Morning Preview: April 30, 2019

Auto PostDaily Market Report

Early Look

Tuesday, April 30, 2019

Futures

Up/Down

%

Last

DJ Industrials

13.00

0.05%

26,561

S&P 500

0.50

0.01%

2,943

Nasdaq

-7.00

0.09%

7,806

 

 

U.S. futures are again little changed after modest gains on Monday, as the tech heavy Nasdaq is indicated lower as Alphabet (GOOGL) reported weaker than expected quarterly revenues on slowing overall ad growth (shares down over 7%) while Samsung posted slower growth as well, while markets await results from tech giant Apple (AAPL) after the close. A very busy morning of earnings includes results from LLY, MRK in the healthcare space along with several industrial earnings (GE, ETN, IR). The quiet start to trading this week in global equity markets comes ahead of a two-day meeting of the policy-setting Federal Open Market Committee tomorrow where no rate changes are expected. China manufacturing data showed continued expansion, but growth slowed from the prior month. In trade, a fresh round of U.S.-China trade talks is set to kick off in China as Treasury Secretary Steven Mnuchin, said Monday that negotiators should know this week or next whether a final trade deal will be made — or not. In Asian markets, The Nikkei Index remained closed for Japan’s national holiday, the Shanghai Index rose 15 points to 3,078 and the Hang Seng Index slipped -193 points to 29,699. In Europe, the German DAX is down about -10 points to 12,3220, while the FTSE 100 is down a few points to 7,425.

Market Closing Prices Yesterday

·     The S&P 500 Index gained 3.15 points, or 0.11%, to 2,943.03

·     The Dow Jones Industrial Average rose 11.06 points, or 0.04%, to 26,554.39

·     The Nasdaq Composite climbed 15.46 points, or 0.19%, to 8,161.85

·     The Russell 2000 Index advanced 6.54 points, or 0.41% to 1,598.36

 

Events Calendar for Today

·     7:45 AM EST      ICSC Weekly Retail Sales

·     8:30 AM EST      Employment Cost Index for Q1…est. 0.7%

·     8:55 AM EST      Johnson/Redbook Weekly Sales

·     9:00 AM EST      S&P CaseShiller 20-city Index for February

·     9:45 AM EST      Chicago PMI for April…est. 58.5

·     10:00 AM EST    Pending Home Sales MoM for March…est. (-4.0%)

·     10:00 AM EST    Consumer Confidence for April…est. 126.8

·     4:30 PM EST       API Weekly Inventory Data

 

Earnings Calendar:

·     Earnings Before the Open: AMAL, AMS AG, AOS, APRN, ARCC, ARNC, BHGE, BP, CDK, CHTR, CMI, COP, CRI, CRTO, CVLT, EADSY, EAT, ETN, FDC, FIS, FLWS, GDI, GE, GLW, GM, GWR, HCA, HUBB, HUN, INCY, IPGP, IR, KKR, LDOS, LL, LLY, LOGI, MA, MCD, MGP, MRK, NLSN, NYCB, OSK, PCAR, PFE, PSX, R, SABR, SAN SC, SHOP, SPG, STX, THRM, TTS, WDR, WH, WRK, ZBRA

·     Earnings After the Close: AAPL, ACGL, ACHC, AKAM, AMD, AMGN, BFAM, BLKB, BXP, CAMP, CB, CBL, CENX, CHRW, CMP, CXO, CYH, DVN, EQR, FEYE, FISV, FLEX, FOE, FTR, GNW, GRPN, GTY, IPHI, JKHY, LSCC, MC, MDLZ, MXIM, NBR, NUS, PAYC, QTS, SSNC, TEX, TWLO, UNM, VRSK, VRTX, ZEN

 

Macro

Up/Down

Last

WTI Crude

0.68

64.18

Brent

0.73

72.77

Gold

5.15

1,285.00

EUR/USD

0.0024

1.121

JPY/USD

-0.33

111.32

10-Year Note

+0.00

2.529%

 

 

World News

·     Deputy Attorney General Rod Rosenstein submitted his resignation letter to President Trump (effective May 11th) on Monday, ending two years period in which, he tried to steady the Justice Department and its relationship with the White House.

