The S&P 500 is down by 0.84% this morning, while the Nasdaq and Dow Jones are each down by nearly identical amounts following the release yesterday afternoon of minutes of the Federal Open Market Committee’s April 26-27 meeting. Those minutes, which suggest a rate hike could be possible by June, were a surprise to market participants, which had placed the odds of a hike as of June at a mere 15%. The Fed minutes have overshadowed positive earnings results from Wal-Mart Stores, Inc. (NYSE:WMT) and mixed results from Dicks Sporting Goods Inc (NYSE:DKS), which we’ll look at in this article. We’ll also take a peek at Alphabet Inc (NASDAQ:GOOGL)‘s latest developer conference and a possible merger between Monsanto Company (NYSE:MON) and Bayer AG (ADR) (OTCMKTS:BAYRY).
At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year (see more details about our small-cap strategy).
Cool Spring Not Enough to Stop Wal-Mart
Let’s start with Wal-Mart Stores, Inc. (NYSE:WMT), which has gained an impressive 9.14% today after the release of its first quarter of fiscal year 2017 financial results this morning. Revenue for the fiscal quarter was up by 0.9% year-over-year to $115.9 billion despite international sales slipping by 7.2% due to currency exchange headwinds. While profit declined by 7.8% to $3.1 billion, the company’s EPS of $0.98 still handily beat estimates of $0.88. Walmart U.S. President and CEO Greg Foran added that while the company’s investment in higher wages for its employees has contributed to a dent in profits, the retailer is also starting to see the benefits from that investment, including the fact that many employees end up spending their enhanced wages at the very company they are getting them from.
15 investors tracked by Insider Monkey added Wal-Mart Stores, Inc. (NYSE:WMT) to their portfolios in the first quarter, including John A. Levin‘s Levin Capital Strategies, which opened a position of 1.53 million shares during the quarter.
Google I/O Conference Shows Off Several New Products, Apps, and Upgrades
Shares of Alphabet Inc (NASDAQ:GOOGL) are 1.04% in the red today in the midst of the company’s Google I/O conference being held in Mountain View, California from May 18 to May 20. Alphabet revealed several innovations during yesterday’s session, including Google Assistant (the company’s answer to Siri), which will also be built into its newly-revealed chat bot app Allo (which can generate replies for users to quickly choose, based on the conversation) and its Amazon Echo-like Home. Other reveals included the voice chat app Duo, the Android-based virtual reality platform Daydream, and updates to Android and Android Wear.
Alphabet Inc (NASDAQ:GOOGL) ranked as the second-most popular stock among the investors in our database as of December 31 and there were several big-name investors who added the stock to their portfolios in the first quarter, including Dan Loeb, Ray Dalio, and Barry Rosenstein.
On the next page we’ll run through the Monsanto/Bayer merger hype and the latest quarterly results at retailer Dicks Sporting Goods.
Bayer and Monsanto Heading in Opposite Directions on Merger Talks
Shares of Monsanto Company (NYSE:MON) have gained nearly 5% today after it was confirmed that German chemicals giant Bayer AG (ADR) (OTCMKTS:BAYRY) has approached the company about a merger. Though the merger discussions had been rumored in recent days, this was the first official confirmation of the discussions. The market has not reacted nearly as favorably to the possible deal from Bayer AG (ADR) (OTCMKTS:BAYRY)’s perspective, with its U.S-traded ADRs down by 8.60% today, despite no actual details of the talks having been revealed yet. Monsanto’s board is currently reviewing the proposal, which would create the largest seed and crop-chemical company in the world and represent the third attempt at creating a crop-chemical powerhouse through a merger in the last year, following the Dow/Dupont and Syngenta/China National Chemical proposed mergers, both of which are still awaiting regulatory approval.
Monsanto Company (NYSE:MON) appears to have been an extremely popular stock during the first quarter, with 18 funds in our database having added it to their portfolios, while just six removed it from their portfolios. Steve Cohen added it to both Point72 and Point72 Asia (Singapore)’s portfolios during the quarter.
Market Shrugs Off Sinking Earnings at Dick’s Sporting Goods
A 10% year-over-year decline in profit and underwhelming second quarter guidance have done nothing to slow shares of Dicks Sporting Goods Inc (NYSE:DKS) today, which are up by 8.43%. Dick’s, which operates both namesake stores as well as Golf Galaxy outlets, topped revenue estimates of $1.63 billion by $30 million. However, EPS came in at $0.50, down from $0.53 in the first quarter of 2015 and missing estimates of $0.54. Projected second quarter EPS of $0.62-to-$0.72 was also well below estimates of $0.78, while the company lowered its full-year EPS guidance to between $2.60 and $2.90, down from a previous range of $2.85 to $3.00. It’s not clear what has prompted investors’ optimism concerning the stock today, given the base results. Chairman and CEO of Dick’s, Edward Stack, did state in the earnings press release that the lowered guidance is a reflection of the fact that Dick’s will attempt to “aggressively capture displaced market share.” It was revealed on Tuesday that Dick’s will bid on about 30 Sports Authority locations in that company’s bankruptcy auction.
Dicks Sporting Goods Inc (NYSE:DKS) was added to the portfolios of 16 investors in our database during the first quarter, while it was removed from the portfolios of nine investors.