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Thursday June 13, 2024



Albertsons Releases Quarterly Report

Albertsons Companies, Inc. (ACI) reported its fourth quarter and full year earnings on Monday, April 22. While the grocery company reported increased revenue, its stock remained relatively unchanged after the release of the report.

The company reported net sales of $18.34 billion for the quarter. This is up from $18.27 billion reported at the same time last year, but below analysts' estimates of $18.47 billion. Full-year sales returned at $79.24 billion, up from $77.65 billion in fiscal 2022.

"We delivered another solid quarter amidst a difficult industry backdrop," said Albertsons CEO, Vivek Sankaran. "Again this quarter, we focused on our strategy to create Customers for Life, which drove strong growth in digital and pharmacy, deepened our omnichannel relationships with our customers and improved our in-store experience. We are pleased with our fiscal 2023 financial results, particularly in omnichannel where we have increased our investments in technology, digital and in-store customer experience and supply chain operations."

The company reported net income of $250.5 million or $0.43 per adjusted share. This was a decrease from the same quarter last year when Albertsons reported net income of $311.1 million or $0.54 per adjusted share. For the full year, the company reported net income of $1.30 billion or $2.23 per adjusted share. This was down from net income of $1.51 billion or $2.27 per adjusted share in fiscal 2022.

Albertsons' boost in net sales was driven by the company's 1.0% increase in identical sales. Digital sales increased by 24%, and the number of loyalty members grew by 16% to 39.8 million members. Albertson's gross margin rate increased to 28.0% during the fourth quarter, compared to 27.8% in the year prior. The company's selling and administrative expenses were 25.7% of net sales and other revenue relatively unchanged year-over-year.

Albertsons Companies, Inc. (ACI) shares ended the week at $20.13, relatively unchanged for the week.

General Motors Drives Up Earnings

General Motors Company (GM) reported its first quarter earnings on Tuesday, April 23. The automaker's stock rose more than 4% following the release of the report.

General Motors announced revenue of $43.01 billion for the quarter. This is up 8% from $39.99 billion for the same time last year and above analysts' expectations of $41.92 billion.

"In January, we outlined clear priorities for GM in 2024," said General Motors CEO, Mary Barra in her shareholder letter. "They are to leverage the strength of our winning ICE portfolio, grow our EV business profitably, advance our software-defined vehicle capability, and relaunch Cruise safely while delivering strong margins and cash flows. I am very pleased to share that the team is executing well and making progress across the board. As we continue to strengthen our ICE portfolio, scale EVs and reinvest in the business, we are very focused on capital efficiency, enhancing profitability and free cash flow, and we will continue to take steps to create shareholder value."

General Motors reported quarterly net income of $2.98 billion, or $2.56 per adjusted share. This was up from $2.40 billion, or $1.69 per adjusted share during the same quarter last year.

The automotive manufacturing company's North America segment saw first quarter revenue increase to $36.01 billion, up from $32.89 billion year-over-year. General Motors' international segment reported revenue of $3.08 billion, down from $3.73 billion the prior year. General Motors raised its full-year guidance for fiscal 2024 and expects income between $10.1 billion and $11.5 billion, up from previous guidance of $9.8 billion to $11.2 billion.

General Motors Company (GM) shares ended the week at $45.84, up 8% for the week.

PepsiCo Serves Up Earnings

PepsiCo, Inc. (PEP) released its first quarter earnings report on Tuesday, April 23. The beverage and snack manufacturer's shares decreased more than 2% following the earnings report.

The company reported quarterly revenue of $18.25 billion, above analysts' estimates of $18.07 billion. This was up from $17.85 billion in revenue during the same quarter last year.

"During the first quarter, our businesses remained agile and performed well, with a strong performance from our International business," said PepsiCo's CEO, Ramon Laguarta. "We delivered a sequential improvement in our volume trends, and year-over-year growth in our net revenue, operating profit margin and EPS - despite the impact of certain product recalls at Quaker Foods North America and a difficult net revenue growth comparison from the prior year. As we look ahead, we will continue to focus our efforts on executing well in the marketplace and delivering great-tasting products that offer convenience and good value to the consumer."

PepsiCo reported net income of $2.04 billion for the quarter, or $1.48 per adjusted share. This was up from $1.93 billion, or $1.40 per adjusted share in the same period a year ago.

The company's PepsiCo Beverages North America segment revenue increased to $5.87 billion, up from $5.80 billion reported in the year prior. The Frito-Lay North America segment also increased to $5.68 billion, from $5.58 billion at the same time last year. The Quaker Foods North America segment generated revenue of $593 million for the quarter, a decrease from $777 million in revenue one year ago. PepsiCo reaffirmed its guidance for fiscal 2024 and expects a 4% increase in organic revenue, total cash return of $8.2 billion to shareholders, including $7.2 billion through the payment of dividends and share repurchases of $1.0 billion.

PepsiCo, Inc. (PEP) shares ended the week at $175.58, relatively unchanged for the week.

The Dow started the holiday week of 4/22 at 38,117 and closed at 38,240 on 4/26. The S&P 500 started the week at 4,987 and closed at 5,100. The NASDAQ started the week at 15,396 and closed at 15,928.


Treasury Yields Vary

U.S. Treasury yields fluctuated throughout the week as investors assessed the latest economic data and its impact on the Federal Reserve's monetary policy decisions. Yields dipped on Friday despite jobless claims unexpectedly dropping to levels not seen since mid-February.

On Thursday, the U.S. Department of Commerce announced that gross domestic product (GDP), which measures the production of all U.S. goods and services, on an annualized basis, rose 1.6% during the first quarter. This was well below economists' expected growth of 2.4% and a significant retreat from the 3.4% gain in the fourth quarter of 2023.

"This was a worst of both worlds report - slower than expected growth, higher than expected inflation," said chief investment officer of CIBC Private Wealth US, David Donabedian. "We are not far from all rate cuts being backed out of investor expectations. It forces [Fed Chair Jerome] Powell into a hawkish tone for next week's [Federal Open Market Committee] meeting."

The benchmark 10-year Treasury note yield opened the week of April 22 at 4.63% and traded as high as 4.74% on Thursday. The 30-year Treasury bond opened the week at 4.71% and traded as high as 4.85% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment fell by 5,000 to 207,000 for the week ending April 20. Continuing unemployment claims decreased by 15,000 to 1.78 million.

"The economy is clearly performing very well," said U.S. Treasury Secretary, Janet Yellen. "I certainly do not see it as overheated. The labor market is the strongest labor market we have had in 50 years."

The 10-year Treasury note yield finished the week of 4/22 at 4.67%, while the 30-year Treasury note yield finished the week at 4.78%.


Mortgage Rates Continue to Rise

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, April 25. The survey showed mortgage rates rising for the fourth straight week.

This week, the 30-year fixed rate mortgage averaged 7.17%, up from last week's average of 7.10%. Last year at this time, the 30-year fixed rate mortgage averaged 6.43%.

The 15-year fixed rate mortgage averaged 6.44% this week, up from 6.39% last week. During the same week last year, the 15-year fixed rate mortgage averaged 5.71%.

"Mortgage rates continued rising this week," said Freddie Mac's Chief Economist, Sam Khater. "Despite rates increasing more than half a percent since the first week of the year, purchase demand remains steady. With rates staying higher for longer, many homebuyers are adjusting, as evidenced by this week's report that sales of newly built homes saw the biggest increase since December 2022."

Based on published national averages, the savings rate was 0.46% as of 04/15. The one-year CD averaged 1.81%.

Published April 26, 2024
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