Hormel Misses and Lowers Guidance
Posted by Eddy Elfenbein on February 23rd, 2017 at 8:36 am

Also this morning, Hormel Foods (HRL) posted fiscal Q1 earnings of 44 cents per share, one penny shy of estimates. The Spam stock also lowered its full-year guidance to $1.65 to $1.71 per share. That’s a decrease of three cents to both ends of the range. Hormel cited “challenging market conditions in the turkey industry.”

For Q1, Jennie-O Turkey sales rose 13% but segment profits fell 25%. Overall sales fell 0.5% to $2.28 billion. Despite the earnings miss, this was Hormel’s 15th record quarter in a row.

“We are tempering our full year outlook for the Jennie-O Turkey Store segment given the shortfalls in the first quarter and the expected continuation of pricing pressure due to low commodity turkey prices. Improvements in our other segments are expected to offset some of the earnings headwinds from Jennie-O Turkey Store,” Snee said.

Cinemark Crushes Estimates
Posted by Eddy Elfenbein on February 23rd, 2017 at 8:19 am

This morning, Cinemark (CNK) reported Q4 earnings of 66 cents per share, which demolished Wall Street’s estimates of 44 cents per share. Quarterly revenues slipped a bit to $700.9 million.

“It was a banner year for the North American industry box office, achieving its 4th all-time high in the past 5 years,” stated Mark Zoradi, Cinemark’s Chief Executive Officer. “Cinemark’s domestic operations outperformed the North American industry box office by 100 basis points, and globally we set numerous records, including total revenues of nearly $3 billion, net income of $255 million and Adjusted EBITDA of more than $706 million. Furthermore, our ability to increase our dividend, while continuing to actively invest in growth initiatives, is indicative of the consistent strength of our balance sheet, as well as our confidence in Cinemark.”

For the year, CNK’s revenues increased 2.3% to $2.92 billion. Earnings per share came in at $2.19 compared to $1.87 for 2015.

The company also raised its quarterly dividend from 27 to 29 cents per share. The new dividend will be paid on March 20 to stockholders of record on March 8.

Cinemark also has ambitious plans for this year:

As of December 31, 2016, the Company’s aggregate screen count was 5,903 and the Company had commitments to open eight new theatres and 69 screens during 2017 and seven new theatres and 76 screens subsequent to 2017.

Morning News: February 23, 2017
Posted by Eddy Elfenbein on February 23rd, 2017 at 4:21 am

OPEC Still Waiting for Evidence Oil Cuts Are Doing Their Job

The Yuge-est Threat to the Trump Economy: Spiking Interest Rates

Thousands of Emails Detail EPA Head’s Close Ties To Fossil Fuel Industry

Carlos Ghosn, Executive Who Revived Nissan, Will Step Aside

Taking Elon Musk Seriously, Not Literally

McDonald’s to Cut Prices on Drinks as Industry Slumps

Soda Sales Fall Further in Mexico’s Second Year of Taxing Them

Barclays Shares Climb on Capital Boost, Restructuring Progress

Amazon Is Running a Limited Time Coupon Code to Thank Customers

PSA Ready for `Opportunities’ as Profit Gain Helps Opel Stance

Fitbit Discloses That It Bought Smartwatch Startup Pebble for $23 Million

SolarCity’s Ties to Foreclosure Cases Raise Questions on Vetting Policies

Tech Breakthroughs Take a Backseat In Upcoming Apple iPhone Launch

David Merkel: Good, Not Average, Not Great

Howard Lindzon: I Survived the BULL Market of 2017

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The Placid Market
Posted by Eddy Elfenbein on February 22nd, 2017 at 2:54 pm

Here’s a look at how relaxed the market has become. This is the daily changes in the S&P 500 over the last 19 months.

The Dollar’s Impact on Stock Sectors
Posted by Eddy Elfenbein on February 22nd, 2017 at 12:31 pm

I was curious to see what effect movements in the U.S. dollar have on different stock sectors. I took ten years of data. I then isolated all the days when the U.S. Dollar Index rose and saw how the 10 different stock sectors did relative to the S&P 500. I then did the same for when the Dollar Index fell.

