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What happened in today's stock market – The Motley Fool



Equities closed the first quarter with a big rally in the holiday season session. The Dow Jones Industrial Average (DJINDICES: ^ DJI) plummeted back through the 24,000 level, but closed the quarter down. The S & P 500 (SNPINDEX: ^ GSPC) also closed in the red zone in 2018, despite rising 7.5% at the end of January.

Today's Stock Exchange

Index [19659006] Percentage Change Point Change
Dow 1
.07%
254.69
S & P 500 1.38% 19659008] 35.87

Data source: Yahoo! Finance

Technology stocks rebounded after drubbing earlier this month, with the [2] Technology Select Sector SPDR ETF (NYSEMKT: XLK) gaining 2%. Energy stocks also rose due to rising crude oil futures; the SPDR S & P Oil & Gas Exploration & Production ETF (NYSEMKT: XOP) rose 2.8%.

As reported for individual stocks Movado Group (NYSE: MOV) the latest in a series of strong quarters, and GameStop (NYSE: GME) announced strong sales, but issued disappointing forecasts for 2018.

  Businessman with tablet and rising graph with skyline in background

Source: Getty Images

Movado Group keeps ticking

Movado luxury watch maker reported higher-than-expected sales and earnings for the fourth quarter the shares increased by 15.7%. Revenues increased 14.1% to $ 149.2 million, ahead of $ 133.8 million and analyst expectations of $ 132.5 million. Adjusted earnings per share were $ 0.52, more than double the previous year's $ 0.22 and well above expectations of $ 0.26. The company also announced it would increase its quarterly dividend by 54% to $ 0.20.

Retail sales in the US were still characterized by headwinds, but international sales and online sales were more than offset. Adjusted for currency effects, sales in the USA increased by 1% and foreign sales by 20.1%. Overall, online sales in the quarter increased 53% yoy, and comparable Movado store sales increased 6.4%. Movado expects EPS to be between $ 2.15 and $ 2.25 in the current fiscal year, up 38% from fiscal 2018 and above Wall Street's expected $ 1.95.

Movado's fourth-quarter results come after big-punch reporting in the third quarter and in the second quarter. The company is taking the right steps: cut costs, control inventory and invest in online sales and the newly acquired Olivia Burton brand. Investors have celebrated the results today.

Strong holiday sales are not enough for GameStop investors

Game retailer GameStop reported fourth-quarter results that exceeded expectations, but guidelines for continued earnings declines and a return to declining sales and the stock gave tanked 10.8%. Revenues increased 15% to $ 3.5 billion, and adjusted EPS, excluding a massive $ 358 million pre-announced impairment charge, was $ 2.02 compared to $ 2, $ 38 a year ago. Analysts expect adjusted EPS of $ 1.96 on revenues of $ 3.26 billion.

Same-store sales increased 12.2%, with hardware sales up 44.8% in the quarter, driven by demand for the Nintendo Switch gaming platform. Software revenue grew 12.4% and revenue with collectors grew 22.8%. For the coming season, the company sees no return to the strong holiday sales. Full-year revenue declines from 2% to 6% and adjusted earnings per share are $ 3.00 to $ 3.35, compared to $ 3.34 last year and $ 3.77 for fiscal 2016.

"While we performed solidly in 2017, there are still many areas that need to be improved to drive future profitability," said CEO Mike Mauler in the press release. "We have three profitable core businesses: video games, collectibles, and technology brands, and next year we're planning a break from investing in additional new businesses or acquisitions, focusing on fundamentals of improving existing businesses."

Despite a remarkably low rating Investors seem to be reluctant to buy stationary stock and may not warm up until the company stabilizes revenue and earnings declines – if so possible.

Jim Crumly has no position in any of these stocks. The Motley Fool owns shares of GameStop and has the following options: shortly April 2018 calls $ 18 GameStop. The Motley Fool recommends the Movado Group. The Motley Fool has a disclosure policy.


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