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Saturday April 18, 2015



Dave & Buster's Issues Cautious Guidance

Dave & Buster's Entertainment, Inc. (PLAY), operator of restaurant and entertainment establishments, announced its fourth quarter results on April 7. Despite generating great results during the quarter, the company issued cautious guidance for 2015.

Dave & Buster's reported that fourth quarter revenue increased 21% to $207.1 million. This topped analyst estimates calling for revenue of $201.4 million.

"2014 was a fantastic year for Dave & Buster's. We generated record-setting revenues, Adjusted EBITDA, and Adjusted EBITDA margins and ended on a high note with an exceptional fourth quarter performance," said CEO Steve King. "The synergistic combination of dining, entertainment, and sports viewing in one destination, makes us the first choice for frequent fun."

Net income during the quarter was $14.7 million or $0.34 per share. This was higher than net income of $4.9 million earned during the comparable period last year.

Dave and Buster's launched its initial public offering last October 21. The company's initial price was $16 per share, but since the IPO Dave and Buster's share price has doubled. A further sign of the company's strength came in the form of a 10.5% same-store sales increase during the quarter. However, despite the successful quarter, Dave & Buster's provided cautious guidance for the rest of the year with same-store growth projected to be in the range of 3% to 4%.

Dave & Buster's Entertainment, Inc. (PLAY) shares ended the week at $33.01, up 9.6% for the week.

Bed Bath & Beyond Reports Earnings

Bed Bath & Beyond, Inc. (BBBY) reported its fourth quarter results on April 8. The company reported sales and earnings that missed expectations.

The company reported that net sales during the quarter increased 4.2% to $3.337 billion. Net sales came in below estimates calling for net sales of $3.366 billion.

"[F]or fiscal 2014, we were able to deliver solid financial results, including growth in both net sales and net earnings per diluted share," said CEO Steven Temares on a conference call. "We continued to enhance shareholder value by returning more than $2.2 billion to our shareholders through share repurchase, while also making strategic investments to improve our omnichannel capabilities."

Net earnings during the quarter were $1.80 per share. This was higher than the $1.60 per share during the comparable period last year.

Bed Bath and Beyond's fourth quarter sales and earnings improved compared to the same period last year, but those improvements were not in line with expectations. Comparable store sales during the quarter increased 3.7%, but that was below a forecast of 4% to 5%. For fiscal year 2015 the company is projecting comparable store sales growth of 2% to 3%.

Bed Bath & Beyond, Inc. (BBBY) shares ended the week at $73.43, down 3.7% for the week.

WD-40 Company's Earnings Beat Estimates

WD-40 Company (WDFC) announced its second quarter results on April 8. The company's results exceeded pre-release estimates.

Net sales during the quarter increased 3% to $97.3 million. This was slightly ahead of expectations that net sales would be $97 million for the quarter.

"We are pleased with the solid performance of our underlying business this quarter and are more confident than ever that our strategic initiatives are well positioned to carry us into the future," said President and CEO Garry Ridge. "Our hard working tribe will remain focused and we expect to deliver a strong finish to fiscal year 2015."

WD-40 Company reported that net income during the quarter increased 10% to $11.3 million or $0.76 per share. Analysts had expected earnings per share to be lower at $0.72.

WD-40 Company, which is headquartered in San Diego, expects full-year earnings to be $3.07 to $3.13 per share. Full-year sales are expected to be $387 million to $400 million. Over the past twelve months the company has seen its share price rise close to 12%.

WD-40 Company (WDFC) shares ended the week at $83.72, down 4.9% for the week.

The Dow started the week of 4/6 at 17,756 and closed at 18,058 on 4/10. The S&P 500 started the week at 2,065 and closed at 2,102. The NASDAQ started the week at 4,856 and closed at 4,996.

Treasuries End Week on Higher Note

Treasury yields rose during early Friday trading on April 10. Following last week's low closing yield of 1.84%, 10-year Treasury yields inched up this week as investors recovered from the disappointing March jobs report.

This week the benchmark 10-year Treasury note yield rose close to 0.1%, causing prices to fall. Bond yields move inversely to prices, so as yields rise, prices fall. On Thursday the 10-year yield closed at 1.957%. During early Friday trading on April 10 the 10-year yield had fallen to 1.928%.

Along with weak economic growth in the U.S., economic uncertainty in Europe is also driving U.S. bond yields. The 10-year yield in Germany is 0.149%, in Japan 0.334% and in the United Kingdom 1.571%. Because the 10-year Treasury note is producing higher yields compared to its peers, it is attracting more foreign investors.

More investors interested in bonds are causing Treasury yields to fall and prices to rise. "There is significant relative value in Treasury bonds, which will continue to attract inflows from abroad," said Jeff Klingelhofer, Co-Portfolio Manager of Global Fixed Income Portfolios at Thornburg Investment Management.

While Treasury yields remain low so far in 2015, they haven't risen or fallen too far in any direction. Analysts suspect uncertainty surrounding the Federal Reserve's decision to raise interest rates is holding investors back from whether to commit to bond investments or not.

This week New York Federal Reserve President William Dudley said weak U.S. economic data has cast doubt on the prospects of a June interest rate hike. However, he indicated that a rate hike at some point this year still seems "reasonable."

The 10-year Treasury note yield finished the week of 4/6 at 1.95% while the 30-year Treasury note yield finished the week at 2.58%.

Interest Rates Fall on Jobs Report

Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, April 9. The results show mortgage rates trending lower this week after a disappointing jobs report for March.

The 30-year fixed rate mortgage averaged 3.66% this week. This was down from last week when it averaged 3.70%.

This week, the 15-year fixed rate mortgage averaged 2.93%. This number was down from last week when it averaged 2.98%.

"Mortgage rates fell across the board following last week's disappointing employment report," said Len Kiefer, Deputy Chief Economist at Freddie Mac. "The US economy added 126,000 new jobs in March, well below market expectations of 247,000 jobs. We did see some uptick in wages, as average hourly earnings increased 7 cents for the month, and are up 2.1% over the year. Meanwhile, jobless claims fell sharply to 268,000 this week, much lower than market expectations of 285,000."

The money market fund finished the week of 4/6 at 0.4%. The 1-year CD finished at 0.7%.

Published April 10, 2015
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