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Investors Eye Uncertain Holiday Retail Prospects
Stocks brushed off cautious comments from retailer heavyweight Target (NYSE: TGT - News) and mixed economic data to post gains. Given the comments from retailers, holiday shoppers aren't exactly flocking to stores to get a head start on their holiday shopping. However, it's still early and comps should be pretty easy following a tough holiday season last year for retailers. Investors are likely to tune into the early post-Thanksgiving numbers to try and get a better handle on how the consumer is faring. After a strong run in retail stocks from their lows, these numbers could dictate where the sector heads from here.
The Agricultural Chemical and Fertilizer Stocks Index was the top performing tickerspy Index on the day, led by KMG Chemicals (Nasdaq: KMGB - News) with a 10% gain.
Stocks squeaked out gains, with the Dow gaining 30 points to close at 10,437. The S&P added 1 point to 1,110, while the Nasdaq rose 6 points to 2,204. Gold climbed $1.00 to $1,139.20 an ounce, while oil tacked on 24 cents to $79.14 a barrel.
On the economic front, the producer price index rose 0.3% in October, while core PPI, which excludes food and energy, fell -0.6%, according to the Labor Department. Economists were looking for gains of 0.5% and 0.1%. respectively. Elsewhere, factory production edged down -0.1% last month, according to a report issued by the Federal Reserve. This was the first decline since June, and followed a 0.8% increase in September. Meanwhile, credit reporting agency TransUnion reported that during the third quarter mortgage delinquencies rose to 6.25%, up 58% from a year ago and 7.6% from Q2. In earnings news, home improvement retailer Home Depot (NYSE: HD - News) earned $689 million, or 41 cents per share, for the third quarter ended November 1st. This topped analyst estimates of 36 cents per share. Last year, the company posted a profit of $756 million, or 45 cents per share. Revenue slid -8% to $16.36 billion, while same-store sales fell -6.9%. Looking ahead, Home Depot guided for full-year adjusted EPS of $1.55, higher than the consensus of $1.52, on a sales decline of -9%. The stock sank -2.4%.
Shares of The TJX Companies (NYSE: TJX - News) fell -1.5% despite the discount retailer posting better-than-expected Q3 results. For the period ended October 31st, the owner of T.J. Maxx and Marshalls reported net income of $347.8 million, or 81 cents a share, up from $235.8 million, or 54 cents a share, a year ago. Wall Street had expected EPS of 80 cents. Sales jumped 10.1% to $5.24 billion, while comparable-store sales climbed 7.0%. TJX said it anticipates Q4 same-store sales to rise between 5-7%, and for EPS in the range of 65-71 cents. Thirty-five Pro investors counted the stock among their top-15 holdings at the start of Q4.
Jacobs Engineering Group (NYSE: JEC - News) saw its shares plunge -14.5% after the company said its Q4 profit dropped -31%. For the quarter ended October 2nd, net income fell to $79.3 million, or 63 cents per share, a nickel below the 68-cent consensus. A year earlier, the company earned $114.4 million, or 92 cents per share. Revenue decreased to $2.55 billion from $3.2 billion. For FY10, Jacobs expects EPS in the range of $2.00-$2.60, below analyst estimates of $2.83. Twenty-three Pro investors counted the stock among their top-15 holdings at the start of Q4. Shares of Canadian Solar (Nasdaq: CSIQ - News) rose 2.1% on news that the company's Q3 profit more than doubled. The solar products maker also predicted a surge in 2010 demand to 600-700 megawatts. For FY09, the company expects between 295-305 megawatts in shipments. For the third quarter, the company posted a profit of $25.3 million, or 69 cents a share, up from $11.1 million, or 31 cents a share, last year. Analysts were expecting EPS of 54 cents. Shipments spiked 71% during Q3 to 102.6 megawatts, but revenue still dropped -16% to $213.1 million due to weak prices.
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