Friday, April 24, 2015
- Ford (F) issues a recall for 390K vehicles under both the Ford and Lincoln brand.
- The issue is with faulty door latches that could lead to an unsafe driving condition.
- The recall covers 2012- 2014 Ford Fiesta, Ford Fusion, and Lincoln MKZ vehicles made in Mexico.
- The last little part is sure to catch the attention of the UAW.
- Related: UAW reacts to production shift to Mexico (Apr. 23 2015)
- Shares spiked briefly for Charter Communications (NASDAQ:CHTR) this hour -- and Time Warner Cable has leapt up to +5.9% -- on word that Charter's advisers have already started pursuing friendly talks with TWC for a speedy acquisition.
- Executives haven't spoken yet and so there's no price or structure to debate. Though one source reports TWC is already balking at the debt level of the combined entity.
- Charter's hostile bid for Time Warner failed before, but to make a friendly deal, it may have to come with more than Comcast's ~$158.82/share offer to make it work.
- Previously: Comcast, TWC move higher premarket on merger's end (Apr. 24 2015)
- Previously: It's over: Comcast officially ends $45B pursuit of TWC (Apr. 24 2015)
- Shake Shack (SHAK +6.6%) is up 7% on strong volume to carve out yet another all-time high.
- Traders think the momentum run-up in shares today is tied to a broader rally in restaurant stocks after Starbucks, Chipotle, Domino's Pizza, and Dunkin' Brands all reported strong growth.
- The market cap of Shake Shack and its 64 stores now exceeds the valuation level of Denny's and Red Robin Gourmet Burgers combined.
- Callaway Golf (ELY -0.9%) trades lower after revenue fell 19% Y/Y in Q1.
- Wood sales fell off 28% as the launch of a new Big Bertha was pushed back.
- F/X swings also impacted the company negatively by a larger degree in the quarter.
- During the earnings call, execs disclosed lowered revenue guidance for the year, but said increased golf exposure this month should be a positive factor.
- Earnings call transcript
- Previously: Callaway Golf beats by $0.11, misses on revenue (April 23)
- Guggenheim Partners thinks expectations are running a bit hot on Costco (COST +0.6%).
- The investment firm takes its estimate for FY16 EPS down to $5.55 from $5.70 after working out the impact of shrinking gas margins and F/X pressure.
- Guggenheim acknowledges the benefit of Costco's new deal with Visa and Citi, but thinks share price has more than factored in the cost savings.
- Costco's FQ3 report is due out on May 27.
- Shareholders with Wynn Resorts (WYNN +1.7%) picked John Hagenbuch and J. Edward Virtue to fill the two board seats up for election in a development that leaves Elaine Wynn on the outside looking in.
- Vote totals haven't been disclosed yet.
- Elaine Wynn is the 2nd largest shareholder of the company.
- Wynn Resorts annual meeting materials
- Luxottica (LUX +0.8%) co-CEO Massimo Vian says it will partner with Google on a new version of Google Glass.
- The exec also tipped off that the company is still moving ahead with its partnership with Intel on a new smart glasses product for 2016.
- Shares of Luxottica are up 19.3% YTD with the potential for wearable technology revenue down the road helping to give them some momentum.
12:00 PM| Comment!
- The early read on Netflix's (NFLX +0.2%) launch in Australia looks favorable, according to The Hollywood Reporter.
- Broadband execs in the nation cite an "absolutely amazing" impact on traffic levels from the Netflix launch last month.
- Local competitors have benefited from the increase in awareness in streaming and are playing nice with Netflix on the promotional front.
- The penetration rate for streaming services in Australia is expected to explode this year.
- A long-term projection from Credit Suisse on Australia calls for the streaming industry to generate $544M a year with Netflix holding a 40% market share.
- The pizza and donut rally is still on a day after Domino's Pizza (DPZ +3.4%) and Dunkin' Brands (DNKN +5.6%) dazzled with their Q1 reports.
- While Dunkin' received the extra jolt of inclusion in the S&P 400, both stocks are being identified by retail analysts as benefiting from shifting consumer trends toward on-the-go and mobile.
- Krispy Kreme Doughnuts (KKD +2.9%), Rave Restaurant Group (RAVE +11.3%), and Papa Murphy's (FRSH +1.4%) are catching some sympathy bids as well.
- Previously: Sizzling comps at Domino's Pizza in Q1 (Apr. 23 2015)
- Previously: Dunkin' Brands +7% after earnings beat and guidance lift (Apr. 23 2015)
- Previously: DNKN +2.3% on S&P 400 addition; WD +3.1% on S&P 600 addition (Apr. 23 2015)
- Shares of DeVry Education (DV -12.2%) crumble after the company reported a drop in revenue during FQ3 and unveiled a plan to convert 14 DeVry locations to online only.
