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Wednesday May 22, 2019

Finances

Finances
 

Macy's Earnings Beat Expectations

Macy's, Inc. (M) reported its latest quarterly earnings on Wednesday, May 15. The department store chain posted better-than-expected earnings for the quarter.

The company's quarterly net sales came in at $5.50 billion, down from $5.54 billion at this time last year. This matched analysts' expected net sales of $5.50 billion.

"Macy's, Inc. is off to a solid start this year, delivering our sixth consecutive quarter of comparable sales growth and making progress against the North Star Strategy," said Macy's Chairman and CEO Jeff Gennette. "As an omnichannel retailer, we are focused on growing our customer base by providing a great experience across all channels and taking market share category by category."

Macy's reported net income of $136 million, or $0.44 per share. This was down from $139 million, or $0.45 per share, during the same quarter last year. Analysts expected earnings of $0.33 per share for the quarter.

The company's earnings beat was spurred by strong same-store sales. The Cincinnati-based retailer posted a 0.7% increase in comparable store sales during the quarter. Experts predicted that the company's same-store quarterly sales would drop 0.2%.

Macy's, Inc. (M) shares ended the week at $21.78, down 1.8%.

Cisco Posts Earnings Beat


Cisco Systems, Inc. (CSC) posted its latest quarterly earnings on Wednesday, May 15. The technology company reported increased revenue and profits for the quarter.

The company reported third quarter revenue of $12.96 billion, up 4% from $12.46 billion in revenue at this time last year. This exceeded experts' predictions of $12.89 billion for the quarter.

"Our strong performance in the quarter was across the business, reflecting our customers' confidence in our strategy, business model and market-leading portfolio," said Chuck Robbins, Cisco's Chairman and CEO. "Technology is at the heart of our customers' strategies and we are building the technology to help them achieve their business objectives."

Net income for the quarter was $3.04 billion. This was an increase from $2.69 billion during the prior year's quarter.

Shares of Cisco stock rose approximately 3% in after-hours trading following the company's earnings release. Cisco's performance in the quarter exceeded expectations during a time when many analysts expect headwinds for technology companies. With ongoing trade tensions between the U.S. and China, Cisco has taken measures to adjust pricing to offset impending tariffs.

Cisco Systems, Inc. (CSCO) shares ended the week at $56.35, up 8.7% for the week.

Jack in the Box Reports Earnings


Jack in the Box Inc. (JACK) released its second quarter earnings report on Wednesday, May 15. The fast food company's sales rose while profits declined.

The company reported revenue of $215.73 million for the quarter. This is up from $209.77 million during the same quarter last year.

"Our greater emphasis on bundled value in the second quarter resulted in a sequential improvement in traffic and sales without sacrificing restaurant margins," said Jack in the Box CEO Lenny Comma. "We're pleased that this momentum has accelerated through the first four weeks of our third quarter as same-store sales have increased by more than 2%."

Net earnings for the quarter totaled $25.09 million. This was down from $47.61 million at this time last year.

Jack in the Box's company-owned stores reported an increase in same-store sales of 0.6% for the quarter, down from 0.9% last year. Franchised locations saw a 0.1% increase in same-store sales, while sales for the entire Jack in the Box system increased 0.2%. The company updated its guidance for the fiscal year, stating that it now expects same-store sales growth of up to 1% across its system.

Jack in the Box (JACK) shares ended the week at $82.17, up 6.3% for the week.

The Dow started the week at 25,568 and closed at 25,764 on 5/17. The S&P 500 started the week at 2,840 and closed at 2,859. The NASDAQ started the week at 7,720 and closed at 7,816.
 

Treasurys Rise on Strong Consumer Sentiment

U.S. Treasury yields rose near week's end following the release of optimistic economic indicators. Rising consumer sentiment and strong housing numbers emerged to boost yields.

On Friday, the University of Michigan released its latest Index of Consumer Sentiment. The index reached a 15-year high of 102.4. Analysts expected the index to hit 97.5 this month. Optimism over the reading was tempered, however, by the ongoing trade tensions between the U.S. and China.

"Consumers viewed prospects for the overall economy much more favorably, with the economic outlook for the near and longer term reaching their highest levels since 2004," said the survey's chief economist, Richard Curtain. "The gains were recorded mostly before the trade negotiations with China collapsed and China responded with their own tariffs."

During early trading on Friday, the yield on the 10-year Treasury note was at 2.396%, up slightly from the week's low of 2.363% reached on Wednesday. The yield on the 30-year Treasury bond was at 2.824%, up from 2.805% on Wednesday.

On Thursday, the U.S. Commerce Department reported that new home construction increased 5.7% in April, reaching a seasonally adjusted annual rate of 1.235 million. Single-family housing starts rose 6.2% to 804,000.

"Builders spotted a clear runway in April, coming on the heels of a March rebound in new home sales and amid low mortgage rates and a robust labor market, and without the barriers presented by this winter's partial government shutdown and early signs of a trade war with China," said Zillow economic data analyst Matthew Speakman. "There's room in the market for new homes, with housing inventory still low and affordability suffering in many markets."

The 10-year Treasury note yield closed at 2.397% on 5/17, while the 30-year Treasury bond yield was 2.824%.
 

Mortgage Rates Fall Slightly

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, May 16. Mortgage rates remained relatively steady, falling by a couple basis points.

This week the 30-year fixed rate mortgage averaged 4.07%, down from 4.10% last week. At this time last year, the 30-year fixed rate mortgage averaged 4.61%.

The 15-year fixed rate mortgage averaged 3.53% this week, a decrease from last week's average of 3.57%. During this time last year, the 15-year fixed rate mortgage averaged 4.08%.

"Modestly weaker consumer spending and manufacturing data, along with continued jitters around trade policy, caused interest rates to decline throughout the yield curve," said Sam Khater, Chief Economist at Freddie Mac. "While signals from the financial markets are flashing caution signs, the real economy remains on solid ground with steady job growth and five-decade low unemployment rates, which will drive up home sales this summer."

Based on published national averages, the money market account closed at 1.36% on 5/17. The one-year CD finished at 2.70%.

Published May 17, 2019
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