Hammerstone’s Early Look

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Tuesday, February 4, 2020

FuturesUp/Down%Last
DJ Industrials307.001.08%28,668
S&P 50035.501.10%3,281
Nasdaq115.501.27%9,229

 

 

U.S. stock futures are pointing to a much higher open, tracking global stocks higher across the board with Europe and Asia outperforming a day after better manufacturing data in the U.S. and as China added more stimulus to its economy, adding another 500B yuan ($71.2B) of liquidity via reverse repo agreements into the financial system, in addition to the $143B injection seen Monday. Markets are focusing on fundamentals this morning while the coronavirus remains a real concern as the latest update on the coronavirus in mainland China has 20,000 cases now, with 426 people confirmed dead worldwide (mostly in China with 1 death in Hong Kong and one in the Philippines). According to a WHO official as per Reuters, said “so far who has no evidence of mutation of coronavirus, “it is quite a stable virus.” Oil prices are bouncing after both WTI crude and Brent fell into bear market territory yesterday (defined as down 20% from recent peaks – marked the 4th time that has happened since June 2017). In earnings overnight, revenue growth at Google parent Alphabet (GOOGL) slowed more sharply than expected in the final quarter of last year, sending shares lower by over 4%. Note tonight is the State of the Union speech by President Trump, expected to talk about the virus, healthcare costs, China, trade among other topics. In politics, Iowa Democrats said the results of their presidential caucus would be delayed. In Asian markets, The Nikkei Index rose 112 points to 23,084, the Shanghai Index gained 36 points to 2,783 and the Hang Seng Index gained 319 points to 26,675. In Europe, the German DAX is higher by nearly 150 points at 13,190 and while the FTSE 100 is up around 100 points to 7,425.

Events Calendar for Today

  • 7:45 AM EST       ICSC Weekly Retail Sales
  • 8:55 AM EST       Johnson/Redbook Weekly Sales
  • 10:00 AM EST     Factory Orders for December…est. 1.2%
  • 10:00 AM EST     Durable Goods Orders, Dec-F…est. 2.4%
  • 10:00 AM EST     Durable Goods Ex: Transportation, Dec-F…est. (-0.1%)
  • 4:30 PM EST        API Weekly Inventory Data

 

Earnings Calendar:

  • Earnings Before the Open: ARMK, ATI, AXE, BDC, CLX, CMI, CNC, COP, EMR, ENTG, ETN, EXP, GRA, HAE, HP, HUBB, IT, LHX, LII, LITE, MCK, MTG, PBI, RCL, RGS, RL, SIRI, SPG, STX, TDG, VSH, WAT, WDR, ZBH
  • Earnings After the Close: AFL, AINV, ALL, BOOT, CCK, CDK, CERN, CMG, CNXN, DIS, DOX, EGHT, ETH, F, FISV, GILD, GL, GNW, IPHI, JKHY, KLAC, KMT, KN, MANH, MCHP, MDU, MOD, MTCH, NBIX, NEWR, OI, OLN, PAA, PAGP, PCTY, PLT, PRU, SCSC, SNAP, TCS, TENB, UNM, USNA, VIAV, ZAYO

 

Other Key Events:

  • Fashion Footwear Association Conference, 2/3-2/7, in New York
  • Stephens Dallas Banks Field trip, 2/3-2/5, in Dallas

 

Market Closing Prices Yesterday

  • The S&P 500 Index gained 23.40 points, or 0.73%, to 3,248.92
  • The Dow Jones Industrial Average rose 143.78 points, or 0.51%, to 28,399.81
  • The Nasdaq Composite climbed 122.47 points, or 1.34%, to 9,273.40
  • The Russell 2000 Index advanced 18.15 points, or 1.12% to 1,632.21

 

 

MacroUp/DownLast
WTI Crude0.7250.83
Brent0.4054.85
Gold-7.801,574.60
EUR/USD-0.00071.1053
JPY/USD0.35109.04
10-Year Note+0.0421.569%

 

 

Sector News Breakdown

Consumer

  • Tesla (TSLA) is rallying for a sixth day, with shares up another 4% premarket to over $800, following yesterday’s incredible run that saw the stock skyrocket 20%. Overnight, Panasonic said its business turned profitable in Q4 as Tesla’s battery output helped push that division into the black
  • Clorox (CLX) Q2 EPS $1.46/$1.45B vs. est. $1/31/$1.43B; sees FY20 EPS $6.10-$6.25 vs. est. $6.18, backs FY20 revenue guidance of down low single-digit to up 1% and sees flat to 2% organic sales growth in FY20
  • Casino operators with interests in Macau such as Wynn Resorts (WYNN), MGM Intl’ (MGM) fell after officials in Macau said they will ask casinos to close for half a month as part of efforts to contain the coronavirus outbreak. The number of confirmed worldwide cases of the coronavirus has risen above 20,000, including 10 cases in the southern Chinese territory of Macau
  • Beacon Roofing (BECN) Q1 EPS loss (43c) on revs $1.68B vs. est. loss (43c) and $1.71B; 1Q adj. net income $28.3M, vs. est. $34.4M
  • Leggett & Platt (LEG) Q4 adjusted EPS 68c/$1.14B vs. est. 66c/$1.16B; guides 2020 EPS $2.40-2.60, sees 2020 sales $4.7-4.9B vs est. $4.95B

