Stock markets looked poised to settle down Wednesday morning after a tumultuous day on Tuesday. Investors now believe they're ready for an aggressive year of monetary policy in 2023, and so stock market index futures were little changed shortly before the market opened.
However, a couple of stocks got a lot of attention. Occidental Petroleum (OXY 5.42%) climbed as the oil and gas exploration and production company was the subject of additional purchases of stock from a major shareholder. However, United Natural Foods (UNFI +4.04%) wasn't as fortunate, as its shares plunged after it reported its latest financial results.
Berkshire buys more Occidental
Shares of Occidental Petroleum were up between 2% and 3% in premarket trading Wednesday morning. The oil stock benefited from further buying interest from Warren Buffett-led Berkshire Hathaway (BRK.A 0.16%) (BRK.B 0.10%).
Berkshire reported multiple purchases of Occidental Petroleum stock over the past week, according to its latest filing with the U.S. Securities and Exchange Commission. According to the filing, purchases amounted to about 2.36 million shares on March 3, 1.68 million shares on March 6, and 1.76 million shares on March 7. Berkshire cited purchase prices in the $60 to $62 per share range.
NYSE: OXY
Key Data Points
Occidental's stock price has fallen sharply over the past four months, as crude oil prices have eased lower. Yet Berkshire seems to have a lot of confidence in the energy company's longer-term prospects, with the purchases taking the Buffett-run enterprise's position in Occidental stock above the 200 million share mark.
Many investors have speculated over whether Berkshire might make a bid to acquire Occidental in full at some point. Regardless, though, the oil stock is already a major component of Berkshire's portfolio of publicly traded stocks, signaling the belief that fossil fuel businesses won't become irrelevant in the near future.
United Natural keeps giving up gains
Meanwhile, shares of United Natural Foods dropped like a hot potato on Wednesday morning, losing 27% of their value in premarket trading. The food company's fiscal second-quarter financial results for the period ending Jan. 28 didn't live up to expectations, and United Natural's outlook for the rest of the year wasn't what investors had hoped to see.
United Natural's financial results were mixed. Net sales were up 5.4% year over year, clocking in at $7.8 billion. However, net income plunged more than 70% to just $19 million, and even on an adjusted basis, earnings of $0.78 per share were down 43% from the same period a year ago.
NYSE: UNFI
Key Data Points
United Natural said that its sales gains came largely from a combination of two factors: rising inflation and new business acquisition. The company said that its customers purchased more categories of items, with an emphasis on private brands and some additional investment in professional services as well. The problem, though, was that the factors that supported high margins in the year-ago period, including the rapid onset of inflationary pressures spurred by supply chain disruptions, didn't repeat in this year's fiscal second quarter. That's a trend that continued from the previous quarter.
Therefore, United Natural cut its expectations for profits for the full 2023 fiscal year. Although it sees the business generating between $100 million and $300 million more in sales than initially expected, United Natural now believes that adjusted earnings will be in a range of $3.05 to $3.90 per share. That's down sharply from the previous range of $4.85 to $5.15 per share. Moreover, with United Natural pulling its fiscal 2024 targets, investors have to be prepared for reduced visibility about the food company's future.
