Stocks were mixed Thursday, with the Dow Jones Industrial Average (DJINDICES: ^DJI) closing at a record high and the S&P 500 (SNPINDEX: ^GSPC) losing ground.
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Today's stock market
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Utilities were the strongest sector today, and the Utilities Select SPDR ETF (NYSEMKT: XLU) gained 0.8%. Industrial stocks continued their strong performance in September, with the Industrial Select SPDR ETF (NYSEMKT: XLI) up 0.5%.
As for individual stocks, United Natural Foods (NASDAQ: UNFI) rose following the release of the company's quarterly earnings, and Hertz Global Holdings (NYSE: HTZ) fell on an analyst downgrade.
United Natural Foods beats on profit
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Shares of grocery wholesaler United Natural Foods popped 5.3% after the company announced fiscal fourth-quarter results that missed revenue expectations but beat them on the bottom line. Sales were up 5.7% from last year to $2.34 billion, slightly missing the consensus analyst expectation of $2.36 billion. For the full year, revenue was up 9.5% to $9.27 billion, below guidance of $9.29 billion to $9.34 billion, which had been lowered last quarter. For the quarter, adjusted earnings per share came in at $0.72, in line with previous guidance and beating Wall Street expectations by $0.02.
An earnings beat by a couple of pennies and a slight miss on the top line would not seem to justify such a cheery reception from the market. But in the conference call, United executives allayed some fears that have helped drive the stock price down 22% from the beginning of the year until yesterday. Top of mind for analysts was the potential that Amazon's acquisition of Whole Foods could have a negative impact on United's wholesale business. CEO Steven Spinner said that United's signed consent to the merger resulted in the e-commerce titan having a commitment for minimum purchases through 2025. "We feel terrific about the relationship that we have with both companies, and we think they're going to do terrific things, and we're glad to be a part of it," he said in the call.
United, along with other companies in the grocery business, has had a headwind of food price deflation to overcome, and there was also good news on that front. Prices increased 0.13 percentage points in the quarter, indicating that the deflationary trend may be near an end.
Hertz hits a pothole
Hertz Global Holdings stock fell 12.4% after an analyst from Morgan Stanley downgraded it from equal weight to underweight on valuation concerns.
The rental car specialist's shareholders have been on a wild ride recently as shifts in consumer behavior and concerns about the impact of ride-sharing services have led the company to embark on a turnaround plan that included spinning off its equipment business as Herc Holdings last year, as well as signing supply agreements with ride-sharing companies Uber and Lyft. Investors were skeptical earlier this year that the company's moves would be adequate to overcome industry headwinds, and the stock drove off a cliff, plunging more than 50% from the beginning of the year until June.
The picture has brightened since then, though, with CEO Kathryn Marinello providing some evidence in last quarter's earnings report that the turnaround is taking hold and giving an upbeat outlook, propelling the stock up 23% in a single day. Lately, shares of rental car companies are apparently benefiting from the prospect of a boost in rentals due to the recent hurricanes. Given the short-term nature of that development, it was perhaps not surprising that observers would conclude that Hertz stock had gotten ahead of itself, and shares retreated back to a level seen earlier this month.
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