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Stock Market Today: eBay and Domino’s Jump as the Broad Market Declines

By Demitri Kalogeropoulos – Jul 21, 2016 at 4:52PM

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The Dow fell for the first time in eight sessions on Thursday, but these stocks posted solid gains.

Stocks took a step back on Thursday. After seven straight record-notching sessions the Dow Jones Industrial Average (^DJI -1.40%) declined by 77 points, or 0.4%. The broader S&P 500 (^GSPC -1.79%) slipped by the same margin as well.

^SPX Chart

^SPX data by YCharts

In economic news, the housing market is on a roll, according to the latest data from the National Association of Realtors. Existing home sales increased for the fourth consecutive month to reach a 5.6-million-unit annual pace in June. First-time buyers took a bigger piece of the market, likely prodded by this year's declining mortgage rates .

Meanwhile, eBay (EBAY -2.79%) and Domino's (DPZ -0.39%) were among the day's biggest individual stock movers.

eBay brightens its outlook

eBay jumped 11% after the online marketplace beat consensus estimates and raised its 2016 sales and profit forecast. Revenue rose 6% as initiatives to simplify the service and broaden its offerings began to pay dividends. eBay passed 1 billion live listings for the first time and its marketplace volume rose 3%, representing a solid improvement from the prior quarter's 1% uptick . "Q2 was another good quarter where we delivered strong results and had acceleration in growth," CEO Devin Wenig said in a press release.

Image source: Getty Images.

Recent acquisitions added to the core momentum as the StubHub business posted a 40% spike in transactions, up from a 34% growth pace in Q1.

As for finances, eBay's operating margin improved to 24% of sales from 20%. That improvement helped earnings tick higher by 2% to $0.43 per share – edging Wall Street targets by a penny.

It was the company's upgraded outlook that likely got investors in a buying mood, though. Wenig and his team forecast a stronger Q3 than consensus estimates, and they raised their full-year guidance to $8.9 billion, representing roughly 6% growth. Three months ago that forecast stood at barely 4% growth. Given the low multiple that investors had assigned to eBay shares heading into this report, accelerating sales gains were enough to spark a double-digit surge in the stock on Thursday.

Domino's sells a ton of pizza

Americans have a huge appetite for pizza. Domino's stock rallied by 6% to touch a new all-time high after the chain posted its 21st consecutive quarter of comparable-store sales growth. These were impressive comps too, with its 5,200 existing U.S. locations growing at a 10% pace to mark an acceleration over the prior quarter's 6% boost .

Image source: Domino's

The extra demand produced mouth-watering financial gains for Domino's investors: Net income rose 7% and earnings per share spiked higher by 21% with help from hefty stock repurchase spending by management. Operating income held steady at 19% of sales.

"The business continued to progress in a very positive direction," CEO J. Patrick Doyle said in a press release.

Domino's debt costs were a nagging issue, with interest expenses rising to 5% of sales from 4% a year ago. The pizza chain's $2.2 billion of debt far exceeds its cash on hand and in fact represents nearly one-third of its market capitalization. Executives are still determined that stock buybacks are a better target for excess cash than debt repayment. Given Thursday's stock price jump, investors appear to have no problem with those priorities – assuming Domino's can keep up its market thumping growth pace.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool owns shares of and recommends eBay. 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.

Stocks Mentioned

eBay Stock Quote
$43.94 (-2.79%) $-1.26
Domino's Pizza Stock Quote
Domino's Pizza
$381.26 (-0.39%) $-1.50
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,947.10 (-1.40%) $-482.78
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,998.84 (-1.79%) $-72.86

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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