Bad-Tasting McD's Earnings, but Fun Ones From Hasbro -- Plus, Russia and Housing-Market Pain

Get hungry -- Wall Street's getting into the meat and potatoes of the first-quarter earnings season. Stocks rose all week long as headline corporations dropped earnings reports like they were hot.

1. Stock winner of the week ...
Toys are fun, but toys that make money are even more fun. That's why Hasbro (NASDAQ: HAS  )  is our pick for stock of the week. Shares of the Rhode Island-based toy designer rose nearly 2% Monday after reporting earnings that were a treat for investors to play with. The company enjoyed $679.5 million in revenues over the first quarter of 2014, a 2% increase from the same period last year.

So what helped out Hasbro? It turns out that, in fact, "boys drool and girls rule." That's because sales of toys focused on boys (we're talking about Nerf classics) rose by just 2% over the quarter -- but for girls, toys like My Little Pony jumped by 21%. Plus, international Hasbro sales gained 5% despite a slight sales slowdown in North America.
 
The reason investors felt like kids on Christmas morning after Hasbro's earnings was that the toy industry hasn't been kind recently. Classic physical toys are facing serious competition from electronic ones -- plus, the unflattering holiday sales season ate away at Mattel's toy sales, according to their earnings report the week earlier. Hasbro's been going through some restructuring since 2013, and as it remakes itself, Wall Street seems happy that its 2014 is off to a mom-approved start.

2. ... And stock loser
The only thing worse than ordering a burger medium rare and getting it well done is having some poorly served earnings from McDonald's (NYSE: MCD  ) . Last Tuesday, the fast-food giant reported an artery-packing $6.7 billion in revenues during the first quarter of the year -- but that represented only a 1% rise from the same period in 2013, which was simply in line with analysts' expectations.

Ronald McDonald may always be smiling, but he wasn't for the first three months of 2014 -- he was shivering. According to the company's earnings report, the brutal winter weather that hurt much of the U.S. economy also had an affect on its consumers, who were apparently just too cold to wait in drive-through lines nationwide. That explains their 1.7% drop in same-store sales over the quarter, 

There was a silver, good-tasting lining, though, from the McDonald's news. The company continues to see impressive numbers outside the United States. International same-store sales have maintained their steady pace -- revenues in Europe gained 1.4%, while Asia's rose by 1%. Last fall, McDonald's failed new menu options didn't gain traction with Uncle Sam's constituents, but at least its classic menu options are still appealing to foreigners.

3. Fresh Ukraine/Russia worries rattled stocks
Fridays are supposed to be casual or just plain fun, but stocks wavered at the end of the week as geopolitical tensions between the West and Russia heated up. Over the past few days, Russia's been ordering new military exercises along Ukraine's border. Now U.S. Secretary of State John Kerry is warning bare-chested President Vladimir Putin to ease tensions, and the West's Group of Seven is meeting again to discuss new economic measures against Russia. Plus, Russian stocks have fallen for five straight days after S&P downgraded the country's credit rating. Ouch.

4. Housing data wasn't fun
Sales of existing homes dipped by 0.2% in March for their seventh contraction in eight months, while sales of new homes plummeted 14%. With the polar-vortex season behind us, economists had expected the improved housing market to see increased activity this spring. But as the Federal Reserve has scaled back its stimulus policies that kept interest rates low to encourage borrowing, the slight increase in interest rates this winter deterred many a mortgage-seeking homebuyer.
 
MarketSnacks this week:
  • Monday: Pending-home sales; first-quarter earnings reports: Buffalo Wild Wings, Caesars Entertainment, Denny's, Kate Spade
  • Tuesday: Two-day Fed meeting begins; earnings reports: Coach, eBay, Merck
  • Wednesday: U.S. GDP; earnings reports: Hyatt Hotels, MetLife, Yelp
  • Thursday: Motor-vehicle sales; earnings reports: Expedia, ExxonMobil, MasterCard
  • Friday: April jobs report; earnings reports: Chevron, CVS Caremark

As originally published on MarketSnacks.com

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10/30/2014 10:29 AM
HAS $56.91 Down -0.28 -0.49%
Hasbro CAPS Rating: ****
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McDonald's CAPS Rating: ***

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