Morning Preview: April 23, 2019

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Early Look

Tuesday, April 23, 2019

Futures

Up/Down

%

Last

DJ Industrials

-19.00

0.07%

26,494

S&P 500

-2.50

0.09%

2,909

Nasdaq

-6.50

0.08%

7,728

 

 

Stock futures in the U.S. are lower ahead of the earnings barrage the next three days, in a week that nearly 1/3 of the S&P and Dow Industrial Average names are expected to report earnings for the quarter. U.S. stocks eked out a gain in light post-holiday volume yesterday in what was a quiet day as seven of the eleven main S&P 500 sectors ended lower, led by declines in REITs and Materials while Energy names outperformed as WTI crude topped 6-month highs. In Asian markets, The Nikkei Index gained 41 points to settle at 22,259, the Shanghai Index dipped -16 points back under 3,200 and the Hang Seng Index was little changed at 29,963. In Europe, the German DAX is down roughly 20 points at 12,200, while the FTSE 100 is up around 20 points at 7,480. The dollar is steady along with gold prices and Treasury yields as attention solely focused on earnings (see below for reporting names).

Market Closing Prices Yesterday

·     The S&P 500 Index gained 2.94 points, or 0.10%, to 2,907.97

·     The Dow Jones Industrial Average fell -48.49 points, or 0.18%, to 26,511.05

·     The Nasdaq Composite gained 17.20 points, or 0.22%, to 8,015.27

·     The Russell 2000 Index declined -5.70 points, or 0.36% to 1,560.04

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      FHFA House Price Index MoM for Feb…est. 0.5%

·     10:00 AM EST    Richmond Fed Index for April…est. 10

·     10:00 AM EST    New Home Sales MoM for March…est. 650K

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: ATI, CNC, DGX, FITB, FNB, HAS, HOG, PG, LMT, MTG, NTRS, NUE, PG, PHM, PII, SHW, SNV, STT, TRU, TWTR, UTX, VZ, WAT

·     Earnings After the Close: AMTD, CP, CSGP, EBAY, EW, HXL, IRBT, KALU, MANH, NAVI, SNAP, SYK, TER, TSS, TXN, VMI, WRB

 

 

Macro

Up/Down

Last

WTI Crude

0.42

65.97

Brent

0.29

74.33

Gold

-1.75

1,273.20

EUR/USD

-0.0006

1.1251

JPY/USD

-0.07

111.87

10-Year Note

+0.001

2.581%

 

 

Sector News Breakdown

Consumer

·     Guess (GES) to reduce future quarterly cash dividends to 11.25c from 22.50c to redeploy capital and buy back shares; said intends to initiate an accelerated share repurchase program of $150M or more and up to $50M of open-market and/or privately negotiated share repurchases; reaffirms 1Q outlook; to offer $250M in convertible senior notes

·     Whirlpool (WHR) Q1 adjusted EPS $3.11/$4.8B vs. est. $2.87/$4.85B; backs FY19 adjusted EPS view $14.00-$15.00 vs. est. $14.56; backs FY19 free cash flow view approximately $800M-$900M; reaffirms its full-year guidance to generate cash provided by operating activities of approximately $1.4B-$1.5B

·     Hasbro (HAS) Q1 EPS 21c/$732.5M vs. est. loss (10c)/$665.3M; 1Q Franchise Brands rev. +9%, 1Q Partner Brands rev. -14%, 1Q Hasbro Gaming rev. +2%, and 1Q Emerging Brands rev. +22%

·     PulteGroup (PHM) Q1 EPS 59c/$1.997B vs. est. 47c/$1.93B; ended the Q1 with a backlog of 10,550 homes valued at $4.6B (prior year Q1 totaled 11,245 homes valued at $5.0B) and the average sales price in backlog was $438,000 (vs. 441K last year)

·     Polaris Industries (PII) Q1 adjusted EPS $1.08/$1.5B vs. est. 91c/$1.5B; raises FY19 EPS view to $6.05-$6.30 from $6.00-$6.25 (est. $6.07) as guidance includes the absorption of $80M-$90M of additional tariff costs anticipated in 2019 over 2018

·     Hormel (HRL) downgraded to Sell at Goldman Sachs and upgraded Sanderson Farm (SAFM) to neutral

·     Tesla (TSLA) investor day focused on self-driving vehicle technology which included a robo-taxi service with no humans at the wheel in 2020, a self-made computer chip and the probable need to raise money

·     Apparel stocks tumbled yesterday with more than 6% declines for shares of ASNA, TLRD, EXPR, URBN; DDS fell about 10% on a Wedbush downgrade; department stores fell (JWN, KSS, M)

 

Energy

·     Northern Oil and Gas (NOG) to buy the Williston Basin properties of VEN Bakken, a unit of Flywheel Bakken for $165 million in cash, a $130 million 6% three-year senior unsecured note due 2022 and about 5.6 million shares of its common stock

