B/E Aerospace Says it Will Break-Up Into Two Companies
B/E Aerospace Says it Will Break-Up Into Two Companies
Closing Bell: FitBit Jumps; Cyber Monday Drags on Retail Stocks
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B/E Aerospace says it will split into two separate publicly traded companies with one business focusing on manufacturing of aircraft cabin interior equipment and one focused on distribution, logistics, and technical services for the aerospace and energy services markets. Breakout Stocks Portfolio Manager Bryan Ashenberg, CFA says BE Aerospace's announcement is a result of its strategic review process about the future of the company. Ashenberg says the split will likely take place in the first quarter of 2015. On a conference call Tuesday, B/E Aerospace raised its full year 2014 earnings guidance to $4.35 from $4.30, that's still below the consensus estimate of $4.39 a share in earnings.
Stocks ended a choppy session modestly lower as the retail sector continued to drag on the benchmark indexes. Retailers such as Walmart (WMT) and Costco (COST) tumbled on signs of weaker sales over Black Friday and Cyber Monday. FitBit (FIT) was an outlier, though, climbing on signs of heavy demand over the weekend. Target (TGT) said the FitBit Charge HR was one of its best sellers on Black Friday, while Best Buy (BBY) announced that sales for wearables such as fitness trackers doubled from a year earlier. BHP Billiton (BHP) dropped after the Brazilian government threatened to launch a multibillion-dollar legal suit over a dam failure in the southeast earlier in November.
Stocks were slightly lower in choppy trading. Retailers including Walmart (WMT) and Macy's (M) were among the worst performers on forecasts fewer shoppers would participate in Cyber Monday this year. Lululemon (LULU) tumbled after shares were downgraded to 'market perform' from 'outperform' at FBR Capital Markets. Analysts lowered their expectations for the athleisure retailer as higher clearance levels pressure margins. Pending home sales also came in weaker than expected, rising just 0.2% in October after two months of declines. Weakness in the housing market has been tied to high prices and lower inventory that has kept home buyers at bay.
U.S. stocks opened higher Monday as investors evaluate how eager Americans were to open their wallets during Black Friday weekend. One trend is clear-more and more people are shopping online instead of going to brick and mortar stores. The National Retail Federation says the same number of people bought products on line as did in the stores over the weekend. The NRF is standing by its prediction that retail sales this holiday season will rise 3.7%, slower growth than last year. The preference for online deals is an encouraging sign for retailers as they roll out another round of online-specific sales heading into December. Although as the shopping season becomes more prolonged, fewer people are expected to shop online on Monday itself compared with last year, 121.3 million vs. 126.9 million in 2014, the NRF says.
It was a shortened trading session on Wall Street after the Thanksgiving holiday on Thursday. Lower volume made for choppier trading, though moves were kept in a narrow range. Disney (DIS) weighed on the Dow after the world's largest entertainment company disclosed that sports channel ESPN had lost SEVEN million subscribers over the past two years. ESPN has historically been one of Disney's biggest profit generators. Crude oil was sharply lower as commodity traders looked toward next week's OPEC meeting. The group's members have held production near record highs, a strategic move to hold onto market share as prices decline. OPEC is not expected to announce production cuts next week.
In 'What to Watch on Wall Street' for the week of November 30, we're going to be hearing from a few more companies on how they did in the latest quarter. The following companies are slated to release their earnings: Bob Evans Farms (BOBE), American Eagle Outfitters (AEO), Box (BOX), Aeropostale (ARO), Dollar General (DG), Medtronic (MDT), Ambarella (AMBA), Kroger (KR), and Five Below (FIVE). The one that many investors will be watching is Kroger. Analysts are expecting the grocery retailer to earn $0.39 a share on over $25 billion in sales. Compared to last year's third quarter results, both profit and revenue are projected to show growth. Additionally, there are several notable economic reports. The week begins with the Chicago PMI report and pending home sales, followed by motor vehicle sales and the ISM manufacturing index on Tuesday. Midweek, we get the ADP employment report and productivity and costs then Thursday, we expect jobless claims. Finally, we end the week with the employment situation and international trade. TheStreet's U-Jin Lee reports from Wall Street.
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