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Wednesday September 19, 2018



Cracker Barrel Posts Strong Profits

Cracker Barrel Old Country Store, Inc. (CBRL) released its latest quarterly and full year earnings report on Wednesday, September 13. The restaurant chain's profits exceeded the prior year's numbers.

The company reported revenue of $743.2 million for the quarter, down from $745.6 million during the same quarter last year. For the full year, Cracker Barrel posted $2.93 billion in gross revenue.

"We ended fiscal 2017 with solid operating income margin and earnings growth," said Cracker Barrel President and CEO Sandra B. Cochran. "Since fiscal 2014, when we laid out our three-year strategic plan, we have grown earnings per share by nearly 50%, well above our target growth. As we enter the new fiscal year, we anticipate the environment to remain challenged, yet are confident in our plans to invest in the long-term growth of the company."

Net income for the quarter was $53.9 million, up from $51.0 million at this time last year. The company reported $201.9 million in net income for the full year.

Cracker Barrel reported a decrease of 0.8% in quarterly comparable restaurant sales from the prior year. For the full year, however, comparable restaurant sales increased 0.2%. The company's comparable retail sales fell 4.4% for the quarter. Despite less than stellar comparable sales, Cracker Barrel expects an increase in comparable restaurant sales of 2.5% to 3.5% in the upcoming year.

Cracker Barrel Old Country Store, Inc. (CBRL) stock ended the week at $152.41, up 4.5% for the week.

Oracle Releases Earnings Report

Oracle Corporation (ORCL) posted quarterly earnings on Thursday, September 14. The technology company reported stronger than expected revenue and profits.

Revenue for the quarter was $9.19 billion, ahead of the $9.02 billion projected by Wall Street analysts. This is an increase of 7% from $8.60 billion during the same quarter last year.

"The sustained hyper-growth in our multi-billion dollar cloud business continues to drive Oracle's overall revenue and earnings higher and higher," said Safra Catz, CEO of Oracle Corporation. "In Q1, total revenues were up 7%, [generally accepted accounting principles (GAAP) earnings per share (EPS)] was up 19%, and non-GAAP EPS was up 12%. Oracle is off to a very, very strong start in FY18."

Net income was $2.21 billion for the quarter. This is a 21% increase year-over-year from $1.83 billion.

Oracle announced that total revenue for its cloud software for the quarter was $1.5 billion, an increase of 51% from the prior year's quarter. The company's Cloud Software as a Service increased revenue by 62%. Revenue from Oracle's Cloud Platform as a Service and Infrastructure as a Service grew 28%.

Oracle Corporation (ORCL) shares ended the week at $48.74, down 6% for the week.

United Natural Foods Grows Strong Earnings

United Natural Foods, Inc. (UNFI) released its quarterly and full year earnings on Wednesday, September 13. The distribution company reported higher year-over-year sales and profits.

The company posted quarterly net sales of $2.34 billion, up from $2.21 billion during the same quarter last year. Full year net sales were $9.27 billion.

"Our performance in fiscal 2017 demonstrated our steadfast focus on serving our customers and managing our business in a challenging and deflationary operating environment," said UNFI Chairman and CEO Steven L. Spinner. "We are optimistic about growth and the opportunities ahead of us, given the strength of our national supply chain as well as the breadth of our unique, better for you, fresh, organic and specialty product offerings."

The company's net income of $38.87 million, or $0.76 per share outshined the prior year's quarterly net income of $34.68 million, or $0.69 per share. For the full year, the company posted net income of $130 million.

United Natural Foods, distributor of natural and organic food products, is one of Whole Foods Market's primary suppliers. Amazon, which recently acquired Whole Foods, has stated a desire to lower prices for consumers. It remains to be seen how this effort will impact the company's distributors over the coming months.

United Natural Foods, Inc. (UNFI) shares ended the week at $39.74, up 11.3% for the week.

The Dow started the week of 9/11 at 21,928 and closed at 22,267 on 9/15. The S&P started the week at 2,475 and closed at 2,500. The NASDAQ started the week at 6,411 and closed at 6,448.

Treasury Yields Rise

U.S. Treasury bond yields rose this week in the aftermath of the second major hurricane to strike the country in less than a month. Investors' optimism that the storm's damage was not as bad as initially feared combined with a strong mid-week Consumer Price Index release buoyed yields.

Treasury yields rose on Monday as Hurricane Irma made its way up the Gulf Coast of Florida. Following the storm's landfall in Florida on Sunday, investors shifted away from the safety of Treasury bonds. Yields on Treasury bonds rise as prices fall.

The benchmark 10-year Treasury note yield opened trading on Monday at 2.09%. By close of trading on Wednesday the yield had risen to 2.19%.

Yields continued their rise on Thursday as the U.S. Department of Labor released its latest Consumer Price Index (CPI) numbers. The CPI rose 0.4% during August, higher than analysts' expected 0.2% increase.

"After a five-month hiatus core inflation came back to life in August," said J.P. Morgan economist Michael Feroli. "Today's report should ease some of the low inflation concerns among wavering FOMC officials, and we continue to expect the leadership will prevail in getting another (interest rate) hike in at the December meeting."

The Federal Open Market Committee (FOMC) is expected to refrain from raising interest rates at its upcoming meeting on September 19-20. Many analysts, however, put the odds of a December hike around 50%.

"You're basically at 50/50," said Cantor Fitzgerald rate strategist Justin Lederer. "The Fed I think is itching to get one more rate hike in this year, but the market has been discounting it."

The 10-year Treasury note yield finished the week of 9/11 at 2.21%. The 30-year Treasury note yield was 2.77%.

Mortgage Rates Hold Steady

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, September 14. The report showed no movement for the 15 and 30-year mortgage rate averages.

The 30-year fixed rate mortgage averaged 3.78% this week, unchanged from last week. During the same time last year, the 30-year fixed rate mortgage averaged 3.5%.

This week, the 15-year fixed rate mortgage averaged 3.08%, showing no movement from last week. Last year at this time, the 15-year fixed rate mortgage averaged 2.77%.

"Following a sharp decline last week, the 10-year Treasury yield rose 11 basis points this week. The 30-year mortgage rate, however, remained unchanged at 3.78%," said Freddie Mac chief economist Sean Becketti. "If Treasury yields continue to rise, mortgage rates could see an increase in next week's survey."

Based on published national averages, the money market account finished the week of 9/11 at 0.71%. The 1-year CD finished at 1.38%.

Published September 15, 2017

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