- The company's string of acquisition helped it boost total enrollment compared to a year ago, but net income fell 15% during the quarter.
- Previously: DeVry Education beats by $0.02, misses on revenue
- The airline stocks sector is active today as oil prices retreat and the first batch of Q1 earnings reports come in promising.
- Fuel costs at American Airlines (AAL +2.7%) fell 42% during Q1, while the expense was down 34% at Hawaiian Holdings (HA +11.4%).
- Efficiency metrics in the sector have also impressed for the most part if F/X swings are backed out.
- United Continental (UAL +3.1%), Alaska Air Group (ALK +2.8%), Delta Air Lines (DAL +1.9%), and Virgin America (VA +2.2%) are all showing strength.
- PepsiCo (PEP -1%) says it will remove aspartame from Diet Pepsi beginning in August.
- The company is making the move to adapt to consumer tastes, not out of safety concerns.
- Sucralose and acesulfame potassium will be used in the U.S. to sweeten Diet Pepsi.
- Pepsi True is a relatively new product out from the beverage seller using the natural sweetener stevia.
- PepsiCo CEO Indra Nooyi tackled the question of changing consumer dynamics during the company's earnings call yesterday (transcript).
- She noted perception on what is "good for you" has changed from diet sodas to organic non-GMO.
- Perhaps with an eye on millennials she mentions different corridors of fruit and vegetable, protein, grains, and carbs in the soda category. Rival Coca-Cola still stacks its brands under calorie counts.
10:15 AM| Comment!
- B&G Foods (BGS +9.3%) rallies following a vibrant Q1 earnings report.
- The company cited positive volume and pricing trends during the quarter across a wide swath of its brands.
- Gross margin slipped 160 bps to 31.0% due in part to the Ortega and Las Palmas recalls which occurred.
- 2015 EPS guidance was reaffirmed by the company at $1.48 to $1.55 vs. $1.51 consensus.
- HanesBrands (HBI -3.8%) slides following a slight Q1 earnings miss.
- The company lifted guidance from its prior view, but to a level short of analyst expectations with the midpoints of the rnage.
- FY15 revenue guidance: $5.9B to $5.95B vs. $5.78B to $5.83 prior and $5.94B consensus.
- FY15 EPS guidance: $1.61 to $1.66 vs. $1.58 to $1.63 prior and $1.64 consensus.
- Previously: Hanesbrands misses by $0.01, misses on revenue (Apr. 23 2015)
- Significant changes are afoot at Abercrombie & Fitch (ANF +0.3%) with new brand presidents exerting their influence without ex-CEO Mike Jeffries around any longer, notes Women's Wear Daily.
- Marketing campaigns will use models that more closely resemble A&F's customer base than borrowing from Paris runways.
- Dress codes for employees and hiring standards have also been updated in a progressive way.
- Abercrombie & Fitch's sales fell 14% in Q4.
- Comcast (NASDAQ:CMCSA) is trading up 1.3% premarket, and Time Warner Cable (NYSE:TWC) is 0.8% higher as well, after confirmation that their $45B merger deal is dead.
- In statements by the Justice Dept. and FCC thanking each other for their cooperation, it's clear that FCC Chairman Tom Wheeler was against the deal, which would have made agency approval a very long shot.
- It's also clear why Wheeler was opposed: It's about broadband, not cable, and protecting the burgeoning streaming video market. "The proposed merger would have posed an unacceptable risk to competition and innovation especially given the growing importance of high-speed broadband to online video and innovative new services."
- While Comcast doesn't pay a breakup fee with the deal's end, that doesn't mean everyone walks away cheaply: Advisers including bankers and lawyers will lose out on $380M in fees, chiefly Goldman Sachs (NYSE:GS), banker for Charter Communications (NASDAQ:CHTR). J.P. Morgan Chase (NYSE:JPM) will drop from second to third in the league tables. As a mitigating factor, more deals are likely on the way, though.
- Other sector players premarket: AT&T -0.3%; Verizon -0.2%.
- Consumer products giant Reckitt Benckiser (OTCPK:RBGLY, OTCPK:RBGPF) reports revenue rose 5% (like-for-like) to £2.216B ($3.35B) in Q1 to top expectations.
- Sales in North America were up 13% on a reported basis due to the impact of the strong U.S. dollar.
- The company's pace of sales in emerging markets trailed peers, but its health unit provided a double-digit sales lift.
- The company's says it on track to meet revenue targets and moderate to "nice" operating margin expansion.
- Shares of Reckitt rose over 1% in London trading.
- Reckitt Benckiser earnings release.
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