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Tuesday March 20, 2018



Domino's Pizza Delivers Earnings

Domino's Pizza, Inc. (DPZ) released its quarterly and full-year earnings on Tuesday, February 20. The company produced increases in earnings and revenue for the quarter and full year.

The pizza chain posted revenue of $892 million for the quarter, up from $819 million during the same time last year. Full-year revenue reached $2.8 billion, up from $2.5 billion the previous year.

"Without question, we are pleased with our fourth quarter and full-year 2017 performance — with results that continued to outpace the industry," said Domino's President and CEO J. Patrick Doyle. "Our 2017 global retail sales growth and domestic comps outperformed the high-end of our stated three to five-year outlook."

The company reported net income of $93.3 million during the fourth quarter, up from $72.7 million during the fourth quarter of 2016. For the full year, the company reported profits of $277.9 million, up from $214.7 million for the previous year.

Domino's, which bills itself as "the largest pizza company in the world based on global retail sales," reported increases in same store sales of 4.2% domestically and 2.5% internationally. For the full year, same store sales rose 7.7% in the U.S. and 3.4% around the globe. Despite the steady growth, these numbers fell short of analysts' expectations. Domino's stock dipped on Tuesday following the release, but rose later in the week.

Domino's Pizza, Inc. (DPZ) stock finished the week at $228.85, up 6.2% for the week.

Home Depot Builds Strong Profits

The Home Depot (HD) reported its quarterly and full-year earnings on Tuesday, February 20. The retailer showed growing revenue and profits.

The company's revenue for the quarter was $23.9 billion, up 7.5% from $22.2 billion at this time last year. For the fiscal year, Home Depot's revenue increased 6.7% to $100.9 billion.

"Our ongoing commitment to enhance the interconnected retail experience for our customers, provide localized and innovative product and deliver best in class productivity resulted in record sales and net earnings for 2017," said Home Depot Chairman, CEO and President Craig Menear. "I would like to thank our associates for their solid execution and exceptional work in service to our customers."

The company reported net earnings of $1.8 billion for the quarter, up from $1.7 billion during the same quarter last year. For the full year, net earnings were up 8.5% to $8.6 billion.

Home Depot's strong earnings growth stands to benefit the company's shareholders in 2018. The company announced during its quarterly earnings release that its board of directors has declared an increase of 15.7% to its quarterly dividend. This brings the dividend up to $1.03 per share.

The Home Depot (HD) shares ended the week at $188.35, down 0.8% for the week.

Jack in the Box Cranks Out Earnings Beat

Jack in the Box Inc. (JACK) reported its quarterly earnings on Wednesday, February 21. The company reported higher-than-expected revenue and profits.

The restaurant chain brought in revenue of $294.5 million for the quarter, exceeding analysts' expected revenue of $285.9 million. This is down from $353.2 million in revenue reported at this time last year.

"Our first quarter operating results for Jack in the Box were in line with our expectations," said Jack in the Box CEO Lenny Comma. "We remain focused on regaining momentum in a highly competitive environment through several key initiatives, including a greater emphasis on value, while continuing to introduce innovative new products like the Ribeye Burger and our recently launched Food Truck series of sandwiches."

The company had net earnings of $12.2 million for the quarter, or $0.41 per share. This is down from $35.9 million, or $1.12 per share during the same quarter last year.

Jack in the Box, known for its eponymous mascot and value-priced tacos, has managed to find success in an era when many consumers tend to be moving away from highly processed fast-food diets. As part of the company's earnings release, Jack in the Box announced a cash dividend of $0.40 per share, payable on March 16 of this year. Same-store sales remained relatively even for the quarter overall, falling 0.3% for franchise locations but rising 0.2% at company-owned restaurants.

Jack in the Box Inc. (JACK) shares ended the week at $89.24, down 1.4% for the week.

The Dow started the week of 2/20 at 25,125 and closed at 25,310. The S&P 500 started the week at 2,723 and closed at 2,747. The NASDAQ started the week at 7,209 and closed at 7,337.

Treasury Yields Rise as Fed Reports Released

U.S. Treasury bond yields rose during a busy week for the Federal Open Market Committee (FOMC). The yield on both the 10-year and 30-year bonds reached multi-year highs this week.

The FOMC released the minutes from its January meeting on Wednesday, February 21. Bond yields rose in response, as many investors interpreted the minutes as an indication that the committee may raise interest rates more quickly than originally planned.

The benchmark 10-year Treasury yield reached its highest closing level since January 2014 on Wednesday, closing at 2.94%. The 30-year Treasury bond closed at 3.22%, a level not seen since June 2015.

"The FOMC minutes were mostly balanced but to our read broke a bit more hawkishly than dovishly," said Aaron Kohli of BMO Capital Markets. "The discussion about inflation eventually recovering to 2% . . . pointed to more optimism regarding the outlook."

On Friday, the FOMC released its first Monetary Policy Report to Congress following the transition from former Chair Janet Yellen to new Chairman Jerome Powell. The Fed reported that it sees a tight labor market and inflation running just below its 2% target for 2018.

"Most participants anticipated that inflation would continue to run a bit below 2% in 2018, and only one participant expected inflation above 2% that year," the report said. "A majority of participants projected that inflation would be equal to the Committee's objective in 2019 and 2020."

The report was silent regarding any change in the Fed's plan for rate hikes, merely reiterating its policy of gradual increases over the next few years. The Fed's next opportunity to raise rates will come at its March 20-21 FOMC meeting.

The 10-year Treasury note yield finished the week of 2/20 at 2.92%, while the 30-year Treasury note yield was 3.21%.

Mortgage Rate Rise Continues

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, February 22. The survey shows mortgage rates continuing to rise for the seventh consecutive week.

The 30-year fixed rate mortgage averaged 4.40%, up from 4.38% during the previous week. Last year at this time, the 30-year fixed rate mortgage averaged 4.16%.

This week, the 15-year fixed rate mortgage averaged 3.85%. This is up from 3.84% last week. At this time last year, the 15-year fixed rate mortgage averaged 3.37%.

"Fixed mortgage rates increased for the seventh consecutive week, with the 30-year fixed mortgage rate reaching 4.40% in this week's survey; the highest since April of 2014," said Freddie Mac Deputy Chief Economist Len Kiefer. "Mortgage rates have followed U.S. Treasurys higher in anticipation of higher rates of inflation and further monetary tightening by the Federal Reserve. Following the close of our survey, the release of the FOMC minutes for February 21, 2018 sent the 10-year Treasury above 2.9%. If those increases stick, we will likely see mortgage rates continue to trend higher."

Based on published national averages, the money market account finished the week of 2/20 at 0.85%. The 1-year CD finished at 1.93%.

Published February 23, 2018
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