Morning Preview: February 26, 2019

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Early Look

Tuesday, February 26, 2019





DJ Industrials




S&P 500










Stock futures are lower as optimism over the U.S./China trade talks from earlier in the week started fading late yesterday as major averages finished well off their best levels. Market attention for the moment turns to Fed Chairman Jerome Powell’s two-day testimony before Congress starting today as markets look for hints about interest rates. (prepared remarks are due at 9:45 AM EST before starting at 10:00 AM EST). Dow component Home Depot (HD) reported a top and bottom line miss this morning, with weaker comp sales and a lower outlook sending shares down. The pound strengthened after U.K. Prime Minister Theresa May was said to be considering a plan to delay Brexit. In other stocks news, shares of TSLA slipped after regulators asked a judge to hold Elon Musk in contempt for violating last year’s SEC settlement. In Asian markets, The Nikkei Index fell -78 points to 21,449, the Shanghai Index slumped -19 points to settle at 2,941 and the Hang Seng Index dropped -187 points to settle at 28,772. In Europe, the German DAX is down a few points at 11,500, while the FTSE 100 is down around -75 points just above the 7,100 level.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 3.44 points, or 0.12%, to 2,796.11

·     The Dow Jones Industrial Average rose 60.14 points, or 0.23%, to 26,091.95

·     The Nasdaq Composite climbed 26.92 points, or 0.36%, to 7,554.46

·     The Russell 2000 Index slipped -1.26 points, or 0.08% to 1,588.81


Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Housing Starts MoM for December…est. -0.2% to 1.25M

·     8:30 AM EST      Building Permits MoM for December…est. -2.4% to 1.29M

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      FHFA Housing Price Index MoM for December…est. 0.4%

·     9:00 AM EST      S&P CoreLogic’s CS 20-city index for December…est. 0.3%

·     10:00 AM EST    Fed Chairman Powell testifies before Senate Banking panel

·     10:00 AM EST    Richmond Fed Activity for February…est. 4

·     10:00 AM EST    Consumer Confidence for February…est. 124.7

·     4:30 PM EST       API Weekly Inventory Data


Earnings Calendar:

·     Earnings Before the Open: AZO, CLVS, DISCA, HD, LNG, M, MNK, NXST, SRE, WP

·     Earnings After the Close: CPE, EOG, EVH, FTR, INGN, MGNX, MYL, NBR, PANW, PLNT, PZZA, TNDM, TOL, VEEV, WLL, WTW


Other Key Events:

·     BMO Capital 28th annual Global Metals and Mining Conference, 2/24-2/27, in Florida

·     JMP Securities Technology Conference, 2/25-2/26, in San Francisco

·     JPMorgan Global High Yield & Leveraged Finance Conference, 2/25-2/27, in Florida

·     KeyBanc 14th Annual Emerging Technology Summit, 2/26-2/27, in San Francisco

·     Mobile World Congress 2019, 2/25-2/29, in Barcelona Spain

·     Morgan Stanley Technology, Media, Telecom Conference, 2/25-2/28, in San Francisco

·     Piper 19th Annual Energy Conference, 2/26-2/28, in Las Vegas






WTI Crude















10-Year Note





World News

·     The House will vote today on whether to block Trump’s emergency declaration regarding taxpayer money for a border wall.

·     The Bank of England will offer Indexed Long-Term Repo (ILTR) operations on a weekly basis instead of monthly to provide additional flexibility during the Brexit process. Mark Carney said the BOE will act if needed to hit inflation targets while saying gradual rate hikes are needed if the economy performs as expected.

·     German consumer sentiment is set to remain stable in March against a backdrop of consumers’ worsening economic expectations but still stable income outlook, market-research group GfK said. GfK’s forward-looking confidence index is expected to come in at 10.8 points in March, unchanged from February, in-line with economists’ forecast


Sector News Breakdown


·     Home Depot (HD) Q4 EPS $2.09/$26.5B vs. est. $2.16/$26.57B; said Q4 was negatively impacted by a nonrecurring, pre-tax charge of approximately $247M, or $184M after tax equaling 16c per diluted share, due to an impairment loss; announces $15B share repurchase program, raises dividend 32%; Q4 comp sales rose 3.2% vs. est. 4.5%; sees FY19 EPS $10.03 vs. est.$10.26 and sees FY19 sales growth of approximately 3.3% and comp sales up about 5%

·     Dillard’s (DDS) Q4 EPS $3.22/$2.01B vs. est. $2.76/$2.08B; total merchandise sales were $1.959 B for the 13-week period ended February 2, 2019 and $2.024B for the 14-week period ended February 3, 2018

·     Floor & Decor (FND) files to sell 10M shares of common stock for holders

·     The U.S. SEC asked a judge to hold Tesla (TSLA) CEO Elon Musk in contempt for violating last year’s settlement with the agency requiring him to seek pre-approval from Tesla Inc. for social media posts and other written communication that would be material

