24/7 Wall St.

Third quarter earnings season has been more positive than expected by and large. We have seen some very positive earnings season reactions. We have also seen some serious duds after earnings. 24/7 Wall St. wanted to see which of the DJIA stocks reacted the best and the worst so far this earnings season.

We reviewed the best and worst performing DJIA stocks of the last month and then reviewed the best and worst post-earnings reports of these DJIA stocks. The price performance immediately after the actual news announcement has been shown, as has the total reaction since the earnings news based upon the closing price of Friday, November 1, 2013.

24/7 Wall St. recently showed the worst DJIA stocks so far in 2013. Those were based upon year-to-date performance and captured the sentiment of the year rather than in recent trading sessions since earnings season kicked off.

The three biggest winners were General Electric Co. (NYSE: GE), American Express Co. (NYSE: AXP), and then The Boeing Company (NYSE: BA). Microsoft Corp. (NASDAQ: MSFT) deserves at least a runner-up mention here as well. The three biggest losers were Caterpillar Inc. (NYSE: CAT), UnitedHealth Group Incorporated (NYSE: UNH), and International Business Machines Corp. (NYSE: IBM). There is also a rather peculiar observation in Alcoa Inc. (NYSE: AA) even though it was booted out of the DJIA recently.

Many issues are driving earnings. The federal government shutdown did not do the worst case damage some were fearful of. Domestic business trends are still better than international and emerging markets. The Fed’s bond tapering is not coming on as fast as once feared, and interest rates are not rising as rapidly as they could have. And both the DJIA and the S&P 500 Index hit new all-time highs this last week.

2013 is turning out to be a stellar year for stocks. The S&P 500 Index is up a whopping 23.5% year-to-date, followed by a gain of some 19.1% for the Dow Jones Industrial Average during the same time.

General Electric Co. (NYSE: GE) managed to beat its earnings expectations and post a record backlog of future orders back on October 18. GE was at $24.68 ahead of earnings, but shares rose 3.5% immediately after the report to $25.55. Things have gotten even better from there with last Friday’s close at $26.54 being a total post-earnings gain of 7.5%. That is a post-meltdown multi-year high closing price for GE’s common stock.

American Express Co. (NYSE: AXP) reported strong earnings based upon strong US trends of 12% domestic growth and total revenue growth of almost 6%. The October 16 report had a closing stock price of $76.32 and shares gained 5.1% the following day to $80.23. Shares closed last Friday even higher at $82.16 for a total post-earnings gain of 7.6%. We would point out that the highest close was $83.66 on October 29, and if that would have been the measuring point the AmEx gain from trough to peak would have been 9.6%.

The Boeing Company (NYSE: BA) was one which raised financial guidance with its earnings on October 23. Boeing even more recently raised its guidance on bread and butter 737 airplane production goals. Shares were at $122.48 prior to earnings and closed up 5.3% at $129.02 after the earnings report. Boeing had its all-time high close this last Friday of $133.03, making the gain since earnings the best of the DJIA with an 8.6% gain.

Does Microsoft Corp. (NASDAQ: MSFT) deserve at least an honorable mention? We think so. Its earnings were good enough that we wondered very briefly if perhaps the company should beg Steve Ballmer not to retire. The earnings beat was even without considering the booked Windows 8.1 orders, and shares rose just under 6% to $35.73 after having closed at $33.72 prior to the report. That move was not given any real follow-thru buying and volatility has been very since. The recent closing price of $35.53 would be a total post-earnings gain of over 5.3%.

The three biggest losers were Caterpillar Inc. (NYSE: CAT), UnitedHealth Group Incorporated (NYSE: UNH), and International Business Machines Corp. (NYSE: IBM).

Caterpillar Inc. (NYSE: CAT) slashed its guidance along with its plummeting earnings back on October 23. Mining and resources are having far lower demand for heavy equipment needs, particularly from the key BRIC and developing nations. Caterpillar shares were at $89.17 prior to earnings and fell 6% down to $83.76 on its earnings day. While the stock tried to bounce nominally back to almost $85, the stock price was down at $83.59 this last Friday for a total loss of 6.25% since the earnings report.

UnitedHealth Group Incorporated (NYSE: UNH) is supposed to be one of the remaining giants and winners under the Affordable Care Act, or Obamacare. Its earnings and guidance on October 17 were not very impressive. Shares were at $75.19 going into earnings, then fell a sharp 5.1% the day after earnings. While shares have bounced almost $2 from the absolute lows since, the stock closed at $68.63 this last Friday for a total post-earnings loss of 8.7%.

International Business Machines Corp. (NYSE: IBM) led the dismal earnings reports of the DJIA. The only saving grace is that a huge buyback announcement since the earnings report of more than $20 billion helped to cushion this blow. IBM’s October 16 earnings report just proved again that the $20 earnings per share goal by 2015 is coming at too high of a price. IBM shares were at $186.73 before earnings, then fell almost 6.4% down to $174.83 the day after earnings. Big Blue even traded under $173 thereafter, but shares recovered on the buyback news. With a close of $179.23 on this last Friday, IBM’s total drop after earnings remains 4%.

If you want some real irony, Alcoa Inc. (NYSE: AA) was booted out of the DJIA and its post earnings reaction would have been the best of the leaders. After it beat earnings on October 8, shares rose from $7.94 to $8.10 the following day. Shares only went up from there and closed out at $9.27 recently. That would be a gain of 16.7% for the DJIA winners had it remained in the DJIA. Alcoa’s guidance and report was far less bad than the Morgan Stanley analyst downgraded right before earnings would have led you to believe.

DJIA stocks are supposed to be stable and somewhat predictable for future earnings. That is why you do not usually see double-digit gains nor double-digit losses after earnings reports and after key news announcements. Still, there are always some surprises each and every earnings season. This last quarter is obviously no different.