Stocks wobbled between gains and losses on Tuesday as investors weighed some disappointing earnings reports and the lack of trade news against dovish comments by Fed Chairman Jay Powell. The Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) posted modest declines.
Today's stock market
Data source: Yahoo! Finance.
No sectors made very big moves today, but technology was one of the strongest areas of the market; the Technology Select Sector SPDR ETF (NYSEMKT: XLK) edged up 0.2%. Bank stocks slipped, with the SPDR S&P Regional Banking ETF (NYSEMKT: KRE) losing 1.1%.
As for individual stocks, investors mostly shrugged off disappointing results and guidance from Home Depot (NYSE: HD) but cheered Etsy's (NASDAQ: ETSY) torrid growth.
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Sales slow at Home Depot but company hikes payout
Home Depot reported mixed results for the fourth quarter and forecast slowing sales growth in 2019, but hiked the dividend a massive 32%, and shares fell 0.9%. Net sales grew 10.9% to $26.5 billion and earnings per share increased 37.5% to $2.09, which missed guidance from three months ago by $0.03.
Comparable-store sales growth in the quarter slowed to 3.2% and for the full year grew 5.2%, a shortfall from the 5.5% the company had said to expect, and which it blamed primarily on cold, wet weather in the U.S. Looking forward, though, Home Depot expects comparable-store sales to fall further to 5% in fiscal 2019 on weakness in the U.S. housing market. Earnings per share are expected to be $10.03, compared to the $10.26 analysts were looking for.
Home Depot forecast operating cash flow to increase 8.1% this year, and plans to increase capital investment by over 10% and shift some return of capital from share buybacks to dividends came as good news to investors.
Etsy grows on higher merchandise volumes
Shares of craft marketplace Etsy soared 16.3% after the company topped expectations for the fourth quarter. Revenue grew a hefty 46.8% to $200 million, beating the analyst consensus of $195 million. Earnings per share declined 11.1% to $0.32, exceeding expectations for $0.21.
Gross merchandise sales (GMS) volume grew 22.3%, active buyers increased 18.2%, and active sellers jumped 9.4%. A price increase last year helped the financial results, with gross profit growing 55.3% and gross margin improving 3.9 percentage points to 71.4%.
Looking forward, Etsy's growth rate will slow as it laps the price increase midyear, but the company still projects strong GMS growth in 2019 of between 17% and 20% despite the higher seller fees. Revenue guidance is for an increase of between 29% and 32% for the full year, and adjusted EBITDA margin should grow between 23% and 25%.
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