A couple of weeks into this quarter’s round of reports and the overall results seem positive so far. At least that seems to be how the market has interpreted them. At the end of the day, when it comes to investing, it’s all about a stock’s relative value (for most of us, anyway). Earnings results can make or break a stock’s price trajectory, accelerating a current trend or reversing it.
Since June 12, which was the start of this earnings season, the S&P 500 has risen from 1070 to its current level of about 1105. While the broad index has managed to get above its 20- and 50- day simple moving averages (SMA), it still has yet to clear and hold above the 200-day SMA, which is currently 1,114.3.
This is in addition to resistance the index may encounter up around the 1,130 level, which was the high back on the 21 of June. The reality of all of this is that we are currently trading just above most of June’s levels, but far below the highs of around 1220 visited in April. While the majority of stocks seem to be meeting or beating estimates, there are a few areas where growth is just not there or a company is guiding lower.
Top line or actual gross sales/revenue seems to be the focus of many market participants. After all, a company can only cut costs so much. Without a real increase in revenue, there may not be much of a reason for companies to hire new employees, which is another looming specter for the markets. By the way, non-farm payrolls will be released next Friday ahead of the opening bell.
Boeing (NYSE:BA) is seeing some bullish attention this week surrounding its second-quarter earnings report. Wednesday ahead of the open, the aerospace name said second-quarter earnings came in at $1.06 per share, a nickel better than the consensus view. Revenue fell short of the mark, however. Nevertheless, Jim Cramer told his Mad Money audience that he likes the stock in the long term, particularly if it tests the $65-$66 region.
Casino giant Wynn Resorts (NASDAQ:WYNN) reports earnings on Thursday, July 29, 2010. Analysts are expecting quarterly earnings of 32 cents per share and the high and low estimates are $0.58 and $0.09, respectively. Earnings season has been relatively strong thus far, with about 80% of companies beating analysts’ expectations.
Late last week on CNBC’s Fast Money, a panelist vocalized a bullish thesis in Altria Group (NYSE:MO), the parent company of Philip Morris (NYSE:PM). The stock has been moving higher since late 2008, gaining more than 50% during this time, and recently overcame its mid-May peak to hit a new 52-week high.
Deutsche Bank upgraded AT&T (NYSE:T) Monday morning to a “buy” rating from “hold” and lifted its 12-month price target by $1 to $31, essentially calling for about 20% of upside over the next year. The firm argued that Ma Bell should be able to sustain double-digit core earnings growth into next year. Potential near-term catalysts for continued growth include a buyback and a dividend increase. Additionally, the firm thinks concerns about the potential loss of the iPhone exclusivity contract may be overblown (or already priced into the shares).
Earlier this week, shares of Intercontinental Exchange (NYSE:ICE) were upgraded to outperform (essentially a “buy”) from market perform (a “hold” rating) at BMO Capital. The firm established a 12-month price target of $125, allowing for roughly 18% of upside.
Texas Instruments (NYSE:TXN) dipped into the red yesterday after its second-quarter earnings report failed to impress. The technology company reported per-share earnings of 62 cents per share, more than triple year-ago results and in line with analysts’ expectations (but reportedly below the “whisper number”). Revenue, meanwhile, hit $3.5 billion, narrowly missing the consensus view of $3.52 billion.
