The first quarter earnings season is well and truly upon us, as Wall Street turns its attention away from catalysts such as the Federal Reserve and U.S.-China trade talks and focuses instead on fundamentals like revenues and profit margins.
So far, results are beating expectations but still showing a slide on the bottom line. Through April 18, 15% of the companies in the S&P 500 reported results. Of those, according to FactSet, 78% beat estimates with results that were 5.7% ahead of analyst expectations. But earnings on a year-over-year basis are down 4.3%.
If the earnings decline holds, it will mark the first pullback in profits since the middle of 2016.
However, investors seem to be focusing on the positive … so far. They’re rewarding stocks that are beating estimates instead of focusing on the overall decline in earnings. Here are four stocks that are rallying today following earnings results:
Twitter (NYSE:TWTR) shares are soaring, up more than 16% as I write this, after reporting better-than-expected results. The move pushes the stock up and out of a sideways consolidation range going back to last summer. And it even caught the eye of President Trump, who took to the Twitter platform to claim credit for its success and warn against alleged anti-conservative bias.
The company reported earnings of 37 cents per share, 22 cents above estimates, on an 18.3% rise in revenues. Daily average users came in at 134 million vs. estimates for around 128 million.
United Technologies (UTX)
Shares of United Technologies (NYSE:UTX) are testing, within pennies, the prior high set last September marking a 40%+ rally off of the late December low. The company reported results before the open, with earnings of $1.91 per share beating estimates by 19 cents on a 20.5% rise in revenues.
This marked the ninth consecutive quarter of beating earnings estimates as the company enjoyed its best organic growth rate in over a decade. The seemingly insatiable demand for airliners is fueling solid results at its Pratt & Whitney engine subsidiary.
Kimberly Clark (KMB)
Toilet paper maker Kimberly Clark (NYSE:KMB) is enjoying an upside breakout after reporting results on Monday. The move pushes shares up and over multi-year resistance near the $125-a-share level that was first established in early 2016. The company reported earnings of $1.66 per share, 11 cents ahead of estimates on a 2.1% drop in revenues.
A series of analyst upgrades have followed, including Argus and Macquarie. The highlight was on a 3% jump in organic revenues and a reaffirming of 2019 guidance. Management continues to focus on alleviating the impact of rising input prices and was able to trim $115 million from its expense line, partially as a result of closing two personal face facilities.
Shares of appliance maker Whirlpool (NYSE:WHR) are rallying to test prior highs set in late February, partially reversing the slide from the 2017 highs near $190. The company has enjoyed a lift following President Trump’s trade action against imported washing machines and dishwashers. The result was the largest-ever three-month increase in the cost of washing machines, helping bolster Whirlpool’s bottom line.
The company reported earnings of $3.11 per share, 26 cents ahead of estimates, despite a 3.1% drop in revenues. Management reaffirmed full-year guidance, including expectations of upwards of $900 million in free cash flow.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.
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