Corporations continued to report solid earnings, with blended profits up over 10% and revenues up over 5% from last year’s second quarter. The economic data was mixed, with the headline payrolls report showing a better than expected 209,000 new jobs added, but with the ISM Non-Manufacturing Index coming in well below expectations. The S&P 500 gained 0.19%, and it now has the longest streak of days moving less than 0.3% ever recorded (12). Small stocks fared worse (as has been the case all year), as the Russell 2000 declined 1.19%. The yield on the Ten-Year Treasury wiggled down 2 basis points to 2.27%. The UN imposed sanctions on North Korea that cut exports by a third and curbed its citizens working abroad. The fact that China didn’t veto these sanctions might reduce the possibility of U.S. trade actions, and signal an improvement in the relationship between the world’s two largest economies.
There will be reports from 36 of the S&P 500, as earnings season ends. It’s a week of industrial data in Europe, where confidence in a sustained recovery is growing. Friday’s CPI data will be in focus as it is an important data point for the Fed’s interest rate policy. Economists estimate that the core rate stayed at 1.7% in July, below the target rate of 2%.
Stocks in the News:
Please feel free to contact us for further information about the highlighted companies. For sake of brevity, we are focusing the comments on a handful of companies, and listing the others that reported results at the end.
Blue Bird Corporation (BLBD): Achieved the highest third quarter bus sales in more than 10 years. The Company authorized a $50 million stock buyback over the next two years, because of their strong fee cash flow.
Johnson Outdoors, Inc. (JOUT): Sales grew 11.5% to a record $155, and net income in the quarter nearly tripled to $1.65 per diluted share. Their flagship fishing brands, Minn Kota and Hummingbird experience particularly strong results.
The Eastern Company (EML): Second quarter 2017 results from most of their businesses improved when compared to the same period last year, benefiting from a better than expected class 8 truck market, a rebound in coal mining and stronger execution in our core businesses. Sales in the Industrial Hardware segment increased by $19.2 million, or 121%, in the second quarter of 2017 compared to the same period in 2016. Sales growth in this segment was primarily the result of the acquisition of Velvac, which contributed $15.9 million in additional sales and 21% growth in their existing businesses.
It’s quite a tongue twister that (CEO August) Vlak bought Velvac.
SP Plus Corporation (SP): Strong results in their airport parking division combined with lower-than-expected cost of health and casualty insurance led to Adjusted EPS of $0.53/share versus $0.34 in the year earlier period. The Company also took an $8.5 million gain on a joint venture transaction.
Alamo Group, Inc. (ALG): Net income for the second quarter was $12.3 million or $1.05 per diluted share, which favorably compares to net income of $10.6 million or $0.92 per diluted share for the second quarter of 2016. Sales grew low single digits in both their Industrial and Agricultural divisions.
Tickers of other companies that reported earnings that we are available to discuss: OESX, GHM, AMC, MUSA, ALSK, CNSL, LEE, MGRC, NTN, BRKS, PMD, DENN, UAA, ARC, MYE, TGNA, DTRX, AHC, ESCA, BBW, BGSF.
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