Rover’s Weekly Market Brief – 12/31/2015

Markets

Nike (NYSE: NKE ^[6]) recorded a 4.1% increase in revenue and a 19.8% increase in net income YoY for Q2 2016. Diluted EPS rose 21.6% to $0.90 from $0.74 same quarter last year. Footwear and apparel sales drove the growth with 8% and 3% increases respectively while equipment sales fell 9% YoY.

Cal-Maine Foods (NASDAQ: CALM ^[7]) reported a revenue increase of 44.2% while net income increased 198.4% YoY. Diluted earnings per share for Q2 2016 rose 197.4% to $2.26 from $0.76 the same quarter last year. The revenue growth was driven by a rise in egg prices caused by higher demand related to thanksgiving.

Cintas (NASDAQ: CTAS ^[8]) revenue for Q2 2016 grew 16.3% while net income increased 17.1%. Diluted earnings per share increased 14.3% to $0.24 from $0.21 YoY. Growth in uniform rental and facility services slowed to 5.2% affected by the downturn in commodities while growth in first aid and safety services accelerated 46.4%.

Paychex (NASDAQ: PAYX ^[9]) reported a 6.8% rise in total revenue for Q2 2016. Net income rose 9.4% whereas diluted EPS increased 10.6% to $0.52 from $0.47 same quarter last year. Payroll services revenue rose 3.9% while human resource services income grew 11.5%.

Economy

Crude Oil fell 2.7% this week to close at $37.06 per barrel. Commercial crude oil inventories (excluding the SPR) increased 0.54% to 487.4 million barrels from 484.8 million the past week. The national average retail regular gasoline price rose 0.4% to $2.034 from $2.026 per gallon the preceding week. Generally, commercial crude inventories are up 26.4% while the regular gasoline price is down 11.5% this year.

Consumer confidence rebounded in December according to The Consumer Confidence Index by The Conference Board. The index rose 4.2% to 96.5 in December from 92.6 in November. Consumers’ assessment of the state of the economy was positive mainly as a result of improved claims about the state of the labor market.

Initial unemployment claims rose 7.5% last week to 287,000 from 267,000 the previous week while continuing claims rose by 3,000 to 2,198,000. Overall this year, continued claims have fallen 9% from 2,415,000 in January to 2,198,000 in December whereas initial claims have declined 2.7% from 295,000 in January to 287,000 in December.

Looking Ahead

There will be few American companies reporting their results in early January as earnings season draws to a close. Nonetheless, major international firms will be announcing their earnings.