Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:40 AM EST
S&P 500: -0.80; 1,458.10
NASDAQ 100: -1.75; 1,825.50
Dow: -4.00; 12,783.00
NIKKEI 225: -0.01%; 17,939.12 (-0.97)
HANG SENG: 20,567.91 (02/16)
S&P/ASX 200: -0.01%; 5,989.70 (-0.40)
BSE SENSEX 30: -1.04%; 14,253.38 (-149.52)
FTSE 100: -0.32%; 6,424.00 (-20.40)
CAC 40: -0.38%; 5,718.15 (-21.75)
XETRA-DAX: -0.23%; 6,970.81 (-16.27)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -2.00%; $58.20 (-$1.19)
Gold: -0.31%; $670.70 (-$2.10)
Natural Gas: -1.61%; $7.38 (-$0.12)
Silver: -0.07%; $13.98 (-$0.01)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Wal-Mart Tops Q4 Forecasts
Wal-Mart Stores, the world's #1 retailer, posted Q4 2006 profits of $3.94 billion this morning, up 9.8% from $3.59 billion in Q4 2005. EPS were $0.95 up from $0.86 last year, and $0.05 higher than analyst estimates of $0.90. Sales revenues were up 11% to $98.1b, short of estimates of $99.6b. Wal-Mart CEO Lee Scott said store associates stepped things up in delivering a "wonderful fourth quarter" and said he enters 2007 encouraged by the results. Same-store sales were up 1.6% to 3%; Sam's Club stores had a 3.1% gain. The company gave Q1 2007 EPS guidance of $0.68-0.71, and $3.15-3.23 for the year; forecasts were for $0.68 and $3.21. Wal-Mart called itself during late 2006 the lowest-price holiday destination; Treasurer Charles Holley said last week the company will continue to stress this message, "getting back really to everyday low prices and making sure that we're the price leader." CEO Scott agreed: "It's a reaffirmation of the proposition that's synonymous with Wal-Mart -- saving people money so they can live better." Competitor Target reports on Feb. 27; it has outdone WMT in same-store sales for the last nine quarters.
Sources: Press Release, MarketWatch, Bloomberg, TheStreet.com
Commentary: Movie Download Wars: Wal Mart Grasping at Straws • Wal-Mart: Priced At a Discount With Room to Grow • Wal-Mart Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Wal-Mart Stores Inc. (WMT). Competitors: Target Corp. (TGT), Costco Wholesale Corp. (COST), Sears Holdings Corp. (SHLD), BJ's Wholesale Club Inc. (BJ), Cost-U-Less Inc. (CULS), Dollar General Corp. (DG). ETFs: Retail HOLDRS ETF (RTH), SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR)
Home Depot: Q4 Profit and Same Store Sales Drop
Home Depot reports Q4 net income fell 28% to $925 million, or $0.46/share, on revenue growth of 4% to $20.3b. Both figures missed analysts' average estimates according to Bloomberg. Executive compensation costs related to former CEO Bob Nardelli's resignation accounted for $0.04/share, bringing EPS to $0.50, still a penny shy of analysts polled by Bloomberg, but in-line with a Thomson poll. Same store sales fell 6.6%. Chairman and CEO Frank Blanke comments, "Reflecting the challenging housing market, our 2006 retail results were disappointing. We may not be able to impact the housing market or general economic conditions, but we know that we can improve our performance relative to our overall market share." Home Depot will provide financial guidance at its analyst and investor meeting on Feb. 28. Its shares are trading lower than their Friday close of $41.44 by about 1.3% to 2.0% on thin volume in pre-market activity.
Sources: Press release, Bloomberg, Forbes-AP
Commentary: Home Depot: Who Is To Blame? • Home Depot Might Sell Wholesale Supply Unit • Home Depot Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Home Depot (HD). Competitor: Lowe's Companies Inc. (LOW). ETFs: Retail HOLDRs (RTH), Consumer Discretionary SPDR (XLY), SPDR S&P Homebuilders (XHB)
Volkswagen's Profit More Than Doubles Sending European Shares Higher
Volkswagen AG reported 2006 profit more than doubled sending shares 6% higher in European trading. By the numbers, profit in FY06 increased to €2.75 billion ($3.61 billion), good for EPS of €7.07, up from €1.12 billion, or EPS of €2.90, in the year earlier period. Bloomberg estimates called for profit of just €1.65 billion. Total sales increased 12% to €104.9 billion. Behind the strong results were sales increases at its Audi and Skoda units, up 9.2% and 12% respectively. Europe's largest carmaker plans to hike its dividend to €1.25 from €1.15. Meanwhile, outlook was strong and was expected to be higher in FY2007 than it was in FY2006 according to management.
