U.S. stock markets finally got their spirit back on Tuesday, snapping out of a funk that lasted more than a week. The S&P 500 Index moved ahead by 0.7% yesterday, the Dow Jones Industrial Average got out of its eight-day slide by advancing 0.7%, and the Nasdaq Composite posted a 0.6% gain.
Several companies including Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) and RH (NYSE:RH) were headed higher Wednesday morning on earnings results as the fourth-quarter season winds down, and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) was making an aggressive move on positive news of its own.
Here’s what you need to know heading into Wednesday’s trade:
Restoration Hardware parent RH received a much-needed bid higher Tuesday morning on a fourth-quarter earnings beat.
The company earned 68 cents per share for Q4, edging out estimates by 2 cents. Meanwhile, revenues came in at $586.7 million, clearing the bar for $584.2 million.
RH also managed to top expectations on its full-year guidance. The company said it’s looking for earnings in a range of $1.78 to $2.19 per share (estimates: $1.94) on a top line of between $2.3 billion to $2.4 billion (estimates: $2.33 billion).
Through all of that, investors are overlooking some pretty serious declines, including a 9% decline in revenues, 18% in comparable-brand revenues and 70%-plus in net income. Said CEO Gary Friedman:
“While 2016 was a year of transformation and transition, 2017 will be a year of execution, architecture, and cash flow at RH. Our focus will be on executing our new business model, architecting a new back-end operating platform, and maximizing cash flow. While our investment strategy will always maintain a long-term view, we believe we can improve working capital and returns by having a more disciplined approach to capital allocation.”
Transformation indeed. RH stock lost more than 60% throughout calendar 2016. Thus, shareholders should feel a little relieved with the 15%-plus gains in the stock this morning.
Vertex Pharmaceuticals Incorporated (VRTX)
VRTX shares shot up like a rocket Wednesday morning thanks to positive results in a late-stage trial of a cystic-fibrosis drug.
Vertex’s treatment — which is meant for patients age 12 or over that have that the mutation that causes this form of lung disease — is a combination of tezacaftor and ivacaftor. After success in a 24-week Evolve study that evaluated the treatment in people with two copies of the F508del mutation, the company now plans to seek regulatory approval in the U.S. and European Union, likely sometime in the third quarter.
If successful, VRTX would be going up against itself in the cystic-fibrosis arena — it currently also markets Orkambi, though the company has said it causes certain side effects that causes patients to drop the drug within months. Vertex has been looking for a replacement for Orkambi in the meanwhile.
VRTX shares are up nearly 20% in Wednesday’s premarket trade.
Ollie’s Bargain Outlet Holdings Inc (OLLI)
Last up is OLLI, which was up a little higher after posting its own fourth-quarter data.
The discount retailer earned 39 cents for its fiscal Q4, easily coming in ahead of the 35-cent quarter that Wall Street predicted. Moreover, revenues of $283.4 million were up 15% year-over-year and beat expectations for $280.38 million. That included a same-store sales improvement of 2%.
The outlook was mixed, however. While Ollie’s projected earnings range came between $1.12 to $1.15 per share to beat the consensus of $1.09, revenues of $1.025 billion to $1.03 billion weren’t able to beat at their midpoint; analysts were hoping for $1.029 billion. The company believes comps will improve 1% to 2%.
Ollie’s opened two stores over the quarter to improve its reach to 234 stores across 19 states. Said CEO Mark Butler:
“The increase in comparable store sales was broad based, with the majority of our 21 departments generating a positive comp. New stores performed above expectations and we finished the year with 234 stores in 19 states, a 15.3% increase year-over-year. “
OLLI shares were looking to start Tuesday 1% to 2% higher.