Some Good, but Mostly Ugly: Earnings This Week

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Sentiment’s been mostly bearish since our last earnings recap.

Sure a few big names like Apple (AAPL), McDonald’s (MCD) and MasterCard (MA) have done well. But there have been few sustained breakouts and many more companies simply are not getting the benefit of the doubt.

Just look at Arconic (ARNC), the manufacturing company separated from Alcoa (AA) two years ago. Tariffs on foreign aluminum forced management to cut guidance, erasing one-quarter of ARNC’s value this week alone. Heath-care supplier Cardinal Health (CAH) was squeezed by an inventory glut and weak generic-drug prices. Both of those issues — metal tariffs and drug-prices — have been politicized recently by the White House.

Others could blame no one but their own weak results: Molson Coors (TAP) didn’t sell enough beer and investors are worried about unsold crowding warehouses. Gilead Sciences (GILD) was plagued by lingering weakness in its core hepatitis-C franchise. Engine-maker Cummins (CMI) warned about higher costs from upgrading older products. Estee Lauder (EL) surpassed consensus but analysts took a glass-half-empty approach when management talked about weak salon sales. Tapestry (TPR) got punished for troubles at its Stuart Weitzman shoe division.

Tesla Motors (TSLA) is probably the weirdest overall. The electric carmaker actually beat estimates, but then celebrity CEO Elon Musk freaked out investors and analysts by calling their questions “boring” and “bonehead.” Observers found it odd for a company that’s so reliant on stockholders and creditors to finance its growth plans.

Getting back to AAPL: iPhone sales, and second-quarter guidance, weren’t as bad as feared. Several analysts had to eat crow after scaring investors into expecting a bad number. The company also announced $100 billion of stock buybacks. But that still wasn’t good enough to get above its mid-April peak.

Same for MCD, which has given back all its gains after using price hikes to boost sales. MA was the only major stock to break out to new highs, powered by strong credit-card volumes.

Chip maker Qorvo (QRVO) had the biggest earnings gain in the the S&P 500, ripping 14 percent this week thanks to consensus-beating profit and revenue.

A pair of energy stocks also stood out. Strong production helped Marathon Oil (MRO) cruise past analysts’ forecasts. Devon Energy (DVN) wasn’t perfect, but analysts saw evidence of its turnaround continuing and are hopeful of higher output from new wells in the Delaware Basin. (Click here for our recent sector recap.)

One other noteworthy company: Widely hyped streaming-music service Spotify (SPOT) fell after missing estimates in its first release as a publicly traded company. Cost pressure was the main concern.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.