Here’s Why These Five Stocks Are on the Move

It’s a quiet day on Wall Street as all three indexes are close to flat, and crude futures are modestly in the green. Although orders for durable good rose in July, much of the good news has been priced in, and traders are now bracing for the next round of potential interest rate hikes in the coming months ahead.

In this article, we take a look at five stocks that are showing more volatility than the broader market, Signet Jewelers Ltd. (NYSE:SIG), Dollar General Corp. (NYSE:DG), Guess?, Inc. (NYSE:GES), Burlington Stores Inc (NYSE:BURL), and North Atlantic Drilling Ltd. (NYSE:NADL). In addition, we are going to discuss what the investors that we track think about these companies.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 750 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

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Signet Jewelers’ Earnings Disappoint

Signet Jewelers Ltd. (NYSE:SIG) shares are 13% in the red after the company reported underwhelming results for the second quarter of fiscal 2017, ended July 30. During the quarter, Signet earned $1.14 per share on revenue of $1.38 billion, missing estimates by $0.31 and $60 million, respectively. Revenue fell by 2.8% year-over-year as same-store sales inched lower by 2.3% and the store count rose by just seven year-over-year. For the full year, management expects similar trends, with same-store sales expected to decline anywhere from 2.5% to 1% and EPS to be in the range of $7.25 to $7.55. At the end of June, 44 funds from our database owned shares of Signet Jewelers Ltd. (NYSE:SIG).

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Discount Retailer Misses the Mark, Shares Down 14%

Dollar General Corp. (NYSE:DG) earned $1.08 per share on revenues of $5.39 billion in the second quarter of fiscal 2016 (ended July 29), missing the consensus estimates by $0.01 and $110 million, respectively. Due to the strong economy, it seems that the discount consumer is shopping at higher-end stores such as Wal-Mart Stores, Inc. (NYSE:WMT). Dollar General’s same-store sales rose by only 0.7% year-over-year and its inventory increased by 8% year-over-year. For the full year, management sees diluted EPS growing 10% to 15%. The smart money as a whole hasn’t changed its opinion on Dollar General. Among the funds we track, 53 funds had a bullish position in Dollar General Corp. (NYSE:DG) at the end of the second quarter, unchanged from the previous quarter.

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On the next page, we find out why Guess, Burlington Stores, and North Atlantic Drilling Ltd are on the move.


Guess Earnings Ahead of Estimates

Guess?, Inc. (NYSE:GES) shares have spiked by more than 23% on the back of EPS of $0.14 for the fiscal 2017 second quarter, which were double the average analyst estimate of $0.07 per share. Although Guess’ revenue of $545 million missed analysts’ expectations by $5.53 million, traders mainly focused on the company’s better-than-expected operating margin, and its strong full year EPS guidance of $0.79 to $0.92, versus the previous range of $0.48 to $0.68. Also helping the stock are analyst upgrades and price target hikes from B Riley and Telsey Advisory Group. Jim Simons’ Renaissance Technologies owned more than 1.2 million shares of Guess?, Inc. (NYSE:GES) at the end of the second quarter.

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Burlington Beats Expectations, Shares Up 3%

Burlington Stores Inc (NYSE:BURL) shareholders are having a good day after the retailer reported earnings of $0.39 per share and revenue of $1.26 billion for the fiscal 2016 second quarter, ended July 30. Burlington’s EPS and revenue beat the average analyst estimates by $0.09 per share and $20 million, respectively. In a good sign for bullish investors, demand for clothes seems to be strong, as comparable-store sales inched up by a healthy 5.4% year-over-year and management estimates full-year adjusted EPS of $2.92 to $2.96. A total of 34 funds had a bullish position in Burlington Stores Inc (NYSE:BURL) at the end of June, compared to 37 funds a quarter earlier.

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North Atlantic Shares Lethargic Despite Earnings Beat

With earnings season for the offshore sector officially on, North Atlantic Drilling Ltd. (NYSE:NADL) did its part by reporting EPS of $0.53 per share on revenue of $164.6 million, beating estimates by $0.06 per share and $14.3 million, respectively. North Atlantic’s results were better-than-expected mainly due to the West Phoenix returning to drilling operations on March 6. However, despite the earnings beat, shares of the company are in the red today, mainly due to the flattish oil prices. In terms of debt coverage, interest bearing debt amounted to $2.384 billion at the end of June, while North Atlantic’s EBITDA came in at $109 million. The number of investors from our database with holdings in North Atlantic Drilling Ltd. (NYSE:NADL) rose by two quarter-over-quarter to seven at the end of June.

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