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Sunday April 22, 2018



Bed Bath & Beyond's Earnings Top Forecasts

Bed Bath & Beyond Inc. (BBBY) announced its fourth quarter and full-year earnings on April 5, 2017. The bedroom and bathroom retailer posted results that topped forecasts.

The company reported that quarterly revenue increased 3.4% to $3.53 billion, higher than a $3.50 billion forecast. For the full year, revenue increased 0.9% to $12.2 billion.

Commenting on the results, Bed Bath & Beyond CEO Steven H. Temares stated, "During fiscal 2016, we made significant investments to evolve our Company and advance our mission to be trusted by our customers as the expert for the home and 'heart-related' life events by continuing to build and deliver a strong foundation of differentiated products, and services and solutions for customers, while driving operational excellence."

Bed Bath & Beyond earned $1.84 per share during the quarter, topping estimates of $1.77 per share. For the full year, the company earned $4.58 per share, less than the $5.10 per share earned during the prior year.

The retailer also reported that comparable store sales increased 0.4% during the quarter, less than the 1.7% increase reported during the same period last year. Despite exceeding expectations this quarter, investors still are looking for more from Bed Bath & Beyond. The company's shares have fallen 7% since the start of the year.

Bed Bath & Beyond Inc. (BBBY) shares ended the week at $39.49, relatively unchanged for the week.

Monsanto Has Strong Quarter

Monsanto Company (MON) announced results for its second quarter on Wednesday, April 5. The agricultural biotechnology company's corn and soybean businesses led to results that exceeded estimates.

The company reported that revenue increased 12% to $5.07 billion during the quarter. This beat estimates for revenue of $4.73 billion.

"We are delighted to have delivered such an excellent first half and strong second quarter, in the face of what is still a tough macro economy for agriculture," said Monsanto Chairman and CEO Hugh Grant. "While we're increasing confidence in the outlook for the rest of the year, our emphasis at Monsanto is where it has always been—on bringing innovation to growers. Our proven innovation and unique platform advantages position us well to meet the challenges ahead, as well as make us an attractive, complementary partner for Bayer."

Monsanto's adjusted earnings were $3.19 per share during the quarter. This topped analysts' estimates of $2.79 per share.

The company attributed its quarterly results to strong demand for its corn and soybean businesses. Sales of corn seeds and traits rose 8% during the quarter while sales of soybean seeds and traits rose 10.2%. Monsanto is currently in the process of being acquired by Germany's Bayer AG for $66 billion. The two companies agreed to a buyout agreement in September and currently await approval of the deal from regulators. If approved, the merged companies would comprise one quarter of the world market for seeds and pesticides.

Monsanto Company (MON) shares ended the week at $116.16, up 2.5% for the week.

CarMax Reports Earnings

CarMax, Inc. (KMX) announced its fourth quarter and full-year results on Thursday, April 6. The used car retailer reported better-than-expected results.

The company reported that revenue increased 9.3% to $4.05 billion during the quarter, beating a $3.97 billion estimate. For the full year, revenue increased 4.8% to $15.88 billion.

"Our core business remains very strong as we estimate used unit comps for our non-Tier 3 customers grew 15.3%, which is the highest comp we have recorded for our non-Tier 3 business in many years," said CarMax CEO Bill Nash in a conference call to investors. "Strong store execution continues to benefit from enhancements to the online customer experience that we've made throughout the year including capabilities like the new online finance pre-qualification product."

CarMax's earnings increased 14.1% to $0.81 per share during the quarter, better than the $0.79 per share estimate. The company earned $3.26 per share for the full year, an increase of 7.6%.

Helping drive the company's revenue increase during the quarter was an 8.7% comparable used unit sales increase. For the full year, the comparable used unit sales increase was 4.3%. CarMax also announced that it opened four new stores during the quarter, bringing its total store count to 173. Since the start of the year, the company's shares have fallen 18%.

CarMax, Inc. (KMX) shares ended the week at $56.50, down 2.9% for the week.

The Dow started the week of 4/3 at 20,655 and closed at 20,656 on 4/7. The S&P 500 started the week at 2,362 and closed at 2,356. The NASDAQ started the week at 5,917 and closed at 5,878.

Treasury Yields Fall on Disappointing Jobs Report

Treasury yields ended the week of April 3 lower after a disappointing jobs report showed only 98,000 jobs were added in March. U.S. airstrikes in Syria late Thursday night also helped drive yields lower for the week.

The 98,000 jobs added during March fell below the consensus forecast of 185,000. February's jobs numbers were also revised downward from 238,000 to 219,000. Curiously, the unemployment rate fell from 4.7% to 4.5%, its lowest level in nearly a decade.

During early Friday trading, the benchmark 10-year note fell 3 basis points to 2.31% compared to a closing yield of 2.34% on Thursday. The 10-year note yield began the year at 2.45% and has steadily fallen since. Bond yields move inversely to prices, so as yields fall, prices rise, signaling increased demand.

Late Thursday night, President Trump ordered an airstrike on a Syrian airbase from which a deadly chemical attack had been launched earlier in the week against unarmed civilians. The chemical attack itself is believed to have been ordered by Syrian President Bashar al-Assad as part of the country's civil war.

The disappointing jobs numbers and uncertainty regarding further U.S. involvement in Syria is leading U.S. investors to shift capital from riskier stocks to the relative safety of bonds. Some investors and analysts also believe the latest jobs report may lead the Federal Reserve to slow its pace of interest rate hikes this year.

"[The jobs report] confirmed the bullish stance on the Treasury market," said Ian Lyngen, an interest-rate strategist at BMO capital. "It continued the way for the developments in Syria. It opened up the possibility that the Fed might struggle to justify a June move."

The 10-year Treasury note yield finished the week of 4/3 at 2.37%, while the 30-year Treasury note yield was 3.00%.

Mortgage Rates Fall Again

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, April 6. The report showed rates fell again for the third consecutive week.

The 30-year fixed rate mortgage averaged 4.10% this week. This represents a decrease from last week when it averaged 4.14%. Last year at this time, the 30-year fixed rate mortgage averaged 3.59%.

This week, the 15-year fixed rate mortgage averaged 3.36%. This was lower than last week's average of 3.49%. The 15-year fixed rate mortgage averaged 2.88% one year ago.

"The 10-year Treasury yield was relatively unchanged this week, while the 30-year mortgage rate fell four basis points to 4.1%," said Sean Becketti, Chief Economist at Freddie Mac. "After three straight weeks of declines, the 30-year mortgage rate is now barely above the 2017 low. Next week's survey rate may be determined by Friday's employment report and whether or not it can sustain the strength from earlier this year."

Based on published national averages, the money market account finished the week of 4/3 at 0.59%. The 1-year CD finished at 1.30%.

Published April 7, 2017
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