·     Etsy (ETSY) Q4 EPS 32c/$200M vs. est. 21c/$194.89M; reports GMS $1.25B vs. $1.02B last year; on a currency-neutral basis, 2018 gross merchandise sales grew 20.4% to $3.9 billion for the year, revenue was up 36.8% to $603.7 million for the year, and we improved our margins; sees 2019 adjusted Ebitda margin +23% to +25% and sees 2019 revenue +29% to +32%

·     Fiesta Restaurant (FRGI) Q4 EPS 8/$167.6M vs. est. 6c/$168.3M; 4Q Pollo Tropical comparable sales -1.9%, estimate +0.1% and 4Q Taco Cabana comp. sales +5.1%, estimate +4.5%

·     Hertz (HTZ) Q4 adjusted EPS loss (55c)/$2.3B vs. est. loss (82c)/$2.15B

·     Heidrick & Struggles (HSII) Q4 EPS 58c/$185.3M vs. est. 35c/$176.05M; raises dividend 15% to 15c from 13c per share; sees Q1 revenue $165M-$175M vs. est. $170.61M

·     HNI Corporation (HNI) Q4 adjusted EPS 97c/$598M vs. est. 96c/$604.93M; sees FY19 EPS $2.50-$2.90 vs. est. $3.02; sees FY19 organic sales growth 3%-7%; sees 2019 revenue $783M-$807M, vs. consensus $799.27M

·     Nautilus (NLS) Q4 EPS 5c/$115.4M vs. est. 4c/$114.71M; says sales in Direct segment and mass retail channel will be “challenged” in 1H; until co. completes revamping market plan in Direct, expects recent sales weakness in that segment will continue through most of 1H

·     Potbelly (PBPB) Q4 adjusted EPS 5c/$102.4M vs. est. 2c/$103.5M; 4Q comparable sales -1.7%, vs. estimate -1.9%; sees FY19 comparable store sales up 0.5%-1.5% and sees FY19 adjusted EBITDA $30M-$33M

·     Shake Shack (SHAK) Q4 adjusted EPS 6c/$124.3M vs. est. 3c/$118.82M; Q4 same-shack sales up 2.3% vs. est. (-1.2%); sees 2019 comparable sales 0% to +1%; sees 2019 revenue $570M-$576M vs. est. $575.5M; 4Q restaurant level operating margin 22.5% vs. 25.2% y/y; sees Between 36 and 40 new domestic company-operated Shacks to be opened in fiscal 2019

·     2U (TWOU) Q4 adjusted EPS 23c/$115.1M vs. est. 21c/$114.85M; sees FY19 adjusted EPS (37c)-(33c) on revs $546.6M-$550.8M vs. est. loss (37c)/$547.06M



·     Carrizo Oil & Gas (CRZO) Q4 adjusted EPS 56c/$273.31M vs. est. 56c/$263.32M; sees 1Q avg production 61,100 to 62,100 boe/d, sees 1Q lease operating expense per boe $7.50 to $8.00, sees 2019 avg production 66,800 to 67,800 boe/d and sees 2019 lease operating expense per boe $7.00 to $7.75; 4Q avg production 68,328 boe/d vs. 62,417 y/y

·     Keane Group (FRAC) Q4 EPS 6c/$486.5M vs. est. 1c/$488.29M; Q4 adjusted EBITDA $88.4M vs. $100.9M in Q3; sees 1Q revenue $400M-$420M vs. est. $460.8M; 4Q active fleets 25.0 vs. 27 q/q; 4Q average hydraulic fracturing fleet utilization 88% vs. 100% y/y

·     Oneok (OKE) Q4 EPS 70c vs. est. 73c; sees 6% adjusted EBITDA midpoint increase to $2.6B in FY19; sees FY19 net income $1.14B-$1.4B, a 10% net income increase to $1.27B at the midpoint; sees FY19 adjusted EBITDA of $2.5B-$2.7B, a 6% adjusted EBITDA increase to $2.6B at the midpoint; sees growth capital midpoint of $3.1B; maintenance capital midpoint of $180M

·     Range Resources (RRC) Q4 adjusted EPS 21c/$880.7M vs. est. 14c/$693.3M; sees 2019 production 2,325 to 2,345 mmcfe/d; sees 2019 capital expenditure about $756 million

·     Sempra Energy (SRE) announced that, in support of the company’s North American strategy, it will launch a formal process in March for the previously announced sale of its equity interests in its South American businesses, including its 83.6% stake in Luz del Sur S.A.A. in Peru and 100% stake in Chilquinta Energia S.A. in Chile

·     Venezuela was forced to cut oil output this week as it runs out of space to store sanctioned crude, Bloomberg reported. About 8.36 million barrels are floating off the coast in tankers as few buyers dare to touch the supply.



