Stocks rallied on Wednesday, with both the Dow Jones Industrial Average (^DJI 0.40%) and the S&P 500 (^GSPC 1.02%) indexes rising more than a half percent.
Today's stock market
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
0.54% |
112.73 |
|
S&P 500 |
0.84% |
19.81 |
Data source: Yahoo! Finance.
Financial stocks saw heavy trading as the Federal Reserve raised interest rates and telegraphed several further hikes ahead in 2017. Yet the popular Financial Select Sector SPDR ETF (XLF -0.15%) trailed the broader market and fell slightly near the close. Gold funds rebounded from recent losses; the Market Vectors Gold Miners ETF (GDX 0.73%) spiked nearly 8%.
Arcos Dorados (ARCO 0.84%) and FTD Companies (FTD) were two of the biggest individual stock movers following major surprises in their latest quarterly reports.
Image source: Getty Images.
Arcos Dorados
Shares of international McDonald's franchisee Arcos Dorados rose almost 20% following fourth-quarter earnings results that included a 16.4% spike in comparable-store sales and solid profitability gains. A large increase in average spending per visit helped the restaurant chain overcome flat customer traffic even as cost cuts supercharged earnings growth. "We ended the year strongly," CEO Sergio Alonso said in a press release, "achieving mid-teen constant currency revenue growth and a 240 basis point increase in Adjusted EBITDA margin."
Image source: Getty Images.
Alonso and his team credited a revamp of Arcos Dorodos' value menu and a string of successful new product launches for helping the company find its footing after several tough quarters of economic decline in many of its biggest markets, including Venezuela, Argentina, and Brazil. Executives believe the region is beginning to recover now, though, which should clear a path toward accelerated sales and profit gains ahead.
Executives didn't provide specific numbers, but their updated outlook calls for accelerating revenue gains as major economies strengthen in Latin America and the Caribbean. Arcos Dorados is also set to benefit from a break on royalty rates over the next three years, which McDonald's offered in exchange for a more aggressive store development pace. To that end, Arcos Dorados plans to open about 60 new locations in each of the next three years, compared to the 33 it launched in 2016.
FTD Companies
Shares of florist giant FTD slumped nearly 24% after the company posted surprisingly weak fourth-quarter results. Revenue declined by 5.6% over the holiday shopping period to put the company below the low end of management's guidance. Net income also failed to meet expectations, thanks to an $84 million impairment charge related to its purchase of Provide Commerce. That segment hasn't been performing as well as expected. In fact, revenue declined 9.2% for the year as operating margin stayed stuck near 7%, or far below the 10.4% that FTD enjoys in its consumer business.
CEO John Walden, only two weeks into the job, expressed optimism that results will improve. "Although I believe the company has recently performed below its potential," Walden explained, "it has several assets to build upon -- strong brands, reliable partners including our member florists, and financial flexibility."
FTD plans to boost advertising spending this year to try to recapture some of the market share it has lost recently, and that move is likely to push profitability down even further. Yet executives are still forecasting roughly zero improvement in revenue in 2017, which helps explain why investors punished the stock on Wednesday.
