Morning Preview: February 22, 2018

Scott GreenDaily Market Report

Early Look
Thursday, February 22, 18
Stock futures are pointing to a mixed open a day after markets dropped late session on rising inflation and borrowing cost fears. Stocks did an about face on Wednesday, reversing earlier gains to close near its worst levels of the day as minutes from the Federal Reserve’s most recent policy-meeting sparked a fresh wave of volatility, while bond rates spiked higher (30-yr above 3.21% to highest since July 2015 and 10-yr to 2.95%, highest YTD) and the dollar strengthened, weighing on equities. Minutes from the January FOMC meeting showed that officials saw a stronger economy than at the end of 2017 and that more rate increases were coming. Given the reaction to the minutes, markets will most likely keep a close watch on comments from various Fed speakers throughout the day (including Dudley and Bostic), along with the weekly reading on jobless claims and oil inventory data. In Asian markets, The Nikkei Index declined -234 points to settle at 21,736, the Shanghai Index reopened, up 69 points to settle at 3,268 and the Hang Seng Index dropped -466 points to settle at 30,965. In Europe, the German DAX is down around -100 points at 10,360, while the FTSE 100 is down around -70 points holding above 7,200. The declines in Europe follow weakness in the U.S. yesterday
Market Closing Prices Yesterday
·      The S&P 500 Index dropped -14.93 points, or 0.55%, to 2,701.33
·      The Dow Jones Industrial Average fell -166.97 points, or 0.67%, to 24,797.78
·      The Nasdaq Composite slumped -16.08 points, or 0.22%, to 7,218.23
·      The Russell 2000 Index advanced 1.84 points, or 0.12% to 1,531.84
Events Calendar for Today
·      8:30 AM EST       Weekly Jobless Claims…est. 230K
·      8:30 AM EST       Continuing Claims…est. 1.935M
·      9:45 AM EST       Bloomberg Consumer Comfort Index…prior 57.0
·      10:00 AM EST     Leading Index for January…est. 0.7%
·      10:30 AM EST     Weekly EIA Natural Gas Inventory Data
·      11:00 AM EST     Weekly DOE Inventory Data
·      11:00 AM EST     Kansas City Fed Manufacturing Activity for February…est. 18
·      12:10 PM EST     Fed’s Bostic speaks on outlook for Economy
Earnings Calendar
·      Earnings Before the Open: APA, CCOI, CHK, CNP, GOGO, HCN, HRL, LKQ, MITL, NEM, PPL, SCG, SRC, TPX, W, WIN
·      Earnings After the Close: APPN, GDDY, HLF, IMMR, INTU, LNT, NDSN, OLED, TTD
Other Key Events
·      CAGNY Conference 2/19-2/23 in Boca Raton, FL
·      Citigroup Industrial Conference, 2/21-2/22, in Miami, FL
·      RBC Healthcare Conference 2/21-2/22, in New York
·      Minutes from the prior ECB Meeting released
World News
·      German business sentiment dropped in February from last month’s record high, as the Ifo’s business climate index fell to 115.4 points in February from 117.6 points in January, disappointing economists’ expectations of 117.0 points.
·      The Office for National Statistics revised down U.K. growth in the final three months of 2017 to 0.4% from 0.5% previously. On an annualized basis, fourth-quarter growth was lowered to 1.6% from 2.0%
Sector News Breakdown
·      Cheesecake Factory (CAKE) Q4 EPS 53c/$571.8M vs. est. 53c/$567.7M; 4Q restaurant comp sales -0.9% vs. estimate -0.7%
·      Jack in the Box (JACK) Q1 operating EPS $1.23/$294.46M vs. est. $1.06/$283.53M; system same-store sales decreased (-0.2%) for the quarter
·      Wendy’s (WEN) Q4 adjusted EPS 11c/$309.2M vs. est. 11c/$313.49M; reports North America systemwide sales growth 2.4%, International sales growth 14.6%; sees year EPS 54c-56c vs. est. 61c; sees year comp sales up 2%-2.5%; Q1 comp sales rose 1.3% vs. est. 1.8%
·      Hormel Foods (HRL) Q1 EPS 44c/$2.33B vs. est. 45c/$2.42B; raises FY18 EPS view to $1.81-$1.95 from $1.62-$1.72 vs. est. $1.73 and backs FY18 revenue guidance of $9.7B-$10.1B
·      Bridgepoint Education (BPI) Q4 adjusted EPS loss (16c)/$105M vs. est. loss (13c)/$109.1M; says total student enrollment 40,730 vs. 45,087 a year ago
·      Ford Motor Co.’s (F) head of North American operations is leaving the automaker immediately following an investigation into reports of “inappropriate behavior.”
