Stocks fell on Tuesday as investors juggled an impending onslaught of earnings reports with a statement from President Trump that the United States and China have a “long way to go” before reaching an agreement on trade. Both the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) posted modest losses.
As for individual stocks, earnings news sent shares of J.B. Hunt Transport Services (NASDAQ: JBHT) and Domino’s Pizza (NYSE: DPZ) in different directions.
A smoother road ahead for J.B. Hunt?
Shares of J.B. Hunt jumped 5.6% after the trucking and transportation company delivered encouraging second-quarter 2019 results — but that’s not to say the news looked good at first glance. On one hand, quarterly revenue climbed 5.7% year over year to $2.26 billion, roughly in line with analysts’ consensus estimate. On the other hand, earnings fell 10% to $1.23 per share, arriving around $0.12 per share below expectations.
So why the rise? For one, the market cheered a stronger-than-expected showing from J.B. Hunt’s dedicated contract services (DCS) segment, where revenue soared 28% to $680 million, in what CFO David Mee described during the subsequent conference call as “a strong quarter, plain and simple.”
The news also helped alleviate concerns over the impact of escalated global trade tensions on the trucking industry.
“From a demand perspective, our customers are optimistic,” added Chief Commercial Officer Shelley Simpson. “They did recognize the level of inventory that they brought in incremental to avoid really what was happening around tariffs, but they are starting to work through that inventory and feel better about the back half of the year.”
Domino’s goes cold
Meanwhile, shares of Domino’s Pizza fell 8.7% after the pizza chain served up its own mixed quarterly report. Domino’s Q2 revenue grew 4.1% year over year to $811.6 million, driven by a combination of new locations, 3% same-store sales growth from U.S. restaurants (decelerating from 3.9% last quarter), and a 2.4% comps increase from international restaurants (a modest acceleration from 2% Q1). On the bottom line, that translated into adjusted net income of $92.4 million, or $2.19 per share, up 19% from $1.84 per share in the year-ago period.
Most analysts were modeling lower earnings of $2.02 per share, but on significantly higher revenue of $837 million.
Management remained optimistic, with CEO Ritch Allison calling it “a good second quarter, particularly for global unit growth.”
“As a work-in-progress brand, we are constantly striving to improve in needed areas, execute our long-term strategy and build toward Dominant #1 — a goal I continue to feel we are built to achieve,” Allison added.
While it’s encouraging that Domino’s can lean on building new locations to drive its top line, investors undoubtedly want to see better growth from existing restaurants in today’s increasingly competitive food-delivery market.