Rover's Weekly Market Brief - 3/4/2016

March 11, 2016 |

Indices

Dow Jones: 17,006.77 (+2.2%)

NASDAQ: 4,717.02 (+2.8%)

S&P 500: 1,999.99 (+2.7%)

Commodities

Gold: 1,260.40 (+1.5%)

Copper: 225.75 (+8.7%)

Crude Oil: 36.09 (+9.4%)

Economy

The trade deficit increased in January dragging down GDP growth estimates for Q1 of 2016. It grew 2.2% sequentially and 4.8% year over year as exports fell more than imports. The goods deficit widened to $63.7 billion from $63 billion in January 2015 and $62.6 billion in December 2015 while the services surplus narrowed to $59.6 billion from $59.7 billion in January 2015 but widened from 59.4 billion in December 2015.

Crude Oil rose 9.4% this week following news of a producer meeting scheduled for March 20 to cap production. It closed at $36.09 per barrel. Commercial crude oil inventories (excluding the Strategic Petroleum Reserve) increased 2% to 518 million barrels from 507.6 million the past week. The national average retail regular gasoline price rose 3.1% to $1.783 from $1.730 per gallon the preceding week.

The job market showed further improvement as total nonfarm employment rose 242,000 in February. Job gains occurred in healthcare and social assistance, retail trade, food services and drinking places, and private educational services while losses were in mining and manufacturing. The total unemployed (i.e. discouraged, part-time & marginally attached workers) rate fell to 9.7% from 9.9% in January.

Markets

Medtronic (NYSE: MDT) reported a revenue increase of 60.6% and net income rise of 12.1% for Q3 2016 YoY. However, diluted EPS fell 21.4% to $0.77 from $0.98 the same quarter the previous year as diluted shares outstanding increased 42.8%. The revenue increase was primarily driven by the acquisition of Covidien (contributed 33% of total revenue). The cardiac & vascular, restorative therapies and diabetes segments grow 8.4%, 6.9% and 5.6% respectively.

Costco (NASDAQ: COST) posted a 2.6% rise in revenue and an 8.7% fall in net income for Q2 2016 YoY. As a result, diluted earnings per share fell 8.1% to $1.24 from $1.35 the same quarter the past year. Net income declined as merchandize costs, and selling, general & administrative expenses increased 2.4% and 6.1%, respectively. Overall, comparable store sales grew 1%.

Workday’s (NYSE: WDAY) revenue rose 42.9% while net losses grew 36.4% for Q4 2016 YoY. Diluted losses per share increased 31.3% to $0.42 from $0.32 from the same quarter in 2015. Both subscription and professional services revenue grew but were offset by a rise in the cost of services, sales and marketing and SGA. The net loss resulted from total costs and expenses growing faster (at 43.5%) than revenue.

Staples (NASDAQ: SPLS) recorded a 6.4% drop in sales and 180.7% rise in net income for the fiscal year 2016. Diluted EPS rose 181% to $0.59 from $0.21 the past year. The rise in net income was driven by an 11.8% decline in operating expenses while the sales drop was led by revenue declines in the North American (8.7%) and International (16.3%) segments. Comparable store sales dropped 3%.

Looking Ahead

The following companies will be releasing their earnings results next week.

Monday Tuesday Wednesday Thursday Friday
Urban Outfitters (URBN) Prudential (PUK) Square (SQ) Dollar General (DG) TerraForm (TERP)
Thor Industries (THO) Dick's (DKS) Box (BOX) Ulta Salon (ULTA) Hibbett Sports (HIBB)

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