Paramount Merger Not Yet Wrapped, BBWI Beats with Lower Guidance

Tuesday, June 4th, 2024

Pre-market trading is back in the red this morning. We have two economic prints out this morning — Job Openings and Labor Turnover Survey (JOLTS) and Factory Orders, both for April and due at 10am ET today — and key earnings reports, most of which are coming after today’s closing bell. Following a mixed market Monday, we’re looking at -114 points on the Dow, -0.29%, the Nasdaq -0.28%, the S&P 500 -0.35% and the small-cap Russell 2000 again the outlier somewhat: -0.78% at this hour.

We had thought we may have been able to announce a merger between CBS parent Paramount PARA and Santa Monica-based filmmaker Skydance by this point in the week, but no final announcement has yet been made. Both companies are reported to have agreed to terms, but some questions have surfaced regarding the $2 billion for its National Amusements segment, which may have some as-yet-unrevealed competition. Shari Redstone, the daughter of the late Sumner Redstone, has controlling interest of Paramount; David Ellison, son of Oracle founder Larry Ellison, is the principal at Skydance.

JOLTS numbers are expected to tick down month over month from 8.488 million to 8.4 million for April. Last time around, the rate of job openings came down for nine states, up for one, and even for the remaining 40. Total “separations” — employees who either quit or were fired/laid off — decreased in March. The hires rate came in at +3.5%, separations reached +3.3%. Today’s JOLTS report is the first of several employment reports this week.

Factory Orders for April are projected to come in less than half of the previous month’s tally. Today’s consensus ahead of the report is +0.7%, versus +1.6% in March. At least these numbers are still to the positive: four months of the last 12 have posted negative factory order growth. Averaged out over that time, we see +2.1% factory orders growth. While still on the positive side of the graph, these numbers have thus far been consistent with a steadily slowing economy.

Specialty retailer Bath & Body Works BBWI reported Q1 earnings before today’s open. Earnings of 38 cents per share outperformed expectations by 5 cents, +15% year over year. Revenues of $1.384 billion was slightly ahead of the $1.37 billion in the Zacks consensus. But shares are down -5% in early trading on modest guidance that takes the midpoint of earnings and sales for the fiscal year lower, even if still within the consensus range.

Q1 earnings season is still not over, by the way. After today’s close, cybersecurity major CrowdStrike CRWD joins Calvin Klein parent PVH PVH and Hewlett Packard Enterprises HPE all report results for their most recent quarters. Also, auto deliveries have begun to hit the tape at this hour, with Ford F having outperformed on EV and especially hybrid deliveries: +64.7% and +64.5% growth, respectively. Sales of the company’s hybrid F-150 is up +51% in the quarter, demonstrating the market demand for hybrid over the EV F-150 Lightning.

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