·     The official China Purchasing Managers’ Index (PMI) for manufacturing unexpectedly fell to 50.1 in April from March’s reading of 50.5, which was the first expansion in four months

·     President Donald Trump has sued Deutsche Bank and Capital One in a bid to stop them from handing over financial records in response to congressional subpoenas issued by Democrats

·     EuroZone area economy strengthened more than expected in the first quarter, buoyed by France and Spain; GDP rose 0.4%, the fastest pace in three quarters

 

Sector News Breakdown

Consumer

·     MGM Resorts (MGM) Q1 EPS 5c/$3.18B vs. est. 21c/$3.13B; MGM Grand Las Vegas 1Q revs fell to $284.7M from $293.8M YoY; Mandalay Bay 1Q revs dipped to $225.6M from $244.6M YoY; Q1 RevPAR increased 3.7% y/y at MGM’s Las Vegas Strip resorts

·     Yum China (YUMC) Q1 adjusted EPS 59c/$2.3B vs. est. 54c/$2.26B; Q1 same-store sales grew 4% year over year (vs. est. 2%), with growth of 5% at KFC and 1% at Pizza Hut, excluding F/X; Q1 restaurant margin was 18.5% vs. 17.9% a year ago

·     Chegg (CHGG) Q1 EPS loss (4c)/$97.4M vs. est. 12c/$94.69M; sees Q2 revenue $91M-$93M vs. est. $92.13M and sees Q2 Services Revenues $79M-$80M; and adjusted EBITDA in the range of $27M-$28M

·     Heidrick & Struggles (HSII) Q1 EPS 62c/$171.6M vs. est. 52c/$170.7M; sees Q2 revenue $172M-$182M vs. est. $186.12M

·     Leggett & Platt (LEG) Q1 adjusted EPS 49c/$1.16B vs. est. 52c/$1.18B; backs FY19 adjusted EPS view $2.45-$2.65 on revs $4.95B-$5.1B vs. est. $2.53/$5B

·     Texas Roadhouse (TXRH) Q1 EPS 70c/$690.61M vs. est. 82c/$693.69M; sees positive comparable restaurant sales growth in FY19, including a menu price increase of approximately 1.5% implemented at the beginning of Q2

·     Trex Company (TREX) Q1 EPS 54c/$179.6M vs. est. 59c/$176.76M; sees Q2 $195M-$205M below consensus $230.78M

 

Energy

·     Continental Resources (CLR) Q1 EPS 58c vs. est. 48c; sees FY Production Expense per BOE $3.75 to $4.25; 1Q avg production 332,236 boe/d; 1Q cash from operating activities $721.5M

·     Murphy USA (MUSA) Q1 EPS 16c/$3.12B vs. est. 27c/$3.13B

·     Transocean (RIG) Q1 EPS loss (28c)/$754M vs. est. loss (32c)/$742.9M; Q1 adjusted EBITDA was $254 million, compared with adjusted EBITDA of $260M QoQ

 

Financials

·     CNO Financial (CNO) Q1 operating EPS 41c/$1.02B vs. est. 45c/$951.93M

·     Credit Acceptance (CACC) Q1 adjusted EPS $8.08/$353.8M vs. est. $7.76/$350.57M

·     CURO Group (CURO) Q1 adjusted EPS 80c/$277.94M vs. est. 70c/$278.83M; announces $50M share buyback program; cuts FY19 adj. EPS view to $2.35-$2.65 from $2.50-$2.80 (est. $2.49); cuts FY19 revenue view to $1.154B-$1.173B from $1.215B-$1.24B

·     Reinsurance Group (RGA) Q1 adjusted EPS $2.61/$3.42B vs. est. $2.64/$3.34B; reports book value per share outstanding, before impact of AOCI, $126.38 vs. $117.49 last year

·     Santander Consumer (SC) Q1 EPS 70c vs. est. 69c; reports Q1 CET1 capital ratio 15.8% and reports Q1 net charge-off ratio 8.6%

 

Healthcare

·     HealthEquity Inc. (HQY) has approached employee benefits administrator WageWorks Inc. (WAGE) with an offer to buy it, Reuters reports https://reut.rs/2DEZVg1

·     Eli Lilly (LLY) Q1 EPS $1.33/$5.09B vs. est. $1.30/$5.13B; sees year EPS $5.60-$5.70 vs. est. $5.63 and sees year revs $22B-$22.5B vs. est. $22.23B

·     Crispr Therapeutics (CRSP) Q1 EPS loss (93c), consensus (88c); Q1 collaboration revenues $300K versus $1.4M in 1Q18; cash as of March 31, was $437.5M

·     G1 Therapeutics Inc. (GTHX) shares rose 20%; said it expects to file a new-drug application for its trilaciclib, a drug designed to protect bone marrow from the effects of chemotherapy

·     Molina Healthcare (MOH) Q1 EPS $3.04/$4.12B vs. est. $2.44; EPS included a net benefit of 38c per diluted share for non-run-rate items; after-tax margin improved to 4.8% in Q1 compared with 2.3% in Q1 of 2018; raises 2019 EPS outlook to $10.50-$11.00 from $9.25-$9.75

·     Tenet Healthcare (THC) Q1 adjusted EPS 54c/$4.545B vs. est. 29c/$4.51B; hospital segment same-hospital net patient service revenues grew 1.9% in the first quarter of 2019: net revenue per adjusted admission increased 1.3%; sees Q2 adjusted EPS 29c-63c on revs $4.4B-$4.7B vs. est. 52c/$4.49B

 

