Strong Results Keep Flowing: Earnings This Week

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As earnings season marches on, investors remain happy with results.

Most of the big companies that have reported in the last week beat estimates, including some well-known retail and media names.

Take Dish Network (DISH) for instance. The satellite-TV company surprised on profit and subscriber growth. That’s lifted it more than 20 percent in the last week. Before the news, DISH was sitting at its lowest level since mid-2012.

Investors also took a glass-half-full view of Viacom (VIAB) and Walt Disney (DIS), even though both had mixed results. VIAB showed traction in Paramount Pictures despite weak TV advertising revenue. In DIS, amusement parks were a positive and optimism grew about its future streaming business.

Remember these media companies have struggled with “cord cutting” in recent years as Netflix (NFLX) took viewers. But this earnings season, NFLX got hammered on slow growth while the Street has found reasons to believe the legacy players will rebound. (Also don’t forget NFLX’s more recent gains have been overseas. That could potentially expose it to currency risk from a rising U.S. dollar.)

Another streaming player is also on the move: Roku (ROKU) shot up 24 percent in the last week after announcing an unanticipated quarterly profit. Subscriber rolls climbed 46 percent and hours viewed rose 57 percent. Revenue blitzed past consensus as well. ROKU, by the way, only went public last September.

A mish-mash of smaller firms rallied as well. Video-game maker Take-Two Interactive (TTWO) beat revenue projections, but failed to break out. Investors seem to be worried about the threat from free competition, given the weaker performances of peers like Activision Blizzard (ATVI) and Electronic Arts (EA).

Speaking of breaking out, that’s exactly what app-based automobile bazaar Carvana (CVNA) did after crushing top-line estimates. Click here for our special report on the rise of new e-commerce firms like CVNA, Yelp (YELP) and Match (MTCH).

GoPro (GPRO) spiked on August 3 after strong results suggested the camera company’s turnaround strategy is bearing fruit. However it slammed into resistance at its 200-day moving average and has chopped lower since. Can this highly shorted stock squeeze the bears into the key holiday season? That’s the question analysts are asking.

You also have three-dimensional printing firm 3D Systems (DDD), up nearly 40 percent in the last week on strong earnings. Another lesser-known tech stock, WorldPay (WP)  ripped to new record highs on strong earnings. Sure it might not be Square (SQ), but it’s still a member of the red-hot electronics-payment space.

Still, there were some tech losers. Booking Holdings (BKNG), the old Priceline, gapped lower today on weak guidance. And Zillow (ZG) is down 10 percent on the week after missing revenue estimates and announcing the acquisition of a mortgage lender.

Turning to the consumer space, Newell Brands (NWL) and Dean Foods (DF) got slammed. NWL had weak sales guidance and DF saw higher costs squeezing profits.

Michael Kors (KORS), on the other hand, surged to a new three-year high. Press reports cited management’s successful turnaround strategy, which includes selling in fewer channels (to better defend prices) and revamping locations.

Finally, two blue chips plodded higher on strong earnings. Warren Buffett’s Berkshire Hathaway (BRK.B) beat estimates thanks to insurance cash-cow Geico. A strong economy also lifted its rail business. CVS Health (CVS) also rose on positive results but remains mired in uncertainty about its purchase of Aetna (AET) and competition from Amazon.com’s (AMZN) PillPack acquisition.

In conclusion, it was a busy week of quarterly results, but most companies that announced seemed to fare well.

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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.