• Sources: Bloomberg
• Commentary: Capture China's Baby Boom With These Stock Ideas • Investing in China's New Environmental Consciousness
• Stocks and ETFs to watch: Volkswagen AG (OTCQX:VLKAY). Competitors: General Motors (GM), DaimlerChrysler (DCX), Ford (F), Toyota (TM), Honda (HMC), Nissan (OTCPK:NSANY)
Boyd Gaming: Q4 Earnings Beat Street Despite Sales Decline
Boyd Gaming reports Q4 net income more than doubled to $56.3 million, or $0.64/share, compared to $22.9m ($0.25/share) last year, on a 4% drop in revenue to $520.8m. Analysts expected $0.39/share on revenue of $509.2m. Boyd attributes its quarterly gain in net income to lower expenses and an insurance gain from a hurricane-related settlement. It reported strength in its downtown Las Vegas and Central Region properties, although sales for the former fell slightly short of last year's record total. Its Atlantic City Borgata property maintained its market share lead, but posted lower gaming sales, while non-gaming revenue jumped 17.7% due to public space expansion. Boyd said it has further expansion plans for the Borgata as well as in Indiana and Florida. Construction for the now $3.3b 5,000 room Echelon Place in downtown Las Vegas is set to commence in Q2 and is planned to open in Q3 2010.
Sources: Press release, Houston Chronicle-AP
Commentary: Hands Off Boyd • A Closer Look at Casino Stocks • Valuing the Casino Industry: Are There More Harrah's Out There?
Stocks/ETFs to watch: Boyd Gaming (BYD). Competitors: Harrah's Entertainment (HET), MGM Mirage (MGM), Station Casinos (STN)
Seeking Alpha's news summaries are combined into a pre-market briefing called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only a few seconds to sign up.
Asian Headlines (via Bloomberg.com)
• Volvo Agrees to Acquire Nissan Diesel for $1.1 Billion for Asia Production Volvo AB (VOLV), the world's second-largest truckmaker, agreed to buy Nissan Diesel Motor Co. for 7.5 billion kronor ($1.1 billion) to gain a regional brand name and add production in Asia, the world's fastest-growing economic area.
• Fukui Likely to Consider BOJ Reputation, Not Just Economy In Rate Decision Bank of Japan Governor Toshihiko Fukui must judge not only what's good for the economy when considering whether to raise interest rates tomorrow. He also has to consider what's good for the central bank.
• Foster's Profit Misses Analyst Estimates After Sales Changes; Shares Slide Foster's Group Ltd., the world's second-largest winemaker, posted first-half earnings growth that missed analysts' estimates after a sales strategy in Australia backfired. The shares had their biggest decline in five months.
• Asian Steelmaker Stocks Climb, Led by Nippon Steel, on Merger Speculation Asian steelmaker stocks rose, led by Nippon Steel Corp. and POSCO (PKX), on speculation more companies will get involved in mergers and acquisitions.
• Sapporo Debt Costs to Drop on Chance of Bid From Higher-Rated Asahi, Kirin Investors should sell the credit- default swaps of Sapporo Holdings Ltd. as Japan's third-largest beer maker may be bought by a higher-rated rival, analysts at JP Morgan Securities Co. and Shinsei Securities Co. said.
European Headlines (via Bloomberg.com)
• European Stocks Drop From Six-Year High; Clariant, Cadbury Shares Decline European stocks fell from a six-year high after earnings at Clariant AG (CLRT), the world's second-largest specialty chemicals company, missed analysts' estimates and chocolate maker Cadbury Schweppes Plc (CSG) reported a drop in profit.
• Shire Agrees to Acquire New River Pharmaceuticals for $2.3 Billion in Cash Shire Plc (SHPGY), the U.K. drugmaker that derives half of its sales from the hyperactivity treatment Adderall XR, agreed to buy New River Pharmaceuticals (NRPH) for $2.6 billion in cash to gain a replacement for its aging best seller.