·      Masonite (DOOR) Q4 adjusted EPS 71c/$509M vs. est. 84c/$511.66M; sees FY18 adjusted EPS $3.70-$4.20 vs. est. $3.95; sees FY18 sales growth 6%-8% vs. est. $2.16B
·      SpartanNash (SPTN) Q4 adjusted EPS 41c/$1.92B vs. est. 41c/$1.94B; sees FY18 adjusted EPS $2.20-$2.32 vs. est. $2.35; sees FY18 CapEx $60M-$70M
·      Fresh Del Monte (FDP) announces $300M share repurchase program
·      Boston Beer (SAM) Q4 revs $206.3M vs. est. $208.0M; sees FY gross margin +52% to +54%; sees 2018 EPS $6.30-$7.30 vs. est. $7.54
·      Interface (TILE) Q4 adjusted EPS 32c/$266.2M vs. est. 30c/$256.28M; sees 2018 organic revenue growth 3%-5%; expects its strongest operating income growth in Q2 and Q3, with softer growth in Q1 and Q4
·      The American Petroleum Institute (API) showed a fall in U.S. oil inventories by around 900,000 barrels last week
·      Continental Resources (CLR) Q4 EPS 41c/$1.047B vs. est. 32c/$962.52M; Q4 net production totaled 26.4 million Boe, or 286,985 Boe per day, up 18% QoQ; increased production 37%, with oil production up 44%; Q1 production is estimated to be between 285K-290K Boe per day.
·      Energy Transfer Partners (ETP) Q4 Ebitda $1.94B vs. est. $1.76B; 4Q revenue $8.61B vs. est. $8.1B
·      Gulfport Energy (GPOR) Q4 adjusted EPS 45c/$338.7M vs. est. 39c/$339.27M; estimates total capital expenditures will be in the range of $770M-$835M, which will be funded within cash flow at current strip pricing; forecasts its 2018 average daily net production will be in the range of 1,250 MMcfe to 1,300 MMcfe per day, an increase of 15% to 19% over its 2017 average daily net production of 1,089.2 MMcfe per day
·      Matador (MTDR) Q4 adjusted EPS 25c vs. est. 23c; average daily oil production increased 5% sequentially from approximately 23,500 barrels per day in Q3 to approximately 24,700 barrels per day in Q4. Average daily natural gas production increased 3% sequentially from approximately 110.5M cubic feet per day in Q3 to approximately 114.3M cubic feet per day in Q4
·      Parsley Energy (PE) Q4 adjusted EPS 30c/$311.49M vs. est. 17c/$298.38M; reports Q4 Net production averaged 80.3 MBoe per day; Proved reserves of 416 MMBoe as of December 31, 2017 represent an 87% increase versus proved reserves as of December 31, 2016
·      SandRidge Energy (SD) Q4 adjusted EPS 34c vs. est. 26c; proved reserves at 2017-year end of 178 MMBoe, with 17% increase in proved oil reserves over year-end 2016; reports 2018 production of 14.9 MMBoe at high end of guidance for 2017
·      Repsol SA (REP) said it has reached an agreement to sell its 20% stake in Gas Natural SDG SA (GAS.MC) to CVC Capital Partners for EUR3.82 billion euros ($4.7 billion), or EUR19 a share.
·      TechnipFMC (FTI) Q4 adjusted EPS 20c/$3.68B vs. est. 43c/$3.84B; 4Q backlog $12.98 billion
·      Whiting Petroleum (WLL) Q4 EPS loss (17c) vs. est. loss (33c); sees FY capital expenditure $750.0M; sees FY production 46.5 to 47.2 MMBoe; 4Q production 128.05 mboe/d
·      WPX Energy (WPX) Q4 adjusted EPS loss (2c) vs. est. loss (7c); Delaware production averaged 58.7 Mboe/d in Q4, up 41% vs. the sequential quarter and 134% higher than the same period in 2016. Williston Basin production averaged 38.7 Mboe/d in Q4, up 8% vs. the sequential quarter
·      Athene Holding (ATH) Q4 operating EPS $1.69 vs. est. $1.29; generated deposits of $3.5B
·      CoStar Group (CSGP) Q4 adjusted EPS $1.25/$254M vs. est. $1.24/$252.75M; sees Q1 adjusted EPS $1.32-$1.40 on revs $269M-$272M vs. est. $1.66/$263.79M; sees FY18 revenue $1.17B-$1.19B vs. consensus $1.11B
·      Life Storage (LSI) Q4 adjusted FFO $1.34/$133.1M vs. est. $1.31/$132.9M; increased same store revenue by 1.3% and same store net operating income by 0.4% as compared to the fourth quarter of 2016
·      Diebold Nixdorf (DBD) announced that Gerrard Schmid will join the company as its president and CEO, effective immediately. He also will join the Diebold Nixdorf Board of Directors
