Hammerstone’s Early Look

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Tuesday, July 28, 2020

FuturesUp/Down%Last
DJ Industrials-83.000.31%26,401
S&P 500-9.500.29%3,223
Nasdaq-37.500.35%10,638

 

 

U.S. stock futures dip after yesterday gains, following European markets lower as markets prepare for another busy day of corporate earnings, including results from four Dow components this morning (PFE, MCD, MMM and RTX). Investors also await results of the FOMC meeting conclusion tomorrow, though no changes are expected, with interest rates to remain near historical lows and the Fed to remain accommodative in the face of the pandemic. Overnight, Senate Majority Leader Mitch McConnell said Monday that Republicans were unveiling their long-awaited opening gambit for the next round of coronavirus aid which likely includes $1,200 stimulus checks for certain Americans. Republicans also appeared to have settled the most divisive issue, how to extend the federal add-on to state jobless benefits. According to a Senate GOP aide, the Republican plan would cut the add-on to $200 per week for two months (from $600) before switching over to a system where the payment would equal 70% of the worker’s old wages. States, many of which have antiquated benefit processing systems, would get a waiver for up to two more months if they could not meet the initial deadline, according to the aide. In Asian markets, The Nikkei Index fell -58 points to 22,657, the Shanghai Index rose 22 points to 3,227 and the Hang Seng Index rose 169 points to 24,772. In Europe, the German DAX is lower by -80 points to 12,750, while the FTSE 100 is down about 15 points to 6,090. Precious metals slip after 7-consecutive gains for gold prices ahead of tomorrows FOMC meeting results. The message from the Fed meeting is expected to be dovish, reiterating the need for more fiscal measures, supportive of gold.

Market Closing Prices Yesterday

  • The S&P 500 Index gained 23.78 points, or 0.74%, to 3,239.41
  • The Dow Jones Industrial Average rose 114.88 points, or 0.43%, to 26,584.77
  • The Nasdaq Composite spiked 173.09 points, or 1.67%, to 10,536.27
  • The Russell 2000 Index advanced 17.10 points, or 1.16% to 1,484.65

 

Economic Calendar for Today

  • 7:45 AM EST       ICSC Weekly Retail Sales
  • 8:55 AM EST       Johnson/Redbook Weekly Sales
  • 9:00 AM EST       S&P CoreLogic’s CaseShiller for May
  • 10:00 AM EST     Consumer Confidence for July…est. 95.0
  • 10:00 AM EST     Richmond Fed Manufacturing for July…est. 5
  • 4:30 PM EST        API Weekly Inventory Data

 

Earnings Calendar:

  • Earnings Before the Open: ABG, ARCH, AWI, B, BEN, CMI, CNC, COWN, CVLT, DHI, DTE, ECL, GLW, HOG, HUN, IVZ, LH, LW, MDC, MLM, MMM, MO, MSCI, PFE, PII, ROK, ROP, RTX, SHW, SPGI, SSTK, ST, TRU, WAB, WAT, WDR, XRX, ZBRA
  • Earnings After the Close: AFL, AKAM, AMD, AMGN, ASH, BGFV, BXP, BYD, CAR, CE, CHRW, CR, CSLT, CYH, DENN, DXCM, EBAY, EGP, EIX, EQR, FEYE, FTV, HA, HP, JNPR, MDLZ, MPWR, MXIM, NBR, OKE, OKG, PKI, PKG, PLT, SBUX, STX, SYK, UDR, UNM, V, WRE

 

 

MacroUp/DownLast
WTI Crude-0.2441.36
Brent-0.0143.40
Gold-4.901,950.50
EUR/USD-0.00241.1728
JPY/USD-0.18105.19
10-Year Note-0.0110.603%

 

 

World News

  • The European Central Bank extended a ban on banks paying dividends and buying back their own stock. The ECB said the prohibition has been extended from October to the end of the year
  • The Trump administration moved forward with plans to regulate content on social-media platforms Monday, formally asking federal regulators (the FCC) to start overseeing how these platforms treat user-generated content
  • China’s gold consumption fell 38% year-on-year in the first half of 2020, the China Gold Association said, news that may have contributed to the weakness on Tuesday.

 

Sector News Breakdown

Consumer

  • Heidrick & Struggles (HSII) Q2 adjusted EPS 37c on revs $145.6M vs. est. 25c/$127.32M; says given continued uncertainty due to the COVID-19 pandemic, the company is not providing financial guidance
  • Polaris (PII) Q2 adjusted EPS $1.30 on revs $1.51B vs. est. 63c/$1.37B; sees FY20 adj. EPS view $6.40-$6.60 vs. est. $3.88 and FY20 revenue view $6.65B-$6.75B vs. consensus $6.1B
  • TrueBlue (TBI) Q2 adjusted EPS loss (12c) on revs $359M vs. est. loss (42c)/$347.16M; not providing quarterly guidance

 

Energy

  • National Oilwell (NOV) reported Q2 EPS loss of (24c), missing the est. of loss (17c) while revs of $1.5B missed estimates and was down nearly 30% YoY
  • Kinder Morgan (KMI) said it is seeking to issue $1.25B of new senior notes to pay off $949M of higher-interest senior notes with 5% and 6.5% interest due in September (the new notes carry 2% and 3.25% interest rates not due until 2031 and 2050)

 

