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Sorting Out the Earnings — Friday’s IP Market Recap

A look back at this week in financial news


Much of this week’s financial buzz centered around Alcoa’s (NYSE:AA) Q3 earnings report Tuesday — the “official” start of earnings season — as well as the quarterly results for a couple major players in the tech and financial sectors, expected to set the pace for the next few weeks as Wall Street shakes out corporate America’s three-month winners and losers.

The aluminum-making earnings bellwether kicked things off on a sour note late Tuesday with a wide miss of expectations, reporting EPS of 15 cents to Wall Street’s 22-cent estimates that sent the stock down as much as 5.5% Wednesday. Alcoa’s report, often also cited as a gauge of numerous economic headwinds, demonstrated a few things — namely, that earnings estimates in general after the past quarter might be too high, and that while China’s economy might be better than thought, Europe’s tanking isn’t being overplayed.

However, AA stock gained back some ground by the end of the trading day and made up most of the rest by the end of the week — and Alcoa actually finished up 5.5% (at $10.26) for the week! The initial drop might have been reactionary, but numerous investors took the opportunity to get a financially sound industry leader at bargain-basement prices.

Financial Sector Blues

JPMorgan Chase (NYSE:JPM) set a poor cadence for financial institutions Thursday despite beating expectations. JPM took a 5% loss on the day and sent its banking brethren to the hurt locker, too. The negativity came not from the earnings, which were $1.02 compared to an expected 92 cents — but from numerous other pieces of unwelcome news, including losses from several fee sources, lawsuits over bad mortgages and an expected $300 million drop in debit card fees in Q4.

Still, JPMorgan remains a highly profitable company that’s a more attractive investment opportunity than some of its other peers. And although JPM took a post-earnings hit, the losses were buffered by a buildup heading into Thursday, and JPM also finished the week for the better, up almost 4% to $31.89.

Finally, Good Earnings News

However, not all earnings reports this week were frowny faces and wilted flowers. Google (NASDAQ:GOOG) — citing massive increases in paid clicks and in its mobile business, as well as 40 million users for its Google+ social network — reported EPS of $9.72 on Thursday, hurdling Wall Street’s expectations by almost 10%.

Google finished Friday at $591.68, which put it up 5.85% for the day and almost 15% for the week. And despite the enormous ramp-up in stock price, GOOG still is reasonably priced. Not to mention the company’s enormous gains came at a generally lousy time for the markets at large, making the case for Google to be considered a tech safe-haven.

BlackBerries Work For 2 Out of 5 Days

Poor Research In Motion (NASDAQ:RIMM). It’s gaining little traction with its new BlackBerry smartphones, the PlayBook has flubbed, and this week it endured another scuff to its tarnished brand when the BlackBerry service endured a three-day outage affecting 70 million users globally and causing scores to renounce their devices.

While the short-term effects on RIMM stock were minimal — it actually finished the week up 1.5% at $23.97 — the long-term damage to the company could be severe. Research In Motion already has numerous superior competitors and several self-made problems, both of which have helped RIMM stock lose more than half its value year to date. Thus, the company was in no position to suffer a massive blow to consumer loyalty.

Three Up

  • Halliburton (NYSE:HAL): Up 6.88% ($2.41) to $37.43.
  • Baker Hughes (NYSE:BHI): Up 6.16% ($3.29) to $56.67.
  • Schlumberger (NYSE:SLB): Up $5.57 ($3.74) to $70.94.

Three Down

  • (NASDAQ:YOKU): Down 6.63% ($1.44) to $20.28.
  • China Unicom (NYSE:CHU): Down 4.16% (83 cents) to $19.12.
  • US Airways (NYSE:LCC): Down 4.13% (26 cents) to $6.04.

As of this writing, Kyle Woodley did not own a position in any of the aforementioned stocks.

Article printed from InvestorPlace Media,

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