Mixed Econ Data, Dunkin's Down Earnings, and Ford/GM Car Performances

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Jul 24, 2014 at 11:00PM
The insane amount of heavy corporate earnings reports released this week means you deserve relaxing with a double IPA (Wall Street is all about an ale with 10% alcohol by volume). Earnings season continued Thursday as the Dow (DJINDICES:^DJI)(DJINDICES:^DJI) slipped three points on some mixed econ news.

1. Dunkin' Donuts stock dunked on sales drop
America may "run on Dunkin'," but investors are running away. Shares of the not-nearly as-good-as-Krispy-Kreme donuts chain dropped 5% Thursday on a sugar-free earnings report. Although revenue rose 4.6% to more than $190 million last quarter, sales gained less than 2%, and the company lowered its 2014 revenue expectations.
 
Dunkin' owns one meal: breakfast. About 80% of Dunkin's sales are during breakfast, and now, the company plans to redesign stores for faster service during busy morning hours and add "healthier breakfast sandwich." And, like competitors, Dunkin's been discounting its morning fare this year to drive early traffic, but will now increase prices slowly by 1%
 
The takeaway is, "go west, young man." The Boston-based Dunkin' is super popular with overly proud New Englanders toting XXXL Red Sox sweatshirts. Now, the chain is opening up more Dunkin' Donuts and Baskin Robbins stores outside the East Coast.

2. Ford's Q2 was hot, while investors ran from GM recalls
Ford released second-quarter earnings, the first one announced by slick-haired, Harvard MBA-touting Mark Fields, the new CEO following the legendary Alan Mullaly. Fields one-upped his predecessor by announcing Ford's (NYSE:F) best profits ever in North America. Overall profits rose 6%, to $1.3 billion, from last year's second quarter. The student has become the teacher. Ford shares rose 0.3%, close to the high for the past 52 weeks.
 
Everything is relative, and relative to General Motor's (NYSE:GM) disastrous quarter that included $2.5 billion in recall costs. Next to GM's new and already embattled CEO Mary Barra, Ford's Fields looks like a supermodel. GM's profits dropped 80%, to $250 million, due to the horribly costly fixes that had to be done to 29 million cars so far this year. Plus, they estimated today that compensation to families of crash victims from their busted ignition switches will be $400 million. GM's stock got smashed by 4.5% Thursday.
 
The takeaway is that car sales in the United States are still driving profitability for both Ford and GM. If it weren't for the horrible skeletons in GM's closet, both car companies would have had yet another quarter of billions in profits. American car buyers are digging GM's and Ford's new cars, and are upgrading their old 1984 Rabbits with American muscle.

3. Housing and jobs data were totally mixed
You can't always get perfect econ data. On the bright side, the number of Americans filing for first-time unemployment claims during the last week (aka "Weekly Jobless Claims"), dropped by 19K to reach the much-lower-than-expected total of 284K claims. Wall Street hopes that's a sign of a trend.
 
On the not-so-hot side, sales of new homes surprisingly fell 8.1% last month. Earlier this week, sales of existing home sales showed some improvement. So what's the deal? Overall, it's a sign that, while the housing market is still recovering, it's doing so at a slower pace than in 2013.
 
As originally published on MarketSnacks.com
 

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Jack Kramer has no position in any stocks mentioned. Nick Martell has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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