Home Depot and Boeing Fall Despite Dow Rising

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

With a few different economic data reports being released today, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is slightly higher this afternoon. As of 1:08 p.m. EST, the blue-chip index is up 17 points, or 0.10%, while the other major U.S. indexes, the S&P 500 and the Nasdaq, have respectively risen 0.16% and 0.32%.

Retail sales figures rose 0.4% in October, while economists had expected the number to be flat. The Census Bureau, meanwhile, reported that business inventories rose 0.6%; estimates had the increased pinned at 0.3%.

Not all the economic news was good, though.

The Mortgage Bankers Association reported that new mortgage applications fell 2.3% last week, which was the third consecutive weekly decline.. To add further negative pressure from the housing market, the National Association of Realtors reported that home sales decreased by 3.2% in October, marking the second straight month of declines.

These reports are putting downward pressure on Home Depot (NYSE: HD  )  shares of the home improvement retail leader are down 0.22% today after climbing more than 1% on Tuesday. The drop is likely the result of a combination of issues. One cause may be the poor earnings report from competitor Lowe's (NYSE: LOW  ) which today noted lower-than-expected earnings per share despite beating on top-line revenue -- $12.95 billion, where Wall Street was looking for $12.72 billion. Earnings per share came in at $0.47, $0.01 below estimates. Despite Home Depot reporting stronger results yesterday, investors may be looking at Lowe's numbers and wondering whether Home Depot can continue outpacing the competition. Shares of Lowe's are down nearly 5% this afternoon.  

Another Dow component losing ground today is Boeing (NYSE: BA  ) as shares are off by 2.31% after an analyst downgraded the stock this morning. Oppenheimer lowered its rating on Boeing to perform from outperform. The reason given for the change was that the valuation had grown. Based on the current stock price, the analyst noted that the stock is already trading at a price-to-earnings ratio of 14 if we run expected earnings out to 2016. Boeing's stock price has been on a tear this year and is selling at a rather high 23 times past earnings. This may not be a bad time to take money off the table as the future growth is already priced into the stock. But only do so if you have a better opportunity in mind.  

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  • Report this Comment On November 20, 2013, at 2:22 PM, Trololololo wrote:

    Only on Wall $treet would a company like Lowe's get slammed today, despite reporting good revenue and earnings, while JC Penny jumps after reporting yet another loss.

    It begs the question: why do analysts get a pass? Why are they never held accountable for being inept at their jobs? Whenever I read, "Analysts expected…" I start to boil over. It is assumed that analysts are always perfect, which they are not. Instead, thanks to CNBC, you now have a ruling class of rockstar wanna-be analysts who never met a studio video camera they didn't like, instead of doing their jobs.

    Why is it that companies get punished for beating their own guidance instead of analysts becoming your new neighborhood Starbucks baristas after a string of poor estimating? Is it too much to ask them to do their job based on solid fundamentals instead of voodoo "channel checks" or in the case of Deutchebank's analyst covering Tesla, basing his estimates on a fanboy site? Or analysts depending on DigiTimes fantasy articles to base their judgments on a company like Apple?

    If I tried stunts like that in my job, I'd be on the street in a heartbeat.

    That the media takes such shoddy research and reports with it chapter and verse terrifies me. And it should terrify you too. What would it take to hold these buffoons accountable?

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