Once again, the bears tried to take a bite out of the market, and once again the bulls didn’t let them get very far. By the time the closing bell rang on Friday, the S&P 500 was up 0.15%, ending the session at 2,367.34, holding above a key technical line in the sand at 2,352.
Not every stock escaped the bears’ clutches though. Royal Bank of Scotland Group PLC (NYSE:RBS), Baidu Inc (ADR) (NASDAQ:BIDU) and Hewlett Packard Enterprise Co (NYSE:HPE) were doomed from the start of today’s action in the wake of disappointing earnings results.
Hewlett Packard Enterprise Co (HPE)
Hewlett Packard Enterprise CEO Meg Whitman didn’t tell HPE shareholders anything they didn’t already know when she described the company’s fiscal Q1 numbers by saying “it wasn’t perfect this quarter.”
For the quarter ending last month, Hewlett Packard Enterprise earned 45 cents per share, topping the market’s outlook for a profit of 44 cents per share of HPE. Revenue of $11.41 billion, however, was well below expectations for $12.13 billion, and even further behind the year-ago top line of $12.72 billion. The company also cautioned HPE shareholders that the current quarter’s likely earnings wouldn’t meet expectations.
And analysts don’t necessarily think it was bad luck and tough circumstances that were behind the poor results. As Pacific Crest analyst Alex Kurtz opined, “While HPE shares benefited in 2016 from a strong capital allocation program and an aggressive plan to separate business units, core execution issues may cause worry about the pro forma EPS outlook, now $1.13-$1.23.”
HPE ended the day 6.9% lower.
Baidu Inc (ADR) (BIDU)
The good news is, Baidu — often called the Google of China — topped its revenue estimates for its recently completed fourth quarter. The bad news is, the company’s revenue was lower on a year-over-year basis. Although the knee-jerk post-close reaction to Thursday afternoon’s announcement was bullish, BIDU investors ultimately saw the glass as half-empty, leading the stock to a loss of 5.1% for the day.
For the quarter ending in December, Baidu earned an operating profit of $1.91 per share on sales of $2.62 billion. The bottom line easily topped expectations of only $1.09 per share of BIDU. But the company was also expected to generate revenue of $2.66 billion. Net income fell along with revenue on a year-over-year basis.
Things are going to get meaningfully better this year, however. The company reported it’s looking for revenue growth of between 4.2% and 7.6% for the quarter currently underway, versus an average analyst expectation for 7.6% growth.
Royal Bank of Scotland Group PLC (RBS)
Finally, dogged by fines in lawsuits resulting from some bad decisions the bank has made in its recent past, Royal Bank of Scotland Group finished the week on a particularly low note. On Friday morning, the company reported a GAAP loss of $8.7 billion for fiscal 2016.
The bulk of the loss consisted of money earmarked to pay penalties and cover legal expenses stemming from improperly selling more securities leading up to (and perhaps contributing to) the sub-prime meltdown of 2008. The bank believes 2017 will be the last year it’s forced to book losses relating to its legal woes. RBS shareholders weren’t impressed, however, sending the stock down to the tune of 5.6%.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
