Stocks were mostly unchanged Wednesday after a spate of earnings reports. The Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) posted modest losses, and advancing issues were roughly equal to losing ones.
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Biotechnology stocks had a good day; the SPDR S&P Biotech ETF (NYSEMKT: XBI) rose 1.6%. Retailers released some encouraging earnings reports, and the SPDR S&P Retail ETF (NYSEMKT: XRT) closed up 1%.
As for individual stocks, Best Buy (NYSE: BBY) reported strong holiday sales and Palo Alto Networks (NYSE: PANW) beat expectations for its latest quarter.
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Best Buy had a good holiday season
Consumer electronics retailer Best Buy reported strong fourth-quarter sales and profit, and shares soared 14.1%. Revenue fell 3.7% to $14.8 billion, but last year's Q4 revenue was boosted by $760 million due to an extra week. Excluding that, revenue grew 1.4% year over year. Adjusted earnings per share jumped 12.4% to $2.72. The revenue was at the top end of guidance and EPS was 7.5% above the midpoint of the company's conservative forecast three months ago.
Comparable-store sales increased 3%, compared with guidance of flat to up 3%. Best Buy said that comparable-store sales gains were driven by strength in wearables, appliances, smart home, and gaming.
Looking forward, Best Buy expects full-year comparable-store sales growth between 0.5% and 2.5%, and non-GAAP EPS to increase between 2.4% and 6.2%, better than the 3.2% analysts have been expecting. The company also boosted its quarterly dividend by 11% to $0.50, resulting in a forward yield of 2.9%. Last year Best Buy used $1.5 billion for share buybacks, which reduced the share count by 7.9%, and expects to spend between $750 and $1 billion for that purpose this year.
Palo Alto Networks beats growth expectations
Cybersecurity specialist Palo Alto Networks reported strong growth in its fiscal second quarter as customers snapped up its latest generation of firewalls and subscription services, and shares jumped 8.2%. Revenue grew 30.4% to $711 million and non-GAAP earnings per share soared 43.8% to $1.51. Analysts were expecting adjusted earnings of $1.22 on revenue of $682 million.
Product revenue grew 33% to $272 million, subscription revenue jumped 36% to $250 million, and support revenue increased 21% to $190 million. Deferred revenue grew 32% to $2.5 billion. The company is still losing money on a GAAP basis, but the loss in Q2 narrowed to $0.03 per share compared to $0.28 per share in the quarter a year ago.
Palo Alto is adding new customers at a rapid pace, and is seeing subscription attach rates of over 90% for some of its products, fueling the fastest-growing segment of its business.
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