Stocks closed the first half of the year with a day of gains. The Dow Jones Industrial Average (DJINDICES: ^DJI) rose today but is still down 1.8% for the year. The S&P 500 (SNPINDEX: ^GSPC), however, is in positive territory for 2018, up 1.7%.
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Data source: Yahoo! Finance.
Energy was the strongest sector as the price of crude oil climbed above $74. The SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT: XOP) rose 0.4% and was one of the best unleveraged stock ETFs in the first half, up 16.2% so far in 2018. The Consumer Discretionary Select SPDR ETF (NYSEMKT: XLY) has also been one of the best places for money lately, gaining 0.2% today and up 11.4% for the year.
As for individual stocks, investors applauded Nike's (NYSE: NKE) strong earnings report, while Constellation Brands (NYSE: STZ) fell on weak profits.
Image source: Getty Images.
Sales growth kicks in for Nike
Nike reported fiscal fourth-quarter results that sprinted past its guidance and Wall Street expectations, and the stock jumped 11.1%. Revenue increased 12.8% to $9.79 billion, well above guidance from three months ago of growth in the "high single digit range" and the analyst consensus for an 8.4% increase. Earnings per share jumped 15% to $0.69, $0.05 above expectations.
International sales fueled the gains, but business in North America returned to growth as well, increasing 3% from the period a year ago. Europe, Middle East, and Africa (EMEA) revenue grew 10% in constant currency, sales in Asia Pacific and Latin America were up 13%, and Greater China sales soared a whopping 25%, excluding currency effects.
Apparel was the strongest category, growing 15% in constant currency, while growth in footwear was 8%. The NIKE brand overall grew 14% (9% excluding currency effects), while revenue from the Converse brand fell 14% ex-currency due to changes in wholesale distribution in North America and EMEA. Gross margin expanded by 60 basis points, due to accelerating full-price sales and expanding digital sales, which grew 41%.
The growth in North America was a welcome development for investors, as was the acceleration of international sales and the announcement of a four-year, $15 billion share repurchase program.
Constellation Brands loses some fizz
Shares of Constellation Brands tumbled 5.6% after the company missed profit expectations for fiscal first-quarter results. Net sales grew 6.2% to $2.05 billion and comparable (non-GAAP) earnings per share fell 6% to $2.20. Analysts were expecting an increase in EPS to $2.43 on sales of $2.04 billion.
Net sales for the beer division, a source of strength for the company in recent quarters, grew 11% and depletion volume -- the sales from distributors to retail locations -- increased approximately 9%. Operating income, however, managed only 4.5% growth due to planned marketing investments, higher transportation costs, and unfavorable currency effects. Constellation's wine and spirits business saw sales fall 2.5% and operating income decline 16.8%.
On the conference call, company officials defended their decision to maintain full-year guidance for comparable EPS in the range of $9.40 to $9.70 despite the relatively weak performance last quarter. Analysts seem to doubt the credibility of that forecast now, especially considering the fact that the higher transportation costs that should continue throughout the year. The analyst consensus of $9.73 for the year is almost certain to drop, adding fuel to the stock's decline.
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