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Tuesday November 20, 2018



Tyson Posts Earnings Beat

Tyson Foods, Inc. (TSN) announced its quarterly and year-end earnings on Monday, November 13. The food giant's quarterly and full-year earnings exceeded Wall Street expectations.

The company reported sales of $10.15 billion for the quarter, up from the previous year's $9.16 billion. For the full year, Tyson reported $38.26 billion in sales, increased from $36.88 billion last year.

"The fourth quarter was a strong finish to another record year," said Tyson Foods' president and CEO Tom Hayes. "We delivered well over our goals of at least 4% operating income growth, EPS growth in the high single digits and 3% volume growth in value-added products, and expect to meet or exceed these goals again in fiscal 2018."

Tyson's net income for the quarter was $394 million, up from $391 million during the same quarter last year. For the full year, net income was $1.774 billion, a year-over-year increase from $1.768 billion the prior year.

In addition to its namesake brand of prepared foods, Tyson's brands include Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells and State Fair. The Springdale, Arkansas company's adjusted earnings per share saw a 49% increase from last year's fourth quarter. The prepared foods segment saw a 9.5% increase in sales from the prior year. With the acquisition of Original Philly Holdings, Tyson Foods has an upbeat outlook for fiscal 2018.

Tyson Foods, Inc. (TSN) shares ended the week at $77.97, up 4.6% for the week.

Beazer Homes Increased Homebuilding Revenue

Beazer Homes USA, Inc. (BZH) released its latest quarterly and full-year earnings report on Tuesday, November 14. The home builder announced quarterly and year-over-year increases in revenue.

Revenue for the fourth quarter reached $673 million, up 6.5% from the same quarter last year. The full-year results also improved, with revenue for fiscal 2017 reaching $34.6 million, up from $21.7 million in fiscal 2016.

"Our fourth quarter results contributed to an exceptionally productive year for the Company," said Beazer Homes President and CEO Allan Merrill. "We generated improvements in virtually every operational metric - including [average selling price], sales pace, gross margin and overhead leverage - which led to substantially higher profitability, and we launched our Gatherings business in multiple markets."

Beazer Homes reported net income for the quarter of $33.7 million, or $1.03 per share. This was up from a loss of $0.9 million, or $0.03 per share, during the prior year's quarter. For the fiscal year, the net income reported was $31.8 million, or $0.99 per share, an increase from $4.7 million, or $0.16 per share last year.

Beazer Homes had significant growth in total homebuilding revenues in the fourth quarter, reporting an increase of 7.3%. The company's homebuilding gross margin was 17% year-over-year. The second Gatherings community, a condominium community for adults ages 55 and older in the Dallas area, was approved during the fourth quarter. For the full year, Beazer Homes had 400 future sales approved throughout Georgia, Texas and Virginia.

Beazer Homes USA, Inc. (BZH) shares ended the week at $20.50, virtually unchanged for the week.

Target's Earnings Hit the Mark

Target Corporation (TGT) reported quarterly earnings on Wednesday, November 15. The company's earnings exceeded Wall Street's estimates for profits and sales.

Revenue for the retail giant was $16.67 billion for the third quarter, slightly ahead of analysts' estimated revenue of $16.61 billion. This is up 1.4% from $16.44 billion during the same quarter last year.

"We're very pleased with Target's third quarter performance, including traffic and sales growth that demonstrate we're building on the progress we saw in the first half of the year," said Target chairman and CEO Brian Cornell. "The investments we're making in our business will help Target drive long-term success and ensure we're well positioned to deliver for guests in the all-important holiday season."

Target reported net earnings for the quarter of $480 million, or $0.88 per share. This is down from $608 million, or $1.06 per share, during the previous year's quarter.

Target's digital sales growth of 24% in the third quarter, fell short of the 32% growth it experienced in the previous quarter. The company is testing new delivery options, such as same-day delivery at four stores in New York and curb-side pickup at 50 stores in the Minneapolis area. Shares fell nearly 10% after Target released its fourth-quarter outlook, stating that same-store sales growth is expected to top out at 2% during the holidays.

Target Corporation (TGT) shares ended the week at $58.14, down 5.3% for the week.

The Dow started the week of 11/13 at 23,367 and closed at 23,358 on 11/17. The S&P 500 started the week at 2,577 and closed at 2,579. The NASDAQ started the week at 6,727 and closed at 6,783.

Treasury Yields Dip

U.S. Treasury bond yields held steady early in the week in anticipation of inflation and economic data. The yield curve maintained its flattening trend, reaching a decade low on Friday of 62.8 basis points separating the 2-year and 10-year Treasury yields.

On Tuesday, the U.S. producer price index (PPI), which notched its biggest annual increase in almost 6 years, rose by 0.4%, beating analysts' expectations of 0.1%. The yield on the benchmark 10-year Treasury note dipped to 3.37% in response to falling crude oil prices and in anticipation of Wednesday's the inflation report.

The Bureau of Labor Statistics released the consumer price index (CPI) on Wednesday, causing the 10-year Treasury yield to continue to fall in response. The CPI revealed subtle inflation, with 0.1% increase for October, compared to the 0.5% increase in September.

"We are seeing a demand for U.S. securities actually go up in ways that are going to flatten the yield curve significantly," said Raphael Bostic, Atlanta Fed President. "That is different from making a read on broader economic performance."

Treasury yield demand picked up on Thursday after unemployment claims rose unexpectedly, according to weekly jobless claims data released by the U.S. Labor Department. On Thursday, the 10-year yield hit a high of 2.379% in response to the House passing its version of tax reform.

The 10-year Treasury note yield finished the week of 11/13 at 2.35%, while the 30-year Treasury note yield was 2.79%.

Mortgage Rates Increase

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, November 16. The report revealed that the 15 and 30-year fixed mortgage rates were higher than last week's averages, with the 30-year fixed rate reaching its highest point since July.

The 30-year fixed rate mortgage averaged 3.95% this week. This represents an uptick from last week when it averaged 3.90%. Last year at this time, the 30-year fixed rate mortgage averaged 3.94%.

This week, the 15-year fixed rate mortgage averaged 3.31%. This was higher than last week's average of 3.24%. The 15-year fixed rate mortgage averaged 3.14% one year ago.

"Rates increased this week," said Sean Becketti, Chief Economist at Freddie Mac. "The 10-year Treasury yield ticked up 6 basis points, while the 30-year mortgage rate jumped 5 basis points to 3.95%. Today's survey rate is the highest rate in nearly four months."

Based on published national averages, the money market account finished the week of 11/13 at 0.74%. The 1-year CD finished at 1.65%.

Published November 17, 2017

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