At Friday’s opening bell, stocks were trading higher, following the December report on nonfarm payrolls. In the first 30 minutes of trading, the Nasdaq was up 0.38%, the S&P 500 by 0.66% and the Dow by 0.75%.
The job gains in the December report were higher than expected (223,000 versus 210,000), and the headline unemployment rate fell from 3.6% to 3.5% instead of rising to 3.7%. All of that would indicate further Federal Reserve tightening and falling equity prices.
But wait, there’s more. Hourly earnings rose less than expected (0.3% vs 0.4%), and the average workweek declined from 34.4 hours to 34.3 hours. These numbers imply that productivity is rising, a good thing, and a reason to expect Fed rate increases to moderate, perhaps as soon as the January 31 meeting.
No notable earnings reports were released Friday morning. They will be scarce until Friday, January 13, when several of the largest U.S. banks and financial services firms, one airline, and one Dow Jones industrial average health care company report quarterly results.
Here is a preview of what to expect when the following two companies report quarterly results before markets open on Tuesday.
In mid-October, Albertsons Companies Inc. (NYSE: ACI) and Kroger announced that they would merge after Kroger acquired all the outstanding shares of Albertsons stock and Albertson’s paid a special dividend of some $4 billion to shareholders.
The special dividend, originally expected to be paid on November 7, remains an open question. The state of Washington Supreme Court has blocked the payment but earlier this week set a January 17 date to hear the company’s request to lift the temporary restraining order so that Albertsons can meet its rescheduled special dividend payment on February 9. Nearly 40% of the payout would go to two asset management firms, Cerberus, which owns about 28.4% of Albertsons stock, and Lubert-Adler, owner of nearly 11% of the stock.
Meanwhile, life goes on. Over the past three months, Albertsons share price has fallen by more than 18%, and over the past year, the shares are down more than 30%. The number of analysts covering the company has dropped from 20 to 17 since October, and 13 of those have a Hold rating. The other four have Buy or Strong Buy ratings, perhaps hopeful of a competing bid. At a recent share price of $21.00, the stock trades about 35 cents below its closing price on the day the deal with Kroger was announced.
Fiscal 2023 third-quarter revenue is forecast at $17.58 billion, which would be down 1.9% sequentially but up 5.0% year over year. Adjusted earnings per share (EPS) are tabbed at $0.67, down 7.6% sequentially and by 15.2% year over year. For the full fiscal year ending in February, Albertsons is expected to post EPS of $3.00, down 2.1%, on sales of $76.68 billion, up by about 6.7%.
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