Industrials & Materials

·     Ingersoll-Rand Plc (IR) said it would spin off its industrial business and merge it with industrial pumps and compressors producer Gardner Denver Holdings Inc. (GDI). The combined company would have a 2019 pro forma revenue of about $6.6B, Ingersoll said. https://reut.rs/2WgPaaP

·     General Electric (GE) shares rise over 7% topping $10 per share after Q1 EPS 14c/$27.3B vs. est. 9c/$27.11B; reaffirms year forecast; sees FY19 adjusted EPS 50c-60c vs. est. 57c and GE Industrial segment organic revenues will grow in the low- to mid-single-digit range in FY19

·     Eaton (ETN) Q1 adjusted EPS $1.26/$5.3B vs. est. $1.24/$5.37B; raises FY19 adjusted EPS view to $5.72-$6.02 from $5.70-$6.00

·     Ingersoll-Rand (IR) Q1 EPS 89c/$3.58B vs. est. 80c/$3.5B; raises FY19 adjusted EPS view to $6.35 from $6.15-$6.35 (est. $6.31)

·     Tianqi Lithium, China’s biggest producer of lithium, said its net profit fell by 83% in the first quarter because of weak lithium prices and high interest payments on a loan taken out – Financial Times (watch shares of ALB, SQM in the lithium space)

·     Honeywell (HON) announces $10B share repurchase program

·     AK Steel (AKS) Q1 EPS 23c/$1.7B vs. est. 13c/$1.74B; sees FY19 EPS 48c-54c vs. est. 47c based on the change in hot-rolled carbon spot market pricing from approximately $720 per ton in January to about $690 per ton currently

·     Canadian National (CNI) Q1 EPS C$1.17/C$3.54B vs. est. C$1.19/C$3.49

·     Kansas City Southern (KSU) says Mexico’s Tax Administration Service eliminated a tax credit for locomotives, effective April 30; change indicates service’s intention that the credit won’t be available for the rest of the year, though Mexico’s tax law on eligibility for the credit in 2019 is unchanged from prior year

·     Woodward (WWD) Q2 adjusted EPS $1.40/$758.84M vs. est. $1.05/$660.23M; raises FY19 EPS view to $4.60-$4.80 from $4.40-$4.70 (est.$4.63) and raises FY19 revenue view $2.8B-$2.9B from $2.65B-$2.8B (est. $2.74B)

 

Technology, Media & Telecom

·     Alphabet (GOOGL) shares fell -6%; Q1 EPS $11.90/$36.34B vs. est. $10.56/$37.34B; 1Q paid clicks on Google properties +39% vs. +66% q/q; 1Q cost-per-click on Google properties -19% vs. -29.0% q/q; 1Q operating income $6.61B vs. $8.20B q/q; 1Q Google advertising revenue $30.72B vs. $32.64B; 1Q Google properties revenues $25.68B vs. $27.02B

·     Western Digital (WDC) shares fell -6%; Q3 EPS 17c/$3.67B vs. est. 46c/$3.68B; said market conditions have generally been consistent with our expectations, and while the business environment remains soft, there are initial indications of improving trends; sees Q4 EPS 10c-30c on revs $3.6B-$3.8B vs. est. 49c/$3.7B; sees Q4 gross margin 24%-25%; says on track for 10%-15% flash memory bit output cut in FY19

·     Samsung Electronics Co. reported a 57% decline in Q1 net profit, as it deals with a postponed rollout of its foldable-screen phone and decreased demand for its memory chips. Meanwhile, a pullback in global spending has sapped demand for its memory chips from its data-server and smartphone clients.

·     Cognex (CGNX) shares fell -14%; Q1 EPS 17c/$173.5M vs. est. 17c/$172.17M; Q1 gross margin 73% vs. 76% last year; sees Q2 revenue $190M-$200M below consensus $223.04M and says Q2 gross margin is expected to be in the mid-70% range

·     Impinj (PI) shares rose 14%; Q1 EPS loss (11c)/$33.1M vs. est. loss (26c)/$31.08M; sees Q2 EPS loss (11c) to (4c) on revs $34.0M-$36.0M vs. est. loss (19c)/$33.01M

·     MKS Instruments (MKSI) Q1 EPS $1.12/$463.6M vs. est. $1.07/$460.65M; sees Q2 EPS 89c-$1.26 on revs $460M-$510M vs. est. $1.37/$507.97M

·     Sanmina (SANM) shares rose 10%; Q2 adjusted EPS 91c/$2.13B vs. est. 74c/$1.95B; sees Q3 adjusted EPS 72c-82c on revs $1.925B-$2.025B vs. est. 74c/$1.91B

·     SBA Communications (SBAC) Q1 AFFO $2.07/$493.3M vs. est. $1.99/$481.89M; sees FY19 AFFO $8.02-$8.47 on revs $1.943B-$1.983B vs. est. $8.24/$1.95B

_________________________________________________________________

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