Although we don’t believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes — just in case they’re material to our investing thesis.
The Dow Jones Industrial Average (Dow Jones Indices:.DJI) is trying to end its four-session losing streak and has bounced back a bit today, up 34 points, or 0.22%, as of 2:45 p.m. EDT. Last week’s pullback of 2.2% also revealed some weakness in retail stocks. Last Wednesday Macy’s second-quarter results missed estimates on earnings per share and revenue. The next day Wal-Mart also missed estimates on EPS and sales, and both companies lowered their earnings guidance for the year. Fortunately for investors looking to start this week off on the right foot, Best Buy Co., Inc. (NYSE:BBY) and The Home Depot, Inc. (NYSE:HD) stepped up to the plate.
The Home Depot, Inc. (NYSE:HD) looks poised to continue recording impressive sales as the housing market rebounds. The company finds itself in a sweet timing spot, as most do-it-yourself home improvement takes place when homes surpass 25 years in age — and nearly 70% of the market has now surpassed that. Yet the earnings beat and improving outlook failed to impress investors today, and The Home Depot, Inc. (NYSE:HD) is one of only a handful of Dow Jones Industrial Average (Dow Jones Indices:.DJI) components trading in the red today, down 0.6%.
Best Buy Co., Inc. (NYSE:BBY)’s stock price has soared this year, up more than 170% year to date. It’s hoping to keep that momentum going today, announcing its first profitable quarter in a year and crushing earnings estimates. Excluding items, Best Buy Co., Inc. (NYSE:BBY)’s EPS came in at $0.32, far ahead of the estimated $0.12 per share. Revenue of $9.3 billion beat estimates still declined from last year. Investors have cheered the news, bidding the stock up 12% today.
Call me crazy, but I haven’t jumped on the Best Buy Co., Inc. (NYSE:BBY) bandwagon yet. The company’s better-than-expected earnings owe largely to cost-cutting measures, rather than impressive revenue growth. That’s not a terrible thing, but it still gives bears reason to believe Amazon is putting a lid on Best Buy Co., Inc. (NYSE:BBY)’s revenue growth. Long-term risks still threaten Best Buy Co., Inc. (NYSE:BBY)’s business model, and the company must stand up to Amazon by reversing its revenue decline and improving its online-shopping position.
Also outside of the Dow Jones Industrial Average (Dow Jones Indices:.DJI), Ford Motor Company (NYSE:F) is up 1.2%, and General Motors Company (NYSE:GM) has climbed 0.7%. The American automakers have had a rough couple of weeks as they take a break from their respective year-to-date stock gains of 25% and 20%.
The full-size pickup segment is the most profitable, and it’s extremely important to the two rival automakers. And as the summer heats, up so have sales. Investors must watch to see whether Ford Motor Company (NYSE:F) increases incentives on its older F-150 to keep up with General Motors Company (NYSE:GM)’s redesigned Silverado. This will have a direct impact on third-quarter profit.
The article Home Depot Beats Estimates and Dow Looks to Snap Losing Streak originally appeared on Fool.com and is written by Daniel Miller.
Fool contributor Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford, General Motors, and Home Depot. The Motley Fool owns shares of Ford.
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