Not surprisingly, the dollar has its greatest impact on the Energy and Materials sectors. When the dollar falls, those sectors outperform the rest of the market. When the dollar rises, Staples and Healthcare do the best against the market.

Interestingly, the impact of the dollar isn’t that strong on the other sectors. I was particularly surprised to see such a small effect on tech stocks.

(I apologize if my methodology is confusing. Just understand that the higher or lower number reflects how each sector performs when the dollar is weak or strong.)

The Dow Goes for Nine in a Row
Posted by Eddy Elfenbein on February 22nd, 2017 at 11:13 am

The Dow is going for its ninth-straight daily gain. This would be the index’s longest winning streak since early 1987.

Ryan Detrick points out that the S&P 500 has now gone 50 straight days without closing up or down by more than 1%. Over the same 50 days one year ago, it happened 29 times!

We haven’t had a 1% decline for the S&P 500 for 90 straight days. That’s the longest streak since 2006, and we’re close to making it the longest streak since 1995.

The S&P 500 Tech Sector has risen for the last 14 days in a row. Yesterday, the index closed at 886.09. The all-time high from March 27, 2000 was 987.07.

The S&P 500 Financials Index had its highest close on February 20, 2007 (10 years and two days ago) at 505.55. Yesterday, it closed at 407.65.

Danaher Raises Dividend
Posted by Eddy Elfenbein on February 22nd, 2017 at 10:33 am

Good news from Danaher (DHR). The company raised its quarterly dividend from 12.5 cents to 14 cents per share. The new dividend is payable on April 28 to holders of record on March 31.

Morning News: February 22, 2017
Posted by Eddy Elfenbein on February 22nd, 2017 at 7:15 am

German Optimism Up in Positive Sign for Europe’s Economy

Mexico and Canada Say Nafta Should Be Re-Negotiated Trilaterally

The Fallout From “A Day Without Immigrants”

Hedge Funds Can’t Sue Over Investments in Fannie and Freddie

Trump’s Threatened Tariffs Could Cloud Walmart’s Future

Airbus Profit Hit By Chart on A400M Program

UPS Has a New Trick to Make Drone Deliveries a Reality

Popeyes’s Eye-Popping Deal

The Big Reason Why Home Depot’s Sales Continue to Build

Macy’s 4Q Sales Sharply Dropped

Uber CEO Apologizes for Company Culture After Harassment Claims

Wells Fargo Has Fired and Cut Bonuses for 4 Executives Over Its Sales Scandal

Switzerland’s ABB Uncovers $100 Million Korean Fraud as Suspect Vanishes

Roger Nusbaum: A Litte Bumpier, But Higher!

Jeff Carter: A Critical Point of Differentiation in Framing

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Remember This?
Posted by Eddy Elfenbein on February 21st, 2017 at 10:16 am

It’s interesting how bearish predictions are so easily forgotten.

This is from the New York Times on October 31.

Assume, for a moment, that Donald J. Trump wins the presidency.

Some readers of this column will shudder at the thought and might even stop reading now. Others in the business world will beam, like Peter Thiel, the Silicon Valley entrepreneur.

But what exactly happens the day after? To markets? To the economy?

The conventional wisdom is that, right off the bat, the stock market would fall precipitously. Simon Johnson, the Massachusetts Institute of Technology economist, posited that Mr. Trump’s presidency would “likely cause the stock market to crash and plunge the world into recession.”

The Dow is up more than 2,500 points since then.

WAB Falls But the Consumer Looks Good
Posted by Eddy Elfenbein on February 21st, 2017 at 10:06 am

It’s a tough morning for our Buy List. Shares of Wabtec (WAB) have been down as much as 7.8%.

The S&P 500 is up to a new all-time high. The index is currently over 2,361.

The U.S. consumer appears to be doing well as reflected by some recent earnings reports. Home Depot (HD), for example, just reported blow-out earnings. HD said it’s going to buy back $15 billion worth of stock, plus they’re hiking their dividend by 29%. Also, Walmart (WMT) reported its best comp store sales increase in four years. Both stocks are in the Dow.

Interestingly, since its 1981 IPO, shares of HD are up 6,000-fold. Not bad.

I’d probably take the earnings reports from Home Depot, Walmart and Amazon over any government report on U.S. consumer spending.