Market Update
Chewy Swung to Quarterly Loss, Gross Margin Expands to Record High
Scott Peters
07 Dec, 2023
New York City
Chewy declined 10.8% to $17.25 after the online pet food and products store reported weaker-than-expected revenue and the company swung to a loss in the quarter.
Revenue in the fiscal third quarter ending in October rose 8.2% to $2.73 billion from $2.53 billion, and the company swung to a net loss of $35.8 million from a profit of $2.3 million, and diluted earnings per share swung to a loss of 8 cents from a profit of 1 cent a year ago.
Gross margin expanded 10 basis points from a year ago to a record high of 28.5%, and autoship customer sales increased 12.8% to $2.1 billion, representing 76.4% of total sales.
Toll Brothers Quarterly Earnings and Home Backlog Declined
Scott Peters
06 Dec, 2023
New York City
Toll Brothers increased 2% to $89.0 after the luxury home builder reported better-than-expected quarterly results.
Revenue in the fiscal fourth quarter ending in October declined to $3.02 billion from $3.7 billion, net income decreased to $445.5 million from $640.5 million, and diluted earnings per share dropped to $4.11 from $5.63 a year ago.
The backlog of homes at the end of October declined 19% to 6,578 and the value of the backlog fell 22% to $6.95 billion.
During the quarter, the company repurchased approximately 4.3 million shares at an average price of $75.70 per share, for a total of $325.5 million.
In the fiscal year, the home builder repurchased approximately 7.9 million shares at an average price of $72 per share, for a total purchase price of $565.9 million.
The home developer estimated home deliveries in the fiscal 2024 first quarter to range between 1,800 and 1,900 units and the average delivery price per unit to range between $985,000 and $1.05 million.
U.S. Employment Expanded 199,000 In November, Jobless Rate Eased to 3.7%
Brian Turner
08 Dec, 2023
New York City
Nonfarm payrolls increased 199,000 in November, following the 150,000 job gains in October, the U.S. Bureau of Labor Statistics reported Friday.
September job gains were downwardly revised by 35,000 to 262,000, and October job gains were unrevised.
Average hourly earnings, an indicator of wage inflation, rose 12 cents, or 0.4%, in the month and advanced 4% over the last 12 months.
The unemployment rate declined to 3.7%, and the number of unemployed people changed little to 6.3 million.
In November, the number of long-term unemployed, those jobless for 27 weeks or more, edged down to 1.2 million, accounting for 18.3% of all unemployed persons.
U.S. Movers: Broadcom, Cooper Companies, DocuSign, lululemon, RH, Vail Resorts
Scott Peters
08 Dec, 2023
New York City
Broadcom decreased 0.3% to $922.0 after the chipmaker reported better-than-expected quarterly results.
Revenue in the fiscal fourth quarter increased to $9.3 billion from $8.93 billion, net income advanced to $3.5 billion from $3.3 billion, and diluted earnings per share rose to $8.25 from $7.83 a year ago.
Semiconductor solution revenue increased 3% to $7.33 billion, and infrastructure revenue rose 7% to $1.97 billion.
The advanced chipmaker guided current fiscal year revenue of $50 billion.
Luluemlon Athletica decreased 2% to $454.67 after the specialty apparel retailer reported quarterly results and issued a weaker-than-expected holiday sales outlook.
Total revenue in the fiscal third quarter ending in October increased 19% to $2.2 billion, driven by a 12% sales increase in North America and a 49% surge in international markets.
Comparable sales increased by 9%, including comparable store sales of 9%, and direct-to-consumer sales soared by 18% from a year ago.
Net income in the quarter decreased to $248.7 million from $255.5 million, and diluted earnings per share fell to $1.97 from $2.0 a year ago.
During the third quarter, the athletic apparel retailer purchased 0.6 million shares of its own common stock at an average price of $380.88 per share for a cost of $210.8 million.
As of the end of the fiscal third quarter on October 29, the company had $243.2 million available for stock repurchase, and the board of directors approved an additional stock repurchase plan of up to $1.0 billion.
The company offered a cautious sales growth outlook for the upcoming holiday season.
For the fiscal fourth quarter, the retailer expects net revenue to be in the range of $3.135 billion to $3.170 billion, representing growth of 13% to 14%.
Diluted earnings per share are expected to be in the range of $4.85 to $4.93 for the quarter, assuming a tax rate of approximately 30%.
RH dropped 8.5% to $257.51 after the furniture retailer reported weaker-than-expected revenue and posted an unexpected loss in its latest quarter.
Net revenue in the third quarter declined to $751.2 million from $869.0 million, and the company swung to a net loss of $2 million from a profit of $98.7 million.
