Stocks fell broadly on Tuesday, with the Dow Jones Industrial Average (DJINDICES: ^DJI) and S&P 500 (SNPINDEX: ^GSPC) both accelerating downward toward the end of the day.
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Today's stock market
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Financial stocks bucked the broader trends, while technology shares led the market down. The Vanguard Financials ETF (NYSEMKT: VFH) gained 0.5% and the Technology Select Sector SPDR ETF (NYSEMKT: XLK) lost 1.6%.
As for individual stocks, shares of casual dining restaurateur Darden Restaurants, Inc (NYSE: DRI) rose following a good earnings report, as did those of Chicago Bridge & Iron (NYSE: CBI) after the company won a big court case.
Darden investors feast on another fine quarter
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If there's a restaurant recession underway, you wouldn't know it from Darden's fiscal fourth-quarter results. Sales from continuing operations totaled $1.93 billion, up 8.1%, and adjusted earnings per share increased 7.3% to $1.18. Analysts were expecting the company to earn $1.15 per share on revenue $1.87 billion. Shares of Darden were up as much as 5.7% on the news, ultimately closing 2.9% higher.
Same-restaurant sales, excluding newly acquired Cheddar's Scratch Kitchen, were up a healthy 3.3%, with the strongest gains coming from the flagship Olive Garden chain, up 4.4% from the previous year. Profit margins expanded, and the board announced a 12.5% increase in the dividend, giving the stock a 2.7% yield.
In the press release, CEO Gene Lee said:
Our strong fourth quarter results wrapped up a solid year of performance. We continue to improve execution in our restaurants by relentlessly focusing on food, service and atmosphere. Our strategy is helping to build guest loyalty, drive improved financial results and grow shareholder value.
Darden has continued its string of positive comps and impressive quarters, stretching back to a shakeup of its board a couple of years ago. Management continues to stress a "back to basics" approach, and is having success with its Olive Garden to-go business, which grew 16% last quarter. With sustained and impressive execution and the prospect of Cheddar's Scratch Kitchen adding to results in upcoming quarters, investors are feeling satisfied with Darden.
A big court win for Chicago Bridge & Iron
Shares of Chicago Bridge & Iron soared 39% on Tuesday following a favorable court ruling in a dispute with Westinghouse Electric Company, a subsidiary of Toshiba. The case was a $2 billion disagreement over the sale by CB&I to Westinghouse of two unfinished nuclear power plants in 2015.
The ruling by the Delaware Supreme Court reversed an earlier decision by a lower court in support of Westinghouse's claim that the closing deal price should be adjusted according to that company's interpretation of CB&I's historical accounting. The nuclear plants had been sold to Westinghouse for the price of zero, but with the obligation to assume liabilities that had resulted in part from spiraling cost overruns on the projects. Westinghouse disputed historical accounting figures and sued to recover an additional $2 billion, which CB&I regarded as an attempt to change the deal. The ruling threw out the accounting claim.
In a brief press release, CB&I CEO Philip K. Asherman said, "We are very pleased with the Delaware Supreme Court's decision, which vindicates our position that Westinghouse's $2 billion claim was without merit under the agreement. CB&I looks forward to quickly resolving any remaining disputes between the parties, which we believe should be immaterial in light of the Court's ruling."
The lawsuit had weighed heavily on CB&I's stock price, which was down more than 54% year to date before today's rally, and added to concerns about net losses and worries about project delays. But with the cloud of the lawsuit lifted, investors are evidently more optimistic about the value of the company and the prospects for its business going forward.
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