Stocks rose Friday after news reports suggested the Fed may slow the wind-down of its bond portfolio. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) were also buoyed by some positive earnings reports.
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Materials stocks and gold were strong; the SPDR S&P Metals and Mining ETF (NYSEMKT:XME) rose 3.6%. Utilities fell on a jump in long-term interest rates, and the Utilities Select SPDR ETF (NYSEMKT:XLU) dropped 1.4%.
Starbucks continues sales growth improvement
Starbucks beat expectations for its fiscal first quarter, as the coffee giant reported strong comparable-sales growth and raised guidance for the year. Revenue increased 9.2% to $6.63 billion, well above expectations for $6.49 billion. Adjusted earnings per share grew 15.4% to $0.75 and included $0.07 of benefit from tax items, but still beat the analyst consensus by $0.10. The stock closed up 3.6%.
Global comparable-store sales grew 4%, a 1-percentage-point improvement from last quarter, with U.S. comps also up 4% and China up 1%. Transactions increased 1% worldwide and were flat in the U.S., with both metrics improving from Q4. Starbucks opened 541 new stores in the quarter, increasing store count by 7% year over year. Non-GAAP operating margin fell 1.8 percentage points from the period a year earlier, due to wage increases and company moves to take over ownership of stores in China.
Looking forward, Starbucks raised non-GAAP EPS guidance for the full year by $0.07 to a range of $2.68 to $2.73 and maintained its forecast for comparable-store sales gains of 3% to 4%.
Expenses rise at Intuitive Surgical
Shares of robotic surgery specialist Intuitive Surgical fell 3.9% after the company missed profit expectations due rising expenses and forecast continuing increases in investments in its business. Revenue grew 17.3% to $1.05 billion, a number that was released earlier this month. Non-GAAP earnings per share rose 13.8% to $2.96, missing the analyst consensus of $3.07.
The key metric of procedure growth came in at 19%, as previously announced, but pro forma operating expenses, excluding a contribution to a newly formed charitable foundation, increased 21%. Intuitive said it is investing in growing its informatics capabilities, funding expansion in India, China, and Taiwan, and building manufacturing automation in order to scale its business.
Looking forward, the company said to expect operating expenses in 2019 to grow 20% to 28%, procedure growth to slow to 13% to 17%, and gross profit margin to fall from 71.5% in 2018 to between 70% and 71% in 2019. Intuitive Surgical is taking advantage of strong results to invest in its future, but investors were concerned about the cost today.
Jim Crumly owns shares of Intuitive Surgical and Starbucks and has the following options: long January 2020 $50 calls on Starbucks. The Motley Fool owns shares of and recommends Intuitive Surgical and Starbucks. The Motley Fool has a disclosure policy.