Strong Earnings Reports - Analyst Blog
May 18 2011 - 5:02AM
Zacks
With nothing major on the economic calendar today, stocks will
likely struggle to gain traction, with macro concerns dominating
the market discourse. We do have a number of positive earnings
reports from household names that may help improve sentiment after
days of market weakness.
We had a solid report from
Dell (DELL) after the
close on Tuesday, helping offset some of the negativity produced by
Hewlett-Packard's (HPQ) weak report. We also have
an impressive report from farm machinery giant
Deere &
Co. (DE). We also have a number of reports from retailers,
with
Target (TGT) and
Ambercombie &
Fitch (ANF) coming ahead, while
Staples
(SPLS) came short of expectations.
Dell not only beat expectations, but raised guidance for the coming
quarter, reassuring the market that there may still be some life
left in the lowly PC market. We should keep in mind, however, that
Dell is substantially geared towards the corporate end market,
while Hewlett-Packard is primarily a consumer PC player. The
growing popularity of tablet computers is more of a threat to the
consumer PC market, but appears to have limited impact in the
corporate end-market, at least so far.
Deere & Company came ahead of expectations on both the top- and
bottom-lines. Demand for the farm equipment giant's tractors,
combines and other machinery has been lifted by the surge in
agriculture commodity prices. The concern lately has been that with
the prices of many of those commodities pulling back, what impact
it will have on demand for farm equipment going forward?
Target handily beat EPS expectations on the back of strength in the
credit card business, while revenue was a shade short of the Zacks
Consensus. The retailer came out with same-store sales growth of
2%, maintaining its positive growth momentum of the last few
quarters. As we saw with
Wal-Mart (WMT) the other
day, the retail group remains under pressure due to high gasoline
prices. However, the recent pullback in oil prices, if sustained,
should be a net positive for the group.
It will be interesting to see how stocks respond to today's batch
of reassuring earnings reports. But the market's recent struggles
have been centered on macro concerns about economic growth
questions. And while today's reports are helpful in that debate,
they are unlikely to resolve it.
ABERCROMBIE (ANF): Free Stock Analysis Report
DEERE & CO (DE): Free Stock Analysis Report
DELL INC (DELL): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
STAPLES INC (SPLS): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis Report
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