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What Happened in the Stock Market Today

By Demitri Kalogeropoulos - Updated Apr 6, 2017 at 5:16PM

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Constellation Brands and CarMax stocks both beat the market as broader indexes rose.

Stocks edged higher on Thursday, with both the Dow Jones Industrial Average (^DJI -0.15%) and the S&P 500 (^GSPC -0.22%) indexes finishing higher by less than 0.25%.

Today's stock market

Index

Percentage Change

Point Change

Dow

0.07%

14.80

S&P 500

0.19%

4.54

Data source: Yahoo! Finance.

Financial stocks modestly outperformed the market to help push the Financial Select Sector SPDR ETF (XLF -0.37%) higher by 0.6%. On the other hand, a small uptick in gold prices failed to keep Direxion Daily Junior Gold Miners Bull 3X ETF (JNUG -2.45%) from falling 1.7%.

As for individual stocks, Constellation Brands (STZ 0.97%) and CarMax (KMX 0.49%) attracted heavy investor interest following the companies' quarterly earnings reports.

Outside the stock exchange in New York.

Image source: Getty Images.

Constellation Brands beats expectations

Shares of alcoholic beverage giant Constellation Brands jumped 6.4% after the company posted fourth-quarter results that showed strong growth on both the top and bottom lines. Revenue rose 5% as surging gains in the beer business offset flat results in the wine and spirits division.

In fact, a 10% volume spike in beer was enough to push revenue in the division up by 17% for the full year, hitting the top of management's guidance range. Higher selling prices, meanwhile, helped push profitability up by 2.2 percentage points to 43.1% of sales in the quarter. "Our beer business continues to be a powerhouse for growth," CEO Rob Sands said in a press release. "We exceeded our profit and margin goals for the year," he added.

Beer in a pint glass.

Image source: Getty Images.

Constellation Brands' initial outlook for fiscal 2018 calls for continued earnings gains as profit improves to between $7.70 and $8.00 per share. At the midpoint of guidance, that translates into a 16% jump over this past year's haul. The wine business should grow organic sales between 4% and 6%, executives said, while the beer segment again grabs market share in the U.S. To support that booming beer volume, the company plans to invest $1 billion to upgrade and expand its Mexican breweries.

CarMax speeds up growth

CarMax shares ticked 2.4% higher following the company's fiscal fourth-quarter earnings report. The automotive retailer beat expectations on sales and profits, with revenue rising 9.3% to $4.05 billion while earnings improved 14.1% to $0.81 per share. In contrast, consensus estimates were targeting $3.93 billion in revenue and $0.79 per share in earnings.

The company benefited from a 8.7% spike in comparable-store sales. Two encouraging trends contributed to produce that impressive result: an uptick in customer traffic and an increase in the percentage of shoppers who turned into buyers.

In addition to the gains from existing locations, CarMax is getting a boost from its aggressive expansion strategy. The retailer opened four new stores during the quarter, including two in completely new markets, to bring its total lot count to 173 across 39 states. CarMax plans to add 15 more locations to that total in fiscal 2018 to keep up the expansion pace from last year.

Key challenges facing the company include tightening credit availability for buyers on the lower end of the credit score spectrum and competition with aggressive promotions at new car dealerships. Investors have to balance those risks against the encouraging uptick in shopper traffic and conversion rates that produced an almost double-digit spike in sales this quarter.

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Stocks Mentioned

Constellation Brands, Inc. Stock Quote
Constellation Brands, Inc.
STZ
$247.88 (0.97%) $2.38
CarMax Inc. Stock Quote
CarMax Inc.
KMX
$98.84 (0.49%) $0.48
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,452.63 (-0.15%) $-48.05
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,903.31 (-0.22%) $-8.43
The Select Sector SPDR Trust - The Financial Select Sector SPDR Fund Stock Quote
The Select Sector SPDR Trust - The Financial Select Sector SPDR Fund
XLF
$32.22 (-0.37%) $0.12
Direxion Shares ETF Trust - Direxion Daily Junior Gold Miners Index Bull 3X Shares Stock Quote
Direxion Shares ETF Trust - Direxion Daily Junior Gold Miners Index Bull 3X Shares
JNUG
$40.50 (-2.45%) $-1.02

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

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