The 5 Best Earnings Trends of the Week
This week has not particularly been characterized by strong earnings as we’ve seen industry juggernauts like Microsoft and Tesla get burned despite solid results. At the same time, the Dow Jones industrial average, Nasdaq and S&P 500 are practically flat for the week, signaling no meaningful change despite positive coronavirus vaccine news to begin the week. However, a few standouts have bucked this overall trend.
Broader economic concerns and how business will be done in the future are still in the back of many investors’ minds. These are still weighing on companies as well, as many are not issuing guidance with their reports
While this earnings season may be written off for many companies due to the pandemic, especially the airlines, the fundamentals still matter as a measure for how these companies survived the crisis.
24/7 Wall St. has taken a look at a few of the biggest earnings winners from the week. We’ve added some brief highlights from each report, as well as a recent trading history and what the analysts’ consensus target is on each.
Keep in mind that the broad markets have weighed on some of these companies, as the market sentiment hasn’t been overtly positive on earnings.
Twitter Inc. (NYSE: TWTR) reported its second-quarter results before the markets opened on Thursday. The social media giant said that it had a net loss of $0.16 per share and $683 million in revenue, which compares with consensus estimates that called for breakeven earnings and revenue of $707.51 million. The same period of last year reportedly had EPS of $1.58 on $829.1 million in revenue.
Average monetizable daily active users totaled 186 million for the second quarter, compared to 139 million in the same period of the previous year and to 166 million in the previous quarter. Twitter grew these users by 34% year over year. Note that this is the highest quarterly year-over-year growth rate Twitter has delivered since it began reporting this metric.
Twitter stock closed Thursday at $38.44, notching a 4% gain on earnings. The stock has a 52-week range of $20.00 to $45.86. The consensus price target is $31.53.
Philip Morris International Inc. (NYSE: PM) reported its most recent quarterly results before markets opened on Tuesday. The tobacco products firm posted earnings per share (EPS) of $1.29 on revenue of $6.65 billion. In the same period a year ago, the company reported EPS of $1.46 on $7.70 billion in revenues. Consensus estimates called for EPS of $1.10 and revenue of $6.50 billion.
One interesting thing to note in this report is that on July 7 the FDA authorized the company’s heat-not-burn IQOS technology as a modified risk tobacco product, enabling the company to market its IQOS products in the United States. IQOS is the company’s acronym for I Quit Ordinary Smoking.
Looking ahead, Philip Morris now expects EPS in a range of $4.84 to $4.99, excluding a currency exchange impact of $0.31 per share. The consensus analyst estimate for the year calls for EPS of $4.92 on sales of $28.71 billion. For the third quarter, analysts are looking for EPS of $1.35 and sales of $7.37 billion.
Phillip Morris stock most recently closed at $76.30, in a 52-week range of $56.01 to $90.17. The consensus price target is $86.60. However, the stock closed up 4% on Tuesday following results.
Lockheed Martin Corp. (NYSE: LMT) posted second-quarter results before the opening bell on Tuesday as well. The country’s largest defense contractor said that it had $5.79 in EPS on sales of $16.2 billion, versus an analyst forecast of $5.72 in EPS and $15.23 billion in revenue. In the year-ago quarter, Lockheed reported EPS of $5.00 and sales of $14.43 billion.
The financial outlook for the year, Lockheed raised sales guidance from the previous range of $62.25 billion to $64.00 billion to a new range of $63.50 billion to $65.00 billion. Operating profit guidance rose from $6.80 billion to $6.95 billion to a new range of $6.90 billion to $7.05 billion. In terms of EPS guidance, the company lifted both ends of its range by a dime. Now expected EPS comes in a range of $23.75 to $24.05, and estimated cash flow from operations rose from a previous estimate of at least $7.6 billion to at least $8 billion.
Lockheed Martin stock closed Thursday at $387.62, in a 52-week range of $266.11 to $442.43. Analysts have a consensus price target of $433.53 for the stock. Note that this stock has gained as much as 7% over the course of the week.
Hershey Co. (NYSE: HSY) released its most recent quarterly results before the markets opened on Thursday. The firm posted $1.31 in EPS and $1.7 billion in revenue, which compares to analyst estimates calling for $1.12 in EPS and $1.74 billion in revenue.
Although total sales decreased year over year by 3.4%, price realization helped partially offset this decline. North America sales actually increased 1% in this time, so International sales dropping 38% was what weighed on the total, but not enough to scare off investors.
The company did not issue guidance but management did say that it expects sales to accelerate during the second half of the year.
Hershey stock closed Thursday up over 5% at $146.33, in a 52-week range of $109.88 to $162.20. The consensus price target is $140.80.
American Airlines Group Inc. (NASDAQ: AAL) is the lone airline stock to make this list, but even though it had a terrible quarter by any standard, investors apparently liked it at this price. American posted a whopping net loss of $7.82 per share and $1.62 billion in revenue, which compares to analyst estimates of a net loss of $6.75 per share and $1.48 billion in revenue.
Perhaps what investors were responding to the most this quarter was the cash burn rate. United Airlines had a similar reaction earlier this week, but American has outpaced it. American cut its cash burn rate to about $30 million per day by the end of June from $100 million per day in April. However, this averaged out to roughly $55 million per day, which compares well to its previously forecasted $70 million daily cash burn.
American Airlines closed Thursday up nearly 4% at $11.77, and it has a 52-week range of $8.25 to $34.82. The consensus analyst target is $12.47.