Stock Market Today: TV Buyout Chatter, Costco's Miss, and Home Depot's Opportunity

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

Expect a flat start to the stock market today, as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is set to rise a meager 14 points at the opening bell. News is breaking this morning regarding Scripps Networks Interactive (NYSE: SNI  ) and Costco (NASDAQ: COST  ) , while Home Depot (NYSE: HD  ) gave investors an updated long-term earnings forecast.

But first, Scripps Networks is on the move this morning on reports that Discovery Communications (NASDAQ: DISCA  ) may be looking to purchase the company. Scripps owns several popular TV content brands, including Food Network and HGTV, while Discovery owns TLC, Animal Planet, and the Discovery Channel, among others. Merging the two portfolios could make more sense now, given that consolidation is coming to the cable industry, and could soon give cable operators more power to push back against content producers' prices. Scripps Networks' stock is up 6.6% in premarket trading.

Costco this morning reported soft results for its fiscal fourth quarter. Profit came in at $0.96 a share, below the $1.02 that Wall Street was targeting -- and just a penny higher than last year's haul. Revenue was also about $1 billion below estimates, registering an increase of just 5% to $24.47 billion. But that seemingly disappointing result could be partly due to a quirk of the calendar. Costco's fourth quarter this year ended on Nov. 24, before the Black Friday shopping weekend, while last year's Q4 included most of that weekend. In any case, membership fees continued to trend higher this past quarter, and comparable-store sales increased by 4% in the U.S., which is likely better than most retailers could manage. Costco's stock is down 1.7% in premarket trading.

Finally, Home Depot expects a fundamental improvement in its business to continue for years. The retailer this morning affirmed its outlook for the rest of 2013, saying that comparable-store sales growth should come in at 7%. It also provided an earnings forecast for 2014 that includes a 17% boost in per share profit. Home Depot updated its 2015 financial targets as well, and now sees operating margin rising to 13%, while its return on invested capital should climb to a stellar 27%. With solid sales results and a strong outlook like that, one has to wonder how the stock has managed to trail the broader market this year. After you're done wondering, consider adding this impressive retailer to your portfolio. Home Depot's stock is unchanged in premarket trading.

More stocks for your portfolio
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses like Home Depot and keep them for the long term. In the special free report, "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2760652, ~/Articles/ArticleHandler.aspx, 4/16/2014 6:46:04 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement