Fastenal, Broadcom-VMware deal, Hormel Foods: Top Stocks
Fastenal (FAST) shares rise during Thursday's session after reporting a third-quarter earnings beat. Shares of Broadcom (AVGO) and VMware (VMW) move higher on news that Broadcom's acquisition of the cloud computing company is likely to be approved by Chinese officials. Lastly, Hormel Foods (HRL) reaches a new labor agreement with union workers in select states, stipulating a record wage increase for the food processing company.
Yahoo Finance Live examines several of Thursday's trending stocks ahead of the closing bell.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
JOSH LIPTON: Shares of Fastenal popping after the company beat third quarter profit expectations, generating $30 million in sales per day in September, the first month in the company's history to do so. So this one, we got an earnings beat, Julie. Jefferies, which, by the way, has a hold on this one, here on the sidelines, telling their clients, the quarter was a modestly positive tailwind. So that's about what you would expect from a hold, that kind of-- it's all right. It's OK.
JULIE HYMAN: Yeah, exactly. They have a certain lens through which they see it, I guess.
JOSH LIPTON: It's all right. They say that reflects a more normalized pricing environment. Looking at peers, too, by the way, I was just seeing who might have been picking up on this. It looks like names like WW Granger, by the way, were also popping.
JULIE HYMAN: Yeah, when you look at some of the other commentary around this here, Raymond James has an underperform on the stocks. They say that the EPS mildly beat estimates here, and that the price to cost ratio was positive for the first time post-pandemic. So that also some grudging praise. But Fastenal in the industrial category here. They make fasteners and other types of tools. So it's interesting to see a little bit of improvement in something like that. And it's one of the best performers in the S&P 500 today.
JOSH LIPTON: Nice pop.
JULIE HYMAN: Yes. Let's talk about another mover, this one in the tech arena, and that is Broadcom. The company's acquisition of VMware reportedly expected to be approved by China soon. According to Deal Reporter, the deal likely to be granted conditional Chinese antitrust approval, which would be another step towards its getting total of approval for this more than $60 billion acquisition here. VMware shares, by the way, had also been rising on this. And the company has said that it expects the transaction to close by October 30. So obviously, would need to get that, all of the approvals in line. And this seems to be another step in that direction.
JOSH LIPTON: Yeah, if you look, Broadcom CEO Hock Tan is a great earnings call, by the way. Yeah, he brings it. But he is a true deal maker, right? And he's been moving this chip maker into more enterprise software. So this would be a big step in that direction. The stock has had a great 2023, by the way. It's roared 60%.
JULIE HYMAN: Yeah, so I don't know if the AI play is part of that.
JOSH LIPTON: Oh, yeah.
JULIE HYMAN: I feel like everything chippy and techie is getting some of those plays.
JOSH LIPTON: And lastly here, shares of Hormel Foods taking a dive. That's after presenting its three-year financial targets and reaching a new labor agreement. Union saying members at Hormel's locations in Minnesota, Georgia, Wisconsin, and Iowa, voted to ratify a contract that includes the largest wage increase in the company's history.
So this one, Hormel the food maker, Julie. So laid out this plan, had some financial targets, but analysts are noting, by the way, the company is calling fiscal '24 a year of significant investment, right? But really, this union news also making a lot of headlines here, too. Hourly wages increased $3 an hour to $6 an hour, among other benefits.
JULIE HYMAN: Yeah, and obviously, there's a lot of attention on any union activity right now within the corporate world and the impact of that. At that investor day, the company talked about that $250 million in operating income growth by 2026. Just for context there, the company's operating income estimate for this year looks like it's $1.18 billion. 2026 would be $1.495 billion here. So if you're looking at the growth over that time, it does seem to be roughly in line with estimates. So it's interesting that we're seeing the stock take such a hit. It might, indeed, be exacerbated by some of that union activity, what we were talking about.
JOSH LIPTON: Yeah, this continuing trend, we talk about all the time. So many-- this Union activity across so many companies, so many sectors and industries, in some cases, able to go to the negotiating table, secure a better pay deal for their members.
JULIE HYMAN: Yeah, we'll be tracking this one in particular.
