Category: Stock Market News

Fitch Ratings on Monday placed AT&T Inc.’s A- long-term rating on Rating Watch Negative after the company said it will buy Time Warner Inc. for $85.4 billion. The ratings agency believes that the merger will provide AT&T with a “strong foothold” in the media landscape but the company’s leverage will likely increase due to the deal. “The transaction, as proposed, is likely to lead to a one-notch downgrade of AT&T,” said Fitch in a statement. At the same time, Fitch affirmed Time Warner’s BBB+ rating. S&P Ratings and Moody’s Investors Service earlier Monday had also placed AT&T’s ratings on review for possible downgrades. AT&T shares edged up 0.1% while Time Warner’s shares were flat after hours.

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Rev Group Inc. said late Monday it is looking to raise up to $100 million in an initial public offering, according to a filing with the Securities and Exchange Commission. The maker of specialty and recreational vehicles reported 2015 revenue of $1.74 billion and net income of $22.9 million. Goldman Sachs, Morgan Stanley and Baird are listed among the underwriters. The company plans on listing on a yet-to-be-named exchange under the ticker “REVG”.

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Buffalo Wild Wings Inc. said late Monday that Alex H. Ware has been appointed vice president and chief financial officer, effective Oct. 31. Ware was previously executive chairman of MStar Holding Corp., the parent company of MicroStar Logistics, which provides kegs for the beer industry, and he will also transition to being the holding corporation’s board director, Buffalo Wild Wings said in a statement. Shares of Buffalo Wild Wings were flat in the extended session after ending the regular trading day up 0.6%.

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Sonic Corp. shares sank nearly 12% in late Monday trading after the company reported a fiscal fourth-quarter sales miss and downbeat fiscal 2017 guidance. Net income totaled $25.4 million, or 53 cents per share, compared with $26.3 million, or 50 cents per share, for the same period last year. Adjusted EPS was 45 cents, beating the 44 cents FactSet consensus. Revenue totaled $162.1 million, down from $175.3 million and below the $167 million FactSet consensus. Systemwide same-restaurant sales fell 2%. “Slowing consumer trends that began in April… persisted through the fourth quarter, resulting in lower-than-expected sales and profits in the fourth fiscal quarter,” said Sonic Chief Executive Cliff Hudson in a statement. For fiscal 2017, Sonic expects adjusted earnings per share to be in the range of down 7% to flat year-over-year versus a FactSet estimate of a 12% increase. And same-store sales are expected to be down 2% to flat, systemwide. Sonic shares are down 18% for the year so far while the S&P 500 Index is up 5.3% for the same period.

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Visa Inc. shares fell 0.3% in the extended session Monday even though the credit-card company reported fiscal fourth quarter per-share earnings and sales that beat expectations. Visa said it earned $1.9 billion, or 79 cents a share, in the quarter, compared with $1.5 billion, or 62 cents a share, in the year-ago period. Adjusted for one-time items, the credit-card company reported a profit of 78 cents a share. Net operating revenue for the quarter was $4.3 billion, up 19% from a year ago. Analysts polled by FactSet had expected the credit card company to report adjusted earnings of 73 cents a share on sales of $4.24 billion. Visa said it recorded a $110 million pretax charge in the quarter to cover severance costs, including planned reductions in Europe. Shares of Visa had ended the regular session up 1%.

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Twitter Inc. said Monday that it was rescheduling its third-quarter earnings report to Thursday before the market opens, instead of its previous time slot of Thursday afternoon. The company will report at about 7 a.m. EST with a conference call at 8 a.m. EST. Twitter said it rescheduled the earnings to avoid overlapping with other technology earnings and calls Thursday afternoon. Alphabet and Amazon are scheduled to report Thursday afternoon. Shares of Twitter have fallen 19.5% in the past month, compared to the S&P 500’s drop of 1%.

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U.S. stocks finished higher on Monday, with all three of the main benchmarks closing at two week highs, thanks in part to a spate of merger announcements. The Dow Jones Industrial Average finished 77.18 points, or 0.4%, higher at 18,222.89, after rising as much as 130 points early in the session. Shares of Microsoft Corp. and Boeing Co. led the blue-chip gauge higher. The S&P 500 index advanced 10.17 points, or 0.5%, to 2,151.32, with technology and consumer staples shares posting the strongest gains. The Nasdaq Composite Index climbed 52.42 points, or 1%, to 5,309.83.

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Standard & Poor’s said Monday it’s placing AT&T Inc.’s BBB-plus rating on CreditWatch negative, after the company said it has agreed to buy Time Warner Inc. for $85.4 billion. The agency said it expects to deal to push AT&T’s adjusted debt-to-EBITDA ration to about 3.7 times, excluding synergies, from about 3.1 times. The deal will be funded with a mix of 50% equity and 50% cash, with the cash component to be funded through a combination of cash and debt. “We believe the acquisition has some strategic merits in that it will bring together Time Warner’s vast library of content assets with AT&T’s distribution capabilities,” S&P credit analyst Chris Mooney said in a statement. Any downgrade will depend on the company’s financial policy and commitment to debt reduction, its ability to growth EBITDA and generate free cash flow. S&P is expecting any potential downgrade to be limited to one notch, which would place the rating two notches above speculative, or “junk” bond status. AT&T shares were down 1.8%.

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Ollie’s Bargain Outlet Holdings Inc. said Monday that it has $100 million available to buy delayed or canceled items from manufacturers, retailers and others who have been impacted by the bankruptcy of freight carrier, Hanjin Shipping Co. The carrier said Monday that it will close its European operations, which The Wall Street Journal says is one more sign the company is “heading toward liquidation.” Ollie’s took out an ad in Monday’s Journal, broadcasting its offer to purchase goods across food, toys, housewares, books and more. “We see an opportunity to do business that is mutually beneficial to those who may need to offload merchandise, so we are just reminding folks that we are here and have the funds available to purchase these merchandise shipments, as well as the logistical expertise to act quickly to take possession of the goods, said Ollie’s Chief Executive Mark Butler, in a statement. Ollie’s shares are up 0.8% in Monday trading, and up nearly 61% for the year so far. The S&P 500 Index up 5.2% for the calendar year to date.

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Embraer S.A., the Brazilian aircraft manufacturer, agreed on Monday with the Securities and Exchange Commission and the Department of Justice to resolve civil and criminal charges it allegedly used its U.S.-based subsidiary May 2008 and February 2011 to pay bribes to foreign government officials in the Dominican Republic, Saudi Arabia, and Mozambique and to pay millions more in falsely recorded payments in India. Authorities say that Embraer realized over $83 million in profits from business obtained through the use of illicit payments. Embraer agreed to a deferred prosecution agreement with the Justice Department and will pay a criminal penalty of $107 million. The company will also pay $98 million in profit disgorgement and interest to the SEC. Embraer may receive up to a $20 million credit depending on the amount of disgorgement it will pay to Brazilian authorities in a parallel civil proceeding in Brazil. Embraer admitted to its involvement in a conspiracy to violate the anti-bribery and books and records provisions of the Foreign Corrupt Practices Act and to a willful failure to implement an adequate system of internal accounting controls, according to the DOJ. Embraer must also retain an independent corporate monitor for at least three years.

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