·     SRC Energy (SRCI) reported preliminary D&C Capital Expenditures for Q1 of $110M; Prelim 1Q realized crude price/barrel $48.33; Prelim 1Q realized natural gas price per thousand cubic feet $2.52; boosts year Average Daily Production Outlook to 63-66 Mboe/D, from prior 59-62 Mboe/D

·     PG&E Corp. (PCG) settled a dispute with an activist investor by restructuring its board to include another director with utility experience, and adding a safety specialist to advise its chief executive

·     Helix Energy (HLX) Q1 adjusted EPS 1c/$166.8M vs. est. 0c/$159.58M; reports Q1 adjusted EBITDA $30.2M vs. $27.6M last year

·     Range Resources (RRC) Q1 non-GAAP EPS 36c/$748M vs. est. 22c/$710.09M; sees Q2 production 2,270 to 2,280 Mmcfe per day; sees FY19 production 2,325 to 2,345 Mmcfe per day and sees FY19 natural Gas NYMEX minus 15c-20c

 

Financials

·     Zions (ZION) Q1 EPS $1.04 vs. est. $1.05; 1Q net interest margin 3.68%, 1Q non-interest income $120 million; sees loan balances, net interest income modestly increasing in next 12 months; sees quarterly loan loss provisions to be modest in next 12 months

·     Fifth Third (FITB) Q1 adjusted EPS 63c/$2.19B vs. est. 58c/$1.74B; Q1 net interest income $1.08B vs. $996M last year and Q1 net interest margin 3.28% vs 3.18% last year

·     Franklin Resources Inc. (BEN) plans to cut as much as 5 percent of its workforce to help save at least $75 million as the fund manager faces continued outflows – Bloomberg

·     Synovus (SNV) Q1 adjusted EPS 98c/$476.5M vs. est. 89c/$463.93M; Q1 net interest margin was 3.78%, down 14 basis points from the previous quarter

·     American Campus (ACC) Q1 FFO 69c/$242.1M vs. est. 65c/$229M; sees FY modified FFO per share $2.35-$2.45 vs. est. $2.41

·     EastGroup Properties (EGP) Q1 FFO $1.20/$78.80M vs. est. $1.18/$78.71M; Q1 same property net operating income for the annual same property pool up 3.7% on a straight-line basis and 4.5% on a cash basis compared to Q1 of FY18; raises FY19 FFO view to $4.84-$4.94 (est. $4.85)

·     Equity LifeStyle (ELS) Q1 FFO $1.13 vs. est. $1.11; sees FY normalized FFO per share $4.10-$4.20 vs. est. $4.17; sees 2Q normalized FFO per share 89c-95c vs. est. 96c

·     NBT Bancorp (NBTB) Q1 EPS 66c vs. est. 63c; 1Q non-interest income $33.8 million

·     Realty Income (O) raises FY19 AFFO view to $3.28-$3.33 from $3.25-$3.31 (est. $3.27) as raised AFFO view after GBP429M Sale-Leaseback transaction

 

Healthcare

·     Centene (CNC) Q1 EPS $1.39/$18.44B vs. est. $1.34/$17.47B; raises FY19 adj. EPS view to $4.24-$4.44 from $4.11-$4.31 (est. $4.24) and raises FY19 revenue view to $72.8B-$73.6B from $70.3B-$71.1B (est. $70.86B)

·     Gritstone Oncology (GRTS) files to sell 6.5M shares of common stock

·     HealthStream (HSTM) Q1 EPS 18c/$65.2M vs. est. 7c/$61.2M; backs FY19 revenue view $251M-$258M vs. est. $255.84M

 

Industrials & Materials

·     Celanese (CE) mixed results as Q1 EPS $2.62/$1.69B vs. est. $2.40/$1.76B; sees FY EPS about $10.50 vs. est. $10.34

·     Graphic Packaging (GPK) Q1 EPS 21c/$1.51B vs. est. 18c/$1.54B; 1Q adjusted Ebitda $259.7M

 

Technology, Media & Telecom

·     Cadence Design (CDNS) Q1 adjusted EPS 54c/$576.7M vs. est. 49c/$569.24M; raises FY19 EPS to $2.04-$2.12 from $1.97-$2.07 (est. $2.03) and raises 2019 revenue view to $2.31B-$2.34B from $2.27B-$2.31B (est. $2.29B); sees FY19 operating margin of about 31%

·     Nvidia Corp. (NVDA) said Monday that Tesla Inc. (TSLA) was wrong in describing its self-driving computer as more powerful than Nvidia’s, which Tesla used until it began developing its own chip

·     Rambus (RMBS) Q1 adjusted EPS loss (8c)/$48.4M vs. est. 23c/$98.83M

·     Liberty Global (LBTYA) announced a multi-year deal with Amazon (AMZN) to make content available to 4 million Virgin Media TV customers in the UK

·     Hemisphere Media Group’s (HMTV) Cinelatino Spanish-language movie channel will be carried on DISH Network (DISH) under a multi-year carriage renewal agreement

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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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