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Domino's Tasty Earnings, Macy's Cold January, and JPM's Bad Investor Event Cocktails

By Jack Kramer and Nick Martell - Feb 26, 2014 at 7:00AM

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Good morning, good lookin'. Here are the four things you need to know on Feb. 26.

If there's one thing you should know today, it's that the legendary Goldman Sachs Elevator tweeter (@GSElevator) was finally unmasked (he's from Texas and no, he's not on Goldman property). But if there's a second thing you should know, it's why the Dow Jones Industrial Average (^DJI -0.86%) slipped 27 points Tuesday.

1. Domino's stock heats up in fourth quarter
The world wants extra cheese. Mass-producing pizza chain Domino's Pizza (DPZ -2.82%) boosted fourth-quarter profits to $44.7 million, a double-crust stuffed gain of 18% from the previous year. The major growth area for the king of not-your-neighborhood pizza in 2013 was abroad, where 573 new stores opened up their ovens (the U.S. is already well-saturated with melted mozzarella -- only 58 new stores were opened here).

Of course, more stores should equal more profits, but a vital measure of growing profitability is same-store sales -- i.e., sales at restaurants that had been open a year or longer. This stat grew by 3.7.% in the U.S. last quarter and 7% overseas.

The takeaway is that Wall Street was already impressed with the "Dominator," even before the report. Analysts had high expectations of 16% profit growth, so the actual 18% gain was like snagging extra toppings for free. The stock is up 63% in the past 12 months and grew a tasty 0.5% Tuesday on the news of more international expansion. The food created by Italy and perfected across NYC is starting to melt taste buds at a faster rate across planet Earth.

2. Macy's earnings were as mixed as a grab bag
If we were fashion bloggers, we'd call Macy's (M -4.53%) earnings report "shabby chic." Some parts looked fancy, others looked sloppy. The "fancy" news for Macy's was that holiday sales (which tanked for most retailers) beat Wall Street's not-so-high expectations.
 
But the "sloppy" was that January sales dropped along with the temperatures. Blizzards across the Northeast forced 244 Macy's stores (including its Bloomingdale's brand) to close temporarily. It's hard to sell goods when you're not open. Or when customers can't leave their homes.
 
Overall, investors were happy to see Macy's maintain its high forecasts for the rest of 2014 as weather (hopefully) returns to normal and spring goods start hitting the shelves for shoppers desperate for summer sun. The projections helped send the stock up more than 6% Tuesday despite the mixed earnings report.
 
3. JPMorgan tempers '14 outlook at "Investor Day"
It was bad news at JPMorgan Chase's (JPM -2.48%) fun Investor Day, as CEO Jamie Dimon and his management All-Star team invited all shareholders to come to Park Avenue to hear what the company is up to. Dimon cancelled the champagne orders for the event and served downer news instead -- profits will be lower than expected in 2014.

It's time for some job cuts. Over on Main Street, local Chase branches designed to write mortgages for homeowners are going to see 8,000 job cuts in 2014. Rising interest rates as the economic recovery improves are slowly discouraging potential homebuyers from borrowing, which hurts the nation's mortgage business, so something's gotta give. And over on Wall Street, trading of stocks and bonds is down as markets remain choppy, which will hurt trading revenues for the company.

Growth in compliance officers was the horrible message for profit-hungry shareholders. Like traffic cops handing out tickets, compliance departments have one job -- make sure every single rule (from "recycle that cup" to "don't steal billions") is obeyed. After adding 7,000 compliance guys to enforce internal rules, JPM is hiring another 3,000 this year. The stock tumbled 1.7% as the depressing words dribbled out management's collective mouth.

4. Consumer confidence sinks in the midwinter
Sad news -- according to The Conference Board, consumer confidence fell in February from 79.4 to 78.1 on the research firm's monthly scale. The biggest area of concern in the report was expectations: The number of Americans thinking business activity and job opportunities will improve in the next six months fell to a four-year low. Sounds like people need more than hugs.
 
The takeaway is that investors paid serious attention to this month's Consumer Confidence report as the culmination of January's key trend: Mother Nature hatin' on Americans. Borderline ice age temperatures not only hurt Macy's sales but have also slowed econ production, from manufacturing to real estate transactions, and the results have only made consumers wary about the U.S. economic recovery. Sounds like it's time to distribute Seasonal Affective Disorder lights nationwide.

Today:
  • New-home sales
  • Fourth-quarter earnings reports: Abercrombie & Fitch, Target

As originally published on MarketSnacks.com

Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs and owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,706.74 (-0.86%) $-292.30
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$118.63 (-2.48%) $-3.01
Macy's, Inc. Stock Quote
Macy's, Inc.
M
$19.40 (-4.53%) $0.92
Domino's Pizza, Inc. Stock Quote
Domino's Pizza, Inc.
DPZ
$405.20 (-2.82%) $-11.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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