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Sunday March 18, 2018



H&R Block Releases Earnings Report

H&R Block, Inc. (HRB) released its quarterly earnings report on Tuesday, March 7. The company reported a decrease in revenue over the prior year's quarter.

The company reported revenue of $452 million for the quarter. This is down from $475 million during the same quarter last year.

"We are delivering what we promised in December. Through aggressive Assisted and DIY offers, we are achieving our goal of new client growth and I'm pleased that we gained market share in both the Assisted and DIY tax preparation categories in the first half of the tax season," said H&R Block President and CEO Bill Cobb. "I'm proud of what we have accomplished so far. These results are in line with our expectations for the first half of the season."

H&R Block posted a net loss for the quarter of $104.5 million. This is more than the $81.7 million loss the company reported at this time last year.

H&R Block, which specializes in assisting Americans with their tax returns, noted in its earnings release that it generally reports losses in the third quarter due to the nature of the tax filing calendar. The company also announced recently that it will be incorporating IBM's Watson into its tax filing experience. The company believes that the addition of Watson's "cognitive computing" will improve the customer experience by assisting tax preparers in finding appropriate tax credits and deductions.

H&R Block, Inc. (HRB) shares ended the week at $23.74, up 12.9% for the week.

Coca-Cola Bottling Co. Reports Rising Sales

Coca-Cola Bottling Co. Consolidated (COKE) reported its quarterly earnings on Wednesday, March 8. The independent bottling company reported an increase in sales and profits.

The company reported net sales of $841.5 million for the quarter. This was an increase of 35.8% from the same quarter last year.

"We are pleased to close another successful year with solid organic growth in our business along with continued expansion through acquisitions," said Coca-Cola Bottling Co. CEO Frank Harrison. "Since the first announcement of our territory expansion in 2013, the Company has nearly doubled its net sales to over $3 billion in 2016. We have also grown our employee base, adding over 7,000 new members to the Coca-Cola Consolidated family."

The company reported net income of $22.8 million, or $2.31 per share. During the same quarter last year, Coca-Cola Consolidated reported net income of $5.6 million.

Coca-Cola Bottling Co. Consolidated is the largest independent U.S. bottler of Coca-Cola products. The Charlotte, North Carolina based company distributes soft drinks and other non-alcoholic beverages across much of the eastern United States. While the company mainly distributes Coca-Cola products, it also includes other brands, such as Dr. Pepper, in its product lineup.

Coca-Cola Bottling Co. Consolidated (COKE) shares ended the week at $171.74, down 1.2% for the week.

Staples' Sales Decline

Staples, Inc. (SPLS) released its quarterly and full year earnings on Thursday, March 9. The company reported decreases in sales and profits for the quarter.

The office supply retailer reported $4.6 billion in revenue for the quarter, down from $4.7 billion during the same quarter last year. For the full year, revenue was down 2.8% to $18.2 billion.

"Our fourth quarter results were right in-line with our expectations, and I'm increasingly confident that we have the right plan and the right team to transform Staples and get back to sustainable sales and earnings growth," said Staples CEO Shira Goodman. "I am particularly proud of our ability to grow our delivery business by continuing to enhance our offering and satisfy our business customers."

The company posted a net loss of $615 million for the quarter, or $0.94 per share. At this time last year, Staples reported net income of $130 million, or $0.20 per share.

Staples' North American Retail segment posted sales of $1.65 billion during the quarter, a drop of 8.2%. Comparable store sales in North America dropped 7% during that period of time. The company announced plans to close 70 stores across North America in the upcoming year. Despite sharp drops in retail sales, the company's North America Delivery segment held relatively steady year-over-year, with sales of $2.65 billion for the quarter.

Staples, Inc. (SPLS) shares ended the week at $8.68, down 2.9% for the week.

The Dow started the week of 3/6 at 20,956 and closed at 20,903 on 3/10. The S&P 500 started the week at 2,375 and closed at 2,373. The NASDAQ started the week at 5,846 and closed at 5,862 for the week.

Treasury Yields Rise Ahead of Fed Meeting

Treasury yields spiked this week as economic signs increasingly point to an interest rate hike at next week's Federal Open Market Committee Meeting. Analysts appear confident that the Fed will raise rates for the first time since December.

Treasury bond yields rose throughout the week in anticipation of Friday's jobs report. The benchmark 10-year Treasury climbed to 2.6% on Thursday while the 30-year Treasury yield peaked at 3.2%.

The U.S. Department of Labor released the February jobs report on Friday, March 10. The economy added 235,000 jobs last month, according to the report, outpacing the expected rate of 190,000 new jobs. Unemployment also dropped slightly from 4.8% to 4.7%.

"A March hike is a done deal," said Aberdeen Asset Management's Luke Bartholomew. "The report was the last piece of the puzzle and there is nothing here that will make the Fed want to step back from their recent signaling."

Despite the near certainty of a rate hike, market enthusiasm was tempered late in the week by falling oil prices. Crude oil prices dropped to $48 per barrel on Friday, down nearly 7% for the week.

The 10-year Treasury note yield finished the week of 3/6 at 2.58%, while the 30-year Treasury note yield was 3.17%.

Mortgage Rates Rise

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, March 9. Mortgage rates increased this week following a period of relatively little movement.

The 30-year fixed rate mortgage averaged 4.21% for the week, up from 4.10% last week. During the same time last year, the 30-year fixed rate mortgage averaged 3.68%.

The 15-year fixed rate mortgage averaged 3.42% this week, up from 3.32% last week. At this time last year, the 15-year fixed rate mortgage averaged 2.96%.

"The 10-year Treasury yield rose about 10 basis points this week. For the first time in weeks, the 30-year mortgage rate moved with treasury yields and jumped 11 basis points to 4.21%," said Freddie Mac Chief Economist Sean Becketti. "The strength of Friday's employment report and the outcome of next week's FOMC meeting are likely to set the direction of next week's survey rate."

Based on published national averages, the money market account finished the week of 3/6 at 0.56%. The 1-year CD finished at 1.25%.

Published March 10, 2017
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