The Market Wrap for October 18: Earnings to the Rescue
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Iuri Struta Jun 06, 2016
Dividend.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
This week has been marked by small rises in traffic, with the list being topped by a component experiencing just a 20% increase in viewership. However, despite slow growth, it is clear that carmakers’ wobbles have grabbed attention. Both Ford (F ) and General Motors (GM ) are present in our list, as their shares have been battered lately by slowing car sales in May. Intel (INTC ) has also attracted readers’ interest, while Toronto-Dominion Bank (TD ) has made it to our trends list for the second consecutive week.
Our page tracking General Motors has seen an increase in viewership of about 20% week-over-week, as carmakers generally have been in the spotlight for reporting disappointing sales in May. General Motors has suffered one of the steepest declines last month, with U.S. vehicle sales falling 18% compared with the same period last year. As a result, the company’s shares have fallen nearly 6% over the past five days, bringing year-to-date performance further into negative territory, to -13%. On the bright side, the dividend yield has jumped to an annual payout of 5% following the declines.
Pundits are not necessarily downbeat about the U.S. car industry, and few are predicting that the cycle has turned. Despite May’s disappointing numbers, many still expect record sales for this year. The argument goes that this past month was shorter by two selling days and had one less weekend than the year before. Moreover, given the high demand for trucks and SUVs, which traditionally provide better margins than other categories, carmakers are expected to show good profits.
Still, there are plenty of reasons for GM bulls to worry. The company’s sales dropped the most in May compared with its peers. Toyota Motor posted sales declines of 9%, while Honda Motor fell about 5%.
Toronto-Dominion Bank: is present in our trends list for the second consecutive week with a 16% increase in traffic. The bank’s shares have continued to rise this past week, extending year-to-date gains to nearly 13%.
As previously reported: the company has posted strong financial results in a banking sector environment full of headwinds and a Canadian economy battered by low oil and gas prices. The bank pays a healthy annual dividend of 3.8%, which is above its 20-year average of 2.7% but below its financial peers’ average of 5.5%. Toronto-Dominion is also poised to gain from tailwinds provided by rising interest rates in the United States.
Legendary technological giant Intel: has seen its viewership rise 11% compared with the same period a week ago. The company is finding itself at a crossroads, as a changing technology landscape is forcing it to adapt. Its core PC business is in structural decline, and the company is attempting to shift more toward the Internet of Things and cloud computing. A restructuring process rarely comes without a price being paid in the form of a declining stock. Shares in Intel are down more than 8% since the beginning of the year, and its dividend yield has grown 3.3%.
Intel’s latest product — a high-performance processor designed for data centers — is a testament to the company’s restructuring process and changing direction. The move from a PC company toward an Internet of Things and cloud firm will not go without pain for some of its employees. When it released its earnings for the first quarter less than two months ago, the company said it will shed as much as 11% of its workforce in a bid to become a nimbler tech firm. The job cuts are expected to strip out $1.2 billion from the profits in the second quarter but will provide $750 million in savings this year and an annual run rate of $1.4 billion by mid-2017.
Compared with General Motors, Ford (F) has seen its sales decline by much less in May. Indeed, the company reported one of the smallest falls in the number of cars sold this past month, posting a 6% slump. The viewership of our page tracking the company’s stock: jumped 8% week-over-week, mostly reflecting our readers’ interest in car manufacturers and their disappointing numbers last month. Ford’s stock has not been hit as badly as its main competitor, GM, falling about 1% over the past five days. Year-to-date, the company’s shares are down 7.5%, and it currently pays an annual dividend of 4.6%.
Luckily for Ford, high-margin large vehicles were in high demand in May. For example, sales of its F-Series pickups have risen 9%. In addition, the price per vehicle sold jumped by $1,500 on average in May, indicating the company’s profits will not suffer as much as the decline in sales suggests.
Ford and GM have attracted readers to their respective pages this past week, as a year-over-year decline of 6% in the number of vehicles sold by car manufacturers in May raised eyebrows. Some fear that the marked slowdown in auto sales could be a sign the industry has hit a rough patch, but many dismiss it as just a temporary hitch. Elsewhere in the trends, Intel’s newly launched high-performance processor, which targets enterprise analytics, serves as proof of the company’s shift from PC to cloud. Meanwhile, Toronto-Dominion Bank has been performing very well in a turbulent market.
By analyzing how you, our valued readers, search our property each week, we hope to uncover important trends that will help you understand how the market is behaving so you can fine-tune your investment strategy. At the end of the week, we’ll share these trends, giving you better insight into the relevant market events that will allow you to make more valuable decisions for your portfolio.
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The Market Wrap for October 18: Earnings to the Rescue
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