·     JPMorgan (JPM) hosts its investor day today

·     Athene Holding (ATH) Q4 adjusted EPS $1.23/$1.15B vs. est. $1.20/$1.17B; 4Q book value per share $42.45

·     DiamondRock (DRH) Q4 AFFO 26c/$223.4M vs. est. 25c/$220.56M; Q4 comparable RevPAR: RevPAR was $188.55, a 1.9% increase from the comparable period of 2017

·     Life Storage (LSI) Q4 FFO per share $1.36, vs. est. $1.37; sees 1Q FFO per share as adjusted $1.27 to $1.31 and sees 2019 FFO per share as adjusted $5.53 to $5.63; sees 2019 revs up 1.5% to 2.5%, net operating income up 1% to 2%

·     QTS Realty Trust (QTS) files to sell 6.75M shares of common stock; announced the formation of a joint venture with Alinda Capital Partners. QTS contributed a 118,000 square foot hyperscale data center under development in Manassas, VA to the venture. The facility was contributed at a stabilized value of approximately $240M



·     Aerie Pharmaceuticals (AERI) Q4 EPS loss ($1.14)/$14.5M vs. est. loss (87c)/$12.94M; cash burn for the year ended December 31, 2018 totaled approximately $215.5M, consistent with previous guidance

·     Foundation Building Materials (FBM) Q4 adjusted EPS 16c/$516.2M vs. est. 11c/$510.32M; sees FY19 adj. EPS 70c-90c on revs $2.1B-$2.25B vs. est. 90c/$2.18B

·     Immunomedics (IMMU) said that its CEO and President will step down due to personal reasons; reported cash and cash equivalents of $492.9M; 6 Months Ended Dec. 31, 2018 Loss (84c) per share; finalizing a response strategy to the issues identified in the CRL from the FDA

·     Insulet (PODD) Q4 EPS 16c/$164.9M vs. est. $162.5M; sees 2019 revenue $662M-$687M vs. est. $689.8M; sees 1Q revenue $152M-$156M vs. est. $155.9M

·     Medpace (MEDP) Q4 adjusted EPS 76c/$192.1M vs. est. 67c/$184.96M; backlog as of December 31, 2018 was $1.1B and net new business awards were $231.2M, representing a net book-to-bill ratio of 1.20 times for Q4

·     Ultragenyx (RARE) files to sell $250M in common stock

·     Sage Therapeutics (SAGE) 3.33M share Spot Secondary priced at $150 per share

·     Tenet (THC) Q4 adjusted EPS 51c/$4.62B vs. est. 28c/$4.51B; Q4 same-hospital net patient revenue declined 1.3% and increased 4.6% after adjusting for California Provider Fee revenues in both periods; sees 2019 adjusted EPS $2.08-$2.59 vs. est. $1.94; sees 2019 revenue $18.0B-$18.4B vs. est. $18.07B


Industrials & Materials

·     Allison Transmission (ALSN) Q4 EPS $1.14/$647M vs. est. 98c/$631.84M; Q4 adjusted EBITDA $261M vs. $210M last year and Q4 adjusted Free Cash Flow $184M vs. $115M last year; sees FY19 revenue $2.58B-$2.68B vs. est. $2.71B; sees FY19 adjusted EBITDA $1.00B-$1.06B vs. $1.13B last year

·     BWX Technologies (BWXT) Q4 EPS 74c/$478M vs. est. 59c/$477M; sees 2019 adjusted EPS about $2.50 vs. est. $2.49 and sees 2019 capital expenditure about $225 million; reiterates 3-5 year, low-double-digit non-GAAP EPS CAGR from 2017 results

·     Boeing (BA) is in discussions with possible customers globally, including the Royal Australian Air Force, about ordering the new T-X training jet after it was chosen by the U.S. Air Force for a $9.2B contract – Reuters

·     Douglas Dynamics (BOOM) Q4 adjusted EPS 62c/$151.8M vs. est. 55c/$140.27M; sees FY19 adjusted EPS $1.60-$2.40 on revs $510M-$570M vs. est. $2.06/$524.43M; adjusted EBITDA is predicted to range from $90M-$115M

·     Mosaic (MOS) Q4 adjusted EPS 77c/$2.5B vs. est. 57c/$2.37B; raises annual dividend target to 20c per share; sees FY19 adjusted EPS $2.10-$2.50, vs. consensus $2.43; initiated full year 2019 adjusted EBITDA guidance at $2.2B-$2.4B

·     Rent-A-Center (RCII) Q4 adjusted EPS 35c/$661.8M vs. est. 20c/$656.78M; Q4 SSS up 9.1%; sees FY19 adjusted EPS $1.75-$2.15 on revs $2.585B-$2.63B vs. est. $1.77/$2.62B; sees FY19 consolidated SSS up in the low to mid-single digits


Technology, Media & Telecom

·     AT&T (T) may learn today whether it can finally move forward with its Time Warner acquisition and put behind it a lengthy legal battle with antitrust enforcers over the $85 billion deal.

·     GoDaddy (GDDY) 8.55M share secondary priced at $75.35 per share

·     RealPage (RP) Q4 adjusted EPS 39c/$227M vs. est. 38c/$229.09M; sees Q1 adjusted EPS 39c-41c on revs $232.8M-$234.8M vs. est. 41c/$237.36M


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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