, a year ago. Adjusted EPS was -35 cents, better than the -38-cent loss anticipated by analysts. Revenue fell to $322.9 million from $326.1 million. During the quarter Block bought back 3.5 million shares of its stock. 12 Pros held the stock in their top-15 U.S.-listed equity positions at the end of Q3, and 125 tickerspy members hold the stock in their portfolios.
In M&A news, healthcare company Johnson & Johnson (JNJ) said that it has offered to buy the rest of Dutch biotechnology company Crucell (CRXL) for 1.75 billion euros ($2.3 billion), or 24.75 euros per share. This represents a premium of 58% over Crucell’s closing price on September 16th, the day before J&J, which already has a 17.9% stake in the company, announced that it intended to buy the rest of it. Shares of J&J edged up 0.2% on the news, while shares of Crucell inched down -0.1%.
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