Stocks fell on Friday after President Trump announced $50 billion in tariffs on imported Chinese goods, stoking fears of an impending trade war between the U.S. and China. By the closing bell, the Dow Jones Industrial Average (DJINDICES:^DJI) had extended yesterday's decline, dropping around 0.3% after paring its earlier losses. The S&P 500 (SNPINDEX:^GSPC) slipped about 0.1%.
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Oil stocks led the market lower on expectations that OPEC and its allies will soon increase output, leaving the SPDR S&P Oil & Gas Exploration and Production ETF (NYSEMKT:XOP) down 2.9%. Meanwhile, consumer goods stocks helped pare the market's losses, with the Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) up 1.3%.
Jabil's beat just wasn't enough
Jabil stock fell 6.5% after an analyst cut his price target on shares of the manufacturing services company despite its stronger-than-expected quarterly results.
Late yesterday, Jabil announced that its fiscal third-quarter revenue climbed 21% year over year to $5.4 billion, which translated to adjusted (non-GAAP) earnings of $79.6 million, or $0.46 per diluted share. Most investors were looking for earnings of $0.45 per share on revenue of $4.9 billion.
Jabil CEO Mark Mondello called it a "strong" quarter despite today's "challenging components market."
In addition, for the current fiscal fourth quarter, Jabil told investors to expect revenue of $5.2 billion to $5.6 billion, and adjusted earnings per share in the range of $0.56 to $0.80. Analysts, on average, were projecting fiscal Q4 earnings of $0.70 per share -- or slightly above the midpoint of guidance -- on revenue near the low end of Jabil's outlook.
Shortly after the release, J.P. Morgan analyst Paul Coster maintained his overweight rating on Jabil, but reduced his per-share price target. Coster pointed to concerns that Jabil's cash flow during the quarter was weaker than expected due to investments in working capital. He also noted that Jabil's margins are being pressured by component supply constraints.
That's not to say this wasn't a solid quarter from Jabil. But it's evident that Wall Street doesn't like that its top-line growth appears to be coming at the expense of cash flow and profitability.
Canada Goose Holdings flies higher
Shares of Canada Goose Holdings skyrocketed 33.1% after the performance luxury apparel company crushed expectations with its fiscal fourth-quarter 2018 results. Quarterly revenue jumped 144% year over year to 124.8 million Canadian dollars, which translated to adjusted net income of CA$9.9 million, or CA$0.09 per share, swinging from a CA$0.15-per-share loss in the year-ago period.
Analysts, on average, were expecting Canada Goose would incur an adjusted loss of CA$0.09 per share on revenue of C$78.9 million.
"These results reinforce my belief that we are still just scratching the surface of our global potential," stated Canada Goose CEO Dani Reiss. "As we continue to bring more Canada Goose to more of the world, we are resolutely focused on the long term and what we need to get there."
Reiss added that in the coming fiscal year, Canada Goose will "make significant strategic investments in infrastructure and people to support [its] foundation for enduring growth."
To that end, over the next three fiscal years, Canada Goose expects average annual growth in revenue and adjusted earnings of "at least" 20% and 25%, respectively.
That's impressive any way you slice it for this up-and-coming company, and it's no surprise to see the stock popping in response.