Tuesday, May 20, 2014

Lower markets of retail earnings

Dow fell 28, decliners over advancers 2-1 & NAZ dropped 11.  The MLP index slipped a fraction to the 486s & the REIT index was down fractionally to the 298s.  Junk bond funds were lower & Treasuries rose.  Oil slipped from a 4-week high on speculation that US inventories are adequate to meet demand from refineries making gasoline for the peak-demand summer months.  Gold languished under 1300.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

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U.S. 2-year


U.S. 10-year


CLM14.NYM...Crude Oil Jun 14...102.39 Down ...0.22  (0.2%)

GCK14.CMX...Gold May 14.....1,290.10 Down ....3.60  (0.3%)

A Customer Pushes a Cart of Lumber at a Home Depot Inc. Store
Photo:   Bloomberg

Home Depot, a Dow stock, sales trailed analysts’ estimates in Q1, but are rebounding as warming weather spurs demand for gardening supplies.  Abnormally frigid weather in the US northeast damped sales while higher mortgage rates cooled the housing expansion that had helped profit more than double iin the past 4 years.  The company expects revenue lost due to the grim winter will be recouped this quarter, CFO Carol Tome said.  “May sales are robust,” she added.  EPS rose to $1 from 83¢ a year earlier.  Excluding some items, EPS was 96¢, below the 99¢ estimate, with some projections as high as $1.01.  Revenue rose 2.9% to $19.7B, trailing analysts’ average estimate of about $20B.  Same-store sales rose 2.6%, versus the 5% projection.  HD said in Feb that continued strength in the housing market would add 2 percentage points of growth in same-store sales this year, part of a total gain of 4.8% & reiterated that forecast today.  The company underestimated how the housing market would rebound last year, with its initial forecast calling for a sales gain of 2%.  Revenue ended up climbing 5.4% to $78.8B.  EPS this year will be $4.42, up from a previous forecast of $4.38 & tops analysts’ $4.41 estimate.  The stock climbed 2.16.  If you would like to learn more about HD,
Click here for a FREE analysis of HD and be sure to notice the intermediate time frame

Home Depot Sales Are Rebounding as Warmth Spurs Gardening

Home Depot (HD)

stock chart

Staples forecasted Q2 profit that was less than estimated.  The company said EPS in fiscal Q2 will be 9¢-14¢.  The forecast called for 15¢.  Staples is shutting 225 stores to trim costs amid rising competition from the internet & sluggish demand for office supplies.  The stock lost $1.43 (11%).  If you would like to learn more about SPLS,
Click here for a FREE analysis of SPLS and be sure to notice the intermediate time frame

Staples Falls After Forecasting Profit That Trails Estimates

Staples (SPLS)

Dick's Sporting Goods shares fell the most 5 years after weak sales of golfing & hunting gear crimped its profit forecast.  CEO Edward Stack said that golf-equipment sales have continued to fall, defying the company’s expectations for “modest improvement.”  EPS in the current fiscal year will be as much as $2.85, down from a previous projection of a maximum of $3.08, DKS said.  The estimate was for $3.08.  To offset the slowdown, Stack is working to increase e-commerce orders & sales of women’s athletic apparel.  Online sales accounted for 7% of the total last qtr, compared with 5.8% last year.  The company also saw strength in footwear & youth apparel, Stack said.  The stock tumbled 8.38 (16%).  If you would like to learn more about DKS,
Click here for a FREE analysis of DKS and be sure to notice the intermediate time frame

Dick’s Sporting Goods Falls as Forecast Trails Estimates

Dick's Sporting Goods (DKS)

Stocks are having a quiet day with a mild negative bias.  As expected, retail earnings are coming in on the soggy side & the outlook for Q2 along with the rest of the year is cloudy.  Yield stocks have seen some profit taking in the last few days, but that was to be expected given their run in 2014.  The MLP index is up 22 YTD while the REIT index rose 34.

Dow Jones Industrials

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