Stocks End Big Week Higher
U.S. Market
Stocks were higher today following the largest two-day rally in years.
There were no major economic news releases this morning although Wednesday’s FOMC statement that the central bank would be patient in raising rates remained in focus.
At market close the Dow, S&P 500 and Nasdaq were up 0.2%, 0.5% and 0.4% respectively.
Stocks on the Move
Wide-moat Nike (NKE) delivered another strong quarter of growth (revenue up 15% to $7.4 billion and earnings per share up 25% to $0.74) and is now pushing returns on capital over the mid-20% range. Further, the firm is also leveraging demand creation and overhead expenses, which grew 17% year over year, below the 24% growth in net income, which was driven by a 120-basis-point increase in gross margin. Futures orders are up 7% but an even stronger 11% at constant exchange rates. Management also noted that the second quarter of last year was the beginning of orders for the 2014 FIFA World Cup, and that futures excluding early World Cup orders last year would be up double digits in Europe, North America, and China. Shares were down over 2% at market close as the future orders were below analyst expectations.
BlackBerry (BBRY) reported fiscal third-quarter revenue quite a bit below our expectations, as most of its smartphone sales pertained to older device models at low prices. Revenue in the quarter was $793 million, far below both consensus estimates of $932 million. Hardware sales were a bit of a flop, as the firm sold 2.0 million units, down 5% sequentially. Even more troubling, the substantial majority of device sales were of older BlackBerry smartphone models, while fewer than 0.2 million units related to the recently released BlackBerry Passport. On the bright side, BlackBerry managed to eke out a profit and turn cash flow positive, thanks to solid cost management, as gross margins improved more than 500 basis points while operating expenses fell 15% sequentially. Shares pared early losses to end down 0.8%.
