Stocks climbed on Wednesday amid reports that China is preparing a plan to widen access to its economy for foreign companies, sparking hope that it may yet resolve trade tensions with the United States. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) both added about a half a percent.
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The gains were broad-based. After starting the week on a low note driven by concerns over a weakening global economy, oil stocks climbed higher today, with the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) up 0.6%. Tech stocks did even better; the Technology Select Sector SPDR Fund (NYSEMKT:XLK) rose 0.8%.
As for individual stocks, United Rentals (NYSE:URI) soared after offering encouraging news at its biennial investor day in New York City, while Dave & Buster's Entertainment (NASDAQ:PLAY) dropped following a disappointing quarterly report.
United Rentals' vision for the future
Shares of United Rentals jumped 6.3% after the equipment rental leader reaffirmed its 2018 guidance, offered a strong outlook for next year, and resumed share repurchases.
For 2018, United Rentals still expects revenue ranging from $7.89 billion to $7.99 billion -- good for growth of 19.6% at the midpoint -- and adjusted EBITDA of $3.815 billion to $3.865 billion.
But more exciting was the company's 2019 guidance for revenue of $9.15 billion to $9.55 billion, and adjusted EBITDA of $4.35 billion to $4.55 billion. Most analysts were modeling 2019 revenue near the low end of that range.
United Rentals also announced it will resume its $1.25 billion share repurchase program this month. After initiating the program this past July and buying back $210 million in shares, the company paused buybacks in early November to focus on integrating its recent $2.1 billion acquisition of BlueLine Rental.
"Our 2019 guidance reflects the healthy momentum we see going into year-end and our confidence that positive conditions will prevail in the coming year," added CEO Michael Kneeland. "Our five 2018 acquisitions have been successfully integrated, increasing the tailwinds in our gen-rent and specialty segments."
Dave & Buster's underwhelming comps
Dave & Buster's stock dropped 7.9% after the entertainment-centric restaurant chain announced third-quarter 2018 results. But those results didn't look bad at first glance. Revenue climbed 12.9% to $282.1 million, translating into net income of $11.9 million, or $0.30 per share. These figures technically beat consensus estimates for earnings of $0.24 per share on revenue of $277.7 million.
But the company's growth was entirely driven by new locations -- it remains on track to open a record 15 restaurants this year -- while comparable-store sales (revenue from restaurants open for at least one year) declined a greater-than-expected 1.3%.
Nonetheless, Dave & Buster's raised the lower end of its full-year revenue outlook by $13 million, resulting in a new range of $1.243 billion to $1.255 billion, and increased its 2018 net income target to $106 million to $113 million (up from $101 million to $111 million before).
In the end, while Dave & Buster's will likely be able to continue driving its top and bottom lines higher with new stores for the foreseeable future, investors obviously want to see healthier results from its large base of older locations.