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What Happened in the Stock Market Today

By Demitri Kalogeropoulos – May 25, 2017 at 5:00PM

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Best Buy soared and Amerco sank as indexes rose.

Stocks pushed further into record territory on Thursday, with the Dow Jones Industrial Average (^DJI 0.45%) and the S&P 500 (^GSPC -0.03%) indexes both edging higher by more than 0.25%.

Today's stock market


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Data source: Yahoo! Finance.

Financial stocks led all sectors in trading volume, and the Financial Select Sector SPDR ETF (XLF 0.33%) slightly underperformed the broader market by logging a 0.2% increase. Gold prices ticked higher, yet the popular VanEck Vectors Gold Miners ETF (GDX -0.94%) still declined by 1.1%.

Outside the stock exchange in New York.

Image source: Getty Images.

As for individual stocks, Best Buy (BBY -1.41%) and Amerco (UHAL 0.44%) saw heavy trading following the companies' quarterly earnings announcements.

Best Buy predicts improving sales trends

Best Buy shares soared 21.5% after the electronics retailer paired solid first-quarter results with an optimistic full-year business outlook. Comparable-store sales rose 1.6% to kick off fiscal 2018, reversing the slight decline from the prior-year period. Best Buy managed comparable-sales increases in its consumer electronics, entertainment, and appliances divisions that helped offset a slight decline in its computer and smartphone segment. The online channel contributed healthy gains too, rising 22.5%.

Profit margin ticked higher thanks to solid demand across most of Best Buy's product categories. "We are pleased today to report strong top and bottom line results," Chairman and CEO Hubert Joly said in a press release. "Our Q1 performance reflects the strength of our customer value proposition and continued momentum in the execution of our strategy," he continued.

A couple picks out a new television.

Image source: Getty Images.

Executives believe the momentum will carry on into the fiscal second quarter, where sales are expected to grow 1.5% to 2.5%. Non-GAAP earnings will rise to $0.57 to $0.62 per share, which is in line with Wall Street targets. Thanks to the surprisingly strong start to the year, Joly and his team raised their full-year outlook to target 2.5% revenue gains, compared to the prior forecast of a 1.5% uptick.

Amerco takes a big earnings charge

Shares of Amerco, the parent company of U-Haul, dropped 10% after the company posted a sharp drop in fourth-quarter profits. The moving equipment specialist announced healthy demand for do-it-yourself rental trucks and for its self-storage products, as equipment rentals rose 2.3% and storage sales improved 14%. However, a spike in depreciation charges sent net income lower by 82% to just $9.5 million. For the full year, earnings fell to $742 million from $867 million.

Amerco's results were hurt by a broad decline in value for used vehicles that's causing both higher depreciation charges and lower recovery prices when the company sells its older models to make room for fleet improvements. That trend was especially pronounced this year, as Amerco placed 42,000 new trucks in service. "Increased truck depreciation and reduction in gain on sale of trucks are big drivers of the earnings drop for the year," Chairman and CEO Joe Shoen explained in a press release.

Shoen and his team are focused on boosting revenue through increased rental volumes, higher average prices, and increased utilization of its equipment. Its capital charges, meanwhile, should decline in the year ahead as fleet investments fall from $705 million in fiscal 2017 to $440 million in fiscal 2018. The company is still likely to endure increased depreciation costs that pinched reported profits this year, though.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Amerco. The Motley Fool has a disclosure policy.

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