Ultimate Market Recap: Fast Food Takes a Fall, RadioShack Slides 18%
Monday Morning’s Top Stories
Shares of Wendy’s Company (NYSE:WEN) declined 2 percent on Monday morning. The company announced its fourth quarter income declined from $6.1 million to $4.3 million. Shares of McDonald’s (NYSE:MCD) and Yum! Brands Inc. (NYSE:YUM) also headed lower.
Pep Boys (NYSE:PBY) shares surged more than 24 percent after agreeing to a buyout offer from investment firm The Gores Group. “Partnering with The Gores Group delivers a significant premium for Pep Boys’ shareholders and ensures a strong foundation for us to continue our expansion,” the company said. Shares of Autozone Inc. (NYSE:AZO) edged higher on the news.
Gannett Co. Inc. (NYSE:GCI) fell .80 percent after reporting a decline in net income. The company earned $116.9 million (49 cents per share), compared to $174.1 million (72 cents per share) in the previous year period.
On Monday, Valeant Pharmaceuticals International Inc. (NYSE:VRX) said it is withdrawing its buyout offer of $7.50 per share for ISTA Pharmaceuticals Inc. (NASDAQ:ISTA) due to a lack of progress. Shares of ISTA declined 2.5 percent on the news.
Starbucks Corp. (NASDAQ:SBUX) finalized a deal with Tata Global Beverages on Monday to form an equal joint venture, that will help Starbucks offer cafes in India. Shares of the coffee giant slipped 1.25 percent in morning trading.
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Monday Morning Hot Stocks
The Pep Boys – Manny, Moe & Jack (NYSE:PBY): The Pep Boys announced that it has entered into a definitive merger agreement under which it will be acquired by The Gores Group, one of the nation’s leading investment firms, led by founder and CEO, Alec Gores. Total enterprise value of the transaction is approximately $1B.Under the terms of the merger agreement, The Gores Group will acquire all the outstanding common shares of Pep Boys for $15.00 per share in cash. This represents a premium of 24% percent over Pep Boys’ closing price of $12.08 on January 27, 2012 and a premium of 36% percent over Pep Boys’ volume weighted average closing price over the last 30 trading days. The transaction is currently expected to close in the second fiscal quarter of 2012. Following completion of the transaction, Pep Boys will become a privately held company and its stock will no longer trade on the New York Stock Exchange. Pep Boys noted that, in light of the proposed transaction, it will not host a conference call to discuss financial results for the 2011 fiscal year, but intends to file its year-end results with the SEC. Shares of The Pep Boys – Manny, Moe & Jack are trading 22.89%higher today.
Thomas & Betts Corporation (NYSE:TNB): ABB (NYSE:ABB) and Thomas & Betts (NYSE:TNB) announced that both companies’ boards of directors have agreed to a transaction in which ABB will acquire Thomas & Betts for $72 per share in cash or approximately $3.9B. The acquisition price represents a 24% premium to Thomas & Betts’ closing stock price on Jan. 27 and a 35% premium to the volume weighted average stock price over the past 60 trading days. The transaction is subject to approval by Thomas & Betts shareholders as well as to customary regulatory approvals, and is expected to close by the middle of 2012. Shares of Thomas & Betts Corporation are trading 22.71% higher today.
GTx, Inc. (NASDAQ:GTXI): 08:41 EDT GTx jumps 21% after Citigroup raises price target for shares to $19. Shares of GTx, Inc. are trading 31.73% higher today.
ABB Ltd (NYSE:ABB): ABB (NYSE:ABB) and Thomas & Betts (NYSE:TNB) announced that both companies’ boards of directors have agreed to a transaction in which ABB will acquire Thomas & Betts for $72 per share in cash or approximately $3.9B. The acquisition price represents a 24% premium to Thomas & Betts’ closing stock price on Jan. 27 and a 35% premium to the volume weighted average stock price over the past 60 trading days. The transaction is subject to approval by Thomas & Betts shareholders as well as to customary regulatory approvals, and is expected to close by the middle of 2012. Shares of ABB Ltd are trading 2.68% lower today.
Gannett Co., Inc. (NYSE:GCI): Says December advertising spending softened, exacerbated by Christmas day falling on Sunday, which negatively impacted advertising sales across some retail categories. Says November was the best month in the quarter in terms of total advertising in the publishing segment. Shares of Gannett Co., Inc. are trading 7.1% lower today.
Monday’s Trending Stocks
Bank of America Corporation (NYSE:BAC): The additions are part of the company’s previously announced plan to hire 1,000 small business bankers across the nation by mid-2012. Meanwhile, Goldman downgraded Bank of America given higher execution risk and valuation, and cited relative returns vs. Citigroup (NYSE:C), which was upgraded to Buy from Neutral. Bank of America price target remains $8. Also, Bank of America (NYSE:BAC) yesterday named Christian Meissner as head of its investment banking unit, ending a leadership structure with three heads of global corporate and investment banking, reports the Wall Street Journal. Shares of Bank of America Corporation are trading 3.02% lower today.
