On Friday, investors responded positively to favorable economic news, with favorable readings on personal income and spending pointing to the resiliency of the American consumer, even in the face of tough winter conditions that many businesses have blamed for temporary shortfalls in revenue and earnings. Even though the broader market gave up most of its gains from earlier in the day, GameStop (GME +2.64%), TriNet Group (TNET +5.15%), and Restoration Hardware (RH +0.54%) all managed to hold onto large advances in their respective share prices going into the weekend.
GameStop jumped 9% Friday, more than making back its losses from yesterday following a quarterly report that initially disappointed investors. The video game retailer saw same-store sales rise 7.8%, but adjusted earnings fell 12%. Despite favorable guidance for 2014, investors worried about the prospect of tougher competition from Wal-Mart (WMT +0.84%) and other retailers, as well as steps from video game makers to eliminate the need for GameStop's middleman services. Analysts at Sterne Agee accentuated the positives in GameStop's report today, with expectations that earnings growth and GameStop's investor day next month could send the stock higher this year if the video game industry generally prospers from the PlayStation 4 and Xbox One. Moreover, initiatives to broaden GameStop's scope to sell other electronics could be a good way to use its store base, even if other companies have struggled selling those electronics on their own.
Newly public TriNet Group rose another 11.5%, adding to its positive performance on Thursday in its first day of post-IPO trading. The human-resources outsourcing company is jumping onto the trend toward cloud-based office support, following in the footsteps of Workday (WDAY +2.49%) in its effort to cater to small- and medium-sized businesses searching for ways to support their employees without having full-time HR staff. With shares up a third from its offering price of $16 per share, TriNet has inspired solid support among investors hoping to cash in on the growth prospects that serving smaller enterprise customers offers.
Restoration Hardware soared 13% despite reporting weaker-than-expected sales in its holiday quarter. Shareholders responded favorably to positive guidance from the home-furnishings retailer, with earnings expectations for the current quarter that are 25% to 60% higher than the consensus forecast. The guidance signals better gross margins for Restoration Hardware, as revenue growth hasn't come in quite as strong as many had thought the company would manage. But with same-store sales growth of 24%, Restoration Hardware has come a long way from its brush with disaster just a few short years ago.
