After taking a breather on Thursday, the bulls were back at it again on Friday. The S&P 500 gained 0.46% today to close out the session and the week at 2175.03, despite a lack of a clear economic catalyst. Indeed, if anything, the earning reports today were more grim than grin inducing.
Case in point? General Electric Company (NYSE:GE) and Paypal Holdings Inc (NASDAQ:PYPL), for two. They, along with Skyworks Solutions Inc (NASDAQ:SWKS) dished out a little pain on an otherwise bullish day.
Here’s what investors need to know.
General Electric Company (GE)
Although the near-2% tumble General Electric shares took today isn’t earth shattering, given its size and degree of investor ownership of the stock, the pullback of GE merits a closer look.
Last quarter’s results were more than adequate. General Electric earned 51 cents per share on revenue of $33.49 billion both topped estimates. The former was up 65% year-over-year, while the latter grew 15%. The impasse was the degree of industrial orders received during the quarter. They were down 16% from year-ago levels, led by especially weak demand for oil and transportation equipment.
The company maintained its 2016 profit outlook at a range of $1.45 to $1.55 per share, in line with average estimates for earnings of $1.51. GE shareholders weren’t impressed, however.
Paypal Holdings Inc (PYPL)
The negotiations between Paypal Holdings and Visa Inc (NYSE:V) are finally over, but the final agreement came at a price … to PYPL. To Visa, not so much.
Both of the payment middlemen, recognizing their worlds are colliding, have struggled to decide whether they want to go to war with one another, or team up. They decided to team up, per today’s announcement. Visa, however, was deemed the winner of the deal, at Paypal’s expense.
The venture is widely expected to crimp Paypal’s margins, though to what degree isn’t entirely clear. That uncertainty is the bulk of the reason PYPL shares ended Friday down nearly 7%.
Still, what Paypal gives up in margins, it would offset with revenue growth. The payment option will soon be available in millions more retail locations thanks to the partnership.
Skyworks Solutions Inc (SWKS)
The good news is, technology outfit Skyworks Solutions beat last quarter’s earnings and revenue expectations. The bad news is, the company’s fiscal Q3 numbers didn’t prevent SWKS shareholders — perhaps looking for any excuse to take profits following a 20% rally from its early June low — chose to focus on the shortcoming, sending SWKS down nearly 9% as a result.
Last quarter, Skyworks Solutions earned $1.24 per share on sales of $751.7 million. Analysts were only calling for a profit of $1.21 per share of SWKS, but they were also looking for a top line of $750.2 million. The modest earnings beat and what was effectively a “met” in terms of revenue just wasn’t enough for a crowd that was likely expecting bigger beats rather than the year-over-year dip in sales.
Fanning the bearish flames that singed SWKS was Q4 earnings and revenue guidance there were both down 6% from year-ago levels.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
