Morning Preview: April 25th, 2017

eOptionDaily Market Report

U.S. stock futures are adding to yesterday’s gains ahead of one of the busiest earnings weeks of the season, as Dow components DD, MCD, MMM and CAT are among those reporting quarterly results this morning. Investors will also be watching for data on confidence, home prices and home sales. Stocks surged on Monday, with major U.S. averages ending higher by more than 1% along with European shares after a presidential vote in France triggered a relief rally in global equities as well as hopes from President Donald Trump’s promise to announce tax reforms this week. Financials led the gains yesterday while the tech heavy Nasdaq Comp posted a new all-time closing high and is up 15% since Nov. 8, compared with 11% in the S&P 500. The “fear” index plunged as the VIX fell 25% to below 11, its biggest drop since August 2011 and the lowest level since February. The tax reform plans promised for Wednesday from the administration of U.S. President Trump, is a key catalyst this week. In Asian markets, The Nikkei Index gained 203 points (1.08%) to finish at 19,079, the Shanghai Index inched higher 5 points to 3,134, and the Hang Seng Index jumped 316points (1.31%) to close at 24,455. In Europe, the German DAX is down a few points around 12,450, while the FTSE 100 is up around 0.2% at 7,285. Though with the reforms, and French elections a positive, the looming worries about a potential government shutdown on Saturday remain a slight concern, though fears may have eased, after Trump backed off on a demand for border wall funding seen as blocking a deal.

Events Calendar for Today

  • 7:45 AM ET          ICSC Weekly Retail Sales
  • 8:55 AM ET          Johnson/Redbook Weekly Sales
  • 9:00 AM ET          FHFA House Price Index MoM for February…est. 0.4%
  • 9:00 AM ET          S&P CaseShiller CoreLogic 20-city index, for March…est. 0.77%
  • 10:00 AM ET       New Home Sales MoM for March…est. (-1.5%) to 583K
  • 10:00 AM ET       Consumer Confidence for April…est. 122.5
  • 10:00 AM ET       Richmond Fed Manufacturing Index for April…est. 16
  • 4:30 PM ET          API Weekly Inventory Data

Earnings Calendar:

  • Earnings Before the Open: AKS, AN, BHI, BIIB, BKU, CAT, CIT, CNC, DD, FCX, FITB, GLW, KO, LH, LLY, LMT, MAS, MCD, MMM, NLSN, NTRS, OI, PCAR, PHM, PNR, R, SPGI, ST, TROW, TRU, TUP, VLO, WAT, WSO, XRX
  • Earnings After the Close: ARNC, BXP, CB, CENX, CHRW, CMG, COF, CREE, DFS, EQR, EW, ILMN, JNPR, MC, MTSI, O, SYK, T, TSS, TXN, UHS, ULTI

Market Closing Prices Yesterday

  • The S&P 500 Index jumped 25.46 points, or 1.08%, to 2,374.15
  • The Dow Jones Industrial Average rose 216.13 points, or 1.05%, to 20,763.89
  • The Nasdaq Composite spiked 73.30 points, or 1.24%, to 5,983.82
  • The Russell 2000 Index advanced 18.09 points, or 1.31% to 1,397.94

World News

  • S. military officials confirmed Monday that in the last 18 months, they have seen more weaponry from Russia in the hands of Taliban fighters, including machine guns and antiaircraft machine guns.
  • North Korea conducted a live-fire exercise on Tuesday, a South Korea media report picked up by Reuters said, as a U.S. submarine docked in South Korea as planned
Sector News Breakdown

Consumer

  • Whirlpool (WHR) Q1 EPS $2.50/$4.8B vs. est. $2.65/$4.75B; lowers FY17 EPS view from to $14.75-$15.50 from $15.25-$16.25 (est. $15.48)
  • Pulte Homes (PHM) Q1 EPS 31c/$1.6B vs. est.  29c/1.76B; new orders up 8% to 6,126 homes; backlog value up 13% to $3.8B; backlog increased 6% to 9,323 homes
  • Supervalu (SVU) Q4 EPS 13c/$2.91B vs. est. 9c/$2.9B; Q4 comp sales (-3.2%) vs. est. (-4.7%)
  • J&J Snack Foods (JJSF) Q2 EPS 85c/$246.5M vs. est. 88c/$244.0M
  • Knoll (KNL) Q1 EPS 31c/$256.8M vs. est. 27c/$253M; 1Q gross margin 37.3%
  • Heidrick & Struggles (HSII) Q1 EPS 19c/$140M vs. est. 21c/$144.97M; sees Q2 revenue $153M-$163M vs. consensus $160.85M

