Monday was a decent day for financials, which finished ahead by 0.6%, but saw a mixed performance across the broader indices. While the Dow Jones Industrial Average hit yet another record high after a 0.3% uptick, the S&P 500 Index slipped by 0.1%, while the Nasdaq Composite fell 0.4%.
Corporate earnings are dominating the headlines once again, with Pfizer Inc. (NYSE:PFE) and Texas Roadhouse Inc (NASDAQ:TXRH) among companies on the move following their most recent financial results. However, Snap Inc (NYSE:SNAP) is also making headlines yet again, this time as Wall Street takes another shot at the Snapchat parent for its decision to limit voting rights.
Here’s what you should be watching as we head into Tuesday’s trade:
Snap Inc (SNAP)
Snap is having a rough week for headlines considering we’ve only gotten through one full day, though the stock is showing at least some resilience.
Snap’s initial public offering lockup period expired on Monday, making an additional 400 million insider shares eligible for selling. Fears of the event exacerbated Snap’s selling, with Wall Street fearing that already significant losses since the IPO would prompt insiders to sell like crazy the second they had the opportunity.
At least early on, that doesn’t appear to be the case. SNAP stock plunged at Monday’s open, but recovered to just 1% losses.
However, Snap faced another headline hurdle later Monday, when S&P Dow Jones Indices LLC announced that the S&P 500, as well as the S&P MidCap 400 and S&P SmallCap 600, will, going forward, exclude companies with multiple share classes, claiming that “companies with multiple share class structures tend to have corporate governance structures that treat different shareholder classes unequally with respect to voting rights and other governance issues.” The move would not affect current components with multiple share classes, such as Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL).
But it’s the latest move by an index provider to strike out against companies — such as Snap — that have seemingly acted against corporate governance by limiting shareholder voting rights. The FTSE Russell has already banned Snap from its indices.
But SNAP stock is holding strong to this news, too, up fractionally Tuesday morning amid what has been a 45% down year for the social media company.
Texas Roadhouse Inc (TXRH)
TXRH could be one of the day’s quietest but biggest winners, as the restaurant chain posted a mostly upbeat Q2 earnings report.
Texas Roadhouse said it earned $37.6 million (53 cents per share) in its second quarter, better by 11.9% year-over-year. That met analysts’ expectations.
Revenues, on the other hand, were able to get over Wall Street’s bar. The top line of $566.2 million climbed by 11.4% year-over-year and was better than expectations for $563 million. That came amid a 4% jump in comparable-restaurant sales at corporate-owned locations, and 3.6% in franchises.
Texas Roadhouse opened 13 company-owned restaurants during the quarter, including two “Bubba’s 33” locations.
The company’s outlook included plans to open 27 to 29 restaurants across the full year, down by original guidance of 30 company restaurants. TXRH also sees the income tax rate coming in at 28%, down from original forecasts for 29%-30%. Meanwhile, management still sees food cost delfation at 1%-2%, and capex of $170 million.
TXRH stock is popping 7% this morning, flipping its year-to-date loss to black ink for 2017.
Pfizer Inc. (PFE)
PFE shares are headed slightly higher on Tuesday despite a pretty mixed quarter that saw demand wane for a few key treatments.
Pfizer reported second-quarter revenues of $12.9 billion, off 2% year-over-year and missing expectations of $13.08 billion.
The company’s sales were dragged down by a weak performance from its rheumatoid arthritis treatment, Enbrel, whose revenues dropped 19.5% to $617 million. Pfizer’s Essential Health division saw sales dip 14% year-over-year amid several losses in marketing exclusivity.
The pharmaceutical company did manage to score a bottom-line beat, though. Profits of $3.07 billion jumped nearly 50%, and on an adjusted basis, earnings of 67 cents per share were a penny better than the analyst consensus. And looking forward, Pfizer boosted its full-year earnings guidance from a range of $2.54-$2.60 to a range of $2.50-$2.60.
PFE stock is up 1% on Tuesday morning, continuing a middling year in which shares have appreciated just 2%.