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Tuesday February 19, 2019



Hyatt Releases Earnings Report

Hyatt Hotels Corporation (H) reported its earnings for the fourth quarter and full year on Wednesday, February 13. The company reported steady revenue, strong comparables and increased income from management and franchising fees.

Hyatt posted revenue of $1.14 billion for the fourth quarter. This was up from $1.12 billion during the same quarter last year. For the full year, Hyatt reported revenue of $4.45 billion.

"We had a very strong 2018 driven by another year of double-digit growth in management and franchising fees, nearly offsetting the earnings decline in our owned & leased segment, resulting from over $1.0 billion of asset sales," said Hyatt's President and CEO Mark Hoplamazian."We successfully closed the acquisition of Two Roads Hospitality LLC, adding five new compelling brands into the Hyatt portfolio and significant future growth opportunities."

Net income for the quarter came in at $44 million, down 79% from $213 million during the prior year's quarter. For the full year, Hyatt reported $769 million in net income, up from $390 million the previous year.

Hyatt attributed its dramatic decrease in profits for the quarter to an unusually strong fourth quarter last year resulting from the sale of the company's stake in Avendra LLC. For the fourth quarter of 2018, Hyatt's global system-wide revenue per available room (RevPAR) increased 1.5%. In the U.S., Hyatt's comparable RevPAR increased 0.9% for the quarter.

Hyatt Hotels Corporation (H) shares ended the week at $72.37, up 2.7% for the week.

Yeti Reports Increased Earnings

YETI Holdings, Inc. (YETI) posted its latest quarterly and full-year earnings report on Thursday, February 14. The company reported increased sales and profits for the quarter.

The company posted net sales of $241.18 million for the fourth quarter, up from $202.10 million during the same quarter last year. For the full year, Yeti reported $778.83 million in net sales, up from $639.24 million the year prior.

"We finished 2018 with significant momentum in our business as we delivered full year results well above our original outlook and solidly at the high end of the revised outlook," said Yeti CEO Matt Reintjes. "We are extremely pleased with the strength in our business as our brand and products continue to resonate with consumers across all markets."

Yeti reported net income of $25.17 million for the quarter, a sharp increase from $2.97 million in net income at this time last year. For the full year, Yeti reported $57.76 million in net income, up from just $15.40 million last year.

Yeti, maker of high-end coolers and drinkware, made its initial public offering in October of last year. Sales of the company's Drinkware products increased 24% for the quarter to $143.5 million. Yeti's Coolers and Equipment posted a 10% increase in net sales, reaching $91.2 million for the quarter. For the full year, Drinkware brought in $424.2 million in sales while Coolers and Equipment reached $331.2 million.

YETI Holdings, Inc. (YETI) shares ended the week at $22.85, up27.0%.

Yelp Posts Mixed Results

Yelp Inc. (YELP) released its latest quarterly earnings report on Wednesday, February 13. The company reported increased revenue but a sharp decrease in net income.

Revenue came in at $243.74 million for the quarter. This was up from $219.44 million for the same quarter last year. For the full year, Yelp reported $942.77 million in revenue.

"In 2018, we evolved our go-to-market strategy to capture more of our addressable market and reduce sales friction," said Jeremy Stoppelman, co-founder and CEO of Yelp. "We also made significant progress in driving consumer usage in the Restaurants vertical and business-owner monetization in the Home & Local Services vertical."

Yelp reported net income of $31.95 million for the fourth quarter, down from $141.09 million during the same time last year. Annual net income also fell to $55.35 million from $153.00 million the previous year.

In its earnings release, the company announced that it plans to increase its share repurchase program by $250 million. This increase brings the total authorized share repurchase amount to $500 million. Yelp plans to repurchase $250 million in common stock in the first half of 2019.

Yelp Inc. (YELP) shares ended the week at $39.92, up 5.0% for the week.

The Dow started the week of 2/11 at 25,143 and closed at 25,883 on 2/15. The S&P 500 started the week at 2,712 and closed at 2,776. The NASDAQ started the week at 7,327 and closed at 7,472.

Treasury Yields Rise on Trade Optimism

Yields on U.S. Treasurys rose on Friday amid growing optimism that the U.S. and China could strike a trade deal before the looming March deadline. Friday's uptick in yields followed a drop-off on Thursday in response to declining retail sales.

Diplomats from the U.S and China met in Beijing throughout the week to work toward a trade agreement. On Friday, U.S. Treasury Secretary Steve Mnuchin and U.S. Trade Representative Robert Lighthizer met with China's President Xi Jinping. Following the meeting, President Xi signaled optimism that a deal could be reached.

"I have said many times that China and the United States are inseparable from each other. Cooperation serves the interests of the two sides and conflict can only hurt both," said President Xi. "The consultations between the two teams have made important progress."

The benchmark 10-year Treasury note yield was at 2.668% during trading on Friday, up slightly from Thursday's closing yield of 2.655%. The 30-year Treasury yield was at 3.000% on Friday.

On Thursday, the U.S. Census Bureau released the monthly retail sales report for December 2018. The report, which was delayed due to last month's government shutdown, showed a 1.2% decrease in monthly sales.

"Until this morning's release, Fed official hesitance to hike further was based on risks emanating from global growth and from financial markets, despite a strong domestic outlook," said Citigroup's Andrew Hollenhorst. "The decline in retail sales calls into question the domestic growth assumption."

The 10-year Treasury note yield closed at 2.67%, while the 30-year Treasury bond yield was 3.00%.

Mortgage Rates Continue to Fall

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, February 14. The report revealed that fixed mortgages have fallen to a 12-month low.

This week, the 30-year fixed rate mortgage averaged 4.37% this week, down from last week's average of 4.41%. At this time last year, the 30-year fixed rate mortgage averaged 4.38%.

The 15-year fixed rate mortgage averaged 3.81% for the week, down from last week's average of 3.84%. The 15-year fixed rate mortgage averaged 3.84% one year ago.

"The combination of cooling inflation and slower global economic growth led mortgage rates to drift down to the lowest levels in a year," said Sam Khater, Chief Economist at Freddie Mac. "While housing activity has clearly softened over the last nine months and the lingering effects of higher rates from last year are still being felt, lower mortgage rates and a strong job market should rekindle demand for the spring homebuying season."

Based on published national averages, the money market account finished the week of 2/4 at 1.22%. The 1-year CD finished at 2.57%.

Published February 15, 2019

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