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Monday November 28, 2022



Twitter Posts Earnings

Twitter, Inc. (TWTR) released its fourth quarter and full-year earnings report on Thursday, February 10. The tech company fell short of quarterly earnings estimates, causing shares to decrease more than 2% following the report's release.

Twitter reported quarterly revenue of $1.57 billion. This is up 22% from last year's fourth quarter revenue of $1.29 billion. Revenue for the full year was $5.08 billion, up 37% from $3.72 billion last year.

"Our mission is to serve the public conversation, and with a broad selection of content that can be personalized to each individual's interests, we believe Twitter is the best place to find out what's happening," said Twitter CEO, Parag Agrawal. "In Q4, we continued our work to make Twitter the best place for people to keep up with and discuss their interests through improved personalization and better onboarding."

The company announced earnings of $182 million for the quarter, down from earnings of $222 million one year ago. On an adjusted earnings per share basis, the company reported earnings of $0.21 per adjusted share, down from $0.27 per adjusted share at the same time last year. For the full year, there was a net income of $221.41 million, compared to net income of $1.14 billion in the prior year.

Twitter announced that its average monetizable daily active usage (mDAU) totaled 217 million for the quarter, marking growth compared to 192 million in the same quarter last year. The average mDAU in the United States grew 2% to 38 million, compared to 37 million during the same period last year. Twitter attributed this increase to product improvements and global conversation around current events.

Twitter, Inc. (TWTR) shares closed at $34.32, down 3.6% for the week.

Under Armour Releases Earnings Report

Under Armour, Inc. (UAA) released its fourth quarter and full-year earnings on Friday, February 11. The athletic-wear company's stock fell 9% following the release of the report, despite reporting better-than-expected quarterly earnings and sales.

The company reported revenue of $1.5 billion for the first quarter, up 9% from $1.4 billion during the same quarter last year. Revenue for the full year was $5.7 billion, up 25% from $4.5 billion last year.

"The final quarter of 2021 demonstrated the power and consistency of Under Armour's strategic playbook, which allowed us to capitalize on improving brand strength and consumer demand," said Under Armour CEO, Patrik Frisk. "By staying hyper-focused on operational excellence and serving the needs of athletes, we were able to deliver record revenue and earnings results for the full year."

Under Armour posted a net income of $110 million, or $.23 per adjusted share for the quarter. This was down from net income of $184 million, or $0.40 per adjusted share at this time last year.

The Baltimore-based sports apparel manufacturer has struggled in the current quarter due to supply chain constraints, causing inventory to be down 9% to $811 million. Notwithstanding supply chain issues, the company's North America segment posted a 15% increase in revenue for the quarter. However, looking forward, Under Armor expects supply chain issues to limit the amount of spring and summer products available, affecting sales during the upcoming transition quarter.

Under Armour, Inc. (UAA) shares ended the week at $16.54, down 5.2% for the week.

CVS Announces Latest Earnings

CVS Health Corporation (CVS) reported its fourth quarter and full-year earnings on Wednesday, February 9. The drug store company's stock fell 5.5% following the release of the report even with earnings exceeding analysts' expectations.

Revenue for the quarter came in at $76.6 billion, up 10.1% from $69.6 billion at this time last year. For the full year, the company reported revenue of $292.1 billion.

"We're engaging millions of customers across our businesses and in our community health destinations, becoming an even bigger part of their everyday health," said CVS Health CEO, Karen S. Lynch. "That's clearly reflected in our performance, but more importantly in our potential."

The company reported net income of $1.3 billion, up from last year's fourth quarter net income of $975 million. Net income for the full year increased to $7.9 billion.

Covid-related services drove foot traffic and sales for CVS as the company administered 8 million Covid tests and more than 20 million Covid vaccines during the quarter. This increase in traffic led to an 8.2% increase in revenue and an 8.4% increase in its Health Care Benefits segment for the quarter. The company announced that it plans to revamp its store footprint by closing 900 locations in an effort to reduce store density and create new store formats to meet customer needs.

CVS Health Corporation (CVS) shares ended the week at $102.13, down 1.9% for the week.

The Dow started the week of 2/14 at 34,695 and closed at 34,079 on 2/18. The S&P 500 started the week at 4,413 and closed at 4,349. The NASDAQ started the week at 13,769 and closed at 13,548.

Treasury Yields Vary

U.S. Treasury yields fluctuated throughout the week as consumer spending increased in spite of rising inflation. Yields lowered on Friday even with unemployment claims on the rise in the wake of the Omicron variant.

On Wednesday, the Commerce Department reported that retail sales for January rose 3.8% despite rising inflation. This exceeded Wall Street's estimate of 2.1%. While the numbers are not adjusted for inflation, the 0.6% increase provided a turnaround from the 2.5% sales decline in December.

"Consumers say they are worried about inflation, but they continue to spend," said PNC's chief economist, Gus Faucher. "Even taking into account the December decline, retail sales in recent months have been increasing much faster than prices, so households are purchasing larger volumes of goods and services, not just paying higher prices."

The benchmark 10-year Treasury note yield opened the week of 2/14 at 1.943% and traded as low as 1.964% on Thursday. The 30-year Treasury bond yield opened the week at 2.251 % and traded as high as 2.387% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment insurance totaled 248,000. This was worse than market estimates of 219,000 and was a drop from the prior week's revised number of 225,000.

"The Omicron wave triggered a brief but startling spike in initial jobless claims, but payroll growth slowed only marginally in January, and the initial data for February from Homebase point to a rebound," said chief economist for Pantheon Macroeconomics, Ian Shepherdson. "At the same time, we are becoming increasingly convinced that the long-awaited rebound in labor participation is now underway."

The 10-year Treasury note yield closed at 1.93% on 2/18, while the 30-year Treasury bond yield was 2.25%.

Mortgage Rates Continue to Rise

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, February 17. The mortgage rates increase is due largely to the high inflation coupled with unexpectedly high consumer spending.

This week, the 30-year fixed rate mortgage averaged 3.92%, up from last week's average of 3.69%. Last year at this time, the 30-year fixed rate mortgage averaged 2.81%.

The 15-year fixed rate mortgage averaged 3.15% this week, up from 2.93% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.21%.

"Mortgage rates jumped again due to high inflation and stronger than expected consumer spending," said Freddie Mac's Chief Economist, Sam Khater. "The 30-year fixed-rate mortgage is nearing four percent, reaching highs we have not seen since May 2019. As rates and house prices rise, affordability has become a substantial hurdle for potential homebuyers, especially as inflation threatens to place a strain on consumer budgets."

Based on published national averages, the savings rate was 0.06% as of 1/18. The one-year CD averaged 0.13%.

Published February 18, 2022
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