From Wall Street to Main Street
Highlights from the past week
Market / Macro Economic Summary Seems like we’re back to the days when the markets are range bound and go up one week and down another without making much progress. The S&P 500 had topped an all-time high on Wednesday, but managed to end the week lower by Friday. Markets wiped the gains from last week, so the Dow Jones & Nasdaq were both 2.5% and the S&P 500 dropped 1.7%. On the year, however…the S&P 50o leads the was with a 2.2% gain, the Dow Jones is second with a 2.1% gain and the Nasdaq remains positive at a 1.1% gain. We have seen a dispersion of stock performance between small & mid cap, value stocks and foreign stocks and our technology leaders. I will say here, I would not be too concerned as I believe this to be healthy market behavior. Stocks should not just go higher over time, even though we would like for that, it is healthy market behavior for them to consolidate before taking another leg higher. Company Specific / Micro Economic Summary Toll Brothers (TOL) Shares fell 7.7% as the home builder reported a miss on the top and bottom-lines. Earnings per share of $1.75 came in woefully short of the Wall Street expectations of $2.05. Revenue of $1.86 billion was also shy of the estimates of $1.91 billion. The pressure from elevated interest rates, low home deliveries and concerns of the broader home market all led to the less optimistic outlook and lower stock price. Alibaba(BABA) Shares rose 6% on the back of a strong quarter. Earnings per share of $21.4 exceeded the calls for 19.4. Revenue of $280 billion was much better than the anticipated $279 billion analysts were looking for. AI cloud revenues was deemed a high spot and corroborated by a 14% growth in AI revenue growth. Walmart (WMT) Stock declined 6% as the U.S.’s largest retailer reported a mixed quarter. Earnings per share of $0.66 beats beat expectations for $0.65. Revenue of $179 billion found a way to match expectations of $1.78 billion. CEO Doug McMillon said he sees momentum in lower prices, eCommerce business and a focus towards faster delivery times. Shake Shak (SHAKE) Shares jumped over 9.5% as the retailer reported a mixed quarter that managed to give investors a little more than they were asking. Earnings per share of $0.26 cents beat Wall Street estimates of $0.25. Revenue of $329 million managed to meet analyst expectations. “In 2025, we expect to execute on another great year of mid-teens sales growth, to open approximately 85 Shacks system-wide, to expand our Restaurant-level profit margin to approximately 22%,and drive Adjusted EBITDA growth of 17% – 22%,” said Chief Financial Officer, Katie Fogertey. Mercado Libre (MELI) Shares rose 8.9% on the heels of a strong quarter. Revenue of $6.06 billion was much stronger than the estimates of $5.94 billion. Earnings per share of $12.6 handedly exceeded the estimates of $7.61. During the conference call with analysts, CFO Martin de los Santos said that, in discussing the credit card business, “having a solid credit card offering is critical to our ambition of being the largest digital bank in Latin America, and leveraging our unique competitive advantages in underwriting and distribution. So we’ll continue investing in our platform to capture these opportunities even if sometime they put short-term pressure on margins.” Parting Thoughts We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, Erick J. Palacios, MBA Wealth/Fiduciary Advisor