Scholastic and OMNOVA Solutions Down on Earnings Reports; Vale SA, Mosaic, and Wal-Mart in Spotlight

Crude futures are up by over 1.5% now as investors cheer yesterday’s solid EIA inventory report and many look forward to the OPEC/Russia meeting in Algeria. If oil can rally above the resistance of $50 per barrel, the broader indexes would benefit from the more sustainable prices and the uptick in energy valuations.

Among the stocks traders are talking about this morning are Scholastic Corp (NASDAQ:SCHL), OMNOVA Solutions Inc. (NYSE:OMN), Vale SA (ADR) (NYSE:VALE), Mosaic Co (NYSE:MOS), and Wal-Mart Stores, Inc. (NYSE:WMT). Let’s take a closer look at the latest developments surrounding these stocks and analyze what the smart money investors we track think about the companies in question.

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Scholastic Corp (NASDAQ:SCHL) reported a loss of $1.15 per share on revenue of $282.7 million for its fiscal first quarter, beating the bottom-line estimates by $0.02, but missing the top-line consensus forecast by $3.8 million. Given that most schools were not in session during the fiscal first quarter, the company’s loss is not surprising. To put the loss in perspective, Scholastic lost $1.46 per share from continuing operations in the prior year period. Scolastic Corp (NASDAQ:SCHL) affirmed its fiscal 2017 outlook for earnings per share excluding one-time items of $1.60 to $1.70 on revenue of $1.7 billion to $1.8 billion. The company also anticipates free cash flow of $40 million to $50 million for the same time period. Chuck Royce‘s Royce & Associates inched up its stake in Scholastic Corp (NASDAQ:SCHL) by 2% to over 2.1 million shares in the second quarter.

OMNOVA Solutions Inc. (NYSE:OMN) also reported mixed earnings for its latest quarter (the company’s fiscal third quarter). Omnova earned $0.14 per share on revenue of $195.6 million during the quarter, versus estimates of earnings of $0.17 per share and revenue of $195.1 million. Adjusted segment operating profit margin rose to 11% versus 10.1% in the third quarter of fiscal 2015, and management successfully reduced the net debt to TTM adjusted EBITDA ratio to 3.5x from 3.8x a year ago. OMNOVA  remains on track to deliver noticeable growth in adjusted EPS for fiscal 2016, largely driven by margin expansion, cost reductions, and improved mix. The smart money was slightly more bullish on the company in the second quarter, as 10 funds from our database were long OMNOVA Solutions Inc. (NYSE:OMN) at the end of June, up by two funds from the previous quarter.

On the next page, we find out why traders are talking about Vale SA, Mosaic Co, and Wal-Mart Stores.

Traders are watching Vale SA (ADR) (NYSE:VALE) and Mosaic Co (NYSE:MOS) after Reuters reported that the Brazilian iron ore producer could announce a partial sale of its fertilizer and phosphate division to Mosaic. According to the article, Mosaic would be acquiring the assets in question under a ‘very accretive multiple’, and Vale would be getting as much as $3 billion for perhaps 75% of those assets to reduce its debt/fortify its balance sheet. Vale shares have gained 66% year-to-date. The number of funds tracked by us with holdings in Vale SA (ADR) (NYSE:VALE) and Mosaic Co (NYSE:MOS) fell by two in each stock quarter-over-quarter to 24 and 19, respectively, at the end of June.

Last but not least, Wal-Mart Stores, Inc. (NYSE:WMT) received some bad news after a U.S. judge ruled that the retail giant will have to face a class action lawsuit in relation to alleged bribery at the company’s Mexican division. Under the lawsuit, Wal-Mart would have to defend against the allegation that it defrauded investors by hiding the fact that its Mexican division was allegedly bribing Mexican officials to grow faster. Wal-Mart doesn’t believe the class action lawsuit is appropriate and may appeal. Warren Buffett’s Berkshire Hathaway cut its stake in Wal-Mart Stores, Inc. (NYSE:WMT) by 28% in the second quarter to just over 40 million shares at the end of the second quarter.

Disclosure: none