Please ensure Javascript is enabled for purposes of website accessibility

What Happened in the Stock Market Today

By Jim Crumly - Updated Feb 21, 2018 at 4:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On an up-and-down day on Wall Street, Advance Auto Parts beat profit expectations and Devon Energy didn't.

Stocks were set to turn in strong gains after the Federal Reserve released minutes from its January meeting, but major benchmarks retreated in the last hours of the session. The Dow Jones Industrial Average (^DJI 2.68%) moved above 25,000 but ultimately closed at 24,797.78. The S&P 500 (^GSPC 3.06%) gave up about half a percentage point.

Today's stock market

Index Percentage Change Point Change
Dow (0.67%) (166.97)
S&P 500 (0.55%) (14.93)

Data source: Yahoo! Finance.

Interest-rate-sensitive real estate shares tumbled, with the Vanguard REIT ETF (VNQ 2.13%) losing 2%. Energy producers were also hit hard today; the SPDR S&P Oil & Gas Exploration & Production ETF (XOP 1.20%) dropped 2.4%.

As for individual stocks, Advance Auto Parts (AAP 2.50%) rose on a big earnings beat, and Devon Energy (DVN -1.77%) fell after production problems hurt profit.

Flags on the New York Stock Exchange

Image source: Getty Images.

Advance Auto Parts beats earnings expectations

Retailer Advance Auto Parts announced fourth-quarter sales and earnings that beat estimates, and shares jumped 8.2%. Revenue declined 2.2% to $2.04 billion and adjusted earnings per share fell to $0.77 compared with $1.00 a year earlier. However, analysts were expecting the company to earn only $0.63 per share on sales of $2.02 billion.

Comparable-store sales fell 2.6% and gross margin dropped 69 basis points, due primarily to increased supply chain costs. The company generated free cash flow of $171 million, far above earlier guidance of $60 million. 

"Through the strong dedication of our entire team, we continued to close the performance gap versus the industry and our laser focus on working capital enabled a 56% increase in free cash flow in a difficult sales environment," said CEO Tom Greco in the press release. "As we enter the second year of our transformation plan, we still have a lot that we want to accomplish."

This was the second quarter in a row Advance Auto Parts has announced declining results that still beat estimates and revved up the stock. Management set a low bar for 2018 with sales guidance of $9.1 billion to $9.4 billion, compared with the analyst consensus of $9.5 billion.

Devon shares drilled on profit miss

Oil exploration and production company Devon Energy reported disappointing profit on lower-than-expected production levels in the fourth quarter, and the stock fell 11.8%. Revenue was up 42% to $3.98 billion, and well ahead of analyst expectations of $3.52 billion in sales. But core earnings per share came in at $0.38, missing the consensus estimate of $0.63.

Devon produced an average of 548,000 oil-equivalent barrels (BOE) per day in Q4. Guidance from last quarter was for production to be between 551,000 and and 571,000. The company said that the shortfall was caused by timing issue with well tie-ins in the STACK shale play in Oklahoma and steam constraints in the Jackfish complex in Canada, both temporary issues. 

Looking forward, Devon expects full-year production to increase to a range of 552,000 BOE per day to 576,000 BOE per day, compared with 543,000 in 2017. But the company pointed out that its strategy is not based on growing production rapidly. "With our disciplined multi-year plan, Devon will accelerate value creation through the pursuit of capital-efficient cash-flow growth and portfolio simplification, not top-line production growth," said CEO Dave Hager in the press release.

Devon expects to generate $2.5 billion in cumulative cash flow through 2020, and exited the quarter with $2.7 billion in cash on hand. Fourth quarter free cash flow was a negative $81 million, so the company has a way to go to meet its goals. But the market was ignoring the longer term today, and seemed to be more focused on short-term production.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Devon Energy Corporation Stock Quote
Devon Energy Corporation
DVN
$53.77 (-1.77%) $0.97
Advance Auto Parts, Inc. Stock Quote
Advance Auto Parts, Inc.
AAP
$183.10 (2.50%) $4.47
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,500.68 (2.68%) $823.32
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,911.74 (3.06%) $116.01
SPDR Series Trust - SPDR S&P Oil & Gas Exploration & Production ETF Stock Quote
SPDR Series Trust - SPDR S&P Oil & Gas Exploration & Production ETF
XOP
$121.99 (1.20%) $1.45
Vanguard Specialized Funds - Vanguard Real Estate ETF Stock Quote
Vanguard Specialized Funds - Vanguard Real Estate ETF
VNQ
$93.12 (2.13%) $1.94

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.