Energy

  • Baker Hughes (BHI) Q1 EPS loss (4c)/$2.3B vs. est. loss (21c)/$2.27B; Q1 Ebitda $309M vs. est. $252.6M; sees int’l onshore markets remaining stable
  • Williams Energy Partners (WPZ) cuts quarterly distribution to 60c from 85c
  • Range Resources (RRC) Q1 EPS 25c/$777M vs. est. 19c/$565.83M; reports cash flow from operations before changes in working capital $258M vs. $99M last year; sees Q2 production 1.93 BCFE per day
  • S. Silica (SLCA) Q1 EPS 9c/$244.8M vs. est. 6c/$238.08M; still sees FY Capex $125M-$150M

Financials

  • Zions Bancorp (ZION) Q1 EPS 61c vs. est. 54c; 1Q net interest margin 3.38%, net charge-offs $46M and provision for credit losses $18M
  • Fifth Third (FITB) Q1 EPS 38c vs. est. 37c; Q1 provision for credit losses $74M and NIM at 3.02%
  • CIT Group (CIT) Q1 EPS 54c vs. est. 63c; reports Q1 book value per share $50.14 and Q1 CET1 capital ratio 14.3%
  • WR Berkley (WRB) Q1 EPS 96c/$1.87B vs. est. 71c/$1.88B; 1Q net premiums written $1.65B and net premiums earned $1.57B; combined ratio 95.7%
  • Ameriprise (AMP) Q1 EPS $2.70/$2.9B vs. est. $2.52/$2.88B; announces additional $2.5B share repurchase plan; raises dividend 11% to 83c per share
  • Everest Re (RE) Q1 EPS $6.29/$1.485B vs. est. $5.31/$1.3B; gross written premiums for the quarter were $1.6B, an increase of 18% QoQ
  • Heartland Financial (HTLF) Q1 EPS 68c (in-line); 1Q net interest margin 3.95%, Q1 return on avg. assets 0.89% and 1Q return on avg. equity 9.71%
  • Banner (BANR) Q1 EPS 72c vs. est. 67c; Q1 total assets $10.1B and 1Q allowance for loan losses $0.68M
  • Weingarten (WRI) Q2 core FFO 61c vs. est. 60c and reaffirms core FFO guidance; backs FY17 core FFO $2.37-$2.43
  • UDR Corp. (UDR) Q1 FFO 45c (in-line) and sees Q2 FFO 45c-47c vs. est. 46c; reaffirms year
  • American Campus (ACC) Q1 FFO 62c on revs $192.9M

Healthcare

  • Fresenius Kabi (FMS) will buy Akorn Inc. (AKRX) for $34 a share, plus the assumption of roughly $450 million of debt, for a deal valued at $4.3B; the deal is expected to close by early 2018 and will add to Fresenius Group’s earnings in 2018 https://goo.gl/IgR6Zx
  • Eli Lilly (LLY) Q1 EPS 98c/$5.23B vs. est. 96c/$5.22B; still sees FY revs $21.8B-$22.3B vs. est. $22.1B
  • Centene (CNC) Q1 EPS $1.12/$11.72B vs. est. $1.05/$11.42B; sees FY17 EPS $4.50-$4.90 on revs $46B-$46.8B vs. est. $4.70/$46.56B
  • Express Scripts (ESRX) Q1 EPS $1.33/$24.65B vs. est. $1.32/$24.99B; raises FY17 adjusted EPS view to $6.90-$7.04 from $6.82-$7.02 (est. $6.93); Express Scripts said it believes its contract with Anthem (ANTM) is unlikely to be extended beyond 2019; Anthem has not provided a formal written notice of its intentions, according to a statement (shares drop over 10% on ANTM news)
  • Humana (HUM) sees Q1 EPS $2.75/$13.76B vs. est. $2.46/$13.64B; sees year EPS at least $11.10, above prior view of $10.80-$11 (est. $10.95); expects Medicare payment final rate notice of 0.45% rate increase for HUM vs CMS est. for the sector of 0.85% on a comparable basis
  • Jazz Pharmaceuticals (JAZZ) announced positive top-line efficacy results from the global, double-blind, placebo-controlled, randomized-withdrawal, multicenter Phase 2/3 study evaluating Xyrem oral solution, CIII, in the treatment of cataplexy in pediatric patients with narcolepsy
  • HealthStream (HSTM) Q1 EPS 4c/$59.9M vs. est. 4c/$59.25M; backs FY17 consolidated revenue growth view of 10%-14% and backs FY17 operating income growth view to 50%-65%.
  • OncoMed Pharmaceuticals Inc. (OMED) announced it will reduce half of its workforce in a bid to cut costs.