Diluted earnings per share were a loss of 12 cents compared to a profit of $4.17 a year ago.
The company attributed the decline in sales to the "frozen housing market" because of elevated home prices and rising mortgage rates combined with higher promotional activities in the furniture industry.
The company narrowed its revenue guidance range for the year to $3.06 billion to $3.08 billion and now expects its adjusted operating margin to be in the range of 13.6% to 14.0%.
Docusign declined 0.9% to $47.0 after the online service provider reported higher-than-expected quarterly earnings but offered a muted outlook.
Total revenue in the fiscal third quarter increased 9% to $700.4 million from $645.6million, and the company swung to a net income of $38.8 million from a loss of $29.9 million, and diluted earnings per share were 19 cents compared to a loss of 15 cents a year ago.
The company guided fiscal fourth quarter revenue to fall between $696 million and $700 million, subscription revenue between $679 million and $688 million, and billings between $858 million and $768 million.
Cooper Companies fell 1.4% to $340.0 despite the eyecare company reporting organic revenue growth and higher earnings in its latest quarter.
Revenue in the fiscal fourth quarter increased 9% to $927.1 million from $848.1 million, net income advanced to $84.5 million from $65.6 million, and diluted earnings per share rose to $1.70 from $1.32 a year ago.
The company announced a four-to-one stock split effective February 16, and the board of directors terminated the semi-annual dividend.
The maker of contact lenses and fertility solutions forecasted fiscal 2024 sales to range between $3.809 billion and $3.877 billion, an increase between 6% and 8%, and non-GAAP diluted earnings per share between $13.60 and $14.0.
Vali Resorts declined 0.8% to $215.25 after the ski resort operator reported weaker-than-expected quarterly sales and earnings.
Revenue in the fiscal first quarter decreased to $258.5 million from $279.4 million, net loss expanded to $175.5 million from $136.9 million, and diluted loss per share rose to $4.60 from $3.40 a year ago.
The ski resort operator increased quarterly cash dividend per share to $2.06 from $1.91 a year ago and payable on January 9 to shareholders on record on December 26.
The company reiterated its fiscal year 2024 earnings in the range between $316 million and $394 million.
U.S. Stocks Struggled, Treasury Yields Declined after Nonfarm Payrolls Accelerated
Barry Adams
08 Dec, 2023
New York City
Stocks turned lower, and Treasury yields perked up after the release of the nonfarm employment report.
Market indexes declined after job gains accelerated in November, the unemployment rate slightly declined, and wage increases were in line with expectations.
Market indexes have been rallying for weeks after the Federal Reserve held rates two times in a row, and subsequent inflation reports have confirmed a cooling trend.
Investors have remained focused on labor markets, and a series of reports covering job openings, weekly jobless claims, and private sector employment have confirmed a cooling but resilient market.
For the week, the Nasdaq is likely to close higher and extend weekly gains for the sixth consecutive week, and the S&P is likely to close down after rallying for five weeks in a row.
Nonfarm Payroll Increase Accelerated in November
Nonfarm payrolls increased 199,000 in November, following the 150,000 job gains in October, the U.S. Bureau of Labor Statistics reported Friday.
September job gains were downwardly revised by 35,000 to 262,000, and October job gains were unrevised.
Average hourly earnings, an indicator of wage inflation, rose 12 cents, or 0.4%, in the month and advanced 4% over the last 12 months.
The unemployment rate declined to 3.7%, and the number of unemployed people changed little to 6.3 million.
In November, the number of long-term unemployed, those jobless for 27 weeks or more, edged down to 1.2 million, accounting for 18.3% of all unemployed persons.
Carrier Global and Honeywell in a $5 billion deal
Carrier Global jumped 5.9% to $56.10 after the company agreed to sell its Global Access Solution unit for $4.95 billion in cash to Honeywell.
The purchase price is 13 times operating earnings, including tax benefits and run-rate cost synergies.
"Honeywell's strong track record delivering building automation products and services makes this a natural fit that will create a leading security platform with forecasted annual revenue in excess of $1 billion," said Vimal Kapur, Chief Executive Officer, Honeywell.
U.S. Indexes and Yields
The S&P 500 index gained 0.7% to 4,581.86, and the Nasdaq Composite increased 1.3% to 14,322.25.
The yield on 2-year Treasury notes increased to 4.70%, 10-year Treasury notes inched higher to 4.23%, and 30-year Treasury bonds increased to 4.32%.
Crude oil decreased $1.50 to $70.84 a barrel, and natural gas prices rose 1 cent to $2.59 a thermal unit.
Gold increased $0.4 to $2,028.34 an ounce on shifting investors' expectations that the Federal Reserve is more likely to cut rates sooner than expected in 2024.
The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.77.
