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Tuesday November 24, 2020



Hewlett Packard Enterprise Reports Earnings

Hewlett Packard Enterprise Co. (HPE) released its quarterly earnings report on Monday, November 25. The information technology products and services provider missed revenue expectations for the quarter.

Hewlett Packard Enterprise reported quarterly revenue of $7.22 billion. This is down 9% from last year's fourth quarter revenue of $7.95 billion and below the $7.40 billion that Wall Street predicted.

"We had a very successful fiscal year, marked by strong and consistent performance," said Hewlett Packard Enterprise President and CEO Antonio Neri. "Through our disciplined execution, we improved profitability across the company and significantly exceeded our original non-GAAP earnings and cash flow outlook, while sharpening our focus, transforming our culture and delivering differentiated innovation to our customers as they accelerate their digital transformations."

The company announced net earnings of $480 million for the quarter, which was up from an earnings loss of $757 million one year ago. On an adjusted earnings per share basis, the company reported an adjusted earnings of $0.49 per share, which was more than the $0.46 per share that analysts predicted.

On August 5, 2019, Hewlett Packard Enterprise announced its acquisition of MapR's business assets. MapR was a leading data platform for artificial intelligence and analytics applications. With this acquisition, Hewlett Packard Enterprise hopes to accelerate its Intelligent Data Platform segment capabilities, including artificial intelligence and machine learning. Hewlett Packard Enterprise also completed the acquisition of the supercomputing leader Cray Inc. in September. The Cray acquisition is expected to increase storage and services in the High Performance Computing segment of Hewlett Packard Enterprise.

Hewlett Packard Enterprise Co. (HPE) shares closed at $15.94 on Wednesday, down 7.1% for the week.

Cracker Barrel Serves Hot Earnings

Cracker Barrel Old Country Store, Inc. (CBRL) released its earnings report for the first quarter on Tuesday, November 26. The company reported an increase in both earnings and profits for the quarter.

The company reported revenue of $749.04 million for the quarter. This was a 2% increase from revenue of $733.54 million during the same quarter last year.

"While we faced headwinds from the softening trend in industry traffic and comparable store sales, I was pleased we again outperformed the casual dining industry, and we delivered solid operating income growth," said Cracker Barrel President and CEO Sandra B. Cochran. "Additionally, we completed our acquisition of Maple Street Biscuit Company, a strong brand with attractive unit economics and growth potential, which accelerates our penetration in the breakfast and lunch-focused fast casual category."

Cracker Barrel posted net income of $43.22 million during the first quarter. During the same quarter last year, the company reported net income of $47.21 million. The company reported adjusted earnings per share of $1.79, down from $1.96 in the same quarter last year.

Cracker Barrel operates "Southern country" themed combined restaurant and gift store locations throughout the country. Although comparable restaurant traffic dropped 1.5% in the quarter, the numbers outperformed in the casual dining industry. The company declared a quarterly dividend of $1.30 per share payable to common shareholders, payable on February 5, 2020 to the shareholder on record as of January 17, 2020.

Cracker Barrel Old Country Store, Inc. (CBRL) shares closed at $151.79 on Wednesday, down 2.1% for the week.

Dick's Sporting Goods' Revenue Hits a Homerun

Dick's Sporting Goods, Inc. (DKS) released its latest quarterly earnings report on Tuesday, November 26. The company's earnings beat expectations, sending shares soaring more than 18% following the earnings release.

Dick's Sporting Goods reported quarterly revenue of $1.96 billion. This was an increase from last year's third quarter revenue of $1.86 billion and above the $1.91 billion analysts expected.

"We saw increases in both average ticket and transactions, as well as growth across each of our three primary categories of hardlines, apparel and footwear," said Dick's Sporting Goods CEO Edward W. Stack. "As we head into the holiday season, we remain very enthusiastic about our business, and we are pleased to increase our full year sales and earnings outlook for the third time this year."

The company announced quarterly earnings of $57.58 million, up from earnings of $37.83 million one year ago. Dick's Sporting Goods reported adjusted earnings of $0.52 per share, up 33% from $0.39 in the same quarter last year. The earnings per share in the quarter surpassed the $0.38 per share Wall Street predicted.

Dick's Sporting Goods reported a 6% increase in consolidated same-store sales, which far exceeded the 2.9% increase Wall Street expected. The company increased its full year 2019 earnings guidance to $3.63 to $3.73 per share, up from a range of $3.30 to $3.45.

Dick's Sporting Goods, Inc. (DKS) shares ended the week at $45.88 on Wednesday, up 13.5% for the week.

The Dow started the week at 27,918 and closed at 28,164 on 11/27. The S&P 500 started the week at 3,117 and closed at 3,154. The NASDAQ started the week at 8,560 and closed at 8,705.

Treasury Yields Rise and Fall on Economic Data

Treasury yields declined early in the week following disappointing economic data. Yields experienced an uptick based on revised gross domestic product growth for the third quarter.

On Tuesday, The Conference Board revealed that consumer confidence fell to 125.5 in November, down from 126.1 in October. Economics expected the index to rise to 126.6 in November.

The results "suggests that economic growth in the final quarter of 2019 will remain weak," said Lynn Franco, senior director of economic indicators at The Conference Board. "However, consumers' short-term expectations improved modestly, and growth in early 2020 is likely to remain at around 2%. Overall, confidence levels are still high and should support solid spending during this holiday season."

The 10-year Treasury note slid to 1.741% on Tuesday. The 30-year Treasury bond dropped to 2.175% on Tuesday.

On Wednesday, Treasury yields rose after the release of revised gross domestic product growth for the third quarter. The U.S. economy expanded at an annual pace of 2.1% based on the revised report, up from the original estimate of 1.9%.

"The economic data continues to largely support growth, at least in the near-term," said Kevin Giddis, chief fixed income strategist at Raymond James. He went on to say that the increased gross domestic product revision "caused [long term investors] to get a bit nervous."

The 10-year Treasury note yield closed at 1.77% on 11/27, while the 30-year Treasury bond yield was 2.19%.

Mortgage Rates Increase

Freddie Mac released its latest Primary Mortgage Market Survey on Wednesday, November 27. The report revealed a slight increase in the 30-year fixed mortgage rate average.

The 30-year fixed rate mortgage rate averaged 3.68%, up from 3.66% last week. At this time last year, the 30-year fixed rate mortgage averaged 4.81%.

This week, the 15-year fixed rate mortgage averaged 3.15%, unchanged from last week. Last year at this time, the 15-year fixed rate mortgage averaged 4.25%.

"Following a decline in the first nine months of 2019, mortgage rates have traded narrower during the last two months with a modest drift upward due to an improved economic outlook," said Freddie Mac's Chief Economist Sam Khater. "While there has been a lag in the housing market's response to lower rates, real estate volumes have clearly shifted into a higher gear. Moreover, the recent improvement in the cyclical segments of the economy and easing financial conditions will provide a gentle tailwind to the real estate market rebound over the next few months."

Based on published national averages, the savings rate was 0.09% for the week of November 25. The one-year CD finished at 0.49%.

Published November 29, 2019

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