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Wednesday April 16, 2014



International Speedway Revs Its Earnings Engine

International Speedway Corporation (ISCA), owner and operator of some of the country's major motorsports entertainment facilities, reported its second quarter results on July 3. The company experienced a decline in revenue but an increase in profit, which was good news for investors.

International Speedway reported revenue of $178.4 million for the quarter, a decline from the same period last year when the company reported revenue of $179.6 million. The company attributed this dip in revenue to a decline in admissions, a trend that has impacted the entire racing industry during the weak economy of the past few years.

Despite a decrease in revenue, International Speedway was able to squeeze more profit out of the quarter's earnings. The company reported an increase in net income to $22.4 million from $13.7 million in the second quarter last year.

International Speedway CEO, Lesa France Kennedy, had this to say about the quarterly results: "We are pleased with our financial results for the quarter and year-to-date. While consumer-related revenues at our events to-date generated mixed results, in part due to inclement weather, we remain optimistic that the economy is poised for stronger growth, which will benefit our fans."

Following the earnings report, International Speedway saw its share price climb as a result of the company's rise in profits. The price increase was no doubt further buoyed by the fact that the rise in profits came from less revenue than the comparable period last year.

International Speedway Corporation (ISCA) shares ended the week at $34.11.

Acuity Brands's Quarterly Results Lights Up Investors

Acuity Brands, Inc. (AYI), a world-renowned provider of lighting solutions, announced its 2013 third quarter results on July 2. The company's results outperformed analysts' expectations.

Acuity reported net sales of $541.5 million, an increase of 11% from the comparable period last year. The company's sales easily outperformed expectations that net sales would be $518.7 million.

The company also reported earnings per share of $0.97 compared to $0.82 during the same period last year. Like Acuity's quarterly sales figure, its earnings per share figure easily topped estimates of $0.88 per share.

Vernon J. Nagel, Chairman, President and CEO of Acuity Brands, had this to say about Acuity's impressive quarterly numbers: "We are very pleased with our adjusted results for the third quarter, particularly the growth in net sales, which we believe meaningfully outperformed the overall growth rate of the North American lighting market that we primarily serve. We believe this is reflective of our strategy to aggressively introduce innovative and energy-efficient lighting solutions, expand in key channels and geographies, and enhance our customer service."

Acuity's share price rose following its earnings report, going from $78.54 on Tuesday morning to $81.39 by the end of the day's trading. Its share price is up around 15% for the year, a reflection of Acuity's focus on new high-growth products and the improving construction market in the U.S.

Acuity Brands, Inc. (AYI) shares ended the week at $84.26.

A. Schulman's Stock Price Falls on a Rough Monday

A. Schulman, Inc. (SHLM), a plastics supplier, announced its 2013 third quarter results on July 1. The company announced lower sales and income figures than a year ago as well as news that it was ceasing efforts to acquire competitor Ferro Corporation.

A. Schulman reported net sales of $548.6 million for the quarter, a 3% decrease from net sales of $563.1 million during the comparable period last year. The company attributed most of the sales decline to the continually anemic European economy.

The company also reported that net income had fallen to $10 million for the quarter from $17.3 million during the same period last year. This figure was below analysts' estimates.

Joseph M. Gingo, Chairman, President and CEO, had this to say about the quarter's lackluster results: "The weak economic environment in Europe has lingered. We continue to face inconsistent order patterns in our European markets, but the strong performance of our Americas and Asia Pacific segments had helped to offset this challenge in prior periods; however, this did not occur during the fiscal 2013 third quarter." Mr. Gingo went on to detail actions the company is undertaking in Brazil and Mexico to cut costs and improve efficiency.

A. Schulman added further fuel to the fire on Tuesday with its announcement that it was ceasing efforts to acquire competitor Ferro Corporation. The company had offered to purchase Ferro for $563 million, an offer Ferro rejected. All of the negative news on Tuesday contributed to the fall in A. Schulman's share price, which had fallen by as much as 7% during late afternoon trading.

A. Schulman, Inc. (SHLM) shares ended the week at $27.51.

The Dow started the week at 14,910 and closed at 15,136. The S&P 500 started the week at 1,606 and closed at 1,632. The NASDAQ started the week at 3,403 and closed at 3,479.

Treasuries Fall on Improved Jobs Numbers

Treasuries fell on Friday following the release of the latest U.S. jobs report that beat expectations but again showed steady, yet tepid job growth. The better-than-expected jobs numbers reaffirmed fears that the Federal Reserve will soon begin to taper its bond purchasing program, known as quantitative easing.

The Labor Department report showed the economy added 195,000 jobs in June, which was greater than forecasts of between 155,000 and 165,000 jobs. In addition, the employment figures for April and May were revised upward by 70,000 jobs. The unemployment rate remained unchanged at 7.6%, however, as more people entered the labor force to find work.

"It's a good number – it doesn't hurt the tapering camp," said Sean Murphy, a trader at primary dealer Societe Generale SA in New York. "I'm not sure if that brings us closer to tapering for September, but it just seems like the market is going to find a footing down here. It [the 10-year note] will settle at 2.7, 2.75%."

During early Friday trading, the 10-year note yield rose 19 basis points to 2.69%. Yields move inversely to prices, so as yields rise prices fall. Yields on the 30-year bond were up 16 basis points to 3.65%.

Treasuries had risen for a brief time earlier this past week on July 3 when international events caused investors to fly to the safety of government bonds. In Portugal, the country's finance minister and foreign minister resigned, further casualties of the ongoing European debt crisis. Meanwhile, in Egypt, a military coup forced President Mohammed Morsi out of power when he failed to meet a deadline for leaving office. Political crises in Turkey, Brazil and Greece further contributed to the rise in Treasury prices.

The impact of these events on Treasuries was largely made irrelevant on Friday, though, with the release of the U.S. jobs report. Many analysts continue to expect a tapering of the Federal Reserves' bond purchases in September, a fact some analysts believe is already priced into Treasuries. Whether the expected tapering occurs remains to be seen, which means investors will be left to continue making bets about what action the Fed will ultimately take.

The 10-year Treasury note yield finished the week at 2.72% while the 30-year Treasury note yield finished the week at 3.68%.

Interest Rates Come Down From Last Week's Jump

On July 3 Freddie Mac released the results of its weekly Primary Mortgage Market Survey (PMMS). This week saw average fixed mortgage rates come down from last week's big jump in rates.

The 15-year fixed rate mortgage averaged 3.39% this week. This represents a welcome decrease from last week when it averaged 3.50%. Last year at this time, the 15-year fixed rate mortgage averaged 2.89%.

The 30-year fixed rate mortgage averaged 4.29% this week. This represents a decrease from last week when it averaged 4.46%. One year ago at this time, the 30-year fixed rate mortgage averaged 3.62%.

Frank Nothaft, Vice President and Chief Economist at Freddie Mac, commented on the change in this week's rates. He said, "Fixed mortgage rates fell over the holiday week as market concerns over the timing of the Federal Reserve's pullback in bond purchases eased somewhat. Rates are still low by historical standards and should continue to aid in housing affordability and the ongoing recovery of the housing market. For instance, pending home sales rose 6.7% in May to the strongest pace in over six years. In addition, residential construction spending increased in four of the first five months this year."

The money market fund finished this week at 0.4%. The 1-year CD finished at 0.6%.

Published July 5, 2013

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