Cashing in on a strong housing market
Dan Caplinger: Low interest rates have been the bane of savers looking to generate more income from their investment portfolios, but they've been a boon to the mortgage industry. Lenders have been able to woo investors with rock-bottom interest rates, spurring successive waves of refinancing activity and stoking a new upward movement in the housing market. For Ellie Mae (NYSE:ELLI), the new housing boom is a huge positive, because it provides the software platform that an increasing number of financial institutions are using to track and manage their mortgage loan portfolios.
In its most recent quarter, Ellie Mae continued its strong pace of growth, with revenue climbing by 37% to send adjusted net income up by more than a third as well. CEO Jonathan Corr pointed to the increasing acceptance of technology to help mortgage lenders handle their business, and the company also boosted its guidance for the remainder of the year. With substantial recurring revenue coming from its Encompass system and new features attracting potential customers, Ellie Mae has developed a smart game plan for future growth. Ellie Mae is in a great position to benefit from what appears to be the new normal of low interest rates for the foreseeable future.
Wings, beer, sports, and profits
Brian Feroldi: For years Buffalo Wild Wings (NASDAQ:BWLD) has posted revenue and profit growth in excess of 20%, which propelled its stock ever high. That growth has been powered by a combination of new store openings and continuous increases in same-store sales as the company's concept has developed a loyal following.
However, we've recently witnessed that trend come to an abrupt stop. Although total revenue grew by 15% last quarter, same-store sales dropped by 2.1% at company-owned restaurants and 2.6% at franchised outlets. That was the second quarter in a row of declining sales, which has caused shares to drop by about 13% over the last year.
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