Wolverine World Wide, Inc. (NYSE:WWW): Sees 2012 revenue $1.485B-$1.525B vs. consensus $1.52B. Cites strengthening of the U.S. dollar vs British Pound, Canadian Dollar, Euro for the outlook. Shares of Wolverine World Wide, Inc. are trading 0.79% higher today.
Amylin Pharmaceuticals, Inc. (NASDAQ:AMLN): Piper Jaffray believes Amylin is a compelling takeout candidate following the FDA approval of Bydureon. Piper thinks the company could be acquired for $33 per share based on recent biotech acquisitions and keeps an Overweight rating on the stock. Shares of Amylin Pharmaceuticals, Inc. are trading 20.25% higher today.
The Wendy’s Company (NASDAQ:WEN): Sees unit development of approximately 40 new franchise restaurants, plus approximately 55 new international franchise and joint-venture restaurants. Sees Wendy’s company-operated restaurant margin of 14%-14.5%, an increase of up to 50 basis points. This assumes the benefit of same-store sales increases offset by increased commodity costs of 115 to 145 basis points, driven primarily by rising beef costs. Shares of The Wendy’s Company are trading 0.96% lower today.
Markets closed down on Wall Street today: Dow -0.05%,S&P -0.25%, Nasdaq -0.16%, Oil -0.59%, Gold -0.21%.
On the commodities front, Oil (NYSE:USO) fell slightly to $98.97 a barrel. Precious metals also fell, with Gold (NYSE:GLD) falling to $1,731.70 an ounce while Silver (NYSE:SLV) fell 1.04% to settle at $33.44.
Hot Feature: The Decline and Fall of Print Media
Today’s markets were down because:
1) Greece. Stocks slipped today as investors awaited news from a European summit in Brussels where leaders are expected to approve a permanent rescue fund for the euro zone and put the finishing touches on a so-called “fiscal compact” for stricter budget discipline. But discussions devolved into a sparring match between Greece and other nations critical of Greece’s half-hearted efforts to get its deficit under control. The country has yet to effect a debt writedown deal with private creditors needed if Greece’s troika of lenders — the European Union, European Central Bank, and International Monetary Fund – are to release its 130 billion-euro bailout now thought to be insufficient to buoy Greece’s flailing economy.
2) Spending. Consumer spending was completely flat in November, the Commerce Department reported this morning. Though spending rose 4.7 percent for the year, when adjusting for inflation, it fell 0.1 percent in the final month of 2011, breaking three months of gains and setting the tone for a slowdown in 2012.
3) Banks. Financial stocks were among the worst performers on Monday, with Bank of America (NYSE:BAC) the biggest decliner on the Dow, falling about 3 percent. Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS) all declined between 1 percent and 2 percent.
After Hours Radar Stocks
Shares of McKesson Corp. (NYSE:MCK) jumped 3.25 percent after reporting a 94 percent jump in third quarter profits. The company earned $300 million ($1.20 per share)m compared to $155 million (60 cents) in the previous year’s third quarter.
RadioShack Corp. (NYSE:RSH) shares plummeted more than 18 percent in late market trading. The company announced it beat fourth quarter revenue expectations, but will miss profit estimates due to selling smartphones at lower prices. The Shack explained, “The Company’s results for the fourth quarter are due in large part to the underperformance of the Sprint (NYSE:S) postpaid wireless business and reflect further unanticipated changes in Sprint’s customer and credit models.” CEO Jim Gooch said the company is moving towards more profitable sales from Verizon (NYSE:VZ) and AT&T (NYSE:T).
Don’t Miss: The Decline and Fall of Print Media.
Coinstar, Inc. (NASDAQ:CSTR) shares fell 2 percent after the closing bell. President and COO Gregg Kaplan is taking a leave of absence due to a family member’s illness. He expect to return in April. Current CFO J. Scott Di Valerio will fill in for Kaplan. Shares of Netflix (NASDAQ:NFLX) and Amazon.com (NASDAQ:AMZN) edged slightly higher in extended trading.
Shares of Rent-A-Center Inc. (NASDAQ:RCII) declined more than 3 percent after reporting fourth quarter results. Net income for the rental and leasing services company increased to $49.3 million (83 cents per share), compared to $31.9 million (49 cents per share) in the same quarter a year earlier. Revenue increased 8.9 percent to $737.5 million, short of $741.1 million estimates. “We are generally pleased with our earnings for the fourth quarter and our overall results for the fiscal year 2011,” said Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “While our top line was somewhat tempered a bit due to our core rent-to-own customers remaining focused on value, our customer demand remained strong.” Shares of Best Buy (NYSE:BBY) also declined in late trading.
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