Financials

  • AGNC Investment (AGNC) Q2 EPS $1.24 vs. est. 46c; reports Q2 $14.92 tangible net book value per common share as of June 30; Q2 net interest income $295M below the $303M est.
  • Cathay General (CATY) Q2 EPS 68c/$150.1M vs. est. 57c/$145.43M; Q2 net interest margin was 3.02% compared to 3.58% YoY and 3.34% for Q1; recorded a provision for credit losses of $25.0 million in Q2 compared to no provision for credit losses same period a year earlier
  • Cincinnati Financial (CINF) 2Q adj EPS $0.44 vs. est. $0.39, revs $2.17B vs. est. $1,65B, earnings premiums $1.48B vs. est. $1.45B
  • Heartland Financial (HTLF) Q2 EPS 82c on revs $153.5M vs. est. 45c/$141.71M; reports Q2 tangible book value per share $31.14; 2Q net interest margin 3.81% vs. 4.06% YoY
  • OneMain (OMF) Q2 adjusted EPS 80c vs. est. 22c; 2Q net charge-offs ratio 6.33% vs. 6.20% YoY; Q2 net-charge off ratio 6.33%
  • Principal Financial (PFG) Q2 adjusted EPS $1.52 vs. est. $1.30; reports Q2 AUM of $701.8B up 0.8% YoY
  • QTS Realty Trust (QTS) raises FY20 FFO view to $2.73-$2.83 from $2.69-$2.83 while reaffirms FY20 revenue view $523M-$537M; raises FY20 EBITDA view to $280M-$290M from $275M-$285M
  • TCF Financial (TCF) Q2 adjusted EPS 54c vs. est. 48c; 2Q return on average assets 0.21%

 

Healthcare

  • Pfizer (PFE) reported Q2 adj EPS 78c on sales $11.8B vs. est. 69c and $11.73B; guides FY rev view to $48.6B-$50.6B from prior $48.5B-$50.5B view; also boosts year EPS view to $2.85-$2.95 from prior $2.82-$2.92
  • Pfizer Inc. (PFE) and BioNTech SE (BNTX) said they have started a late-stage clinical trial for one of their COVID-19 vaccine candidates, involving 30,000 people around the world.
  • Centene (CNC) Q2 adj. EPS $2.40 on revs $27.71B vs. est. $2.43/$27.58B; reaffirms FY20 adj. EPS view $4.76-$4.96 (est. $4.90) and reaffirms FY20 revenue view $109B-$111.4B vs. est. $108.79B)
  • Encompass Health (EHC) Q2 adjusted EPS 31c on revs $1.074B vs. est. 42c/$1.05B; Q2 adj Ebitda $162.2M vs. est. $157M
  • Medpace Holdings (MEDP) 2Q $0.64 vs. est. $0.41 on revs $205Mm vs. est. $180.5Mm; guides FY20 EPS $3.62-3.83, sees revs $880-920Mm (+2.2-6.9%)
  • Universal Health (UHS) Q2 adjusted EPS $2.93 on revs $2.73B vs. est. 74c/$2.45B; 2Q acute care adjusted admissions +24.8% vs. +5% YoY and 2Q behavioral health adjusted admissions -15.4% vs. +0.50% YoY; says impact of COVID-19 ‘beyond our capability to control’
  • Vocera (VCRA) Q2 adjusted EPS 10c on revs $47.3M vs. est. loss (6c)/$40.04M

 

Industrials & Materials

  • 3M (MMM) Q2 adjusted EPS $1.78 on sales $7.2B vs. est. $1.80/$7.32B; FY20 guidance remains withdrawn; company to continue to provide monthly sales updates
  • Otis Worldwide (OTIS) Q2 adj. EPS 56c on revs $3.03B vs. est. 44c/$2.94B; sees FY20 adj. EPS $2.20-$2.30 vs. est. $2.08 and sees FY20 revenue down 4.5%-6.5%
  • Hexcel (HXL) Q2 adjusted EPS 8c on revs $379M vs. est. 21c/21c/$370.5M; 2Q Industrial sales $66.4M, -18% YoY and 2Q Commercial Aerospace Sales $203.9 million, -51% YoY
  • Potlatch (PCH) Q2 adjusted EPS 4c on revs $181.6M vs. est. 2c and $175.5M
  • Simpson Manufacturing (SSD) Q2 EPS $1.22 on revs $326.1M vs. est. 55c/$251.94M; guides FY20 revenue up 1.5%-4% while sees FY gross margins 43%-45%; maintain quarterly dividend

 

Technology, Media & Telecom

  • Amkor Technologies (AMKR) shares rose 10%; Q2 EPS 23c on sales $1.17B vs. est. loss (3c); guides Q3 EPS 17c-35c on sales $1.2B-$1.3B vs. est. 15c
  • F5 Networks (FFIV) Q3 adjusted EPS $2.18 on revs $583M vs. est. $2.03/$572.44M; said demand for solutions to meet these immediate and long-term business requirements drove 4% GAAP and non-GAAP revenue growth, and 43% non-GAAP software revenue growth in our third quarter; sees Q4 adjusted EPS $2.30-$2.42 on revs $595M-$615M vs. est. $2.26/$598.2M
  • NXP Semiconductors (NXPI) Q2 results topped views but was offset with Automotive losses that were wider than guided; said Q2 automotive revenue totaled $674M, down 32% Q/Q and down 35% Y/Y as revenue breakdown for the other segments: Industrial and IoT, $435M (+16%; +12%); Mobile, $255M (+3%; -14%); Comm. Infra & Other, $453M (+12%; -9%); guides Q3 revs $1.9-2.1B (vs. est.$1.9B) and a 20.3-24% operating margin.
  • Xerox (XRX) Q2 EPS 15c on revs $1.47B vs. est. loss (7c)/$1.48B;
  • Shopify (SHOP) upgraded to Buy from Neutral at Goldman Sachs with $1,127 target

 

 

 

 

 

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