U.S. Stock Movers
Broadcom decreased 0.3% to $922.0 after the chipmaker reported better-than-expected quarterly results.
Revenue in the fiscal fourth quarter increased to $9.3 billion from $8.93 billion, net income advanced to $3.5 billion from $3.3 billion, and diluted earnings per share rose to $8.25 from $7.83 a year ago.
Semiconductor solution revenue increased 3% to $7.33 billion, and infrastructure revenue rose 7% to $1.97 billion.
The advanced chipmaker guided current fiscal year revenue of $50 billion.
Lulu Lemon Athletica decreased 2% to $454.67 after the specialty apparel retailer reported quarterly results and issued a weaker-than-expected holiday sales outlook.
RH dropped 8.5% to $257.51 after the furniture retailer reported weaker-than-expected revenue and posted an unexpected loss in its latest quarter.
Docusign declined 0.9% to $47.0 after the online service provider reported higher-than-expected quarterly earnings but offered a muted outlook.
Cooper Companies fell 1.4% to $340.0 despite the eyecare company reporting organic revenue growth and higher earnings in its latest quarter.
Vali Resorts declined 0.8% to $215.25 after the ski resort operator reported weaker-than-expected quarterly sales and earnings.
Europe Movers: Anglo American, Berkeley Group, Energy Stocks, Monk Investment, Vivendi, Worldline
Inga Muller
08 Dec, 2023
Frankfurt
European markets advanced on the final day of the week and extended weekly gains for the sixth week in a row.
The DAX index increased 0.4% to 16,695.43, the CAC-40 index rose 1.0% to 7,498.74, and the FTSE 100 index fell 0.6% to 7,556.17.
For the week, the DAX index advanced 1.6%, the CAC-40 index gained 2.2%, and the FTSE 100 index gained 0.2%.
The yield on 10-year German bonds increased to 2.23%; French bonds traded higher to 2.77%; the UK gilts rose to 4.02%; and Italian bonds inched higher to 4.0%.
Natural resource stocks were in focus after energy prices rebounded by about 1.5% following calls from Saudi Arabia and Russia to cut oil production.
BP Plc rose 1.4% to 466.80 pence, Shell PLC added 1% to €29.65, Repsol added 0.5% to €13.88, and TotalEnergies gained 1% to €61.31.
Anglo American dropped 7.2% to 2,065.50 pence after the company announced a plan to lower its production in a bid to cut costs.
The company said it has reduced its operating costs by $0.5 billion in 2023 and identified an additional $0.5 billion in cost savings in 2024.
Moreover, the company plans to reduce its capex by $0.2 billion to $5.8 billion.
The diversified mining company said it will reduce its production at its iron ore mine in Kumba, South Africa, focus on higher margin production of platinum group metals, and continue production at only one plant at the Los Bronces copper operation in Chile.
The mining company forecasted 2023 production to increase by 0.3%: Quellaveco copper production ramp-up and solid iron ore production, offset by ore grades in Chile and lower platinum group metals and diamonds production.
Monk Investment Trust PLC gained 0.8% to 1,014.39 pence after the company reported a narrower loss in the first half of the fiscal year.
Berkeley Group Holdings decreased 1.8% to 4,848.0 pence after the home builder cautioned about challenging market conditions.
Vivendi Group advanced 2.4% to €8.88 after the media group was set to be included in the CAC 40 index on December 18, replacing Worldline.
Worldline added 0.7% to €15.87.
European Markets Rally Extends to Fourth Week, German Inflation Eased In November
Bridgette Randall
08 Dec, 2023
Frankfurt
European markets traded higher on the final day of the week, and bond yields rebounded from seven-month lows.
Benchmark indexes in Frankfurt and Paris gained, but in London they edged lower after Germany confirmed the decline in inflation in November.
Market indexes in Europe are set to close higher for the fourth week in a row.
Investors have been bidding up stocks in the hopes that interest rates are near peak rates and the European Central Bank may lead other central banks of the advanced nations in cutting rates as early as the first quarter of 2024.
Germany's inflation eased in November.
German consumer price inflation was confirmed at 3.2%, the Federal Statistics Office, or Destatis, reported Friday.
Overall annual inflation eased to 3.2% from 3.8% in October and declined for the fifth month in a row.
Consumer price inflation declined by 0.4% on a monthly basis after staying stable in October.
The sharp decline in overall inflation was driven by a slowdown in food inflation to 5.5% from 6.1% and an additional decline in energy prices to 4.2% from 3.5% in the previous month, respectively.
Core inflation, which excludes volatile food and energy prices, slowed to 3.2% from 3.8% in the previous month.
Europe Indexes and Yields
The DAX index increased 0.4% to 16,695.43, the CAC-40 index rose 1.0% to 7,498.74, and the FTSE 100 index fell 0.6% to 7,556.17.
