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What Happened in the Stock Market Today

Stock indexes were up in the morning Thursday, but drifted down during the session, despite advancing issues outnumbering decliners. TheDow Jones Industrial Average (DJINDICES:^DJI)lost about a quarter percentage point, and theS&P 500 (SNPINDEX:^GSPC)closed just barely in the red.

Today’s stock market

Index Percentage Change Point Change
Dow (0.22%) (54.95)
S&P 500 (0.09%) (2.33)

Data source: Yahoo! Finance.

Energy stocks rose on higher crude oil prices; theSPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) jumped 3.1%. Small caps continued their recent upward trend, with theiShares Russell 2000 ETF (NYSEMKT:IWM) rising 0.5%.

As for individual stocks, Walmart (NYSE:WMT) reported first-quarter sales gains, and shares ofCisco Systems (NASDAQ:CSCO) fell after the tech giant gave uninspiring guidance.

People in business attire in front of display of stock prices.

Image source: Getty Images.

Walmart sees strong sales and falling margins

Walmart reported solid sales performance in its fiscal first quarter and managed to beat profit expectations despite rising costs and investments in e-commerce, but shares slumped 1.9%. Sales grew 4.4% — or 2.7% in constant currency terms — to $122.7 billion, compared with the analyst consensus estimate of $120.5 billion. Adjusted earnings per share of $1.14 beat estimates by $0.02, and grew 14% year over year.

Comparable sales in Walmart U.S. stores grew 2.1% with a 0.8% increase in traffic, while Sam’s Club stores had a 3.8% comp gain. Walmart International grew sales by 4.5% in constant currency, and U.S. e-commerce sales grew 33%.

Profits came under pressure, with gross margin falling 23 basis points in the U.S. and 15 basis points overall due to rising transportation and fuel costs and “price investments.” Operating costs as a percentage of sales increased 11 basis points primarily due to investments in e-commerce.

Walmart executives highlighted the investments the company is making in its future. It will increase online grocery pickup by around 1,000 stores this year to more than 2,100 locations in the U.S. It also expects to roll out grocery delivery to 800 stores by year-end, covering 40% of the U.S. population. The company’s most important bet is its acquisition of Indian e-commerce company Flipkart, which it announced last week. Walmart reiterated guidance that the deal will impact this year’s EPS by $0.25 to $0.30.

The earnings report held few surprises, but the good news of decent sales was apparently outweighed by the profit impact of Walmart’s growth initiatives.

Cisco fails to excite investors

Networking giant Cisco Systems announced fiscal third-quarter results that edged out expectations and issued guidance in line with estimates, but that wasn’t enough to inspire shareholders, and the stock fell 3.8%. Revenue increased 4.4% to $12.5 billion and non-GAAP earnings per share jumped 10% to $0.66. Analysts were expecting the company to earn $0.65 per share on $12.4 billion in sales.

Cisco is pushing to grow recurring revenue by moving to a subscription model, and reported some success in that area. Recurring revenue was 32% of the total, which was 2 percentage points above the year-ago result, but less than the 33% reported last quarter. Revenue from the applications segment grew a strong 19% to $1.3 billion, while infrastructure platforms increased 2% to $7.2 billion. Non-GAAP product gross margin fell from 63.2% to 62.9%, primarily due to pricing and higher memory costs.

For the fourth quarter, Cisco forecast revenue growth of 4% to 6% and non-GAAP EPS of between $0.68 and $0.70, compared with $0.61 last year. This was right on the analyst consensus of $0.69 in EPS on sales growth of 5%.

The quarter was decent for Cisco, although not particularly exciting. Investors were evidently hoping for a better outlook, although the stock is still up 15% for the year.

What Happened in the Stock Market Today

Stocks were mostly unchanged Tuesday. TheDow Jones Industrial Average (DJINDICES:^DJI)had a tiny gain and theS&P 500 (SNPINDEX:^GSPC)lost less than a point.

Today’s stock market

Index Percentage Change Point Change
Dow 0.01% 2.89
S&P 500 (0.03%) (0.71)

Data source: Yahoo! Finance.

Energy stocks rose after President Trump announced the U.S. would withdraw from the Iran nuclear accord. TheSPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) gained 2.1%.Utility stocks fell on rising interest rates, with theUtilities Select SPDR ETF (NYSEMKT:XLU) dropping 2.5%.

As for individual stocks, Zillow (NASDAQ:Z) (NASDAQ:ZG) fell slightly after the company reported earnings, while Camping World Holdings (NYSE:CWH)plunged on first-quarter results.

People and stock display in front of skyline.

Image source: Getty Images.

Zillow reports 22% revenue growth

Real estate services specialist Zillow’s first-quarter earnings met expectations for revenue and beat on the bottom line, but the company announced soft guidance and the departure of its chief financial officer, and Class C shares fell 1.5%. Revenue grew 22% to $299.9 million. The company is not profitable on a GAAP basis, but adjusted earnings came in at $0.07, a penny better than analysts were predicting.

Premier agent revenue grew 22% to $213.7 million and rentals revenue increased 35% to $29.1 million. Average monthly unique users grew 5% to 175.5 million, and visits jumped 15%.

Looking forward, Zillow guided to Q2 revenue of between $322 million to $327 million, well below the analyst consensus of $355 million. The company did raise its revenue guidance for the full year, though, from a range of $1.3 billion to $1.32 billion estimated last quarterto $1.43 billion to $1.58 billion.

“This year, we are taking our business beyond lead generation by creating better experiences for consumers and further strengthening our partnerships with real estate professionals,” said CEOSpencer Rascoff in the press release. “Our opportunity is expanding with the introduction of innovative products and services, like Zillow Instant Offers, that provide end-to-end solutions for consumers and will generate more home-related transactions across our platforms.”

Last month the company unveiled its Instant Offers program, which spooked investors concerned about capital requirements and risk, although the stock recovered in the weeks to follow. The earnings report today offered little in the way of surprises, and investors took it in stride.

Camping World tumbles on RV price worries

Shares of Camping World Holdings plunged 16.7% after the company reported first-quarter results that got investors worried about slowing same-store sales growth due to falling RV prices. Revenue increased 20.4% to $1.06 billion, edging out the analyst consensus of $1.05 billion. Adjusted EPS grew 9.7% to $0.41, missing expectations by $0.01.

Same-store sales increased 3.9%, below the 11.9% gain last quarter and the 9.6% increase in the period a year earlier.The number of RVs sold grew 21%, but average selling prices fell 4.3%. Factoring into the same-store sales growth was a 22% increase in finance and insurance sales.

Weather was also cited as a factor. “While the unseasonably cold weather throughout a good portion of the country has likely impacted the early part of the peak selling season, we believe the backdrop across the RV industry remains strong and we continue to plan our business around a mid-single digit increase in same store sales in 2018,” said CEO Marcus Lemonis in the press release.

Camping World’s strategy is to be the price leader on vehicles while cross-selling services and accessories. Despite decent sales growth, investors were worriedabout the lower average selling prices headed into the critical summer sales period, and bid the stock down to only eight times estimated 2018 earnings.