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What Investors Missed in the Market This Week

It was a wild week in the markets, with earnings season continuing to chug along in full force. Investors were also gifted with a solid jobs report for July: The U.S. created 209,000 new jobs last month, topping Wall Street forecasts of 175,000. That was good enough to send the unemployment rate down from 4.4% to 4.3%. As always, though, it's important not to read too much into any one jobs report, so take it with a grain of salt.

In other news, the Dow Jones Industrial Average ended at a record for the eighth consecutive trading day, finishing above 22,000.

With the week in the record books, let's turn our attention to three companies that made big headlines or big market moves.

Let's talk shareholder value

Investors of Papa John's Inc. (NASDAQ: PZZA) have had a great couple of weeks, between strong second-quarter earnings and two other developments that will return more value to shareholders -- and what investor doesn't want that? Those developments helped boost Papa John's stock price almost 8% higher for the week, and as high as 12% during trading Wednesday.

Image source: Getty Images.

Starting with the pizza maker's second-quarter result, the top line failed to impress, with comparable sales growth of only 1.4% and total revenue moving 2.8% higher to $434.8 million, missing analysts' estimates of $439 million. The bottom line fared a bit better, as earnings per share checked in at $0.65 per share, topping analysts' estimates by just a penny.

But the real driving force behind the company's movement this week was the announcement that it will buy back $500 million of its stock. Without context that doesn't mean much, but consider that the move would reduce outstanding shares enough to lift earnings per share by almost 20%. The share-buyback announcement, moreover, marks the second recent plan to return value to shareholders. In late July, the board of directors approved a 12.5% increase in the quarterly dividend, which now equals $0.90 on an annual basis, or a 1.15% yield.

Papa John's had a strong 2016 in terms of its stock price gains, but investors are sure to be looking for management to find other ways to grow comparable-store sales in addition to its dividend and share-buyback decisions.

Let's talk guidance

Shares of Take-Two Interactive Software Inc. (NASDAQ: TTWO) jumped Thursday, after the maker of Grand Theft Auto announced strong first-quarter results. The stock moved nearly 10% higher for the week. Net revenue jumped 34% to $418.2 million from the prior year, driven by strong first-quarter sales from its NBA 2K17, Grand Theft Auto V, and WWE 2K17 titles, among others.

But Take-Two's top-line surge was arguably not even the most impressive takeaway for investors. As gaming continues to move from physical media to online content, it's a huge positive that Take-Two's digitally delivered net revenue spiked 56% to $268.2 million and its recurrent consumer spending -- virtual currency, downloadable add-on content, and microtransactions -- grew 72% over the prior year and generated 41% of total net revenue.

Meanwhile, Take-Two's bottom line flipped from a prior-year loss of $0.46 per share to earnings of $0.57 per share, blowing away analysts' estimates of $0.40. The icing on the cake was something every investor loves to hear: Management is lifting guidance. The game developer upped its full-year net sales forecast from between $1.42 billion and $1.52 billion up to a new range of $1.65 billion to $1.75 billion -- well above analysts' estimates of $1.54 billion.

Let's talk timeline

One of the most polarizing companies in recent history is electric-car maker Tesla (NASDAQ: TSLA), which traded more than 6% higher this week after the company's second-quarter earnings were released on Wednesday. Tesla managed to beat analysts' estimates with a better-than-expected revenue result and a narrower-than-expected loss. Revenue checked in at $2.79 billion, with an adjusted loss per share of $1.33, topping revenue estimates of $2.51 billion and adjusted losses of $1.83 per share.

Image source: Tesla.

But investors and analysts alike realize this is Tesla's big moment, as Model 3 production begins to ramp up. A company that tends to overpromise needs to prove it can meet its lofty goals. Tesla, for its part, says it remains on track to produce its 5,000 vehicles per week target by the end of this year and plans to ramp that number up to 10,000 vehicles per week at some point in 2018.

As usual, many ended the company's conference call more intrigued than when they'd dialed in. Management again reminded investors about its semi-truck unveiling and said it wants to bring the Model Y to market earlier than its previous timeline of late 2019 to early 2020. Tesla is a momentum stock trading far ahead of its present value, and it will take years to grow into its valuation and perhaps a decade to reach mass production with its electric vehicles. This is a long-term stock, and while keeping an eye on quarter-to-quarter production levels is important, investors should take quarterly results with a grain of salt and focus on whether Tesla remains on path for the long term. For now, it seems to be.n  

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Daniel Miller has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Take-Two Interactive Software and Tesla. The Motley Fool has a disclosure policy.