Friday was a good day on Wall Street, with favorable macroeconomic news supporting the overall market. Unexpectedly large gains in nonfarm payroll numbers from the Bureau of Labor Statistics helped to create a more optimistic view of the future of the U.S. economy, and earnings season continued to lift many individual stocks. U.S. Steel (X -2.21%), Turning Point Brands (TPB 2.44%), and El Pollo Loco Holdings (LOCO 2.79%) were among the top performers. Here's why they did so well.
U.S. Steel makes the most of tough times
Shares of U.S. Steel were up 15% following the steelmaker's release of third-quarter financial results. U.S. Steel's numbers weren't all that good, with the company seeing revenue fall 18% from the year-ago quarter and suffering an adjusted net loss for the period. Yet $35 million in red ink for the quarter wasn't as bad as many shareholders had feared, and CEO David Burritt said that the company is still looking at ways to make the most of its assets, cut fixed costs, and highlight strong-performing areas like the flat-rolled steel segment. U.S. Steel has a long way to go, but investors feel more confident that it's headed in the right direction.
Image source: U.S. Steel.
A turning point for Turning Point?
Turning Point Brands saw its stock soar 17% after the company made a huge announcement about its business model. At the same time as it issued its third-quarter financial report, Turning Point said that it's looking at ways to divest itself of its vaping distribution business. The tobacco and alternative products specialist said that sales were up 16% year over year during the quarter, but net income fell more than 20%. Yet news about health consequences from vaping weighed on that part of the business, and that prompted Turning Point to move away from its third-party distribution of vaping products. Given all the controversy surrounding vaping, that was clearly the right move in investors' eyes, and it could mark the beginning of a bigger turnaround if the company can find other pathways to growth.
El Pollo Loco looks crazy good
Finally, shares of El Pollo Loco Holdings soared 29%. Overall results for the Mexican-style chicken restaurant chain seemed lackluster, with total revenue remaining flat in the third quarter of 2019 on systemwide comparable-restaurant sales growth of 1.1%, and adjusted net income eased lower year over year. Yet CEO Bernard Acoca noted that the month of September saw comps climb 4.2%, showing signs of gaining momentum heading into the fourth quarter. There's a lot of competition in the restaurant space, but El Pollo Loco's latest report suggests that it might have what it takes to beat out some of its peers.
