Start the conversation
Hot stocks to watch: A spate of earnings reports from key industry players triggered mixed markets today (Thursday).
Two high-profile tech companies slumped after missing Wall Street estimates. But, a couple of investment banks, a beverage giant, and a gourmet burrito chain all reported better-than-expected numbers and moved higher.
Following are today's hot stocks to watch based on earnings news and developments...
7 of Today's Hot Stocks to Watch
Chipotle Mexican Grill (NYSE: CMG) shares were up $28.10, or 5%, to $580 Thursday morning on strong Q1 results - but then dipped by more than 4.5% in the afternoon. The company posted earnings per share (EPS) of $2.64, up 7.8% year over year, yet shy of the $2.88 analysts were expecting. But, net income grew 8.5% to $83.1 million. And, revenue increased 24.4% to $904.2 million, better than the $873 million expected, according to FactSet. The fast-casual restaurant chain attributed the revenue rise to a 13.4% jump in same-store sales. The company said comparable sales are projected to rise in the "high single digits" in FY2014. Buoyed by speedier transaction times, expansion, and more marketing, EPS are expected to grow a sizzling 54% over the next two years.
Goldman Sachs Group Inc. (NYSE: GS) shares gained 2% to $161.46 after handily beating analysts' estimates. The investment bank reported Q1 EPS of $4.02, down 10% year over year. But, that was comfortably better than the EPS of $3.48 forecast. Revenue slipped 8% to $9.33 billion, compared to $10.09 billon year over year, yet was also better than the $8.66 expected. Investment banking revenue grew 13% to $1.78 billion, from $1.57 billion a year ago. Fixed-income revenues, meanwhile, where down 11% to $2.85 billion, from $3.22 billion a year earlier. That was, however, up 65% from Q4. Employee headcount grew to 32,600, from 32,000 a year ago.
Google Inc. (Nasdaq: GOOG, GOOGL) shares fell about 3% to around $540 in mid-morning trading Thursday after delivering Q1 earnings after Wednesday's close that missed on both earnings and revenue. The world's largest Internet search provider reported Q1 revenue of $15.4 billion, up 19% from $12.95 billion a year ago, yet short of the $15.54 billion analysts had expected. EPS came in at $6.27, below the $6.44 per share analysts were expecting. Google's cost-per-click, the average price it charges advertisers, declined 9%. Paid-click growth increased 26%, but it has historically been up about 30% in good quarters. On a positive note, the company said Tuesday's one-day sale of its $1,500 Google Glass sold "really fast." R.W. Baird & Co, with an "Outperform" on the stock, called the Q1 performance a "very slight miss." Speaking of Google's investment ventures, Baird said "Google invests early and innovates early." Indeed, R&D spending jumped 31% year over year. Before the earnings reports, Google shares had surged 27% over the past six months and were priced for perfection.
International Business Machines Corp. (NYSE: IBM) shares slumped 4% to $187.01 in morning trading after posting a 21% drop in Q1 profits. Revenues continue to be pressured by a sharp decline in hardware sales, as more and more companies move to rent out computing power over the Internet. EPS fell 15% to $2.54 in the first quarter. Revenue slipped 4% to $22.5 billion, marking the lowest revenue total in 5 years. Expectations from Thomson Reuters were for EPS of $2.54 on revenue on $22.91 billion. Wall Street's whisper number was for a much higher EPS of $2.58 per share. The tech giant saw double-digits revenue declines in the Asia-Pacific region (down 12%), and an 11% revenue dip in the BRIC countries of Brazil, Russia, India and China. On a positive note, IBM said cloud revenue grew 50% in the quarter, but didn't provide an actual dollar amount. Citigroup downgraded IBM ahead of the report to "Neutral," and Credit Suisse reiterated its "Underperform" and $160 price target.
Morgan Stanley (NYSE: MS) shares moved up 3% to $31.18 on an 18% increase in Q1 earnings. The firm posted EPS of $0.68 a share, up from $0.60 in the year ago quarter. Analysts were looking for $0.60. Revenue rose to $8.8 billion, up from $8.48 billion, and beat the $8.57 billion expected. The solid quarter was driven in part by a surprisingly strong showing from the bank's fixed-income division (which trades bonds, commodities, and derivatives). Fixed income has long been a significant source of revenue for Wall Street firms, and many of Morgan Stanley's rivals have so far reported declines in this lucrative segment in Q1 (see Goldman Sachs above). Morgan Stanley also announced it will double its quarterly dividend to $0.10 per share.
PepisCo Inc. (NYSE: PEP) shares popped nearly 1% to $85.94 in morning trading after reporting Q1 profit grew 13%, as growth in the company's snack foods operations offset another soft period from its beverage business. The maker of Pepsi-Cola, Frito Lay snacks, and Tropicana juice posted net income of $1.22 billion, or $0.79 per share, up from $1.08 billion, or $0.69 per share a year ago. Chief Financial Officer Hugh Johnson attributed the better than expected earnings to the substantial growth of shoppers buying both snacks and drinks under the Pepsi banner. In a CNBC interview Thursday, Johnson said shoppers are buying them together more often than peanut butter and jelly. Pepsi has been under pressure from activist investor Nelson Peltz to split the beverage and snack food businesses. Thursday's Q1 reports makes a strong case for keeping them together.
SanDisk Corp. (Nasdaq: SNDK) shares surged 11% to $84.02 Thursday, after reporting a 62% jump Q1 earnings after the close Wednesday. The flash memory maker posted net income of $269 million, or $1.14 a share, on revenue of $1.51 billion. After accounting for one-time charges, SanDisk reported profits of $1.44 a share, handily topping analysts' projections of $1.26 a share. CEO Sanjay Mehrotta credited the robust quarter to strong sales of solid state drives and retail products. "We are excited by the momentum we are building in our business as we continue to execute on growth initiatives," Mehrotta said in a statement. SanDisk is continuing the positive momentum it enjoyed last year, in which revenue grew by more than $1 billion and net income more than doubled.
Next: Regardless of what happens to the Affordable Care Act in the future, one tech sector will do well thanks to its role in reining in healthcare costs. These are the stocks that will prosper - regardless of Obamacare's fate.