Dow Jumps Despite Tepid Jobs Report; Outerwall Gains, but Linkedin Fades

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.

Stocks jumped again today despite a tepid jobs report, as all three major indexes tacked on at least 1% for the second day in a row. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) added 166 points, or 1.1%, for the day. The Department of Labor reported just 113,000 jobs were added in January, short of estimates of 175,000, but private-sector performance was better, seeing an addition of 142,000 jobs. Meanwhile, the unemployment rate ticked down from 6.7% to 6.6%. Many recent economic reports have been unfavorable due to bad weather, and investors seem to have attributed the lackluster jobs report to that factor. There were also positive signs in the report as the percentage of working-age Americans with jobs hit its highest mark since October 2012, at 58.8%, and the number of long-term unemployed fell by 232,000, to 3.6 million. This is a positive sign, as those Americans have been hit hardest by the slow economic recovery. That figure has dropped by 1.1 million during the last year as the economy moves back to full employment.

On the earnings board today, Outerwall (NASDAQ: OUTR  ) jumped 12% after announcing earnings and a share buyback plan. The parent of Coinstar and Redbox said it would repurchase $350 million worth of shares through a modified Dutch auction, giving shareholders the opportunity to sell their stock at a price between $66.82 and $76.32. The offer could lead to the company buying back as much as 20.8% of its stock, which would inflate per-share earnings by more than 25%. Considering shares are now at a 52-week high, the timing of the proposal may be odd, but the market almost always cheers buybacks, especially ones of this size. As for earnings, adjusted profits rose to $1.68 from $1.01 on a 5% increase in revenue, to $593.7 million, showing that the Redbox video-rental model continues to be successful despite the proliferation of video streaming.

Elsewhere, Linkedin (NYSE: LNKD  ) shares finished down 6% after reporting disappointing guidance in its quarterly report. The hot social media stock actually beat on both top and bottom lines, as its adjusted per-share profit of $0.39 was $0.01 ahead of estimates; but the professional social network saw top-line growth slowing in the current year. After a 47% increase in sales in the most recent quarter, Linkedin sees growth coming in at about 33% this year. For nearly any other company, that number would be eyepopping, but Linkedin carries a sky-high valuation, as shares have jumped more than 300% since its IPO. Still, the company has the type of business model that can easily convert sales into profits, making it different from many of its Web 2.0 peers.

One reason to bet on Linkedin
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free, and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.


Read/Post Comments (1) | 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.

  • Report this Comment On February 08, 2014, at 7:44 AM, C237 wrote:

    " Considering shares are now at a 52-week high, the timing of the proposal may be odd..."

    They are at a 52-week high because of the buyback. Circular reasoning here to say it's odd that they did it, given their stock is now at a 52 week high.

    Regardless, it's where it was in 2012. The buyback is effective if they feel the stock is undervalued now. The historical price movements are irrelevant.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2829647, ~/Articles/ArticleHandler.aspx, 12/18/2014 2:34:30 PM

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