Wednesday, April 20, 2011
With the earnings season getting into full gear, I am increasingly getting more optimistic about the staying power of the earnings growth momentum. My favorable takeaway does not reflect the stand-out results from tech bellwethers like Intel (INTC) and IBM (IBM) only.
There is broad-based strength, from railroads to diversified industrials, which should reassure the market of the sustainability of the economic recovery. i will be looking for stocks to start reflecting this favorable trend.
Intel and IBM may no longer be in the vanguard of the technology revolution, but they do provide an excellent early look into global technology spending patterns. Intel’s comments about low double-digit growth in global PC market is particularly important, as it runs counter to the consensus view of ‘flattish’ growth due to cannibalization from tablets. Given the chipmaker’s central place in the PC value chain, we should see a reassessment of those growth expectations in the coming days.
But the earnings strength is hardly confined to techdom. United Technology (UTX), the maker of jet engines, elevators and air conditioners, came out with better-than-expected earnings and revenue numbers this morning. Eaton Corp (ETN), a diversified manufacturer, did the same, beating earnings and revenue expectations. Railroad operator CSX Corp (CSX) came out with better-than-expected results last night as well.
Admittedly, it’s not all milk and honey. AT&T (T) came inline on EPS, but fell short of revenue expectations. It appears that the end of the iPhone exclusivity has had a negative impact on subscriber growth. On the positive side for AT&T, the long-feared exodus of iPhone subscribers to Verizon (VZ) did not take place.
In other major earnings reports today, Wells Fargo (WFC) beat on EPS, but came short on revenue. Abbott Labs (ABT), the medical device maker, missed expectations.
We have just entered the heart of the first quarter reporting season, but I am very happy with what I am seeing thus far. Let’s see if this trend is sustained in the coming days. We will be hearing from Apple Inc. (AAPL) later today when it reports after the close.
APPLE INC (AAPL): Free Stock Analysis Report
ABBOTT LABS (ABT): Free Stock Analysis Report
CSX CORP (CSX): Free Stock Analysis Report
EATON CORP (ETN): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
INTEL CORP (INTC): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
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