 

Energy, Industrials and Materials

  • BP PLC (BP) raised its dividend despite reporting a 26% drop in fourth-quarter earnings as higher production failed to offset lower oil and gas prices; reports FY19 reported oil and gas production 3.8M bpd, up 2.7% YoY
  • Cabot Corp. (CBT) Q1 adj EPS $0.69 vs. est. $0.73 on net sales $727Mm vs. est. $765.7Mm; guides FY adj EPS $3.60-3.90 vs prior $3.60-4.10
  • Eaton (ETN) Q4 EPS $1.46/$5.2B vs. est. $1.4/$5.34B; expect 2020 adjusted earnings per share to be between $5.60-$5.90 (vs. est. $5.74), flat at the midpoint with 2019, excluding the 2019 vehicle warranty costs
  • Hexcel (HXL) Q4 adjusted EPS 86c on revs $564.3M vs. est. 84c/$590.9M; sees 2020 sales to have flat-to-low-single-digit growth and sees 2020 adj eps to have low-to-mid-single-digit growth; sees selling material for 200 737 max aircraft in 2020
  • Kennametal (KMT) Q2 adjusted EPS 17c/$505M vs. est. 20c/$520.53M; lowers FY adj EPS $1.20-1.50, from prior $1.70-$2.10 and sees FY20 organic sales down 9%-12%; adjusted ETR of 25%-28% and capital spending of $240M-$260M
  • PotlatchDeltic (PCH) Q4 adj. EPS 17c/$203.5M vs. est. 13c/$211.88M
  • Simpson Manufacturing (SSD) Q4 EPS 63c/$262.5M vs. est. 57c/$263.61M; said 2019 net sales improved 5.4% over 2018 to $1.14B, driven by higher sales volume, despite the adverse weather conditions experienced in the first half of the year and lapping the benefit of higher sales prices following the price increases we implemented in mid-2018
  • QIAGEN N.V. (QGEN) announces CE Mark certification of its therascreen PIK3CA RGQ PCR kit as an aid in identifying breast cancer patients with a PIK3CA mutation. Market launch is underway
  • Woodward (WWD) Q1 EPS $1.10/$720M vs. est. $1.02/$669.63M; sees FY20 EPS $5.22-$5.52 on revs $2.9B-$3.0B vs. est. $5.45/$3.03B; Aerospace sales are now anticipated to be up low single digits compared to the prior year, and Aerospace segment earnings as a percent of segment net sales are still expected to be approximately 21%.

 

Financials

  • Hartford Financial (HIG) Q4 core EPS $1.43/$5.36B vs. est. $1.33/$5.24B; raises dividend 8.3% to 32.5c; Q4 book value per share $43.85 vs.  $35.06 YoY
  • Ezcorp (EZPW) reports Q1 adj. EPS 16c/$222.4M vs. est. 22c/$240M; Q1 adj. EBITDA $15.2M vs. $7.6M last year; says Q1 reflects management efforts to reduce inventory
  • Alexandria Real Estate (ARE) Q4 adjusted FFO $1.77/$408.1M vs. est. $1.78/$305.29M

 

Healthcare

  • Centene (CNC) Q4 adj. EPS 73c/$18.86B vs. est. 73c/$18.43B
  • Catalent (CTLT) announces offering of $500M of common stock

 

Technology, Media & Telecom

  • Alphabet (GOOGL) Q4 EPS $15.35/$37.75B ex-TAC B vs. est. $12.53/$38.40B; Q4 properties revenues $31.9B vs. $26.9B a year ago; Q4 Google Cloud revenue $2.61B vs. $1.71B in prior year and Q4 YouTube ads revenue of $4.72B vs. $3.61B in same quarter of prior year; Q4 operating  margin 20% below the 24.7% estimate and op income $9.27B vs. est. $9.79B
  • Harmonic (HLIT) Q4 non-GAAP EPS 12c/$122.2M vs. est. 8c/$113.07M; Q4 SaaS and service revenue $36.3M, up 18.9% year over year; sees 1Q net revenue $80M-$90M below the $99M estimate; sees 1Q adjusted loss per share (3c-10c) vs. est. 3c
  • MTS Systems (MTSC) Q1 adjusted EPS 37c/$205.8M vs. est. 45c/$225.84M (Q1 EPS includes 20c of amortization expense); backs FY20 adjusted EPS view $2.20-$2.55 and also backs FY20 revenue view $955M-$995M (est. $976.89M)
  • NXP Semiconductors NV (NXPI) Q4 EPS 40c on revs $2.3B, down from prior year figures of 94c and $2.4B (vs. est. $2.28B); sees Q1 revs of $2.2B-$2.6B vs. est. $2.17B
  • Alteryx (AYX) announced a five-year strategic relationship with PwC U.S., which includes the designation of the firm as a “Global Elite Partner.” This relationship supports PwC’s $3 billion investment in advancing digital transformation within its own workforce, for its clients and communities, through the firm’s “New world. New skills.” commitment.

 

 

 

 

 

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