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Friday October 22, 2021



Hyatt Releases Earnings Report

Hyatt Hotels Corporation (H) reported its earnings for the third quarter on Wednesday, November 4. The company reported revenue that was impacted by the COVID-19 pandemic.

Hyatt posted revenue of $393 million for the third quarter. This was down from $1.2 billion during the same quarter last year.

"Third quarter results reflect Hyatt's ability to adapt to a continuously changing and uneven demand environment," said Hyatt's CEO Mark Hoplamazian. "In the third quarter, we doubled the number of room nights sold compared to the second quarter of 2020. I am exceptionally proud of our hotel teams who gained transient demand market share in the segments and geographies of strongest demand globally as they continue to discover and secure demand from many different sources."

Net losses for the quarter came in at $161 million. This was down from net income of $296 million during the prior year's quarter.

Hyatt opened 27 new hotels in the quarter, a record for the third quarter. The company experienced a sharp drop in revenue from its Owned and Leased Hotels segment, down 81.4% to $80 million. For the third quarter, Hyatt's Owned and Leased Hotels segment revenue per available room (RevPAR) decreased 83.1%. The significant decrease is attributed to hotel closures and restricted travel from the coronavirus pandemic.

Hyatt Hotels Corporation (H) shares ended the week at $56.36, up 1.9% for the week.

AMC Networks Reports Results

AMC Networks Inc. (AMCX), owner of several cable TV channels, announced its third quarter results on Monday, November 2. Although the company saw its quarterly profit decrease, it surpassed analysts' expectations.

AMC Networks reported third quarter revenue of $654.0 million, a 9% decrease from the $718.6 million reported during the same period last year. Analysts had expected revenue to be $606 million.

"With the addition of our new AMC+ premium SVOD offering, we expect to have 5.0 to 5.5 million total SVOD subscribers, in aggregate, by the end of the year," said AMC Networks' CEO Josh Sapan. "Our strong content also continues to resonate with viewers, with AMC home to four of the top six cable dramas in 2020 among adults 25-54, including our newest series in The Walking Dead Universe, The Walking Dead: World Beyond ranking as the #1 freshman cable drama of the year."

Net income for the quarter was $61.6 million. This fell 47% from $116.9 million during the comparable period last year.

AMC Networks increased its subscription video service, AMC+ through launches on Comcast, Amazon Prime and Apple TV platforms. The company's goal of over four million subscribers was set for the end of 2022. Based on the launch of AMC+, the company now expects to exceed the subscriber count by the end of 2020. The company repurchased 10.8 million shares for $251 million in October.

AMC Networks Inc. (AMCX) shares ended the week at $23.89, up 8.6% for the week.

Red Robin Reports Third Quarter Results

Red Robin Gourmet Burgers, Inc. (RRGB) announced its third quarter earnings on Thursday, November 5. The casual-dining restaurant chain's results were heavily influenced by operation shifts and dining room closures.

The company reported revenue of $200.5 million during the quarter. This was a decline of 31.9% year-over-year from $294.2 million.

"The third quarter was an inflection point for the brand with robust sequential sales improvement throughout the quarter, closing the traffic gap to our casual dining peers," said Red Robin CEO Paul J. B. Murphy III. "This, in conjunction with prudent restaurant and overhead cost structure enhancements in place, drove better-than-expected cash flow performance."

Red Robin reported a net loss for the quarter of $6.2 million. This was an increased net loss from the prior year's quarter of $1.8 million.

The company primarily attributes its losses to closed restaurants in the quarter stemming from COVID-19. Comparable restaurant revenue for the quarter decreased significantly due to limited capacity in reopened restaurants and take-out only structure for restaurants with closed dining rooms. The company reported take-out sales increased 127.2% in the quarter, totaling 40.7% of its total food and beverage sales.

Red Robin Gourmet Burgers, Inc. (RRGB) shares ended the week at $14.00, up 14.8% for the week.

The Dow started the week at 26,691 and closed at 28,323 on 11/6. The S&P 500 started the week at 3,296 and closed at 3,509. The NASDAQ started the week at 11,010 and closed at 11,895.

Treasury Yields Buoyed by Jobs Report

U.S. Treasury yields recovered from mid-week lows late this week as employment data was better than expected. The yields were impacted early in the week due to uncertainty with election results.

On Friday, the U.S. Department of Labor released its Employment Situation report for October. The economy gained 638,000 jobs in October. Unemployment decreased to 6.9%, from 7.9% in September.

"It's better than expected, but we're starting to see headwinds," said Diane Swonk, chief economist with Grant Thornton. "The drop in the unemployment rate is welcome news, but there are still over 11 million unemployed workers."

On Wednesday, the 10-year Treasury note had its largest daily drop since April. The significant movement was attributed to uncertainty surrounding the U.S. Presidential election results.

"Regardless of who wins the election, the market is certainly anticipating more fiscal aid," said AmeriVet Securities Head of U.S. Rates Gregory Faranello. "And that aid may not arrive until 2021."

The 10-year Treasury note yield closed at 0.82% on 11/6, while the 30-year Treasury bond yield was 1.60%.

Mortgage Rates Decline

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, November 5. The 30-year fixed rate mortgage fell to its lowest rate yet.

The 30-year fixed rate mortgage averaged 2.78% this week, down from 2.81% last week. Last year at this time, the 30-year fixed rate mortgage averaged 3.69%.

This week, the 15-year fixed rate mortgage averaged 2.32%, unchanged from last week's average. During the same week last year, the 15-year fixed rate mortgage averaged 3.13%.

"Mortgage rates hit another record low, the twelfth time this year, due to economic and political ambiguity," said Sam Khater, Chief Economist at Freddie Mac. "Despite the uncertainty that we've all experienced this year, the housing market, buoyed by low rates, continues to be a bright spot."

Based on published national averages for the week of 11/2, the national savings rate was 0.05%. The one-year CD finished at 0.17%.

Published November 6, 2020

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