The stock market fell modestly on Friday, continuing its streak of relatively quiet moves in either direction. Most market commentators seemed to keep their focus on the Federal Reserve, and many are confused about whether the central bank will stick to a September timetable to implement the next round of interest rate increases, or wait longer before making a move.
In the face of uncertainty, the path of least resistance for the day was down, but some companies stood out with strong performances that sent their shares moving higher despite the somewhat downbeat mood on Wall Street. Among the best performers were GEO Group (NYSE:GEO), DeVry Education (NYSE:ATGE), and Restoration Hardware (NYSE:RH).
GEO gets a stay of execution
GEO Group soared 21%, earning back a portion of the private prison operator's 40% drop Thursday. Yesterday's decline came on news that the U.S. Department of Justice would seek alternatives to private prisons for housing federal inmates, but investors appear to have had more time to consider the actual impact on GEO Group, and that prompted a partial rebound. In particular, the company expects no impact whatsoever from the DOJ move in 2016, and even in the long run, the decline seems to be disproportionately large compared to the amount of revenue that GEO Group gets from the federal prison system.
The biggest concern is that state governments might follow the federal government's lead, but yesterday's decline seemed to take that as a foregone conclusion. GEO Group's advance today appears to assign a more realistic probability that the worst-case scenario might not play out.
DeVry gets smarter
DeVry Education jumped 17% after reporting fiscal fourth-quarter results that were far better than most investors had expected from the for-profit education provider. The company said Thursday evening that total revenue eased downward less than 1% for the quarter, and that it suffered a net loss of $10 million, or $0.16 per share. However, CEO Lisa Wardell pointed to the early success of efforts to diversify the company's sources of revenue, with gains in the medical/healthcare field, and the international and professional education segment helping to offset big declines in the business, technology, and management areas.
By focusing on training for specialties that are in high demand worldwide, DeVry hopes to put a stop to the decline in total enrollment and new student counts going forward. Despite new enrollment declines of nearly a quarter, investors seem to believe that the best might lie ahead for DeVry.
Restoration Hardware looks a little prettier
Finally, Restoration Hardware gained 11%. The high-end home-furnishings retailer got a favorable review from analysts at Goldman Sachs, including an upgrade that put the stock on the investment bank's conviction list. Analysts believe that Restoration Hardware's recent efforts to restore its business, including the full rollout of the RH Modern line of products and the inclusion of member pricing levels in marketing materials, should lead to a nice bounce for the retailer.
Given very low expectations, Restoration Hardware is in the enviable position of having little to lose, but a lot to gain, if it can surpass the low bar it has set for itself. Shareholders hope that Goldman is right, and the recent bounce in other areas of retail could be just the catalyst that Restoration Hardware needs to join the party going forward.