Stock Market Today: Kraft Heinz Plunges, Roku Soars
Stocks rallied Friday on positive trade news and dovish comments by the Federal Reserve. The Dow Jones Industrial Average (DJINDICES: ^DJI) has now had nine straight weekly gains and the S&P 500 (SNPINDEX: ^GSPC) has had four.
Today's stock market
Index | Percentage Change | Point Change |
|---|---|---|
Dow | 0.70% | 181.18 |
S&P 500 | 0.64% | 17.79 |
Data source: Yahoo! Finance.
Technology and healthcare stocks led the market. The Technology Select Sector SPDR ETF (NYSEMKT: XLK) rose 1.3% and the SPDR S&P Pharmaceuticals ETF (NYSEMKT: XPH) closed up 1.7%.
As for individual stocks, it wasn't a good day for Kraft Heinz (NASDAQ: KHC), but Roku (NASDAQ: ROKU) impressed investors with its fourth-quarter results.
Image source: Getty Images.
Kraft Heinz posts unappetizing results
Shares of Kraft Heinz plunged 27.5% after the food giant unleashed a litany of bad news last night. Fourth-quarter results missed analysts' expectations for the top and bottom lines, and the company took a $15.4 billion writedown on the value of its brands, cut the dividend, and revealed that the SEC is investigating accounting practices in its procurement function.
Net sales grew 0.7% to $6.89 billion, short of the $6.93 billion analyst consensus. The writedown resulted in a loss of $10.34 per share, but excluding that one-time event, earnings per share of $0.84 fell 6.7% from last year and came in $0.10 less than expectations.
Kraft cut its quarterly dividend from $0.625 to $0.40, saying it is strengthening its balance sheet to prepare for future acquisition opportunities. But analysts on the conference call were clearly skeptical considering that cost savings from the merger of Kraft and Heinz have been disappointing.
Investors who remain optimistic about the future of brands like Jell-O, Kool Aid, Velveeta, and Oscar Mayer may still be hanging on, but the rest were tossing the stock in the dumpster today.
Roku is monetizing its rapidly growing user base
Three months ago, Roku reported an excellent quarter but shares fell on weak guidance for Q4. Last night, the company announced results for Q4 that blew away that outlook, and shares soared 25.2%.
Revenue increased 46.4% to $275.7 million, gross profit rose 53% to $112.3 million, and adjusted EBITDA jumped 70% to $24.5 million. Roku had forecast revenue between $255 million and $265 million, gross profit of $103 million-$110 million, and adjusted EBITDA between $13 million and $20 million.
Roku had previously announced torrid user and engagement growth in Q4, with active accounts growing 40% and streaming hours up 69% over the period a year ago. Adding to the picture was better monetization of those users, with average revenue per user increasing 30% to $17.95. For the full year, monetized video advertising impressions across the platform more than doubled.
Looking forward, Roku expects revenue for the full year to grow 36% to over $1 billion, above what analysts were expecting.
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Jim Crumly owns shares of Roku, Inc. The Motley Fool is short shares of Kraft Heinz. The Motley Fool has a disclosure policy.
