Archive for August, 2020

• Great Earnings from Trex
  Eddy Elfenbein, August 3rd, 2020 at 4:19 pm

  Great quarter for Trex (TREX). The deck stock earned 81 cents per share for Q2. That beat by 16 cents per share. Sales rose 7% to $221 million. Nice increases in gross and EBITDA margins.

  “Strong second quarter results demonstrated continued broad-based demand for Trex decking and railing products reinforcing our leadership position in outdoor living. Trex Enhance® Basics and Naturals decking has significantly expanded the size of our addressable market and has accelerated our ability to take share from wood, while Trex Transcend® and Trex Select® decking continued to gain market share.

  “Our gross margin performance reflected improvements in both Trex Residential and Trex Commercial. The 80-basis point expansion in Trex Residential gross margin was primarily due to improved throughput and reduced material costs in our Enhance product line, partially offset by startup costs for the new capacity in Nevada. Trex Commercial gross margin reflected quarter-specific project mix, as well as improvements in overall execution and manufacturing cost savings.

  “Production efficiencies, stable raw material costs and disciplined SG&A spending drove strong operating leverage in the quarter, resulting in a 580 basis-point expansion in EBITDA margin and 33% growth in earnings per share in the second quarter,” noted Bryan Fairbanks, President and Chief Executive Officer.”

  Now let’s look at guidance. For Q3, the company expects sales between $215 million and $225 million. The midpoint is a 13% increase over last year’s Q3. Wall Street had been expecting quarterly sales of $193.94 million.

  Trex also announced a 2-for-1 stock split. This means that investors will get twice as many shares and the share price will fall in half. The split will happen on September 14. (The split will take effect the following day.)

  The shares are up 3.7% in after-hours trading.

• Stocks Reach 5-1/2 Month High
  Eddy Elfenbein, August 3rd, 2020 at 10:47 am

  

  The stock market had a very good July. The S&P 500 gained 5.51% for the month making it the fourth monthly gain in a row.

  This morning, the index got as high as 3,299. That’s the highest intra-day level since February 20. We have new highs from Trex, Danaher, Ansys and Broadridge. Several others are very close.

  On Friday, the 10-year Treasury closed at a record low of 0.55%.

  This is an important week for economic news. This morning, the ISM Manufacturing Index came in at 54.2. That’s pretty good. It was the best ISM number since March of last year.

  There’s more economic news due later this week. On Wednesday, ADP will release its payroll report for July. On Thursday, we’ll get another report on jobless claims. This has increased over the last two weeks. Then on Friday, we’ll get the July jobs report.

• Morning News: August 3, 2020
  Eddy Elfenbein, August 3rd, 2020 at 7:08 am

  China Factory Activity Expands At Fastest Rate in 9 Years

  Fed Is Headed for a Clash With Hedge Funds, Other Shadow Banks

  Buy, Sell, Repeat! No Room For ‘Hold’ In Whipsawing Markets

  Gold Can Do What Bonds Can’t in a Superlow-Rate World

  Microsoft Talks To Buy TikTok’s U.S. Operations Spark Ire In China

  Marathon Petroleum Sells Speedway to 7-Eleven Owner For $21 Billion

  Men’s Wearhouse Owner Files for Bankruptcy & Lord & Taylor Files for Bankruptcy as Retail Collapses Pile Up

  Swiss Industry Recovers From Covid-19 Slump and Redirects Orders

  Apple Reportedly Eyes Turning iPhones Into Payment Terminals

  In Showdown Between China and the West, HSBC Gets Caught in the Middle

  Roger Nusbaum: It Boils Down To Having The Correct Asset Allocation

  Jeff Miller: Weighing the Week Ahead: Is the Payroll Employment Report Accurate?

  Howard Lindzon: SPAC SPAC SPAC SPAC SPAC

  Ben Carlson: Why Would Anyone Own Bonds Right Now? & The Battle of the Bubbles

  Michael Batnick: Animal Spirits: Fixed Income in a Low Rate Environment, It’s Either Sadness or Euphoria & Do Technology Stocks Dominate?

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