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Earnings Momentum Continues

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Regular day trading Monday fought back from pre-market declines to finish slightly in the green, as softness in Asian markets look to be providing a gentle headwind on Western markets again this morning. Futures are again in the red, as forecasts for China’s economy expect it to slow in Q4. This is somewhat offset by better-than-expected GDP in Germany: +0.8% from the +0.6% analysts were looking for, on slightly stronger exports and capital investments.

The main piece of econ data here at home this morning is the monthly Producer Price Index (PPI), which came in hotter than we were expecting for October: +0.4% versus the +0.1% consensus, with the ex-food & energy read also at 0.4% (+0.2% was expected). The headline also matched September’s 0.4%; year over year we see +2.8% — the best year-over-year PPI read since 2011.

These numbers help illustrate the continued slow seep of inflation into the economy, as well as the fact that hurricane effects continue to roll off the data. It’s the Consumer Price Index (CPI), due out later, that will help the Fed solidify its rate increase plans for its December FOMC meeting (or not). The CPI not only gives a good indication of inflation metrics month by month, but also gives insight into consumers’ coping mechanisms with higher (or lower) prices.

Q3 Earnings Rundown

Zacks Rank #2 (Buy) stock Home Depot (HD - Free Report)  posted a typical positive earnings surprise ahead of today’s opening bell: earnings of $1.84 per share beat the Zacks consensus by 3 cents, and revenues of $25.03 billion easily surpassed the $24.52 billion we had been looking for. This is at least the fifth straight earnings beat for Home Depot, whose trailing 4-quarter average was +3.8%.

Home Depot also upped its full-year guidance from estimates, and expect comps to be up 6.5% year over year. The company said the balance of hurricane affects created a net loss of $51 million in the quarter, but things appear to be looking up for Home Depot for the year as a whole.

Zacks Rank #4 (Sell)-rated TJX Companies (TJX - Free Report)  posted a mixed report this morning, meeting the $1.00 per share expected while sales reached $8.76 billion, beneath the $8.88 billion the Zacks consensus anticipated. Hurricanes — including dozens of stores on the devastated island of Puerto Rico — and warmer weather hit the discount retailer in the quarter. Forecasts for fiscal 2018 (January end) are also beneath estimates.

Advance Auto Parts (AAP - Free Report)  shares are rocketing up 18% in today’s pre-market following a big beat on the bottom line: $1.43 per share versus a $1.22 consensus estimate. Sales of $2.18 billion came in slightly under the $2.21 billion expected. This marks the first earnings beat for AAP in the last 4 quarters, and the stock had been down more than 50% year to date before this morning’s bid-up.

DICK’S Sporting Goods (DKS - Free Report)  is selling off following its earnings release before the opening bell, even after beating estimates on its top and bottom lines: 30 cents per share outperformed the 26 cents expected, and revenues $1.94 billion surpassed the $1.89 billion in the Zacks consensus. However, reports of pressured margins suggest the company will underperform expectations, perhaps by as much as 20% in 2018. Shares are down 4% ahead of the opening bell.

Finally, private investment firm Roark Capital has offered to buy Buffalo Wild Wings  for $150 per share this morning, sending shares surging more than 26% in today’s pre-market. This follows BWLD’s strong Q3 report from a couple weeks ago, when the stock also surged more than 20%; year-to-date, however, the specialty food and drink establishment was down 24%. This morning’s news looks to finally swing Buffalo Wild Wings into the black for calendar 2017.

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