This chart caught my eye. This shows the long-term performance of Consumer Discretionaries (XLY) and Energy (XLE). Note how different they are. Both have had periods of tremendous growth, and both have also had rough patches.
These aren’t individual stocks but major market sectors, and they’re still vulnerable to the whims of the market.
This morning, we got the final earnings report of this season. Cognizant Technology Solutions (CTSH) just posted Q2 earnings of 79 cents per share. That was six cents better than estimates. Revenue rose 22.6% to $3.09 billion.
Cognizant also sees full-year earnings of at least $3 per share. The previous guidance expected earnings of at least $2.93 per share. They’ve already earned $1.50 per share for the first half of this year.
The Company is providing the following guidance:
Third quarter 2015 revenue expected to be at least $3.14 billion.
Third quarter 2015 non-GAAP diluted EPS expected to be at least $0.75.
Fiscal 2015 revenue expected to be at least $12.33 billion, up at least 20.1% compared to 2014.
Fiscal 2015 non-GAAP diluted EPS expected to be at least $3.00.
“Our strong performance has allowed us to raise our full year revenue and EPS guidance for the second time this year, despite the impact to our full year revenues from the announcement that Health Net would be acquired by Centene Corporation,” said Karen McLoughlin, Chief Financial Officer. “During the quarter, we repurchased $153 million of shares, under our existing stock repurchase program, reflecting our strong cash flows and our confidence in the strength of our business.”
The shares are up 5% in pre-market trading.
Sixteen of our 20 Buy List stocks have reported Q2 earnings in the current reporting season. Here’s a list of reporting dates and Wall Street’s consensus estimates.
| Stock |
Symbol |
Date |
Estimate |
Result |
| Wells Fargo |
WFC |
14-Jul |
$1.03 |
$1.03 |
| eBay |
EBAY |
16-Jul |
$0.73 |
$0.76 |
| Signature Bank |
SBNY |
21-Jul |
$1.69 |
$1.77 |
| Microsoft |
MSFT |
21-Jul |
$0.56 |
$0.62 |
| Qualcomm |
QCOM |
22-Jul |
$0.95 |
$0.99 |
| CR Bard |
BCR |
23-Jul |
$2.18 |
$2.27 |
| Snap-on |
SNA |
23-Jul |
$2.00 |
$2.03 |
| Stryker |
SYK |
23-Jul |
$1.17 |
$1.20 |
| Wabtec |
WAB |
23-Jul |
$1.02 |
$1.04 |
| AFLAC |
AFL |
28-Jul |
$1.52 |
$1.50 |
| Ford Motor |
F |
28-Jul |
$0.37 |
$0.47 |
| Express Scripts |
ESRX |
28-Jul |
$1.40 |
$1.44 |
| Fiserv |
FISV |
29-Jul |
$0.94 |
$0.95 |
| Ball Corp. |
BLL |
30-Jul |
$0.94 |
$0.89 |
| Moog |
MOG-A |
31-Jul |
$0.94 |
$1.05 |
| Cognizant Technology |
CTSH |
5-Aug |
$0.73 |
$0.79 |
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Sam Ro points out a study done by Bank of America Merrill Lynch’s Savita Subramanian:
“We compare a buy-and-hold strategy vs. a panic selling strategy from 1960-present,” she said in a recent note to clients. “We assume an investor sells after a 2% down-day and buys back 20 trading days later, provided the market is flat or up at the end of that period.”
Can you guess what happened?
“This strategy underperforms the market on a cumulative basis since 1960 both overall and during every decade, given the best days typically follow the worst days.”
This confirms what we’ve believed for a long time. It’s best for investors to ride out storms. In fact, the worst of it has usually passed by the time you even realize you’re in a storm.
After slipping for several months, sales at Ford (F) rose 4.8% last month.
The company finally found some momentum in both production and demand. “As our inventories continue to improve, we are seeing sales follow,” Ford Vice President Mark LaNeve said on a conference call this morning. He added that Ford’s pickup workers are getting “very good at squeezing additional production now when we need it.”
It’s difficult to overstate how critical this truck is to Ford and the size of the shadow it casts on the auto business at large. It has been the best-selling vehicle in the U.S. for decades, and it is the closest thing this fickle industry has to a sure thing.
Puerto Rico Just Defaulted On Its $72 Billion Debt Pile
Oil’s Below $50 and About to Get Worse
Auto Sales Jumped in July; G.M. and Fiat Chrysler Were Up 6%
CVS Health Gives Soft Outlook Despite Strong Pharmacy Sales
Aetna Profit Beats as Government Plans Expand
Toyota Warns of Tougher China Market, Raises Japan Target
Glamour Is Out At Pimco As It Begins To Recover From Gross Exit
Alibaba Group Appoints Michael Evans as President of Alibaba Group
Archer Daniels Midland Earnings Fall on Record Ethanol Production
Scripps Networks Profit Rises 26% on Higher Affiliate Fees
Regeneron Pharmaceuticals Profit Doubles
Macy’s Is Taking On Amazon With Same-Day Delivery in 17 Cities
BMW Shifts Gear and Steers Sales Away From China
Howard Lindzon: Something Has to Give !?
Roger Nusbaum: A Deceptively Volatile Week
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At CNBC, Alex Rosenberg notes that companies beating earnings aren’t getting the love they used to:
“One possibility is that this far in the cycle, investors understand company fundamentals well enough that surprises aren’t really surprising,” Convergex chief market strategist Nicholas Colas told CNBC.
In other words, investors don’t need to be convinced that a company is able to operate profitably, and the questions answered by a given earnings report are thus less consequential than they used to be.
A similar argument can be made about momentum stocks, according to Eddy Elfenbein, author of the “Crossing Wall Street” blog.
“One of the few areas that have been working consistently has been momentum stocks like biotech and online retail names,” Elfenbein wrote recently. “That’s the sign of an aging bull, and I think the reaction to earnings beliefs reflects the thought that the ceiling is close for momentum.”
So at the same time moderate growth is less noteworthy, fast growth isn’t quite as impressive as it used to be, either. Investors figure that it won’t last forever.
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Program to Manage Care of Poor, Disabled Sustains Losses
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Fed Doesn’t Demand Wage Growth Before Increasing Interest Rate
Goldman Raises Top End of Legal-Loss Estimate
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Jeff Miller: Weighing the Week Ahead: Will Soft Economic Data Confirm the Commodity Price Message?
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Eddy Elfenbein is a Washington, DC-based speaker, portfolio manager and editor of the blog Crossing Wall Street. His Buy List has beaten the S&P 500 over the last 20 years. (more)
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