Scout Daily Update: Conspicuous ISM Report

STOCK NEWS

Constellation Brands, Inc. (NYSE:STZ): Reported Q2 EPS of $1.77 which beat estimates by eleven cents. Revenues of $2.02 billion were up 16.8% year over year and beat estimates by $60 million. Full-year EPS guidance was raised from $6.05-$6.35 to $6.30-$6.45. The acquisition of Ballast Point had a positive impact on earnings.

Acuity Brands, Inc. (NYSE:AYI): Reported Q4 EPS of $2.21 which missed expectations by 6 cents. Revenues were $925.5 million which was up 21.9% year over year and missed estimates by $22.76 million. The CEO made the following statement: “During the fourth quarter, we made the decision to accelerate certain actions to streamline our supply chain, enhance our customer service and drive productivity.  These actions included, among others, the closure of a manufacturing facility and the transfer of certain production to alternate locations in order to free up additional capacity for future growth and to better leverage our overall supply chain.

Global Payments Inc. (NYSE:GPN): Reported Q1 EPS 86 cents. Revenues of $817.26 million were up 52.2% year over year which beat estimates by $4.81 million. Cash earnings from segments were the following: North America $178.36 million which was up 83.9%; Europe $72.11 million which was down 6.4%; Asia Pacific $16.49 million which was up 19.4%.

Monsanto Company (NYSE:MON): Q4 EPS of $0.07 beat estimates by 9 cents. Revenues of $2.56 billion were up 8.5% year over year which beat estimates by $320 million. Monsanto Company (NYSE:MON) reported weak 2017 EPS guidance which was $4.50-$4.90 which was lower than the $4.90 consensus. Monsanto’s full-year net sales fell year over year due mostly to currency headwinds and price declines in agricultural productivity.

ECONOMIC NEWS

The ISM report was very confusing because ISM services jumped the most in history even as employment was the weakest since 2013 and business optimism was near the lowest since the financial crisis. As you can see in the chart below, the last two times the ISM popped, it preceded a recession. This is a weird statistical anomaly, so it’s hard to tell what this report means. The algorithms that run the market think this means the Fed will hike in November. This is not going to happen. There’s no chance of a rate hike one week before the election.