U.S. stocks ended down slightly on Thursday after President Donald Trump canceled a planned summit with North Korea’s Kim Jong Un and threatened to impose tariffs on auto imports, though losses were limited by gains in Netflix and General Electric.
Trump’s order on Wednesday for an investigation into whether vehicle and auto part imports had damaged the U.S. auto industry could further complicate trade negotiations with China and other trading partners.
Early Thursday, Trump canceled the June 12 meeting citing Pyongyang’s “open hostility,” even after North Korea followed through on a pledge to blow up tunnels at its nuclear test site.
But stocks recouped much of the day’s losses by the end of the session, and market participants said the sharp drop after the summit was canceled was a knee-jerk reaction.
A decline in energy shares following lower oil prices also weighed on the market, with the S&P energy index ending down 1.7 percent. On the flip side, General Electric rose 3 percent, rebounding from the previous session’s losses, and Netflix’s stock gained 1.3 percent, both assisting the market.
Netflix’s stock market value ballooned to a record US$153 billion and eclipsed Walt Disney Co for the first time, making it the world’s most valuable entertainment company.
The Dow Jones Industrial Average fell 75.05 points, or 0.30 percent, to 24,811.76, the S&P 500 lost 5.53 points, or 0.20 percent, to 2,727.76 and the Nasdaq Composite dropped 1.53 points, or 0.02 percent, to 7,424.43.
Defense stocks jumped after Trump called off the North Korea meeting and warned the U.S. military was ready in the event of any “reckless” acts by North Korea.
Ford and General Motors also gained on the possibility of tariffs on European and Asian car imports. U.S.-listed shares of Fiat Chrysler Automobiles fell 0.93 percent. (Source: Reuters)
Stock to Watch: L Brands Inc (LB)
On Thursday, Shares of L Brands Inc (NYSE: LB) 3.44% and ended its trading session at $35.22. The company saw 15,035,416 shares trade hands over the course of the day. Given that its average daily volume over the 30 days has been 4.88M shares a day, this signifies a pretty noteworthy change over the norm.
The analysts, on average, are forecasting a $44.83 price target, but the individual stock is already up 14.72% from its recent lows. However, the stock is trading at -44.18% as compared to recent highs. Leading up to this report, we have seen a -0.68% return in the stock price over the last 30 days and a -27.69% return over the past 3 months. Since the starting of the calendar year, the stock’s performance is recorded at -41.51%.
The stock price recently practiced a 5-day change of 3.44% with 1.20 as average true range (ATR). LB has a beta of 0.76 and RSI is 54.85. The stock declared an annual dividend of $6.81% per share.
Introduction to Net Income & Its Uses in Most Important Indicators:
Income is money received by an individual or business in exchange for supplying a good or service or through investing capital. Income is consumed to fuel day-to-day expenditures. In businesses, income can refer to a company’s remaining revenues after all expenses and taxes have been paid. In this case, it is also known as “earnings”. Most forms of income are subject to taxation.
However, Net income (NI) is a corporation’s total earnings (or profit); net income is computed by taking revenues and subtracting the costs of doing business such as depreciation, interest, taxes and other expenses. This number appears on a company’s income statement and is an important measure of how profitable the company is over a period of time.
Role of Net Income in Calculating EPS:
Businesses use net income to calculate their earnings per share (EPS). Business analysts often refer to net income to as the bottom line, since it is listed at the bottom of the income statement. In the United Kingdom, NI is known as profit attributable to shareholders. To know the company’s net income – refer to this link: http://finviz.com. L Brands Inc (NYSE: LB) is a stock with 281.36M shares outstanding. As the earnings per share (EPS) formula is stated as earnings available to common shareholders divided by number of common stock shares outstanding, therefore its diluted EPS is calculated to be 3.13 (ttm). EPS is an indicator of company profit because the more earnings a company can generate per share, the more valuable each share is to shareholders.
A key aspect of EPS that’s often overlooked is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) – that company would be more efficient at using its capital to generate income and, all other things being equal would be a “better” company. Shareholders also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.
Role of EPS in Calculating Price to Earnings Ratio (P/E):
Earnings per share are generally pondered to be the single most essential variable in determining a share’s price. It is also a key component used to calculate the price-to-earnings valuation (P/E) ratio.
Analysts also use the price-to-earnings (P/E) ratio for stock valuation, which is calculated as market price per share ($35.22) divided by EPS (3.13). Price to earnings ratio (P/E) for LB stock is recorded at $11.27. The P/E ratio calculates how expensive a stock price is relative to the earnings produced per share. For example, if the P/E ratio of a stock is 20 times earnings, an analyst compares that P/E ratio to other companies in the same industry and to the ratio for the broader market.
Analysts’ Recommendation to Consider:
Analysts have a mean recommendation of 2.70 on this stock (A rating of less than 2 means buy, “hold” within the 3 range, “sell” within the 4 range, and “strong sell” within the 5 range).
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