For the week, the DAX index advanced 1.6%, the CAC-40 index gained 2.2%, and the FTSE 100 index gained 0.2%.
The yield on 10-year German bonds increased to 2.23%; French bonds traded higher to 2.77%; the UK gilts rose to 4.02%; and Italian bonds inched higher to 4.0%.
The euro traded lower to $1.078, the British pound inched lower to $1.257, and the U.S. dollar eased to 87.52 Swiss cents.
Brent crude increased $1.06 to $75.12 a barrel, and the Dutch TTF natural gas increased by €1.38 to €40.35 per MWh.
Europe Stock Movers
Natural resource stocks were in focus after energy prices rebounded by about 1.5% following calls from Saudi Arabia and Russia to cut oil production.
BP Plc rose 1.4% to 466.80 pence, Shell PLC added 1% to €29.65, Repsol added 0.5% to €13.88, and TotalEnergies gained 1% to €61.31.
Anglo American dropped 7.2% to 2,065.50 pence after the company announced a plan to lower its production in a bid to cut costs.
The company said it has reduced its operating costs by $0.5 billion in 2023 and identified additional $0.5 billion in cost savings in 2024.
Moreover, the company plans to reduce its capex by $0.2 billion to $5.8 billion.
The diversified mining company said it will reduce its production at its iron ore mine in Kumba, South Africa, focus on higher margin production of platinum group metals, and continue production at only one plant at the Los Bronces copper operation in Chile.
Monk Investment Trust PLC gained 0.8% to 1,014.39 pence after the company reported a narrower loss in the first half of the fiscal year.
Berkeley Group Holdings decreased 1.8% to 4,848.0 pence after the home builder cautioned about challenging market conditions.
Vivendi Group advanced 2.4% to €8.88 after the media group was set to be included in the CAC 40 index on December 18, replacing Worldline.
Worldline added 0.7% to €15.87.
Movers: CONCOR, IRB Infra, NTPC, Olectra Greentech, REC, Sugar Stocks, Zomato
Arun Goswami
08 Dec, 2023
Mumbai
Two popular benchmark indexes are set to close higher for the sixth week in a row, with a weekly gain of about 1.9%.
In a widely anticipated decision, the Reserve Bank of India held its key lending rates, lifted its view on economic growth, but left its inflation forecast intact for the fiscal year 2024, citing multiple food price shocks.
The Sensex index increased 164.08 points to 69,685.77, and the Nifty index rose 55.60 points to 20,956.75.
On the Mumbai stock exchange, 200 stocks traded at their 52-week highs and 12 stocks traded at their 52-week lows.
The yield on the 10-year Indian government bonds held firm at 7.24%, and the Indian rupee hovered near ₹83.34 against the U.S. dollar.
Container Corporation of India added 0.5% to ₹846.75 after the company signed an agreement with NTPC Vidyut Vyapar Nigam for setting up solar power projects at CONCOR terminals.
NTPC jumped 1.9% to ₹289.25.
REC jumped 2.2% to ₹403.50 on reports that the company is looking to raise as much as ₹6,000 crore through two bond offerings.
Zomato Ltd. gained 1.4% to ₹122.15 on a report that Japan-based Softbank is looking to sell a 1.1% stake in the delivery service company.
Olectra Greentech advanced 2.2% to ₹1,255.10 after the company signed a contract to deliver 40 electric buses.
Spicejet declined 1.3% to ₹51.68 on a report that the company is looking to raise additional capital, including a stock offering.
Sugar stocks declined after the government barred companies from making ethanol using sugarcane juice but permitted the use of molasses.
The sugarcane crop is down this year after uneven monsoon rains, and the government issued the directive as sugar supply is barely expected to meet the annual demand of 28 million tons.
About 25% of sugarcane juice production is used to make ethanol, and sugar production in the first two months of this crop cycle ending in November declined by 10.5%.
Shree Renuka fell 5.7% to ₹45.15, Bajaj Hindusthan declined 6.8% to ₹27.15, Balarampur Chini Mills dropped 2.7% to ₹397.80, and Dalmia Bharat Sugar and Industries decreased 1.2% to ₹403.65.
Power sector stocks surged after the rate decision by the Reserve Bank of India.
IREDA soared 12% to ₹72.10, REC added 2.2% to ₹405.0, Power Finance Corporation advanced 1.8% to ₹383.90, Power Grid jumped 0.3% to ₹230.85, but Torrent Power declined 3.3% to ₹968.70.
IRB Infrastructure Developers jumped 3.6% to ₹39.85 after the company said toll revenue soared 20% from a year ago to ₹437 crore in November.