Earnings can dictate the direction of a stock for the following three months. Investors pay close attention to earnings and often make emotional decisions based on the performance of a stock post-earnings. However, the performance of a stock following earnings should never be the first line of research, rather the last. With that being said, I am looking at three companies that reported earnings on Monday and providing my outlook, regardless of stock performance.
Not a Spectacular Quarter, But Still the Best in the Space
Shares of retailer Costco Wholesale Corporation (NASDAQ:COST) came close to touching new highs on Monday, increasing 1.29% following an earnings report that met expectations. The company saw top-line growth of 8% year-over-year (yoy), which was fueled by a 15% rise in membership fees. More importantly, this rise was due to volume, not a price hike. Looking ahead, the company continues to see strong performance in same-store sales, and so far, has fared well against Amazon.com, Inc. (NASDAQ:AMZN)’s Prime membership.
Personally, I wasn’t too impressed with Costco’s quarter, but I think what impressed the Street is that the company did not see the same struggles experienced by Target Corporation (NYSE:TGT) or Wal-Mart Stores, Inc. (NYSE:WMT) in the quarter. With that being said, I was very impressed with its 39% rise in net profit, despite a $62 million tax benefit. This is a company with a lot of room to grow, trading with operating margins of just 2.82%. Therefore, with it being cheaper on a price/sales basis than either Target or Wal-Mart, and seeing greater growth, I think COST is a “buy” and is the best of the three.
Strong Growth Under-Performing Stock that is a 'Buy'
BioScrip Inc. (NASDAQ:BIOS) saw a 12.57% rise on Monday, touching new highs, after an earnings report that beat expectations. First, the company saw top line growth of 14.2% and posted sales of $180.7 million, $6.83 million better than the consensus. Then, it posted an EPS of $0.04, which was $0.03 better than analysts expected. Furthermore, the company’s full-year revenue guidance between $830 million and $865 million trumped the consensus of $770 million.
BioScrip Inc. (NASDAQ:BIOS) has seen a 76% rise over the last year, however after this quarter, the stock is being added to my Motley Fool “CAPS” list the minute I am done with this paragraph. It is a stock with double-digit growth that continues to trade with a price/sales far below 1.0. It is a small under-the-radar company that often gets forgotten in the discussion of best small cap stocks. But in my opinion, this is a good investment for the next year to come; it’s simply too cheap compared to growth and that distinction will create value for shareholders.