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Saturday September 24, 2016



Oracle Releases Quarterly Earnings

Oracle Corporation (ORCL) released its quarterly earnings report on Thursday, September 15. The technology company's revenue and profits missed Wall Street expectations.

The company reported revenue of $8.6 billion, up from $8.4 billion during the same quarter last year. Analysts expected revenue of $8.7 billion for the quarter.

"This year we are on track to sell more than $2 billion of SaaS and PaaS annually recurring revenue," said Mark Hurd, CEO of Oracle. "We believe this will be the second year in a row that Oracle has sold more SaaS and PaaS than any cloud service provider. In the first quarter alone, we added more than 750 new SaaS customers including 344 new SaaS Fusion ERP customers - that's more ERP customers than Workday has sold in the history of their company."

Net income for the quarter was $1.8 billion, or $0.44 per share. During the same period last year, the company reported net income of $1.7 billion, or $0.40 per share.

Oracle Corporation is among the technology companies driving the growth in cloud computing. Company Chairman and CTO Larry Ellison announced that Oracle will be releasing its next generation of IaaS next week at its OpenWorld conference. The company's total Cloud Revenues for the quarter, which includes software as a service (Saas), platform as a service (PaaS) and infrastructure as a service (IaaS), were $969 million, up 59% from last year.

Oracle Corporation (ORCL) shares ended the week at $38.92, down 2.6% for the week.

Cracker Barrel Serves Up Strong Earnings

Cracker Barrel Old Country Store, Inc. (CBRL) released its quarterly earnings report on Wednesday, September 14. The restaurant company's earnings and revenue exceeded analysts' expectations.

The company reported revenue of $745.6 million. This was up 4% from last year, when the company reported revenue of $719 million.

"We believe the strategic programs we implemented during the fiscal year successfully drove our continued positive results," said Cracker Barrel President and CEO Sandra B. Cochran. "While we anticipate ongoing challenges in the industry during fiscal 2017, our management team and employees remain focused on delivering continued growth in our business and driving long-term shareholder value."

Net income for the quarter was $51 million, or $2.12 per share. This was up from the same period last year when net income was $47.4 million, or $1.98 per share.

Cracker Barrel operates restaurants throughout the U.S., each with its own retail store attached. The company's comparable restaurant sales increased 3.2% for the quarter while comparable retail sales rose 3.5%. For the full fiscal year, Cracker Barrel reported revenue of $2.91 billion and net income of $189.3 million.

Cracker Barrel Old Country Store, Inc. (CBRL) shares ended the week at $140.15, down 4.3% for the week.

Coffee Holding Co. Reports Earnings

Coffee Holding Co., Inc. (JVA) reported its quarterly revenue on Wednesday, September 14. The company reported an increase in net income but a decrease in revenue.

The company reported net sales of $17.4 million for the quarter. This was down sharply from $27 million during the same quarter last year.

"I'm pleased to report another solid quarter to our shareholders as we earned $0.12 per share for the quarter ended July 31, 2016 versus $0.02 per share for last year's corresponding quarter," said Coffee Holding Co. CEO Andrew Gordon. "The second half of the quarter saw positive developments for the green coffee market as prices continued to rise from previous lows. These higher prices have translated into improved margins on our sales of specialty green coffee as we are able to take advantage of our favorable inventory position."

Net income for the quarter was $755,518, or $0.12 per share. This is up from $139,162, or $0.02 per share during the same period last year.

Coffee Holding Co. produces specialty green and private label coffees as well as its own branded coffee and tea. The company recently announced a deal with Food Lion stores to stock its Café Caribe brand in over 900 stores in the U.S.

Coffee Holding Co., Inc (JVA) shares ended the week at $5.31, virtually unchanged for the week.

The Dow started the week of 9/12 at 18,029 and closed at 18,124 on 9/16. The S&P 500 started the week at 2,121 and closed at 2,139. The NASDAQ started the week at 5,098 and closed at 5,245.

Treasury Yields Continue Rollercoaster Ride

Treasury yields rose and prices consequently fell as economic indicators were released this week. The reports revealed mixed economic growth numbers.

On Tuesday, the U.S. Census Bureau released a report showing that median household income increased 5.2% from last year. This was the largest yearly increase since the Census Bureau began tracking household income in 1967.

The U.S. Department of Commerce reported on Thursday that retail sales dropped 0.3% in August. This was a larger drop in sales than the 0.1% expected by analysts.

On Friday, the Department of Labor released its latest consumer-price index, showing an increase of 0.2% in August. This was the result of increases in the cost of medical care and shelter, while food and energy prices remained the same.

The 30-year Treasury bond was at 2.45% during trading on Friday, down from 2.47% on Thursday. The 10-year Treasury note peaked on Thursday at 1.70% before falling to 1.69% during trading on Friday.

"The inflation data overall have not been suggesting disinflation or deflation, but the flat trend line is enough below target that, in my opinion, the shortfall cannot be considered immaterial," said Dennis Lockhart, President of the Federal Reserve Bank of Atlanta. "I find this to be an awkward state of affairs."

With these mixed results, the likelihood of a rate hike at next week's Federal Open Market Committee meeting remains low. The Fed will have one last chance to raise rates this year when it meets again in December.

The 10-year Treasury note yield finished the week of 9/12 at 1.70%, while the 30-year Treasury note yield was 2.45%.

Mortgage Rates Slightly Higher

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, September 15. Rates crept upward this week, helped by a rise in Treasury yields.

The 30-year fixed rate mortgage averaged 3.50% this week. This represents an increase from last week when it averaged 3.44%. Last year at this time, the 30-year fixed rate mortgage averaged 3.91%.

This week, the 15-year fixed rate mortgage averaged 2.77%. This was higher than last week's average of 2.76%. The 15-year fixed rate mortgage averaged 3.11% one year ago.

"The 10-year Treasury yield rose 18 basis points to 1.73%, its highest level since Brexit," said Freddie Mac Chief Economist Sean Becketti. "The 30-year fixed-rate mortgage followed suit, rising 6 basis points to 3.50% this week. This is the first week since June that mortgage rates were above 3.48%, snapping an 11-week trend."

Based on published national averages, the money market account finished the week of 9/12 at 0.48%. The 1-year CD finished at 1.16%.

Published September 16, 2016
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