Earnings Roundup: Companies That Matter
James is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Recently there were some big earnings reports and quite a few surprises. Let's take a quick look at some of the more important companies to report in a variety of industries.
Freeport McMoRan (NYSE: FCX) reported better than expected results on both the top and bottom line with revenue adding up to $4.51 billion and net income totaling 743 million or $0.78/share. While net margins did increase, both gross and operating margins declined.
Recent acquisitions in the energy sector are allowing for a more diversified company which might insulate FCX in the future from large price fluctuations often seen in the raw materials sector.
Currently trading around $35, FCX sports some attractive valuations: A P/E of 11.03 and a Forward P/E of 7.23 are the first things that grab investor’s attention. Add in the 3.7% yield at the expense of only a 35% payout ratio and you've got my attention.
International Business Machines (NYSE: IBM) issued stronger than expected guidance for 2013 following nearly flat revenue, but increasing profits. This is most likely due to IBM's position in IT that makes its vertical integration efficient and hard to replicate putting it in the undisputed leader category.
IBM was up almost 4% after hours when investors realized that tech spending might not be as weak as many had figured. With data solutions, cloud computing, and an increasing focus on emerging markets; this company is well positioned to be the solution, storage, and developing IT champion for years to come.
Currently trading around $200, IBM has a P/E of 14 and a Forward P/E of 10.65. The 3.4% yield comes at the expense of only a 23% payout ratio which leaves plenty of money for increased dividends or future growth. Warren Buffett recently added IBM to his top five holdings and that appears to have been yet another smart move.
Johnson and Johnson (NYSE: JNJ) is a company that usually impresses investors but failed to win my approval this round. Reasons for my dislike include reduced consumer product line spending in many key areas, delays in returning recalled products back to the market, and lower guidance than analysts had predicted for 2013.
The stock was little changed on the earnings release meaning the news was not a total shock to investors. Perhaps many are hanging on because of the promising news regarding the medical device sector that saw profits in all areas up except for one, the global cardiology care sector.
Currently trading around $72 JNJ has a P/E of 23.82 and boasts a healthy Forward P/E of 12.39. The 3.3% yield comes at the expense of a whopping 77% payout ratio. Even with the high payout ratio I don't believe the company's 50 year legacy of raising dividends is in jeopardy.
JNJ seems to be putting on a strong performance with its medical device sector and will be expanding operations further in the Middle East, Africa, and Asia. Look for strong sales and performance to continue in those regions.
Every company is allowed a slow quarter in my book for long term strategy. An isolated bad quarter often is a blessing in disguise for the value savvy buyer.
Texas Instruments (NASDAQ: TXN) had a rough quarter and year. Declining revenue, profits, and sales all spelled trouble for this chip maker. The CEO, Richard Templeton, noted "we continue to operate in a weak demand environment."
Forecasting demand appears to be creating some trouble in the field as purchasers are keeping their stockpiles low in anticipation of market changes, technological advances, and cost cutting measures.
Currently trading around $33 with a P/E of 21.6 TXN might be in for a bumpy ride even with its Forward P/E of 15.32. The company itself indicated that those estimates deserve to be called into question with repeated bearish statements from their CEO regarding the macro-economic environment.
Google (NASDAQ: GOOG) absolutely knocked the cover off the ball this quarter. Many analysts were caught flat-footed with these great numbers. Some analysts even lowering their estimates the day of the earnings release only to see shares jumping up over $40 from the previous closing price of around $700.
Highlights included the continued monetization of mobile, the success of the Android OS, and superb margins. At around the $750 range it appears expensive at first glance. But this growth stock also offers some great value. A Forward P/E of 14, a PEG of 1.16, a price/book of 3.46, and year over year revenue growth of 36% are just some of the highlights. The nearly $50 billion of cash is also worth noting.
Lulupoopsalot has no position in any stocks mentioned. The Motley Fool recommends Google and Johnson & Johnson. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold, Google, International Business Machines., and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!