Stock Market Today: A $6 Billion Food Merger and a Profit Spike for AutoZone
Stocks appear set to march deeper into record territory after their three-day rest. The Dow Jones Industrial Average has gained 70 points in pre-market trading, suggesting a positive start to the stock market today. The Dow is sitting just 0.2% higher on the year, while the broader S&P 500 is up 2.8%. Global markets were mostly flat overnight, with Europe's STOXX index rising a scant 0.02% as of 7:30 a.m. EST.
Stocks on the move
Meanwhile, shares of Hillshire Brands and AutoZone are in focus this morning following breaking news that should make for a heavy trading day for the two stocks.
Hillshire Brands' was up 21% in pre-market trading after it became an acquisition target this morning. Pilgrim's Pride offered to purchase the company for $45 a share, or $6.4 billion total. The merger would unite the world's second-largest chicken producer with Hillshire's strong portfolio of food brands including Jimmy Dean and Ball Park. It would would create "considerable value for shareholders" of both companies, Pilgrim's CEO Bill Lovette asserted in a press release. However, the purchase offer is contingent on Hillshire walking away from its own splashy acquisition: Pilgrim's Pride is insisting the company end its proposed $6.6 billion purchase of Pinnacle Foods . Investors appear to find that scenario plausible, as Pinnacle's stock was down 6.3% in pre-market trading.
AutoZone this morning posted a 6% sales boost for its fiscal third quarter. Revenue came in at $2.3 billion, exactly what Wall Street was expecting from the auto parts and accessories retailer. Comparable-store sales were up a healthy 4% in the quarter due to a strong rebound in AutoZone's deferrable maintenance business. But earnings grew much faster than sales, rising 16% to $8.46 a share. That bounce was thanks to aggressive share repurchases, along with an uptick in profitability: gross profit improved to 52% of sales as AutoZone managed its 31st consecutive quarter of double-digit earnings-per-share growth. CEO Bill Rhodes said in a press release that the company is "committed to to our disciplined approach to growing operating earnings and utilizing capital effectively," suggesting steady profit growth and heavy share repurchases should continue. The stock was up 2% in pre-market trading.
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The article Stock Market Today: A $6 Billion Food Merger and a Profit Spike for AutoZone originally appeared on Fool.com.Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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