Stocks rose in pre-holiday trading Wednesday, with the Dow Jones Industrial Average (DJINDICES: ^DJI) up most of the session but closing flat, and the S&P 500 (SNPINDEX: ^GSPC) posting a gain. Advancing issues led declining ones by almost 3 to 1.
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Data source: Yahoo! Finance.
Energy stocks rose after crude oil prices firmed up, and the technology sector managed to halt its slide. The SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT: XOP) regained 2.4% and the PowerShares NASDAQ Internet ETF (NASDAQ: PNQI) closed up 1.7%.
As for individual stocks, mall-based Foot Locker (NYSE: FL) had good news for investors going into the holidays, and Deere & Company (NYSE: DE) rose despite missing profit forecasts.
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Foot Locker reports sales growth and margin expansion
Foot Locker provided some welcome news for the retail sector when it announced better-than-expected third-quarter results and upbeat guidance, and shares soared 14.9%. Adjusted earnings per share grew 9.2% to $0.95 on the strength of a 2.9% increase in comparable-store sales. Overall sales fell 0.5% to $1.86 billion due to store closures and currency exchange losses. Analysts were expecting Foot Locker to earn $0.92 per share on sales of $1.85 billion.
Comparable sales were up 5.9% in the digital channel and 2.4% in physical stores, and the footwear segment had its first comps gain in six quarters. Boosting profits was an increase in gross margin of 60 basis points to 31.6%, attributed to more full-price selling. Average selling price moved higher in both footwear and apparel.
Looking forward, Foot Locker raised its guidance, saying in its conference call that Q4 comps will be up low- to mid-single digits and gross margin should improve 1 to 1.3 percentage points from the period last year.
Deere shares rise after earnings miss
Agricultural equipment manufacturer Deere reported fiscal fourth-quarter earnings that missed expectations and provided 2019 guidance that was below analyst projections, but the stock rose 2.4% after the company calmed investors concerned about trade issues. Net equipment sales grew 17.6% to $8.34 billion, below the expected $8.57 billion. Earnings per share came in at $2.42, missing the analyst consensus by $0.03. An acquisition added 11% to sales in the quarter.
Looking forward, Deere expects 2019 sales to increase by 7%, which is slightly less than observers have been predicting, with implied net income of about $11.09 per share, well below the analyst consensus of $11.64 per share.
The disappointing earnings and outlook didn't scare off investors, possibly because Deere officials said on the conference call that the impact on soybean farmers from Chinese tariffs will be moderate due to increases in exports to other markets and shifts in acreage to corn and wheat next year. A forecast for a 45% increase in cash flow from equipment operations in 2019 to $4.8 billion could have helped, too.
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