·      ProAssurance (PRA) Q4 net premiums earned $183.0M and Q4 net premiums written $167.4M; Q4 EPS 55c vs. est. 62c
·      Globus Medical (GMED) Q4 EPS 38c/$176.0M vs. est. 35c/$166.5M; reaffirmed forecast
·      GW Pharmaceuticals (GWPH) said GWP42006 didn’t meet the primary endpoint of a Phase 2a proof of concept study for adult patients with focal seizures; remains committed to continued development of GWP42006 for autism spectrum disorders
·      PRA Health (PRAH) Q4 EPS $1.04/$655.9M vs. est. $1.03/$543.54M
·      Quidel (QDEL) Q4 EPS 56c/$114.9M vs. est. 53c/$114.7M; 4Q gross margin +51%
·      Ultragenyx (RARE) files automatic mixed securities shelf
Industrials & Materials
·      Avis Budget (CAR) Q4 adjusted EPS 45c/$2.02B vs. est. 22c/$2.0B;
·      Aerojet Rocketdyne (AJRD) Q4 adjusted EPS 16c/$528.2M vs. est. 27c/$544.4M
·      Kaiser Aluminum (KALU) Q4 EPS $1.22/$353M vs. est. $1.23/$348.8M; sees mid-single-digit growth in shipments and value-added revenue for the full year 2018; sees 2018 adjusted EBITDA margin in the mid-20 percent range
·      Trinity Industries (TRN) Q4 adjusted EPS 43c/$906.4M vs. est. 42c/$1.03B; sees FY18 adjusted EPS $1.15-$1.35 vs. est. $1.34; now anticipates 2018 railcar deliveries of 20,500, compared to deliveries of 18,395 railcars in 2017
·      Stericycle (SRCL) Q4 EPS $1.00/$887.8M vs. est. $1.14/$883.28M
Technology, Media & Telecom
·      Pandora (P) Q4 adjusted EPS loss (13c)/$395.3M vs. est. loss (7c)/$376.43M; said total listener hours were 5.03B for Q4, compared to 5.38B for the same period of the prior year; active listeners were 74.7M for Q4
·      Roku (ROKU) shares fell -20%; Q4 EPS 6c/$188.3M vs. est. $182.5M; sees 1Q revenue $120M-$130M vs. est. $132M; 4Q average rev. per user $13.78; sees year total net revs $660M-$690M vs. est. $661.6M; sees year net income loss $40M-$55M
·      Applied Optoelectronics (AAOI) shares fell -11%; Q4 EPS 89c/$79.9M vs. est. 83c/$85.52M; sees Q1 EPS 28c-34c on revs $67M-$71M, well below the consensus 74c/$87.21M
·      Synopsys (SNPS) shares rose 5%; Q1 EPS $1.10/$769.4M vs. est. $1.00/$751.19M; sees Q2 adjusted EPS $1.06 – $1.10 on revs $765M-$790M vs. est. 84c/$715.23M; sees FY18 adjusted EPS $3.67-$3.74 on revs $2.92B-$2.95B vs. est. $3.50/$2.9B
·      Convergys (CVG) Q4 adjusted EPS 47c/$689Mvs. est. 45c/$695.73M; sees FY18 adjusted EPS decrease of up to 10% and sees FY18 constant currency revenue decrease of up to 7%
·      Cotiviti Holdings (COTV) Q4 adjusted EPS 47c/$176.7M vs. est. 43c/$179.1M; Q4 non-GAAP adjusted EBITDA of $77.6M; Sees FY revenue $740M-$775M vs. est. $761.5M
·      Five9 (FIVN) Q4 EPS 7c/$55.4M vs. est. 4c/$52.3M; sees Q1 EPS 2c-4c on revs $54.5M-$55.5M vs. est. 1c/$54.9M; sees FY18 EPS 20c-25c on revs $231M-$234M vs. est. 13c/$231.4M
·      Mellanox (MLNX) announced that Jacob Shulman has accepted an executive position at a pre-IPO company and will step down as Chief Financial Officer of Mellanox on May 4, 2018; sees Q1 revenue $240M-$250M vs. est. $227M and Q1 Non-GAAP gross margins of 68.5% to 69.5%.
·      Mindbody (MB) Q4 EPS 3c/$49.7M vs. est. 1c/$48.96M
· (STMP) Q4 EPS $4.68/$132.5M vs. est. $2.72/$120.26M; Q4 adjusted EBITDA was $64.1M, up 15% compared to $55.9M; Sees FY adjusted EPS $8.80-$9.80 on revs $530M-$560M vs. est. $8.21/$531M
·      Tyler Technologies (TYL) Q4 adjusted EPS $1.07/$218.1M vs. est. $1.04/$220.6M; sees FY18 EPS $4.73-$4.83 on revs $913M-$929M vs. est. $4.40/$933.6M
·      Sinclair (SBGI) is planning to sell New York’s WPIX and Chicago’s WGN TV stations to help secure FCC approval for its $3.9B takeover of Tribune Media (TRCO) but will still operate the properties, Bloomberg reports


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.

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