Today's stock market
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Direxion Daily Gold Miners Bull ETF (NYSEMKT:NUGT) jumped 10% higher as the leveraged fund benefited from an uptick in gold prices. The precious metal rose 0.6% to mark its second straight positive session after hitting a four-month low. iShares MSCI Emerging Markets (NYSEMKT:EEM) investors also enjoyed solid gains as strength in global markets pushed the fund up nearly 2%.
Netflix shocks investors
For the second quarter in a row, Netflix missed its subscriber growth forecast -- but this time management overshot its target. The streaming video giant added 3.6 million new members worldwide, compared to the 2.3 million that CEO Reed Hastings and his executive team had projected. As a result, the stock soared higher by 19%. In an earnings conference call with analysts, Hastings apologized for the volatility that investors have seen over the last few months even if, as he said, "This time it's in a good direction."
Remember, management provides their internal forecast for the coming quarter at earnings time, and they aim to be accurate, which implies misses on both the positive and negative sides.
The outperformance was mainly due to buzz around Netflix's original and exclusive shows, especially Narcos and Stranger Things. New members signing on to access these shows helped offset the continued drag from existing members canceling the service over price increases.
Netflix will be done with the rollout of that price hike in the current quarter, and so the company will enter 2017 with solid profitability in addition to strong subscriber momentum. Its huge bet on original shows continues to soak up cash and will require another dip into the credit markets soon. However, there's every reason to believe Netflix will generate material profits next year, as Hastings and his team have predicted.
Domino's delivers faster growth
Domino's Pizza is doing a lot of things right. The global pizza chain posted a 13% spike in comparable-store sales in its U.S. business along with a 7% increase overseas to push total revenue higher by 17%. That comp gain represented the second straight quarter of accelerating gains for Domino's. Comps were up 10% last quarter and 6% in the final quarter of 2015.
Profitability improved as well, which powered a 25% spike in net income to $47 million. "We continued to execute at a very high level during the third quarter," CEO J. Patrick Doyle said in a press release, "as our unprecedented momentum, steady strategy and alignment with our outstanding franchisees is helping to take the business to new heights."
Interest expenses from Domino's $2 billion debt burden grew to $25 million, representing 4.4% of sales compared to 4.1% a year ago. However, the benefits of rising customer order volumes and lower food costs more than made up for the difference. Bottom-line profitability ticked up to 8.3% of revenue from 7.8% in the year-ago period.
While it's hard to identify a single catalyst that's behind Domino's market-thumping growth, the mixture of menu innovations, store redesigns, and aggressive e-commerce strategies have combined to produce a broadly successful business. That's why investors might not want to bet against this stock right now, even though shares are up almost 500% since 2011.