Stocks were mixed on Friday, with the Dow Jones Industrial Average (^DJI -0.98%) and the S&P 500 (^GSPC -0.46%) indexes each moving less than 0.1%.
Today's stock market
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
(0.01%) |
(2.67) |
|
S&P 500 |
0.03% |
0.75 |
Data source: Yahoo! Finance.
Financial stocks led the market in trading volumes, and the Financial Select Sector SPDR ETF (XLF -0.58%) mimicked the broader market's flat result. Gold prices rose by nearly a full percentage point to help push the VanEck Vectors Gold Miners ETF (GDX 3.65%) up 1%.
As for individual stocks, Deckers Outdoor (DECK -5.31%) and GameStop (GME 2.56%) saw heavy trading following the companies' quarterly earnings announcements.
Image source: Getty Images.
Deckers Outdoor boosts profits
Deckers Outdoor stock jumped nearly 19% after the footwear specialist posted surprisingly strong results for its fiscal fourth quarter. The top- and bottom-line figures weren't especially impressive, with revenue falling 2.4% and adjusted earnings holding steady at $0.11 per share.
Image source: Getty Images.
But the sales figure easily beat management's February forecast that predicted a drop of as much as 6%. The profit result also outpaced consensus estimates looking for a loss of $0.06 per share, due to a mix of cost cuts and improved pricing trends. "I am proud of the work the team has accomplished" in improving profitability, CEO Dave Powers said in a press release.
Gross profit margin jumped to 43% of sales from 40.9% as Deckers scaled back on its promotions. Its core brands -- including UGG, Teva, and Sanuk -- all experienced volume declines.
Powers and his team see room to cut $150 million out of its cost infrastructure over the next three fiscal years. The retailer might benefit from a sales turnaround, too, given that executives forecast modest revenue gains for the current quarter. The improving operating and financial trends could give executives added leverage in any buyout negotiations they conduct as they look for ways to maximize shareholder returns.
GameStop returns to growth
Shares of specialty retailer GameStop slipped 6% after the company announced fiscal first-quarter earnings in which sales growth returned amid declining profits. The revenue rebound came courtesy of healthy demand for new gaming consoles that offset declines in its software segment. GameStop also benefited from increases in its consumer products and collectibles divisions, two areas it sees as critical to its plan to diversify away from the shrinking market for physical video game discs. "Our first quarter results reflect the power of our leadership position within the video game market and our ongoing diversification efforts," CEO Paul Raines said in a press release.
The retailer still sees its comparable-store sales ranging between flat and a 5% decline in 2017 as earnings fall for the second straight year. Its nearly 7% dividend yield remains well covered both by earnings and cash flow. However, Wall Street chose to focus instead on GameStop's uncertain revenue outlook in an era of weakening customer traffic trends among major retailers.
Investors who are comfortable with that elevated risk might find the stock attractive given that it comes with one of the market's biggest dividend yields. GameStop is likely to post another year of declining top- and bottom-line numbers in 2017, but its results don't indicate the type of collapsing business that its valuation of just six times earnings would imply.
