{"id":46654,"date":"2014-01-23T07:37:44","date_gmt":"2014-01-23T12:37:44","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=46654"},"modified":"2014-01-23T07:37:44","modified_gmt":"2014-01-23T12:37:44","slug":"earnings-finally-catching-stocks-reporting-season","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2014\/01\/23\/earnings-finally-catching-stocks-reporting-season\/","title":{"rendered":"Earnings Finally Catching Up to Stocks This Reporting Season?"},"content":{"rendered":"

by Mitchell Clark<\/a>, B. Comm.<\/strong><\/p>\n

With U.S. oil and gas production surging, you\u2019d expect a company<\/a> like Halliburton Company (HAL) to be doing well. The company is a major provider of hydraulic fracturing services, otherwise known as \u201cfracking.\u201d<\/p>\n

However, the surprise in the company\u2019s latest results wasn\u2019t financial strength in domestic operations, but in business conditions in the Middle East and Asian markets. The company\u2019s 2013 fourth-quarter revenues grew to a record $7.6 billion, up two percent sequentially.<\/p>\n

For the year, the company noted that Eastern hemisphere operations provided 17% year-over-year growth, while also contributing a 23% gain to adjusted operating income.<\/p>\n

In comparison, North American fourth-quarter sales fell one percent and adjusted operating income dropped six percent due to weather-related disruptions and holidays.<\/p>\n

The company just slightly beat consensus and the stock sold off on the news.<\/p>\n

We\u2019ve been getting quite a few stocks selling off after reporting, which is more normal trading action.<\/p>\n

Johnson & Johnson (JNJ), a benchmark stock, also sold off after reporting fourth-quarter revenue and earnings that beat consensus, conservatively guiding 2014 earnings per share to the low end of the forecast.<\/p>\n

Delta Air Lines, Inc. (DAL) moved a point higher after the company announced a strong fourth quarter on lower fuel costs. Management expects meaningful margin expansion this quarter. This stock has doubled since last April and is a bullish indicator for the U.S. economy.<\/p>\n

On balance, the numbers, so far, are decent, but they aren\u2019t really strong enough to warrant new bidding action, largely because stocks are already fully valued.<\/p>\n

If anything, fourth-quarter earnings results should be justifying current share prices. A company\u2019s latest financial results are like confirmation of last year\u2019s share price appreciation. Strong share price action should really only occur if corporate outlooks exceed previous forecasts.<\/p>\n

With this in mind, this stock market is very much a hold. As companies often do, dividend increases were announced in the fourth quarter, so there shouldn\u2019t be a lot of big dividend news this earnings season. I find company dividend increases are often more prevalent in the bottom half of the year. For now, we\u2019ll probably get more share buyback announcements and more stock splits.<\/p>\n

Stocks selling off after meeting fourth-quarter guidance is perfectly healthy. (See \u201cTop Market Sectors for 2014<\/a>.\u201d) If there isn\u2019t going to be a correction, then prolonged consolidation is useful in terms of allowing earnings to catch up with share prices.<\/p>\n

Dividend-paying blue chips are still a favorite place to be, and I see no reason why they can\u2019t tick higher over the next several years, given current information. Large corporations have the economies of scale, the pricing power, and the best potential for margin expansion.<\/p>\n

But generally speaking, a fully invested, balanced portfolio of stocks doesn\u2019t require much in the way of new positions after 2013\u2019s incredible performance. Valuations among more speculative issues are extreme and while the market\u2019s top growth stories can always tick higher if the broader market is strong, current trading is pretty subdued.<\/p>\n

The adage \u201csell in May, and go away\u201d is a real possibility again this year in terms of price consolidation. There\u2019s no need to sell blue chips; there\u2019s not much reason for big new positions either.<\/p>\n

This article Earnings Finally Catching Up to Stocks This Reporting Season?<\/a> Was originally posted at Profit Confidential.<\/a><\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

by Mitchell Clark, B. Comm. With U.S. oil and gas production surging, you\u2019d expect a company like Halliburton Company (HAL) to be doing well. The company is a major provider of hydraulic fracturing services, otherwise known as \u201cfracking.\u201d However, the surprise in the company\u2019s latest results wasn\u2019t financial strength in domestic operations, but in business … <\/p>\n

Continue reading “Earnings Finally Catching Up to Stocks This Reporting Season?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-46654","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/46654","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=46654"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/46654\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=46654"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=46654"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=46654"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}