MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Tuesday, June 18, 2013
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4:46 PM More on La-Z-Boy (LZB): FQ4 beats on all counts. Net earnings fell 6.6% Y/Y however, as year-ago results were bolstered by a large benefit from antidumping income. Margins improved in the latest period to 33.8% from 31.6%. Retail segment sales, which includes La-Z-Boy Furniture Galleries stores, swung to an operating profit of $4M from a year-earlier loss of $1.1M. Same-store written sales rose 11.2%, while wholesale upholstery, the main contributor to its top line, saw revenue grow 8.4% to $289.4M. Comment!
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3:41 PM McDonald's (MCD +0.9%) will sell premium hamburgers in Japan for a limited time in order to see if the company can improve the sluggish results it has been seeing in the nation. (MCD Japan sales timeline) Comment!
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3:14 PM Smoking rates in the U.S. dipped even lower than expected, according to data released by the CDC. Last year, only 18% of adults in the U.S. identified themselves as smokers after the rate stalled around the 20% to 21% range for a seven-year period. The news isn't a shock for Big Tobacco (MO, LO, RAI, BTI) which has been pitching the case that electronic cigarettes will be a billion-dollar business. 4 Comments
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2:44 PM Tesla Motors (TSLA +1.3%) shares are on the move amid some chatter that General Motors is interested in the EV automaker's technology. Though Tesla supplies Mercedes-Benz with electric drivetrains, there hasn't been any prior indication that the Big Three automakers have had any serious interest in working a deal with Tesla. 12 Comments
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2:37 PM Chrysler (FIATY.PK) has reportedly decided to comply with a government request to recall 2.7M vehicles to end a showdown over the issue which upset the status quo in the industry a bit. Comment!
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2:31 PM "We hosted meetings at [company] HQ with senior management," Sterne Agee proudly says of talks with Ulta Salon's (ULTA +0.3%) top brass. Analyst Ike Boruchow ups the price target on the shares to $104 from $100 citing a positive outlook for the "themes of the day": Margins and inventory. Comment!
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2:13 PM A mini-drama is evolving in the automobile industry with Chrysler (FIATY.PK) expected to formally inform the NHTSA it won't comply with a request to recall certain older Jeep Grand Cherokee and Jeep Liberty models. If the stalemate continues between the automaker and the agency, the issue could be resolved in hearings or in court. (Chrysler White Paper on recall) Comment!
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2:05 PM United Technologies (UTX +1.1%) has been ordered to pay $473M, plus interest, for overcharging the US Air Force for jet engines. The ruling is the result of a lawsuit filed by the DoJ in 1999 seeking reimbursement for inflated costs by UTX unit Pratt & Whitney under the False Claims Act. Since the judgement includes interest charges, hundreds of millions in dollars could be added to the $473M price tag once it's all tallied, as the overcharges go all the way back to 1986. Comment!
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1:55 PM Not all consumer staples funds (XLP, FXG, VDC, KXI, PMR) are created equal, according to S&P Capital IQ. Fund managers' weighting toward certain sub-sectors or their willing to invest globally or lean on fundamentals can create varying rates of return in the staples group. If there is some common ground, it's with the propensity of staples favorites Procter & Gamble (PG +0.1%), Coca-Cola (KO +0.5%), Philip Morris (PM +0.2%), and Wal-Mart (WMT +1%) to show up as top ten holdings. Comment!
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1:15 PM Noodles (NDLS) will offer 5.4M shares in a price range of $13 to $15 in its IPO. What to watch: The chain boasts some of the highest margins in the fast-casual sector and has seen comparable store sales growth accelerate over the last few years. (S-1) 2 Comments
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12:50 PM Sears Holdings (SHLD -0.3%) is in a death spiral, according to the former CEO of Sears Canada. The grumpy critic discounts the company's resilient share price and notes the firesale of assets without a clear strategy will run out of steam. 2 Comments
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12:44 PM Heard during Starbucks' (SBUX +1.4%) presentation at the Jefferies 2013 Global Consumer Conference: 1) The company has a long-term revenue growth target of +10% and EPS growth target of 15%-20%. 2) Opportunities for expansion of food sales exist around the world. 19% of total Starbucks sales is food - led by France with a food mix of 28% and trailed by China at 10%. 3) New food products are trending well including new items from recently-acquired La Boluange. 4) The company's loyalty program accounts for almost 25% of all transactions. 5) Rest easy Green Mountain Coffee Roasters (GMCR). CFO Troy Alstead says Starbucks has no plans to turn into a "deep equipment" company.(webcast) 1 Comment
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12:30 PM Summer blockbusters Man of Steel and Iron Man 3 are strong indicators that moviegoers in the U.S are willing to buck up for the higher ticket prices for the IMAX (IMAX -1.6%) format. Last weekend, Man of Steel averaged a rousing $53K per IMAX screen. 1 Comment
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11:39 AM "A mid-single digit operating margin over the next 2-3 years is reasonable," says Piper's Stephanie Wissink of Wet Seal (WTSL +0.7%) in a cautious note. Although "sales stability, merchandise margin improvement, and cost leverage" should drive margin expansion, "the current environment" warrants trepidation regarding store growth expectations, she adds. Meanwhile, SA contributor Unbigoted Research says the stock could be "the turnaround story of 2013". Comment!
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