Fed "Minutes" Smacked the Dow
1. Fed minutes show stimulus party may end sooner
If you have a job, you probably drink five daily cups of weak coffee from Green Mountain Coffee Roasters Keurig K-Cup machines. The Vermont-based coffee company famous for its single-cup coffee brewers reported quarterly earnings Wednesday afternoon up 38% from last year. It also said that next quarter's earnings would be $0.90 per share, less than the $0.95 per share analysts expected (ValueWalk).
Despite the poor forecast, the stock rose 3% in after-hours trading like it had been crushing Orange Mocha Frappuccinos. So what else do the maple syrup sniffers up in VT have up their sleeve? Dividends and share buybacks, baby. The quaint GMCR is finally maturing into a company that returns profits to investors. For the first time, it will give its profits to shareholders via a dividend every quarter, and that tastes refreshing to Wall Street.
Green Mountain is up more than 800% since '08 on its revolutionary Keurig coffee machine. But the expiration of that patent in 2012 opened the doors to new competition, which is slowing the company's growth. Despite the threat, investors are happy to see it enter a new phase through the dividend and share buyback plan. Its profit per share will rise, which boosted the stock's value like a high-speed gondola on the Stowe slopes.
3. J.C. Penney's surprisingly un-brutal earnings report
The retail store that even your aunt gave up on has some not-so-bad news. On the bad side, J.C. Penney reported Wednesday that its $2.78 billion in quarterly revenues were below analysts' expectations and the company won't likely return to profitability until JNCOs are back in style (Forbes).
So why'd the stock pop 8%? Wall Street has some low standards -- investors were impressed that sales overall rose 0.9% last quarter and online sales are up nearly 25% from this time last year. Penney has been promoting its holiday deals for shoppers aggressively over the last month, and like other retailers, the early work is paying off.
The takeaway is that it's all about the shake-up. Penney struggled for a year under iPad-obsessed CEO Ron Johnson before replacing him with Mike Ullman over the summer. The drama over that transition was deserving of a Bravo reality TV show -- but for a stock down more than 50% year to date, the positive signs hidden in its third-quarter earnings report were enough to get investors interested.
- Weekly jobless claims
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