Finances

Tennessee-based Dollar General Corp. (DG) reported its most recent quarterly earnings on September 5th. The company reported strong second-quarter results.

Dollar General reported quarterly sales of $3.95 billion. This represents an increase of 10.4% from the same period last year, when the company reported sales of $3.58 billion. Dollar General's same-store sales increased 5.1% over the same 13-week period last year.

The company's net income was $214 million for the quarter. In the same period last year, Dollar General reported net income of $146 million, an increase of 47%. On an earnings per share basis, Dollar General reported income of $0.64 per share, up from $0.42 in the same period last year.

"Dollar General had another strong quarter," said Rick Dreiling, Dollar General's Chairman and Chief Executive Officer. "Our same-store sales increase of 5.1% demonstrates the ongoing execution of the initiatives around our key operating priorities and is evidence of our continued importance to our customers."

Dollar General, with 10,203 stores in 40 states, operates more retail locations in the U.S. than any other retailer. The chain sells high quality private brands as well as a number of brand name products.

Dollar General Corp. (DG) shares ended the week at $50.14.

H&R Block Reports Earnings

Tax services provider H&R Block, Inc. (HRB) recently reported its first-quarter results. The company typically reports a first quarter operating loss. The losses in Q1 2013 were less than in the same period last year.

H&R Block reported quarterly revenue of $96 million. This is a decrease of 4% from the comparable period last year when the company reported revenue of $101 million.

The company has engaged in a series of "cost reduction initiatives." Accordingly, the company saw an improved position relative to the most recent quarterly earnings. H&R Block reported a net loss of $106 million for the quarter (a loss of $0.38 per share). This compares favorably to the same period last year in which the company reported a loss of $119 million (or a loss of $0.38 per share).

"During the second half of fiscal 2012, we completed a thorough review of our organization and made some difficult decisions to reduce our cost structure and to drive efficiency," said Bill Cobb, H&R Block's President and Chief Executive Officer. "The improvement in our first quarter results and lower operating expenses in part reflects the impact of our cost reduction initiatives. We expect these initiatives will add $85 to $100 million of pretax earnings in fiscal 2013, leading to earnings and margin expansion."

H&R Block, Inc. (HRB) closed the week at $16.33 per share.

VeriFone Reports Increased Earnings

VeriFone Systems, Inc. (PAY), a secure payment processor, announced its earnings results for the third quarter.

For the quarter, VeriFone reported revenue of $489 million. This represents an improvement of 54.3% from the same period last year in which the company reported revenue of $316 million.

The company reported net income of $37.7 million for the quarter, up 43.1% from the same period last year in which the company's net income was $26.3 million. On an earnings per share basis, VeriFone reported income of $0.34 per share, up from $0.28 per share in the comparable period last year.

"We are very proud of our performance in Q3. Despite continued volatility around exchange rates, our business remains vibrant in all geographies," said Douglas G. Bergeron, Chief Executive Officer. "In the U.S., growth accelerated as we saw the beginnings of the adoption of EMV-based systems and the first significant payments services deals in the quarter. We are excited about our prospects for 2013 and beyond."

Shares of VeriFone Systems, Inc. (PAY) ended the week trading at $32.26 per share.

The Dow started the week at 13,091 and closed at 13,307. The NASDAQ started the week at 3,067 and finished at 3,136. The S&P 500 started the week at 1,407 and ended at 1,438.

According to the results of a Bloomberg Global Poll, many poll respondents think that the London interbank offered rate (known as the Libor) will be replaced by a more strictly regulated rate within the next five years. The Libor is a key interest rate that affects $500 trillion of securities worldwide.

Market confidence in the Libor has fallen following disclosure that several financial firms may have manipulated the reporting of the Libor to conceal their credit troubles and to reap profits on their investments. Barclays, UBS, Citigroup and HSBC are among the large banks implicated in the rate fixing scandal. In June, Barclays agreed to pay a penalty of $460 million for its role in the rate fixing.

The Libor is established based on a daily survey of banks by the British Bankers' Association (BBA). The survey asks lenders what it would cost them to borrow from each other for various loan terms, from overnight to one year, and in various currencies such as the U.S. dollar, the Euro and the yen. The average of those rates determines the rate published by the BBA.

U.S. Treasury Secretary Timothy Geithner has advocated for greater government control in the establishment of inter-bank lending rates. In testimony before the Senate Banking Committee, Geithner stated, "We have to take a careful look at other parts of the financial system where the markets rely heavily on private organizations composed of private firms like the BBA that have some quasi-regulatory or self-regulatory role." Geithner also cautioned, "We've got to be careful to make sure the system is not relying on associations of private firms that leave us vulnerable to the kind of things we've seen."

Secretary Geithner has been criticized for not doing more to head off the Libor manipulation after writing a memo in 2008, while he was at the New York Fed, which raised concerns. He was questioned by members of the Senate Banking Committee about why, given his concerns, he allowed the Libor to be used as a key rate in various government programs such as the Troubled Asset Relief Program (TARP) and whether taxpayers had been adversely affected by the Libor manipulation. Geithner said the Treasury Department did not yet know the impact on taxpayers.

The 10-year Treasury note yield finished the week at 1.66% while the 30-year Treasury note yield finished the week at 2.83%.

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on September 6, 2012. The results of the latest survey show that fixed rate mortgages (FRM) remain near their record lows.

The 30-year FRM averaged 3.55% for the week. This is a decline from the week prior when the 30-year mortgage averaged 3.59%. Last year at this time, the 30-year FRM averaged 4.12%.

The 15-year FRM remained unchanged from the week prior, coming in at an average of 2.86%. Last year at this time, the 15-year FRM averaged 3.33%.

"Mortgage rates were little changed over the holiday week amid mixed economic data releases," stated Frank Nothaft, Freddie Mac's Vice President and Chief Economist. "Although consumer spending rose 0.4% in July, representing the largest gain in five months, the core price index was unchanged suggesting little threat of inflation. Consumer confidence picked up slightly in August according to the University of Michigan, but remained below this year's peak in May. And the manufacturing industry contracted for the third consecutive month in August."

The money market fund finished this week at 0.5%. The 1-year CD finished at 0.7%.