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Monday February 27, 2017

Finances

Finances
 

Tesla Reports Net Loss Despite Increased Sales

Tesla, Inc. (TSLA) released its quarterly and full-year earnings on Wednesday, February 22. The electric automobile company reported increased revenue and fewer losses from the prior year.

The company reported revenue for the quarter of $2.28 billion, up from $1.2 billion during the same quarter last year. Tesla reported revenue of $7 billion for the full year.

"We start 2017 well positioned to scale our business significantly," said Tesla Chairman and CEO Elon Musk and CFO Jason Wheeler in a letter to investors. "Model S and X net order growth remains strong, as we are continually evolving our products by elevating performance, convenience and safety."

The automaker posted a net loss of $121 million, or $0.78 per share for the quarter. This was down from $320 million, or $2.44 per share during the same time last year.

Tesla, which currently offers two vehicle models, is set to release its Model 3 later this year. The company expects to begin production in July. While Tesla's current line of vehicles carry a hefty price tag, the Model 3 is targeted toward a more middle-class demographic.

Tesla, Inc. (TSLA) shares ended the week at $257.00, down 6.6% for the week.

Fitbit Reports Earnings Decline


Fitbit, Inc. (FIT) reported its quarterly and full-year earnings on Wednesday, February 22. The wearable technology company reported a decrease in sales and profits from last year, falling short of analysts' expectations.

The company reported revenue of $573.8 million for the quarter. This is down from $711.6 million at this time last year. For the full year, Fitbit reported revenue of $2.2 billion.

"Our ten-year history of building this category, coupled with our powerful brand and engaged global community gives us confidence we are making the right investments to support our vision and drive long-term success," said Fitbit CEO James Park. "We will leverage our leadership position, recently acquired talent and IP and the valuable data we collect to improve demand and continue to set the pace of innovation for the industry through more personalized experiences, deeper insights and guidance, expansion into new categories and deeper integration within the healthcare system."

Fitbit had a net loss of $146.3 million for the quarter. At this time last year, the company reported net income of $64.2 million. For the full year, the company reported a net loss of $102.8 million.

Fitbit, known for its wearable health tracking devices, has faced ever-increasing competition in recent years. The company's earnings report offered guidance for the upcoming fiscal year that indicated an uphill battle over the coming months. Fitbit projects revenue will decline to $1.5 to $1.7 billion for the upcoming year.

Fitbit, Inc. (FIT) shares ended the week at $6.15, down 2.5% for the week.

Carter's Reports Steady Growth


Carter's, Inc. (CRI) reported its fourth quarter and annual results on Thursday, February 23. The company reported strong sales and profits.

The children's clothing company reported net sales of $934.2 million for the quarter, up from $866.5 million during the same quarter last year. Carter's reported full-year sales of $3.2 billion.

"The fourth quarter represented a strong finish to another record year of sales and profitability for Carter's," said company Chairman and CEO Michael D. Casey. "Our focus on providing the best value and experience in young children's apparel, extending the reach of our brands, and improving profitability enabled us to achieve our 28th consecutive year of sales growth, improve our profit margins and increase the return of capital to shareholders."

The company reported net income of $87.1 million during the quarter, an increase from $72.6 million at this time last year. The company's full-year net income was $237.8 million.

Carter's, Inc. owns and operates two popular brands of children's clothing, Carter's and OshKosh. The company reported increases in both brands' comparable store sales over last year, with Carter's and OshKosh brands showing 5.4% and 5.8% growth, respectively. For the upcoming year, the company expects sales to increase 4-6%.

Carter's, Inc. (CRI) shares ended the week at $90.04, up 7.1% for the week.

The Dow started the week of 2/21 at 20,663 and closed at 20,822 on 2/24. The S&P 500 started the week at 2,355 and closed at 2,367. The NASDAQ started the week at 5,850 and closed at 5,845 for the week.
 

Treasury Yields Fall After Fed Minutes Release

Yields on U.S. Treasury bonds declined this week. Investors appear ready to return to the safety of the bond market following months of market confidence.

The minutes from the latest Federal Open Market Committee meeting were released on Wednesday, February 22. Many analysts interpreted the report as a signal that the Fed is unlikely to raise rates at its upcoming March meeting. The Fed last raised rates in December of 2015 and 2016, capping off an eight-year run of near-zero rates.

The report stated that "it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations." Despite the indication of an upcoming rate hike, Fed funds futures placed the chances of an increase in March at 22% on Thursday.

The benchmark 10-year Treasury note yield began the week trading at 2.43% before dipping to 2.33% during trading on Friday. Similarly, the 30-year yield was 3.02% on Tuesday and dropped to 2.96% during early Friday trading.

Yields also reacted this week to Treasury Secretary Steve Mnuchin's televised interview with CNBC. Mr. Mnuchin indicated that the Treasury Department is exploring the possibility of issuing 50-year and 100-year bonds.

"We'll reach out to the market, investors, different people, but I think it's something that is a very serious issue of whether we should explore whether we can raise 50- or 100-year money at a very slight premium," said Mr. Mnuchin. "That's something that makes sense for the Treasury to look at."

The 10-year Treasury note yield finished the week of 2/21 at 2.32%, while the 30-year Treasury note yield was 2.96%.
 

Mortgage Rates Show Little Movement

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, February 23. Interest rates made small gains for the week.

The 30-year fixed rate mortgage averaged 4.16% for the week, up from 4.15% last week. At this time last year, the 30-year fixed rate mortgage averaged 3.62%.

The 15-year fixed rate mortgage averaged 3.37% this week. This was up from last week's average of 3.35%. During the same time last year, the 15-year fixed rate mortgage averaged 2.93%.

"In a short week following Presidents Day, the 10-year Treasury yield fell about 8 basis points," said Freddie Mac Chief Economist Sean Becketti. "However, the 30-year mortgage rate rose 1 basis point to 4.16%. This week's survey once again displays the disconnect between mortgage rates and Treasury yields, a result of continued uncertainty."

Based on published national averages, the money market account finished the week of 2/20 at 0.54%. The 1-year CD finished at 1.24%.

Published February 24, 2017
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