Industrials & Materials

  • DuPont (DD) Q1 operating EPS $1.64/$7.74B vs. est. $1.39/$7.51B; expects first-half 2017 GAAP1 earnings per share of about $2.42, a decrease of about 5 percent from prior year
  • Alcoa (AA) Q1 EPS 63c/$2.66B vs. est. 48c/$2.96B; Q1 Ebitda $533M vs. est. $477.5M; sees FY global aluminum surplus 300,000-700,000 metric tons, saw 400,000-800,000 and sees 2017 Global Aluminum Demand +4.5% to +5% up from prior 4%
  • The Trump administration is taking retaliatory action against Canada over a trade dispute, moving to impose a 20% tariff on softwood lumber that is typically used to build single-family homes. The tariff will be applied retroactively and imposed on Canadian exports to the U.S. of about $5 billion a year; watch shares of RYN, WY, OSB, LPX, PCH, UFPI
  • Newmont (NEM) Q1 EPS 25c/$1.66B vs. est. 21c/$1.72B; 1Q attributable gold production 1.23m oz, 1Q gold costs applicable to sales per ounce $687; 1Q copper output 13,000 tonnes; reaffirms year forecast for attributable gold production and boosts cap-ex to $900M-$1.1B
  • Barrick Gold (ABX) Q1 EPS 14c/$1.99B vs. est. 20c/$2.17B; gold production in the first quarter was 1.31M ounces; cuts FY17 gold production view to 5.3M-5.6M oz from 5.6M-5.9M
  • Crane (CR) Q1 EPS $1.05/$673M vs. est. $1.00/$656.25M; raises FY17 EPS view to $4.35-$4.55 from $4.30-$4.55 (est. $4.45)
  • Owens-Illinois (OI) Q1 EPS 58c/$1.6B vs. est. 53c/$1.58B; sees FY EPS $2.40-$2.50 vs. est. $2.43
  • KMG Chemicals Inc. (KMG) to acquire pipeline performance chemicals company Flowchem from Arsenal Capital Partners. KMG said it will buy Flowchem for $495 million in cash
  • Canadian National (CNI) Q1 EPS C$1.15/$3.21B in revs

Technology, Media & Telecom

  • T-Mobile (TMUS) Q1 EPS 38c/$9.61B vs. est. 34c/$9.62B; reports Q1 total branded postpaid net additions 914,000, Q1 branded prepaid net additions 386,000; Q1 branded postpaid phone churn 1.18%; still sees FY adj. Ebitda $10.4B-$10.8B vs. est. $10.7B; still sees FY Capex $4.8B-$5.1B
  • Sanmina (SANM) Q2 EPS 76c/$1.68B vs. est. 70c/$1.71B; sees 3Q EPS 72c-77c on revs $1.7B-$1.8B vs. est. 72c/$1.73B;
  • Cadence Design (CDNS) Q1 EPS 32c/$476.9M vs. est. 32c/$474.3M; sees Q2 EPS 31c-33c on revs $470M-$480M vs. est. 32c/$480.6M; sees FY EPS $1.32-$1.42 on revs $1.90B-$1.95B vs. est. $1.33/$1.93B
  • Rambus (RMBS) Q1 EPS 17c/$97.4M vs. est. 15c/$95.52M; sees Q2 adjusted EPS 10c-16c on revs $90M-$96M vs. est. 15c/$93.98M
  • Crown Castle (CCI) Q1 revs $1.02B vs. est. $1.01B; sees FY AFFO $1.81B-$1.84B; raises outlook
  • Unisys (UIS) Q1 EPS 30c/$664.5M vs. est. 22c/$618.3M; sees FY revs $2.65B-$2.75B vs. est. $2.71B; sees FY17 non-GAAP operating profit margin of 7.25%-8.25% and adjusted free cash flow of $130M-$170M

Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

Live Trading

Open an Account

Paper Trading

Register