Walgreens' Earnings & Economic Data In Focus

Another delayed economic read has crossed into pre-market headlines this morning: February’s Durable Goods Orders have been released. Even those these figures are lagging indicators (due to the government shutdown in December/January), the good news is that we are catching up with more or less “real time” data.

The preliminary view on February Durable Goods Orders was better than expected: -1.6% as compared with -2.1% expected. The revision to January’s headline lost 20 basis points to +0.1%.

The key to this sort of data is to consider the volatility of large goods orders — particularly new airplanes. While they bring volatility to these monthly numbers depending on how many plane orders are made, they make a significant contribution to the U.S. economy. Thus we pay close attention to these figures month by month, then do the math over the longer term.

Ex-transportation, Durable Goods swings to a positive, at +0.1%. This represents a swing from -0.2% in the last read. However, ex-Defense spending, we see -1.9%, pulling the overall durables reads deeper into negative territory in February.

Non-Defense, ex-aircraft spending — sort of the bottom line of all these figures — also swung from a negative to a positive: -0.2% to +0.1%. We take this as an overall positive on Durable Goods data, albeit a month in arrears. We look forward to more current Durable Goods data coming out later this month.

Jobs Data Tomorrow, Friday

Speaking of up-to-date economic data, tomorrow we see private sector payroll totals for March from Automatic Data Processing ADP, followed on Friday by the government’s employment report from the Bureau of Labor Statistics (BLS). February numbers on the BLS side were disappointing, with only 20K new jobs reported. ADP put up 183K for the month, in-line with estimates.

Walgreens Boots (WBA) Disappoints

Shares of Walgreens Boots Alliance WBA are down 9.5% in today’s pre-market following a very disappointing fiscal Q2 earnings report. Not only did earnings of $1.64 per share miss the Zacks consensus by 6 cents, on $34.5 billion in revenues than came in slightly below estimates.

Looking under the hood, comps for the quarter fell 3.8%, which puts it in the bottom range of retail earnings releases for the quarter. And guidance has been slashed for full-year 2019 from +7-12% previously to flat this morning. The company had carried a Zacks Rank #4 (Sell) rating ahead of this Q2 report. For more on WBA’s earnings, click here.

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