The stock market today opened well in the red after earnings from industry leaders disappointed investors on the 25th anniversary of Black Friday.
Here's today's roundup and one stock that has gained over 30% this week.
- General Electric Co. (NYSE: GE), Microsoft Corp. (Nasdaq: MSFT) fall short of estimates– Two American titans, software leader Microsoft and diversified conglomerate General Electric, reported their latest earnings. GE saw its third-quarter profit rise 8.3% to $3.49 billion, or 33 cents per share, from $3.22 billion, or 22 cents per share a year earlier. Yet the company's revenue fell short of expectations and its outlook for next year did not inspire much confidence. Microsoft saw its fiscal first-quarter earnings drop 22% from a year ago and missed analysts' forecasts for earnings and revenue. GE and Microsoft are struggling with the same obstacles that have scared investors and hurt other businesses: the global economic slowdown and uncertainty regarding the fiscal cliff. "We're not assuming that Europe gets any better," GE's Chief Executive Officer, Jeff Immelt, told investors on a conference call. "We're looking at '13 being kind of like '12, with the big variable being the fiscal cliff." GE stock is down 2.5% in early trading and MSFT stock is down almost 3%.
- Restaurant stocks hurt by drought- McDonald's Corp. (NYSE: MCD) and Chipotle Mexican Grill Inc. (NYSE: CMG) both reported weak third-quarter earnings, an indication they are still feeling the effects of this summer's epic drought. Same-store sales were the driving negative factor for both restaurants. McDonald's posted global same-store sales growth of 1.9%, the first time that number has been below 2% since 2003. Chipotle's comparable sales rose 4.8% in the quarter, its lowest growth in almost three years. "I think that competition has certainly gotten more aggressive the past several quarters," Morningstar analyst R.J. Hottovy told Reuters. "Between commodity costs coming in and companies being able to price more aggressively, but also consumers still being very fixated on value, it's led to a very cutthroat restaurant environment." Chipotle has seen its stock plunge to under $250 from above $400 earlier this summer after two consecutive dismal earnings reports. "They're coming up against a little bit of a ceiling," Peter Saleh, a New York-based analyst at Telsey Advisory Group, told Bloomberg. "They need to do something more either on advertising or new product news to draw more customers into their stores." MCD stock is down 3.4% today and CMG stock is down over 14% as of noon.
While most companies are suffering this quarter as they report earnings, this company has quietly soared over 30% this week and could be set for even more gains.
- Ethan Allen Interiors Inc. (NYSE: ETH) is this week's hidden gem- The Danbury, CT-based home furnisher reported solid earnings yesterday (Thursday) which sent its stock up almost 20% and is surging once again. The company blew past expectations for its fiscal first-quarter earnings of 25 cents per share when it reported profits of 35 cents per share. Ethan Allen's CEO Farooq Kathwari stated that through its competitive advantages his company will continue to prosper, and analysts seem to agree. Today Stifel Nicolaus upgraded its price target on the stock to $32 from $24 and maintained a "Buy" rating. The stock is up 5% to $29.50 and has now gained 32% this week.
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